What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-23 compared with 2020-02-24 · 932 added, 828 removed, 1269 unchanged (58% of the section changed)

Financial Statements and Supplemental Data

Financial Statements and Supplementary Data

Index to Financial Statements

16 unchanged sentences

We have audited the accompanying consolidated balance sheets of iStar Inc.

and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows, for the years ended December 31, 2019 and 2018, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years ended December 31, 2019 and 2018, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 3 to the financial statements, effective January 1, 2019, the company adopted FASB Accounting Standards Updates 2016-02 and 2018-11, Leases, using the modified retrospective approach.

Effective January 1, 2019, the company adopted FASB Accounting Standards Updates 2016-02 and 2018-11, Leases, using the modified retrospective approach.

As discussed in Note 3 to the financial statements, the Company has changed its method of accounting for allowance for Loan Losses and Net Investment in Leases in 2020 due to adoption of Financial Accounting Standards Board (“FASB”);

Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments on January 1, 2020.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Real Estate-Impairment-Refer to Notes 3 and 4 to the financial statements

Critical Audit Matter Description

The Company reviews real estate to be held for use and land and development assets for impairment in value whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

The value of a real estate asset held for use and land and development assets are impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the asset (taking into account the anticipated holding period of the asset) is less than the carrying value.

Such estimate of cash flows considers factors, such as expected future operating income trends, as well as the effects of demand, competition and other economic factors.

To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the estimated fair value of the asset and reflected as an adjustment to the basis of the asset.

Given the subjectivity in identifying the events or changes in circumstances that would lead to an impairment, as well as in estimating the aggregate future cash flows and the fair value of the impaired asset, performing audit procedures to evaluate impairment of the real estate assets required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to identifying events that would lead to an impairment as well as related to the aggregate future cash flows and the fair value of the impaired asset included the following, among others:

We tested the effectiveness of controls over management’s identification of events or changes in circumstances that would lead to an impairment, estimate of future cashflows used to determine fair value, including controls over management selection of the hold period, discount rates, growth rates, and capitalization rates.

We evaluated management’s assessment of events or changes in circumstances that would lead to an impairment, such as identifying when an asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life by:

Discussing with management and Company personnel responsible for real estate investment strategy to determine if management’s intent regarding the hold period had changed;

Read meeting minutes to identify any evidence that may contradict management’s estimate of the hold period for indicators that it is likely a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life;

Compared the recorded value for those long-lived assets which are being marketed for sale to any current purchase offers and identified those properties where potential sale proceeds may be less than the recorded value.

We evaluated management’s ability to forecast future cashflows by comparing actual results to management’s historical forecasts.

We evaluated the reasonableness of management’s future cashflows by comparing the forecasts to:

Historical revenues, expenses, and capital expenditures;

Internal communications to management and the Board of Directors;

Recently executed agreements, market rent comparables, and expense growth expectations in the industry.

With the assistance of our fair value specialists, we evaluated the reasonableness of the fair value of the impaired asset and consistency with external data from other sources.

Loans Receivable and Other Lending Investments, Net-Reserve for Loan Losses-Refer to Notes 3 and 6 to the financial statements

Critical Audit Matter Description

The reserve for loan losses reflects management’s estimate of loan losses inherent in the loan portfolio as of the balance sheet date.

The reserve for loan losses includes an asset-specific component.

The asset-specific reserve component relates to reserves for losses on impaired loans.

A reserve is established for an impaired loan when the present value of payments expected to be received or the estimated fair value of the collateral (for loans that are dependent on the collateral for repayment) is lower than the carrying value of the loan.

Given the judgment necessary to identify events or changes in circumstances that indicate the carrying amounts of loans receivable may not be recoverable, performing audit procedures to evaluate the reserve for loan losses and estimated asset-specific reserve for loan losses required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the allowance for loan losses and the collectability of the loan portfolio, loss rates, present value of payments to be received, and fair value of collateral included the following, among others:

We tested the effectiveness of controls over the asset-specific reserves for loan losses, including management’s controls over the identification of impairment indicators, determination of risk ratings, present value of payments to be received, and the fair value of collateral.

With the assistance of our fair value specialists, we evaluated loans for potential impairment by:

Evaluating the accuracy and determining the relevance of the factors utilized during the Company’s evaluation;

Analyzing period over period changes on items, such as net operating income, debt service coverage ratio, occupancy, cash flow volatility, leasing and tenant profile, loan structure, exit plan, and project sponsorship, to determine impact on loan performance;

Evaluating the financial performance of the collateral associated with each loan;

Evaluating the impact of macroeconomic and microeconomic events on the borrower, sponsor, or asset type.

We reviewed remittance for loans in the Company’s portfolio to corroborate that the borrowers had the ability to pay their obligations in accordance with the loan agreements.

With the assistance of our fair value specialists, we evaluated the reasonableness and financial performance of the collateral values and consistency with external data from other sources.

Net Investment in Leases-Refer to Notes 3 and 5 to the financial statements

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Current Expected Credit Loss (“Expected Loss”) – Refer to Note 3 and Note 5 to the financial statements

Critical Audit Matter Description

In May 2019, the Company entered into a transaction with an operator of bowling entertainment venues, consisting of the purchase of nine bowling centers for $56.7 million, of which seven were acquired from the lessee for $44.1 million, and a commitment to purchase up to $55.0 million in additional bowling centers over the next several years.

The new centers were added to the Company’s existing master leases with the tenant.

In connection with this transaction, the maturities of the master leases were extended by 15 years to 2047.

As a result of the modifications to the leases, the Company classified the leases as sales-type leases and recorded $424.1 million in “Net investment in leases” and derecognized $193.4 million from “Real estate, net” and “Real estate available and held for sale,” $25.4 million

from “Deferred operating lease income receivable, net,” $13.4 million from “Deferred expenses and other assets, net,” and $1.9 million from “Accounts payable, accrued expenses and other liabilities” on its consolidated balance sheet.

The Company recognized $180.4 million in “Selling profit from sales-type leases” in its consolidated statements of operations as a result of the transaction.

The Company determined that the seven bowling centers acquired from the lessee did not qualify as a sale leaseback transaction and, as a result, recorded $44.1 million financing receivable in “Loans receivable and other lending investments, net” on its consolidated balance sheet.

We identified the recognition of net investment in leases due to the lease modification as a critical audit matter because of the significant estimates and assumptions management makes to determine the appropriate lease classification, identification of separate lease components, and the valuation methodology for estimating the fair value of assets and liabilities.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s discounted cash flow analysis, valuation methodology, and cost to replace certain assets.

The Company estimates its Expected Loss on its loans (including unfunded loan commitments), net investment in leases, financing receivables and held-to-maturity debt securities based on relevant information including historical realized loss rates, current market conditions and reasonable and supportable forecasts that may affect the collectability of its investments.

estimate of the Company's Expected Loss required judgment when determining the current and future economic conditions that may impact the performance of the assets securing the Company’s investments.

The determination of the Company’s expected loss rate, including the projection of current and future economic conditions, represents a critical audit matter given the level of subjectivity and judgement involved.

Performing audit procedures to evaluate the expected loss rate required a high degree of auditor judgment, and an increased extent of effort to evaluate whether management reasonably and appropriately quantified the macroeconomic risks associated with the Company’s portfolio.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recognition of net investment in leases due to the lease modification included the following, among others:

We tested the effectiveness of controls over the net investment in leases, including management’s controls over the modification of leases, the identification of separate lease components, and the valuation methodology for estimating the fair value of assets and liabilities.

We assessed the reasonableness of the lease modification and management’s classification analysis by comparing the extension term, remaining economic life, present value of the lease payments, and projected cash flows associated with the modified lease to in-place lease agreements.

With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, (2) current market data, (3) cost to replace certain assets, and (4) assumptions used in the discounted cash flows, including testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing our estimates to those used by management.

Our audit procedures to assess the estimate applied by management to the Expected Loss to account for current and future economic conditions included the following, among others:

– We tested the effectiveness of controls implemented by the Company in relation to the calculation of the Expected Loss, including the judgements involved in the determination of the macroeconomic factors applied to the historical loss rate.

– With the assistance of a credit specialist, we evaluated the reasonableness of the methodology and significant assumptions used by management.

– We evaluated management’s expected loss rate by performing a peer benchmarking analysis.

– We tested the accuracy and completeness of quantitative data used by management to estimate the current and future economic conditions.

/s/ DELOITTE & TOUCHE LLP

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 24, 2020, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s change in the manner in which it accounts for leases due to the adoption of FASB Accounting Standards Updates 2016-02 and 2018-11, Leases, using the modified retrospective approach.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 23, 2021, expressed , an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of Financial Accounting Standards Board (“FASB”);

Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments, using the modified retrospective approach method.

Basis for Opinion

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We have served as the Company's auditor since 2018.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of iStar Inc.

Opinion on the Financial Statements

We have audited the consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows of iStar Inc.

and its subsidiaries (the “Company”) for the year ended December 31, 2017 , including the related notes and schedules of valuation and qualifying accounts and reserves, real estate and accumulated depreciation, and mortgage loans on real estate for the year ended December 31, 2017 listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

New York, New York

February 26, 2018, except for the change in the manner in which the Company classifies certain cash receipts and cash payments and the change in manner in which it presents restricted cash on the consolidated statements of cash flows discussed in Note 3 (not presented herein) to the consolidated financial statements appearing under Item 8 of the Company’s 2018 annual report on Form 10-K, as to which the date is February 25, 2019

We served as the Company's auditor from at least 1997 to 2018.

We have not been able to determine the specific year we began serving as auditor of the Company.

Consolidated Balance Sheets

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Deferred expenses and other assets, net 436,839 442,488

Total assets $ 4,861,808 $ 5,085,109

LIABILITIES AND EQUITY

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Preferred Stock Series D, G and I, liquidation preference $ 25.00 per share (refer to Note 14)

Convertible Preferred Stock Series J, liquidation preference $50.00 per share (refer to Note 14)

Common Stock, $ 0.001 par value, 200,000 shares authorized, 73,967 and 77,810 shares issued and outstanding as of December 31, 2020 and 2019, respectively

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Noncontrolling interests 193,414 197,538

Total equity 1,064,383 1,237,960

Total liabilities and equity $ 4,861,808 $ 5,085,109

_______________________________________________________________________________

Note - Refer to Note 2 for details on the Company's consolidated variable interest entities ("VIEs").

(1) Refer to Note 2 for details on the Company's consolidated variable interest entities ("VIEs").

The accompanying notes are an integral part of the consolidated financial statements.

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For the Years Ended December 31,

2020 2019 2018

Operating lease income $ 188,722 $ 206,388 $ 208,192

1 unchanged sentence

Interest income from sales-type leases 33,552 20,496 —

Other income 83,857 55,363 82,342

Land development revenue 164,702 119,595 409,710

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General and administrative 100,879 98,609 92,135

Provision for (recovery of) loan losses

Provision for loan losses 9,052 6,482 16,937

Provision for losses on net investment in leases 1,760 — —

Impairment of assets 7,827 13,419 147,108

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Gain on consolidation of equity method investment — — 67,877

Income (loss) from continuing operations before income taxes

Income tax benefit (expense)

Income (loss) from continuing operations

Income from discontinued operations

Gain from discontinued operations

Net income (loss) from operations before income taxes ( 30,618 ) 334,763 ( 17,511 )

Income tax expense ( 235 ) ( 438 ) ( 815 )

Net income (loss) ( 30,853 ) 334,325 ( 18,326 )

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Net income (loss) attributable to iStar Inc.

( 42,441 ) 324,042 ( 32,262 )

Preferred dividends ( 23,496 ) ( 32,495 ) ( 32,495 )

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Per common share data:

Income (loss) attributable to iStar Inc.

from continuing operations:

Net income (loss) attributable to iStar Inc.:

Net income (loss) allocable to common shareholders

Basic $ ( 0.87 ) $ 4.51 $ ( 0.95 )

Diluted $ ( 0.87 ) $ 3.73 $ ( 0.95 )

Weighted average number of common shares:

Basic 75,684 64,696 67,958

Diluted 75,684 80,666 67,958

The accompanying notes are an integral part of the consolidated financial statements.

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For the Years Ended December 31,

2020 2019 2018

Net income (loss) $ ( 30,853 ) $ 334,325 $ ( 18,326 )

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Reclassification of (gains) losses on cash flow hedges into earnings upon realization (2)

8,075 14,524 ( 1,508 )

Unrealized gains (losses) on available-for-sale securities 1,838 2,280 ( 1,135 )

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$ ( 56,414 ) $ 302,605 $ ( 47,050 )

_______________________________________________________________________________

(1) Amounts were reclassified to "Earnings (losses) from equity method investments" in the Company's consolidated statements of operations.

(2) Reclassified to "Interest expense" in the Company's consolidated statements of operations are $ 6,974 , $ 1,861 and $ 388 for the years ended December 31, 2020, 2019 and 2018, respectively.

Amount reclassified to "Gain on consolidation of equity method investment" in the Company's consolidated

statements of operations is $ 1,876 for the year ended December 31, 2018.

Amount reclassified to "Gain on consolidation of equity method investment" in the Company's consolidated statements of operations is $ 1,876 for the year ended December 31, 2018.

Reclassified to "Earnings (losses) from equity method investments" in the Company's consolidated statements of operations are $ 1,101 , $ 184 and $( 20 ), respectively, for the years ended December 31, 2020, 2019 and 2018.

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Preferred Stock Series J (1)

Par Additional

Capital Retained

(Deficit) Accumulated

Comprehensive

Income (Loss)

Noncontrolling

Income (Loss) Noncontrolling

Interests Total

Balance as of December 31, 2017 $ 12 $ 4 $ 68 $ 3,352,665 $ ( 2,470,564 ) $ ( 2,482 ) $ 34,546 $ 914,249

Dividends declared—preferred — — — — ( 32,495 ) — — ( 32,495 )

Dividends declared—common ($ 0.18 per share)

— — — — ( 12,333 ) — — ( 12,333 )

Issuance of stock/restricted stock unit amortization, net (2)

Net income (3)

— — 1 7,863 — — — 7,864

Net loss — — — — ( 32,262 ) — 13,936 ( 18,326 )

Change in accumulated other comprehensive income (loss) — — — — — ( 15,064 ) ( 1,921 ) ( 16,985 )

Repurchase of stock — — ( 1 ) ( 8,303 ) — — — ( 8,304 )

Issuance of senior unsecured convertible notes (refer to Note 11)

Dividends declared and payable — Series E and Series F Preferred Stock

Redemption of Series E and F Preferred Stock

Change in additional paid in capital attributable to redeemable noncontrolling interest (4)

Contributions from noncontrolling interests — — — — — — 15,227 15,227

Distributions to noncontrolling interests — — — — — — ( 48,930 ) ( 48,930 )

Change in noncontrolling interest attributable to consolidation of equity method investment (refer to Note 8) — — — — — — 188,279 188,279

Impact from adoption of new accounting standards — — — — 75,593 276 — 75,869

Balance as of December 31, 2018 $ 12 $ 4 $ 68 $ 3,352,225 $ ( 2,472,061 ) $ ( 17,270 ) $ 201,137 $ 1,064,115

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Dividends declared—common ($ 0.39 per share)

— — — — ( 25,324 ) — — ( 25,324 )

Issuance of stock/restricted stock unit amortization, net (2)

Change in accumulated other comprehensive income

— — 1 7,317 — — 2,864 10,182

Net income — — — — 324,042 — 10,283 334,325

Change in accumulated other comprehensive income (loss) — — — — — ( 21,437 ) ( 4,341 ) ( 25,778 )

Repurchase of stock — — ( 7 ) ( 74,640 ) — — — ( 74,647 )

Redemption of Series J Preferred Stock — ( 4 ) 16 ( 25 ) — — — ( 13 )

Contributions from noncontrolling interests — — — — — — 2,592 2,592

Distributions to noncontrolling interests — — — — — — ( 14,997 ) ( 14,997 )

Change in noncontrolling interest attributable to consolidation of equity method investment (refer to Note 8)

Impact from adoption of new accounting standards

Balance as of December 31, 2019 $ 12 $ — $ 78 $ 3,284,877 $ ( 2,205,838 ) $ ( 38,707 ) $ 197,538 $ 1,237,960

Impact from adoption of new accounting standards (refer to Note 3) — — — — ( 12,382 ) — — ( 12,382 )

Dividends declared—preferred — — — — ( 23,496 ) — — ( 23,496 )

Dividends declared—common ($ 0.43 per share)

— — — — ( 32,815 ) — — ( 32,815 )

Consolidated Statements of Changes in Equity

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Preferred Stock Series J (1)

Par Additional

Capital Retained

(Deficit) Accumulated

Comprehensive

Income (Loss)

Noncontrolling

Balance as of December 31, 2018

Dividends declared—preferred

Dividends declared—common ($0.39 per share)

Income (Loss) Noncontrolling

Interests Total

Issuance of stock/restricted stock unit amortization, net — — 1 4,060 — — 3,363 7,424

Net income (loss) — — — — ( 42,441 ) — 11,588 ( 30,853 )

Change in accumulated other comprehensive income (loss) — — — — — ( 13,973 ) ( 4,404 ) ( 18,377 )

Repurchase of stock — — ( 5 ) ( 48,402 ) — — — ( 48,407 )

Redemption of Series J Preferred Stock

Contributions from noncontrolling interests — — — — — — 496 496

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(2) Net of payments for withholding taxes upon vesting of stock-based compensation.

For the year ended December 31, 2017, net income shown above excludes $ 1,327 of net loss attributable to redeemable noncontrolling interests.

Represents the amount paid in excess of its carrying value to acquire a redeemable noncontrolling interest.

The accompanying notes are an integral part of the consolidated financial statements.

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For the Years Ended December 31,

2020 2019 2018

Cash flows from operating activities:

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Adjustments to reconcile net income (loss) to cash flows from operating activities:

Provision for (recovery of) loan losses

Provision for loan losses 9,052 6,482 16,937

Provision for losses on net investment in leases 1,760 — —

Impairment of assets 7,827 13,419 147,108

6 unchanged sentences

Gain from consolidation of equity method investment — — ( 67,877 )

Gain from discontinued operations

Selling profit from sales-type leases — ( 180,416 ) —

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Repurchase of stock ( 54,565 ) ( 68,289 ) ( 8,304 )

Redemption of Series E and F preferred stock

Payments for deferred financing costs ( 7,711 ) ( 19,928 ) ( 5,471 )

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For the Years Ended December 31,

2020 2019 2018

Supplemental disclosure of non-cash investing and financing activity:

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Defeasance of mortgage notes payable — — ( 105,785 )

Receivable from sales of real estate and land parcels

Accrued finance costs 115 2,362 —

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The Company has invested over $ 40 billion of capital over the past two decades and is structured as a real estate investment trust ("REIT") with a diversified portfolio focused on larger assets located in major metropolitan markets.

The Company's primary reportable business segments are real estate finance, net lease, operating properties and land and development (refer to Note 18).

The Company's primary reportable business segments are net lease, real estate finance, operating properties and land and development (refer to Note 18).

Organization —The Company began its business in 1993 through the management of private investment funds and became publicly traded in 1998.

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Note 2— Basis of Presentation and Principles of Consolidation

Basis of Presentation —The accompanying audited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP") for complete financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

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The following table presents the assets and liabilities of the Company's consolidated VIEs as of December 31, 2020 and 2019 ($ in thousands):

2020 December 31,

Real estate, at cost $ 899,110 $ 891,000

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Deferred expenses and other assets, net 122,591 134,117

Total assets $ 1,253,427 $ 1,301,104

Accounts payable, accrued expenses and other liabilities $ 115,581 $ 107,455

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Note 3— Summary of Significant Accounting Policies

The following paragraphs describe the impact on the Company's consolidated financial statements from the adoption of Accounting Standards Updates ("ASUs") on January 1, 2019.

ASU 2016-02 and ASU 2018-11—Accounting Standards Update ("ASU") 2016-02, Leases ("ASU 2016-02") required the recognition of right-of-use lease assets and lease liabilities by the Company as lessee for those leases classified as operating or finance leases, both measured at the present value of the lease payments, on its consolidated balance sheets.

For operating lease arrangements as of December 31, 2018 for which the Company was the lessee, primarily under leases of office space and certain ground leases, the Company recorded operating lease right-of-use assets of $ 31.6 million in "Deferred expenses and other assets, net" and operating lease liabilities of $ 31.6 million in "Accounts payable, accrued expenses and other liabilities" on its consolidated balance sheets.

In addition, the Company entered into finance leases in 2019, and as of December 31, 2019 , recorded finance lease right-of-use assets of $ 145.2 million in "Deferred expenses and other assets, net" and finance lease liabilities of $ 147.7 million in "Accounts payable, accrued expenses and other liabilities" on its consolidated balance sheets (refer to Significant Accounting Policies below).

The Company, as lessor, classifies certain of its leases on net lease properties as sales-type leases and records the leases as "Net investment in leases" on the Company's consolidated balance sheets (refer to Note 5).

For the Company's leases which qualify as sales-type leases, the Company records "Interest income from sales-type leases" in the Company's consolidated statements of operations.

The amount recorded as interest income from sales-type leases in any given period will likely be different than the straight-line lease income that would have been recorded under the superseded guidance.

The following paragraph describes the impact on the Company's consolidated financial statements from the adoption of Accounting Standards Updates ("ASUs") on January 1, 2020.

The Company adopted ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), as amended, on January 1, 2020 using the modified retrospective approach method.

Under the modified retrospective approach, the Company recorded a cumulative effect adjustment to retained earnings by increasing its allowance for loan losses and recording an initial allowance for losses on net investment in leases.

Periods presented that are prior to the adoption date of January 1, 2020 will not be adjusted.

ASU 2016-13 replaced the incurred loss impairment methodology with a methodology that reflects a current expected credit loss ("Expected Loss").

ASU 2016-13 impacted all of the Company’s investments held at amortized cost, which included its loans (including unfunded loan commitments), financing receivables, net investment in leases and held-to-maturity debt securities.

Upon adoption of ASU 2016-13 on January 1, 2020, the Company recorded an increase to its allowance for loan losses of $ 3.3 million and an initial allowance for losses on net investment in leases of $ 9.1 million, both of which were recorded as a cumulative effect adjustment to retained earnings.

Subsequent increases or decreases in the allowance for loan losses or the allowance for losses on net investment in leases will be charged to "Provision for (recovery of) loan losses" and "Provision for (recovery of) losses on net investment in leases," respectively, in the Company's consolidated statements of operations.

Refer to "Significant Accounting Policies" below for more information on how the Company determines its allowance for loan losses and its allowance for losses on net investment in leases.

Notes to Consolidated Financial Statements (Continued)

Management elected the practical expedient package that allowed the Company:

(a) to not reassess whether any expired or existing contracts entered into prior to January 1, 2019 are or contain leases;

(b) to not reassess the lease classification for any expired or existing leases entered into prior to January 1, 2019;

and (c) to not reassess initial direct costs for any expired or existing leases entered into prior to January 1, 2019.

In addition, the Company elected to not record on its consolidated balance sheets leases whose term is less than 12 months at lease inception.

ASU 2018-11, Leases amended ASU 2016-02 so that:

(i) entities could elect to not recast the comparative periods presented when transitioning to ASC 842 by allowing entities to change their initial application to the beginning of the period of adoption;

and (ii) provided lessors with a practical expedient to not separate non-lease components from the associated lease component of the contractual payments if certain conditions are met.

Management elected both of these provisions.

ASU 2018-16—ASU 2018-16, Derivatives and Hedging (Topic 815):

Inclusion of the Secured Overnight Financing Rate ("SOFR") Overnight Index Swap ("OIS") Rate as a Benchmark Interest Rate for Hedge Accounting Purposes was issued in October 2018 and expands the list of U.S.

benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based on SOFR as an eligible benchmark interest rate.

The adoption of ASU 2018-16 did not have a material impact on the Company's consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform ("ASU 2020-04").

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

In March 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Significant Accounting Policies

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In-place leases are amortized over the remaining non-cancelable term and the amortization expense is included in "Depreciation and amortization" in the Company's consolidated statements of operations.

Lease incentive assets and above-market (or below-market) lease value is amortized as a reduction of (or, increase to) operating lease income over the remaining non-cancelable term of each lease plus any renewal periods with fixed rental terms that

Notes to Consolidated Financial Statements (Continued)

are considered to be below-market.

The Company may also engage in sale/leaseback transactions and execute leases with the occupant simultaneously with the purchase of the asset.

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The value of a long-lived asset held for use and land and development assets are impaired only if management's estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the asset (taking into account the anticipated holding period of the asset) is less than the carrying value.

Such estimate of cash flows considers factors such as expected future operating income trends, as well as the effects of demand, competition and other economic factors.

Such estimate of cash flows considers factors such as

Notes to Consolidated Financial Statements (Continued)

expected future operating income trends, as well as the effects of demand, competition and other economic factors.

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or (ii) the estimated fair value at the date of the subsequent decision not to sell.

Dispositions—G ains or losses on the sale of real estate assets, including residential property, are recognized in accordance with Accounting Standards Codification ("ASC") 610-20 , Gains and Losses from the Derecognition of Nonfinancial Assets.

Dispositions— Gains or losses on the sale of real estate assets, including residential property, are recognized in accordance with Accounting Standards Codification ("ASC") 610-20 , Gains and Losses from the Derecognition of Nonfinancial Assets.

The Company primarily uses specific identification and the relative sales value method to allocate costs.

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Net Investment in Leases —Net investment in leases are recognized when the Company's leases qualify as sales-type leases.

The net investment in leases is initially measured at the present value of the fixed and determinable lease payments, including any guaranteed or unguaranteed residual value of the asset at the end of the lease, discounted at the rate implicit in the lease.

The net investment in leases is initially measured at the present value of the fixed and determinable lease payments, including any guaranteed or unguaranteed estimated residual value of the asset at the end of the lease, discounted at the rate implicit in the lease.

Acquisition-related costs are capitalized and recorded in "Net Investment in Leases" on the Company's consolidated balance sheets.

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Management considers nearly all of its loans to be held-for-investment, although certain investments may be classified as held-for-sale or available-for-sale.

Loans receivable classified as held-for-investment and debt securities classified as held-to-maturity are reported at their outstanding unpaid principal balance, and include unamortized acquisition premiums or discounts and unamortized deferred loan costs or fees.

These loans and debt securities also include accrued and paid-in-kind interest and accrued exit fees that the Company

Notes to Consolidated Financial Statements (Continued)

determines are probable of being collected.

Debt securities classified as available-for-sale are reported at fair value with unrealized gains and losses included in "Accumulated other comprehensive income (loss)" on the Company's consolidated balance sheets.

Loans receivable and other lending investments designated for sale are classified as held-for-sale and are carried at lower of amortized historical cost or estimated fair value.

Loans receivable classified as held-for-investment and debt securities classified as held-to-maturity are reported at their outstanding unpaid principal balance net of any unamortized acquisition premiums or discounts and unamortized deferred loan costs or fees.

These loans and debt securities could also include accrued and paid-in-kind interest and accrued exit fees that the Company determines are probable of being collected.

Debt securities classified as available-for-sale are reported at fair value with unrealized gains and losses recorded in "Accumulated other comprehensive income (loss)" on the Company's consolidated balance sheets.

Loans receivable and other lending investments designated for sale are classified as held-for-sale and are carried at lower of amortized cost or estimated fair value.

The amount by which carrying value exceeds fair value is recorded as a valuation allowance.

Subsequent changes in the valuation allowance are included in the determination of net income (loss) in the period in which the change occurs.

For held-to-maturity and available-for-sale debt securities held in "Loans receivable and other lending investments, net," management evaluates whether the asset is other-than-temporarily impaired when the fair market value is below carrying value.

The Company considers debt securities other-than-temporarily impaired if:

(1) the Company has the intent to sell the security;

(2) it is more likely than not that it will be required to sell the security before recovery;

or (3) it does not expect to recover the entire amortized cost basis of the security.

If it is determined that an other-than-temporary impairment exists, the portion related to credit losses, where the Company does not expect to recover its entire amortized cost basis, will be recognized as an "Impairment of assets" in the Company's consolidated statements of operations.

If the Company does not intend to sell the security and it is more likely than not that the entity will not be required to sell the security, but the security has suffered a credit loss, the impairment charge will be separated.

The credit loss component of the impairment will be recorded as an "Impairment of assets" in the Company's consolidated statements of operations, and the remainder will be recorded in "Accumulated other comprehensive income (loss)" on the Company's consolidated balance sheets.

The Company acquires properties through foreclosure or by deed-in-lieu of foreclosure in full or partial satisfaction of non-performing loans.

Notes to Consolidated Financial Statements (Continued)

The Company may acquire properties through foreclosure or by deed-in-lieu of foreclosure in full or partial satisfaction of non-performing loans.

Based on the Company's strategic plan to realize the maximum value from the collateral received, property is classified as "Land and development, net," "Real estate, net" or "Real estate available and held for sale" at its estimated fair value when title to the property is obtained.

Any excess of the carrying value of the loan over the estimated fair value of the property (less costs to sell for assets held for sale) is charged-off against the reserve for loan losses as of the date of foreclosure.

Any excess of the carrying value of the loan over the estimated fair value of the property (less costs to sell for assets held for sale) is charged-off against the allowance for loan losses as of the date of foreclosure.

Equity method investments — Equity interests are accounted for pursuant to the equity method of accounting if the Company can significantly influence the operating and financial policies of an investee.

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Cash and cash equivalents — Cash and cash equivalents include cash held in banks or invested in money market funds with original maturity terms of less than 90 days.

Notes to Consolidated Financial Statements (Continued)

Restricted cash — Restricted cash represents amounts required to be maintained under certain of the Company's debt obligations, loans, leasing, land development, sale and derivative transactions.

Restricted cash — Restricted cash represents amounts required to be maintained under certain of the Company's debt obligations, loans, leasing, land development and derivative transactions.

Restricted cash is included in "Deferred expenses and other assets, net" on the Company's consolidated balance sheets.

The following table provides a reconciliation of the cash and cash equivalents and restricted cash reported in the Company's consolidated balance sheets that total to the same amount as reported in the consolidated statements of cash flows (in thousands):

December 31, 2019

December 31, 2018

December 31, 2017

December 31, 2016

Cash and cash equivalents

Restricted cash included in deferred expenses and other assets, net

Total cash, cash equivalents and restricted cash reported in the consolidated statements of cash flows

Variable interest entities — The Company evaluates its investments and other contractual arrangements to determine if they constitute variable interests in a VIE.

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The Company reassesses its evaluation of the primary beneficiary of a VIE on an ongoing basis and assesses its evaluation of an entity as a VIE upon certain reconsideration events.

Deferred expenses and other assets / Accounts payable, accrued expenses and other liabilities — Deferred expenses and other assets include certain non-tenant receivables, leasing costs, lease incentives and financing fees associated with revolving-debt arrangements.

Deferred expenses and other assets / Accounts payable, accrued expenses and other liabilities — Deferred expenses and other assets include right-of-use lease assets, certain non-tenant receivables, leasing costs, lease incentives and financing fees associated with revolving-debt arrangements.

Financing fees associated with other debt obligations are recorded as a reduction of the carrying value of "Debt obligations, net" and "Loan participations payable, net" on the Company's consolidated balance sheets.

Lease incentives and leasing costs that include brokerage, legal and other costs are amortized over the life of the respective leases and presented as an operating activity in the Company's consolidated statements of cash flows.

External fees and costs incurred to obtain long-term debt financing have been deferred and are amortized over the term of the respective borrowing using the effective interest method.

External fees and costs incurred to obtain long-term debt financing have been deferred and are amortized over the term of the respective

Notes to Consolidated Financial Statements (Continued)

borrowing using the effective interest method.

Amortization of leasing costs is included in "Depreciation and amortization" and amortization of deferred financing fees is included in "Interest expense" in the Company's consolidated statements of operations.

Effective January 1, 2019 with the adoption of ASU 2016-02, the Company, as lessee, records right-of-use lease assets in "Deferred expenses and other assets" and lease liabilities in "Accounts payable, accrued expenses and other liabilities" on its consolidated balance sheets for operating and finance leases, both measured at the present value of the fixed and determinable lease payments.

The Company, as lessee, records right-of-use lease assets in "Deferred expenses and other assets" and lease liabilities in "Accounts payable, accrued expenses and other liabilities" on its consolidated balance sheets for operating and finance leases, both measured at the present value of the fixed and determinable lease payments.

Some of the Company's lease agreements include extension options, which are not included in the lease payments unless the extensions are reasonably certain to be exercised.

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The Company reviews finite lived intangible assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

If the Company determines the carrying

Notes to Consolidated Financial Statements (Continued)

value of an intangible asset is not recoverable it will record an impairment charge to the extent its carrying value exceeds its estimated fair value.

If the Company determines the carrying value of an intangible asset is not recoverable it will record an impairment charge to the extent its carrying value exceeds its estimated fair value.

Impairments of intangible assets are recorded in "Impairment of assets" in the Company's consolidated statements of operations.

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These rents are recognized only after the defined threshold has been met for the period.

Management estimates losses within its operating lease income receivable and deferred operating lease income receivable balances as of the balance sheet date and incorporates a reserve based on management's evaluation of the credit risks associated with these receivables.

As of December 31, 2019 and 2018 , the allowance for doubtful accounts related to real estate tenant receivables was $ 1.0 million and $ 1.5 million , respectively, and the allowance for doubtful accounts related to deferred operating lease income was $ 1.0 million and $ 1.8 million , respectively.

The Company moves to cash basis operating lease income recognition in the period in which collectability of all lease payments is no longer considered probable.

At such time, any operating lease receivable or deferred operating lease income receivable balance will be written off.

If and when lease payments that were previously not considered probable of collection

Notes to Consolidated Financial Statements (Continued)

become probable, the Company will move back to the straight-line method of income recognition and record an adjustment to operating lease income in that period as if the lease was always on the straight-line method of income recognition.

Interest Income:

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If loans with premiums, discounts, loan origination or exit fees are prepaid, the Company immediately recognizes the unamortized portion, which is included in "Other income" or "Other expense" in the Company's consolidated statements of operations.

The Company considers a loan to be non-performing and places loans on non-accrual status at such time as:

(1) the loan becomes 90 days delinquent;

(2) the loan has a maturity default;

The Company considers a loan to be non-performing and places it on non-accrual status at such time as:

(1) interest payments become 90 days delinquent;

(2) it has a maturity default;

or (3) management determines it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan.

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Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest and outstanding principal are ultimately collectible, based on the underlying collateral and operations of the borrower.

Notes to Consolidated Financial Statements (Continued)

Certain of the Company's loan investments provide for additional interest based on the borrower's operating cash flow or appreciation of the underlying collateral.

Such amounts are considered contingent interest and are reflected as interest income only upon receipt of cash.

Interest Income from Sales-Type Leases —Interest income from sales-type leases is recognized in "Interest income from sales-type leases" in the Company's consolidated statements of operations under the effective interest method.

Interest Income from Sales-Type Leases:

Interest income from sales-type leases is recognized in "Interest income from sales-type leases" in the Company's consolidated statements of operations under the effective interest method.

The effective interest method produces a constant yield on the net investment in the lease over the term of the lease.

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Other income:

Other income includes revenues from hotel operations, which are recognized when rooms are occupied and the related services are provided.

Revenues include room sales, food and beverage sales, parking, telephone, spa services and gift shop sales.

Other income also includes gains from sales of loans, loan prepayment fees, yield maintenance payments, lease termination fees, management fees and other ancillary income.

During the year ended December 31, 2017, the Company recorded $ 123.4 million of interest income and real estate tax reimbursements resulting from the settlement of litigation involving a dispute over the purchase and sale of land (refer to Note 6).

Other income includes mark-to-market gains on equity method investments, management fees, other ancillary income from our operating properties, land and development projects and loan portfolio and revenues from hotel operations, which are recognized when rooms are occupied and the related services are provided.

Hotel revenues include room sales, food and beverage sales, parking, telephone, spa services and gift shop sales.

Other ancillary income could include gains from sales of loans, loan prepayment fees, yield maintenance payments, lease termination fees and other ancillary income.

Land development revenue and cost of sales:

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The Company primarily uses specific identification and the relative sales value method to allocate costs.

Reserve for loan losses — The reserve for loan losses reflects management's estimate of loan losses inherent in the loan portfolio, including financing receivables (refer to Note 5), as of the balance sheet date.

If the Company determines that the collateral fair value less costs to sell is less than the carrying value of a collateral-dependent loan, the Company will record a reserve.

The reserve is increased (decreased) through "Provision for (recovery of) loan losses" in the Company's consolidated statements of operations and is decreased by charge-offs.

During delinquency and the foreclosure process, there are typically numerous points of negotiation with the borrower as the Company works toward a settlement or other alternative resolution, which can impact the potential for loan repayment or receipt of collateral.

Allowance for loan losses and net investment in leases — The Company performs quarterly a comprehensive analysis of its loan and sales-type lease portfolios and assigns risk ratings that incorporate management's current judgments about credit quality based on all known and relevant internal and external factors that may affect collectability.

The Company considers, among other things, payment status, lien position, borrower or tenant financial resources and investment collateral, collateral type, project economics and geographical location as well as national and regional economic factors.

This methodology results in loans and sales-type leases being risk rated, with ratings ranging from "1" to "5" with "1" representing the lowest risk of loss and "5" representing the highest risk of loss.

Upon adoption of ASU 2016-13 on January 1, 2020, the Company estimates its Expected Loss on its loans (including unfunded loan commitments), held-to-maturity debt securities and net investment in leases based on relevant information

Notes to Consolidated Financial Statements (Continued)

including historical realized loss rates, current market conditions and reasonable and supportable forecasts that affect the collectability of its investments.

The estimate of the Company's Expected Loss requires significant judgment and the Company analyzes its loan portfolio based upon its different categories of financial assets, which includes:

(i) loans and held-to-maturity debt securities;

(ii) construction loans;

and (iii) net investment in leases and financings that resulted from the acquisition of properties that did not qualify as a sale leaseback transaction and, as such, are accounted for as financing receivables (refer to Note 5).

For the Company's loans, held-to-maturity debt securities, construction loans, net investment in leases and financings that resulted from the acquisition of properties that did not qualify as sale leaseback transactions, the Company analyzed its historical realized loss experience to estimate its Expected Loss.

The Company adjusted its Expected Loss through the use of third-party market data that provided current and future economic conditions that may impact the performance of the commercial real estate assets securing its investments.

The Company considers a loan or sales-type lease to be non-performing and places it on non-accrual status at such time as:

(1) interest payments become 90 days delinquent;

(2) it has a maturity default;

or (3) management determines it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan or sales-type lease.

Non-accrual loans or sales-type leases are returned to accrual status when they have become contractually current and management believes all amounts contractually owed will be received.

The Company will record a specific allowance on a non-performing loan or sales-type lease if the Company determines that the collateral fair value less costs to sell is less than the carrying value of the collateral-dependent asset.

The specific allowance is increased (decreased) through "Provision for (recovery of) loan losses" or "Provision for losses on net investment in leases" in the Company's consolidated statements of operations and is decreased by charge-offs.

During delinquency and the foreclosure process, there are typically numerous points of negotiation with the borrower or tenant as the Company works toward a settlement or other alternative resolution, which can impact the potential for repayment or receipt of collateral.

The Company's policy is to charge off a loan when it determines, based on a variety of factors, that all commercially reasonable means of recovering the loan balance have been exhausted.

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The Company considers circumstances such as the foregoing to be indicators that the final steps in the loan collection process have occurred and that a loan is uncollectible.

At this point, a loss is confirmed and the loan and related reserve will be charged off.

The Company has one portfolio segment, represented by commercial real estate lending, whereby it utilizes a uniform process for determining its reserve for loan losses.

The reserve for loan losses includes a general, formula-based component and an asset-specific component.

The general reserve component covers performing loans and reserves for loan losses are recorded when:

(i) available information as of each balance sheet date indicates that it is probable a loss has occurred in the portfolio;

and (ii) the amount of the loss can be reasonably estimated.

The formula-based general reserve is derived from estimated principal default probabilities and loss severities applied to groups of loans based upon risk ratings assigned to loans with similar risk characteristics during the Company's quarterly loan portfolio assessment.

During this assessment, the Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability.

The Company considers, among other things, payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographical location as well as national and regional economic factors.

This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss.

Ratings range from "1" to "5" with "1" representing the lowest risk of loss and "5" representing the highest risk of loss.

The Company estimates loss rates based on historical realized losses experienced within its portfolio and takes into account current economic conditions affecting the commercial real estate market when establishing appropriate time frames to evaluate loss experience.

The asset-specific reserve component relates to reserves for losses on impaired loans.

The Company considers a loan to be impaired when, based upon current information and events, it believes that it is probable that the Company will be unable to collect all amounts due under the contractual terms of the loan agreement.

This assessment is made on a loan-by-loan basis each quarter

Notes to Consolidated Financial Statements (Continued)

based on such factors as payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographical location as well as national and regional economic factors.

A reserve is established for an impaired loan when the present value of payments expected to be received, observable market prices, or the estimated fair value of the collateral (for loans that are dependent on the collateral for repayment) is lower than the carrying value of that loan.

At this point, a loss is confirmed and the loan and related allowance will be charged off.

The Company made the accounting policy election to record accrued interest on its loan portfolio separate from its loans receivable and other lending investments and to exclude accrued interest from its amortized cost basis disclosures (refer to Note 7).

As of December 31, 2020 and 2019, accrued interest was $ 5.0 million and $ 4.2 million, respectively, and is recorded in "Accrued interest and operating lease income receivable, net" on the Company's consolidated balance sheets.

The Company places loans on non-accrual status once interest on the loan becomes 90 days delinquent and reverses any accrued interest as a reduction to interest income or recognizes a credit loss expense at such time.

As such, the Company elected the practical expedient to not record an allowance against accrued interest receivable.

During the years ended December 31, 2020, 2019 and 2018, the Company did not reverse any accrued interest on its loan portfolio.

As of December 31, 2020, all of the Company's net investment in leases were performing in accordance with the terms of the respective leases.

The Company's one impaired loan is collateral dependent and impairment is measured using the estimated fair value of the collateral, less costs to sell.

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In some cases, the Company obtains external "as is" appraisals for loan collateral, generally when third party participations exist.

Valuations are performed or obtained at the time a loan is determined to be impaired and designated non-performing, and they are updated if circumstances indicate that a significant change in value has occurred.

Valuations are performed or obtained at the time a loan is determined to be impaired or designated non-performing, and they are updated if circumstances indicate that a significant change in value has occurred.

In limited cases, appraised values may be discounted when real estate markets rapidly deteriorate.

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Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loan.

Reserve for losses on net investment in leases — The Company evaluates its net investment in leases for impairment under ASC 310.

As part of its process for monitoring the credit quality of its net investment in leases, the Company performs a quarterly assessment for each of its net investment leases.

The Company considers a net investment in lease to be impaired when, based upon current information and events, it believes that it is probable that it will be unable to collect all amounts due under the contractual terms of the lease.

As of December 31, 2019 , all of the Company's net investment in leases were performing in accordance with the terms of the respective leases.

Any potential reserve for losses on net investment in leases will reflect management's estimate of losses inherent in the portfolio as of the balance sheet date.

If the Company determines that the cash flows it expects to receive from the underlying collateral over the lease term is less than the carrying value of the net investment in lease, it will record a reserve.

The reserve, if applicable, will be increased (decreased) through "Reserve for losses on net investment in leases" in the Company's consolidated statements of operations.

For available-for-sale debt securities held in "Loans receivable and other lending investments, net," management evaluates an available-for-sale security for impairment if the security's fair value is less than its amortized cost.

If the Company

Notes to Consolidated Financial Statements (Continued)

has an impaired security, it will then determine if:

(1) the Company has the intent to sell the security;

(2) it is more likely than not that it will be required to sell the security before recovery;

or (3) it does not expect to recover the entire amortized cost basis of the security.

If the Company does not intend to sell the security, it is more likely than not that the entity will not be required to sell the security or it does not expect to recover its amortized cost, the Company will record an allowance for credit losses.

The credit loss component of the allowance will be recorded (or reversed, if necessary) as an "Impairment of assets" in the Company's consolidated statements of operations, and the remainder of the allowance will be recorded in "Accumulated other comprehensive income (loss)" on the Company's consolidated balance sheets.

Loss on debt extinguishments — The Company recognizes the difference between the reacquisition price of debt and the net carrying amount of extinguished debt currently in earnings.

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and (ii) the outcome of awards with performance or service conditions through the requisite service period.

Compensation cost for market-based awards is determined using a Monte Carlo model to simulate a range of possible future stock prices for the Company's common stock, which is reflected in the grant date

Notes to Consolidated Financial Statements (Continued)

All compensation cost for market-based awards in which the service conditions are met is recognized regardless of whether the market-condition is satisfied.

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While the Company must distribute at least 90% of its taxable income to maintain its REIT status, the Company typically distributes all of its taxable income, if any, to eliminate any tax on undistributed taxable income.

In addition, the Company is allowed several other deductions in computing its REIT taxable income, including non-cash items such as depreciation expense and certain specific reserve amounts that the Company deems to be uncollectable.

In addition, the Company is allowed several other deductions in computing its REIT taxable income, including non-cash items such as depreciation expense and certain specific allowance amounts that the Company deems to be uncollectable.

These deductions allow the Company to reduce its dividend payout requirement under federal tax laws.

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As of December 31, 2019, the Company had $ 460.6 million of REIT net operating loss ("NOL") carryforwards at the corporate REIT level that can generally be used to offset both ordinary taxable income and capital gain net income in future years.

The NOL carryforwards will expire beginning in 2031 and through 2036 if unused.

The amount of NOL carryforwards as of December 31, 2019 will be subject to finalization of the Company's 2019 tax return.

The NOL carryforwards will begin to expire in 2032 and will fully expire in 2036 if unused.

The amount of NOL

Notes to Consolidated Financial Statements (Continued)

carryforwards as of December 31, 2020 will be subject to finalization of the Company's 2020 tax return.

The Tax Cuts and Jobs Act reduced the deduction for net operating losses to 80% of the Company’s taxable income for losses incurred after December 31, 2017.

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The Company's tax years from 2016 through 2019 remain subject to examination by major tax jurisdictions.

During the year ended December 31, 2019 , the Company is expected to have REIT taxable income before the deduction for dividends paid and the NOL deduction.

During the year ended December 31, 2020, the Company is expected to have a REIT taxable loss before the deduction for dividends paid and the NOL deduction.

The Company recognizes interest expense and penalties related to uncertain tax positions, if any, as "Income tax (expense) benefit" in the Company's consolidated statements of operations.

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For the Years Ended December 31,

2020 2019 2018

Current tax benefit (expense) (1)(2)

$ ( 106 ) $ ( 35 ) $ ( 447 )

Total income tax (expense) benefit $ ( 106 ) $ ( 35 ) $ ( 447 )

_______________________________________________________________________________

For the year ended December 31, 2017, the Company recognized a tax benefit for alternative minimum tax credits generated from a carryback of NOLs to 2014 and 2015.

For the year ended December 31, 2019, excludes a REIT tax expense of $ 0.4 million , for the year ended December 31, 2018, excludes a REIT tax expense of $ 0.5 million and for the year ended December 31, 2017, excludes a REIT income tax benefit of $ 0.4 million .

(1) For the years ended December 31, 2020, 2019, and 2018, excludes a REIT tax expense of $ 0.1 million, $ 0.4 million, $ 0.5 million, respectively.

(2) Under the Tax Cuts and Jobs Act, the alternative minimum tax credit carryforward is a refundable tax credit over a four year period beginning in 2018 and ending in 2021 upon which the full amount of the credit will be allowed.

During the year ended December 31, 2019 , the Company’s TRS entities generated a taxable loss of $ 31.6 million for which the Company recognized no current tax benefit.

The Company’s TRS NOL will be carried forward and the Company’s TRS recorded a full valuation allowance against the related deferred tax asset.

During the year ended December 31, 2018 , the Company's TRS entities generated a taxable loss of $ 25.9 million for which the Company recognized no current tax benefit.

The Company’s TRS NOL will be carried forward and the Company’s TRS recorded a full valuation allowance against the related deferred tax

Notes to Consolidated Financial Statements (Continued)

The CARES Act enacted on March 27, 2020 permits corporate taxpayers to accelerate the full amount of its alternative minimum tax credits.

The Company filed a claim for refund and received a $ 3.0 million refund for which the benefit had been recognized in 2017.

During the year ended December 31, 2020, the Company’s TRS entities generated a taxable loss of $ 28.7 million for which the Company recognized no current tax benefit.

As of December 31, 2019, the Company's TRS entities had $ 123.4 million of NOL carryforwards that can generally be used to offset both ordinary taxable income and capital gain net income in future years.

The NOL carryforwards will begin to expire in 2036, of which $ 73.6 million will fully expire in 2037, if unused.

NOL carryforwards generated in 2018 and thereafter do not expire and are limited to 80% of taxable income when utilized.

The amount of NOL carryforwards as of December 31, 2020 will be determined upon finalization of the Company's 2020 tax return.

Total cash paid for taxes for the years ended December 31, 2020, 2019 and 2018 was $ 0.8 million, $ 0.4 million and $ 2.0 million, respectively.

The taxes paid in 2017 were primarily alternative minimum taxes at the REIT which the Company expects to be refunded over the next two years.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes, as well as operating loss and tax credit carryforwards.

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The valuation allowance was reduced to reflect the change in value of our net deferred tax assets that reflects a reduced rate of tax under the Tax Cuts and Jobs Act.

Notes to Consolidated Financial Statements (Continued)

Deferred tax assets and liabilities of the Company's TRS entities were as follows ($ in thousands):

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Deferred tax assets (1)

$ 80,101 $ 79,645

Valuation allowance ( 80,101 ) ( 79,645 )

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(1) Deferred tax assets as of December 31, 2020 include temporary differences related primarily to asset basis of $ 26.7 million, deferred expenses and other items of $ 12.7 million, NOL carryforwards of $ 38.4 million and other credits of $ 2.3 million.

Deferred tax assets as of December 31, 2018 include temporary differences related primarily to asset basis of $ 35.3 million , deferred expenses and other items of $ 17.2 million and NOL carryforwards of $ 25.6 million .

Deferred tax assets as of December 31, 2019 include temporary differences related primarily to asset basis of $ 32.9 million, deferred expenses and other items of $ 11.9 million and NOL carryforwards of $ 32.5 million and other credits of $ 2.3 million.

The Company has determined that the change in tax law associated with the Tax Cuts and Jobs Act will not have a material effect on whether its deferred tax assets are realizable.

Gross deferred tax assets as of December 31, 2017 were valued at the enacted corporate tax rate during the period in which such deferred tax assets are expected to be realized.

The Tax Cuts and Jobs Act reduced the federal corporate tax rate to 21% from 35% for taxable years beginning after December 31, 2017.

The Company’s TRS’s applied its reduced effective tax rate to compute its gross deferred tax assets before valuation allowance.

Earnings per share — The Company uses the two-class method in calculating earnings per share ("EPS") when it issues securities other than common stock that contractually entitle the holder to participate in dividends and earnings of the Company when, and if, the Company declares dividends on its common stock.

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Diluted earnings per share ("Diluted EPS") is calculated similarly, however, it reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower earnings per share amount.

New accounting pronouncements — In June 2016 , the FASB issued ASU 2016-13, Financial Instruments—Credit Losses:

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") which was issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments held by a reporting entity.

This amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.

New accounting pronouncements — In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) ("ASU 2020-06").

ASU 2020-06 was issued to reduce the complexity associated with applying current accounting guidance for certain financial instruments with characteristics of both liabilities and equity.

ASU 2020-06 removes certain separation models under ASC 470-20 so that a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

In addition, ASU 2020-06 requires that the if-converted method be used for all convertibles and that the treasury stock method no longer be used.

ASU 2020-06 is effective for interim and annual reporting periods beginning after December 15, 2021.

On January 1, 2020, upon the adoption of ASU 2016-13, the Company expects to record an increase to its general reserve of approximately $12.0 million on its loan portfolio and its net investment in leases, which will be recorded as a decrease to shareholders' equity on January 1, 2020.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company plans to early adopt ASU 2020-06 effective with the annual reporting period beginning January 1, 2021.

The impact from the adoption of ASU 2020-06 on the Company’s consolidated balance sheet will be an increase to "Debt obligations, net" as of January 1, 2021 of approximately $ 10 million with a corresponding decrease to "Total iStar Inc.

shareholders' equity" as of January 1, 2021 of approximately $ 10 million.

Notes to Consolidated Financial Statements (Continued)

In May 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ("ASU 2019-04") to clarify certain accounting topics from previously issued ASUs, including ASU 2016-13.

ASU 2019-04 addresses certain aspects of ASU 2016-13, including but not limited to, accrued interest receivable, loan recoveries, interest rate projections for variable-rate financial instruments and expected prepayments.

ASU 2019-04 provides alternatives that allow entities to measure credit losses on accrued interest separate from credit losses on the principal portion of a loan, clarifies that entities should include expected recoveries in the measurement of credit losses, allows entities to consider future interest rates when measuring credit losses and can elect to adjust effective interest rates used to discount expected cash flows for expected loan prepayments.

ASU 2019-04 is effective upon the adoption of ASU 2016-13.

Management does not expect the adoption of ASU 2019-04 to have a material impact on the Company’s consolidated financial statements.

Note 4— Real Estate

The Company's real estate assets were comprised of the following ($ in thousands):

Net Lease (1)

As of December 31, 2020

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Real estate available and held for sale (2)

— 5,212 5,212

Total real estate $ 1,291,903 $ 197,590 $ 1,489,493

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Real estate available and held for sale (2)

— 8,650 8,650

Total real estate $ 1,327,082 $ 208,787 $ 1,535,869

_______________________________________________________________________________

In May 2019, the Company modified certain of its leases.

As a result of these modifications, the Company classified the leases as sales-type leases and recorded $ 424.1 million in "Net investment in leases" and derecognized $ 193.4 million from "Real estate, net" and "Real estate available and held for sale" on its consolidated balance sheet (refer to Note 5).

(1) As of December 31, 2020 and 2019, real estate, net included $ 755.5 million and $ 768.6 million, respectively, of real estate of the Net Lease Venture (refer to Net Lease Venture below).

(2) As of December 31, 2020 and 2019, the Company had $ 5.2 million and $ 8.7 million, respectively, of residential condominiums available for sale in its operating properties portfolio.

Net Lease Venture —In February 2014, the Company partnered with a sovereign wealth fund to form a venture to acquire and develop net lease assets (the "Net Lease Venture") and gave a right of first offer to the venture on all new net lease investments.

The Company and its partner had joint decision making rights pertaining to the acquisition of new investments.

Upon the expiration of the investment period on June 30, 2018, the Company obtained control of the venture through its unilateral rights of management and disposition of the assets.

As a result, the expiration of the investment period resulted in a reconsideration event under GAAP and the Company determined that the Net Lease Venture is a VIE for which the Company is the primary beneficiary.

Effective June 30, 2018, the Company consolidated the Net Lease Venture as an asset acquisition under ASC 810.

The Company recorded a gain of $ 67.9 million in "Gain on consolidation of equity method investment" in the Company's consolidated statement of operations as a result of the consolidation.

The Net Lease Venture had previously been accounted for as an equity method investment.

The Company has an equity interest in the Net Lease Venture of approximately 51.9 %.

The Company is responsible for sourcing new opportunities and managing the venture and its assets in exchange for a management fee and incentive fee.

Several of the Company's senior executives whose time is substantially devoted to the Net Lease Venture own a total of 0.6 % equity ownership in the venture via co-investment.

These senior executives are also entitled to an amount equal to 50 % of any incentive fee received based on the 47.5 % external partner's interest.

Real Estate Available and Held for Sale— The following table presents the carrying value of properties transferred to held for sale, by segment ($ in millions):

Year Ended December 31,

Years Ended December 31,

Property Type 2020 2019 2018

Operating Properties $ — $ 14.5 $ 23.2

Net Lease 8.9 185.9 8.1

Total $ 8.9 $ 200.4 $ 31.3

_______________________________________________________________________________

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All of these properties were ultimately sold.

Notes to Consolidated Financial Statements (Continued)

Acquisitions— During the year ended December 31, 2019, the Company acquired a net lease asset for $ 11.5 million.

In addition, the Company acquired the leasehold interest in an office property for $ 98.2 million , inclusive of closing costs, and simultaneously entered into a new 98 -year ground lease with SAFE (refer to Note 8) and also acquired the leasehold interest in a net lease asset for $ 110.6 million and simultaneously entered into a new 99 -year Ground Lease with SAFE (refer to Note 8).

In addition, the Company acquired the leasehold interest in a net lease asset for $ 98.2 million, inclusive of closing costs, and simultaneously entered into a new 98-year ground lease with SAFE (refer to Note 8) and also acquired the leasehold interest in a net lease asset for $ 110.6 million and simultaneously entered into a new 99-year Ground Lease with SAFE (refer to Note 8).

During the year ended December 31, 2018, the Company acquired two net lease assets for an aggregate $ 14.8 million.

Disposition of Ground Lease Business— In April 2017, institutional investors acquired a controlling interest in the Company's ground lease business through the merger of a Company subsidiary and related transactions (the "Acquisition Transactions").

Ground leases generally represent ownership of the land underlying commercial real estate projects that is triple net leased by the fee owner of the land to the owners/operators of the real estate projects built thereon ("Ground Lease").

The Company's Ground Lease business was a component of the Company's net lease segment and consisted of 12 properties subject to long term net leases including seven Ground Leases and one master lease (covering five properties).

The acquiring entity was a newly formed unconsolidated entity named Safety, Income & Growth Inc., which was subsequently renamed Safehold Inc.

The carrying value of the Company's Ground Lease assets was approximately $ 161.1 million .

Shortly before the

Notes to Consolidated Financial Statements (Continued)

Acquisition Transactions, the Company completed a $ 227.0 million financing on its Ground Lease assets.

The Company received all of the proceeds of the financing.

The Company received an additional $ 113.0 million of proceeds in the Acquisition Transactions, including $ 55.5 million that the Company contributed to SAFE in its initial capitalization.

As a result of the Acquisition Transactions, the Company deconsolidated the 12 properties and the associated financing.

The Company accounts for its investment in SAFE as an equity method investment (refer to Note 8).

The Company accounted for this transaction as an in substance sale of real estate and recognized a gain of $ 123.4 million , reflecting the aggregate gain less the fair value of the Company's retained interest in SAFE.

The gain was recorded in "Gain from discontinued operations" in the Company's consolidated statements of operations.

As a result of the adoption of ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, on January 1, 2018, the Company recorded an increase to retained earnings of $ 55.5 million , bringing the Company's aggregate gain on the sale of its Ground Lease business to approximately $ 178.9 million .

Discontinued Operations— The transactions described above involving the Company's Ground Lease business qualified for discontinued operations and the following table summarizes income from discontinued operations for the year ended December 31, 2017 ($ in thousands) (1) :

Income from sales of real estate

Income from discontinued operations

_______________________________________________________________________________

The transactions closed on April 14, 2017.

Revenues primarily consisted of operating lease income and expenses primarily consisted of depreciation and amortization and real estate expense.

The following table presents cash flows provided by operating activities and cash flows used in investing activities from discontinued operations for the year ended December 31, 2017 ($ in thousands).

Cash flows provided by operating activities

Cash flows used in investing activities

Notes to Consolidated Financial Statements (Continued)

Other Dispositions— The following table presents the proceeds and income recognized for properties sold, by property type ($ in millions):

Dispositions— The following table presents the proceeds and income recognized for properties sold, by property type ($ in millions):

Years Ended December 31,

2020 2019 2018

Operating Properties (1)

Proceeds $ 5.9 $ 86.1 $ 327.9

Income from sales of real estate 0.2 11.9 81.0

Net Lease (2)

Proceeds $ 42.4 $ 469.4 $ 79.7

Income from sales of real estate 6.1 224.7 45.0

Proceeds $ 48.3 $ 555.5 $ 407.6

Income from sales of real estate 6.3 236.6 126.0

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During the year ended December 31, 2018, the Company sold 10 commercial operating properties and residential condominium units from other properties and recognized $ 81.0 million of gains in "Income from sales of real estate" in the Company's consolidated statements of operations, of which $ 9.8 million was attributable to a noncontrolling interest at one of the properties.

(2) During the year ended December 31, 2020, proceeds includes $ 7.5 million of proceeds from the sale of a net lease asset for which the Company recognized an impairment of $ 1.7 million in connection with the sale.

During the year ended December 31, 2019, the Company sold a portfolio of net lease assets with an aggregate carrying value of $ 220.4 million and recognized $ 219.7 million of gains in "Income from sales of real estate" in the Company's consolidated statements of operations.

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During the year ended December 31, 2018, the Company sold five net lease assets and recognized $ 45.0 million of gains in "Income from sales of real estate" in the Company's consolidated statements of operations.

During the year ended December 31, 2017, the Company sold one net lease property and recognized a gain on sale of $ 62.5 million .

Prior to the sale, the Company acquired the noncontrolling interest with a carrying value of $ 3.5 million for $ 12.0 million .

Impairments— During the years ended December 31, 2020, 2019 and 2018, the Company recorded aggregate impairments on real estate assets totaling $ 4.8 million, $ 5.4 million and $ 90.4 million, respectively.

During the year ended December 31, 2020, the Company recorded an impairment of $ 1.7 million in connection with the sale of a net lease asset and an impairment of $ 3.1 million on a real estate asset held for sale.

During the year ended December 31, 2019, the Company recorded an aggregate impairment of $ 5.4 million in connection with the sale of net lease and operating properties and residential condominium units.

The impairments recorded in 2018 were primarily from the Company's decision to accelerate the monetization of certain legacy assets, including several larger assets.

The impairments recorded in 2017 were primarily the result of shifting demand in the local condominium markets, changes in the Company's exit strategy on other real estate assets and an impairment recorded in connection with the sale of an outparcel located at a commercial operating property.

Tenant Reimbursements— The Company receives reimbursements from tenants for certain facility operating expenses including common area costs, insurance, utilities and real estate taxes.

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These amounts are included in "Operating lease income" in the Company's consolidated statements of operations.

Allowance for Doubtful Accounts— As of December 31, 2019 and 2018 , the allowance for doubtful accounts related to real estate tenant receivables was $ 1.0 million and $ 1.5 million , respectively, and the allowance for doubtful accounts related to deferred operating lease income was $ 1.0 million and $ 1.8 million , respectively.

Allowance for Doubtful Accounts— As of December 31, 2020 and 2019, the allowance for doubtful accounts related to real estate tenant receivables was $ 1.7 million and $ 1.0 million, respectively.

As of December 31, 2019, the allowance for doubtful accounts related to deferred operating lease income was $ 1.0 million.

These amounts are included in "Accrued interest and operating lease income receivable, net" and "Deferred operating lease income receivable, net," respectively, on the Company's consolidated balance sheets.

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Future Minimum Operating Lease Payments— Future minimum operating lease payments to be collected under non-cancelable leases, excluding customer reimbursements of expenses, in effect as of December 31, 2020, are as follows ($ in thousands):

Operating Properties

Year Net Lease

Assets Operating Properties

2021 $ 131,625 $ 15,948

2022 129,891 7,784

2023 121,586 7,469

2024 115,900 7,462

2025 119,357 6,809

Thereafter 1,238,073 9,712

Note 5— Net Investment in Leases

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In connection with this transaction, the maturities of the master leases were extended by 15 years to 2047.

As a result of the modifications to the leases, the Company classified the leases as sales-type leases and recorded $ 424.1 million in "Net investment in leases" and derecognized $ 193.4 million from "Real estate, net" and "Real estate available and held for sale," $ 25.4 million from "Deferred operating lease income receivable, net," $ 13.4 million from "Deferred expenses and other assets, net" and $ 1.9 million from "Accounts payable, accrued expenses and other liabilities" on its consolidated balance sheet.

In the second quarter 2020, the Company entered into a transaction with the lessee whereby it would apply $ 10 million of the net proceeds it received from certain sales of the lessee's facilities to the lessee's upcoming rent obligations to the Company.

In exchange, the Company's obligation under the lease to acquire an equal amount of new facilities for them or to reduce their rent in the future has been terminated.

In the third quarter 2020, the Company granted the lessee a nine-month rent deferral on its two wholly-owned master leases in exchange for eliminating the Company's commitment to invest up to $ 55.0 million in additional bowling centers over the next several years.

All deferred amounts are required to be repaid with interest beginning in January 2023.

As a result of the May 2019 modifications to the leases, the Company classified the leases as sales-type leases and recorded $ 424.1 million in "Net investment in leases" and derecognized $ 193.4 million from "Real estate, net" and "Real estate available and held for sale," $ 25.4 million from "Deferred operating lease income receivable, net," $ 13.4 million from "Deferred expenses and other assets, net" and $ 1.9 million from "Accounts payable, accrued expenses and other liabilities" on its consolidated balance sheet.

As a result of the modifications in the second and third quarter 2020, the Company reassessed this classification as required by ASC 842, and concluded that the leases should continue to be classified as sales-type leases.

In May 2019, the Company determined that the seven bowling centers acquired did not qualify as a sale leaseback transaction and recorded $ 44.1 million in "Loans receivable and other lending investments, net" on its consolidated balance sheet (refer to Note 7).

The Company recognized $ 180.4 million in "Selling profit from sales-type leases" in its consolidated statements of operations for the year ended December 31, 2019 as a result of the transaction.

The Company determined that the seven bowling centers acquired from the lessee did not qualify as a sale leaseback transaction and, as a result, recorded a $ 44.1 million financing receivable in "Loans receivable and other lending investments, net" on its consolidated balance sheet (refer to Note 7).

For the year ended December 31, 2019 , the Company recognized $ 20.5 million of "Interest income from sales-type leases" in the Company's consolidated statements of operations.

Future Minimum Lease Payments under Sales-type Leases — Future minimum lease payments to be collected under sales-type leases, excluding lease payments that are not fixed and determinable, in effect as of December 31, 2019 , are as follows by year ($ in thousands):

For the years ended December 31, 2020 and 2019, the Company recognized $ 10.8 million and $ 17.0 million, respectively, of cash interest income and $ 22.8 million and $ 3.5 million, respectively, of non-cash interest income in "Interest income from sales-type leases" in the Company's consolidated statements of operations.

The Company's net investment in leases were comprised of the following as of December 31, 2020 and December 31, 2019 ($ in thousands):

December 31, 2020 December 31, 2019

Total undiscounted cash flows $ 1,020,921 $ 1,042,019

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Present value discount ( 926,233 ) ( 963,724 )

Net investment in leases as of December 31, 2019

Impairments— During the year ended December 31, 2019 , the Company recorded an impairment of $ 0.9 million in connection with the sale of a net lease property.

Allowance for losses on net investment in leases ( 10,871 ) —

Net investment in leases (1)

$ 429,101 $ 418,915

_______________________________________________________________________________

(1) As of December 31, 2020 and 2019, all of the Company's net investment in leases were current in their payment status and performing in accordance with the terms of the respective leases.

As of December 31, 2020, the risk rating on the Company's net investment in leases was 2.0 (refer to Note 3).

Notes to Consolidated Financial Statements (Continued)

2021 $ 14,248

Thereafter 862,273

Total undiscounted cash flows $ 1,020,921

Allowance for Losses on Net Investment in Leases —Changes in the Company's allowance for losses on net investment in leases for the year ended December 31, 2020 were as follows ($ in thousands):

Allowance for losses on net investment in leases at beginning of period $ —

Initial allowance recorded upon adoption of new accounting standard (1)

Provision for losses on net investment in leases (2)

Allowance for losses on net investment in leases at end of period $ 10,871

_________________________________________________________

(1) The Company recorded an initial allowance for losses on net investment in leases of $ 9.1 million upon the adoption of ASU 2016-13 on January 1, 2020 (refer to Note 3).

(2) During the year ended December 31, 2020, the Company recorded a provision for losses on net investment in leases of $ 1.8 million resulting primarily from the macroeconomic impact of the COVID-19 pandemic on commercial real estate markets and the adoption of ASU 2016-13 (refer to Note 3).

Impairments— During the year ended December 31, 2019, the Company recorded an impairment of $ 0.9 million in connection with the sale of a net lease property.

Note 6— Land and Development

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Total land and development, net $ 430,663 $ 580,545

Acquisitions— During the year ended December 31, 2019, the Company acquired a land and development asset from an unconsolidated entity in which the Company owned a noncontrolling 50 % equity interest for $ 34.3 million , which consisted of a $ 7.3 million cash payment and the assumption of a $ 27.0 million loan (refer to Note 8).

Acquisitions— During the year ended December 31, 2019, the Company acquired a land and development asset from an unconsolidated entity in which the Company owned a noncontrolling 50 % equity interest for $ 34.3 million, which consisted of a $ 7.3 million cash payment and the assumption of a $ 27.0 million loan.

This land and development asset was sold in the fourth quarter 2020.

During the year ended December 31, 2018, the Company acquired, via foreclosure, title to a land asset which had a total fair value of $ 4.6 million and had previously served as collateral for loans receivable held by the Company.

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Dispositions— During the years ended December 31, 2020, 2019 and 2018, the Company sold land parcels and residential lots and units and recognized land development revenue of $ 164.7 million, $ 119.6 million and $ 409.7 million, respectively.

In connection with the sale of two land parcels totaling 93 acres during the year ended December 31, 2018, the Company provided an aggregate $ 145.0 million of financing to the buyers, of which $ 94.2 million was outstanding as of December 31, 2019.

During the years ended December 31, 2019 , 2018 and 2017 , the Company recognized land development cost of sales of $ 109.7 million , $ 350.2 million and $ 180.9 million , respectively, from its land and development portfolio.

In connection with the resolution of litigation involving a dispute over the purchase and sale of approximately 1,250 acres of land in Prince George’s County, Maryland, during the year ended December 31, 2017, the Company recognized $ 114.0 million of land development revenue and $ 106.3 million of land development cost of sales.

Impairments— During the year ended December 31, 2019 , the Company recorded an aggregate impairment of $ 5.3 million on two land and development assets based on expected sales proceeds and an impairment of $ 1.1 million on a land and development asset due to a change in business strategy.

During the year ended December 31, 2018, the Company recorded an aggregate impairment of $ 56.7 million on five land and development assets, primarily from the Company's decision to accelerate the monetization of legacy assets, including several larger assets.

During the year ended December 31, 2017, the Company recorded impairments on land and development assets of $ 20.5 million resulting from a decrease in expected cash flows on one asset and a change in exit strategy on another asset.

In connection with the sale of two land parcels totaling 93 acres during the year ended December 31, 2018, the Company provided an aggregate $ 145.0 million of financing to the buyers, of which $ 58.2 million and $ 94.2 million was outstanding as of December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020, 2019 and 2018, the

Notes to Consolidated Financial Statements (Continued)

Company recognized land development cost of sales of $ 177.7 million, $ 109.7 million and $ 350.2 million, respectively, from its land and development portfolio.

Impairments— During the year ended December 31, 2020, the Company recorded an aggregate impairment of $ 2.7 million on two land and development assets.

During the year ended December 31, 2019, the Company recorded an aggregate impairment of $ 5.3 million on two land and development assets based on expected sales proceeds and an impairment of $ 1.1 million on a land and development asset due to a change in business strategy.

Note 7— Loans Receivable and Other Lending Investments, net

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As of December 31,

Type of Investment

Construction loans 2020 2019

Senior mortgages $ 449,733 $ 518,992

Corporate/Partnership loans 65,100 95,394

Subtotal - gross carrying value of construction loans (1)

514,833 614,386

Senior mortgages 35,922 53,592

Corporate/Partnership loans 20,567 24,424

Subordinate mortgages 11,640 10,877

Total gross carrying value of loans

Reserves for loan losses

Total loans receivable, net

Subtotal - gross carrying value of loans 68,129 88,893

Other lending investments

Financing receivables (refer to Note 5) 46,549 44,339

Held-to-maturity debt securities 90,715 84,981

Available-for-sale debt securities 25,274 23,896

Subtotal - other lending investments 162,538 153,216

Total gross carrying value of loans receivable and other lending investments 745,500 856,495

Allowance for loan losses ( 13,170 ) ( 28,634 )

Total loans receivable and other lending investments, net $ 732,330 $ 827,861

_______________________________________________________________________________

As of December 31, 2019 , includes a $ 44.3 million financing receivable related to the acquisition of bowling centers from one of the Company's lessees (refer to Note 5).

Reserve for Loan Losses — Changes in the Company's reserve for loan losses were as follows ($ in thousands):

For the Years Ended December 31,

Reserve for loan losses at beginning of period

Provision for (recovery of) loan losses

Reserve for loan losses at end of period

_______________________________________________________________________________

During the year ended December 31, 2019, the Company charged-off $ 19.2 million from the specific reserve due to the resolution of a non-performing loan and $ 12.0 million due to the deterioration of the collateral on a separate non-performing loan.

(1) As of December 31, 2020, 47 %, or $ 241.8 million, gross carrying value of construction loans had completed construction and 5 %, or $ 24.6 million, gross carrying value of construction loans had substantially completed construction.

Notes to Consolidated Financial Statements (Continued)

The Company's recorded investment in loans (comprised of a loan's carrying value plus accrued interest) and the associated reserve for loan losses were as follows ($ in thousands):

Allowance for Loan Losses — Changes in the Company's allowance for loan losses were as follows for the year ended December 31, 2020 ($ in thousands):

General Allowance

Construction Loans

Loans Held to

Maturity Debt Securities Financing Receivables Specific

Allowance Total

Allowance for loan losses at beginning of period $ 6,668 $ 265 $ — $ — $ 21,701 $ 28,634

Adoption of new accounting standard (1)

( 353 ) 98 20 964 — 729

Provision for loan losses (2)

226 1,280 3,073 186 4,931 9,696

Charge-offs (3)

— — — — ( 25,889 ) ( 25,889 )

Allowance for loan losses at end of period $ 6,541 $ 1,643 $ 3,093 $ 1,150 $ 743 $ 13,170

____________________________________________________________

(1) On January 1, 2020, the Company recorded an increase to its allowance for loan losses of $ 3.3 million upon the adoption of ASU 2016-13 (refer to Note 3), of which $ 2.5 million related to expected credit losses for unfunded loan commitments and was recorded in "Accounts payable, accrued expenses and other liabilities."

(2) During the year ended December 31, 2020, the Company recorded a provision for loan losses of $ 9.1 million in its consolidated statement of operations resulting from the macroeconomic impact of the COVID-19 pandemic on commercial real estate markets, of which $ 1.5 million related to a recovery of credit losses for unfunded loan commitments and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities" and $ 0.9 million related to a provision on a non-performing loan that was recorded as a reduction to "Accrued interest and operating lease income receivable, net."

(3) During the year ended December 31,2020, the Company charged-off $ 25.9 million from the specific allowance due to the sale of a non-performing loan.

During the year ended December 31, 2019, the Company charged-off $ 19.2 million from the specific allowance due to the resolution of a non-performing loan and $ 12.0 million due to the deterioration of the collateral on a separate non-performing loan.

The Company's investment in loans and other lending investments and the associated allowance for loan losses were as follows ($ in thousands):

Evaluated for

1 unchanged sentence

Evaluated for

Impairment (2)

Impairment Total

As of December 31, 2020

Reserve for loan losses

Construction loans (2)

$ 53,305 $ 461,528 $ 514,833

— 68,129 68,129

Financing receivables — 46,549 46,549

Held-to-maturity debt securities — 90,715 90,715

Available-for-sale debt securities (3)

— 25,274 25,274

Allowance for loan losses ( 743 ) ( 12,427 ) ( 13,170 )

Total $ 52,562 $ 679,768 $ 732,330

As of December 31, 2019

Reserve for loan losses

Construction loans (2)

$ — $ 614,386 $ 614,386

The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs totaling net discounts of $ 0.1 million and $ 0.5 million as of December 31, 2019 and 2018 , respectively.

The Company's loans individually evaluated for impairment primarily represent loans on non-accrual status;

37,820 51,073 88,893

Financing receivables — 44,339 44,339

Held-to-maturity debt securities — 84,981 84,981

Available-for-sale debt securities — 23,896 23,896

Allowance for loan losses ( 21,701 ) ( 6,933 ) ( 28,634 )

Total $ 16,119 $ 811,742 $ 827,861

_______________________________________________________________________________

(1) The carrying value of these loans includes an unamortized net discount of $ 0.8 million and $ 0.1 million as of December 31, 2020 and 2019, respectively.

The Company's loans individually evaluated for impairment represents loans on non-accrual status;

therefore, the unamortized amounts associated with these loans are not currently being amortized into income.

The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs totaling net discounts of $ 0.7 million and $ 3.1 million as of December 31, 2019 and 2018 , respectively.

The Company's recorded investment in loans as of December 31, 2019 and 2018 includes accrued interest of $ 3.3 million and $ 4.9 million , respectively, which is included in "Accrued interest and operating lease income receivable, net" on the Company's consolidated balance sheets.

As of December 31, 2019 , excludes a $ 44.3 million financing receivable (refer to Note 5).

As of December 31, 2019 and 2018 , the total amounts exclude $ 108.9 million and $ 122.1 million , respectively, of securities that are evaluated for impairment under ASC 320.

(2) The carrying value of these loans includes an unamortized net discount of $ 2.3 million and $ 0.7 million as of December 31, 2020 and 2019, respectively.

(3) Available-for-sale debt securities are evaluated for impairment under ASC 326-30.

Notes to Consolidated Financial Statements (Continued)

Credit Characteristics —As part of the Company's process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans.

Risk ratings, which range from 1 (lower risk) to 5 (higher risk), are based on judgments which are inherently uncertain and there can be no assurance that actual performance will be similar to current expectation.

Notes to Consolidated Financial Statements (Continued)

The Company's recorded investment in performing loans, presented by class and by credit quality, as indicated by risk rating, was as follows ($ in thousands):

As of December 31,

The Company's amortized cost basis in performing senior mortgages, corporate/partnership loans, subordinate mortgages and financing receivables, presented by year of origination and by credit quality, as indicated by risk rating, was as follows as of December 31, 2020 ($ in thousands):

Year of Origination

2020 2019 2018 2017 2016 Prior to

Senior mortgages

1.0 $ — $ — $ — $ — $ — $ — $ —

1.5 — — — — — — —

2.0 — — — — — — —

2.5 — — 58,070 — — — 58,070

3.0 20,115 — 109,121 145,585 42,502 3,925 321,248

3.5 — — — — — — —

4.0 — — 53,033 — — — 53,033

4.5 — — — — — — —

5.0 — — — — — — —

$ 20,115 $ — $ 220,224 $ 145,585 $ 42,502 $ 3,925 $ 432,351

Corporate/partnership loans

1.0 $ — $ — $ — $ — $ — $ — $ —

1.5 — — — — — — —

2.0 — — — — — — —

2.5 — — — — — — —

3.0 — — 22,155 — — — 22,155

3.5 — — — — — — —

4.0 — — 20,567 — 42,945 — 63,512

4.5 — — — — — — —

5.0 — — — — — — —

Subtotal $ — $ — $ 42,722 $ — $ 42,945 $ — $ 85,667

Subordinate mortgages

The Company's recorded investment in loans, aged by payment status and presented by class, was as follows ($ in thousands):

As of December 31, 2019

1.0 $ — $ — $ — $ — $ — $ — $ —

1.5 — — — — — — —

2.0 — — — — — — —

2.5 — — — — — — —

3.0 — — — — — 11,640 11,640

3.5 — — — — — — —

4.0 — — — — — — —

4.5 — — — — — — —

5.0 — — — — — — —

Subtotal $ — $ — $ — $ — $ — $ 11,640 $ 11,640

Notes to Consolidated Financial Statements (Continued)

Financing receivables

1.0 $ — $ — $ — $ — $ — $ — $ —

1.5 — — — — — — —

2.0 — 46,549 — — — — 46,549

2.5 — — — — — — —

3.0 — — — — — — —

3.5 — — — — — — —

4.0 — — — — — — —

4.5 — — — — — — —

5.0 — — — — — — —

Subtotal $ — $ 46,549 $ — $ — $ — $ — $ 46,549

Total $ 20,115 $ 46,549 $ 262,946 $ 145,585 $ 85,447 $ 15,565 $ 576,207

____________________________________________________________

(1) As of December 31, 2020, excludes $ 53.3 million for one loan on non-accrual status.

The Company's amortized cost basis in loans, aged by payment status and presented by class, was as follows ($ in thousands):

As of December 31, 2020 Current Less Than

to 90 Days Greater

90 Days Total

Past Due Total

Senior mortgages $ 443,154 $ 42,501 $ — $ 42,501 $ 485,655

1 unchanged sentence

Subordinate mortgages 11,640 — — — 11,640

Total $ 497,515 $ 85,447 $ — $ 85,447 $ 582,962

As of December 31, 2019

2 unchanged sentences

Subordinate mortgages 10,877 — — — 10,877

_______________________________________________________________________________

As of December 31, 2019, the Company had one loan which was greater than 90 days delinquent and was in various stages of resolution, including legal and environmental matters, and was 10.5 years outstanding.

As of December 31, 2018, the Company had two loans which were greater than 90 days delinquent and were in various stages of resolution, including legal and foreclosure-related proceedings and environmental matters, and ranged from 4.0 to 9.0 years outstanding.

Impaired Loans —In the second quarter 2018, the Company resolved a non-performing loan with a carrying value of $ 145.8 million .

Total $ 665,460 $ — $ 37,820 $ 37,820 $ 703,280

Notes to Consolidated Financial Statements (Continued)

Impaired Loans —In the fourth quarter 2020, the Company sold a non-performing loan with a carrying value of $ 15.2 million and received proceeds of $ 11.0 million.

In addition, the Company recorded a $ 4.2 million loan loss provision and simultaneously charged-off of the remaining unpaid balance.

In the second quarter 2018, the Company resolved a non-performing loan with a carrying value of $ 145.8 million.

The Company received a $ 45.8 million cash payment and a preferred equity investment with a face value of $ 100.0 million that is mandatorily redeemable in five years .

1 unchanged sentence

In addition, the Company recorded a $ 21.4 million loan loss provision and simultaneously charged-off of the remaining unpaid balance.

The Company's recorded investment in impaired loans, presented by class, was as follows ($ in thousands) (1) :

As of December 31, 2019

As of December 31, 2018

The Company's impaired loans, presented by class, were as follows ($ in thousands):

As of December 31, 2020 As of December 31, 2019

Investment Unpaid

Balance Related

Allowance Recorded

Investment Unpaid

Balance Related

With an allowance recorded:

1 unchanged sentence

$ 53,305 $ 52,552 $ ( 743 ) $ 37,820 $ 37,923 $ ( 21,701 )

All of the Company's non-accrual loans are considered impaired and included in the table above.

Notes to Consolidated Financial Statements (Continued)

Total $ 53,305 $ 52,552 $ ( 743 ) $ 37,820 $ 37,923 $ ( 21,701 )

_______________________________________________________________________________

(1) The Company has one non-accrual loan as of December 31, 2020 and one non-accrual loan as of December 31, 2019 that are considered impaired and included in the table above.

The Company did no t record any interest income on impaired loans for the years ended December 31, 2020, 2019 and 2018.

The Company's average recorded investment in impaired loans and interest income recognized, presented by class, was as follows ($ in thousands):

For the Years Ended December 31,

Years Ended December 31,

2020 2019 2018

Investment Interest

Recognized Average

Investment Interest

Recognized Average

Investment Interest

With no related allowance recorded:

Subordinate mortgages $ — $ — $ — $ — $ — $ 301

Subtotal — — — — — 301

With an allowance recorded:

1 unchanged sentence

Corporate/Partnership loans — — — — 39,169 —

Subtotal 50,205 2,145 38,556 — 106,210 —

Senior mortgages 50,205 2,145 38,556 — 67,041 —

1 unchanged sentence

Subordinate mortgages — — — — — 301

There was no interest income related to the resolution of non-performing loans recorded during the years ended December 31, 2019 , 2018 and 2017 .

Total $ 50,205 $ 2,145 $ 38,556 $ — $ 106,210 $ 301

Notes to Consolidated Financial Statements (Continued)

Other lending investments — Other lending investments includes the following securities ($ in thousands):

Amortized Cost Basis

Net Unrealized Gain

Estimated Fair Value

Net Carrying Value

Face Value Amortized Cost Basis Net Unrealized Gain Estimated Fair Value Net Carrying Value

As of December 31, 2020

3 unchanged sentences

Debt securities 100,000 90,715 — 90,715 90,715

Total $ 120,680 $ 111,395 $ 4,594 $ 115,989 $ 115,989

As of December 31, 2019

3 unchanged sentences

Debt securities 100,000 84,981 — 84,981 84,981

Notes to Consolidated Financial Statements (Continued)

Total $ 121,140 $ 106,121 $ 2,756 $ 108,877 $ 108,877

As of December 31, 2020, the contractual maturities of the Company's securities were as follows ($ in thousands):

Held-to-Maturity Securities

Available-for-Sale Securities

Amortized Cost Basis

Estimated Fair Value

Amortized Cost Basis

Estimated Fair Value

Held-to-Maturity Securities Available-for-Sale Securities

Amortized Cost Basis Estimated Fair Value Amortized Cost Basis Estimated Fair Value

Within one year $ — $ — $ — $ —

2 unchanged sentences

After 10 years — — 20,680 25,274

Total $ 90,715 $ 90,715 $ 20,680 $ 25,274

Notes to Consolidated Financial Statements (Continued)

Note 8— Other Investments

The Company's other investments and its proportionate share of earnings (losses) from equity method investments were as follows ($ in thousands):

Carrying Value

Equity in Earnings (Losses)

As of December 31,

For the Years Ended December 31,

Carrying Value Equity in Earnings (Losses) (1)

As of December 31, For the Years Ended December 31,

2020 2019 2020 2019 2018

Real estate equity investments

Safehold Inc.

$ 937,712 $ 729,357 $ 53,476 $ 29,764 $ 4,711

iStar Net Lease II LLC ("Net Lease Venture II") 78,998 30,712 2,654 ( 529 ) ( 333 )

iStar Net Lease I LLC ("Net Lease Venture") (3)

— — — — 4,100

Other real estate equity investments (4)

89,939 104,553 ( 12,929 ) 12,620 ( 4,112 )

Subtotal 1,106,649 864,622 43,201 41,855 4,366

Other strategic investments (5)

69,911 43,253 ( 1,075 ) ( 6 ) ( 9,373 )

Total $ 1,176,560 $ 907,875 $ 42,126 $ 41,849 $ ( 5,007 )

_______________________________________________________________________________

(1) For the years ended December 31, 2020, 2019 and 2018, earnings (losses) from equity method investments is net of the Company's pro rata share of $ 19.5 million, $ 14.4 million and $ 16.9 million, respectively, of depreciation expense and $ 59.3 million, $ 32.9 million and $ 18.1 million, respectively, of interest expense.

(2) As of December 31, 2020, the Company owned 34.8 million shares of SAFE common stock which, based on the closing price of $ 72.49 on December 31, 2020, had a market value of $ 2.5 billion.

For the year ended December 31, 2019, equity in earnings includes a dilution gain of $ 7.6 million resulting from SAFE equity offerings during 2019.

The Company consolidated the assets and liabilities of the Net Lease Venture on June 30, 2018 (refer to Net Lease Venture below).

For the year ended December 31, 2020, equity in earnings includes $ 14.4 million of dilution gains resulting from the dilution of our ownership in SAFE in connection with equity offerings at SAFE in 2020.

For the year ended December 31, 2019, equity in earnings includes dilution gains of $ 7.6 million.

(3) The Company consolidated the assets and liabilities of the Net Lease Venture on June 30, 2018 (refer to Note 4).

(4) During the year ended December 31, 2019, equity in earnings (losses) includes $ 19.3 million of income resulting primarily from the sale of properties at two of the Company's equity method investments.

During the year ended December 31, 2018, the Company recorded a $ 6.1 million impairment on a land and development equity method investment due to a change in business strategy.

(5) During the year ended December 31, 2020, the Company identified observable price changes in an equity security held by the Company as evidenced by orderly private issuances of similar securities by the same issuer.

In accordance with ASC 321, the Company remeasured its equity investment at fair value and recognized aggregate mark-to-market gains of $ 23.9 million in "Other income" in the Company's consolidated statements of operations.

For the year ended December 31, 2018, equity in earnings (losses) includes a $ 10.0 million impairment on a foreign equity method investment due to local market conditions.

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• Automatic annual renewals thereafter, subject to non-renewal upon certain findings by SAFE's independent directors and payment of termination fee equal to three times the prior year's management fee.

In August 2019, the Company acquired 6.0 million shares of SAFE's common stock in a private placement for $ 168.0 million .

In November 2020, the Company acquired 1.1 million shares of SAFE's common stock in a private placement for $ 65.0 million.

In March 2020, the Company acquired 1.7 million shares of SAFE's common stock in a private placement for $ 80.0 million.

In November 2019, the Company acquired 3.8 million shares of SAFE's common stock in a private placement for $ 130.0 million.

In August 2019, the Company acquired 6.0 million shares of SAFE's common stock in a private placement for $ 168.0 million.

As of December 31, 2020, the Company owned approximately 65.4 % of SAFE's common stock outstanding.

During the year ended December 31, 2019 , the Company recorded $ 7.5 million of management fees and during the six months ended December 31, 2018, the Company recorded $ 1.8 million of management fees pursuant to its management agreement with SAFE.

During the six months ended June 30, 2018, the Company waived $ 1.8 million of management fees and during the year ended December 31, 2017, the Company waived $ 2.0 million management fees pursuant to its management agreement with SAFE.

During the years ended December 31, 2020 and 2019, the Company recorded $ 12.7 million and $ 7.5 million, respectively, of management fees and during the six months ended December 31, 2018, the Company recorded $ 1.8 million of management fees pursuant to its management agreement with SAFE.

During the six months ended June 30, 2018, the Company waived $ 1.8 million of management fees pursuant to its management agreement with SAFE.

The Company is also entitled to receive certain expense reimbursements, including for the allocable costs of its personnel that perform certain legal, accounting, due diligence tasks and other services that third-party professionals or outside consultants otherwise would perform.

The Company has waived or elected not to charge in full certain of the expense reimbursements while SAFE is growing its portfolio.

For the year ended December 31, 2019, the Company was reimbursed $ 2.1 million of expense reimbursements and for the six months ended December 31, 2018, the Company was reimbursed $ 0.7 million of expense reimbursements.

For the years ended December 31, 2020 and 2019, the Company was reimbursed $ 5.0 million and $ 2.1 million, respectively, of expense reimbursements and for the six months ended December 31, 2018, the Company was reimbursed $ 0.7 million of expense reimbursements.

Pursuant to the terms of the management agreement with SAFE, the Company waived all expense reimbursements for the first year after the closing of SAFE's initial public offering, through June 30, 2018.

The Company has an exclusivity agreement with SAFE pursuant to which it agreed, subject to certain exceptions, that it will not acquire, originate, invest in, or provide financing for a third party’s acquisition of, a Ground Lease unless it has first offered that opportunity to SAFE and a majority of its independent directors has declined the opportunity.

Notes to Consolidated Financial Statements (Continued)

Ground Lease unless it has first offered that opportunity to SAFE and a majority of its independent directors has declined the opportunity.

Following is a list of investments that the Company has transacted with SAFE, all of which were approved by the Company's and SAFE's independent directors, for the periods presented:

In August 2017, the Company committed to provide a $ 24.0 million loan to the ground lessee of a Ground Lease originated at SAFE.

The loan was for the renovation of a medical office building in Atlanta, GA.

The loan was for the renovation of a medical office building.

The Company funded $ 18.4 million of the loan, which was fully repaid in August 2019.

During the years ended December 31, 2019 , 2018 and 2017, the Company recorded $ 1.2 million , $ 1.4 million and $ 0.2 million , respectively, of interest income on the loan.

In October 2017, the Company closed on a 99 -year Ground Lease and a $ 80.5 million construction financing commitment to support the ground-up development of a to-be-built luxury multi-family project in San Jose, CA.

During the years ended December 31, 2019 and 2018, the Company recorded $ 1.2 million and $ 1.4 million, respectively, of interest income on the loan.

In October 2017, the Company closed on a 99-year Ground Lease and a $ 80.5 million construction financing commitment to support the ground-up development of a to-be-built luxury multi-family project.

The transaction includes a combination of:

2 unchanged sentences

As of December 31, 2020, $ 61.8 million of the leasehold first mortgage was funded.

During the years ended December 31, 2019 and 2018, the Company recorded $ 1.2 million and $ 0.2 million , respectively, of interest income on the loan.

The Company entered into a forward purchase contract with SAFE under which SAFE would acquire the Ground Lease in November 2020 for approximately $ 34.0 million .

During the years ended December 31, 2020, 2019 and 2018, the Company recorded $ 3.4 million, $ 1.2 million and $ 0.2 million, respectively, of interest income on the loan.

The Company sold the Ground Lease to SAFE in September 2020 for $ 34.0 million and recognized a gain of $ 6.1 million in "Income from sales of real estate" in connection with the sale.

In May 2018, the Company provided a $ 19.9 million leasehold mortgage loan to the ground lessee of a Ground Lease originated at SAFE.

The loan was for the acquisition of two multi-tenant office buildings in Atlanta, GA.

The loan was for the acquisition of two multi-tenant office buildings.

The loan was repaid in full in November 2019 and during the years ended December 31, 2019 and 2018, the Company recorded $ 1.9 million and $ 1.4 million, respectively, of interest income on the loan.

In June 2018, the Company sold two industrial facilities located in Miami, FL to a third-party and simultaneously structured and entered into two Ground Leases.

In June 2018, the Company sold two industrial facilities to a third-party and simultaneously structured and entered into two Ground Leases.

The Company then sold the two Ground Leases to SAFE.

1 unchanged sentence

In January 2019, the Company committed to provide a $ 13.3 million loan to the ground lessee of a Ground Lease originated at SAFE.

The loan is for the conversion of an office building into a multi-family property in Washington, DC.

As of December 31, 2019 , $ 12.6 million of the loan was funded.

During the year ended December 31, 2019 , the Company recorded $ 1.0 million of interest income on the loan.

The loan is for the conversion of an office building into a multi-family property.

During the years ended December 31, 2020 and 2019, the Company recorded $ 1.0 million and $ 1.0 million, respectively, of interest income on the loan.

The loan was repaid in the fourth quarter 2020.

In February 2019, the Company acquired the leasehold interest in an office property and simultaneously entered into a new 98-year Ground Lease with SAFE (refer to Note 4).

3 unchanged sentences

The Company sold the loan at par to a third-party in November 2019.

Net Lease Venture —In February 2014, the Company partnered with a sovereign wealth fund to form the Net Lease Venture to acquire and develop net lease assets and gave a right of first offer to the venture on all new net lease investments.

The Company and its partner had joint decision making rights pertaining to the acquisition of new investments.

Upon the expiration of the investment period on June 30, 2018, the Company obtained control of the venture through its unilateral rights of management and disposition of the assets.

Effective June 30, 2018, the Company consolidated the Net Lease Venture as an asset acquisition under ASC 810.

The Company recorded a gain of $ 67.9 million in "Gain on consolidation of equity method investment" in the Company's consolidated statement of operations as a result of the consolidation.

The Net Lease Venture had previously been accounted for as an equity method investment.

The Company has an equity interest in the Net Lease Venture of approximately 51.9 % and recorded a $ 188.3 million increase to "Noncontrolling interests" and $ 11.8 million increase to "Redeemable noncontrolling interest" on the Company's consolidated balance sheet as a result of the consolidation.

The Company acquired the redeemable noncontrolling interest in the fourth quarter 2018.

The Company is responsible for sourcing new opportunities and managing the venture and its assets in exchange for a management fee and incentive fee.

Several of the Company's senior executives whose time is substantially devoted to the Net Lease Venture own a total of 0.6 % equity ownership in the venture via co-investment.

These senior executives are also entitled to an amount equal to 50 % of any incentive fee received based on the 47.5 % partner's interest.

Notes to Consolidated Financial Statements (Continued)

During the years ended December 31, 2018 and 2017, the Company recorded $ 1.3 million and $ 2.1 million , respectively, of management fees from the Net Lease Venture.

The management fees are included in "Other income" in the Company's consolidated statements of operations.

In addition, beginning after the Company's consolidation of the Net Lease Venture on June 30, 2018 and after the effect of eliminations, during the year ended December 31, 2019 and the six months ended December 31, 2018, the Company earned $ 1.5 million and $ 0.7 million , respectively, of management fees with respect to services provided to other investors in the Net Lease Venture, which was recorded as a reduction to "Net income attributable to noncontrolling interests" in the Company's consolidated statements of operations.

In June 2020, Net Lease Venture II (see below) acquired the leasehold interest in an office laboratory property in Honolulu, HI and simultaneously entered into a 99 year Ground Lease with SAFE.

In October 2020, the Company provided a $ 22.5 million loan to the ground lessee of a Ground Lease originated at SAFE.

The loan was for the Ground Lease tenant's recapitalization of an existing multi-family property.

The Company received $ 2.3 million of consideration from SAFE in connection with this transaction.

During the year ended December 31, 2020, the Company recorded $ 0.3 million of interest income on the loan.

Net Lease Venture II —In July 2018, the Company entered into a new venture ("Net Lease Venture II") with an investment strategy similar to the Net Lease Venture.

2 unchanged sentences

Net Lease Venture II is a voting interest entity and the Company has an equity interest in the venture of approximately

Notes to Consolidated Financial Statements (Continued)

The Company does not have a controlling interest in Net Lease Venture II due to the substantive participating rights of its partner.

The Company accounts for its investment in Net Lease Venture II as an equity method investment and is responsible for managing the venture in exchange for a management fee and incentive fee.

During the years ended December 31, 2019 and 2018, the Company recorded $ 1.5 million and $ 0.4 million , respectively, of management fees from Net Lease Venture II.

During the years ended December 31, 2020, 2019 and 2018, the Company recorded $ 1.5 million, $ 1.5 million and $ 0.4 million, respectively, of management fees from Net Lease Venture II.

In December 2019, Net Lease Venture II closed on a commitment to provide up to $ 150.0 million in net lease financing for the construction of three industrial centers and entered into a 25 year master lease with the tenant.

1 unchanged sentence

In December 2019, Net Lease Venture II closed on the acquisition of two grocery distribution centers for $ 81.8 million, inclusive of assumed debt.

The properties are 100 % leased with two separate coterminous leveraged leases with 6.2 years remaining on the lease terms.

In December 2018, Net Lease Venture II acquired four buildings comprising 168,636 square feet (the "Properties") located in Livermore, CA.

The properties are 100 % leased with two separate coterminous leveraged leases that expire in February 2026.

In December 2018, Net Lease Venture II acquired four buildings (the "Properties").

Net Lease Venture II acquired the Properties for $ 31.2 million which are 100 % leased with four separate leases that expire in December 2028.

2 unchanged sentences

In December 2019, the Company sold a partial interest in one of its other real estate equity investments to a related party for $ 0.5 million and recorded no gain or loss on the transaction.

In August 2018, the Company provided a mezzanine loan with a principal balance of $ 33.0 million and $ 30.5 million as of December 31, 2019 and 2018, respectively, to an unconsolidated entity in which the Company owns a 50 % equity interest.

In August 2018, the Company provided a mezzanine loan with a principal balance of $ 33.0 million as of December 31, 2020 and 2019, to an unconsolidated entity in which the Company owns a 50 % equity interest.

The loan matures in August 2021.

The loan is included in "Loans receivable and other lending investments, net" on the Company's consolidated balance sheet.

During the years ended December 31, 2019 and 2018, the Company recorded $ 2.8 million and $ 1.1 million , respectively, of interest income on the mezzanine loan.

During the years ended December 31, 2020, 2019 and 2018, the Company recorded $ 2.4 million, $ 2.8 million and $ 1.1 million, respectively, of interest income on the mezzanine loan.

In December 2016, the Company sold a land and development asset to a newly formed unconsolidated entity in which the Company owned a 50.0 % equity interest.

The Company provided financing to the entity in the form of a $ 27.0 million senior loan, all of which was funded as of December 31, 2018 and was included in "Loans receivable and other lending investments, net" on the Company's consolidated balance sheet.

The Company provided financing to the entity in the form of a $ 27.0 million senior loan.

In April 2019, the Company acquired the land and development asset from the entity for $ 34.3 million, which consisted of a $ 7.3 million cash payment and the assumption of the $ 27.0 million senior loan.

During the years ended December 31, 2019 , 2018 and 2017, the Company recorded $ 0.6 million , $ 2.1 million and $ 1.9 million , respectively, of interest income on the senior loan.

During the years ended December 31, 2019 and 2018, the Company recorded $ 0.6 million and $ 2.1 million, respectively, of interest income on the senior loan.

This asset was sold in the fourth quarter 2020.

Other strategic investments —As of December 31, 2020 and 2019, the Company also had investments in real estate related funds and other strategic investments in real estate entities.

Notes to Consolidated Financial Statements (Continued)

Summarized investee financial information — The following table presents the investee level summarized financial information of the Company's equity method investments ($ in thousands):

As of December 31,

For the Years Ended December 31,

Balance Sheets

Income Statements

Total liabilities

Noncontrolling interests

Net income attributable to parent entities

As of December 31, For the Years Ended December 31,

2020 2019 2020 2019 2018

Balance Sheets Income Statements

Total assets $ 4,522,147 $ 3,653,763 Revenues $ 149,928 $ 214,123 $ 262,970

Total liabilities 2,437,621 1,918,034 Expenses ( 203,689 ) ( 181,456 ) ( 187,257 )

Noncontrolling interests 2,124 1,486 Net income attributable to parent entities ( 53,955 ) 32,474 75,056

Total equity attributable to parent entities 2,082,402 1,734,243

During the year ended December 31, 2020, SAFE represented a significant subsidiary of the Company.

For detailed financial information regarding SAFE, please refer to its financial statements, which are publicly available on the website of the Securities and Exchange Commission at http://www.sec.gov under the ticker symbol "SAFE."

Notes to Consolidated Financial Statements (Continued)

Note 9— Other Assets and Other Liabilities

2 unchanged sentences

Intangible assets, net (1)

$ 156,041 $ 174,973

Finance lease right-of-use assets (2)

143,727 145,209

Operating lease right-of-use assets (2)

48,891 34,063

Other receivables 10,881 16,846

1 unchanged sentence

Other assets (3)

19,453 17,534

Leasing costs, net (4)

9 unchanged sentences

These amounts are included in "Depreciation and amortization" in the Company's consolidated statements of operations.

As of December 31, 2019 , the weighted average amortization period for the Company's intangible assets was approximately 20.7 years .

As of December 31, 2020, the weighted average remaining amortization period for the Company's intangible assets was approximately 16.7 years.

(2) Right-of-use lease assets relate primarily to the Company's leases of office space and certain of its ground leases.

1 unchanged sentence

The lease liability (see table below) equals the present value of the minimum rental payments due under the lease discounted at the rate implicit in the lease or the Company's incremental secured borrowing rate for similar collateral.

For operating leases, lease liabilities were discounted at the Company's weighted average incremental secured borrowing rate for similar collateral estimated to be 5.3 % and the weighted average lease term is 7.8 years.

For finance leases, lease liabilities were discounted at a weighted average rate implicit in the lease of 5.5 % and the weighted average lease term is 98.0 years.

For operating leases, lease liabilities were discounted at the Company's weighted average incremental secured borrowing rate for similar collateral estimated to be 5.1 % and the weighted average remaining lease term is 8.2 years.

For finance leases, lease liabilities were discounted at a weighted average rate implicit in the lease of 5.5 % and the weighted average remaining lease term is 97.0 years.

Right-of-use assets for finance leases are amortized on a straight-line basis over the term of the lease and are recorded in "Depreciation and amortization" in the Company's consolidated statements of operations.

During the year ended December 31, 2019 , the Company recognized $ 5.1 million in "Interest expense" and $ 0.9 million in "Depreciation and amortization" in its consolidated statement of operations relating to finance leases.

During the years ended December 31, 2020 and 2019, the Company recognized $ 8.2 million and $ 5.1 million, respectively, in "Interest expense" and $ 1.5 million and $ 0.9 million, respectively, in "Depreciation and amortization" in its consolidated statement of operations relating to finance leases.

For operating leases, rent expense is recognized on a straight-line basis over the term of the lease and is recorded in "General and administrative" and "Real estate expense" in the Company's consolidated statements of operations (refer to Note 3).

During the year ended December 31, 2019 , the Company recognized $ 3.6 million in "General and administrative" and $ 3.3 million in "Real estate expense" in its consolidated statement of operations relating to operating leases.

As of December 31, 2018 , includes $ 26.0 million of reimbursements receivable related to the construction and development of an operating property that was received in 2019.

During the years ended December 31, 2020 and 2019, the Company recognized $ 4.7 million and $ 3.6 million, respectively, in "General and administrative" and $ 3.5 million and $ 3.3 million, respectively, in "Real estate expense" in its consolidated statement of operations relating to operating leases.

(3) Other assets primarily includes derivative assets, prepaid expenses and deposits for certain real estate assets.

5 unchanged sentences

Other liabilities (1)

$ 91,513 $ 81,709

Finance lease liabilities (see table above) 150,520 147,749

3 unchanged sentences

Intangible liabilities, net (2)

48,738 51,223

Accounts payable, accrued expenses and other liabilities $ 467,922 $ 424,374

1 unchanged sentence

(1) As of December 31, 2020 and 2019, "Other liabilities" includes $ 36.9 million and $ 27.5 million, respectively, of deferred income.

As of December 31, 2019 and 2018 , "Other liabilities" includes $ 0.1 million and $ 18.5 million , respectively, related to profit sharing arrangements with developers for certain properties sold.

As of December 31, 2019 and 2018 , "Other liabilities" also includes $ 6.2 million and $ 9.4 million , respectively, related to tax increment financing bonds which were issued by government entities to fund development within two of the Company's land projects.

The amount represents tax assessments associated with each project, which will decrease as the Company sells units or pays down the bonds.

As of December 31, 2020 and 2019, other liabilities includes $ 19.0 million and $ 8.7 million, respectively, of derivative liabilities.

As of December 31, 2020, other liabilities includes $ 1.0 million of expected credit losses for unfunded loan commitments.

(2) Intangible liabilities, net includes below market lease liabilities related to the acquisition of real estate assets.

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Intangible assets— The estimated expense from the amortization of intangible assets for each of the five succeeding fiscal years is as follows ($ in thousands):

2021 $ 11,725

Note 10— Loan Participations Payable, net

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Carrying Value as of

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Loan participations payable (1)

$ 42,501 $ 35,656

Debt discounts and deferred financing costs, net — ( 18 )

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The Company's debt obligations were as follows ($ in thousands):

Carrying Value as of December 31,

Interest Rates

Carrying Value as of December 31, Stated

Interest Rates Scheduled

Maturity Date

Secured credit facilities and mortgages:

2015 $350 Million Revolving Credit Facility

LIBOR + 2.25%

Revolving Credit Facility $ — $ — LIBOR + 2.00 %

September 2022

Senior Term Loan

LIBOR + 2.75%

Senior Term Loan 491,875 491,875 LIBOR + 2.75 %

Mortgages collateralized by net lease assets (3)

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Total secured credit facilities and mortgages (4)

1,212,950 1,212,993

Unsecured notes:

6.00 % senior notes (5)

4.625% senior notes (5)

6.50% senior notes (6)

6.00% senior notes (7)

— 110,545 6.00 % —

5.25 % senior notes (6)

September 2022

— 400,000 5.25 % —

3.125 % senior convertible notes (7)

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4.75 % senior notes (8)

775,000 775,000 4.75 % October 2024

4.25 % senior notes (9)

550,000 550,000 4.25 % August 2025

5.50 % senior notes (10)

400,000 — 5.50 % February 2026

Total unsecured notes 2,012,500 2,123,045

Other debt obligations:

Trust preferred securities

LIBOR + 1.50%

Trust preferred securities 100,000 100,000 LIBOR + 1.50 %

Total debt obligations 3,325,450 3,436,038

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$ 3,286,975 $ 3,387,080

The loan bears interest at the Company's election of either:

_______________________________________________________________________________

(1) The Revolving Credit Facility bears interest at the Company's election of either:

(i) a base rate, which is the greater of (a) prime, (b) federal funds plus 0.50 % or (c) LIBOR plus 1.00 % and subject to a margin ranging from 1.00 % to 1.50 %;

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At maturity, the Company may convert outstanding borrowings to a one year term loan which matures in quarterly installments through September 2023.

The loan bears interest at the Company's election of either:

(2) The Senior Term Loan bears interest at the Company's election of either:

(i) a base rate, which is the greater of (a) prime, (b) federal funds plus 0.50 % or (c) LIBOR plus 1.00 % and subject to a margin of 1.75 %;

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As of December 31, 2020, the weighted average interest rate of these loans is 4.4 % inclusive of the effect of interest rate swaps.

The Company prepaid these senior notes in March 2019 without penalty.

The Company prepaid these senior notes in October 2019 with a $ 6.0 million prepayment penalty.

The Company prepaid these senior notes in October 2019 with a $ 4.5 million prepayment penalty.

The Company partially prepaid these senior notes in December 2019 with a $ 10.1 million prepayment premium.

The Company repaid the remaining senior notes in January 2020.

The Company can prepay these senior notes without penalty beginning September 15, 2021.

(4) As of December 31, 2020, $ 2.1 billion net carrying value of assets served as collateral for the Company's secured debt obligations.

(5) The Company repaid these senior notes in January 2020.

(6) The Company repaid these senior notes in September 2020.

(7) The Company's 3.125 % senior convertible fixed rate notes due September 2022 (" 3.125 % Convertible Notes") are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding September 15, 2022.

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As of December 31, 2019, the carrying value of the 3.125 % Convertible Notes was $ 268.7 million, net of fees, and the unamortized discount of the 3.125 % Convertible Notes was $ 15.5 million, net of fees.

During the years ended December 31, 2019 , 2018 and 2017, the Company recognized $ 9.0 million , $ 9.0 million and $ 2.5 million , respectively, of contractual interest and $ 5.0 million , $ 4.7 million and $ 1.3 million , respectively, of discount amortization on the 3.125 % Convertible Notes.

During the years ended December 31, 2020, 2019 and 2018, the Company recognized $ 9.0 million, $ 9.0 million, $ 9.0 million, respectively, of contractual interest and $ 5.2 million, $ 5.0 million and $ 4.7 million, respectively, of discount amortization on the 3.125 % Convertible Notes.

The effective interest rate for 2020, 2019 and 2018 was 5.2 %.

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(9) The Company can prepay these senior notes without penalty beginning May 1, 2025.

(10) The Company can prepay these senior notes without penalty beginning August 15, 2024.

(11) The Company capitalized interest relating to development activities of $ 1.9 million, $ 7.5 million and $ 11.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

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Future Scheduled Maturities — As of December 31, 2020, future scheduled maturities of outstanding debt obligations are as follows ($ in thousands):

Unsecured Debt

Unsecured Debt Secured Debt Total

2021 $ — $ 156,144 $ 156,144

2022 287,500 46,787 334,287

2023 — 491,875 491,875

2024 775,000 — 775,000

2025 550,000 272,843 822,843

Thereafter 500,000 245,301 745,301

Total principal maturities 2,112,500 1,212,950 3,325,450

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The Senior Term Loan permits substitution of collateral, subject to overall collateral pool coverage and concentration limits, over the life of the facility.

The Company may make optional prepayments, subject to prepayment fees, and is required to repay 0.25 % of the principal amount of the Senior Term Loan each quarter.

During the years ended December 31, 2018 and 2017, repayments of the Senior Term Loan prior to modifications and expenses incurred for the modifications resulted in losses on early extinguishment of debt of $ 2.5 million and $ 0.8 million , respectively.

The Company may make optional prepayments, subject to prepayment fees.

During the year ended December 31, 2018, repayments of the Senior Term Loan prior to modification and expenses incurred for the modification resulted in losses on early extinguishment of debt of $ 2.5 million.

Revolving Credit Facility —In September 2019, the Company amended its secured revolving credit facility (the "Revolving Credit Facility") to increase the maximum capacity to $ 350.0 million, extend the maturity date to September 2022 and make certain other changes.

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At maturity, the Company may convert outstanding borrowings to a one year term loan which matures in quarterly installments through September 2023.

As of December 31, 2019 , based on the Company's borrowing base of assets, the Company had $ 350.0 million of borrowing capacity available under the Revolving Credit Facility.

As of December 31, 2020, based on the Company's borrowing base of assets, the Company had the ability to draw $ 350.0 million without pledging any additional assets to the facility.

Unsecured Notes —In September 2019, the Company issued $ 675.0 million principal amount of 4.75 % senior unsecured notes due October 2024.

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Proceeds from the offering were used to redeem the $ 375.0 million principal amount outstanding ($ 110.5 million was redeemed in January 2020) of the 6.00 % senior unsecured notes due April 2022, repay a portion of the borrowings outstanding under the Senior Term Loan and pay related premiums and expenses in connection with the transaction.

In August 2020, the Company issued $ 400.0 million principal amount of 5.50 % senior unsecured notes due February 2026.

Proceeds from the offering, together with cash on hand, were used to repay in full the $ 400.0 million principal amount outstanding of the 5.25 % senior unsecured notes due September 2022.

During the years ended December 31, 2020, 2019 and 2018, repayments of senior unsecured notes prior to maturity resulted in losses on early extinguishment of debt of $ 12.0 million, $ 26.6 million and $ 1.2 million, respectively.

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Notes to Consolidated Financial Statements (Continued)

Collateral Assets — The carrying value of the Company's assets that are directly pledged or are held by subsidiaries whose equity is pledged as collateral to secure the Company's obligations under its secured debt facilities are as follows, by asset type ($ in thousands):

As of December 31,

Collateral Assets (1)

Non-Collateral Assets

Collateral Assets (1)

Non-Collateral Assets

Real estate, net

Real estate available and held for sale

Net investment in leases

Land and development, net

Loans receivable and other lending investments, net (2)(3)

Other investments

Cash and other assets

_______________________________________________________________________________

The Senior Term Loan and the Revolving Credit Facility are secured only by pledges of equity of certain of the Company's subsidiaries and not by pledges of the assets held by such subsidiaries.

Such subsidiaries are subject to contractual restrictions under the terms of such credit facilities, including restrictions on incurring new debt (subject to certain exceptions).

As of December 31, 2019 , Collateral Assets includes $ 438.7 million carrying value of assets held by entities whose equity interests are pledged as collateral for the Revolving Credit Facility that is undrawn as of December 31, 2019 .

As of December 31, 2019 and 2018 , the amounts presented exclude general reserves for loan losses of $ 6.9 million and $ 13.0 million , respectively.

As of December 31, 2019 and 2018 , the amounts presented exclude loan participations of $ 35.6 million and $ 22.5 million , respectively.

Debt Covenants

The Company's outstanding unsecured debt securities contain corporate level covenants that include a covenant to maintain a ratio of unencumbered assets to unsecured indebtedness, as such terms are defined in the indentures governing the debt securities, of at least 1.2 x and a covenant not to incur additional indebtedness (except for incurrences of permitted debt), if on a pro forma basis, the Company's consolidated fixed charge coverage ratio, determined in accordance with the indentures governing the Company's debt securities, is 1.5 x or lower.

If any of the Company's covenants are breached and not cured within applicable cure periods, the breach could result in acceleration of its debt securities unless a waiver or modification is agreed upon with the requisite percentage of the bondholders.

If the Company's ability to incur additional indebtedness under the fixed charge coverage ratio is limited, the Company is permitted to incur indebtedness for the purpose of refinancing existing indebtedness and for other permitted purposes under the indentures.

The Company's Senior Term Loan and the Revolving Credit Facility contain certain covenants, including covenants relating to collateral coverage, restrictions on fundamental changes, transactions with affiliates, matters relating to the liens granted to the lenders and the delivery of information to the lenders.

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To satisfy this covenant, the Company has the option to pay down outstanding borrowings or substitute assets in the borrowing base.

The Company may not pay common dividends if it ceases to qualify as a REIT.

In June 2018, the Company amended the terms of the Senior Term Loan and the Revolving Credit Facility to include the ability to pay common dividends with no restrictions so long as the Company is not in default on any of its debt obligations.

Under both the Senior Term Loan and the Revolving Credit Facility the Company is permitted to pay dividends provided that no material default (as defined in the relevant agreement) has occurred and is continuing or would result therefrom and the Company remains in compliance with its financial covenants after giving effect to the dividend.

The Company's Senior Term Loan and the Revolving Credit Facility contain cross default provisions that would allow the lenders to declare an event of default and accelerate the Company's indebtedness to them if the Company fails to pay amounts due in respect of its other recourse indebtedness in excess of specified thresholds or if the lenders under such other indebtedness are otherwise permitted to accelerate such indebtedness for any reason.

The indentures governing the Company's unsecured public debt securities permit the bondholders to declare an event of default and accelerate the Company's indebtedness to them if the

Notes to Consolidated Financial Statements (Continued)

Company's other recourse indebtedness in excess of specified thresholds is not paid at final maturity or if such indebtedness is accelerated.

The indentures governing the Company's unsecured public debt securities permit the bondholders to declare an event of default and accelerate the Company's indebtedness to them if the Company's other recourse indebtedness in excess of specified thresholds is not paid at final maturity or if such indebtedness is accelerated.

Note 12— Commitments and Contingencies

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Loans and Other Lending Investments (1)

Real Estate (2)

Investments Total

Performance-Based Commitments $ 63,419 $ 2,213 $ 25,959 $ 91,591

Strategic Investments — — 12,810 12,810

Total $ 63,419 $ 2,213 $ 38,769 $ 104,401

___________________________________________________________________________

(1) Excludes $ 7.5 million of commitments on loan participations sold that are not the obligation of the Company.

Includes a commitment to invest up to $ 55.0 million in additional bowling centers over the next several years (refer to Note 5).

Notes to Consolidated Financial Statements (Continued)

Other Commitments —Total operating lease expense for the years ended December 31, 2020, 2019 and 2018 was $ 5.4 million, $ 4.4 million and $ 5.0 million, respectively.

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Operating (1)(2)

2021 $ 3,797 $ 5,494

2022 6,756 5,604

2023 6,393 5,716

2024 6,309 5,830

2025 6,297 5,946

Thereafter 496 1,567,826

Total undiscounted cash flows 30,048 1,596,416

Present value discount (1)

( 3,771 ) ( 1,445,896 )

Other adjustments (2)

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_______________________________________________________________________________

During the year ended December 31, 2019 , the Company made payments of $ 4.1 million related to its operating leases and $ 3.3 million related to its finance leases (refer to Note 4).

The weighted average lease term for the Company's operating leases, excluding operating leases for which the Company's tenants pay rent on its behalf, was 4.2 years and the weighted average discount rate was 5.6 % .

The weighted average lease term for the Company's finance leases was 93 years and the weighted average discount rate was 5.4 % .

(1) During the years ended December 31, 2020 and 2019, the Company made payments of $ 4.3 million and $ 4.1 million, respectively, related to its operating leases and $ 5.4 million and $ 3.3 million, respectively, related to its finance leases (refer to Note 4).

As of December 31, 2020, the weighted average lease term for the Company's operating leases, excluding operating leases for which the Company's tenants pay rent on its behalf, was 5.6 years and the weighted average discount rate was 5.0 %.

As of December 31, 2020, the weighted average lease term for the Company's finance leases was 97 years and the weighted average discount rate was 5.5 %.

(2) The Company is obligated to pay ground rent under certain operating leases;

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The amount shown above is the net present value of the payments to be made by the Company's tenants on its behalf.

Notes to Consolidated Financial Statements (Continued)

Future minimum lease obligations under operating leases as of December 31, 2018 were as follows ($ in thousands):

Future minimum lease obligations under operating and finance leases as of December 31, 2019 were as follows ($ in thousands):

Operating (1)(2)

2020 $ 4,167 $ 5,386

2021 1,803 5,494

2022 1,098 5,604

2023 728 5,716

2024 617 5,830

Thereafter 1,447 1,573,824

Total undiscounted cash flows 9,860 1,601,854

Present value discount (1)

( 1,057 ) ( 1,454,105 )

Other adjustments (2)

Lease liabilities $ 34,182 $ 147,749

_______________________________________________________________________________

(1) As of December 31, 2019, the weighted average lease term for the Company's operating leases, excluding operating leases for which the Company's tenants pay rent on its behalf, was 4.2 years and the weighted average discount rate was 5.6 %.

As of December 31, 2019, the weighted average lease term for the Company's finance leases was 93 years and the weighted average discount rate was 5.4 %.

(2) The Company is obligated to pay ground rent under certain operating leases;

however, the Company's tenants at the properties pay this expense directly under the terms of various subleases and these amounts are excluded from lease obligations.

The amount shown above is the net present value of the payments to be made by the Company's tenants on its behalf.

Legal Proceedings —The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to the Company's business as a finance and investment company focused on the commercial real estate industry, including foreclosure-related proceedings.

The Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding that would have a material adverse effect on the Company’s consolidated financial statements.

Notes to Consolidated Financial Statements (Continued)

Note 13— Risk Management and Derivatives

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Risk concentrations —Concentrations of credit risks arise when a number of borrowers or tenants related to the Company's investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions.

Substantially all of the Company's real estate as well as assets collateralizing its loans receivable are located in the United States.

As of December 31, 2019 , the only states with a concentration greater than 10.0% were New York with 16.7 % , New Jersey with 14.2 % and California with 12.5 % .

As of December 31, 2019 , the Company's portfolio contains concentrations in the following asset types:

office/industrial 28.5 % , land 15.4 % , entertainment/leisure 20.1 % , hotel 5.2 % and mixed use/mixed collateral 5.3 % .

Substantially all of the Company's real estate, net investment in leases and assets collateralizing its loans receivable are located in the United States.

As of December 31, 2020, the Company's portfolio contains concentrations in the following property types:

office, entertainment/leisure, Ground Leases, industrial, land and development, multifamily, hotel, condominium, retail and other property types.

The Company underwrites the credit of prospective borrowers and tenants and often requires them to provide some form of credit support such as corporate guarantees, letters of credit and/or cash security deposits.

Although the Company's loans and real estate assets are geographically diverse and the borrowers and tenants operate in a variety of industries, to the extent the Company has a significant concentration of interest or operating lease revenues from any single borrower or tenant, the inability of that borrower or tenant to make its payment could have a material adverse effect on the Company.

As of December 31, 2019 , the Company's five largest borrowers or tenants collectively accounted for approximately 19.8 % of the Company's 2019 revenues, of which the largest customer, from the Company's net lease segment, accounted for 11.8 % .

During the year ended December 31, 2020, the Company's five largest borrowers or tenants collectively accounted for approximately 21.4 % of the Company's revenues, of which the largest customer, from the Company's net lease segment, accounted for 11.6 %.

The Company's use of derivative financial instruments has historically been limited to the utilization of interest rate swaps, interest rate caps and foreign exchange contracts.

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The Company may have derivatives that are not designated as hedges because they do not meet the strict hedge accounting requirements.

Although not designated as hedges, such derivatives are entered into to manage the Company's

Although not designated as hedges, such derivatives are entered into to manage the Company's exposure to interest rate movements and other identified risks.

Notes to Consolidated Financial Statements (Continued)

exposure to interest rate movements and other identified risks.

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2020 and 2019 ($ in thousands) (1) :

Derivative Assets

Derivative Liabilities

As of December 31, 2019

Balance Sheet

Derivative Assets Derivative Liabilities

As of December 31, 2020 Balance Sheet

Location Fair

Value Balance Sheet

Location Fair

Derivatives Designated in Hedging Relationships

Interest rate swaps

Deferred expenses and other assets, net

Accounts payable, accrued expenses and other liabilities

Interest rate swaps Deferred expenses and other assets, net $ — Accounts payable, accrued expenses and other liabilities $ 18,926

Total $ — $ 18,926

As of December 31, 2019

Derivatives Designated in Hedging Relationships

Interest rate swaps

Deferred expenses and other assets, net

Accounts payable, accrued expenses and other liabilities

Interest rate swaps Deferred expenses and other assets, net $ 114 Accounts payable, accrued expenses and other liabilities $ 8,680

Total $ 114 $ 8,680

____________________________________________________________________________

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The tables below present the effect of the Company's derivative financial instruments, including the Company's share of derivative financial instruments at certain of its equity method investments, in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) ($ in thousands):

Derivatives Designated in Hedging Relationships

Location of Gain (Loss)

When Recognized in Income

Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings

Derivatives Designated in Hedging Relationships Location of Gain (Loss)

When Recognized in Income Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings

For the Year Ended December 31, 2020

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Interest expense $ ( 14,931 ) $ ( 6,974 )

Interest rate swaps

Earnings from equity method investments

Interest rate swaps Earnings from equity method investments ( 13,359 ) ( 1,101 )

For the Year Ended December 31, 2019

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Interest expense ( 21,165 ) ( 1,861 )

Interest rate swaps

Earnings from equity method investments

Interest rate swaps Earnings from equity method investments ( 21,417 ) ( 184 )

For the Year Ended December 31, 2018

Interest rate cap

Earnings from equity method investments

Interest rate swaps (1)

Interest expense ( 12,963 ) ( 388 )

Interest rate swap

Earnings from equity method investments

Foreign exchange contracts

Earnings from equity method investments

______________________________________________________________

For the year ended December 31, 2019, $ 4.3 million of the loss recognized in accumulated other comprehensive income was attributable to a noncontrolling interest.

Notes to Consolidated Financial Statements (Continued)

Location of Gain or

(Loss) Recognized in

Amount of Gain

or (Loss) Recognized in Income

Derivatives not Designated in Hedging Relationships (1)

Ended December 31, 2017

Interest rate cap

Other expense

Foreign exchange contracts

Other expense

Interest rate swaps Earnings from equity method investments ( 1,736 ) 20

______________________________________________________________

The Company did not have any derivatives not designated in hedging relationships during the years ended December 31, 2019 and 2018.

(1) For the years ended December 31, 2020, 2019 and 2018, $ 4.4 million, $ 4.3 million, and $ 1.9 million, respectively, of the loss recognized in accumulated other comprehensive income was attributable to a noncontrolling interest.

Interest Rate Hedges —For derivatives designated and qualifying as cash flow hedges, the changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive Income (Loss).

For derivatives not designated as cash flow hedges, the changes in the fair value of the derivatives are reported in the Company's consolidated statements of operations within "Other Expense."

Credit Risk-Related Contingent Features —The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

The Company reports derivative instruments on a gross basis in its consolidated financial statements.

In connection with its derivatives which were in a liability position as of December 31, 2018, the Company posted collateral of $ 6.4 million and is included in "Deferred expenses and other assets, net" on the Company's consolidated balance sheets.

The Company's net exposure under these contracts was zero as of December 31, 2018.

Notes to Consolidated Financial Statements (Continued)

indebtedness, then the Company could also be declared in default on its derivative obligations.

The Company did not post any collateral related to its derivatives as of December 31, 2020.

Note 14— Equity

Preferred Stock —In December 2019, the Company issued an aggregate 16.5 million shares of its common stock upon conversion its outstanding Series J Preferred Stock at a conversion rate of 4.125 shares of common stock per each share of Series J Preferred Stock.

The total carrying value of the Series J Preferred Stock prior to redemption was $ 193.5 million , net of discounts and fees, and was recorded in "Additional paid-in-capital" and "Convertible Preferred Stock Series J, liquidation preference $ 50.00 per share" on the Company's consolidated balance sheet as of December 31, 2018.

The Company had the following series of Cumulative Redeemable and Convertible Perpetual Preferred Stock outstanding as of December 31, 2019 and 2018 :

The total carrying value of the Series J Preferred Stock prior to redemption was $ 193.5 million, net of discounts and fees, and was recorded in "Additional paid-in-capital" and "Convertible Preferred Stock Series J, liquidation preference $ 50.00 per share" on the Company's consolidated balance sheet.

The Company had the following series of Cumulative Redeemable Preferred Stock outstanding as of December 31, 2020 and 2019:

Cumulative Preferential Cash

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(in thousands)

Shares Issued and

(in thousands)

Liquidation Preference (3)(4)

Rate per Annum

Series Shares Issued and

(in thousands) Par Value Liquidation Preference (3)

Rate per Annum Annual

Dividend Rate

December 31, 2019

December 31, 2018

J (convertible) (4)

(per share) December 31, 2020 December 31, 2019

D 4,000 $ 0.001 $ 25.00 8.00 % $ 2.00 $ 89,041 $ 89,041

G 3,200 0.001 25.00 7.65 % 1.91 72,664 72,664

I 5,000 0.001 25.00 7.50 % 1.88 120,785 120,785

Total 12,200 $ 282,490 $ 282,490

_______________________________________________________________________________

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(2) The Company declared and paid dividends of $ 8.0 million, $ 6.1 million and $ 9.4 million on its Series D, G and I Cumulative Redeemable Preferred Stock during the years ended December 31, 2020 and 2019, respectively.

The Company declared and paid dividends of $ 9.0 million and $ 9.0 million on its Series J Convertible Perpetual Preferred Stock during the years ended December 31, 2019 and 2018 , respectively.

The Company declared and paid dividends of $ 9.0 million on its Series J Convertible Perpetual Preferred Stock during the year ended December 31, 2019.

The character of the 2020 dividends was 100 % return of capital.

The character of the 2019 dividends was 100 % capital gain distribution, of which 34.01 % represented unrecaptured section 1250 gain.

The character of the 2018 dividends was 100 % capital gain distribution, of which 26.02 % represented unrecaptured section 1250 gain and 73.98 % long term capital gain.

There are no dividend arrearages on any of the preferred shares currently outstanding.

(3) The Company may, at its option, redeem the Series G and I Preferred Stock, in whole or in part, at any time and from time to time, for cash at a redemption price equal to 100 % of the liquidation preference of $ 25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

The Company redeemed all of its Series J Preferred Stock in December 2019.

Dividends —To maintain its qualification as a REIT, the Company must annually distribute, at a minimum, an amount equal to 90% of its taxable income, excluding net capital gains, and must distribute 100% of its taxable income (including net capital gains) to eliminate corporate federal income taxes payable by the REIT.

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The Company declared and paid common stock dividends of $ 32.8 million, or $ 0.43 per share, for the year ended December 31, 2020 and $ 25.3 million, or $ 0.39 per share, for the year ended December 31, 2019.

The character of the 2020 dividends was 100 % return of capital.

The character of the 2019 dividends was 100 % capital gain distribution, of which 34.01 % represented unrecaptured section 1250 gain.

The character of the 2018 dividends was 100 % capital gain distribution, of which 26.02 % represented unrecaptured section 1250 gain and 73.98 % long term capital gain.

Notes to Consolidated Financial Statements (Continued)

Stock Repurchase Program —The Company may repurchase shares in negotiated transactions or open market transactions, including through one or more trading plans.

During the year ended December 31, 2020, the Company

Notes to Consolidated Financial Statements (Continued)

repurchased 4.2 million shares of its outstanding common stock for $ 48.4 million, for an average cost of $ 11.48 per share.

During the year ended December 31, 2019, the Company repurchased 7.3 million shares of its outstanding common stock for $ 74.6 million, for an average cost of $ 10.16 per share.

During the three months ended March 31, 2018, the Company repurchased 0.8 million shares of its outstanding common stock for $ 8.3 million , for an average cost of $ 10.22 per share.

The Company did not repurchase any shares of its common stock during the nine months ended December 31, 2018 or the year ended December 31, 2017 under stock repurchase programs.

As of December 31, 2020, the Company had authorization to repurchase up to $ 33.8 million of common stock.

In February 2021, the Company's board of directors authorized an increase to the stock repurchase program to $ 50.0 million.

Accumulated Other Comprehensive Income (Loss) — "Accumulated other comprehensive income (loss)" reflected in the Company's shareholders' equity is comprised of the following ($ in thousands):

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The fair value of the class B units was determined using a model that forecasts the underlying cash flows from the investments within the entity to which the class B units have ownership rights.

During the year ended December 31, 2019 , the Company recorded $ 2.9 million of expense related to the 2019-2020 iPIP plan.

During the years ended December 31, 2020 and 2019, the Company recorded $ 3.4 million and $ 2.9 million, respectively, of expense related to the 2019-2020 iPIP plan.

Distributions on the class B units will be 50 % in cash and 50 % in shares of the Company's common stock or in shares of SAFE's common stock owned by the Company.

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iPIP Investment Pool

2013-2014 2015-2016 2017-2018

Points at beginning of period 81.17 73.28 77.27

Forfeited ( 1.00 ) ( 2.88 ) ( 3.93 )

Points at end of period 80.17 70.40 73.34

During the years ended December 31, 2020, 2019 and 2018, the Company recorded $ 30.7 million, $ 21.2 million and $ 15.0 million, respectively, of expense related to the 2013-2018 iPIP plans.

During the year ended December 31, 2020, the Company made distributions to participants in the 2015-2016 investment pool.

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After deducting statutory minimum tax withholdings, a total of 192,829 shares of the Company's common stock were issued.

During the year ended December 31, 2019, the Company made distributions to participants in the 2013-2014 investment pool.

The iPIP participants received total distributions in the amount of $ 7.4 million as compensation, comprised of cash and 389,545 shares of the Company's common stock with a fair value of $ 9.21 per share, which are fully-vested and issued under the 2009 LTIP (see below).

After deducting statutory minimum tax withholdings, a total of 209,118 shares of the Company's common stock were issued.

As of December 31, 2020 and 2019, the Company had accrued compensation costs relating to iPIP of $ 69.1 million and $ 41.9 million, respectively, which are included in "Accounts payable, accrued expenses and other liabilities" on the Company's consolidated balance sheets.

5 unchanged sentences

As of December 31, 2020, an aggregate of 2.4 million shares remain available for issuance pursuant to future awards under the Company's 2009 LTIP.

Notes to Consolidated Financial Statements (Continued)

Restricted Stock Units — Changes in non-vested restricted stock units ("Units") during the year ended December 31, 2020 were as follows (number of shares and $ in thousands, except per share amounts):

Weighted Average

of Shares Weighted Average

Per Share Aggregate

Non-vested as of December 31, 2019 598 $ 9.18 $ 8,688

Granted 181 $ 14.68

Vested ( 248 ) $ 9.62

Non-vested as of December 31, 2020 531 $ 10.85 $ 7,885

2 unchanged sentences

Directors' Awards —Non-employee directors are awarded CSEs or restricted share awards at the time of the annual shareholders' meeting in consideration for their services on the Company's Board of Directors.

During the year ended December 31, 2019 , the Company awarded to non-employee Directors 65,936 restricted shares of common stock at a fair value per share of $ 8.74

Notes to Consolidated Financial Statements (Continued)

at the time of grant.

These restricted shares have a vesting term of one year .

The Company also issued a total of 6,254 CSEs at a fair value of $ 10.90 in respect of dividend equivalents on outstanding CSEs during the year ended December 31, 2019 .

During the year ended December 31, 2020, the Company awarded to non-employee Directors 79,138 restricted shares of common stock at a fair value per share of $ 9.75 at the time of grant for their annual equity awards, 10,710 restricted shares of common stock to a non-employee Director at a fair value of $ 11.52 at the time of grant for their annual equity award and also issued 3,096 common stock equivalents ("CSEs") at a fair value of $ 12.20 per CSE in respect of dividend equivalents on outstanding CSEs.

Dividends will accrue as and when dividends are declared by the Company on shares of its common stock, but will not be paid unless and until the CSEs and restricted shares of common stock vest and are settled.

5 unchanged sentences

The Company made gross contributions of $ 1.1 million, $ 0.9 million and $ 1.1 million, respectively, for the years ended December 31, 2020, 2019 and 2018.

Notes to Consolidated Financial Statements (Continued)

Note 16— Earnings Per Share

Earnings per share ("EPS") is calculated using the two-class method, which allocates earnings among common stock and participating securities, if applicable, to calculate EPS when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities.

Notes to Consolidated Financial Statements (Continued)

The following table presents a reconciliation of income (loss) from continuing operations used in the basic and diluted EPS calculations ($ in thousands, except for per share data):

The following table presents a reconciliation of income (loss) from operations used in the basic and diluted EPS calculations ($ in thousands, except for per share data):

For the Years Ended December 31,

Income (loss) from continuing operations

2020 2019 2018

Net income (loss) $ ( 30,853 ) $ 334,325 $ ( 18,326 )

Net income attributable to noncontrolling interests ( 11,588 ) ( 10,283 ) ( 13,936 )

Preferred dividends ( 23,496 ) ( 32,495 ) ( 32,495 )

Premium above book value on redemption of preferred stock

Income (loss) from continuing operations attributable to iStar Inc.

and allocable to common shareholders for basic earnings per common share

Net income (loss) allocable to common shareholders for basic earnings per common share $ ( 65,937 ) $ 291,547 $ ( 64,757 )

Effect of Series J convertible perpetual preferred stock — 9,000 —

Income (loss) from continuing operations attributable to iStar Inc.

and allocable to common shareholders for diluted earnings per common share

Notes to Consolidated Financial Statements (Continued)

Net income (loss) allocable to common shareholders for diluted earnings per common share $ ( 65,937 ) $ 300,547 $ ( 64,757 )

For the Years Ended December 31,

2020 2019 2018

Earnings allocable to common shares:

Numerator for basic earnings per share:

Income (loss) from continuing operations attributable to iStar Inc.

and allocable to common shareholders

Income from discontinued operations

Gain from discontinued operations

Net income (loss) attributable to iStar Inc.

and allocable to common shareholders

Net income (loss) allocable to common shareholders $ ( 65,937 ) $ 291,547 $ ( 64,757 )

Numerator for diluted earnings per share:

Income (loss) from continuing operations attributable to iStar Inc.

and allocable to common shareholders

Income from discontinued operations

Gain from discontinued operations

Net income (loss) attributable to iStar Inc.

and allocable to common shareholders

Net income (loss) allocable to common shareholders $ ( 65,937 ) $ 300,547 $ ( 64,757 )

Denominator for basic and diluted earnings per share:

4 unchanged sentences

Basic earnings per common share:

Income (loss) from continuing operations attributable to iStar Inc.

and allocable to common shareholders

Income from discontinued operations

Gain from discontinued operations

Net income (loss) attributable to iStar Inc.

and allocable to common shareholders

Net income (loss) allocable to common shareholders $ ( 0.87 ) $ 4.51 $ ( 0.95 )

Diluted earnings per common share:

Income (loss) from continuing operations attributable to iStar Inc.

and allocable to common shareholders

Income from discontinued operations

Gain from discontinued operations

Net income (loss) attributable to iStar Inc.

and allocable to common shareholders

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2019 , 2018 and 2017 , the following shares were not included in the diluted EPS calculation because they were anti-dilutive (in thousands) (1)(2)(3) :

For the Years Ended December 31,

Joint venture shares

Series J convertible perpetual preferred stock

Net income (loss) allocable to common shareholders $ ( 0.87 ) $ 3.73 $ ( 0.95 )

_______________________________________________________________________________

For the year ended December 31, 2017, the effect of 6 and 17 unvested time and market-based Units, respectively, were anti-dilutive due to the Company having a net loss for the period.

For the year ended December 31, 2018, the effect of the Company's unvested Units, CSEs and restricted stock awards were anti-dilutive due to the Company having a net loss for the period.

(1) For the years ended December 31, 2020 and 2018, the effect of certain of the Company's restricted stock awards were anti-dilutive due to the Company having a net loss for the period.

For the year ended December 31, 2018, 15,704 shares of Series J convertible perpetual preferred stock (refer to Note 14) were anti-dilutive.

The Company will settle conversions of the 3.125 % Convertible Notes by paying the conversion value in cash up to the original principal amount of the notes being converted and shares of common stock to the extent of any conversion premium.

1 unchanged sentence

Based upon the conversion price of the 3.125 % Convertible Notes, no shares of common stock would have been issuable upon conversion of the 3.125 % Convertible Notes for the years ended December 31, 2020, 2019, and 2018, and therefore the 3.125 % Convertible Notes had no effect on diluted EPS for such periods.

Notes to Consolidated Financial Statements (Continued)

Note 17— Fair Values

8 unchanged sentences

Such assets are classified as being valued on a non-recurring basis.

Notes to Consolidated Financial Statements (Continued)

The following fair value hierarchy table summarizes the Company's assets and liabilities recorded at fair value on a recurring and non-recurring basis by the above categories ($ in thousands):

Fair Value Using

Quoted market

Total Quoted market

active markets

Significant other

(Level 1) Significant other

(Level 2) Significant

As of December 31, 2020

Recurring basis:

Derivative assets (1)

Derivative liabilities (1)

18,926 — 18,926 —

Available-for-sale securities (1)

25,274 — — 25,274

Non-recurring basis:

Impaired land and development (2)

6,078 — — 6,078

As of December 31, 2019

1 unchanged sentence

Derivative assets (1)

$ 114 $ — $ 114 $ —

Derivative liabilities (1)

8,680 — 8,680 —

Available-for-sale securities (1)

$ 23,896 $ — $ — $ 23,896

Non-recurring basis:

Impaired real estate (3)

Impaired real estate available and held for sale (4)

Impaired land and development (3)

40,000 — — 40,000

_______________________________________________________________________________

(1) The fair value of the Company's derivatives are based upon widely accepted valuation techniques utilized by a third-party specialist using observable inputs such as interest rates and contractual cash flow and are classified as Level 2.

The fair value of the Company's available-for-sale securities are based upon unadjusted third-party broker quotes and are classified as Level 3.

(2) The Company recorded a $ 1.3 million impairment on a land and development asset with an estimated fair value of $ 6.1 million.

The fair value is based on future cash flows expected to be received.

(3) The Company recorded aggregate impairments of $ 5.3 million on two land and development assets with an estimated aggregate fair value of $ 40.0 million.

The estimated fair values are based on expected sales proceeds.

The Company recorded aggregate impairments of $ 76.3 million on three real estate assets with an estimated aggregate fair value of $ 29.4 million .

The impairments were as follows:

A $ 23.2 million impairment on a commercial operating property based on a decline in expected operating performance.

The fair value is based on the Company's estimate of the recoverability of its investment in the project.

A $ 6.0 million impairment on a property based on a strategic decision to sell the asset.

The fair value is based on purchase offers received from third parties, which is consistent with the Company's estimate of fair value.

A $ 47.1 million impairment on a commercial operating property based on a strategic decision to sell the asset.

The fair value is based on purchase offers received from third parties, which is consistent with the Company's estimate of fair value.

The Company recorded aggregate impairments of $ 3.7 million on two real estate assets held for sale.

The fair values are based on market comparable sales.

The Company recorded aggregate impairments of $ 55.4 million on four land and development assets with an estimated aggregate fair value of $ 78.4 million .

The impairments were as follows:

A $ 25.0 million impairment on a waterfront land and development asset based on a strategic decision to sell the asset.

The fair value is based on purchase offers received from third parties, which is consistent with the Company's estimate of fair value.

A $ 21.6 million impairment on a master planned community based on a strategic decision to sell the asset.

The fair value is based on purchase offers received from third parties, which is consistent with the Company's estimate of fair value.

A $ 6.9 million impairment on an infill land and development asset based on the deterioration of the asset.

The fair value is based on purchase offers received from third parties, which is consistent with the Company's estimate of fair value.

A $ 1.9 million impairment on a waterfront land and development asset based on the sale of the asset in 2019.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes changes in Level 3 available-for-sale securities reported at fair value on the Company's consolidated balance sheets for the years ended December 31, 2020 and 2019 ($ in thousands):

Notes to Consolidated Financial Statements (Continued)

Beginning balance $ 23,896 $ 21,661

Unrealized gains (losses) recorded in other comprehensive income

Repayments ( 460 ) ( 45 )

Unrealized gains recorded in other comprehensive income 1,838 2,280

Ending balance $ 25,274 $ 23,896

Fair values of financial instruments— The Company's estimated fair values of its loans receivable and other lending investments and outstanding debt was $ 0.9 billion and $ 3.6 billion , respectively, as of December 31, 2019 and $ 1.0 billion and $ 3.5 billion , respectively, as of December 31, 2018 .

The Company determined that the significant inputs used to value its loans receivable and other lending investments and debt obligations fall within Level 3 of the fair value hierarchy.

The carrying value of other financial instruments including cash and cash equivalents, restricted cash, net investment in leases, accrued interest receivable and accounts payable, approximate the fair values of the instruments.

Cash and cash equivalents and restricted cash values are considered Level 1 on the fair value hierarchy.

The fair value of other financial instruments, including derivative assets and liabilities, are included in the fair value hierarchy table above.

Given the nature of certain assets and liabilities, clearly determinable market based valuation inputs are often not available, therefore, these assets and liabilities are valued using internal valuation techniques.

Subjectivity exists with respect to these internal valuation techniques, therefore, the fair values disclosed may not ultimately be realized by the Company if the assets were sold or the liabilities were settled with third parties.

The methods the Company used to estimate the fair values presented in the table above are described more fully below for each type of asset and liability.

Derivatives —The Company uses interest rate swaps, interest rate caps and foreign exchange contracts to manage its interest rate and foreign currency risk.

Fair values of financial instruments— The following table presents the carrying value and fair value for the Company's financial instruments ($ in millions):

As of December 31, 2020 As of December 31, 2019

Value Carrying

Net investment in leases (1)

$ 429 $ 431 $ 419 $ 419

Loans receivable and other lending investments (1)

732 772 828 864

Cash and cash equivalents (2)

99 99 307 307

Restricted cash (2)

Loan participations payable, net (1)

Debt obligations, net (1)

3,287 3,414 3,387 3,531

_______________________________________________________________________________

(1) The fair value of the Company's net investment in leases, loans receivable and other lending investments, net, loan participations payable, net and debt obligations, net are classified as Level 3 within the fair value hierarchy.

(2) The Company determined the carrying values of its cash and cash equivalents and restricted cash approximated their fair values.

Restricted cash is recorded in "Deferred expenses and other assets, net" on the Company's balance sheet.

The fair value of the Company's cash and cash equivalents and restricted cash are classified as Level 1 within the fair value hierarchy.

Derivatives —The Company may use interest rate swaps, interest rate caps and foreign exchange contracts to manage its interest rate and foreign currency risk.

The valuation of these instruments is determined using discounted cash flow analysis on the expected cash flows of each derivative.

3 unchanged sentences

The Company has determined that the significant inputs used to value its derivatives fall within Level 2 of the fair value hierarchy.

Impaired loans —The Company's loans identified as being impaired are nearly all collateral dependent loans and are evaluated for impairment by comparing the estimated fair value of the underlying collateral, less costs to sell, to the carrying value of each loan.

Due to the nature of the individual properties collateralizing the Company's loans, the Company generally uses a discounted cash flow methodology through internally developed valuation models to estimate the fair value of the collateral.

This approach requires the Company to make judgments in respect to significant unobservable inputs, which may include discount rates, capitalization rates and the timing and amounts of estimated future cash flows.

For income producing properties, cash flows generally include property revenues, operating costs and capital expenditures that are based on current observable market rates and estimates for market rate growth and occupancy levels.

For other real estate, cash flows may include lot and unit sales that are based on current observable market rates and estimates for annual revenue growth, operating costs, costs of completion and the inventory sell out pricing and timing.

The Company will also consider market comparables if available.

In some cases, the Company obtains external "as is" appraisals for loan collateral, generally when third party participations exist, and appraised values may be discounted when real estate markets rapidly deteriorate.

The Company has determined that significant inputs used in its internal valuation models and appraisals fall within Level 3 of the fair value hierarchy.

Impaired real estate —If the Company determines a real estate asset available and held for sale is impaired, it records an impairment charge to adjust the asset to its estimated fair market value less costs to sell.

2 unchanged sentences

For other real estate, cash

Notes to Consolidated Financial Statements (Continued)

flows may include lot and unit sales that are based on current observable market rates and estimates for annual market rate growth, operating costs, costs of completion and the inventory sell out pricing and timing.

For other real estate, cash flows may include lot and unit sales that are based on current observable market rates and estimates for annual market rate growth, operating costs, costs of completion and the inventory sell out pricing and timing.

The Company will also consider market comparables if available.

4 unchanged sentences

Loans receivable and other lending investments and net investment in leases —The Company estimates the fair value of its performing loans and other lending investments and net investment in leases using a discounted cash flow methodology.

This method discounts estimated future cash flows using rates management determines best reflect current market interest rates or rental rates that would be offered for loans or tenants with similar characteristics and credit quality.

This method discounts estimated future cash flows using rates management determines best reflect current market interest rates

Notes to Consolidated Financial Statements (Continued)

or rental rates that would be offered for loans or tenants with similar characteristics and credit quality.

The Company determined that the significant inputs used to value its loans and other lending investments and net investment in leases fall within Level 3 of the fair value hierarchy.

For certain lending investments, the Company uses market quotes, to the extent they are available, that fall within Level 2 of the fair value hierarchy or broker quotes that fall within Level 3 of the fair value hierarchy.

The Company estimates the fair value of its non-performing loans using a discounted cash flow methodology through internally developed valuation models to estimate the fair value of the collateral.

The Company will also consider market comparables if available.

The Company has determined that significant inputs used in its internal valuation models and appraisals fall within Level 3 of the fair value hierarchy.

Debt obligations, net —For debt obligations traded in secondary markets, the Company uses market quotes, to the extent they are available, to determine fair value and are considered Level 2 on the fair value hierarchy.

4 unchanged sentences

These reportable segments include:

Real Estate Finance, Net Lease, Operating Properties and Land and Development.

Net Lease, Real Estate Finance, Operating Properties and Land and Development.

The Net Lease segment includes the Company's activities and operations related to the ownership of properties generally leased to single corporate tenants and its investments in SAFE and Net Lease Venture II (refer to Note 8).

The Real Estate Finance segment includes all of the Company's activities related to senior and mezzanine real estate loans and real estate related securities.

The Net Lease segment includes the Company's activities and operations related to the ownership of properties generally leased to single corporate tenants and its investment in SAFE (refer to Note 8).

The Operating Properties segment includes the Company's activities and operations related to its commercial and residential properties.

3 unchanged sentences

The Company's segment information is as follows ($ in thousands):

Real Estate Finance

Operating Properties

Land and Development

Corporate/Other (1)

Company Total

Lease Real Estate

Finance Operating

Properties Land and

Development Corporate/

Year Ended December 31, 2020

2 unchanged sentences

Interest income from sales-type leases 33,552 — — — — 33,552

Other income 18,116 11,975 8,065 19,030 26,671 83,857

Land development revenue — — — 164,702 — 164,702

Earnings (losses) from equity method investments 56,130 — ( 16,361 ) 3,432 ( 1,075 ) 42,126

Selling profit from sales-type leases

Income from sales of real estate 6,056 — 262 — — 6,318

5 unchanged sentences

Allocated general and administrative (2)

( 23,223 ) ( 6,622 ) ( 2,591 ) ( 9,990 ) ( 19,099 ) ( 61,525 )

Segment profit (loss) (3)

$ 133,444 $ 38,373 $ ( 21,298 ) $ ( 41,123 ) $ ( 11,891 ) $ 97,505

Other significant items:

Provision for loan losses $ 186 $ 8,866 $ — $ — $ — $ 9,052

Provision for losses on net investment in leases 1,760 — — — — 1,760

Impairment of assets 2,037 — 3,052 2,738 — 7,827

4 unchanged sentences

Interest income 2,018 75,636 — — — 77,654

Interest income from sales-type leases 20,496 — — — — 20,496

Other income 16,718 4,946 17,384 7,838 8,477 55,363

Land development revenue — — — 119,595 — 119,595

Earnings (losses) from equity method investments 29,235 — 8,298 4,322 ( 6 ) 41,849

Gain from consolidation of equity method investment

Selling profit from sales-type leases 180,416 — — — — 180,416

Income from sales of real estate 224,654 — 11,969 — — 236,623

5 unchanged sentences

Allocated general and administrative (2)

( 25,990 ) ( 8,254 ) ( 2,887 ) ( 11,957 ) ( 19,085 ) ( 68,173 )

Segment profit (loss) (3)

505,286 $ 42,279 $ 17,616 $ ( 42,603 ) $ ( 51,495 ) $ 471,083

Other significant non-cash items:

4 unchanged sentences

Notes to Consolidated Financial Statements (Continued)

Real Estate Finance

Operating Properties

Land and Development

Corporate/Other (1)

Company Total

Lease Real Estate

Finance Operating

Properties Land and

Development Corporate/

Year Ended December 31, 2018

1 unchanged sentence

Interest income — 97,878 — — — 97,878

Other income 4,286 4,556 54,361 7,320 11,819 82,342

Land development revenue — — — 409,710 — 409,710

Earnings (losses) from equity method investments 8,479 — ( 1,003 ) ( 3,110 ) ( 9,373 ) ( 5,007 )

Income from discontinued operations

Gain from discontinued operations

Gain from consolidation of equity method investment 67,877 — — — — 67,877

Income from sales of real estate 45,038 — 80,966 — — 126,004

5 unchanged sentences

Allocated general and administrative (2)

( 20,713 ) ( 12,997 ) ( 6,574 ) ( 14,313 ) ( 19,975 ) ( 74,572 )

Segment profit (loss) (3)

$ 176,186 $ 47,206 $ 84,239 $ ( 13,600 ) $ ( 60,868 ) $ 233,163

Other significant non-cash items:

Recovery of loan losses

Provision for loan losses $ — $ 16,937 $ — $ — $ — $ 16,937

Impairment of assets 10,391 — 79,991 56,726 — 147,108

2 unchanged sentences

Notes to Consolidated Financial Statements (Continued)

Real Estate Finance

Operating Properties

Land and Development

Corporate/Other (1)

Company Total

Lease Real Estate

Finance Operating

Properties Land and

Development Corporate/

As of December 31, 2020

Real estate, net

$ 1,291,903 $ — $ 192,378 $ — $ — $ 1,484,281

Real estate available and held for sale

— — 5,212 — — 5,212

Total real estate 1,291,903 — 197,590 — — 1,489,493

5 unchanged sentences

Cash and other assets 603,661

Total assets $ 4,861,808

As of December 31, 2019

2 unchanged sentences

Total real estate 1,327,082 — 208,787 — — 1,535,869

Net investment in leases 418,915 — — — — 418,915

Land and development, net — — — 580,545 — 580,545

3 unchanged sentences

Cash and other assets 814,044

Total assets $ 5,085,109

_______________________________________________________________________________

4 unchanged sentences

For the Years Ended December 31,

2020 2019 2018

Segment profit $ 97,505 $ 471,083 $ 233,163

(Provision for) recovery of loan losses

Provision for loan losses ( 9,052 ) ( 6,482 ) ( 16,937 )

Provision for losses on net investment in leases ( 1,760 ) — —

Impairment of assets ( 7,827 ) ( 13,419 ) ( 147,108 )

1 unchanged sentence

Stock-based compensation expense ( 39,354 ) ( 30,436 ) ( 17,563 )

Income tax (expense) benefit

Income tax expense ( 235 ) ( 438 ) ( 815 )

Loss on early extinguishment of debt, net ( 12,038 ) ( 27,724 ) ( 10,367 )

Net income (loss) $ ( 30,853 ) $ 334,325 $ ( 18,326 )

Notes to Consolidated Financial Statements (Continued)

Note 19— Quarterly Financial Information (Unaudited)

The following table sets forth the selected quarterly financial data for the Company ($ in thousands, except per share amounts).

For the Quarters Ended

September 30,

Net income (loss)

Net income (loss) attributable to iStar Inc.

Earnings per common share data (1) :

Net income (loss) attributable to common shareholders

Earnings per share

Weighted average number of common shares

Net income (loss)

Net income (loss) attributable to iStar Inc.

Earnings per common share data (1) :

Net income (loss) attributable to common shareholders

Earnings per share

Weighted average number of common shares

_______________________________________________________________________________

(1) Basic and diluted EPS are computed independently based on the weighted-average shares of common stock and stock equivalents outstanding for each period.

Accordingly, the sum of the quarterly EPS amounts may not agree to the total for the year.

Schedule II—Valuation and Qualifying Accounts and Reserves

($ in thousands)

of Period Charged to

Expenses Adjustments

Accounts Deductions Balance at

For the Year Ended December 31, 2018

Reserve for loan losses (1)(2)

$ 78,489 $ 16,937 $ — $ ( 42,031 ) $ 53,395

Allowance for doubtful accounts (2)

2,610 1,300 — ( 639 ) 3,271

Allowance for deferred tax assets (2)

63,258 14,849 — — 78,107

$ 144,357 $ 33,086 $ — $ ( 42,670 ) $ 134,773

For the Year Ended December 31, 2019

Reserve for loan losses (1)(2)

$ 53,395 $ 6,482 $ — $ ( 31,243 ) $ 28,634

Allowance for doubtful accounts (2)

3,271 ( 696 ) — ( 633 ) 1,942

Allowance for deferred tax assets (2)

78,107 1,538 — — 79,645

$ 134,773 $ 7,324 $ — $ ( 31,876 ) $ 110,221

For the Year Ended December 31, 2020

Reserve for loan losses (1)(2)

$ 28,634 $ 9,696 $ 729 $ ( 25,889 ) $ 13,170

Allowance for doubtful accounts (2)

1,942 1,601 — ( 1,866 ) 1,677

Allowance for deferred tax assets (2)

79,645 456 — — 80,101

$ 110,221 $ 11,753 $ 729 $ ( 27,755 ) $ 94,948

_____________________________________________________________

(1) Refer to Note 7 to the Company's consolidated financial statements.

3 unchanged sentences

($ in thousands)

Initial Cost to Company

Initial Cost to Company Cost

Subsequent to

2 unchanged sentences

at Close of Period

Location Encumbrances Land Building and

Improvements Land Building and

Improvements Total Accumulated

Depreciation Date

Acquired Depreciable

OFFICE FACILITIES:

Tempe, Arizona

Alameda, California

Collins, Colorado

Lisle, Illinois

Cockeysville, Maryland

Chelmsford, Massachusetts

Jersey City, New Jersey

Laurel, New Jersey

Riverview, New Jersey

North Hills, New York

Austin, Texas

Irving, Texas

Oakton, Virginia

Tempe, Arizona OFF001 $ — (1) $ 1,033 $ 6,652 $ 2,942 $ 1,033 $ 9,594 $ 10,627 $ 5,324 1999 40.0

Tempe, Arizona OFF002 — (1) 1,033 6,652 491 1,033 7,143 8,176 3,724 1999 40.0

Tempe, Arizona OFF003 — (1) 1,033 6,652 556 1,033 7,208 8,241 3,750 1999 40.0

Tempe, Arizona OFF004 — (1) 701 4,339 2,171 701 6,510 7,211 2,845 1999 40.0

Alameda, California OFF005 26,025 9,702 29,831 1,167 9,702 30,998 40,700 2,397 2018 40.0

Collins, Colorado OFF006 — — 16,752 ( 11,239 ) — 5,513 5,513 474 2002 40.0

Lisle, Illinois OFF007 21,115 7,681 30,230 — 7,681 30,230 37,911 2,411 2018 40.0

Cockeysville, Maryland OFF008 115,000 19,529 148,286 ( 85 ) 19,529 148,201 167,730 8,269 2018 40.0

Chelmsford, Massachusetts OFF009 5,931 1,600 21,947 285 1,600 22,232 23,832 10,540 2002 40.0

Jersey City, New Jersey OFF010 63,500 — 99,296 — — 99,296 99,296 4,571 2019 40.0

Laurel, New Jersey OFF011 46,787 7,726 74,429 10 7,724 74,441 82,165 33,620 2002 40.0

Riverview, New Jersey OFF012 6,850 1,008 13,763 206 1,008 13,969 14,977 5,847 2004 40.0

Riverview, New Jersey OFF013 16,288 2,456 28,955 814 2,456 29,769 32,225 12,511 2004 40.0

North Hills, New York OFF014 70,149 19,631 104,527 — 19,631 104,527 124,158 6,840 2018 40.0

Austin, Texas OFF015 91,000 — 88,136 17,436 — 105,572 105,572 3,811 2019 40.0

Oakton, Virginia OFF016 54,085 14,242 68,610 — 14,242 68,610 82,852 5,175 2018 40.0

Subtotal $ 516,730 $ 87,375 $ 749,057 $ 14,754 $ 87,373 $ 763,813 $ 851,186 $ 112,109

INDUSTRIAL FACILITIES:

Montague, Michigan

Little Falls, Minnesota

Jackson, Ohio

Montague, Michigan IND001 — (1) 598 9,814 — 598 9,814 10,412 4,540 2007 40.0

Little Falls, Minnesota IND002 — (1) 6,705 17,690 — 6,225 18,170 24,395 7,228 2005 40.0

Jacksonville, Ohio IND003 52,410 1,990 56,329 23,979 1,990 80,308 82,298 4,302 2018 40.0

El Reno, Oklahoma IND004 7,903 401 7,644 — 401 7,644 8,045 1,023 2018 40.0

Fort Worth, Texas IND005 7,903 2,341 17,142 — 2,341 17,142 19,483 1,343 2018 40.0

Schedule III—Real Estate and Accumulated Depreciation (Continued)

1 unchanged sentence

($ in thousands)

Initial Cost to Company

Initial Cost to Company Cost

Subsequent to

2 unchanged sentences

at Close of Period

El Reno, Oklahoma

Fort Worth, Texas

Chippewa Falls, Wisconsin

Scottsdale, Arizona

Whittmann, Arizona

Mammoth Lakes, California

San Jose, California

Santa Clarita Valley, California

Fort Myers, Florida

Indiantown, Florida

Naples, Florida

Chicago, Illinois

Asbury Park, New Jersey

Brooklyn, New York

Long Beach, New York

Wawarsing, New York

Location Encumbrances Land Building and

Improvements Land Building and

Improvements Total Accumulated

Depreciation Date

Acquired Depreciable

Chippewa Falls, Wisconsin IND006 29,670 2,845 55,805 273 2,845 56,078 58,923 4,397 2018 40.0

Subtotal $ 97,886 $ 14,880 $ 164,424 $ 24,252 $ 14,400 $ 189,156 $ 203,556 $ 22,833

Scottsdale, Arizona LAN001 — 1,400 — 800 2,200 — 2,200 — 2011 0

Whittmann, Arizona LAN002 — 96,700 — — 96,700 — 96,700 — 2010 0

Mammoth Lakes, California LAN003 — 28,464 2,836 ( 19,517 ) 8,947 2,836 11,783 2,836 (3) 2010 0

Naples, Florida LAN004 — 26,600 — ( 20,516 ) 26,600 ( 20,516 ) 6,084 5 2010 0

Chicago, Illinois LAN005 — 31,500 — — 31,500 — 31,500 — 2016 0

Asbury Park, New Jersey LAN006 — 43,300 — 39,736 83,036 — 83,036 1,123 2009 0

Asbury Park, New Jersey LAN007 — 3,992 — 106,934 110,926 — 110,926 — (3) 2009 0

Asbury Park, New Jersey LAN008 — 111 5,954 2,206 2,317 5,954 8,271 — 2009 0

Brooklyn, New York LAN009 — 58,900 — ( 19,874 ) 39,026 — 39,026 — 2011 0

Long Beach, New York LAN010 — 52,461 — ( 22,461 ) 30,000 — 30,000 — 2009 0

Wawarsing, New York LAN011 — 4,600 — — 4,600 — 4,600 — 2018 0

Chesterfield County, Virginia LAN012 — 72,138 — 35,137 107,275 — 107,275 5,944 2009 0

Subtotal $ — $ 420,166 $ 8,790 $ 102,445 $ 543,127 $ ( 11,726 ) $ 531,401 $ 9,908

ENTERTAINMENT:

Birmingham, Alabama ENT001 1,618 1,939 1,840 — 1,939 1,840 3,779 288 2018 40.0

Avondale, Arizona ENT002 1,293 389 2,074 1 389 2,075 2,464 195 2018 40.0

Glendale, Arizona ENT003 2,281 1,750 2,118 — 1,750 2,118 3,868 314 2018 40.0

Gilbert, Arizona ENT004 4,801 1,969 3,552 — 1,969 3,552 5,521 412 2018 40.0

Mesa, Arizona ENT005 1,448 970 1,710 — 970 1,710 2,680 190 2018 40.0

Schedule III—Real Estate and Accumulated Depreciation (Continued)

1 unchanged sentence

($ in thousands)

Initial Cost to Company

Initial Cost to Company Cost

Subsequent to

2 unchanged sentences

at Close of Period

Chesterfield County, Virginia

Ranson, West Virginia

ENTERTAINMENT:

Birmingham, Alabama

Avondale, Arizona

Glendale, Arizona

Gilbert, Arizona

Mesa, Arizona

Scottsdale, Arizona

Tucson, Arizona

Chula Vista, California

Fontana, California

Moreno Valley, California

Murrieta, California

Norco, California

Palmdale, California

San Diego, California

Thousand Oaks, California

Upland, California

Brampton, ONT, Canada

Aurora, Colorado

Location Encumbrances Land Building and

Improvements Land Building and

Improvements Total Accumulated

Depreciation Date

Acquired Depreciable

Scottsdale, Arizona ENT006 1,694 1,205 1,933 — 1,205 1,933 3,138 204 2018 40.0

Tucson, Arizona ENT007 948 456 877 1 456 878 1,334 114 2018 40.0

Chula Vista, California ENT008 2,552 2,032 4,869 — 2,032 4,869 6,901 554 2018 40.0

Fontana, California ENT009 1,578 1,097 1,882 1 1,097 1,883 2,980 244 2018 40.0

Moreno Valley, California ENT010 1,503 990 1,910 — 990 1,910 2,900 228 2018 40.0

Murrieta, California ENT011 2,754 1,649 3,803 — 1,649 3,803 5,452 431 2018 40.0

Norco, California ENT012 2,570 1,503 3,608 — 1,503 3,608 5,111 394 2018 40.0

Palmdale, California ENT013 1,103 777 1,963 — 777 1,963 2,740 263 2018 40.0

San Diego, California ENT014 — (1) — 18,000 — — 18,000 18,000 7,303 2003 40.0

Thousand Oaks, California ENT015 — (1) — 1,953 28,817 — 30,770 30,770 8,201 2008 40.0

Upland, California ENT016 1,578 1,167 1,930 — 1,167 1,930 3,097 235 2018 40.0

Brampton, ONT, Canada ENT017 2,074 1,231 2,491 — 1,231 2,491 3,722 294 2018 40.0

Aurora, Colorado ENT018 1,596 1,057 1,719 — 1,057 1,719 2,776 222 2018 40.0

Colorado Springs, Colorado ENT019 1,087 497 820 — 497 820 1,317 120 2018 40.0

Lakewood, Colorado ENT020 1,513 713 2,206 — 713 2,206 2,919 187 2018 40.0

Lone Tree, Colorado ENT021 5,458 2,880 5,586 — 2,880 5,586 8,466 576 2018 40.0

Westminster, Colorado ENT022 1,601 1,018 1,886 — 1,018 1,886 2,904 223 2018 40.0

Wheat Ridge, Colorado ENT023 1,038 669 1,671 — 669 1,671 2,340 198 2018 40.0

Apopka, Florida ENT024 1,139 757 1,347 — 757 1,347 2,104 171 2018 40.0

Boca Raton, Florida ENT025 — (1) — 41,809 — — 41,809 41,809 24,456 2005 27.0

Boynton Beach, Florida ENT026 — (1) 6,550 — 17,118 6,533 17,135 23,668 5,852 2006 40.0

Schedule III—Real Estate and Accumulated Depreciation (Continued)

1 unchanged sentence

($ in thousands)

Initial Cost to Company

Initial Cost to Company Cost

Subsequent to

2 unchanged sentences

at Close of Period

Colorado Springs, Colorado

Lakewood, Colorado

Lone Tree, Colorado

Westminster, Colorado

Wheat Ridge, Colorado

Apopka, Florida

Boca Raton, Florida

Boynton Beach, Florida

Margate, Florida

Melbourne, Florida

Petersburg, Florida

Palm Beach, Florida

Augusta, Georgia

Kennesaw, Georgia

Lawrenceville, Georgia

Marietta, Georgia

Norcross, Georgia

Roswell, Georgia

Algonquin, Illinois

Buffalo Grove, Illinois

Chicago, Illinois

Location Encumbrances Land Building and

Improvements Land Building and

Improvements Total Accumulated

Depreciation Date

Acquired Depreciable

Margate, Florida ENT027 1,222 513 493 — 513 493 1,006 52 2018 40.0

Melbourne, Florida ENT028 1,287 843 1,537 — 843 1,537 2,380 198 2018 40.0

Petersburg, Florida ENT029 — (1) 4,200 18,272 2,591 4,200 20,863 25,063 7,240 2005 40.0

Palm Beach, Florida ENT030 — (1) — 19,337 3,863 — 23,200 23,200 7,659 2005 40.0

Augusta, Georgia ENT031 1,885 1,383 3,776 — 1,383 3,776 5,159 378 2018 40.0

Kennesaw, Georgia ENT032 4,484 2,098 5,113 ( 1 ) 2,098 5,112 7,210 500 2018 40.0

Lawrenceville, Georgia ENT033 1,412 911 1,285 — 911 1,285 2,196 158 2018 40.0

Marietta, Georgia ENT034 2,043 1,180 1,436 — 1,180 1,436 2,616 170 2018 40.0

Marietta, Georgia ENT035 1,215 715 760 — 715 760 1,475 110 2018 40.0

Norcross, Georgia ENT036 2,283 1,110 380 — 1,110 380 1,490 100 2018 40.0

Roswell, Georgia ENT037 2,022 893 311 1 893 312 1,205 53 2018 40.0

Algonquin, Illinois ENT038 2,990 1,312 4,041 — 1,312 4,041 5,353 524 2018 40.0

Buffalo Grove, Illinois ENT039 1,627 861 3,945 — 861 3,945 4,806 397 2018 40.0

Chicago, Illinois ENT040 — (1) 8,803 57 33,479 8,803 33,536 42,339 10,166 2006 40.0

Glendale Heights, Illinois ENT041 1,050 455 819 1 455 820 1,275 79 2018 40.0

Lake Zurich, Illinois ENT042 1,163 924 238 1 924 239 1,163 161 2018 40.0

Mount Prospect, Illinois ENT043 1,188 704 956 ( 1 ) 704 955 1,659 109 2018 40.0

Romeoville, Illinois ENT044 2,863 2,254 3,251 — 2,254 3,251 5,505 481 2018 40.0

Roselle, Illinois ENT045 1,058 730 682 — 730 682 1,412 121 2018 40.0

River Grove, Illinois ENT046 1,720 1,754 3,289 ( 1 ) 1,754 3,288 5,042 397 2018 40.0

Vernon Hills, Illinois ENT047 949 600 666 — 600 666 1,266 107 2018 40.0

Waukegan, Illinois ENT048 603 342 670 — 342 670 1,012 83 2018 40.0

Schedule III—Real Estate and Accumulated Depreciation (Continued)

1 unchanged sentence

($ in thousands)

Initial Cost to Company

Initial Cost to Company Cost

Subsequent to

2 unchanged sentences

at Close of Period

Glendale Heights, Illinois

Lake Zurich, Illinois

Mount Prospect, Illinois

Romeoville, Illinois

Roselle, Illinois

River Grove, Illinois

Vernon Hills, Illinois

Waukegan, Illinois

Woodridge, Illinois

Columbia, Maryland

Ellicott City, Maryland

Blaine, Minnesota

Brooklyn Park, Minnesota

Burnsville, Minnesota

Eden Prairie, Minnesota

Lakeville, Minnesota

Rochester, Minnesota

Peters, Missouri

Valley Park, Missouri

Location Encumbrances Land Building and

Improvements Land Building and

Improvements Total Accumulated

Depreciation Date

Acquired Depreciable

Woodridge, Illinois ENT049 1,135 829 1,597 ( 1 ) 829 1,596 2,425 200 2018 40.0

Columbia, Maryland ENT050 1,653 1,762 1,300 — 1,762 1,300 3,062 207 2018 40.0

Ellicott City, Maryland ENT051 1,286 889 1,632 1 889 1,633 2,522 161 2018 40.0

Blaine, Minnesota ENT052 2,542 1,801 2,814 ( 1 ) 1,801 2,813 4,614 417 2018 40.0

Brooklyn Park, Minnesota ENT053 2,534 1,455 2,036 — 1,455 2,036 3,491 300 2018 40.0

Burnsville, Minnesota ENT054 — (1) 2,962 — 17,164 2,962 17,164 20,126 6,877 2006 40.0

Eden Prairie, Minnesota ENT055 2,589 1,496 2,117 — 1,496 2,117 3,613 277 2018 40.0

Lakeville, Minnesota ENT056 2,591 1,910 3,373 — 1,910 3,373 5,283 384 2018 40.0

Rochester, Minnesota ENT057 — (1) 2,437 8,715 2,098 2,437 10,813 13,250 4,830 2006 40.0

Peters, Missouri ENT058 2,818 1,936 3,381 — 1,936 3,381 5,317 378 2014 40.0

Valley Park, Missouri ENT059 1,326 803 1,408 — 803 1,408 2,211 153 2014 40.0

Asbury Park, New Jersey ENT060 — 750 10,670 798 750 11,468 12,218 868 2017 40.0

Fairlawn, New Jersey ENT061 1,542 1,141 2,094 — 1,141 2,094 3,235 205 2018 40.0

Turnersville, New Jersey ENT062 1,413 1,354 1,314 — 1,354 1,314 2,668 252 2018 40.0

Brooklyn, New York ENT063 — 3,277 — 501 587 3,191 3,778 169 2013 40.0

Ridgeville, Ohio ENT064 921 290 1,057 — 290 1,057 1,347 79 2018 40.0

Belle Vernon, Pennsylvania ENT065 801 410 759 — 410 759 1,169 113 2018 40.0

Denton, Texas ENT066 1,135 712 763 — 712 763 1,475 97 2018 40.0

Worth, Texas ENT067 926 379 266 — 379 266 645 48 2018 40.0

Watauga, Texas ENT068 2,062 1,073 2,274 — 1,073 2,274 3,347 241 2018 40.0

Schedule III—Real Estate and Accumulated Depreciation (Continued)

1 unchanged sentence

($ in thousands)

Initial Cost to Company

Initial Cost to Company Cost

Subsequent to

2 unchanged sentences

at Close of Period

Asbury Park, New Jersey

Fairlawn, New Jersey

Turnersville, New Jersey

Brooklyn, New York

Ridgeville, Ohio

Belle Vernon, Pennsylvania

Denton, Texas

Watauga, Texas

Lynnwood, Washington

Quincy, Washington

Scottsdale, Arizona

Colorado Springs, Colorado

Augustine, Florida

Honolulu, Hawaii

Chicago, Illinois

Albuquerque, New Mexico

Hamburg, New York

Anthony, Texas

Location Encumbrances Land Building and

Improvements Land Building and

Improvements Total Accumulated

Depreciation Date

Acquired Depreciable

Lynnwood, Washington ENT069 2,071 1,608 4,010 — 1,608 4,010 5,618 447 2018 40.0

Quincy, Washington ENT070 — (1) 1,500 6,500 — 1,500 6,500 8,000 3,246 2003 40.0

Subtotal $ 105,636 $ 96,624 $ 242,951 $ 106,431 $ 93,917 $ 352,089 $ 446,006 $ 101,061

Colorado Springs, Colorado RET001 — (1) 2,631 279 5,195 2,607 5,498 8,105 1,860 2006 40.0

Augustine, Florida RET002 — (1) 3,950 — 10,285 3,908 10,327 14,235 3,674 2005 40.0

Honolulu, Hawaii RET003 — 3,393 21,155 ( 7,132 ) 3,393 14,023 17,416 4,546 2009 40.0

Chicago, Illinois RET004 — (1) — 336 2,275 — 2,611 2,611 1,460 2010 40.0

Albuquerque, New Mexico RET005 — (1) 1,733 — 8,728 1,705 8,756 10,461 3,235 2005 40.0

Hamburg, New York RET006 — (1) 731 6,073 699 711 6,792 7,503 2,859 2005 40.0

Anthony, Texas RET007 — (1) 3,538 4,215 ( 187 ) 3,514 4,052 7,566 1,499 2005 40.0

Draper, Utah RET008 — (1) 3,502 — 5,975 3,502 5,975 9,477 2,107 2005 40.0

Subtotal $ — $ 19,478 $ 32,058 $ 25,838 $ 19,340 $ 58,034 $ 77,374 $ 21,240

Honolulu, Hawaii HOT001 — 17,996 17,996 ( 31,160 ) 3,419 1,413 4,832 4,531 2009 40.0

Asbury Park, New Jersey HOT002 — 297 18,299 3,896 297 22,195 22,492 1,850 2019 40.0

Asbury Park, New Jersey HOT003 — 120 6,548 10 120 6,558 6,678 246 2019 40.0

Asbury Park, New Jersey HOT004 — 3,815 40,194 4,052 3,815 44,246 48,061 8,433 2016 40.0

Subtotal $ — $ 22,228 $ 83,037 $ ( 23,202 ) $ 7,651 $ 74,412 $ 82,063 $ 15,060

APARTMENT/RESIDENTIAL:

Mammoth, California APA001 — 10,078 40,312 ( 50,315 ) 15 60 75 — 2007 0

Atlanta, Georgia APA002 — 2,963 11,850 ( 10,171 ) 928 3,714 4,642 — 2010 0

Jersey City, New Jersey APA003 — 36,405 64,719 ( 100,930 ) 69 125 194 — 2009 0

Subtotal $ — $ 49,446 $ 116,881 $ ( 161,416 ) $ 1,012 $ 3,899 $ 4,911 $ —

Schedule III—Real Estate and Accumulated Depreciation (Continued)

1 unchanged sentence

($ in thousands)

Initial Cost to Company

Initial Cost to Company Cost

Subsequent to

2 unchanged sentences

at Close of Period

Honolulu, Hawaii

Asbury Park, New Jersey

APARTMENT/RESIDENTIAL:

Mammoth, California

Atlanta, Georgia

Jersey City, New Jersey

Riverside, California

Location Encumbrances Land Building and

Improvements Land Building and

Improvements Total Accumulated

Depreciation Date

Acquired Depreciable

Riverside, California MXU001 — 5,869 629 2 5,869 631 6,500 630 2010 40.0

Subtotal $ — $ 5,869 $ 629 $ 2 $ 5,869 $ 631 $ 6,500 $ 630

Total $ 720,252 $ 716,066 $ 1,397,827 $ 89,104 $ 772,689 $ 1,430,308 $ 2,202,997 (4) $ 282,841 (5)

_______________________________________________________________________________

4 unchanged sentences

(5) Includes $ 10.5 million and $ 4.5 million relating to accumulated depreciation for land and development assets and real estate assets held for sale, respectively, as of December 31, 2020.

Schedule III—Real Estate and Accumulated Depreciation (Continued)

As of December 31, 2019

($ in thousands)

The following table reconciles real estate from January 1, 2018 to December 31, 2020:

2020 2019 2018

Balance at January 1 $ 2,364,413 $ 2,710,512 $ 2,577,195

2 unchanged sentences

Other acquisitions — 231,436 762,207

Dispositions ( 209,532 ) ( 464,648 ) ( 656,900 )

— ( 236,545 ) —

Impairments ( 5,790 ) ( 10,377 ) ( 179,714 )

Balance at December 31 $ 2,202,997 $ 2,364,413 $ 2,710,512

1 unchanged sentence

(1) Refer to Note 5.

Schedule III—Real Estate and Accumulated Depreciation (Continued)

As of December 31, 2020

($ in thousands)

The following table reconciles accumulated depreciation from January 1, 2018 to December 31, 2020:

2020 2019 2018

Balance at January 1 $ ( 247,998 ) $ ( 318,724 ) $ ( 366,265 )

Additions ( 44,270 ) ( 45,615 ) ( 48,376 )

Dispositions 9,427 72,141 95,917

Balance at December 31 $ ( 282,841 ) $ ( 247,998 ) $ ( 318,724 )

4 unchanged sentences

($ in thousands)

Type of Loan/Borrower

Underlying Property Type

Type of Loan/Borrower Underlying Property Type Contractual

Rates Contractual

Rates Effective

Dates Periodic

Mortgages Carrying

Mortgages (2)(3)

Senior Mortgages:

Mixed Use/Mixed Collateral

Borrower A Mixed Use/Mixed Collateral LIBOR + 4.50 %

LIBOR + 4.50 %

January, 2021 IO $ — $ 83,579 $ 83,846

Borrower B Land LIBOR + 6.00 %

LIBOR + 6.00 %

Mixed Use/Mixed Collateral

LIBOR +4.00% to LIBOR +12.35%

Mixed Use/Mixed Collateral

March, 2021 IO $ — 58,161 58,070

Borrower C Apartment/Residential Fixed:

April, 2021 IO — 61,805 61,740

Borrower D Apartment/Residential LIBOR + 5.25 %

LIBOR + 5.25 %

June, 2021 IO — 53,055 53,033

Borrower E Mixed Use/Mixed Collateral LIBOR + 6.75 %

LIBOR + 6.75 %

Apartment/Residential

June, 2021 IO — 52,552 52,563

Borrower F Mixed Use/Mixed Collateral LIBOR + 4.75 %

LIBOR + 4.75 %

July, 2021 IO — 51,705 51,629

Borrower G Hotel LIBOR + 4.50 %

LIBOR + 4.50 %

Apartment/Residential

February 2020

Senior mortgages individually <3%

Apartment/Residential, Retail, Mixed Use/Mixed Collateral, Office, Hotel, Land, or Other

LIBOR + 5% to LIBOR + 5.25%

February, 2021 IO — 42,501 42,501

Borrower H Apartment/Residential LIBOR + 5.25 %

LIBOR + 5.25 %

December, 2021 IO — 24,585 24,610

Borrower I Apartment/Residential LIBOR + 2.65 %

LIBOR + 2.65 %

November, 2023 IO — 22,500 20,115

Borrower J Apartment/Residential LIBOR + 5.25 %

LIBOR + 5.25 %

September, 2021 IO — 20,955 20,999

Senior mortgages individually <3% Apartment/Residential, Retail, Mixed Use/Mixed Collateral, Office, Hotel, Land, or Other Fixed:

LIBOR + 5.00 %

2021 to 2024 IO — 15,694 15,807

487,092 484,913

Subordinate Mortgages:

Subordinate mortgages individually <3%

6.8% to 14.0%

Subordinate mortgages individually <3% Hotel Fixed:

September, 2057 IO — 11,637 11,640

11,637 11,640

Total mortgages $ 498,729 $ 496,553

1 unchanged sentence

(1) IO = Interest only.

Amounts are presented net of asset-specific reserves of $ 21.7 million on impaired loans.

(2) Amounts are presented net of asset-specific allowances of $ 0.7 million on impaired loans.

Impairment is measured using the estimated fair value of collateral, less costs to sell.

5 unchanged sentences

The following table reconciles Mortgage Loans on Real Estate from January 1, 2018 to December 31, 2020:

2020 2019 2018

Balance at January 1 $ 561,761 $ 730,515 $ 752,129

1 unchanged sentence

Additions under existing mortgage loans 72,574 164,120 157,702

25,867 25,740 25,778

Deductions (3) :

Collections of principal ( 178,662 ) ( 355,769 ) ( 501,466 )

Recovery of (provision for) loan losses

Provision for loan losses ( 4,930 ) ( 493 ) ( 45 )

Transfers to real estate and equity investments — ( 13,987 ) ( 84,684 )

2 unchanged sentences

______________________________________________________________

Balances represent the carrying value of loans, which are net of asset specific reserves.

(1) Balances represent the carrying value of loans, which are net of asset specific allowances.

(2) Amount includes amortization of discount, deferred interest capitalized and mark-to-market adjustments resulting from changes in foreign exchange rates.

Amounts are presented net of charge-offs of $ 19.2 million and $ 1.2 million for the years ended December 31, 2019 and 2017, respectively.

(3) Amount is presented net of charge-offs of $ 25.9 million and $ 19.2 million for the years ended December 31, 2020 and 2019.

Changes and Disagreements with Registered Public Accounting Firm on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data