What changed in this filing

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Item 1. Financial Statements

2021-11-02 compared with 2021-08-03 · 285 added, 241 removed, 913 unchanged (37% of the section changed)

2 unchanged sentences

(In thousands, except per share data) (1)

September 30,

Real estate, at cost

3 unchanged sentences

Total real estate

Net investment in leases ($ 9,005 and $ 10,871 of allowances as of June 30, 2021 and December 31, 2020, respectively)

Net investment in leases ($ 9,136 and $ 10,871 of allowances as of September 30, 2021 and December 31, 2020, respectively)

Land and development, net

Loans receivable and other lending investments, net ($ 7,135 and $ 13,170 of allowances as of June 30, 2021 and December 31, 2020, respectively)

Loans receivable and other lending investments, net ($ 6,370 and $ 13,170 of allowances as of September 30, 2021 and December 31, 2020, respectively)

Loans receivable held for sale

15 unchanged sentences

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

Common Stock, $ 0.001 par value, 200,000 shares authorized, 72,419 and 73,967 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Common Stock, $ 0.001 par value, 200,000 shares authorized, 70,031 and 73,967 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

11 unchanged sentences

(In thousands, except per share data)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Operating lease income

10 unchanged sentences

(Recovery of) provision for loan losses

(Recovery of) provision for losses on net investment in leases

Provision for (recovery of) losses on net investment in leases

Impairment of assets

2 unchanged sentences

Income from sales of real estate

Loss from operations before earnings from equity method investments and other items

Income (loss) from operations before earnings from equity method investments and other items

Loss on early extinguishment of debt, net

Earnings from equity method investments

Net loss before income taxes

Income tax expense

Net income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Net (income) attributable to noncontrolling interests

Net loss attributable to iStar Inc.

Net income (loss) attributable to iStar Inc.

Preferred dividends

Net loss allocable to common shareholders

Net income (loss) allocable to common shareholders

Per common share data:

Net loss allocable to common shareholders:

Net income (loss) allocable to common shareholders:

Weighted average number of common shares:

2 unchanged sentences

(In thousands)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Net income (loss)

Other comprehensive income (loss):

4 unchanged sentences

Comprehensive income (loss)

Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive (income) attributable to noncontrolling interests

Comprehensive income (loss) attributable to iStar Inc.

(1) Amounts reclassified to “Interest expense” in the Company’s consolidated statements of operations for the three months ended June 30, 2021 and 2020 are $ 2,029 and $ 1,799 , respectively, and amounts reclassified to “Interest expense” in the Company’s consolidated statements of operations for the six months ended June 30, 2021 and 2020 are $ 4,133 and $ 2,887 , respectively.

Amounts reclassified to “Earnings from equity method investments” in the Company’s consolidated statements of operations for the three months ended June 30, 2021 and 2020 are $ 457 and $ 307 , respectively, and amounts reclassified to “Earnings from equity method investments” in the Company’s consolidated statements of operations for the six months ended June 30, 2021 and 2020 are $ 691 and $ 533 , respectively.

(1) Amounts reclassified to “Interest expense” in the Company’s consolidated statements of operations for the three months ended September 30, 2021 and 2020 are $ 2,050 and $ 2,038 , respectively, and amounts reclassified to “Interest expense” in the Company’s consolidated statements of operations for the nine months ended September 30, 2021 and 2020 are $ 6,183 and $ 4,926 , respectively.

Amounts reclassified to “Earnings from equity method investments” in the Company’s consolidated statements of operations for the three months ended September 30, 2021 and 2020 are $ 633 and $ 333 , respectively, and amounts reclassified to “Earnings from equity method investments” in the Company’s consolidated statements of operations for the nine months ended September 30, 2021 and 2020 are $ 1,324 and $ 866 , respectively.

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

5 unchanged sentences

Income (Loss)

Balance as of March 31, 2021

Balance as of June 30, 2021

( 2,338,454 )

2 unchanged sentences

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

Net income (loss)

Change in accumulated other comprehensive income (loss)

2 unchanged sentences

Distributions to noncontrolling interests

Balance as of June 30, 2021

Change to noncontrolling interest

Balance as of September 30, 2021

( 2,225,552 )

Balance as of March 31, 2020

Balance as of June 30, 2020

( 2,279,284 )

2 unchanged sentences

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

Net income (loss)

Change in accumulated other comprehensive income (loss)

2 unchanged sentences

Distributions to noncontrolling interests

Balance as of June 30, 2020

Balance as of September 30, 2020

( 2,289,668 )

9 unchanged sentences

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

Net income (loss)

Change in accumulated other comprehensive income (loss)

2 unchanged sentences

Distributions to noncontrolling interests

Balance as of June 30, 2021

Change to noncontrolling interest

Balance as of September 30, 2021

( 2,225,552 )

10 unchanged sentences

Distributions to noncontrolling interests

Balance as of June 30, 2020

Balance as of September 30, 2020

( 2,289,668 )

4 unchanged sentences

(In thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

31 unchanged sentences

Net proceeds from sales of real estate

Net proceeds from sales of net investment in leases

Net proceeds from sales of land and development assets

Net proceeds from sales of other investments

Distributions from other investments

18 unchanged sentences

Cash, cash equivalents and restricted cash at end of period

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Reconciliation of cash and cash equivalents and restricted cash presented on the consolidated statements of cash flows

Cash and cash equivalents

Restricted cash included in deferred expenses and other assets, net

Total cash and cash equivalents and restricted cash

Supplemental disclosure of non-cash investing and financing activity:

1 unchanged sentence

Accounts payable for capital expenditures on land and development and real estate assets

Contributions to other investments

Accrued repurchase of stock

24 unchanged sentences

The liabilities of these VIEs are non-recourse to the Company and can only be satisfied from each VIE’s respective assets.

The Company did not have any unfunded commitments related to consolidated VIEs as of June 30, 2021 and December 31,

The Company did not have any unfunded commitments related to consolidated VIEs as of September 30, 2021 and

Notes to Consolidated Financial Statements (Continued)

The following table presents the assets and liabilities of the Company’s consolidated VIEs as of June 30, 2021 and December 31, 2020 ($ in thousands):

June 30, 2021

December 31, 2020.

The following table presents the assets and liabilities of the Company’s consolidated VIEs as of September 30, 2021 and December 31, 2020 ($ in thousands):

September 30, 2021

December 31, 2020

Real estate, at cost

11 unchanged sentences

Unconsolidated VIEs —The Company has investments in VIEs where it is not the primary beneficiary and accordingly the VIEs have not been consolidated in the Company’s consolidated financial statements.

As of June 30, 2021, the Company’s maximum exposure to loss from these investments does not exceed the sum of the $ 130.1 million carrying value of the investments, which are classified in “Other investments” on the Company’s consolidated balance sheets, and $ 14.9 million of related unfunded commitments.

As of September 30, 2021, the Company’s maximum exposure to loss from these investments does not exceed the sum of the $ 149.4 million carrying value of the investments, which are classified in “Other investments” on the Company’s consolidated balance sheets, and $ 7.6 million of related unfunded commitments.

Note 3—Summary of Significant Accounting Policies

16 unchanged sentences

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

As of June 30, 2021

As of September 30, 2021

Land, at cost

11 unchanged sentences

Total real estate

(1) As of June 30, 2021 and December 31, 2020, real estate, net included $ 746.1 million and $ 755.5 million, respectively, of real estate of the Net Lease Venture (refer to Net Lease Venture below).

(2) As of June 30, 2021 and December 31, 2020, the Company had $ 2.4 million and $ 5.2 million, respectively, of residential condominiums available for sale in its operating properties portfolio.

(1) As of September 30, 2021 and December 31, 2020, real estate, net included $ 741.6 million and $ 755.5 million, respectively, of real estate of the Net Lease Venture (refer to Net Lease Venture below).

(2) As of September 30, 2021 and December 31, 2020, the Company had $ 2.0 million and $ 5.2 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.

8 unchanged sentences

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.

Dispositions— During the six months ended June 30, 2020, the Company sold a net lease asset for net proceeds of $ 7.5 million and recognized an impairment of $ 1.7 million in connection with the sale.

Dispositions— During the nine months ended September 30, 2021, the Company sold an operating property with a carrying value of $ 96.8 million for $ 125.0 million and recognized a gain of $ 25.6 million after selling costs.

Notes to Consolidated Financial Statements (Continued)

Real Estate Available and Held for Sale— During the six months ended June 30, 2021, the Company transferred an operating property with a carrying value of $ 96.8 million to held for sale due to an executed contract with a third party.

The operating property was sold in July 2021 for $ 125.0 million and the Company expects to recognize a gain of approximately $ 25.0 million after selling costs.

Impairments— During the six months ended June 30, 2020, the Company recorded an impairment of $ 1.7 million in connection with the sale of a net lease asset and an impairment of $ 3.0 million on a real estate asset held for sale.

recorded in “Income from sales of real estate” in the Company’s consolidated statements of operations.

During the nine months ended September 30, 2020, the Company sold a net lease asset for net proceeds of $ 7.5 million and recognized an impairment of $ 1.7 million in connection with the sale.

Impairments— During the three and nine months ended September 30, 2021, the Company recorded an impairment of $ 0.4 million on an operating property.

During the nine months ended September 30, 2020, the Company recorded an impairment of $ 1.7 million in connection with the sale of a net lease asset and an impairment of $ 3.0 million on a real estate asset held for sale.

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

Tenant expense reimbursements were $ 5.1 million and $ 12.1 million for the three and six months ended June 30, 2021, respectively, and $ 5.4 million and $ 11.4 million for the three and six months ended June 30, 2020, respectively .

Tenant expense reimbursements were $ 5.3 million and $ 17.4 million for the three and nine months ended September 30, 2021, respectively, and $ 5.8 million and $ 17.1 million for the three and nine months ended September 30, 2020, respectively .

These amounts are included in “Operating lease income” in the Company’s consolidated statements of operations.

Allowance for Doubtful Accounts— As of June 30, 2021 and December 31, 2020, the allowance for doubtful accounts related to real estate tenant receivables was $ 0.7 million and $ 1.7 million, respectively.

Allowance for Doubtful Accounts— As of September 30, 2021 and December 31, 2020, the allowance for doubtful accounts related to real estate tenant receivables was $ 0.4 million and $ 1.7 million, respectively.

These amounts are included in “Accrued interest and operating lease income receivable, net” on the Company’s consolidated balance sheets.

Future Minimum Operating Lease Payments —Future minimum operating lease payments to be collected under non-cancelable operating leases, excluding customer reimbursements of expenses, in effect as of June 30, 2021, are as follows by year ($ in thousands):

2021 (remaining six months)

Future Minimum Operating Lease Payments —Future minimum operating lease payments to be collected under non-cancelable operating leases, excluding customer reimbursements of expenses, in effect as of September 30, 2021, are as follows by year ($ in thousands):

2021 (remaining three months)

Note 5—Net Investment in Leases

4 unchanged sentences

The Company classified one of the Ground Leases as a sales-type lease and it is recorded in “Net investment in leases” on the Company’s consolidated balance sheets.

One Ground Lease was entered into with the seller of the land and did not qualify for sale leaseback accounting, and as such, is accounted for as a financing transaction and $ 42.2 million is recorded in “Loans receivable held for sale” on the Company’s consolidated balance sheet.

One Ground Lease was entered into with the seller of the land and did not qualify for sale leaseback accounting, and as such, was accounted for as a financing transaction and $ 42.0 million was recorded in “Loans receivable held for sale” on the Company’s consolidated balance sheet.

There can be no assurance that the conditions to closing will be satisfied and that SAFE will acquire the properties and Ground Leases from the Company.

3 unchanged sentences

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 was terminated.

In the third quarter

In exchange, the Company’s obligation under the lease to

Notes to Consolidated Financial Statements (Continued)

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.

acquire an equal amount of new facilities for them or to reduce their rent in the future was 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.

2 unchanged sentences

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).

For the three and six months ended June 30, 2021 , the Company recognized $ 0.2 million and $ 0.3 million, respectively, of cash interest income and $ 8.5 million and $ 17.0 million, respectively, of non-cash interest income in “Interest income from sales-type leases” in the Company’s consolidated statements of operations.

For the three and six months ended June 30, 2020, the Company recognized $ 2.3 million and $ 9.2 million, respectively, of cash interest income and $ 6.0 million and $ 7.5 million, respectively, of non-cash interest income in "Interest income from sales-type leases"

For the three and nine months ended September 30, 2021 , the Company recognized $ 7.0 million and $ 7.3 million, respectively, of cash interest income and $ 2.5 million and $ 19.6 million, respectively, of non-cash interest income in “Interest income from sales-type leases” in the Company’s consolidated statements of operations.

For the three and nine months ended September 30, 2020, the Company recognized $ 1.5 million and $ 10.7 million, respectively, of cash interest income and $ 6.9 million and $ 14.3 million, respectively, of non-cash interest income in "Interest income from sales-type leases"

in the Company's consolidated statements of operations.

Dispositions— During the six months ended June 30, 2021, the Company sold net lease assets for net proceeds of $ 6.6 million and recognized an aggregate impairment of $ 1.5 million in connection with the sales.

The Company’s net investment in leases were comprised of the following as of June 30, 2021 and December 31, 2020 ($ in thousands):

June 30, 2021

Dispositions— During the nine months ended September 30, 2021, the Company sold net lease assets for net proceeds of $ 8.7 million and recognized an aggregate impairment of $ 2.3 million in connection with the sales.

The Company’s net investment in leases were comprised of the following as of September 30, 2021 and December 31, 2020 ($ in thousands):

September 30, 2021

December 31, 2020

5 unchanged sentences

Net investment in leases (1)

(1) As of June 30, 2021 and December 31, 2020, 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 June 30, 2021, the weighted average risk rating on the Company’s net investment in leases was 1.9 .

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 June 30, 2021, are as follows by year ($ in thousands):

2021 (remaining six months)

(1) As of September 30, 2021 and December 31, 2020, 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 September 30, 2021, the weighted average risk rating on the Company’s net investment in leases was 2.0 .

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 September 30, 2021, are as follows by year ($ in thousands):

2021 (remaining three months)

Total undiscounted cash flows

Notes to Consolidated Financial Statements (Continued)

Allowance for Losses on Net Investment in Leases —Changes in the Company’s allowance for losses on net investment in leases for the three and six months ended June 30, 2021 and 2020 were as follows ($ in thousands):

Allowance for Losses on Net Investment in Leases —Changes in the Company’s allowance for losses on net investment in leases for the three and nine months ended September 30, 2021 and 2020 were as follows ($ in thousands):

Three Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

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

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

(Recovery of) provision for losses on net investment in leases (2)

Provision for (recovery of) losses on net investment in leases (2)

Allowance for losses on net investment in leases at end of period

(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.

(2) During the three and six months ended June 30, 2021, the Company recorded a recovery of losses on net investment in leases of $ 0.3 million and $ 1.9 million, respectively, due primarily to an improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

During the three and six months ended June 30, 2020, the Company recorded an allowance for losses on net investment in leases of $ 0.5 million and $ 1.8 million, respectively, due primarily to the macroeconomic impact of COVID-19 on commercial real estate markets and the adoption of ASU 2016-13 .

(2) During the three and nine months ended September 30, 2021, the Company recorded a provision for (recovery of) losses on net investment in leases of $ 0.1 million and ($ 1.7 ) million, respectively.

The provision for losses for the three months ended September 30, 2021 resulted from market changes since June 30, 2021 and the recovery of losses for the nine months ended September 30, 2021 was due primarily to asset sales and an improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

During the three and nine months ended September 30, 2020, the Company recorded a provision for losses on net investment in leases of $ 0.2 million and $ 2.0 million, respectively, due primarily to the macroeconomic impact of COVID-19 on commercial real estate markets and the adoption of ASU 2016-13 .

Note 6—Land and Development

The Company’s land and development assets were comprised of the following ($ in thousands):

September 30,

Land and land development, at cost

1 unchanged sentence

Total land and development, net

Dispositions— During the six months ended June 30, 2021 and 2020, the Company sold land parcels and residential lots and units and recognized land development revenue of $ 64.6 million and $ 95.8 million, respectively.

During the six months ended June 30, 2021 and 2020, the Company recognized land development cost of sales of $ 60.1 million and $ 93.3 million, respectively, from its land and development portfolio.

Impairments— During the six months ended June 30, 2020, the Company recorded an impairment of $ 1.5 million on a land and development asset.

Dispositions— During the nine months ended September 30, 2021 and 2020, the Company sold land parcels and residential lots and units and recognized land development revenue of $ 157.9 million and $ 116.3 million, respectively.

During the nine months ended September 30, 2021 and 2020, the Company recognized land development cost of sales of $ 147.5 million and $ 114.7 million, respectively, from its land and development portfolio.

Impairments— During the nine months ended September 30, 2020, the Company recorded an impairment of $ 1.5 million on a land and development asset.

Notes to Consolidated Financial Statements (Continued)

1 unchanged sentence

The following is a summary of the Company’s loans receivable and other lending investments by class ($ in thousands):

June 30, 2021

September 30, 2021

December 31, 2020

15 unchanged sentences

Total loans receivable and other lending investments, net

(1) As of June 30, 2021, 91 % of gross carrying value of construction loans had completed construction.

Allowance for Loan Losses —Changes in the Company’s allowance for loan losses were as follows for the three months ended June 30, 2021 and 2020 ($ in thousands):

(1) As of September 30, 2021, 98 % of gross carrying value of construction loans had completed construction.

Notes to Consolidated Financial Statements (Continued)

Allowance for Loan Losses —Changes in the Company’s allowance for loan losses were as follows for the three months ended September 30, 2021 and 2020 ($ in thousands):

General Allowance

Maturity Debt

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Allowance for loan losses at beginning of period

Recovery of loan losses (1)

(Recovery of) provision for loan losses (1)

Allowance for loan losses at end of period

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Allowance for loan losses at beginning of period

Provision for loan losses (1)

(Recovery of) provision for loan losses (1)

Allowance for loan losses at end of period

(1) During the three months ended June 30, 2021 and 2020, the Company recorded a provision for (recovery of) loan losses of ($ 2.3 ) million and $ 2.1 million, respectively, in its consolidated statement of operations.

The recovery in 2021 was due primarily to the repayment of loans during the three months ended June 30, 2021 and an improving macroeconomic forecast on commercial real estate markets since March 31, 2021.

Of this amount, $ 0.4 million related to a provision for loan losses for unfunded loan commitments and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities."

The provision in 2020 was due to the macroeconomic impact of COVID-19 on commercial real estate markets, which was partially offset by a $ 0.3 million reduction in provision for loan losses for unfunded loan commitments that were funded during the three months ended June 30, 2020, and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities."

Notes to Consolidated Financial Statements (Continued)

Changes in the Company’s allowance for loan losses were as follows for the six months ended June 30, 2021 and 2020 ($ in thousands):

(1) During the three months ended September 30, 2021 and 2020, the Company recorded a provision for (recovery of) loan losses of ($ 1.6 ) million and ( $ 2.0 ) million, respectively, in its consolidated statements of operations.

The recovery in 2021 was due primarily to the repayment of loans during the three months ended September 30, 2021 and an improving macroeconomic forecast on commercial real estate markets since June 30, 2021.

Of this amount, $ 0.9 million related to a recovery of loan losses for unfunded loan commitments and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities."

The recovery in 2020 resulted from the reversal of CECL allowances on loans that repaid in full in the third quarter 2020 and a more favorable economic outlook on commercial real estate markets in the third quarter 2020 as compared to the second quarter 2020 .

Of this amount, $ 0.7 million related to a recovery of loan 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."

Changes in the Company’s allowance for loan losses were as follows for the nine months ended September 30, 2021 and 2020 ($ in thousands):

General Allowance

Maturity Debt

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Allowance for loan losses at beginning of period

1 unchanged sentence

Allowance for loan losses at end of period

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Allowance for loan losses at beginning of period

2 unchanged sentences

Allowance for loan losses at end of period

(1) During the six months ended June 30, 2021 and 2020, the Company recorded a provision for (recovery of) loan losses of ($ 6.1 ) million and $ 6.1 million, respectively, in its consolidated statements of operations.

The recovery in 2021 was due primarily to the repayment of loans during the six months ended June 30, 2021 and an improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

The provision for loan losses in 2020 resulted from the macroeconomic impact of COVID-19 on commercial real estate markets and was partially offset by a $ 0.2 million reduction in provision for loan losses for unfunded loan commitments that were funded during the six months ended June 30, 2020 and is recorded as a reduction to "Accounts payable, accrued expenses and other liabilities."

(2) 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, 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.”

(1) During the nine months ended September 30, 2021 and 2020, the Company recorded a provision for (recovery of) loan losses of ($ 7.6 ) million and $ 4.1 million, respectively, in its consolidated statements of operations.

The recovery in 2021 was due primarily to the repayment of loans during the nine months ended September 30, 2021 and an improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

Of this amount, $ 0.9 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 .” The provision for loan losses in 2020 resulted from the macroeconomic impact of COVID-19 on commercial real estate markets, of which $ 0.9 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."

Notes to Consolidated Financial Statements (Continued)

The Company’s investment in loans and other lending investments and the associated allowance for loan losses were as follows as of June 30, 2021 and December 31, 2020 ($ in thousands):

The Company’s investment in loans and other lending investments and the associated allowance for loan losses were as follows as of September 30, 2021 and December 31, 2020 ($ in thousands):

Evaluated for

1 unchanged sentence

Impairment (1)

As of June 30, 2021

As of September 30, 2021

Construction loans (2)

9 unchanged sentences

Allowance for loan losses

(1) The carrying value of this loan includes an unamortized discount of $ 0.8 million and $ 0.8 million as of June 30, 2021 and December 31, 2020, respectively.

(1) The carrying value of this loan includes an unamortized discount of $ 0.8 million and $ 0.8 million as of September 30, 2021 and December 31, 2020, respectively.

The Company’s loans individually evaluated for impairment represent loans on non-accrual status and the unamortized amounts associated with these loans are not currently being amortized into income.

(2) The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs totaling net discounts of $ 1.7 million and $ 2.3 million as of June 30, 2021 and December 31, 2020, respectively.

(2) The carrying value of these loans include unamortized discounts, premiums, deferred fees and costs totaling net discounts of $ 0.2 million and $ 2.3 million as of September 30, 2021 and December 31, 2020, respectively.

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

7 unchanged sentences

Notes to Consolidated Financial Statements (Continued)

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, as of June 30, 2021 were as follows ($ in thousands):

Year of Origination

4 unchanged sentences

Financing receivables

(1) As of June 30, 2021, excludes $ 56.6 million for one loan on non-accrual status.

(1) As of September 30, 2021, excludes $ 58.8 million for one loan on non-accrual status.

Notes to Consolidated Financial Statements (Continued)

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

As of June 30, 2021

As of September 30, 2021

Senior mortgages

6 unchanged sentences

Impaired Loans —The Company’s impaired loan was as follows ($ in thousands):

As of June 30, 2021

As of September 30, 2021

As of December 31, 2020

1 unchanged sentence

Senior mortgages (1)

(1) The Company has one non-accrual loan as of June 30, 2021 and December 31, 2020 that is considered impaired and included in the table above.

The Company did no t record any interest income on impaired loans for the six months ended June 30, 2021 and 2020.

(1) The Company has one non-accrual loan as of September 30, 2021 and December 31, 2020 that is considered impaired and included in the table above.

The Company did no t record any interest income on impaired loans for the nine months ended September 30, 2021 and 2020.

Loans receivable held for sale —In March 2021, the Company acquired land and simultaneously structured and entered into with the seller a Ground Lease on which a multi-family project will be constructed.

The Company funded $ 16.1 million at closing and the Ground Lease documents provide for future funding obligations of approximately $ 11.9 million of deferred purchase price and $ 52.0 million of leasehold improvement allowance upon achievement of certain milestones.

At closing, the Company entered into an agreement with SAFE pursuant to which, subject to certain conditions being met, SAFE will acquire the ground lessor from the Company.

The Company determined that the transaction did not qualify as a sale leaseback transaction and recorded the Ground Lease in “Loans receivable held for sale” on the Company’s consolidated balance sheet as of June 30, 2021.

The Company received $ 2.7 million of consideration from SAFE in connection with this transaction.

The Company funded $ 16.1 million at closing and the Ground Lease documents provided for future funding obligations to the Ground Lease tenant of approximately $ 11.9 million of deferred purchase price and $ 52.0 million of leasehold improvement allowance upon achievement of certain milestones.

At closing, the Company entered into an agreement with SAFE pursuant to which, subject to certain conditions being met, SAFE would acquire the ground lessor entity from the Company.

Subsequent to closing, the Company funded approximately $ 6.0 million of the deferred purchase price to the Ground Lease tenant.

The Company sold the ground lessor entity (and SAFE assumed all future funding obligations to the Ground Lease tenant) to SAFE in September 2021 for $ 22.1 million and recorded no gain or loss on the sale.

In June 2021, the Company acquired a parcel of land for $ 42.0 million and simultaneously entered into a Ground Lease (refer to Note 5).

The Company also concurrently entered into an agreement pursuant to which SAFE would acquire the Ground Lease from the Company.

The Ground Lease was entered into with the seller of the land and did not qualify for sale leaseback accounting, and as such, is accounted for as a financing transaction and $ 42.2 million is recorded in “Loans receivable held for sale” on the Company’s consolidated balance sheets.

The Ground Lease was entered into with the seller of the land and did not qualify for sale leaseback accounting, and as such, was accounted for as a financing transaction and $ 42.0 million was recorded in “Loans receivable held for sale” on the Company’s consolidated balance sheets.

Notes to Consolidated Financial Statements (Continued)

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

As of June 30, 2021

As of September 30, 2021

Available-for-Sale Securities

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Debt securities

As of June 30, 2021, the contractual maturities of the Company’s securities were as follows ($ in thousands):

As of September 30, 2021, the contractual maturities of the Company’s securities were as follows ($ in thousands):

Held-to-Maturity Debt Securities

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For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Real estate equity investments

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Other strategic investments (3)

(1) For the three months ended June 30, 2021 and 2020, earnings (losses) from equity method investments is net of the Company’s pro rata share of $ 5.5 million and $ 4.8 million, respectively, of depreciation expense and $ 17.7 million and $ 15.7 million, respectively, of interest expense.

For the six months ended June 30, 2021 and 2020, earnings (losses) from equity method investments is net of the Company’s pro rata share of $ 11.1 million and $ 8.8 million, respectively, of depreciation expense and $ 33.2 million and $ 29.4 million, respectively, of interest expense.

(2) As of June 30, 2021, the Company owned 35.2 million shares of SAFE common stock which, based on the closing price of $ 78.50 on June 30, 2021, had a market value of $ 2.8 billion.

For the six months ended June 30, 2021 and 2020, equity in earnings includes dilution gains of $ 0.5 million and $ 7.9 million, respectively, resulting from SAFE equity offerings.

(3) During the six months ended June 30, 2021 and 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 for the six months ended June 30, 2021 and 2020 of $ 5.1 million and $ 9.9 million, respectively, in “Other income” in the Company’s consolidated statements of operations.

(1) For the three months ended September 30, 2021 and 2020, earnings (losses) from equity method investments is net of the Company’s pro rata share of $ 5.1 million and $ 4.6 million, respectively, of depreciation expense and $ 18.5 million and $ 14.6 million, respectively, of interest expense.

For the nine months ended September 30, 2021 and 2020, earnings (losses) from equity method investments is net of the Company’s pro rata share of $ 16.2 million and $ 13.4 million, respectively, of depreciation expense and $ 51.7 million and $ 44.0 million, respectively, of interest expense.

(2) As of September 30, 2021, the Company owned 36.0 million shares of SAFE common stock which, based on the closing price of $ 71.89 on September 30, 2021, had a market value of $ 2.6 billion.

Pursuant to ASC 323-10-40-1, an equity method investor shall account for a share issuance by an investee as if the investor had sold a proportionate share of its investment.

Any gain or loss to the investor resulting from an investee’s share issuance shall be recognized in earnings.

For the three months ended September 30, 2021, equity in earnings includes a dilution gain of $ 60.2 million resulting from a SAFE equity offering.

For the nine months ended September 30, 2021 and 2020, equity in earnings includes dilution gains of $ 60.7 million and $ 7.9 million, respectively, resulting from SAFE equity offerings.

(3) During the three and nine months ended September 30, 2021 and the three and nine months ended September 30, 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 $ 14.0 million and $ 19.1 million for the three and nine months ended September 30, 2021, respectively, and aggregate mark-to-market gains of $ 14.0 million and $ 23.9 million for the three and nine months ended September30, 2020, respectively, in “Other income” in the Company’s consolidated statements of operations.

Safehold Inc.

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

As of June 30, 2021, the Company owned approximately 66.0 % of SAFE’s common stock outstanding.

During the nine months ended September 30, 2021, the Company purchased 0.4 million shares of SAFE's common stock for $ 27.9 million, for an average cost of $ 71.68 per share, in open market purchases made in accordance with Rules 10b5-1 and 10b-18 under the Securities and Exchange Act of 1934, as amended.

As of September 30, 2021, the Company owned approximately 63.6 % of SAFE’s common stock outstanding.

In January 2019, the Company purchased 12.5 million newly designated limited partnership units (the “Investor Units”) in SAFE’s operating partnership (“SAFE OP”), at a purchase price of $ 20.00 per unit, for a total purchase price of $ 250.0 million.

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● limits the Company’s discretionary voting power to 41.9 % of the outstanding voting power of SAFE’s common stock until its aggregate ownership of SAFE common stock is less than 41.9 % ;

● requires the Company to cast all of its voting power in favor of three director nominees to SAFE’s board who are independent of each of the Company and SAFE for three years ;

Notes to Consolidated Financial Statements (Continued)

● requires the Company to cast all of its voting power in favor of three director nominees to SAFE’s board who are independent of each of the Company and SAFE until January 2022;

● subjects the Company to certain standstill provisions;

● provides the Company certain preemptive rights.

Notes to Consolidated Financial Statements (Continued)

In September 2021, the Company acquired 657,894 shares of SAFE’s common stock in a private placement for $ 50.0 million.

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

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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.

During the three months ended June 30, 2021 and 2020, the Company recorded $ 3.5 million and $ 3.2 million, respectively, of management fees pursuant to its management agreement with SAFE.

During the six months ended June 30, 2021 and 2020, the Company recorded $ 7.0 million and $ 6.0 million, respectively, of management fees pursuant to its management agreement with SAFE.

During the three months ended September 30, 2021 and 2020, the Company recorded $ 3.6 million and $ 3.2 million, respectively, of management fees pursuant to its management agreement with SAFE.

During the nine months ended September 30, 2021 and 2020, the Company recorded $ 10.6 million and $ 9.3 million, respectively, 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 elected not to charge in full certain of the expense reimbursements while SAFE is growing its portfolio.

During the three months ended June 30, 2021 and 2020, the Company recognized $ 1.9 million and $ 1.3 million, respectively, of expense reimbursements pursuant to its management agreement with SAFE.

During the six months ended June 30, 2021 and 2020, the Company recognized $ 3.8 million and $ 2.5 million, respectively, of expense reimbursements pursuant to its management agreement with SAFE.

During the three months ended September 30, 2021 and 2020, the Company recognized $ 1.9 million and $ 1.3 million, respectively, of expense reimbursements pursuant to its management agreement with SAFE.

During the nine months ended September 30, 2021 and 2020, the Company recognized $ 5.6 million and $ 3.8 million, respectively, of expense reimbursements pursuant to its management agreement with SAFE.

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)

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:

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and (ii) an $ 80.5 million leasehold first mortgage.

During the three months ended June 30, 2020, the Company recorded $ 0.8 million of interest income on the loan.

During the six months ended June 30, 2021 and 2020, the Company recorded $ 0.3 million and $ 1.5 million, respectively, of interest income on the loan.

The Company sold the Ground Lease to SAFE in September 2020 for $ 34.0 million and sold the leasehold first mortgage to an entity in which the Company has a 53 % equity interest (refer to “Other strategic investments” below) in January 2021 for $ 63.3 million.

Notes to Consolidated Financial Statements (Continued)

During the three and nine months ended September 30, 2020, the Company recorded $ 0.9 million and $ 2.5 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 and sold the leasehold first mortgage to an entity in which the Company has a 53 % equity interest (refer to “Other strategic investments” below) in January 2021 for $ 63.3 million.

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

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The loan was repaid during the fourth quarter 2020.

During the three and six months ended June 30, 2020, the Company recorded $ 0.3 million and $ 0.5 million, respectively, of interest income on the loan.

During the three and nine months ended September 30, 2020, the Company recorded $ 0.3 million and $ 0.8 million, respectively, of interest income on the loan.

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.

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The Company received $ 1.9 million of consideration from SAFE in connection with this transaction.

As of June 30, 2021, $ 42.7 million of the loan was funded and during the three and six months ended June 30, 2021, the Company recorded $ 1.5 million and $ 2.4 million, respectively, of interest income on the loan.

The Company sold the loan in July 2021 and recorded no gain or loss on the sale.

During the three and nine months ended September 30, 2021, the Company recorded $ 0.4 million and $ 2.9 million, respectively, of interest income on the loan.

In March 2021, the Company acquired land and simultaneously structured and entered into with the seller a Ground Lease on which a multi-family project will be constructed.

At closing, the Company entered into an agreement with SAFE pursuant to which, subject to certain conditions being met, SAFE will acquire the ground lessor from the Company (refer to Note 7 - Loans receivable held for sale).

At closing, the Company entered into an agreement with SAFE pursuant to which, subject to certain conditions being met, SAFE would acquire the ground lessor entity from the Company.

The Company sold the ground lessor entity to SAFE in September 2021 and recognized no gain or loss on the sale (refer to Note 7 - Loans receivable held for sale).

The Company also committed to provide a $ 75.0 million construction loan to the Ground Lease tenant.

The Company received $ 2.7 million of consideration from SAFE in connection with this transaction.

In September 2021, the construction loan commitment and the $ 2.7 million of consideration was transferred to an entity in which the Company has a 53.0 % noncontrolling equity interest (refer to “Other strategic investments” below).

In June 2021, the Company sold to SAFE its rights under a purchase option agreement for $ 1.2 million.

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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 three months ended June 30, 2021 and 2020, the Company recorded $ 0.4 million and $ 0.4 million, respectively, of management fees from Net Lease Venture II.

During the six months ended June 30, 2021 and 2020, the Company recorded $ 0.8 million and $ 0.8 million, respectively, of management fees from Net Lease Venture II.

Other real estate equity investments —As of June 30, 2021, the Company’s other real estate equity investments include equity interests in real estate ventures ranging from 33 % to 95 %, comprised of investments of $ 55.3 million in operating properties and $ 13.6 million in land assets.

During the three months ended September 30, 2021 and 2020, the Company recorded $ 0.4 million and $ 0.4 million, respectively, of management fees from Net Lease Venture II.

During the nine months ended September 30, 2021 and 2020, the Company recorded $ 1.2 million and $ 1.1 million, respectively, of management fees from Net Lease Venture II.

Other real estate equity investments —As of September 30, 2021, the Company’s other real estate equity investments include equity interests in real estate ventures ranging from 48 % to 95 %, comprised of investments of $ 43.7 million in operating properties and $ 0.5 million in land assets.

As of December 31, 2020, the Company’s other real estate equity investments included $ 58.7 million in operating properties and $ 31.2 million in land assets.

In August 2018, the Company provided a mezzanine loan with a principal balance of $ 33.0 million as of June 30, 2021 and December 31, 2020 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 September 30, 2021 and December 31, 2020 to an unconsolidated entity in which the Company owns a 50 % equity interest.

The loan matures in August 2022.

As of June 30, 2021, and December 31, 2020, the loan is included in “Loans receivable and other lending investments, net” on the Company’s consolidated balance sheet.

During the three months ended June 30, 2021 and 2020, the Company recorded $ 0.6 million and $ 0.6 million, respectively, of interest income on the mezzanine loan.

During the six months ended June 30, 2021 and 2020, the Company recorded $ 1.1 million and $ 1.2 million, respectively, of interest income on the mezzanine loan.

Other strategic investments —As of June 30, 2021 and December 31, 2020, the Company also had investments in real estate related funds and other strategic investments in real estate entities.

As of September 30, 2021, and December 31, 2020, the loan is included in “Loans receivable and other lending investments, net” on the Company’s consolidated balance sheet.

During the three months ended September 30, 2021 and 2020, the Company recorded $ 0.6 million and $ 0.6 million, respectively, of interest income on the mezzanine loan.

During the nine months ended September 30, 2021 and 2020, the Company recorded $ 1.7 million and $ 1.8 million, respectively, of interest income on the mezzanine loan.

Other strategic investments —As of September 30, 2021 and December 31, 2020, the Company also had investments in real estate related funds and other strategic investments in real estate entities.

In January 2021, the Company sold two loans for $ 83.4 million to a newly formed entity in which the Company has a 53.0 % noncontrolling equity interest.

The Company did no t recognize any gain or loss on the sales.

In September 2021, the Company transferred a $ 75.0 million construction loan commitment to this entity.

The Company does not have a controlling interest in this entity due to the substantive participating rights of its partner.

The Company accounts for this investment as an equity method investment and receives a fixed annual fee in exchange for managing the entity.

Summarized investee financial information — The following table presents the investee level summarized financial information for the Company’s equity method investment that was significant as of June 30, 2021 ($ in thousands):

Net Income Attributable to Parent

For the Six Months Ended June 30, 2021

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2021

For the Nine Months Ended September 30, 2020

Notes to Consolidated Financial Statements (Continued)

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Deferred expenses and other assets, net, consist of the following items ($ in thousands):

June 30, 2021

September 30, 2021

December 31, 2020

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(1) Intangible assets, net includes above market and in-place lease assets and lease incentives related to the acquisition of real estate assets.

Accumulated amortization on intangible assets, net was $ 50.6 million and $ 44.4 million as of June 30, 2021 and December 31, 2020, respectively.

The amortization of above market leases and lease incentive assets decreased operating lease income in the Company’s consolidated statements of operations by $ 0.3 million and $ 0.3 million for the three months ended June 30, 2021 and 2020, respectively, and $ 0.7 million and $ 0.7 million for the six months ended June 30, 2021 and 2020, respectively.

Accumulated amortization on intangible assets, net was $ 50.8 million and $ 44.4 million as of September 30, 2021 and December 31, 2020, respectively.

The amortization of above market leases and lease incentive assets decreased operating lease income in the Company’s consolidated statements of operations by $ 0.5 million and $ 0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $ 1.1 million and $ 1.0 million for the nine months ended September 30, 2021 and 2020, respectively.

These intangible lease assets are amortized over the remaining term of the lease.

The amortization expense for in-place leases was $ 2.6 million and $ 2.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 5.8 million and $ 5.3 million for the six months ended June 30, 2021 and 2020, respectively.

The amortization expense for in-place leases was $ 2.8 million and $ 2.6 million for the three months ended September 30, 2021 and 2020, respectively, and $ 8.6 million and $ 7.9 million for the nine months ended September 30, 2021 and 2020, respectively.

These amounts are included in “Depreciation and amortization” in the Company’s consolidated statements of operations.

As of June 30, 2021, the weighted average remaining amortization period for the Company’s intangible assets was approximately 16.4 years.

As of September 30, 2021, the weighted average remaining amortization period for the Company’s intangible assets was approximately 16.2 years.

(2) Right-of-use lease assets relate primarily to the Company’s leases of office space.

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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.

During the three months ended June 30, 2021 and 2020, the Company recognized $ 1.2 million and $ 1.2 million, respectively, in "General and administrative"

During the three months ended September 30, 2021 and 2020, the Company recognized $ 1.2 million and $ 1.2 million, respectively, in "General and administrative"

and $ 0.9 million and $ 0.9 million, respectively, in "Real estate expense"

in its consolidated statement of operations relating to operating leases.

During the six months ended June 30, 2021 and 2020, the Company recognized $ 2.5 million and $ 2.2 million, respectively, in "General and administrative"

in its consolidated statements of operations relating to operating leases.

During the nine months ended September 30, 2021 and 2020, the Company recognized $ 3.7 million and $ 3.4 million, respectively, in "General and administrative"

and $ 2.7 million and $ 2.6 million, respectively, in "Real estate expense"

in its consolidated statement of operations relating to operating leases.

in its consolidated statements of operations relating to operating leases.

(3) Other assets primarily includes prepaid expenses, deposits for certain real estate assets and management fees and expense reimbursements due from SAFE (refer to Note 8).

(4) Accumulated amortization of leasing costs was $ 2.2 million and $ 2.6 million as of June 30, 2021 and December 31, 2020, respectively.

(5) Accumulated depreciation on corporate furniture, fixtures and equipment was $ 14.6 million and $ 14.3 million as of June 30, 2021 and December 31, 2020, respectively.

(4) Accumulated amortization of leasing costs was $ 2.1 million and $ 2.6 million as of September 30, 2021 and December 31, 2020, respectively.

(5) Accumulated depreciation on corporate furniture, fixtures and equipment was $ 14.7 million and $ 14.3 million as of September 30, 2021 and December 31, 2020, respectively.

Accounts payable, accrued expenses and other liabilities consist of the following items ($ in thousands):

June 30, 2021

September 30, 2021

December 31, 2020

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Accounts payable, accrued expenses and other liabilities

(1) As of June 30, 2021 and December 31, 2020, other liabilities includes $ 33.0 million and $ 36.9 million, respectively, of deferred income.

As of June 30, 2021 and December 31, 2020, other liabilities includes $ 13.5 million and $ 19.0 million, respectively, of derivative liabilities.

As of June 30, 2021 and December 31, 2020, other liabilities includes $ 1.0 million and $ 1.0 million, respectively, of expected credit losses for unfunded loan commitments.

(1) As of September 30, 2021 and December 31, 2020, other liabilities includes $ 20.7 million and $ 36.9 million, respectively, of deferred income.

As of September 30, 2021 and December 31, 2020, other liabilities includes $ 11.7 million and $ 19.0 million, respectively, of derivative liabilities.

As of September 30, 2021 and December 31, 2020, other liabilities includes $ 0.1 million and $ 1.0 million, respectively, 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.

Accumulated amortization on below market lease liabilities was $ 8.8 million and $ 7.5 million as of June 30, 2021 and December 31, 2020, respectively.

The amortization of below market leases increased operating lease income in the Company's consolidated statements of operations by $ 0.6 million and $ 0.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 1.2 million and $ 1.2 million for the six months ended June 30, 2021 and 2020, respectively.

Accumulated amortization on below market lease liabilities was $ 9.0 million and $ 7.5 million as of September 30, 2021 and December 31, 2020, respectively.

The amortization of below market leases increased operating lease income in the Company's consolidated statements of operations by $ 0.6 million and $ 0.6 million for the three months ended September 30, 2021 and 2020, respectively, and $ 1.9 million and $ 1.9 million for the nine months ended September 30, 2021 and 2020, respectively.

Notes to Consolidated Financial Statements (Continued)

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Carrying Value as of

June 30, 2021

September 30, 2021

December 31, 2020

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or (ii) LIBOR subject to a margin of 2.75 % .

(3) As of June 30, 2021, the weighted average interest rate of these loans is 4.4 % , inclusive of the effect of interest rate swaps.

(4) As of June 30, 2021, $ 2.0 billion net carrying value of assets served as collateral for the Company’s secured debt obligations.

(3) As of September 30, 2021, the weighted average interest rate of these loans is 4.4 % , inclusive of the effect of interest rate swaps.

(4) As of September 30, 2021, $ 2.0 billion net carrying value of assets served as collateral for the Company’s secured debt obligations.

(5) 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.

The conversion rate as of June 30, 2021 was 71.2325 shares per $1,000 principal amount of 3.125 % Convertible Notes, which equals a conversion price of $ 14.04 per share.

The conversion rate as of September 30, 2021 was 71.5797 shares per $1,000 principal amount of 3.125 % Convertible Notes, which equals a conversion price of $ 13.97 per share.

The conversion rate is subject to adjustment from time to time for specified events.

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Upon the adoption of ASU 2020-06 on January 1, 2021, the Company reclassed the unamortized discount to shareholders equity (refer to Note 3).

During the three months ended June 30, 2021 and 2020, the Company recognized $ 2.2 million and $ 2.2 million, respectively, of contractual interest and during the three months ended June 30, 2020, the Company recognized $ 1.3 million of discount amortization on the 3.125 % Convertible Notes.

During the six months ended June 30, 2021 and 2020, the Company recognized $ 4.5 million and $ 4.5 million, respectively, of contractual interest and during the six months ended June 30, 2020, the Company recognized $ 2.6 million of discount amortization on the 3.125 % Convertible Notes.

The effective interest rate for the three and six months ended June 30, 2020 was 5.2 % .

During the three months ended September 30, 2021 and 2020, the Company recognized $ 2.2 million and $ 2.2 million, respectively, of contractual interest and during the three months ended September 30, 2020, the Company recognized $ 1.3 million of discount amortization on the 3.125 % Convertible Notes.

During the nine months ended September 30, 2021 and 2020, the Company recognized $ 6.7 million and $ 6.7 million, respectively, of contractual interest and during the nine months ended September 30, 2020, the Company recognized $ 3.9 million of discount amortization on the 3.125 % Convertible Notes.

The effective interest rate for the three and nine months ended September 30, 2020 was 5.2 % .

(6) The Company can prepay these senior notes without penalty beginning July 1, 2024.

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(9) On January 1, 2021, the Company adopted ASU 2020-06 and reclassed $ 10.0 million of debt discount and unamortized fees from the 3.125 % Convertible Notes to shareholders’ equity on the Company’s consolidated balance sheet (refer to Note 3).

(10) The Company capitalized interest relating to development activities of $ 0.2 million and $ 0.6 million during the three months ended June 30, 2021 and 2020, respectively, and $ 0.5 million and $ 1.1 million during the six months ended June 30, 2021 and 2020, respectively.

(10) The Company capitalized interest relating to development activities of $ 0.2 million and $ 0.5 million during the three months ended September 30, 2021 and 2020, respectively, and $ 0.7 million and $ 1.6 million during the nine months ended September 30, 2021 and 2020, respectively.

Notes to Consolidated Financial Statements (Continued)

Future Scheduled Maturities —As of June 30, 2021, future scheduled maturities of outstanding debt obligations are as follows ($ in thousands):

Future Scheduled Maturities —As of September 30, 2021, future scheduled maturities of outstanding debt obligations are as follows ($ in thousands):

Unsecured Debt

2021 (remaining six months)

2021 (remaining three months)

Total principal maturities

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The Company may make optional prepayments, subject to prepayment fees.

As of June 30, 2021, the outstanding balance on the Company’s Senior Term Loan was $ 491.9 million.

As of September 30, 2021, the outstanding balance on the Company’s Senior Term Loan was $ 491.9 million.

Revolving Credit Facility —The Company has a secured revolving credit facility (the “Revolving Credit Facility”) with a maximum capacity of $ 350.0 million that matures in September 2022.

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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 June 30, 2021, based on the Company’s borrowing base of assets, the Company had the ability to draw $ 341.7 million without pledging any additional assets to the facility.

Unsecured Notes —As of June 30, 2021, the Company has senior unsecured notes outstanding with varying fixed-rates and maturities ranging from September 2022 to February 2026.

As of September 30, 2021, based on the Company’s borrowing base of assets, the Company had the ability to draw $ 340.2 million without pledging any additional assets to the facility.

Unsecured Notes —As of September 30, 2021, the Company has senior unsecured notes outstanding with varying fixed-rates and maturities ranging from September 2022 to February 2026.

The Company’s senior unsecured notes are interest only, are generally redeemable at the option of the Company and contain certain financial covenants (see below).

During the six months ended June 30, 2020, repayments of unsecured notes prior to maturity resulted in losses on early extinguishment of debt of $ 4.1 million.

During the nine months ended September 30, 2020, repayments of unsecured notes prior to maturity resulted in losses on early extinguishment of debt of $ 12.0 million.

This amount is included in “Loss on early extinguishment of debt, net” in the Company’s consolidated statements of operations.

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These arrangements are referred to as Strategic Investments.

As of June 30, 2021, the maximum amount of fundings the Company may be required to make under each category, assuming all performance hurdles and milestones are met under the Performance-Based Commitments and that 100 % of its capital committed to Strategic Investments is drawn down, are as follows ($ in thousands):

As of September 30, 2021, the maximum amount of fundings the Company may be required to make under each category, assuming all performance hurdles and milestones are met under the Performance-Based Commitments and that 100 % of its capital committed to Strategic Investments is drawn down, are as follows ($ in thousands):

Loans and Other

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Notes to Consolidated Financial Statements (Continued)

Other Commitments —Future minimum lease obligations under non-cancelable operating and finance leases as of June 30, 2021 are as follows ($ in thousands):

Other Commitments —Future minimum lease obligations under non-cancelable operating and finance leases as of September 30, 2021 are as follows ($ in thousands):

Operating (1)(2)

2021 (remaining six months)

2021 (remaining three months)

Total undiscounted cash flows

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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 three months ended June 30, 2021 and 2020, the Company recognized $ 2.1 million and $ 2.0 million, respectively, in "Interest expense"

During the three months ended September 30, 2021 and 2020, the Company recognized $ 2.1 million and $ 2.0 million, respectively, in "Interest expense"

and $ 0.4 million and $ 0.4 million, respectively, in "Depreciation and amortization"

in its consolidated statement of operations relating to finance leases.

During the six months ended June 30, 2021 and 2020, the Company recognized $ 4.1 million and $ 4.1 million, respectively, in "Interest expense"

in its consolidated statements of operations relating to finance leases.

During the nine months ended September 30, 2021 and 2020, the Company recognized $ 6.2 million and $ 6.1 million, respectively, in "Interest expense"

and $ 1.1 million and $ 1.1 million, respectively, in "Depreciation and amortization"

in its consolidated statement of operations relating to finance leases.

During the three months ended June 30, 2021 and 2020, the Company made payments of $ 0.4 million and $ 1.1 million, respectively, related to its operating leases and $ 1.4 million and $ 1.3 million, respectively, related to its finance leases with SAFE .

During the six months ended June 30, 2021 and 2020, the Company made payments of $ 1.2 million and $ 2.1 million, respectively, related to its operating leases and $ 2.7 million and $ 2.7 million, respectively, related to its finance leases with SAFE .

in its consolidated statements of operations relating to finance leases.

During the three months ended September 30, 2021 and 2020, the Company made payments of $ 0.8 million and $ 1.0 million, respectively, related to its operating leases and $ 1.3 million and $ 1.4 million, respectively, related to its finance leases with SAFE .

During the nine months ended September 30, 2021 and 2020, the Company made payments of $ 2.1 million and $ 3.2 million, respectively, related to its operating leases and $ 4.1 million and $ 4.0 million, respectively, related to its finance leases with SAFE .

(2) The Company is obligated to pay ground rent under certain operating leases;

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Although not designated as hedges, such derivatives are entered into to manage the Company’s 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 June 30, 2021 and December 31, 2020 ($ in thousands):

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 September 30, 2021 and December 31, 2020 ($ in thousands):

Derivative Liabilities

Balance Sheet

As of June 30, 2021

As of September 30, 2021

Derivatives Designated in Hedging Relationships

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Income into Earnings

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

Interest rate swaps

2 unchanged sentences

Earnings from equity method investments

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

Interest rate swaps

2 unchanged sentences

Earnings from equity method investments

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Interest rate swaps

2 unchanged sentences

Earnings from equity method investments

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

Interest rate swaps

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Note 14—Equity

Preferred Stock —The Company had the following series of Cumulative Redeemable Preferred Stock outstanding as of June 30, 2021 and December 31, 2020:

Preferred Stock —The Company had the following series of Cumulative Redeemable Preferred Stock outstanding as of September 30, 2021 and December 31, 2020:

Cumulative Preferential Cash

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Dividends will be payable to holders of record as of the close of business on the first day of the calendar month in which the applicable dividend payment date falls or on another date designated by the Company’s Board of Directors for the payment of dividends that is not more than 30 nor less than 10 days prior to the dividend payment date.

(2) The Company declared and paid dividends of $ 4.0 million, $ 3.1 million and $ 4.7 million on its Series D, G and I Cumulative Redeemable Preferred Stock during both the six months ended June 30, 2021 and 2020.

(2) The Company declared and paid dividends of $ 6.0 million, $ 4.6 million and $ 7.0 million on its Series D, G and I Cumulative Redeemable Preferred Stock during both the nine months ended September 30, 2021 and 2020.

The character of the 2020 dividends was 100 % return of capital.

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The Senior Term Loan and the Revolving Credit Facility permit the Company to pay common dividends with no restrictions so long as the Company is not in default on any of its debt obligations.

The Company declared common stock dividends of $ 17.4 million, or $ 0.235 per share, for the six months ended June 30, 2021 and $ 16.3 million, or $ 0.21 per share, for the six months ended June 30, 2020.

The Company declared common stock dividends of $ 26.3 million, or $ 0.36 per share, for the nine months ended September 30, 2021 and $ 24.6 million, or $ 0.32 per share, for the nine months ended September 30, 2020.

The character of the 2020 dividends was 100 % return of capital.

Stock Repurchase Program —The Company may repurchase shares in negotiated transactions or open market transactions, including through one or more trading plans.

During the six months ended June 30, 2021, the Company repurchased 1.8 million shares of its outstanding common stock for $ 32.4 million, for an average cost of $ 17.57 per share.

During the six months ended June 30, 2020, the Company repurchased 2.5 million shares of its outstanding common stock for $ 27.8 million, for an average cost of $ 10.98 per share.

During the nine months ended September 30, 2021, the Company repurchased 4.2 million shares of its outstanding common stock for $ 91.9 million, for an average cost of $ 21.70 per share.

During the nine months ended September 30, 2020, the Company repurchased 3.7 million shares of its outstanding common stock for $ 41.4 million, for an average cost of $ 11.32 per share.

The Company is generally authorized to repurchase up to $ 50.0 million in shares of its common stock.

As of July 31, 2021, the Company had remaining authorization to repurchase up to $ 33.0 million of common stock under its stock repurchase program.

The Company’s Board of Directors subsequently authorized an increase to the stock repurchase program to $ 50.0 million effective after the date of the filing of this report on Form 10-Q.

As of September 30, 2021, the Company had remaining authorization to repurchase up to $ 30.9 million of common stock under its stock repurchase program.

Notes to Consolidated Financial Statements (Continued)

Accumulated Other Comprehensive Income (Loss) — “Accumulated other comprehensive income (loss)” reflected in the Company’s shareholders’ equity is comprised of the following ($ in thousands):

June 30, 2021

September 30, 2021

December 31, 2020

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Note 15—Stock-Based Compensation Plans and Employee Benefits

Stock-Based Compensation —The Company recorded stock-based compensation expense, including the expense related to performance incentive plans (see below), of $ 14.8 million and $ 20.3 million for the three and six months ended June 30, 2021, respectively, and $ 4.7 million and $ 21.0 million for the three and six months ended June 30, 2020, respectively, in “General and administrative” in the Company’s consolidated statements of operations.

Stock-Based Compensation —The Company recorded stock-based compensation expense, including the expense related to performance incentive plans (see below), of $ 3.0 million and $ 23.3 million for the three and nine months ended September 30, 2021, respectively, and $ 5.7 million and $ 26.7 million for the three and nine months ended September 30, 2020, respectively, in “General and administrative” in the Company’s consolidated statements of operations.

Performance Incentive Plans —The Company’s Performance Incentive Plans (“iPIP”) are designed to provide, primarily to senior executives and select professionals engaged in the Company’s investment activities, long-term compensation which has a direct relationship to the realized returns on investments included in the plans.

Awards vest over six years , with 40 % being vested at the end of the second year and 15 % each year thereafter.

As of June 30, 2021, there are five iPIP Plans, each covering a two-year investment period beginning with the 2013-2014 Plan through the 2021-2022 Plan.

As of September 30, 2021, there are five iPIP Plans, each covering a two-year investment period beginning with the 2013-2014 Plan through the 2021-2022 Plan.

2019-2022 iPIP Plans —The Company’s 2019-2020 and 2021-2022 iPIP plans are equity-classified awards which are measured at the grant date fair value and recognized as compensation cost in “General and administrative” in the Company’s consolidated statements of operations and “Noncontrolling interests” in the Company’s consolidated statements of changes in equity over the requisite service period.

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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 six months ended June 30, 2021 and 2020, the Company recorded $ 1.5 million and $ 1.6 million, respectively, of expense related to the 2019-2022 iPIP plans.

During the nine months ended September 30, 2021 and 2020, the Company recorded $ 2.6 million and $ 2.5 million, respectively, of expense related to the 2019-2022 iPIP plans.

Distributions on the class B units are expected to be 50 % in cash and 50 % in shares of the Company’s common stock;

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and (b) if the principal remaining material asset in a plan is unsold SAFE shares, the Company may elect to distribute SAFE shares in lieu of cash and Company stock.

The following is a summary of the status of the Company’s equity-classified iPIP plans and changes during the six months ended June 30, 2021.

The following is a summary of the status of the Company’s equity-classified iPIP plans and changes during the nine months ended September 30, 2021.

iPIP Investment Pool

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Notes to Consolidated Financial Statements (Continued)

As of June 30, 2021, investments with an aggregate gross book value of $ 1.1 billion, including 26.7 million shares of SAFE common stock acquired by the Company, were attributable to the 2019-2020 Plan and investments with an aggregate gross book value of $ 109 million, including 0.3 million shares of SAFE common stock acquired by the Company, were attributable to the 2021-2022 Plan.

As of September 30, 2021, investments with an aggregate gross book value of $ 1.2 billion, including 26.7 million shares of SAFE common stock acquired by the Company, were attributable to the 2019-2020 Plan and investments with an aggregate gross book value of $ 163 million, including 1.0 million shares of SAFE common stock acquired by the Company, were attributable to the 2021-2022 Plan.

2013-2018 iPIP Plans —The remainder of the Company’s iPIP plans, as shown in the table below, are liability-classified awards and are remeasured each reporting period at fair value until the awards are settled.

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Settlement of the awards 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.

The following is a summary of the status of the Company’s liability-classified iPIP plans and changes during the six months ended June 30, 2021.

The following is a summary of the status of the Company’s liability-classified iPIP plans and changes during the nine months ended September 30, 2021.

iPIP Investment Pool

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Points at end of period

During the six months ended June 30, 2021 and 2020, the Company recorded $ 15.1 million and $ 16.8 million, respectively, of expense related to the 2013-2018 iPIP plans.

As of June 30, 2021, investments with an aggregate gross book value of $ 387 million were attributable to the 2013-2014 Plan, investments with an aggregate gross book value of $ 434 million were attributable to the 2015-2016 Plan and investments with an aggregate gross book value of $ 496 million, including 7.6 million shares of SAFE common stock acquired by the Company, were attributable to the 2017-2018 Plan.

During the six months ended June 30, 2021, the Company made distributions to participants in the 2015-2016 investment pool.

During the nine months ended September 30, 2021 and 2020, the Company recorded $ 15.0 million and $ 20.2 million, respectively, of expense related to the 2013-2018 iPIP plans.

As of September 30, 2021, investments with an aggregate gross book value of $ 387 million were attributable to the 2013-2014 Plan, investments with an aggregate gross book value of $ 396 million were attributable to the 2015-2016 Plan and investments with an aggregate gross book value of $ 480 million, including 7.6 million shares of SAFE common stock acquired by the Company, were attributable to the 2017-2018 Plan.

During the nine months ended September 30, 2021, the Company made distributions to participants in the 2015-2016 investment pool.

The iPIP participants received total distributions in the amount of $ 3.2 million as compensation, comprised of cash and 97,881 shares of the Company’s common stock with a fair value of $ 17.65 per share, which are fully-vested and issued under the 2009 LTIP (see below).

After deducting statutory minimum tax withholdings, a total of 57,920 shares of the Company’s common stock were issued.

During the six months ended June 30, 2020, the Company made distributions to participants in the 2015-2016 investment pool.

During the nine months ended September 30, 2020, the Company made distributions to participants in the 2015-2016 investment pool.

The iPIP participants received total distributions in the amount of $ 1.5 million as compensation, comprised of cash and 54,245 shares of the Company’s common stock with a fair value of $ 14.51 per share, which are fully-vested and issued under the 2009 LTIP.

After deducting statutory minimum tax withholdings, a total of 32,825 shares of the Company’s common stock were issued.

As of June 30, 2021 and December 31, 2020, the Company had accrued compensation costs relating to iPIP of $ 81.0 million and $ 69.1 million, respectively, which are included in “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets.

As of September 30, 2021 and December 31, 2020, the Company had accrued compensation costs relating to iPIP of $ 80.9 million and $ 69.1 million, respectively, which are included in “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets.

Long-Term Incentive Plan —The Company’s 2009 Long-Term Incentive Plan (the “2009 LTIP”) is designed to provide incentive compensation for officers, key employees, directors and advisors of the Company.

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Company’s shareholders approved an increase in the number of shares available for issuance under the 2009 LTIP from a maximum of 8.9 million to 9.9 million and extended the expiration date of the 2009 LTIP from May 2029 to May 2031.

As of June 30, 2021, an aggregate of 3.1 million shares remain available for issuance pursuant to future awards under the Company’s 2009 LTIP.

Restricted Stock Unit Activity —A summary of the Company’s stock-based compensation awards to certain employees in the form of long-term incentive awards for the six months ended June 30, 2021, is as follows (in thousands):

As of September 30, 2021, an aggregate of 3.1 million shares remain available for issuance pursuant to future awards under the Company’s 2009 LTIP.

Restricted Stock Unit Activity —A summary of the Company’s stock-based compensation awards to certain employees in the form of long-term incentive awards for the nine months ended September 30, 2021, is as follows (in thousands):

Nonvested at beginning of period

Nonvested at end of period

As of June 30, 2021, there was $ 6.7 million of total unrecognized compensation cost related to all unvested restricted stock units that are expected to be recognized over a weighted average remaining vesting/service period of 1.85 years.

Directors’ Awards —During the six months ended June 30, 2021, the Company granted 38,186 restricted shares of common stock to non-employee Directors at a fair value of $ 17.51 at the time of grant for their annual equity awards and also issued 1,159 common stock equivalents (“CSEs”) at a fair value of $ 18.24 per CSE in respect of dividend equivalents on outstanding CSEs.

As of June 30, 2021, a combined total of 129,019 CSEs and restricted shares of common stock granted to members of the Company’s Board of Directors remained outstanding under the Company’s Non-Employee Directors Deferral Plan, with an aggregate intrinsic value of $ 2.7 million.

401(k) Plan — The Company made contributions of $ 0.1 million and $ 0.1 million for the three months ended June 30, 2021 and 2020, respectively, and $ 0.7 million and $ 0.7 million for the six months ended June 30, 2021 and 2020, respectively, to the Company’s 401(k) Plan.

As of September 30, 2021, there was $ 6.8 million of total unrecognized compensation cost related to all unvested restricted stock units that are expected to be recognized over a weighted average remaining vesting/service period of 1.35 years.

Directors’ Awards —During the nine months ended September 30, 2021, the Company granted 38,186 restricted shares of common stock to non-employee Directors at a fair value of $ 17.51 at the time of grant for their annual equity awards and also issued 1,592 common stock equivalents (“CSEs”) at a fair value of $ 20.41 per CSE in respect of dividend equivalents on outstanding CSEs.

As of September 30, 2021, a combined total of 129,452 CSEs and restricted shares of common stock granted to members of the Company’s Board of Directors remained outstanding under the Company’s Non-Employee Directors Deferral Plan, with an aggregate intrinsic value of $ 3.2 million.

401(k) Plan — The Company made contributions of $ 0.1 million and $ 0.2 million for the three months ended September 30, 2021 and 2020, respectively, and $ 0.8 million and $ 1.0 million for the nine months ended September 30, 2021 and 2020, respectively, to the Company’s 401(k) Plan.

Note 16—Earnings Per Share

The following table presents a reconciliation of income from operations used in the basic and diluted earnings per share (“EPS”) calculations ($ in thousands, except for per share data):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Net income (loss)

Net income attributable to noncontrolling interests

Preferred dividends

Net loss allocable to common shareholders for basic and diluted earnings per common share

Net income (loss) allocable to common shareholders for basic and diluted earnings per common share

Notes to Consolidated Financial Statements (Continued)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Earnings allocable to common shares:

Numerator for basic and diluted earnings per share:

Net loss attributable to iStar Inc.

Numerator for basic earnings per share:

Net income (loss) attributable to iStar Inc.

and allocable to common shareholders

Numerator for diluted earnings per share:

Net income (loss) allocable to common shareholders

Denominator for basic and diluted earnings per share:

Weighted average common shares outstanding for basic earnings per common share

Effect of assumed shares issued under treasury stock method for restricted stock units

Effect of convertible debt

Weighted average common shares outstanding for basic and diluted earnings per common share

Basic and diluted earnings per common share:

Net loss allocable to common shareholders

(1) For the three and six months ended June 30, 2021, the effect of the Company’s restricted stock awards were anti-dilutive.

For the three and six months ended June 30, 2021, 4,700,805 shares and 3,797,296 shares, respectively, of the 3.125 % Convertible Notes (refer to Note 11) were anti-dilutive based upon the conversion price for such period.

For the three and six months ended June 30, 2020, no shares of common stock would have been issuable upon conversion of the 3.125 % Convertible Notes, and therefore the 3.125 % Convertible Notes had no effect on diluted EPS for such periods.

Net income (loss) allocable to common shareholders

Diluted earnings per common share:

Net income (loss) allocable to common shareholders

(1) For the three and nine months ended September 30, 2020, no shares of common stock would have been issuable upon conversion of the 3.125 % Convertible Notes, and therefore the 3.125 % Convertible Notes had no effect on diluted EPS for such periods.

Note 17—Fair Values

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Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Notes to Consolidated Financial Statements (Continued)

Certain of the Company’s assets and liabilities are recorded at fair value either on a recurring or non-recurring basis.

2 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

As of June 30, 2021

As of September 30, 2021

Recurring basis:

2 unchanged sentences

Non-recurring basis:

Impaired real estate available and held for sale (2)

Other investments (3)

7 unchanged sentences

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) During the six months ended June 30, 2021, the Company identified an observable price change in an equity security held by the Company as evidenced by an orderly private issuance of similar securities by the same issuer and, as such, classified such observable price change as Level 2.

(2) The Company recorded a $ 0.4 million impairment on an operating property held for sale with an estimated fair value of $ 1.7 million.

The estimated fair value is based on an executed sales contract with a third party.

(3) During the nine months ended September 30, 2021, the Company identified an observable price change in an equity security held by the Company as evidenced by an orderly private issuance of similar securities by the same issuer and, as such, classified such observable price change as Level 2.

(4) The Company recorded a $ 1.3 million impairment on a land and development asset with an estimated fair value of $ 6.1 million.

The estimated fair value is based on future cash flows expected to be received.

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 six months ended June 30, 2021 and 2020 ($ in thousands):

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 nine months ended September 30, 2021 and 2020 ($ in thousands):

Beginning balance

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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 June 30, 2021

As of September 30, 2021

As of December 31, 2020

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The fair value of the Company’s cash and cash equivalents and restricted cash are classified as Level 1 within the fair value hierarchy.

(3) As of June 30, 2021 and December 31, 2020, the fair value of the Company’s 3.125 % Senior Convertible Notes was $ 435.9 million and $ 338.8 million, respectively.

(3) As of September 30, 2021 and December 31, 2020, the fair value of the Company’s 3.125 % Senior Convertible Notes was $ 527.2 million and $ 338.8 million, respectively.

Note 18—Segment Reporting

8 unchanged sentences

The Company’s segment information is as follows ($ in thousands):

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Operating lease income

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Other significant items:

Recovery of loan losses

Recovery of losses on net investment in leases

Provision for (recovery of) loan losses

Provision for losses on net investment in leases

Impairment of assets

Depreciation and amortization

Capitalized expenditures

Three Months Ended June 30, 2020

Operating lease income

Notes to Consolidated Financial Statements (Continued)

Three Months Ended September 30, 2020

Operating lease income

Interest income

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Other significant non-cash items:

Provision for loan losses

Provision for (recovery of) loan losses

Provision for losses on net investment in leases

Impairment of assets

Depreciation and amortization

Capitalized expenditures

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Operating lease income

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Capitalized expenditures

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Operating lease income

14 unchanged sentences

Provision for losses on net investment in leases

Impairment of assets

Notes to Consolidated Financial Statements (Continued)

Impairment of assets

Depreciation and amortization

Capitalized expenditures

As of June 30, 2021

As of September 30, 2021

Real estate, net

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This caption also includes the Company’s joint venture investments and strategic investments that are not included in the other reportable segments above.

(2) General and administrative excludes stock-based compensation expense of $ 14.8 million and $ 20.3 million for the three and six months ended June 30, 2021, respectively, and $ 4.7 million and $ 21.0 million for the three and six months ended June 30, 2020, respectively.

(2) General and administrative excludes stock-based compensation expense of $ 3.0 million and $ 23.3 million for the three and nine months ended September 30, 2021, respectively, and $ 5.7 million and $ 26.7 million for the three and nine months ended September 30, 2020, respectively.

(3) The following is a reconciliation of segment profit to net income (loss) ($ in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Segment profit

Recovery of (provision for) loan losses

Recovery of (provision for) losses on net investment in leases

(Provision for) recovery of losses on net investment in leases

Impairment of assets

1 unchanged sentence

Depreciation and amortization

Income tax expense

Income tax benefit (expense)

Loss on early extinguishment of debt, net

Net income (loss)

Notes to Consolidated Financial Statements (Continued)

Note 19—Subsequent Events

Subsequent to the end of the quarter, the Company obtained the consents of holders of its outstanding 4.75 % senior notes due 2024, 4.25 % senior notes due 2025 and 5.50 % senior notes due 2026 to certain amendments to the indentures governing the notes intended to align the indentures with the potential sale of the Company's net lease assets.

The Company paid holders consent fees ranging from 0.75 % to 1.00 % of the principal amount of consenting notes, depending on the relevant series.

The Company previously announced on July 6, 2021 that it intended to explore market interest for possible sales of its net lease assets.

That process remains ongoing.

There can be no assurance as to whether the Company will sell some, all or none of its net lease assets, or as to the timing and terms of any sales.

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-Q

Item 1. Financial Statements