What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-04 · 357 added, 215 removed, 846 unchanged (40% of the section changed)

8 unchanged sentences

Real estate and other assets available and held for sale and classified as discontinued operations (2)

Net investment in leases ($ 281 and $ 0 of allowances as of March 31, 2022 and December 31, 2021, respectively)

Net investment in leases ($ 380 and $ 0 of allowances as of June 30, 2022 and December 31, 2021, respectively)

Land and development, net

Loans receivable and other lending investments, net ($ 4,932 and $ 4,769 of allowances as of March 31, 2022 and December 31, 2021, respectively)

Loans receivable and other lending investments, net ($ 3,033 and $ 4,769 of allowances as of June 30, 2022 and December 31, 2021, respectively)

Loans receivable held for sale

13 unchanged sentences

Preferred Stock Series D, G and I, liquidation preference $ 25.00 per share

Common Stock, $ 0.001 par value, 200,000 shares authorized, 69,096 and 68,870 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Common Stock, $ 0.001 par value, 200,000 shares authorized, 83,303 and 68,870 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

12 unchanged sentences

(In thousands, except per share data)

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Operating lease income

22 unchanged sentences

Net income from discontinued operations (1)

Net loss from continuing operations attributable to noncontrolling interests

Net income (loss)

Net (income) loss from continuing operations attributable to noncontrolling interests

Net (income) from discontinued operations attributable to noncontrolling interests

Net income attributable to iStar Inc.

Net income (loss) attributable to iStar Inc.

Preferred dividends

13 unchanged sentences

(In thousands)

For the Three Months Ended March 31,

Other comprehensive income (loss):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Net income (loss)

Other comprehensive income:

Reclassification of losses on cash flow hedges into earnings upon realization (1)

Unrealized losses on available-for-sale securities

Unrealized gains on cash flow hedges

Unrealized gains (losses) on available-for-sale securities

Unrealized gains (losses) on cash flow hedges

Other comprehensive income

Comprehensive income

Comprehensive income (loss)

Comprehensive (income) attributable to noncontrolling interests (2)

Comprehensive income attributable to iStar Inc.

(1) Reclassified to “Net income from discontinued operations” in the Company’s consolidated statements of operations for the three months ended March 31, 2021 is $ 2,104 .

Reclassified to “Earnings from equity method investments” in the Company’s consolidated statements of operations for the three months ended March 31, 2022 and 2021 are $ 621 and $ 234 , respectively.

(2) For the three months ended March 31, 2022 and 2021, $ 179.1 million and $ 5.0 million, respectively, of comprehensive income attributable to noncontrolling interests was from discontinued operations .

Comprehensive income (loss) attributable to iStar Inc.

(1) Reclassified to “Net income from discontinued operations” in the Company’s consolidated statements of operations for the three and six months ended June 30, 2021 is $ 2,029 and $ 4,133 , respectively.

Reclassified to “Earnings from equity method investments” in the Company’s consolidated statements of operations for the three months ended June 30, 2022 and 2021 are $ 580 and $ 457 respectively.

Reclassified to “Earnings from equity method investments” in the Company’s consolidated statements of operations for the six months ended June 30, 2022 and 2021 are $ 1,201 and $ 691 , respectively.

(2) For the three months ended June 30, 2021, $ 2.8 million of comprehensive income attributable to noncontrolling interests was from discontinued operations.

For the six months ended June 30, 2022 and 2021, $ 179.1 million and $ 7.8 million, respectively, of comprehensive income attributable to noncontrolling interests was from discontinued operations .

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

5 unchanged sentences

Income (Loss)

Balance as of March 31, 2022

( 1,625,086 )

Dividends declared—preferred

Dividends declared—common ($ 0.125 per share)

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

Issuance of common stock in connection with 3.125 % convertible notes

Net income (loss)

Change in accumulated other comprehensive income (loss)

Distributions to noncontrolling interests

Balance as of June 30, 2022

( 1,774,069 )

Balance as of March 31, 2021

( 2,309,763 )

Dividends declared—preferred

Dividends declared—common ($ 0.125 per share)

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

Net income (loss)

Change in accumulated other comprehensive income (loss)

Repurchase of stock

Contributions from noncontrolling interests

Distributions to noncontrolling interests

Balance as of June 30, 2021

( 2,338,454 )

Shareholders' Equity

Comprehensive

Noncontrolling

Income (Loss)

Balance as of December 31, 2021

3 unchanged sentences

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

Issuance of common stock in connection with 3.125 % convertible notes

Change in accumulated other comprehensive income (loss)

1 unchanged sentence

Distributions to noncontrolling interests

Balance as of March 31, 2022

Balance as of June 30, 2022

( 1,774,069 )

5 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 March 31, 2021

Balance as of June 30, 2021

( 2,338,454 )

4 unchanged sentences

(In thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities:

22 unchanged sentences

Changes in accounts payable, accrued expenses and other liabilities

Cash flows used in operating activities

Cash flows provided by (used in) operating activities

Cash flows from investing activities:

8 unchanged sentences

Net proceeds from sales of net investment in leases

Net proceeds from net investment in leases

Distributions from other investments

5 unchanged sentences

Repayments and repurchases of debt obligations

( 1,037,079 )

Purchase of marketable securities in connection with the defeasance of mortgage notes payable

13 unchanged sentences

Cash, cash equivalents and restricted cash at end of period

For the Three Months Ended March 31,

For the Six Months Ended June 30,

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

4 unchanged sentences

Fundings and (repayments) of loan receivables and loan participations, net

Accrued repurchase of stock

Distributions to noncontrolling interests

28 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 March 31, 2022 and December 31,

The Company did not have any unfunded commitments related to consolidated VIEs as of June 30, 2022 and December 31,

Notes to Consolidated Financial Statements (Continued)

The following table presents the assets and liabilities of the Company’s consolidated VIEs as of March 31, 2022 and December 31, 2021 ($ in thousands):

March 31, 2022

The following table presents the assets and liabilities of the Company’s consolidated VIEs as of June 30, 2022 and December 31, 2021 ($ in thousands):

June 30, 2022

December 31, 2021

5 unchanged sentences

Cash and cash equivalents

Accrued interest and operating lease income receivable, net

Deferred operating lease income receivable, net

4 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 March 31, 2022, the Company’s maximum exposure to loss from these investments does not exceed the sum of the $ 58.7 million carrying value of the investments, which are classified in “Other investments” on the Company’s consolidated balance sheets, and $ 2.3 million of related unfunded commitments.

As of June 30, 2022, the Company’s maximum exposure to loss from these investments does not exceed the sum of the $ 57.5 million carrying value of the investments, which are classified in “Other investments” on the Company’s consolidated balance sheets, and $ 2.2 million of related unfunded commitments.

Note 3—Summary of Significant Accounting Policies

8 unchanged sentences

At the time of closing, the portfolio was encumbered by an aggregate of $ 702 million of mortgage indebtedness, including indebtedness from equity method investments, which was repaid with proceeds from the sale.

After repayment of the mortgage indebtedness and prepayment penalties, a senior term loan secured by certain of the assets (refer to Note 10), payments to terminate derivative contracts, payments to joint venture partners, and payments of promotes, transaction expenses and amounts due under employee incentive plans, the Company retained net cash proceeds

In addition, as part of the transaction, the buyer sold three of the properties to Safehold

Notes to Consolidated Financial Statements (Continued)

of $ 1.2 billion from the transaction.

In addition, as part of the transaction, the buyer sold three of the properties to Safehold Inc.

(“SAFE”) for $ 122.0 million and entered into three Ground Leases with SAFE.

6 unchanged sentences

Net Lease Venture was part of the Net Lease Sale.

As of March 31, 2022, $ 316.6 million of “Noncontrolling interests” was attributable to the Net Lease Venture and represented proceeds from the Net Lease Sale that were not yet distributed to the Company’s partners in the venture as of March 31, 2022.

As of June 30, 2022, $ 3.2 million of “Noncontrolling interests” was attributable to the Net Lease Venture and represented proceeds from the Net Lease Sale that were not yet distributed to the Company’s partners in the venture as of June 30, 2022.

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

The Company was responsible for managing the venture in exchange for a management fee and incentive fee.

During the three months ended March 31, 2022 and 2021, the Company recorded $ 0.4 million and $ 0.4 million, respectively, of management fees from Net Lease Venture II in “Net income from discontinued operations” in the Company’s consolidated statements of operations.

During the six months ended June 30, 2022, the Company recorded $ 0.4 million of management fees from Net Lease Venture II in “Net income from discontinued operations” in the Company’s consolidated statements of operations.

During the three and six months ended June 30, 2021, the Company recorded $ 0.4 million and $ 0.8 million, respectively, of management fees from Net Lease Venture II in “Net income from discontinued operations” in the Company’s consolidated statements of operations.

Net Lease Venture II was part of the Net Lease Sale.

As of March 31, 2022, $ 216.3 million of “Real estate and other assets available and held for sale and classified as discontinued operations” was attributable to the Net Lease Venture II and represented proceeds from the Net Lease Sale that were not yet distributed to the Company as of March 31, 2022.

Discontinued Operations — The Company’s net lease assets and liabilities included in the Net Lease Sale and the Company’s other two net lease assets are classified as “Real estate and other assets available and held for sale and classified as discontinued operations” and “Liabilities associated with real estate held for sale and classified as discontinued operations,” respectively, on the Company’s consolidated balance sheets as of December 31, 2021.

For the three months ended March 31, 2022 and 2021, the operations of such assets are classified in “Net income from discontinued operations” in the Company’s consolidated statements of operations.

As of June 30, 2022, $ 2.0 million of “Real estate and other assets available and held for sale and classified as discontinued operations” was attributable to the Net Lease Venture II and represented proceeds from the Net Lease Sale that were not yet distributed to the Company as of June 30, 2022.

Discontinued Operations — The Company’s net lease assets and liabilities associated with the Net Lease Sale and the Company’s other two net lease assets are classified as “Real estate and other assets available and held for sale and classified as discontinued operations” and “Liabilities associated with real estate held for sale and classified as discontinued operations,” respectively, on the Company’s consolidated balance sheets as of June 30, 2022 and December 31, 2021.

For the three months ended June 30, 2021 and the six months ended June 30, 2022 and 2021, the operations of such assets are classified in “Net income from discontinued operations” in the Company’s consolidated statements of operations.

Notes to Consolidated Financial Statements (Continued)

The following table presents the Company’s consolidated assets and liabilities recorded in “Real estate and other assets available and held for sale and classified as discontinued operations” and “Liabilities associated with real estate held for sale and classified as discontinued operations,” respectively, on the Company’s consolidated balance sheets as of March 31, 2022 and December 31, 2021 ($ in thousands).

The following table presents the Company’s consolidated assets and liabilities recorded in “Real estate and other assets available and held for sale and classified as discontinued operations” and “Liabilities associated with real estate held for sale and classified as discontinued operations,” respectively, on the Company’s consolidated balance sheets as of June 30, 2022 and December 31, 2021 ($ in thousands).

Real estate, at cost

14 unchanged sentences

Notes to Consolidated Financial Statements (Continued)

The transaction described above involving the Company's net lease business qualified for discontinued operations and the following table summarizes net income from discontinued operations for the three months ended March 31, 2022 and 2021 ($ in thousands):

For the Three Months Ended March 31,

The transaction described above involving the Company's net lease business qualified for discontinued operations and the following table summarizes net income from discontinued operations for the three and six months ended June 30, 2022 and 2021 ($ in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Operating lease income

20 unchanged sentences

Net income from discontinued operations attributable to iStar Inc.

(1) For the three months ended March 31, 2022, the Company recorded $ 1.3 million of “Interest expense” in its consolidated statements of operations from its Ground Leases with SAFE.

For the three months ended March 31, 2021, the Company recorded $ 2.1 million and $ 0.4 million, respectively, of “Interest expense” and “Depreciation and amortization” in its consolidated statements of operations from its Ground Leases with SAFE.

(2) Represents the reversal of other expenses recognized in connection with the settlement of interest rate hedges during the three months ended March 31, 2022.

The following table presents cash flows provided by operating activities and cash flows used in investing activities from discontinued operations for the three months ended March 31, 2022 and 2021 ($ in thousands).

For the Three Months Ended March 31,

(1) For the six months ended June 30, 2022, the Company recorded $ 1.3 million of “Interest expense” in its consolidated statements of operations from its Ground Leases with SAFE.

For the three and six months ended June 30, 2021, the Company recorded $ 2.1 million and $ 4.1 million, respectively, of “Interest expense” and $ 0.4 million and $ 0.7 million, respectively, of “Depreciation and amortization” in its consolidated statements of operations from its Ground Leases with SAFE.

(2) During both the six months ended June 30, 2022 and 2021, the Company sold assets and recognized aggregate impairments of $ 1.5 million in connection with the sales.

(3) Represents the reversal of other expenses recognized in connection with the settlement of interest rate hedges during the six months ended June 30, 2022.

The following table presents cash flows provided by operating activities and cash flows used in investing activities from discontinued operations for the six months ended June 30, 2022 and 2021 ($ in thousands):

For the Six Months Ended June 30,

Cash flows provided by operating activities

3 unchanged sentences

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

As of March 31, 2022

Land, at cost

Buildings and improvements, at cost

accumulated depreciation

Real estate, net

Real estate available and held for sale (1)

Total real estate

As of December 31, 2021

June 30, 2022

December 31, 2021

Land, at cost

4 unchanged sentences

Total real estate

(1) As of March 31, 2022 and December 31, 2021, the Company had $ 0.3 million and $ 0.3 million, respectively, of residential condominiums available for sale in its operating properties portfolio.

(1) As of June 30, 2022 and December 31, 2021, the Company had $ 2.0 million and $ 0.3 million, respectively, of residential homes/condominiums available for sale in its operating properties portfolio.

Dispositions— Refer to Note 3 - Net Lease Sale and Discontinued Operations.

Impairments— During the three and six months ended June 30, 2022, the Company recognized an impairment of $ 1.8 million on an operating property based on the expected cash flows to be received.

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 $ 0.7 million and $ 0.7 million for the three months ended March 31, 2022 and 2021, respectively .

Tenant expense reimbursements were $ 0.7 million and $ 1.4 million for the three and six months ended June 30, 2022, respectively, and $ 0.8 million and $ 1.4 million for the three and six months ended June 30, 2021, respectively .

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

Allowance for Doubtful Accounts— As of March 31, 2022 and December 31, 2021, the allowance for doubtful accounts related to real estate tenant receivables was $ 0.1 million and $ 0.1 million, respectively.

Allowance for Doubtful Accounts— As of June 30, 2022 and December 31, 2021, the allowance for doubtful accounts related to real estate tenant receivables was $ 0.1 million and $ 0.1 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 March 31, 2022, are as follows by year ($ in thousands):

2022 (remaining nine 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 June 30, 2022, are as follows by year ($ in thousands):

2022 (remaining six months)

Note 5—Net Investment in Leases

1 unchanged sentence

Each Ground Lease also provides for a leasehold improvement allowance up to a maximum of $ 83.0 million.

The Company also concurrently entered into an agreement pursuant to which SAFE would

Notes to Consolidated Financial Statements (Continued)

acquire the Ground Leases from the Company.

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

If certain construction conditions are not met within a specified time period, SAFE will have no obligation to acquire the Ground Leases or fund the leasehold improvement allowances.

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.

For the three months ended March 31, 2022, the Company recognized $ 0.2 million of non-cash interest income in "Interest income from sales-type leases"

in the Company’s consolidated statements of operations.

The Company classified one of the Ground Leases as a sales-type lease and it was recorded in “Net investment in leases” on the

Notes to Consolidated Financial Statements (Continued)

Company’s consolidated balance sheet at the time of acquisition.

In January 2022, the Company sold the Ground Lease to an investment fund in which the Company owns a 53 % noncontrolling interest (refer to Note 8 – Ground Lease Plus Fund).

3 unchanged sentences

In January 2022, the Company entered into a commitment to acquire land for $ 36.0 million and simultaneously structured and entered into a Ground Lease as part of the Ground Lease tenant’s recapitalization of an existing multifamily property.

As of March 31, 2022, the Company had funded $ 28.2 million of this commitment.

As of June 30, 2022, the Company had funded $ 32.0 million of this commitment.

SAFE (refer to Note 8) waived its right of first refusal on this investment but entered into an agreement with the Company pursuant to which SAFE would acquire the land and related Ground Lease when certain construction related conditions are met.

The Company’s net investment in leases were comprised of the following as of March 31, 2022 and December 31, 2021 ($ in thousands):

March 31, 2022

SAFE acquired the Ground Lease from the Company in July 2022.

The Company’s net investment in leases were comprised of the following as of June 30, 2022 and December 31, 2021 ($ in thousands):

June 30, 2022

December 31, 2021

4 unchanged sentences

Net investment in leases (1)

(1) As of March 31, 2022 and December 31, 2021, the Company’s net investment in lease was current in its payment status and performing in accordance with the terms of the lease.

As of March 31, 2022, the risk rating on the Company’s net investment in leases was 1.0 .

Dispositions— During the three months ended March 31, 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 which is recorded in “Net income from discontinued operations” in the Company’s consolidated statements of operations.

Future Minimum Lease Payments under Sales-type Leases —Future minimum lease payments to be collected under sales-type leases, excluding lease payments that are not fixed and determinable, in effect as of March 31, 2022, are as follows by year ($ in thousands):

2022 (remaining nine months)

(1) As of June 30, 2022 and December 31, 2021, the Company’s net investment in lease was current in its payment status and performing in accordance with the terms of the lease.

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, 2022, are as follows by year ($ in thousands):

2022 (remaining six 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 months ended March 31, 2022 and 2021 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 six months ended June 30, 2022 and 2021 were as follows ($ in thousands):

Three Months Ended

March 31, 2022

March 31, 2021

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Allowance for losses on net investment in leases at beginning of period (1)

2 unchanged sentences

(1) All 2021 amounts were for net investment in leases included in the Net Lease Sale (refer to Note 3 – Net Lease Sale and Discontinued Operations).

(2) During the three months ended March 31, 2022, the Company recorded a provision for losses on net investment in leases of $ 0.3 million due primarily to the macroeconomic forecast on commercial real estate markets.

During the three months ended March 31, 2021, the Company recorded a recovery of losses on net investment in leases of $ 1.6 million (which is included in “Net income from discontinued operations’) due primarily to an improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

(2) During the three and six months ended June 30, 2022, the Company recorded a provision for losses on net investment in leases of $ 0.1 million and $ 0.4 million, respectively, due primarily to the macroeconomic forecast on commercial real estate markets.

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 (both of which are included in “Net income from discontinued operations”), respectively, due primarily to an improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

Note 6—Land and Development

3 unchanged sentences

Total land and development, net

Dispositions— During the three months ended March 31, 2022 and 2021, the Company sold land parcels and residential lots and units and recognized land development revenue of $ 14.9 million and $ 32.2 million, respectively.

During the three months ended March 31, 2022 and 2021, the Company recognized land development cost of sales of $ 14.5 million and $ 29.3 million, respectively, from its land and development portfolio.

Dispositions— During the six months ended June 30, 2022 and 2021, the Company sold land parcels and residential lots and units and recognized land development revenue of $ 39.3 million and $ 64.6 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company recognized land development cost of sales of $ 38.6 million and $ 60.1 million, respectively, from its land and development portfolio.

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):

March 31, 2022

June 30, 2022

December 31, 2021

13 unchanged sentences

Total loans receivable and other lending investments, net

(1) As of March 31, 2022, 100 % 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 March 31, 2022 and 2021 ($ in thousands):

(1) As of June 30, 2022, 100 % 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, 2022 and 2021 ($ in thousands):

General Allowance

Maturity Debt

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Allowance for loan losses at beginning of period

Provision for (recovery of) loan losses (1)

Charge-offs (1)

Allowance for loan losses at end of period

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Allowance for loan losses at beginning of period

1 unchanged sentence

Allowance for loan losses at end of period

(1) During the three months ended March 31, 2022 and 2021, the Company recorded a provision for (recovery of) loan losses of $ 0.1 million and ( $ 3.6 ) million, respectively, in its consolidated statements of operations.

The provision in 2022 was due primarily to accretion on the Company’s held-to-maturity debt security.

The recovery in 2021 was d ue primarily to the repayment of loans during the three months ended March 31, 2021 and an improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

(1) During the three months ended June 30, 2022 and 2021, the Company recorded a provision for (recovery of) loan losses of $ 22.6 million and ( $ 2.2 ) million, respectively, in its consolidated statements of operations.

The provision in 2022 was due primarily to a $ 25.0 million charge-off on the Company’s held-to-maturity debt security, which is now recorded at its expected repayment proceeds.

The recovery in 2021 was d ue 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 .”

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 March 31, 2022 and December 31, 2021 ($ in thousands):

Changes in the Company’s allowance for loan losses were as follows for the six months ended June 30, 2022 and 2021 ($ in thousands):

General Allowance

Maturity Debt

Six Months Ended June 30, 2022

Allowance for loan losses at beginning of period

Provision for (recovery of) loan losses (1)

Charge-offs (1)

Allowance for loan losses at end of period

Six Months Ended June 30, 2021

Allowance for loan losses at beginning of period

Recovery of loan losses (1)

Allowance for loan losses at end of period

(1) During the six months ended June 30, 2022 and 2021, the Company recorded a provision for (recovery of) loan losses of $ 22.7 million and ($ 5.8 ) million, respectively, in its consolidated statements of operations.

The provision in 2022 was due primarily to a $ 25.0 million charge-off on the Company’s held-to-maturity debt security, which is now recorded at its expected repayment proceeds.

The recovery in 2021 was d ue 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 Company’s investment in loans and other lending investments and the associated allowance for loan losses were as follows as of June 30, 2022 and December 31, 2021 ($ in thousands):

Evaluated for

1 unchanged sentence

Impairment (1)

As of March 31, 2022

As of June 30, 2022

Construction loans (2)

7 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 March 31, 2022 and December 31, 2021, respectively.

(1) The carrying value of this loan includes an amortized exit fee of $ 0.8 million and $ 0.8 million as of June 30, 2022 and December 31, 2021, 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 includes unamortized discounts, premiums, deferred fees and costs totaling net discounts of $ 0.2 million and $ 0.2 million as of March 31, 2022 and December 31, 2021, respectively.

(2) The carrying value of these loans includes unamortized discounts, premiums, deferred fees and costs totaling net premiums (discounts) of $ 0.3 million and ($ 0.2 ) million as of June 30, 2022 and December 31, 2021, respectively.

(3) Available-for-sale debt securities are evaluated for impairment under ASC 326-30 – Financial Instruments-Credit Losses .

1 unchanged sentence

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

The Company designates loans as non-performing at such time as:

The Company designates loans as non-performing at such

Notes to Consolidated Financial Statements (Continued)

(1) interest payments become 90 days delinquent;

2 unchanged sentences

All non-performing loans are placed on non-accrual status and income is only recognized in certain cases upon actual cash receipt.

Notes to Consolidated Financial Statements (Continued)

The Company’s amortized cost basis in performing senior mortgages, corporate/partnership loans and subordinate mortgages, presented by year of origination and by credit quality, as indicated by risk rating, as of March 31, 2022 were as follows ($ in thousands):

Year of Origination

2 unchanged sentences

Subordinate mortgages

(1) As of March 31, 2022, excludes $ 59.6 million for one loan on non-accrual status.

(1) As of June 30, 2022, excludes $ 60.3 million for one loan on non-accrual status.

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

As of March 31, 2022

As of June 30, 2022

Senior mortgages

6 unchanged sentences

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

As of March 31, 2022

As of June 30, 2022

As of December 31, 2021

1 unchanged sentence

Senior mortgages (1)

(1) The Company has one non-accrual loan as of March 31, 2022 and December 31, 2021 that is considered impaired and included in the table above.

The Company did no t record any interest income on impaired loans for the three months ended March 31, 2022 and 2021.

(1) The Company has one non-accrual loan as of June 30, 2022 and December 31, 2021 that is considered impaired and included in the table above.

The Company did no t record any interest income on impaired loans for the three and six months ended June 30, 2022 and 2021.

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.

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

As of March 31, 2022

As of June 30, 2022

Available-for-Sale Securities

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Debt securities

(1) During the three months ended June 30, 2022, the Company received a $ 40.0 million repayment, reduced the maturity date by six months to December 30, 2022 and recorded a $ 25.0 million provision in ‘Provision for (recovery of) loan losses” in its consolidated statements of operations on its debt security.

Notes to Consolidated Financial Statements (Continued)

As of March 31, 2022, the contractual maturities of the Company’s securities were as follows ($ in thousands):

As of June 30, 2022, the contractual maturities of the Company’s securities were as follows ($ in thousands):

Held-to-Maturity Debt Securities

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Earnings (Losses) from

Carrying Value

Equity Method Investments

For the Three Months Ended

For the Six Months Ended

Real estate equity investments

4 unchanged sentences

Other strategic investments (2)

(1) As of March 31, 2022, the Company owned 40.1 million shares of SAFE common stock which, based on the closing price of $ 55.45 on March 31, 2022, had a market value of $ 2.2 billion.

(1) As of June 30, 2022, the Company owned 40.1 million shares of SAFE common stock which, based on the closing price of $ 35.37 on June 30, 2022, had a market value of $ 1.4 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 March 31, 2022 and 2021, equity in earnings includes dilution gains of $ 0.9 million and $ 0.5 million, respectively, resulting from SAFE equity offerings.

(2) During the three months ended March 31, 2021, 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.

For the six months ended June 30, 2022 and 2021, equity in earnings includes dilution gains of $ 0.9 million and $ 0.5 million, respectively, resulting from SAFE equity offerings.

(2) During the six months ended June 30, 2021, 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 – Investments – Equity Securities, the Company remeasured its equity investment at fair value and recognized a mark-to-market gain of $ 5.1 million in “Other income” in the Company’s consolidated statements of operations.

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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”).

During the three months ended March 31, 2022, the Company purchased 0.2 million shares of SAFE's common stock for $ 10.5 million, for an average cost of $ 66.83 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.

During the six months ended June 30, 2022, the Company purchased 0.2 million shares of SAFE's common stock for $ 10.5 million, for an average cost of $ 66.83 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.

In March 2022, the Company acquired 3,240,000 shares of SAFE’s common stock in a private placement for $ 191.2 million.

As of March 31, 2022, the Company owned approximately 64.7 % of SAFE’s common stock outstanding.

As of June 30, 2022, the Company owned approximately 64.7 % 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 % ;

● subjects the Company to certain standstill provisions;

● provides the Company certain preemptive rights.

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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 March 31, 2022 and 2021, the Company recorded $ 4.5 million and $ 3.5 million, respectively, of management fees pursuant to its management agreement with SAFE.

During the three months ended June 30, 2022 and 2021, the Company recorded $ 5.2 million and $ 3.5 million, respectively, of management fees pursuant to its management agreement with SAFE.

During the six months ended June 30, 2022 and 2021, the Company recorded $ 9.7 million and $ 7.0 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.

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This historical election is not a waiver of reimbursement for similar expenses in future periods and the Company has started to elect to seek, and may further seek in the future, reimbursement of such additional expenses that it has not previously sought, including, without limitation, rent, overhead and certain personnel costs.

During the three months ended March 31, 2022 and 2021, the Company recognized $ 3.1 million and $ 1.9 million, respectively, of expense reimbursements pursuant to its management agreement with SAFE.

During the three months ended June 30, 2022 and 2021, the Company recognized $ 3.1 million and $ 1.9 million, respectively, of expense reimbursements pursuant to its management agreement with SAFE.

During the six months ended June 30, 2022 and 2021, the Company recognized $ 6.3 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.

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:

Notes to Consolidated Financial Statements (Continued)

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

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

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

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

In June 2020, Net Lease Venture II (see Note 3) acquired the leasehold interest in an office laboratory property in Honolulu, HI and simultaneously entered into a 99-year Ground Lease with SAFE.

In November 2021, the Company acquired the property from Net Lease Venture II.

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The purchase price to be paid is $ 33.3 million, plus an amount necessary for the Company to achieve the greater of a 1.25 x multiple and a 12 % return on its investment.

In addition, the Ground Lease provides for a leasehold improvement allowance up to a maximum of $ 51.8 million, which obligation would be assumed by SAFE upon acquisition.

If certain construction conditions are not met within a specified time period, SAFE will have no obligation to acquire the Ground Lease or fund the leasehold improvement allowance.

There can be no assurance that the conditions to

In addition, the Ground Lease provides for a leasehold

Notes to Consolidated Financial Statements (Continued)

closing will be satisfied and that SAFE will acquire the land and Ground Lease from the Ground Lease Plus Fund (refer to Ground Lease Plus Fund below).

improvement allowance up to a maximum of $ 51.8 million, which obligation would be assumed by SAFE upon acquisition.

If certain construction conditions are not met within a specified time period, SAFE will have no obligation to acquire the Ground Lease or fund the leasehold improvement allowance.

There can be no assurance that the conditions to closing will be satisfied and that SAFE will acquire the land and Ground Lease from the Ground Lease Plus Fund (refer to Ground Lease Plus Fund below).

In December 2021, the Company’s partner in a venture recapitalized an existing multifamily property, which included a Ground Lease provided by SAFE.

As part of the recapitalization, the Company’s partner acquired its 50 % equity interest in the entity and the mezzanine loan held by the Company was repaid in full.

During the three months ended March 31, 2021, the Company recorded $ 0.6 million of interest income on the mezzanine loan.

During the three and six months ended June 30, 2021, the Company recorded $ 0.6 million and $ 1.1 million, respectively, of interest income on the mezzanine loan.

In January 2022, the Company and SAFE entered into an agreement pursuant to which SAFE would acquire land and a related Ground Lease originated by the Company when certain construction related conditions are met.

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In February 2022, the Loan Fund (refer to Other Strategic Investments below) committed to provide a $ 130.0 million loan to the ground lessee of a Ground Lease originated at SAFE.

The loan is for the Ground Lease tenant’s recapitalization of a life science office property.

The loan is for the Ground Lease tenant’s recapitalization of a life science property.

The Loan Fund received $ 9.0 million of consideration from SAFE in connection with this transaction.

In April 2022, the Company sold a Ground Lease on a hotel property to SAFE for $ 9.0 million.

The Company previously owned a 50 % equity interest in a venture that owned the hotel property.

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

In June 2022, the Loan Fund (refer to Other Strategic Investments below) committed to provide a $ 105.0 million loan to the ground lessee of a Ground Lease originated at SAFE.

The loan is for the Ground Lease tenant’s recapitalization of a mixed-use property.

The Loan Fund received $ 5.0 million of consideration from SAFE in connection with this transaction.

Notes to Consolidated Financial Statements (Continued)

Ground Lease Plus Fund —The Company formed and manages an investment fund that targets the origination and acquisition of Ground Leases for commercial real estate projects that are in a pre-development phase (the “Ground Lease Plus Fund”).

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In addition, the Ground Lease Plus Fund has first look rights through December 2023 on qualifying pre-development projects that SAFE has elected to not originate.

In January 2022, the Company sold two Ground Leases to the Ground Lease Plus Fund (refer to Note 5) and recognized an aggregate $ 0.5 million of gains in “Income from sales of real estate” on the sale.

The Company and SAFE entered into an agreement pursuant to which SAFE would acquire the land properties and related Ground Leases from the Ground Lease Plus Fund when certain construction related conditions are met by a specified time period (refer to “Safehold Inc.” above).

In November 2021, the Company acquired land for $ 33.3 million and simultaneously structured and entered into a Ground Lease on which a multi-family project will be constructed.

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The Company and SAFE entered into an agreement pursuant to which SAFE would acquire the land and related Ground Lease from the Ground Lease Plus Fund when certain construction related conditions are met by a specified time period (refer to “Safehold Inc.” above).

Other real estate equity investments —As of March 31, 2022, the Company’s other real estate equity investments include equity interests in real estate ventures ranging from 48 % to 95 %, comprised of investments of $ 43.2 million in operating properties and $ 0.2 million in land assets.

Other real estate equity investments —As of June 30, 2022, the Company’s other real estate equity investments include equity interests in real estate ventures ranging from 48 % to 95 %, comprised of investments of $ 38.2 million in operating properties and $ 0.3 million in land assets.

As of December 31, 2021, the Company’s other real estate equity investments included $ 43.3 million in operating properties and $ 1.1 million in land assets.

Other strategic investments —As of March 31, 2022 and December 31, 2021, the Company also had investments in real estate related funds and other strategic investments in real estate entities.

Other strategic investments —As of June 30, 2022 and December 31, 2021, 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 owns a 53.0 % noncontrolling equity interest (the “Loan Fund”).

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

Notes to Consolidated Financial Statements (Continued)

In February 2022, the Loan Fund committed to provide a $ 130.0 million loan to the ground lessee of a Ground Lease originated at SAFE.

The loan was for the Ground Lease tenant’s recapitalization of a life science office property.

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 March 31, 2022 ($ in thousands):

The loan was for the Ground Lease tenant’s recapitalization of a life science property.

In June 2022, the Loan Fund committed to provide a $ 105.0 million loan to the ground lessee of a Ground Lease originated at SAFE.

The loan was for the Ground Lease tenant’s recapitalization of a mixed-use property.

Net Income Attributable to Parent

For the Three Months Ended March 31, 2022

For the Three Months Ended March 31, 2021

For the Six Months Ended June 30, 2022

For the Six Months Ended June 30, 2021

Notes to Consolidated Financial Statements (Continued)

Note 9—Other Assets and Other Liabilities

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

March 31, 2022

June 30, 2022

December 31, 2021

Intangible assets, net (2)

Restricted cash

Operating lease right-of-use assets (3)

Other assets (2)

Operating lease right-of-use assets (3)

Restricted cash

Other receivables

Leasing costs, net (5)

Corporate furniture, fixtures and equipment, net (4)

Leasing costs, net (5)

Intangible assets, net (6)

Deferred financing fees, net

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(1) Certain items have been reclassified to “Real estate and other assets available and held for sale and classified as discontinued operations” (refer to Note 3).

(2) 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 $ 9.2 million and $ 10.2 million as of March 31, 2022 and December 31, 2021, respectively.

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

The amortization expense for in-place leases was $ 0.6 million for the three months ended March 31, 2021.

This amount is included in “Depreciation and amortization” in the Company’s consolidated statements of operations.

As of March 31, 2022, the weighted average remaining amortization period for the Company’s intangible assets was approximately 5.6 years.

(2) 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).

(3) 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 March 31, 2022 and 2021, the Company recognized $ 1.2 million and $ 1.2 million, respectively, in "General and administrative"

During the three months ended June 30, 2022 and 2021, the Company recognized $ 1.2 million and $ 1.2 million, respectively, in "General and administrative"

and $ 0.3 million and $ 0.2 million, respectively, in "Real estate expense"

in its consolidated statements of operations relating to operating leases.

(4) 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).

(5) Accumulated amortization of leasing costs was $ 0.9 million and $ 1.1 million as of March 31, 2022 and December 31, 2021, respectively.

(6) Accumulated depreciation on corporate furniture, fixtures and equipment was $ 14.9 million and $ 14.8 million as of March 31, 2022 and December 31, 2021, respectively.

Notes to Consolidated Financial Statements (Continued)

During the six months ended June 30, 2022 and 2021, the Company recognized $ 2.4 million and $ 2.5 million, respectively, in "General and administrative"

and $ 0.4 million and $ 0.3 million, respectively, in "Real estate expense"

in its consolidated statements of operations relating to operating leases.

(4) Accumulated depreciation on corporate furniture, fixtures and equipment was $ 12.0 million and $ 14.8 million as of June 30, 2022 and December 31, 2021, respectively.

(5) Accumulated amortization of leasing costs was $ 0.4 million and $ 1.1 million as of June 30, 2022 and December 31, 2021, respectively.

(6) 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 $ 0.1 million and $ 10.2 million as of June 30, 2022 and December 31, 2021, respectively.

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

The amortization expense for in-place leases for the three and six months ended June 30, 2021 was $ 0.1 million and $ 0.7 million, respectively.

This amount is included in “Depreciation and amortization” in the Company’s consolidated statements of operations.

As of June 30, 2022, the weighted average remaining amortization period for the Company’s intangible assets was approximately 5.4 years.

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

March 31, 2022

June 30, 2022

December 31, 2021

Other liabilities (1)

Accrued expenses

Operating lease liabilities (see table above)

Accrued interest payable

Other liabilities (1)

Operating lease liabilities (see table above)

Accounts payable, accrued expenses and other liabilities

(1) As of March 31, 2022 and December 31, 2021, other liabilities includes $ 20.8 million and $ 20.1 million, respectively, of deferred income.

As of March 31, 2022 and December 31, 2021, other liabilities includes $ 0.1 million and $ 0.1 million, respectively, of expected credit losses for unfunded loan commitments.

(1) As of June 30, 2022 and December 31, 2021, other liabilities includes $ 20.2 million and $ 20.1 million, respectively, of deferred income.

As of December 31, 2021, other liabilities includes $ 0.1 million of expected credit losses for unfunded loan commitments.

Notes to Consolidated Financial Statements (Continued)

Note 10—Debt Obligations, net

1 unchanged sentence

Carrying Value as of

March 31, 2022

June 30, 2022

December 31, 2021

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

(3) 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 (refer to Note 18) at any time prior to the close of business on the business day immediately preceding September 15, 2022.

The conversion rate as of March 31, 2022 was 72.3126 shares per $1,000 principal amount of 3.125 % Convertible Notes, which equals a conversion price of $ 13.83 per share.

(3) 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, 2022 was 72.8554 shares per $1,000 principal amount of 3.125 % Convertible Notes, which equals a conversion price of $ 13.73 per share.

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

Upon conversion, the Company will pay or deliver, as the case may be, a combination of cash and shares of its common stock.

During both the three months ended March 31, 2022 and 2021, the Company recognized $ 2.2 million of contractual interest on the 3.125 % Convertible Notes.

During the three months ended June 30, 2022 and 2021, the Company recognized $ 0.9 million and $ 2.2 million, respectively, of contractual interest on the 3.125 % Convertible Notes.

During the six months ended June 30, 2022 and 2021, the Company recognized $ 3.2 million and $ 4.5 million, respectively, of contractual interest on the 3.125 % Convertible Notes.

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

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(6) The Company can prepay these senior notes without penalty beginning August 15, 2024.

(7) The Company capitalized interest relating to development activities of $ 0.3 million and $ 0.2 million during the three months ended March 31, 2022 and 2021, respectively.

Notes to Consolidated Financial Statements (Continued)

Future Scheduled Maturities —As of March 31, 2022, future scheduled maturities of outstanding debt obligations are as follows ($ in thousands):

(7) The Company capitalized interest relating to development activities of $ 0.4 million and $ 0.2 million during the three months ended June 30, 2022 and 2021, respectively, and $ 0.7 million and $ 0.4 million during the six months ended June 30, 2022 and 2021, respectively.

Future Scheduled Maturities —As of June 30, 2022, future scheduled maturities of outstanding debt obligations are as follows ($ in thousands):

Unsecured Debt

2022 (remaining nine months) (1)

2022 (remaining six months)

Total principal maturities

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Total debt obligations, net

(1) Refer to Note 18.

Notes to Consolidated Financial Statements (Continued)

Senior Term Loan —The Company had a $ 650.0 million senior term loan (the “Senior Term Loan”) that accrued interest at LIBOR plus 2.75 % per annum and matured in June 2023.

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The Company repaid the Senior Term Loan in full in March 2022 using proceeds from the Net Lease Sale (refer to Note 3 - Net Lease Sale and Discontinued Operations).

During the three months ended March 31, 2022, the Company incurred a “Loss on extinguishment of debt” of $ 1.4 million in connection with the repayment of the Senior Term Loan.

During the six months ended June 30, 2022, the Company incurred a “Loss on extinguishment of debt” of $ 1.4 million in connection with the repayment of the Senior Term Loan.

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

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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 March 31, 2022, based on the Company’s borrowing base of assets, the Company had the ability to draw $ 59.9 million without pledging any additional assets to the facility.

Unsecured Notes —As of March 31, 2022, the Company has senior unsecured notes outstanding with varying fixed-rates and maturities ranging from September 2022 to February 2026.

In connection with the Net Lease Sale, in the fourth quarter 2021, 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.

As of June 30, 2022, based on the Company’s borrowing base of assets, the Company had the ability to draw $ 35.2 million without pledging any additional assets to the facility.

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

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

In April 2022, the Company completed separate, privately-negotiated transactions with holders of $ 194 million aggregate principal amount of the Company's 3.125 % Convertible Notes in which the noteholders exchanged their convertible notes with the Company for 13.75 million newly issued shares of the Company's common stock and aggregate cash payments of $ 14 million.

The 3.125 % Convertible Senior Notes received by the Company were retired.

The Company recognized a net increase in shareholders’ equity of $ 180.6 million inclusive of a $ 118.1 million loss on extinguishment of debt in connection with these transactions.

In April 2022, the Company redeemed $ 7.1 million principal amount of its 4.75 % senior notes due October 2024 for $ 7.2 million.

The Company recognized a $ 0.2 million loss on extinguishment of debt in connection with these transactions.

In June 2022, the Company redeemed $ 53.1 million principal amount of its 5.50 % senior notes due February 2026 for $ 50.6 million.

The Company recognized a $ 1.7 million net gain on extinguishment of debt in connection with these transactions.

Debt Covenants —The Company’s outstanding unsecured debt securities contain corporate level covenants that include a covenant to maintain a ratio of unencumbered assets to unsecured indebtedness, as such terms are defined in the indentures governing the debt securities, of at least 1.3 x and a covenant restricting certain incurrences of debt based on a fixed charge coverage ratio.

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These arrangements are referred to as Strategic Investments.

As of March 31, 2022, 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 June 30, 2022, 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 leases as of March 31, 2022 are as follows ($ in thousands):

Operating (1)

2022 (remaining nine months)

Other Commitments —Future minimum lease obligations under non-cancelable operating leases as of June 30, 2022 are as follows ($ in thousands):

2022 (remaining six months)

Total undiscounted cash flows

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For operating leases, lease liabilities were discounted at the Company’s weighted average incremental secured borrowing rate for similar collateral estimated to be 4.7 % and the weighted average remaining lease term is 4.2 years.

During the three months ended March 31, 2022 and 2021, the Company made payments of $ 1.7 million and $ 0.8 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 three months ended June 30, 2022 and 2021, the Company made payments of $ 1.7 million and $ 0.4 million, respectively, related to its operating leases and during the three months ended June 30, 2021 made payments of $ 1.4 million related to finance leases with SAFE .

During the six months ended June 30, 2022 and 2021, the Company made payments of $ 3.4 million and $ 1.2 million, respectively, related to its operating leases and $ 1.3 million and $ 2.7 million, respectively, related to finance leases with SAFE .

Legal Proceedings —The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to the Company’s business as a finance and investment company focused on the commercial real estate industry, including foreclosure-related proceedings.

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Notes to Consolidated Financial Statements (Continued)

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 March 31, 2022 and December 31, 2021 ($ 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 June 30, 2022 and December 31, 2021 ($ in thousands):

Derivative Liabilities

Balance Sheet

As of March 31, 2022

As of June 30, 2022

Derivatives Designated in Hedging Relationships

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(1) Over the next 12 months, the Company expects that $ 2.4 million related to its proportionate share of cash flow hedges held by SAFE will be reclassified from “Accumulated other comprehensive income (loss)” as a decrease to earnings from equity method investments.

Notes to Consolidated Financial Statements (Continued)

The table below presents the effect of the Company’s derivative financial instruments, including the Company’s share of derivative financial instruments at certain of its equity method investments, in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) ($ in thousands):

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Income into Earnings

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

Interest rate swaps

Earnings from equity method investments

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2021

Interest rate swaps

2 unchanged sentences

Earnings from equity method investments

For the Six Months Ended June 30, 2022

Interest rate swaps

Earnings from equity method investments

For the Six Months Ended June 30, 2021

Interest rate swaps

Net income from discontinued operations

Interest rate swaps

Earnings from equity method investments

Notes to Consolidated Financial Statements (Continued)

Note 13—Equity

Preferred Stock —The Company had the following series of Cumulative Redeemable Preferred Stock outstanding as of March 31, 2022 and December 31, 2021:

Preferred Stock —The Company had the following series of Cumulative Redeemable Preferred Stock outstanding as of June 30, 2022 and December 31, 2021:

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 $ 2.0 million, $ 1.5 million and $ 2.3 million on its Series D, G and I Cumulative Redeemable Preferred Stock during both the three months ended March 31, 2022 and 2021.

(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, 2022 and 2021.

The character of the 2021 dividends was 100 % capital gain distribution, of which 18.31 % represented unrecaptured section 1250 gain.

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As of December 31, 2021, the Company had $ 614.6 million of NOL carryforwards at the corporate REIT level that can generally be used to offset both ordinary taxable income and capital gain net income in future years.

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

The amount of NOL carryforwards as of December 31, 2021 will be determined upon finalization of the Company’s 2021 tax return.

The NOL carryforwards will begin to expire in 2032 and will fully expire in 2036 if unused, except for $ 154 million of NOL which never expires.

Because taxable income differs from cash flow from operations due to non-cash revenues and expenses (such as depreciation and certain asset impairments), in certain circumstances, the Company may generate operating cash flow in excess of its dividends, or alternatively, may need to make dividend payments in excess of operating cash flows.

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 $ 8.7 million, or $ 0.125 per share, for the three months ended March 31, 2022 and $ 8.2 million, or $ 0.11 per share, for the three months ended March 31, 2021.

The Company declared common stock dividends of $ 19.2 million, or $ 0.25 per share, for the six months ended June 30, 2022 and $ 17.4 million, or $ 0.235 per share, for the six months ended June 30, 2021.

The character of the 2021 dividends was 100 % capital gain distribution, of which 18.31 % represented unrecaptured section 1250 gain.

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

The Company did not repurchase any shares of its common stock during the three months ended March 31, 2022.

During the three months ended March 31, 2021, the Company repurchased 0.7 million shares of its outstanding common stock for $ 12.4 million, for an average cost of $ 17.20 per share.

The Company did not repurchase any shares of its common stock during the six months ended June 30, 2022.

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.

The Company is generally authorized to repurchase up to $ 50.0 million in shares of its common stock and in February 2022, the Company's Board of Directors authorized an increase to the stock repurchase program to $ 50.0 million.

As of March 31, 2022, the Company had remaining authorization to repurchase up to $ 50.0 million of common stock under its stock repurchase program.

As of June 30, 2022, the Company had remaining authorization to repurchase up to $ 50.0 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):

March 31, 2022

June 30, 2022

December 31, 2021

Unrealized gains on available-for-sale securities

Unrealized (losses) gains on available-for-sale securities

Unrealized losses on cash flow hedges

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Note 14—Stock-Based Compensation Plans and Employee Benefits

Stock-Based Compensation —The Company recorded stock-based compensation (income) expense, including the expense related to performance incentive plans (see below), of ($ 12.4 ) million and $ 5.5 million for the three months ended March 31, 2022 and 2021, respectively, in “General and administrative” in the Company’s consolidated statements of operations.

Stock-Based Compensation —The Company recorded stock-based compensation, including the expense related to performance incentive plans (see below), of ($ 17.9 ) million and $ 14.8 million for the three months ended June 30, 2022 and 2021, respectively, and ($ 30.4 ) million and $ 20.3 million for the six months ended June 30, 2022 and 2021, 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 March 31, 2022, 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 June 30, 2022, 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 three months ended March 31, 2022 and 2021, the Company recorded $ 1.3 million and $ 1.4 million, respectively, of expense related to the 2019-2022 iPIP plans.

During the six months ended June 30, 2022 and 2021, the Company recorded $ 2.4 million and $ 1.5 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 three months ended March 31, 2022.

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, 2022.

iPIP Investment Pool

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Points at end of period

As of March 31, 2022, investments with an aggregate gross book value of $ 764 million, including 26.7 million shares of SAFE common stock acquired by the Company, were attributable to the 2019-2020 Plan and investments with an

As of June 30, 2022, investments with an aggregate gross book value of $ 764 million, including 26.7 million shares of SAFE common stock acquired by the Company, were attributable to the 2019-2020 Plan and investments with an

Notes to Consolidated Financial Statements (Continued)

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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 three months ended March 31, 2022.

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, 2022.

iPIP Investment Pool

2015 ‑ 2016 (1)

Points at beginning of period

Points at end of period

During the three months ended March 31, 2022, the Company recorded a $ 16.0 million reduction of expense related to the 2013-2018 iPIP plans, primarily due to a decrease in the price per share of SAFE common stock.

During the three months ended March 31, 2021, the Company recorded $ 2.4 million of expense related to the 2013-2018 iPIP plans.

As of March 31, 2022, investments with an aggregate gross book value of $ 13 million were attributable to the 2013-2014 Plan and investments with an aggregate gross book value of $ 277 million, including 7.6 million shares of SAFE common stock acquired by the Company, were attributable to the 2017-2018 Plan.

As of March 31, 2022 there were no investments attributable to the 2015-2016 Plan.

During the three months ended March 31, 2021, the Company made distributions to participants in the 2015-2016 investment pool.

(1) As of June 30, 2022, all awards under the 2015-2016 Plan had been paid.

During the six months ended June 30, 2022, the Company recorded a $ 37.1 million reduction of expense related to the 2013-2018 iPIP plans, primarily due to a decrease in the price per share of SAFE common stock.

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

As of June 30, 2022, investments with an aggregate gross book value of $ 13 million were attributable to the 2013-2014 Plan and investments with an aggregate gross book value of $ 238 million, including 7.6 million shares of SAFE common stock acquired by the Company, were attributable to the 2017-2018 Plan.

As of June 30, 2022 there were no investments attributable to the 2015-2016 Plan.

During the six months ended June 30, 2022, the Company made distributions to participants in the 2013-2014 investment pool.

The iPIP participants received total distributions in the amount of $ 19.6 million as compensation, comprised of cash and 412,041 shares of the Company’s common stock with a fair value of $ 16.06 per share, which are fully-vested and issued under the 2009 LTIP.

After deducting statutory minimum tax withholdings, a total of 215,657 shares of the Company’s common stock were issued.

As of March 31, 2022 and December 31, 2021, the Company had accrued compensation costs relating to iPIP of $ 102.4 million and $ 116.6 million, respectively, which are included in “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets.

During the six months ended June 30, 2022, the Company made distributions to participants in the 2015-2016 investment pool.

The iPIP participants received total distributions in the amount of $ 19.2 million as compensation, comprised of cash and 402,731 shares of the Company’s common stock with a fair value of $ 16.06 per share, which are fully-vested and issued under the 2009 LTIP.

After deducting statutory minimum tax withholdings, a total of 193,416 shares of the Company’s common stock were issued.

During the six months ended June 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.

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

As of June 30, 2022 and December 31, 2021, the Company had accrued compensation costs relating to iPIP of $ 47.0 million and $ 116.6 million, respectively, which are included in “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets.

Notes to Consolidated Financial Statements (Continued)

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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In May 2021, the 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 March 31, 2022, an aggregate of 2.8 million shares remain available for issuance pursuant to future awards under the Company’s 2009 LTIP.

Notes to Consolidated Financial Statements (Continued)

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 three months ended March 31, 2022, is as follows (in thousands):

As of June 30, 2022, an aggregate of 2.3 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, 2022, is as follows (in thousands):

Nonvested at beginning of period

Nonvested at end of period

As of March 31, 2022, there was $ 9.4 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 1.78 years.

Directors’ Awards —During the three months ended March 31, 2022, the Company issued 478 common stock equivalents (“CSEs”) at a fair value of $ 23.99 per CSE in respect of dividend equivalents on outstanding CSEs.

As of March 31, 2022, a combined total of 130,414 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 $ 3.1 million.

401(k) Plan — The Company made contributions of $ 0.8 million and $ 0.5 million for the three months ended March 31, 2022 and 2021, respectively, to the Company’s 401(k) Plan.

As of June 30, 2022, there was $ 7.7 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 1.54 years.

Directors’ Awards — During the six months ended June 30, 2022, the Company granted 38,953 restricted shares of common stock to non-employee Directors at a fair value of $ 16.33 at the time of grant for their annual equity awards and also issued 1,280 common stock equivalents (“CSEs”) at a fair value of $ 17.97 per CSE in respect of dividend equivalents on outstanding CSEs.

As of June 30, 2022, a combined total of 131,983 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 $ 1.8 million.

401(k) Plan — The Company made contributions of $ 0.1 million and $ 0.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 0.9 million and $ 0.7 million for the six months ended June 30, 2022 and 2021, respectively, to the Company’s 401(k) Plan.

Note 15—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 March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Net loss from continuing operations

Net loss from continuing operations attributable to noncontrolling interests

Net (income) loss from continuing operations attributable to noncontrolling interests

Preferred dividends

1 unchanged sentence

Notes to Consolidated Financial Statements (Continued)

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Earnings allocable to common shares:

10 unchanged sentences

Net income (loss) allocable to common shareholders

(1) For the three months ended March 31, 2022 and 2021, the effect of certain of the Company’s restricted stock awards were anti-dilutive due to the Company having a net loss from continuing operations and allocable to common shareholders for the period.

For the three months ended March 31, 2022 and 2021, 8,829,274 and 2,893,787 shares, respectively, of the 3.125 % Convertible Notes were antidilutive based upon the conversion price for such periods.

(1) For the three and six months ended June 30, 2022 and 2021, the effect of certain of the Company’s restricted stock awards were anti-dilutive due to the Company having a net loss from continuing operations and allocable to common shareholders for the period.

For the three months ended June 30, 2022 and 2021, 1,787,708 and 4,700,805 shares, respectively, of the 3.125 % Convertible Notes were antidilutive based upon the conversion price for such periods.

For the six months ended June 30, 2022 and 2021, 5,308,491 and 3,797,296 shares, respectively, of the 3.125 % Convertible Notes were antidilutive based upon the conversion price for such periods .

Note 16—Fair Values

11 unchanged sentences

Fair Value Using

As of March 31, 2022

As of June 30, 2022

Recurring basis:

Available-for-sale securities (1)

Non-recurring basis:

Real estate, net (2)

Held-to-maturity securities (3)

As of December 31, 2021

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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.

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 three months ended March 31, 2022 and 2021 ($ in thousands):

(2) The Company recorded a $ 1.8 million impairment on an operating property with an estimated fair value of $ 0.8 million.

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

(3) In the second quarter 2022, the Company received a $ 40.0 million repayment on a held-to-maturity security.

The Company then recorded a $ 25.0 million charge-off (refer to Note 7) on the held-to-maturity security to record the security at the expected future cash flows 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, 2022 and 2021 ($ 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 March 31, 2022

As of June 30, 2022

As of December 31, 2021

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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 March 31, 2022 and December 31, 2021, t he fair value of the Company’s unsecured notes is classified as Level 1 in the fair value hierarchy.

As of March 31, 2022 and December 31, 2021, the fair value of the Company’s 3.125 % Senior Convertible Notes was $ 497.5 million and $ 527.5 million, respectively (refer to Note 18).

(3) As of June 30, 2022 and December 31, 2021, t he fair value of the Company’s unsecured notes is classified as Level 1 in the fair value hierarchy.

As of June 30, 2022 and December 31, 2021, the fair value of the Company’s 3.125 % Senior Convertible Notes was $ 99.6 million and $ 527.5 million, respectively (refer to Note 10).

Note 17—Segment Reporting

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

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Operating lease income

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Land development revenue

Earnings from equity method investments

Earnings (losses) from equity method investments

Income from sales of real estate

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Allocated interest expense

Allocated general and administrative (2)

Notes to Consolidated Financial Statements (Continued)

Segment profit (loss) (3)

Other significant items:

Provision for loan losses

Provision for losses on net investment in leases

Impairment of assets

Depreciation and amortization

Capitalized expenditures

Three Months Ended June 30, 2021

Operating lease income

Interest income

Interest income from sales-type leases

Land development revenue

Earnings (losses) from equity method investments

Income from sales of real estate

Total revenue and other earnings

Real estate expense

Land development cost of sales

Other expense

Allocated interest expense

Allocated general and administrative (2)

Segment profit (loss) (3)

Other significant non-cash items:

Provision for (recovery of) loan losses

Provision for losses on net investment in leases

Depreciation and amortization

Capitalized expenditures

Six Months Ended June 30, 2022

Operating lease income

Interest income

Interest income from sales-type leases

Land development revenue

Earnings from equity method investments

Income from sales of real estate

Total revenue and other earnings

Real estate expense

Land development cost of sales

Other expense

Allocated interest expense

Allocated general and administrative (3)

Segment profit (loss) (4)

Other significant items:

1 unchanged sentence

Provision for losses on net investment in leases

Impairment of assets

Depreciation and amortization

Capitalized expenditures

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Operating lease income

9 unchanged sentences

Allocated interest expense

Notes to Consolidated Financial Statements (Continued)

Allocated general and administrative (3)

2 unchanged sentences

Recovery of loan losses

Provision for losses on net investment in leases

Impairment of assets

1 unchanged sentence

Capitalized expenditures

As of March 31, 2022

As of June 30, 2022

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.

Notes to Consolidated Financial Statements (Continued)

(3) General and administrative excludes stock-based compensation (income) expense of ($ 12.4 ) million and $ 5.5 million for the three months ended March 31, 2022 and 2021, respectively.

(3) General and administrative excludes stock-based compensation of ($ 17.9 ) million and $ 14.8 million for the three months ended June 30, 2022 and 2021, respectively, and ($ 30.4 ) million and $ 20.3 million for the six months ended June 30, 2022 and 2021, respectively.

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

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

(Provision for) recovery of loan losses

6 unchanged sentences

Net income from discontinued operations

Net income (loss)

Notes to Consolidated Financial Statements (Continued)

Note 18 – Subsequent Events

On April 8, 2022, the Company completed separate, privately-negotiated transactions with holders of $ 194 million aggregate principal amount of the Company's 3.125 % Convertible Notes (refer to Note 10) in which the noteholders exchanged their convertible notes with the Company for 13.75 million newly issued shares of the Company's common stock and aggregate cash payments of $ 14 million.

The 3.125 % Convertible Senior Notes received by the Company were retired.

In July and August 2022, the Company completed a series of privately-negotiated exchange transactions with holders of approximately $ 47.9 million aggregate principal amount of the Company's 3.125 % Convertible Notes due 2022 (refer to Note 10) in which the noteholders exchanged their convertible notes with the Company for an aggregate of approximately 2.0 million newly issued shares of the Company's common stock and aggregate cash payments of approximately $ 24.3 million.

The convertible notes received by the Company were retired.

The Company will recognize a net increase in shareholders’ equity of $ 24.2 million inclusive of a $ 6.1 million loss on extinguishment of debt in connection with these transactions.

In July 2022, the Company sold a Ground Lease to SAFE for $ 36.0 million.

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