What changed in this filing

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Item 1. Financial Statements

2024-10-29 compared with 2024-07-30 · 242 added, 191 removed, 943 unchanged (31% of the section changed)

3 unchanged sentences

(In thousands)

June 30, 2024

September 30, 2024

December 31, 2023

Net investment in sales-type leases ($ 1,522 and $ 465 of allowances as of June 30, 2024 and December 31, 2023, respectively)

Ground Lease receivables, net ($ 773 and $ 369 of allowances as of June 30, 2024 and December 31, 2023, respectively)

Net investment in sales-type leases ($ 6,047 and $ 465 of allowances as of September 30, 2024 and December 31, 2023, respectively)

Ground Lease receivables, net ($ 3,384 and $ 369 of allowances as of September 30, 2024 and December 31, 2023, respectively)

Real estate, at cost

4 unchanged sentences

Total real estate, net and real estate-related intangible assets, net and real estate available and held for sale

Loans receivable, net - related party ($ 2,356 and $ 2,429 of allowances as of June 30, 2024 and December 31, 2023, respectively)

Loans receivable, net - related party ($ 2,291 and $ 2,429 of allowances as of September 30, 2024 and December 31, 2023, respectively)

Equity investments

13 unchanged sentences

shareholders' equity:

Common stock, $ 0.01 par value, 400,000 shares authorized, 71,435 and 71,077 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.01 par value, 400,000 shares authorized, 71,436 and 71,077 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

6 unchanged sentences

(1) Refer to Note 2 for details on the Company’s consolidated variable interest entities (“VIEs”).

(2) As of June 30, 2024 and December 31, 2023, includes $ 5.2 million and $ 7.1 million, respectively, due from related parties.

(2) As of September 30, 2024 and December 31, 2023, includes $ 4.3 million and $ 7.1 million, respectively, due from related parties.

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

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Interest income from sales-type leases

8 unchanged sentences

General and administrative (3)

Impairment of goodwill

Provision for (recovery of) credit losses

13 unchanged sentences

(1) Refer to Note 6.

(2) For the three and six months ended June 30, 2024, includes $ 4.4 million and $ 9.9 million, respectively, of management fees from related parties.

For both the three and six months ended June 30, 2023, includes $ 7.2 million of management fees from related parties.

(3) For the six months ended June 30, 2023, includes $ 8.3 million of general and administrative expenses incurred to related parties that includes management fees and expense reimbursements to the Former Manager (refer to Note 1).

(2) For the three and nine months ended September 30, 2024, includes $ 3.7 million and $ 13.6 million, respectively, of management fees from related parties.

For the three and nine months ended September 30, 2023, includes $ 6.0 million and $ 13.2 million, respectively, of management fees from related parties.

(3) For the nine months ended September 30, 2023, includes $ 8.3 million of general and administrative expenses incurred to related parties that includes management fees and expense reimbursements to the Former Manager (refer to Note 1).

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

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Net income (loss)

15 unchanged sentences

Income (Loss)

Balance at March 31, 2024

Balance at June 30, 2024

Net income (loss)

2 unchanged sentences

Change in accumulated other comprehensive income (loss)

Contributions from noncontrolling interests

Distributions to noncontrolling interests

Redemption of noncontrolling interests

Contribution from noncontrolling interests

Acquisition of noncontrolling interest

Balance at September 30, 2024

Balance at June 30, 2023

Balance at March 31, 2023

Net income (loss)

2 unchanged sentences

Change in accumulated other comprehensive income (loss)

Contributions from noncontrolling interests

Distributions to noncontrolling interests

Balance at June 30, 2023

Balance at September 30, 2023

Balance at December 31, 2023

3 unchanged sentences

Change in accumulated other comprehensive income (loss)

Change in noncontrolling interests

Contributions from noncontrolling interests

Distributions to noncontrolling interests

Contribution from noncontrolling interests

Acquisition of noncontrolling interest

Redemption of noncontrolling interests

Balance at June 30, 2024

Balance at September 30, 2024

Balance at December 31, 2022

7 unchanged sentences

Merger consideration (refer to Note 1 and Note 3)

Balance at June 30, 2023

Balance at September 30, 2023

(1) Refer to Note 3.

3 unchanged sentences

(In thousands)

For the Six Months Ended

For the Nine Months Ended

September 30,

Cash flows from operating activities:

7 unchanged sentences

Amortization of real estate-related intangibles, net

Impairment of goodwill

Provision for credit losses

9 unchanged sentences

Cash flows from investing activities:

Acquisitions of real estate

Origination/acquisition of net investment in sales-type leases and Ground Lease receivables

7 unchanged sentences

Return of deposits on Ground Lease investments

Return of cash collateral for debt obligations

Funding of cash collateral for debt obligations

3 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of common stock

Proceeds from debt obligations

7 unchanged sentences

Contributions from noncontrolling interests

Acquisition of noncontrolling interest

Other financing activities

Cash flows provided by (used in) financing activities

12 unchanged sentences

Non-cash interest accrued to debt balances

Accrued finance costs

Accrued offering costs

77 unchanged sentences

Consolidated VIEs —The Company consolidates VIEs for which it is considered the primary beneficiary.

As of June 30, 2024, the total assets of these consolidated VIEs were $ 75.2 million and total liabilities were $ 30.0 million.

As of September 30, 2024, the total assets of these consolidated VIEs were $ 75.8 million and total liabilities were $ 30.1 million.

Safehold Inc.

Notes to Consolidated Financial Statements

classifications of these assets are primarily within “Net investment in sales-type leases,” “Real estate, net,” “Real estate-related intangible assets, net” and “Deferred operating lease income receivable” on the Company’s consolidated balance sheets.

The classifications of these assets are primarily within “Net investment in sales-type leases,” “Real estate, net,” “Real estate-related intangible assets, net” and “Deferred operating lease income receivable” on the Company’s consolidated balance sheets.

The classifications of liabilities are primarily within “Debt obligations, net” and “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets.

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

The Company has provided no financial support to VIEs that it was not previously contractually required to provide and did not have any unfunded commitments related to consolidated VIEs as of June 30, 2024.

Note 3—Summary of Significant Accounting Policies

Significant Accounting Policies

Allowance for credit losses on net investment in sales-type leases and Ground Lease receivables —Effective January 1, 2023, upon the adoption of ASU 2016-13, the Company implemented procedures to estimate its allowance for credit losses on net investment in sales-type leases and Ground Lease receivables, including unfunded commitments, using a quantitative analysis to estimate expected loss rates for its portfolio of net investment in sales-type leases and Ground Lease receivables.

ASU 2016-13 replaced the incurred loss impairment methodology in prior GAAP with a methodology that reflects expected credit losses over the life of the investment and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The Company analyzed historical data provided by Trepp (“Trepp”) for single asset borrower loans and considered comparable loan to value ratios, loss rates, timing of losses, vintage, property type and other statistics.

The Company updated its analysis for current market conditions and reasonable and supportable forecasts of unemployment rates to develop an estimate of credit losses.

Beginning in the third quarter of 2024, the Company enhanced its policy to inform credit loss estimates by analyzing historical loss data for high-credit rated long-duration bonds, which the Company believes have similar risk profiles to its Ground Leases, provided by external third parties along with the historical data provided by Trepp.

The Company continues to consider comparable loan to value ratios, loss rates, timing of losses, vintage, property type and other statistics in its estimate of credit losses.

The Company also continues to analyze its portfolio of Ground Leases in two categories, based on whether the underlying property is a stabilized property or a development project (projects with unfunded commitments that are under development or in transition).

The Company’s development properties are assigned a higher loss rate due to the higher potential risk for deals under construction.

The Company may adopt alternative approaches to estimate its credit losses in the future based on factors such as, but not limited to, the loan to value ratios, property type and the availability of relevant historical market loss data for similar type financial instruments.

The Company did not have any charge-offs of its net investment in sales-type leases or Ground Lease receivables for any of the periods presented.

Interest receivable is not included in the Company’s allowance for credit losses on net investment in sales-type leases and Ground Lease receivables as the Company performs timely write-offs, if any, of aged interest receivables.

The Company has also made a policy election to write off aged interest receivables through interest income from sales-type leases as opposed to through the provision for credit losses.

Fair Values —The Company is required to disclose fair value information with regard to its financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practical to estimate fair value.

3 unchanged sentences

quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;

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

prices or valuation techniques that require inputs that are

Safehold Inc.

Notes to Consolidated Financial Statements

both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The Company determines the estimated fair values of financial assets and liabilities based on a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the Company and the Company’s own assumptions about market participant assumptions.

The following table presents the carrying value and fair value for the Company’s financial instruments ($ in millions):

As of June 30, 2024

As of September 30, 2024

As of December 31, 2023

9 unchanged sentences

(2) The Company determined the carrying values of its cash and cash equivalents and restricted cash approximated their fair values and are classified as Level 1 within the fair value hierarchy .

Safehold Inc.

Notes to Consolidated Financial Statements

Redeemable Noncontrolling Interests —In February 2022, the Company sold 108,571 Caret units (refer to Note 12) for $ 19.0 million to third-party investors and received a commitment from an existing shareholder (which is affiliated with one of the Company’s independent directors) for the purchase of 28,571 Caret units for $ 5.0 million (which did not close).

9 unchanged sentences

or (ii) the redemption value.

Safehold Inc.

Notes to Consolidated Financial Statements

Acquisitions —The Company evaluates each acquisition transaction to determine whether the acquired asset meets the definition of a business.

14 unchanged sentences

As lessee, right of use lease assets and lease liabilities are measured at the present value of lease payments not yet paid, discounted at the implied rate charged by the lessor if that rate is readily determinable, or if that rate is not readily determinable, the Company's incremental borrowing rate, as of the date of the acquisition.

As lessee, operating lease

Safehold Inc.

Notes to Consolidated Financial Statements

right of use assets are included in “Deferred expenses and other assets, net” and operating lease liabilities are recorded in “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets.

As lessee, operating lease right of use assets are included in “Deferred expenses and other assets, net” and operating lease liabilities are recorded in “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets.

As lessee, above-market operating lease intangibles and below-market lease assets are each recorded at their fair values and included in “Deferred expenses and other assets, net” on the Company’s consolidated balance sheets.

9 unchanged sentences

The Merger was accounted for as a business combination pursuant to ASC 805 and all Merger related costs were expensed as incurred.

The Company recorded $ 0.1 million of Merger expenses and $ 0.3 million of related non-recurring charges during the three months ended June 30, 2023 in “Other expense” in the Company’s consolidated statements of operations.

The Company recorded $ 18.9 million of Merger expenses during the six months ended June 30, 2023, of which $ 14.1 million was recorded in “Other expense” and $ 4.8 million was recorded in “General and administrative” in the Company’s consolidated statements of operations.

During the six months ended June 30, 2023, the Company also recorded $ 0.9 million of related non-recurring charges in “Other expense” and a provision for credit losses of $ 2.3 million on the Secured Term Loan Facility (refer to Note 6) which was originated at the time of the Merger in conjunction with the Spin-Off.

The Company recorded $ 0.1 million of Merger expenses during the three months ended September

Safehold Inc.

Notes to Consolidated Financial Statements

30, 2023 in “Other expense” in the Company’s consolidated statements of operations.

The Company recorded $ 18.9 million of Merger expenses during the nine months ended September 30, 2023, of which $ 14.1 million was recorded in “Other expense” and $ 4.8 million was recorded in “General and administrative” in the Company’s consolidated statements of operations.

During the nine months ended September 30, 2023, the Company also recorded $ 0.9 million of related non-recurring charges in “Other expense” and a provision for credit losses of $ 2.3 million on the Secured Term Loan Facility (refer to Note 6) which was originated at the time of the Merger in conjunction with the Spin-Off.

Excluding $ 3.0 million of related non-recurring charges and the $ 2.3 million provision for credit losses on the Secured Term Loan Facility, the Company has incurred $ 26.6 million of Merger expenses.

32 unchanged sentences

Notes to Consolidated Financial Statements

The following table summarizes the Company's pro forma revenues and net income (loss) for the three and six months ended June 30, 2023 as if the Merger described in Note 1 was completed on January 1, 2022 ($ in thousands):

During the three months ended September 30, 2023, the Company experienced a precipitous and sustained decline in the price per share of its common stock, which it identified as an indicator of goodwill impairment.

As a result, the Company performed an interim goodwill evaluation.

At that time, the Company determined that its current operations are carried out through a single reporting unit with a carrying value of approximately $ 2.4 billion.

The estimated fair value of the Company was determined to be the Company’s market capitalization adjusted for a control premium estimated by the Company representing an amount a market participant would pay to obtain a controlling interest in the Company.

The Company determined that its carrying value exceeded its estimated fair value and therefore recorded an impairment of goodwill.

The Company recorded a $ 145.4 million full impairment of the goodwill recognized as a result of the Merger, which is recorded as a non-cash charge in “Impairment of goodwill” in the Company’s consolidated statements of operations.

Goodwill did not have any tax impact on the Company’s financial statements.

The following table summarizes the Company's pro forma revenues and net income (loss) for the three and nine months ended September 30, 2023 as if the Merger described in Note 1 was completed on January 1, 2022 ($ in thousands):

Three Months Ended

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

Pro forma revenues

Pro forma net income

The pro forma revenues and net income are presented for informational purposes only and may not be indicative of what the actual results of operations of the Company would have been assuming the transaction occurred on January 1, 2022, nor do they purport to represent the Company’s results of operations for future periods.

From the date of the Merger closing through June 30, 2023, $ 0.1 million of total revenues and $ 4.6 million of net income of the acquiree are included in the Company’s consolidated statements of operations.

Pro forma net income (loss)

The pro forma revenues and net income (loss) are presented for informational purposes only and may not be indicative of what the actual results of operations of the Company would have been assuming the transaction occurred on January 1, 2022, nor do they purport to represent the Company’s results of operations for future periods.

From the date of the Merger closing through September 30, 2023, $ 0.1 million of total revenues and $ 6.0 million of net income of the acquiree are included in the Company’s consolidated statements of operations.

New accounting pronouncements — In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60):

16 unchanged sentences

The Company is currently evaluating ASU 2023-09 but does not expect this standard to have a material impact on its consolidated financial statements.

Safehold Inc.

Notes to Consolidated Financial Statements

Note 4—Net Investment in Sales-type Leases and Ground Lease Receivables

5 unchanged sentences

The Company committed approximately $ 275 million for a 55 % controlling interest in the joint venture and the sovereign wealth fund committed approximately $ 225 million for a 45 % noncontrolling interest in the joint venture.

Each party’s commitment is

Safehold Inc.

Notes to Consolidated Financial Statements

discretionary.

Each party’s commitment is discretionary.

The joint venture is a voting interest entity and the Company consolidates the joint venture in its financial statements due to its controlling interest.

The Company’s joint venture partners’ interest is recorded in “Noncontrolling interests” on the Company’s consolidated balance sheets.

The Company’s joint venture partners’ interest was recorded in “Noncontrolling interests” on the Company’s consolidated balance sheet as of December 31, 2023.

The Company receives a management fee, measured on an asset-by-asset basis, equal to 25 basis points on invested equity for such asset for the first five years following its acquisition, and 15 basis points on invested equity thereafter.

The Company will also receive a promote of 15 % over a 9 % internal rate of return, subject to a 1.275 x multiple on invested capital.

The venture has first look rights on qualifying investments for 18 months .

Since formation, the joint venture acquired eight Ground Leases for an aggregate purchase price of $ 146.7 million, of which $ 88.9 million has been funded as of June 30, 2024.

In January 2024, the Company acquired a Ground Lease from the Ground Lease Plus Fund for $ 38.3 million, excluding $ 36.5 million funded by the Company pursuant to a leasehold improvement allowance (refer to Note 14).

On August 30, 2024, the Company acquired its partners’ share of the Ground Leases for $ 48.3 million.

The excess of the purchase price and related transactions costs over the carrying value of $ 46.0 million was recorded as a reduction to additional paid-in capital in the Company’s consolidated statement of changes in equity.

Since formation through August 30, 2024, the joint venture acquired nine Ground Leases for an aggregate purchase price of $ 170.4 million, of which $ 101.2 million had been funded as of August 30, 2024.

The partner's participation right in certain qualifying Ground Lease investment opportunities expired on September 30, 2024.

In January 2024, the Company acquired a Ground Lease from the Ground Lease Plus Fund for $ 38.3 million, excluding amounts funded by the Company pursuant to a leasehold improvement allowance (refer to Note 7 and Note 14).

The Company’s net investment in sales-type leases were comprised of the following ($ in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

6 unchanged sentences

Net investment in sales-type leases

(1) As of June 30, 2024, total discounted cash flows were approximately $ 3,350 million and the discounted unguaranteed estimated residual value was $ 31.2 million.

(1) As of September 30, 2024, total discounted cash flows were approximately $ 3,414 million and the discounted unguaranteed estimated residual value was $ 31.6 million.

As of December 31, 2023, total discounted cash flows were approximately $ 3,225 million and the discounted unguaranteed estimated residual value was $ 30.4 million.

(2) As of June 30, 2024 and December 31, 2023, $ 16.5 million and $ 16.4 million, respectively, was attributable to noncontrolling interests.

Safehold Inc.

Notes to Consolidated Financial Statements

The following table presents a rollforward of the Company’s net investment in sales-type leases and Ground Lease receivables for the six months ended June 30, 2024 and 2023 ($ in thousands):

The following table presents a rollforward of the Company’s net investment in sales-type leases and Ground Lease receivables for the nine months ended September 30, 2024 and 2023 ($ in thousands):

Net Investment in

Sales-type Leases

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Beginning balance

4 unchanged sentences

Sales-type Leases

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Beginning balance

5 unchanged sentences

For newly originated or acquired Ground Leases, the Company’s estimate of residual value equals the fair value of the land at lease commencement.

(2) As of June 30, 2024 and December 31, 2023, all of the Company’s net investment in sales-type leases and Ground Lease receivables were current in their payment status.

As of June 30, 2024, the Company’s weighted average accrual rate for its net investment in sales-type leases and Ground Lease receivables was 5.3 % and 5.5 % , respectively.

As of June 30, 2024, the weighted average remaining life of the Company’s 39 Ground Lease receivables was 97.7 years.

(2) As of September 30, 2024 and December 31, 2023, all of the Company’s net investment in sales-type leases and Ground Lease receivables were current in their payment status.

As of September 30, 2024, the Company’s weighted average accrual rate for its net investment in sales-type leases and Ground Lease receivables was 5.3 % and 5.5 % , respectively.

As of September 30, 2024, the weighted average remaining life of the Company’s 40 Ground Lease receivables was 97.5 years.

Safehold Inc.

Notes to Consolidated Financial Statements

Allowance for Credit Losses —Changes in the Company’s allowance for credit losses on net investment in sales-type leases for the three and six months ended June 30, 2024 and 2023 were as follows ($ in thousands):

Allowance for Credit Losses —Changes in the Company’s allowance for credit losses on net investment in sales-type leases for the three and nine months ended September 30, 2024 and 2023 were as follows ($ in thousands):

Net investment in sales-type leases

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Allowance for credit losses at beginning of period

1 unchanged sentence

Allowance for credit losses at end of period (2)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Allowance for credit losses at beginning of period

1 unchanged sentence

Allowance for credit losses at end of period (2)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Allowance for credit losses at beginning of period

1 unchanged sentence

Allowance for credit losses at end of period (2)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Allowance for credit losses at beginning of period

2 unchanged sentences

Allowance for credit losses at end of period (2)

(1) During the three and six months ended June 30, 2024, the Company recorded a provision for credit losses on net investment in sales-type leases of $ 0.6 million and $ 1.1 million, respectively.

The provision for credit losses was due primarily to current market conditions, including an increase in the Ground Lease cost to value ratio on the Company’s portfolio of Ground Leases since March 31, 2024 and December 31, 2023.

During the three and six months ended June 30, 2023, the Company recorded a provision for (recovery of) credit losses on net investment in sales-type leases of $ 11 thousand and ($ 20 ) thousand, respectively.

The provision for credit losses for the three months ended June 30, 2023 was due primarily to a declining macroeconomic forecast since March 31, 2023.

The recovery of credit losses for the six months ended June 30, 2023 was due primarily to an improving macroeconomic forecast since December 31, 2022.

(1) During the three and nine months ended September 30, 2024, the Company recorded a provision for credit losses on net investment in sales-type leases of $ 4.5 million and $ 5.6 million, respectively.

The provision for credit losses for the three and nine months ended September 30, 2024 was due primarily to elective enhancements to the Company’s general provision for credit loss methodology (refer to Note 3), current market conditions and growth in the portfolio during the period.

During the three and nine months ended September 30, 2023, the Company recorded a provision for credit losses on net investment in sales-type leases of $ 0.1 million and $ 0.1 million, respectively.

The provision for credit losses for the three and nine months ended September 30, 2023 was due primarily to a declining macroeconomic forecast since June 30, 2023 and December 31, 2022, respectively.

(2) Allowance for credit losses on unfunded commitments is recorded in “Accounts payable and accrued expenses” on the Company’s consolidated balance sheets.

2 unchanged sentences

Notes to Consolidated Financial Statements

Changes in the Company’s allowance for credit losses on Ground Lease receivables for the three and six months ended June 30, 2024 and 2023 were as follows ($ in thousands):

Changes in the Company’s allowance for credit losses on Ground Lease receivables for the three and nine months ended September 30, 2024 and 2023 were as follows ($ in thousands):

Ground Lease receivables

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Allowance for credit losses at beginning of period

1 unchanged sentence

Allowance for credit losses at end of period (2)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Allowance for credit losses at beginning of period

1 unchanged sentence

Allowance for credit losses at end of period (2)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Allowance for credit losses at beginning of period

1 unchanged sentence

Allowance for credit losses at end of period (2)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Allowance for credit losses at beginning of period

2 unchanged sentences

Allowance for credit losses at end of period (2)

(1) During the three and six months ended June 30, 2024, the Company recorded a provision for credit losses on Ground Lease receivables of $ 0.1 million and $ 0.4 million, respectively.

During the three and six months ended June 30, 2023, the Company recorded a provision for (recovery of) credit losses on Ground Lease receivables of $ 23 thousand and ($ 2 ) thousand, respectively.

The provision for credit losses for the three months ended June 30, 2023 was due primarily to a declining macroeconomic forecast since March 31, 2023.

The recovery of credit losses for the six months ended June 30, 2023 was due primarily to an improving macroeconomic forecast since December 31, 2022.

(1) During the three and nine months ended September 30, 2024, the Company recorded a provision for credit losses on Ground Lease receivables of $ 2.7 million and $ 3.0 million, respectively.

During the three and nine months ended September 30, 2023, the Company recorded a provision for credit losses on Ground Lease receivables of $ 0.1 million and $ 0.1 million, respectively.

The provision for credit losses for the three and nine months ended September 30, 2023 was due primarily to a declining macroeconomic forecast since June 30, 2023 and December 31, 2022.

respectively.

(2) Allowance for credit losses on unfunded commitments is recorded in “Accounts payable and accrued expenses” on the Company’s consolidated balance sheets.

2 unchanged sentences

Notes to Consolidated Financial Statements

The Company’s amortized cost basis in net investment in sales-type leases and Ground Lease receivables, presented by year of origination and by stabilized or development status, was as follows as of June 30, 2024 ($ in thousands):

Year of Origination

19 unchanged sentences

Development properties

Future Minimum Lease Payments under Sales-type Leases —Future minimum lease payments to be collected under sales-type leases accounted for under ASC 842 - Leases, excluding lease payments that are not fixed and determinable, in effect as of June 30, 2024, are as follows by year ($ in thousands):

Future Minimum Lease Payments under Sales-type Leases —Future minimum lease payments to be collected under sales-type leases accounted for under ASC 842 - Leases, excluding lease payments that are not fixed and determinable, in effect as of September 30, 2024, are as follows by year ($ in thousands):

with Inflation

2024 (remaining six months)

2024 (remaining three months)

Total undiscounted cash flows

1 unchanged sentence

Notes to Consolidated Financial Statements

During the three and six months ended June 30, 2024 and 2023, the Company recognized interest income from sales-type leases in its consolidated statements of operations as follows ($ in thousands):

During the three and nine months ended September 30, 2024 and 2023, the Company recognized interest income from sales-type leases in its consolidated statements of operations as follows ($ in thousands):

Net Investment

in Sales-type

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Total interest income from sales-type leases

1 unchanged sentence

in Sales-type

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Total interest income from sales-type leases

1 unchanged sentence

in Sales-type

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Total interest income from sales-type leases

1 unchanged sentence

in Sales-type

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Total interest income from sales-type leases

3 unchanged sentences

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

June 30, 2024

September 30, 2024

December 31, 2023

7 unchanged sentences

Real estate-related intangible assets, net consist of the following items ($ in thousands):

As of June 30, 2024

As of September 30, 2024

Above-market lease assets, net (1)

11 unchanged sentences

Notes to Consolidated Financial Statements

The amortization of real estate-related intangible assets had the following impact on the Company’s consolidated statements of operations for the three and six months ended June 30, 2024 and 2023 ($ in thousands):

The amortization of real estate-related intangible assets had the following impact on the Company’s consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):

Income Statement

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Intangible asset

6 unchanged sentences

Income Statement

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Intangible asset

6 unchanged sentences

The estimated amortization of real estate-related intangible assets for each of the five succeeding fiscal years is as follows ($ in thousands):

2024 (remaining six months)

(1) As of June 30, 2024, the weighted average amortization period for the Company’s real estate-related intangible assets was approximately 81.0 years.

2024 (remaining three months)

(1) As of September 30, 2024, the weighted average amortization period for the Company’s real estate-related intangible assets was approximately 81.2 years.

Real estate-related intangible liabilities, net consist of the following items ($ in thousands):

As of June 30, 2024

As of September 30, 2024

Below-market lease liabilities (1)

3 unchanged sentences

Below-market lease liabilities are amortized over the non-cancelable term of the leases.

The amortization of real estate-related intangible liabilities had the following impact on the Company’s consolidated statements of operations for the three and six months ended June 30, 2024 and 2023 ($ in thousands):

Safehold Inc.

Notes to Consolidated Financial Statements

The amortization of real estate-related intangible liabilities had the following impact on the Company’s consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):

Income Statement

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Intangible liability

2 unchanged sentences

Income Statement

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Intangible liability

1 unchanged sentence

Operating lease income

Safehold Inc.

Notes to Consolidated Financial Statements

Future Minimum Operating Lease Payments —Future minimum lease payments to be collected under non-cancelable operating leases, excluding lease payments that are not fixed and determinable, in effect as of June 30, 2024, are as follows by year ($ in thousands):

2024 (remaining six months)

(1) During the three months ended June 30, 2024 and 2023, the Company recognized $ 0.2 million and $ 0.3 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.

During the six months ended June 30, 2024 and 2023, the Company recognized $ 4.8 million and $ 4.0 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.

Future Minimum Operating Lease Payments —Future minimum lease payments to be collected under non-cancelable operating leases, excluding lease payments that are not fixed and determinable, in effect as of September 30, 2024, are as follows by year ($ in thousands):

2024 (remaining three months)

(1) During the three months ended September 30, 2024 and 2023, the Company recognized $ 0.2 million and $ 0.2 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.

During the nine months ended September 30, 2024 and 2023, the Company recognized $ 5.0 million and $ 4.2 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.

Note 6 — Loan Receivable, net – Related Party

On March 31, 2023, the Company, as lender and as administrative agent, and Star Holdings, as borrower, entered into a senior secured term loan facility, which was amended on October 4, 2023, in an aggregate principal amount of $ 115.0 million (the “Secured Term Loan Facility”) and an additional commitment amount of up to $ 25.0 million at Star Holding’s election (the “Incremental Term Loan Facility”, together with the Secured Term Loan Facility, as amended, the “Star Holdings Term Loan Facility”).

During the three and six months ended June 30, 2024, the Company recorded $ 2.4 million and $ 4.7 million, respectively, of interest income on the Star Holdings Term Loan Facility, which is recorded in “Interest income – related party” in the Company’s consolidated statements of operations.

During the three and six months ended June 30, 2023, the Company recorded $ 2.4 million of interest income on the Star Holdings Term Loan Facility, which is recorded in “Interest income – related party” in the Company’s consolidated statements of operations.

As of June 30, 2024, the Star Holdings Term Loan Facility had a principal balance of $ 115.0 million and a carrying value of $ 112.2 million.

During the three and nine months ended September 30, 2024, the Company recorded $ 2.4 million and $ 7.1 million, respectively, of interest income on the Star Holdings Term Loan Facility, which is recorded in “Interest income – related party” in the Company’s consolidated statements of operations.

During the three and nine months ended September 30, 2023, the Company recorded $ 2.4 million and $ 4.8 million, respectively, of interest income on the Star Holdings Term Loan Facility, which is recorded in “Interest income – related party” in the Company’s consolidated statements of operations.

As of September 30, 2024, the Star Holdings Term Loan Facility had a principal balance of $ 115.0 million and a carrying value of $ 112.3 million.

As of December 31, 2023, the Star Holdings Term Loan Facility had a principal balance of $ 115.0 million and a carrying value of $ 112.1 million.

3 unchanged sentences

The Star Holdings Term Loan Facility is secured by a first-priority perfected security pledge of all the equity interests in Star Holding’s primary real estate subsidiary.

Starting the quarter that is six months after closing, within five business days after Star Holdings has delivered its unaudited quarterly financial statements, Star Holdings will apply any unrestricted cash on its balance sheet in excess of the aggregate of (i) an operating reserve; and (ii) $ 50 million, to prepay its Star Holdings Term Loan Facility or alternatively, with the consent of the Company, Star Holdings may apply such cash to prepay its margin loan facility in lieu of any prepayment of the Star Holdings Term Loan Facility.

The operating reserve will be calculated quarterly and is equal to the aggregate of projected operating expenses (including payments to the Star Holdings local property consultants but excluding management fees and public company costs), projected land carry costs, projected capital expenditure and projected interest expense on the margin loan facility and Star Holdings Term Loan Facility for the next twelve months; less the projected operating revenues for the next twelve months consistent with the operating budget approved by the Company.

Starting the quarter that is nine months after closing, within five

Safehold Inc.

Notes to Consolidated Financial Statements

business days after Star Holdings has delivered its unaudited quarterly financial statements, Star Holdings will apply any unrestricted cash on its balance sheet in excess of the aggregate of (i) an operating reserve; and (ii) $ 50 million, to prepay its Star Holdings Term Loan Facility or alternatively, with the consent of the Company, Star Holdings may apply such cash to prepay its margin loan facility in lieu of any prepayment of the Star Holdings Term Loan Facility.

The Star Holdings Term Loan Facility contains certain customary covenants, including affirmative covenants on reporting, maintenance of property, continued ownership of interests in the Company as well as negative covenants relating to investments, indebtedness and liens, fundamental changes, asset dispositions, repayments, distributions and affiliate transactions.

Furthermore, the Star Holdings Term Loan Facility contains customary events of default, including payment defaults, failure to perform covenants, cross-default and cross acceleration to other indebtedness, including the margin loan facility, impairment of security interests and change of control.

During the three and six months ended June 30, 2024, the Company recorded a recovery of credit losses of $ 36 thousand and $ 0.1 million, respectively, on the Star Holdings Term Loan Facility, including amounts on the Incremental Term Loan Facility, which was undrawn as of June 30, 2024 and December 31, 2023.

During the three and six months ended June 30, 2023, the Company recorded a provision for credit losses of $ 11 thousand and $ 2.3 million, respectively, on the Star Holdings Term Loan Facility which was originated at the time of the Merger in conjunction with the Spin-Off.

As of June 30, 2024 and December 31, 2023, the Company had $ 0.1 million and $ 0.1 million, respectively, of accrued interest receivable which is recorded in “Deferred expenses and other assets, net” on the Company’s consolidated balance sheets.

The Company did not reverse any accrued interest on its loan asset during the three and six months ended June 30, 2024 and 2023.

During the three and nine months ended September 30, 2024, the Company recorded a recovery of credit losses of $ 0.1 million and $ 0.2 million, respectively, on the Star Holdings Term Loan Facility, including amounts on the Incremental Term Loan Facility, which was undrawn as of September 30, 2024 and December 31, 2023.

During the three and nine months ended September 30, 2023, the Company recorded a provision for credit losses of $ 0.1 million and $ 2.4 million, respectively, on the Star Holdings Term Loan Facility which was originated at the time of the Merger in conjunction with the Spin-Off.

The Company did not have any accrued interest receivable from the Star Holdings Term Loan Facility as of September 30, 2024.

As of December 31, 2023, the Company had $ 0.1 million of accrued interest receivable which is recorded in “Deferred expenses and other assets, net” on the Company’s consolidated balance sheets.

The Company did not reverse any accrued interest on its loan asset during the three and nine months ended September 30, 2024 and 2023.

Safehold Inc.

Notes to Consolidated Financial Statements

Note 7—Equity Investments

6 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Equity investment

2 unchanged sentences

Leasehold Loan Fund (2)

(1) As of June 30, 2024, the Company has a basis difference of $ 19.3 million in the Ground Lease Plus Fund that will be amortized over a weighted average remaining term of 106.1 years using the effective interest method.

During the three and six months ended June 30, 2024, ($ 0.1 ) million and $ 0.1 million, respectively, of the basis difference was amortized as an increase (decrease) to earnings from equity method investments.

During both the three and six months ended June 30, 2023, $ 0.8 million of the basis difference was amortized as an increase to earnings from equity method investments.

(2) As of June 30, 2024, the Company has a basis difference of $ 8.1 million in the Leasehold Loan Fund that will be amortized over a weighted average remaining term of 2.7 years using the effective interest method.

During the three and six months ended June 30, 2024, $ 2.2 million and $ 3.2 million, respectively, of the basis difference was amortized as an increase to earnings from equity method investments.

During both the three and six months ended June 30, 2023, $ 1.0 million of the basis difference was amortized as an increase to earnings from equity method investments.

(1) As of September 30, 2024, the Company has a basis difference of $ 19.3 million in the Ground Lease Plus Fund that will be amortized over a weighted average remaining term of 105.8 years using the effective interest method.

During the three and nine months ended September 30, 2024, ($ 0.1 ) million and $ 0.1 million, respectively, of the basis difference was amortized as a (decrease) increase to earnings from equity method investments.

During the three and nine months ended September 30, 2023, $ 0.8 million and $ 1.6 million, respectively, of the basis difference was amortized as an increase to earnings from equity method investments.

(2) As of September 30, 2024, the Company has a basis difference of $ 7.2 million in the Leasehold Loan Fund that will be amortized over a weighted average remaining term of 2.5 years using the effective interest method.

During the three and nine months ended September 30, 2024, $ 0.8 million and $ 4.0 million, respectively, of the basis difference was amortized as an increase to earnings from equity method investments.

During the three and nine months ended September 30, 2023, $ 1.0 million and $ 2.0 million, respectively, of the basis difference was amortized as an increase to earnings from equity method investments.

425 Park Avenue —In August 2019, the Company formed a venture with a sovereign wealth fund that is an existing shareholder of the Company to acquire the existing Ground Lease at 425 Park Avenue in New York City.

3 unchanged sentences

32 Old Slip —In June 2021, the Company acquired a 29.2 % noncontrolling equity interest in a Ground Lease at an office property in New York City.

Safehold Inc.

Notes to Consolidated Financial Statements

Ground Lease Plus Fund —In connection with Merger, the Company acquired from iStar an investment fund that iStar managed 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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At the time of iStar’s acquisition in November 2021, the Company and iStar entered into an agreement pursuant to which the Company 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.

In January 2024, the Company acquired the Ground Lease from the Ground Lease Plus Fund for $ 38.3 million, excluding $ 36.5 million funded by the Company pursuant to a leasehold improvement allowance (refer to Note 14).

In January 2024, the Company acquired the Ground Lease from the Ground Lease Plus Fund for $ 38.3 million, excluding amounts funded by the Company pursuant to a leasehold improvement allowance (refer to Note 14).

Safehold Inc.

Notes to Consolidated Financial Statements

In June 2021, the Company entered into two agreements (refer to Note 14) pursuant to each of which it agreed to acquire land and a related Ground Lease originated by iStar when certain construction related conditions are met by a specified time period.

12 unchanged sentences

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

As of June 30, 2024, the Leasehold Loan Fund has not funded any of the commitment.

As of September 30, 2024, the Leasehold Loan Fund has not funded any of the commitment.

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

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

As of June 30, 2024, the Leasehold Loan Fund funded $ 40.8 million of the commitment.

As of September 30, 2024, the Leasehold Loan Fund funded $ 40.8 million of the commitment.

In July 2024, the Leasehold Loan Fund committed to provide a $ 31.5 million loan to the ground lessee of a Ground Lease originated by the Company.

The loan was for the Ground Lease tenant’s construction of a student housing property.

As of September 30, 2024, the Leasehold Loan Fund has no t funded any of the commitment.

Safehold Inc.

2 unchanged sentences

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

June 30, 2024

September 30, 2024

December 31, 2023

11 unchanged sentences

Operating lease right-of-use asset is amortized on a straight-line basis over the term of the lease and is recorded in “Real estate expense” in the Company’s consolidated statements of operations.

During both the three months ended June 30, 2024 and 2023, the Company recognized $ 0.1 million in “Real estate expense” and $ 0.1 million in “Other income” from its operating lease right-of-use asset.

During both the six months ended June 30, 2024 and 2023, the Company recognized $ 0.3 million in “Real estate expense” and $ 0.3 million in “Other income” from its operating lease right-of-use asset.

During both the three months ended September 30, 2024 and 2023, the Company recognized $ 0.1 million in “Real estate expense” and $ 0.1 million in “Other income” from its operating lease right-of-use asset.

During both the nine months ended September 30, 2024 and 2023, the Company recognized $ 0.4 million in “Real estate expense” and $ 0.4 million in “Other income” from its operating lease right-of-use asset.

The related operating lease liability (see table below) equals the present value of the minimum rental payments due under the lease discounted at the Company’s incremental secured borrowing rate for a similar asset estimated to be 5.5 % .

The Company also has operating leases for office space that it assumed from iStar in connection with the Merger (refer to Note 10).

(2) Accumulated amortization of deferred finance costs was $ 1.0 million and $ 11.0 million as of June 30, 2024 and December 31, 2023, respectively.

(3) As of June 30, 2024, includes $ 19.1 million of cash posted as temporary replacement collateral in a pool that has asset substitution rights related to certain of the Company’s debt obligations.

As of June 30, 2024 and December 31, 2023, includes $ 4.3 million and $ 6.9 million, respectively, of management fees due from Star Holdings.

Through June 30, 2024, the Company has earned $ 29.3 million of management fees from Star Holdings and as of June 30, 2024, $ 20.7 million of the transaction price is attributable to performance obligations that remain unsatisfied.

(2) Accumulated amortization of deferred finance costs was $ 2.2 million and $ 11.0 million as of September 30, 2024 and December 31, 2023, respectively.

(3) As of September 30, 2024 and December 31, 2023, includes $ 4.2 million and $ 6.9 million, respectively, of management fees due from Star Holdings.

Through September 30, 2024, the Company has earned $ 33.0 million of management fees from Star Holdings and as of September 30, 2024, $ 17.0 million of the transaction price is attributable to performance obligations that remain unsatisfied.

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

June 30, 2024

September 30, 2024

December 31, 2023

6 unchanged sentences

(1) Refer to Note 10.

(2) As of June 30, 2024 and December 31, 2023, accrued expenses includes accrued compensation, legal, audit and property expenses.

(2) As of September 30, 2024 and December 31, 2023, accrued expenses includes accrued compensation, legal, audit and property expenses.

Safehold Inc.

2 unchanged sentences

The Company’s outstanding debt obligations consist of the following ($ in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

21 unchanged sentences

(1) For mortgages, represents the weighted average stated interest rate over the term of the debt from funding through maturity based on the contractual payments owed excluding the effect of debt premium, discount and deferred financing costs.

As of June 30, 2024, the weighted average cash interest rate for the Company’s consolidated mortgage debt, based on interest rates in effect at that date, was 3.33 % .

As of September 30, 2024, the weighted average cash interest rate for the Company’s consolidated mortgage debt, based on interest rates in effect at that date, was 3.34 % .

The difference between the weighted average interest rate and the weighted average cash interest rate is recorded to interest payable within “Accounts payable, accrued expenses, and other liabilities” on the Company’s consolidated balance sheets.

As of June 30, 2024, the Company’s combined weighted average stated interest rate and combined weighted average cash interest rate of the Company’s consolidated mortgage debt, the mortgage debt of the Company’s unconsolidated ventures (applying the Company’s percentage interest in the ventures - refer to Note 7), unsecured senior notes and trust preferred securities were 4.04 % and 3.58 % , respectively.

As of September 30, 2024, the Company’s combined weighted average stated interest rate and combined weighted average cash interest rate of the Company’s consolidated mortgage debt, the mortgage debt of the Company’s unconsolidated ventures (applying the Company’s percentage interest in the ventures - refer to Note 7), unsecured senior notes and trust preferred securities were 4.04 % and 3.58 % , respectively.

(2) Represents the extended maturity date for all debt obligations.

(3) As of June 30, 2024, $ 2.0 billion of real estate, at cost, net investment in sales-type leases and Ground Lease receivables served as collateral for the Company’s debt obligations.

(3) As of September 30, 2024, $ 2.1 billion of real estate, at cost, net investment in sales-type leases and Ground Lease receivables served as collateral for the Company’s debt obligations.

Mortgages —Mortgages consist of asset specific non-recourse borrowings that are secured by the Company’s real estate and Ground Leases.

As of June 30, 2024, the Company’s mortgages are full term interest only, bear interest at a weighted average interest rate of 3.99 % and have maturities between April 2027 and November 2069.

As of September 30, 2024, the Company’s mortgages are full term interest only, bear interest at a weighted average interest rate of 3.99 % and have maturities between April 2027 and November 2069.

Unsecured Notes —In May 2021, Portfolio Holdings, then known as Safehold Operating Partnership LP, (as issuer) and the Company (as guarantor), issued $ 400.0 million aggregate principal amount of 2.80 % senior notes due June 2031 (the “ 2.80 % Notes”).

34 unchanged sentences

The Company also pays a facility fee of 0.10 %, subject to the Company’s credit ratings.

As of June 30, 2024, there was $ 1.0 billion of undrawn capacity on the 2024 Unsecured Revolver.

As of September 30, 2024, there was $ 939 million of undrawn capacity on the 2024 Unsecured Revolver.

2021 Unsecured Revolver—In March 2021, Portfolio Holdings, then known as Safehold Operating Partnership LP, (as borrower) and the Company (as guarantor), entered into an unsecured revolving credit facility with an initial maximum aggregate principal amount of up to $ 1.0 billion (the “2021 Unsecured Revolver”), which amount was increased to $ 1.35 billion in December 2021.

13 unchanged sentences

The interest rates will vary based on the ratings assigned to the Notes by credit rating agencies and market conditions at the time of issuance.

As of June 30, 2024, the Company had no outstanding balance under the Commercial Paper Program.

As of September 30, 2024, the Company had no outstanding balance under the Commercial Paper Program.

Borrowings reduce amounts otherwise available under the 2024 Unsecured Revolver.

11 unchanged sentences

The Company’s mortgages contain no significant maintenance or ongoing financial covenants.

As of June 30, 2024, the Company was in compliance with all of its financial covenants.

Future Scheduled Maturities —As of June 30, 2024, future scheduled maturities of outstanding debt obligations, assuming all extensions that can be exercised at the Company’s option, are as follows ($ in thousands):

2024 (remaining six months)

As of September 30, 2024, the Company was in compliance with all of its financial covenants.

Future Scheduled Maturities —As of September 30, 2024, future scheduled maturities of outstanding debt obligations, assuming all extensions that can be exercised at the Company’s option, are as follows ($ in thousands):

2024 (remaining three months)

Total principal maturities

1 unchanged sentence

Total debt obligations, net

(1) As of June 30, 2024, the Company’s weighted average maturity for its secured mortgages was 27.0 years.

(1) As of September 30, 2024, the Company’s weighted average maturity for its secured mortgages was 26.8 years.

Safehold Inc.

1 unchanged sentence

Note 10—Commitments and Contingencies

Lease Commitments —Future minimum lease obligations under non-cancelable operating leases as of June 30, 2024 are as follows ($ in thousands):

2024 (remaining six months)

Lease Commitments —Future minimum lease obligations under non-cancelable operating leases as of September 30, 2024 are as follows ($ in thousands):

2024 (remaining three months)

Total undiscounted cash flows (1)

7 unchanged sentences

The Company assumed its operating leases from iStar in connection with the Merger and therefore did not directly make any payments under its operating leases for the three months ended March 31, 2023.

During the three months ended June 30, 2023, the Company made payments of $ 1.5 million related to its operating leases.

During the three and six months ended June 30, 2024, the Company made payments of $ 1.4 million and $ 2.8 million, respectively, related to its operating leases.

During the three and six months ended September 30, 2023, the Company made payments of $ 1.4 million and $ 2.9 million, respectively, related to its operating leases.

During the three and nine months ended September 30, 2024, the Company made payments of $ 1.4 million and $ 4.3 million, respectively, related to its operating leases.

Unfunded Commitments —The Company has unfunded commitments to certain of its Ground Lease tenants related to leasehold improvement allowances that it expects to fund upon the completion of certain conditions.

As of June 30, 2024, the Company had $ 50.6 million of such commitments, excluding commitments to be funded by noncontrolling interests.

As of September 30, 2024, the Company had $ 70.6 million of such commitments, excluding commitments to be funded by noncontrolling interests.

The Company also has unfunded forward commitments related to agreements that it entered into for the acquisition of new Ground Leases or additions to existing Ground Leases if certain conditions are met (refer to Note 14).

These commitments may also include leasehold improvement allowances that will be funded to the Ground Lease tenants when certain conditions are met.

As of June 30, 2024, the Company had an aggregate $ 150.4 million of such commitments.

As of September 30, 2024, the Company had an aggregate $ 150.3 million of such commitments.

There can be no assurance that the conditions to closing for these transactions will be satisfied and that the Company will acquire the Ground Leases or fund the leasehold improvement allowances .

1 unchanged sentence

We refer to these arrangements as performance-based commitments.

As of June 30, 2024, the Company had $ 103.3 million of such commitments.

As of September 30, 2024, the Company had $ 120.1 million of such commitments.

Legal Proceedings —The Company evaluates developments in legal proceedings that could require a liability to be accrued and/or disclosed.

22 unchanged sentences

Notes to Consolidated Financial Statements

The table below presents the Company’s derivatives as well as their classification on the consolidated balance sheets as of June 30, 2024 and December 31, 2023 ($ in thousands):

June 30, 2024

The table below presents the Company’s derivatives as well as their classification on the consolidated balance sheets as of September 30, 2024 and December 31, 2023 ($ in thousands):

September 30, 2024

December 31, 2023

5 unchanged sentences

Accounts payable, accrued expenses and other liabilities

(1) As of June 30, 2024, the Company has two interest rate swap derivatives outstanding that mature in April 2028 and have an aggregate $ 500.0 million notional amount, which hedge in-place floating-rate debt.

(1) As of September 30, 2024, the Company has two interest rate swap derivatives outstanding that mature in April 2028 and have an aggregate $ 500.0 million notional amount, which hedge in-place floating-rate debt.

The Company also has three designated derivatives outstanding that protect the Company against interest rate volatility with respect to long-term debt to be placed in the future, which have an aggregate $ 350.0 million notional amount, one of which matures in December 2024 and two that mature in December 2025.

These designated hedges protect the Company against interest rate volatility with respect to future debt with a tenor of approximately 30 years .

(2) Over the next 12 months, the Company expects that $ 4.4 million related to cash flow hedges will be reclassified from “Accumulated other comprehensive income (loss)” as a decrease to interest expense.

(2) Over the next 12 months, the Company expects that $ 1.1 million related to cash flow hedges will be reclassified from “Accumulated other comprehensive income (loss)” as an increase to interest expense.

(3) The fair value of the Company’s derivatives is estimated using valuation techniques utilized by a third-party specialist using observable inputs such as interest rates and contractual cash flow and are classified as Level 2 within the fair value hierarchy.

1 unchanged sentence

The Company has agreements with each of its derivative counterparties that contain a provision whereby if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

The table below presents the effect of the Company’s derivative financial instruments in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2024 and 2023 ($ in thousands):

The table below presents the effect of the Company’s derivative financial instruments in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):

Amount of Gain

9 unchanged sentences

Derivatives Designated in Hedging Relationships

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

Interest rate swaps

Interest expense

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Interest rate swaps

Interest expense

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

Interest rate swaps

Interest expense

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Interest rate swaps

4 unchanged sentences

Common Stock —At the effective time of the Merger on March 31, 2023, each share of Old SAFE common stock issued and outstanding immediately prior to the effective time (other than any shares owned directly by iStar or any of the wholly-owned subsidiaries of iStar and in each case not held on behalf of third parties) was converted into the right to receive one share of newly issued common stock of the Company.

As of June 30, 2024, the Company has one class of common stock outstanding.

As of September 30, 2024, the Company has one class of common stock outstanding.

In April 2023, the Company filed with the U.S.

3 unchanged sentences

Actual sales, if any, will depend on a variety of factors to be determined by the Company from time to time, including, among other things, market conditions, the trading price of the Common Stock, capital needs and determinations by the Company of the appropriate sources of its funding.

Through June 30, 2024, the Company has no t sold any shares of its common stock through the Primary Sales Agreement.

Through September 30, 2024, the Company has no t sold any shares of its common stock through the Primary Sales Agreement.

In August 2023, the Company sold 6,500,000 shares of its common stock in an underwritten public offering for gross proceeds of $ 139.1 million.

7 unchanged sentences

Prior to the effective time of the Merger, Old SAFE awarded all shares of Old SAFE common stock remaining available for issuance under the 2017 Equity Incentive Plan to members of its Former Manager’s management team and employees who performed services for Old SAFE.

As of June 30, 2024, there were no shares available for issuance for future awards under Old SAFE’s 2017 Equity Incentive Plan.

As of September 30, 2024, there were no shares available for issuance for future awards under Old SAFE’s 2017 Equity Incentive Plan.

iStar’s amended and restated 2009 Long-Term Incentive Program (the “LTIP”) was approved by stockholders in 2021 and remained in effect after the closing of the Merger.

11 unchanged sentences

In addition, in May 2024, the Company’s shareholders approved an increase to the LTIP of 1,000,000 shares.

As of June 30, 2024, an aggregate of 1,054,733 shares of the Company’s common stock remains available for awards under the LTIP.

As of June 30, 2024, there was $ 9.9 million of total unrecognized compensation cost related to all unvested restricted stock units that is expected to be recognized over a weighted average remaining vesting/service period of 2.0 years.

As of September 30, 2024, an aggregate of 1,054,098 shares of the Company’s common stock remains available for awards under the LTIP.

As of September 30, 2024, there was $ 8.6 million of total unrecognized compensation cost related to all unvested restricted stock units that is expected to be recognized over a weighted average remaining vesting/service period of 1.8 years .

Caret Performance Incentive Plan — During the third quarter of 2018, Old SAFE adopted, and in the second quarter of 2019, its stockholders approved, the Caret Performance Incentive Plan (the “Original Caret Performance Incentive Plan”).

7 unchanged sentences

The new Caret unit awards were granted immediately following the Merger and the effectiveness of the Amended Caret Performance Incentive Plan, and cliff vest on the fourth anniversary of their grant date if the Company’s common stock has traded at an average per share price of $ 60.00 or more for at least 30 consecutive trading days during that four-year period.

As of June 30, 2024, there was $ 3.8 million of total unrecognized compensation cost related to all unvested Caret units that is expected to be recognized over a remaining vesting/service period of 2.75 years.

As of June 30, 2024, and after giving effect to the Caret Restructuring and the post-Merger Caret unit awards, Amended Caret Performance Incentive Plan participants held 1,371,254 Caret units, representing 14.4 % of the then-outstanding Caret units and 11.4 % of the then-authorized Caret units.

During the three and six months ended June 30, 2024, the Company recognized ($ 0.3 ) million and $ 0.2 million, respectively, of (income) expense from Caret units, which is recorded in “General and administrative” in the Company’s consolidated statements of operations and “Noncontrolling interests” on the Company’s consolidated balance sheets.

During both the three and six months ended June 30, 2023, the Company recognized $ 0.5 million in expense from Caret

As of September 30, 2024, there was $ 3.5 million of total unrecognized compensation cost related to all unvested Caret units that is expected to be recognized over a remaining vesting/service period of 2.5 years.

As of September 30, 2024, and after giving effect to the Caret Restructuring and the post-Merger Caret unit awards, Amended Caret Performance Incentive Plan participants held 1,371,254 Caret units, representing 14.4 % of the then-outstanding Caret units and 11.4 % of the then-authorized Caret units.

During the three and nine months ended September 30, 2024, the Company recognized $ 0.3 million and $ 0.6 million, respectively, of expense from Caret units, which is recorded in “General and administrative” in the Company’s consolidated statements of operations and “Noncontrolling interests” on the Company’s consolidated balance sheets.

During the three and nine months ended September 30, 2023, the Company recognized $ 0.5 million and $ 1.0 million,

Safehold Inc.

Notes to Consolidated Financial Statements

units, which is recorded in “General and administrative” in the Company’s consolidated statements of operations and “Noncontrolling interests” on the Company’s consolidated balance sheets.

respectively, in expense from Caret units, which is recorded in “General and administrative” in the Company’s consolidated statements of operations and “Noncontrolling interests” on the Company’s consolidated balance sheets.

401(K) Plan —The Company has a savings and retirement plan (the "401(k) Plan"), which is a voluntary, defined contribution plan.

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At the discretion of the Company’s Board of Directors, the Company may make matching contributions on the participant’s behalf of up to 50 % of the participant’s contributions, up to a maximum of 10 % of the participants’ compensation.

The Company made gross contributions of $ 0.5 million for the six months ended June 30, 2024.

The Company made gross contributions of $ 0.5 million for the nine months ended September 30, 2024.

Accumulated Other Comprehensive Income (Loss) —Accumulated other comprehensive income (loss) consists of net unrealized gains (losses) on the Company’s derivative transactions.

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Because taxable income differs from cash flow from operations due to non-cash revenues and expenses (such as depreciation and other items), 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.

During the six months ended June 30, 2024 and 2023, the Company declared cash dividends on its common stock of $ 25.4 million, or $ 0.354 per share, and $ 22.6 million, or $ 0.354 per share, respectively.

During the nine months ended September 30, 2024 and 2023, the Company declared cash dividends on its common stock of $ 38.1 million, or $ 0.531 per share, and $ 35.3 million, or $ 0.531 per share, respectively.

Safehold Inc.

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Earnings attributable to common shares:

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common shareholders - diluted

(1) For the three months ended June 30, 2024 and 2023, the effect of 9 thousand and 452 thousand, respectively, of the Company’s restricted stock awards were antidilutive.

For the six months ended June 30, 2024 and 2023, the effect of 31 thousand and 456 thousand, respectively, of the Company’s restricted stock awards were antidilutive.

(1) For the three months ended September 30, 2023, the effect of 51 thousand of the Company’s restricted stock units were antidilutive.

For the nine months ended September 30, 2024 and 2023, the effect of 10 thousand and 22 thousand, respectively, of the Company’s restricted stock units were antidilutive.

Note 14—Related Party Transactions

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3 x prior year’s management fee

The Company did not incur management fees to the Former Manager for the three months ended June 30, 2023.

During the six months ended June 30, 2023, the Company recorded $ 5.2 million in management fees to the Former Manager.

The Company did not incur management fees to the Former Manager for the three months ended September 30, 2023.

During the nine months ended September 30, 2023, the Company recorded $ 5.2 million in management fees to the Former Manager.

These management fees are recorded in “General and administrative” in the Company’s consolidated statements of operations.

1 unchanged sentence

The Company paid, or reimbursed iStar for, certain of the Company’s operating expenses as well as the costs of personnel performing certain legal, accounting, finance, due diligence tasks and other services, in each case except those specifically required to be borne or elected not to be charged by the iStar under the management agreement.

The Company was not allocated any expenses from iStar for the three months ended June 30, 2023.

During the six months ended June 30, 2023, the Company was allocated $ 3.1 million in expenses from iStar.

The Company was not allocated any expenses from iStar for the three months ended September 30, 2023.

During the nine months ended September 30, 2023, the Company was allocated $ 3.1 million in expenses from iStar.

These expenses are recorded in “General and administrative” in the Company’s consolidated statements of operations.

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These transactions were approved by the Company’s independent directors in accordance with the Company’s policy with respect to related party transactions.

The Company entered into a discretionary commitment to fund up to $ 9.0 million of preferred equity in an entity that owns the leasehold interest under one of the Company’s office Ground Leases located in Washington, DC.

This preferred equity position is intended to fund any operating cash flow deficits and leasing capital necessary at the property as our tenant explores potential re-leasing or a leasehold sale.

In-place cash flows at the property covered ground rent through September 30, 2024, though a semi-annual property tax payment made in September 2024 produced a shortfall, which resulted in a $ 1.5 million funding.

During the three and nine months ended September 30, 2024, the Company funded $ 1.5 million of the commitment which is included in “Deferred expenses and other assets” on the Company’s consolidated balance sheet as of September 30, 2024.

In addition, the Company has recognized $ 1.7 million and $ 2.7 million, respectively, of interest income from sales-type leases from the Ground Lease in its consolidated statements of operations for the three and nine months ended September 30, 2024.

In November 2021, the Company entered into an agreement pursuant to which it agreed to acquire land and a related Ground Lease originated by iStar when certain construction related conditions are met by a specified time period.

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In May 2023, certain milestones were met by the tenant as it exited the pre-development stage and the tenant began accessing the leasehold improvement allowance.

As of June 30, 2024, the Company funded $ 49.3 million of the leasehold improvement allowance.

As of September 30, 2024, the $ 51.8 million leasehold improvement allowance has been fully funded.

In June 2021, the Company acquired from iStar a purchase option agreement for $ 1.2 million, which amount was equal to the deposit previously made by iStar under such option agreement plus assumption of iStar’s out of pocket costs and expenses in connection with entering into such option agreement.

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In September 2023, the Company terminated its acquisition right under the option agreement for $ 0.3 million and recognized a loss of $ 1.9 million, inclusive of the derecognition of previously-capitalized deal structuring costs.

The loss is recorded in “Other expense” in the Company’s consolidated statements of operations.

In June 2021, the Company entered into two agreements pursuant to each of which it agreed to acquire land and a related Ground Lease originated by iStar when certain construction related conditions are met by a specified time period.

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There can be no assurance that the conditions to closing will be satisfied and that the Company will acquire the other property and Ground Lease from the Ground Lease Plus Fund.

Safehold Inc.

Notes to Consolidated Financial Statements

In February 2022, Old SAFE sold an aggregate of 108,571 Caret units, 1.08 % of the then-authorized Caret units, to a group of investors (refer to Note 3).

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In April 2024, all of the investors in the February 2022 transaction exercised this right and elected to have their Caret units redeemed.

Safehold Inc.

Notes to Consolidated Financial Statements

On March 31, 2023, shortly before the closing of the Merger, iStar sold and affiliates of MSD Partners bought 5,405,406 shares of Old SAFE’s common stock then owned by iStar.

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In the event of a termination without cause by Star Holdings prior to the fourth anniversary of the Spin-Off, Star Holdings will pay SpinCo Manager a termination fee of $ 50.0 million minus the aggregate amount of management fees actually paid to SpinCo Manager prior to the termination date.

However, if Star Holdings has completed the liquidation of its assets on or before the termination date, the termination fee will consist of any portion of the annual management fee that remained unpaid for the remainder of the then current annual term plus, if the termination date occurs on or before the third anniversary of the Spin-Off, the amount of the management fee that would have been payable for the next succeeding annual term, or if the termination date occurs after the third anniversary of the Spin-Off, zero .

In the event of a termination by the Company based on a reduction in the amount of Star Holdings’ consolidated assets below designated thresholds, Star Holdings will pay SpinCo Manager a termination fee of $ 30.0 million if the termination occurs in the first year, $ 15.0 million if the termination occurs in the second year and $ 5.0 million if the termination occurs in the third year, in each case, plus the balance of any unpaid portion of the annual management fee for the applicable year.

However, if Star Holdings has completed the liquidation of

Safehold Inc.

Notes to Consolidated Financial Statements

During the three and six months ended June 30, 2024, the Company recorded $ 4.4 million and $ 9.9 million, respectively, in management fees from Star Holdings.

During both the three and six months ended June 30, 2023, the Company recorded $ 7.2 million in management fees from Star Holdings.

its assets on or before the termination date, the termination fee will consist of any portion of the annual management fee that remained unpaid for the remainder of the then current annual term plus, if the termination date occurs on or before the third anniversary of the Spin-Off, the amount of the management fee that would have been payable for the next succeeding annual term, or if the termination date occurs after the third anniversary of the Spin-Off, zero .

During the three and nine months ended September 30, 2024, the Company recorded $ 3.7 million and $ 13.6 million, respectively, in management fees from Star Holdings.

During the three and nine months ended September 30, 2023, the Company recorded $ 6.0 million and $ 13.2 million, respectively, in management fees from Star Holdings.

The management fees are included in “Other income” in the Company’s consolidated statements of operations.

The Company and Star Holdings also entered into a governance agreement that places certain restrictions on the transfer and voting of the shares of the Company owned by Star Holdings, and a registration rights agreement under which the Company agreed to register such shares for resale in accordance with applicable securities laws.

As of June 30, 2024, Star Holdings owned approximately 18.9 % of the Company’s common stock outstanding through a wholly-owned subsidiary.

As of September 30, 2024, Star Holdings owned approximately 18.9 % of the Company’s common stock outstanding through a wholly-owned subsidiary.

In April 2023, the Company, Portfolio Holdings and Star Investment Holdings SPV LLC (“Star Investment Holdings”), a subsidiary of Star Holdings, entered into an ATM Equity Offering Sales Agreement (the “Selling Stockholder Sales Agreement”) with the sales agents named therein pursuant to which Star Investment Holdings may sell, from time to time, subject to receiving the Company’s consent, up to 1,000,000 shares of the Company’s common stock (the “Selling Stockholder Shares”) through or to the sales agents.

2 unchanged sentences

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