What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-10-29 · 242 added, 562 removed, 623 unchanged (56% of the section changed)

3 unchanged sentences

(In thousands)

September 30, 2024

December 31, 2023

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)

Net investment in sales-type leases ($ 7,697 and $ 6,821 of allowances as of March 31, 2025 and December 31, 2024, respectively)

Ground Lease receivables, net ($ 5,213 and $ 3,664 of allowances as of March 31, 2025 and December 31, 2024, respectively)

Real estate, at cost

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

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

Loans receivable, net - related party ($ 2,194 and $ 2,311 of allowances as of March 31, 2025 and December 31, 2024, respectively)

Equity investments

4 unchanged sentences

Deferred expenses and other assets, net (2)

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

LIABILITIES AND EQUITY

Accounts payable, accrued expenses and other liabilities

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Commitments and contingencies (refer to Note 10)

Redeemable noncontrolling interests (refer to Note 3)

Safehold Inc.

shareholders' equity:

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

Common stock, $ 0.01 par value, 400,000 shares authorized, 71,723 and 71,440 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

4 unchanged sentences

Noncontrolling interests

Total liabilities, redeemable noncontrolling interests and equity

Total liabilities and equity

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

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

(2) As of March 31, 2025 and December 31, 2024, includes $ 3.7 million and $ 3.8 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 Nine Months Ended

September 30,

Interest income from sales-type leases

8 unchanged sentences

General and administrative

Impairment of goodwill

Provision for (recovery of) credit losses

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(1) Refer to Note 6.

(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).

(2) For the three months ended March 31, 2025 and 2024, includes $ 3.6 million and $ 5.5 million, respectively, of management fees 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 Nine Months Ended

September 30,

Net income (loss)

15 unchanged sentences

Income (Loss)

Balance at June 30, 2024

Net income (loss)

Issuance of common stock, net / amortization

Dividends declared ($ 0.177 per share)

Change in accumulated other comprehensive income (loss)

Distributions to noncontrolling interests

Contribution from noncontrolling interests

Acquisition of noncontrolling interest

Balance at September 30, 2024

Balance at June 30, 2023

Net income (loss)

Issuance of common stock, net / amortization

Dividends declared ($ 0.177 per share)

Change in accumulated other comprehensive income (loss)

Distributions to noncontrolling interests

Balance at September 30, 2023

Balance at December 31, 2024

4 unchanged sentences

Distributions to noncontrolling interests

Contribution from noncontrolling interests

Acquisition of noncontrolling interest

Redemption of noncontrolling interests

Balance at September 30, 2024

Balance at March 31, 2025

Balance at December 31, 2023

Impact from adoption of new accounting standard

Net income (loss)

2 unchanged sentences

Change in accumulated other comprehensive income (loss)

Contributions from noncontrolling interests, net

Change in noncontrolling interests

Distributions to noncontrolling interests

Merger consideration (refer to Note 1 and Note 3)

Balance at September 30, 2023

Balance at March 31, 2024

(1) Refer to Note 3.

3 unchanged sentences

(In thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash flows from operating activities:

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Amortization of real estate-related intangibles, net

Impairment of goodwill

Write-off of investment in preferred equity

Provision for credit losses

2 unchanged sentences

Amortization of premium, discount and deferred financing costs on debt obligations, net

Non-cash management fees

Other operating activities

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Cash flows from investing activities:

Acquisitions of real estate

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

Origination of loans receivable, net

Payment for merger consideration

Cash and cash equivalents acquired upon merger

Contributions to equity method investments

Distributions from equity method investments

Funding reserves received from Ground Lease tenant net of disbursements

Net proceeds received from sale of real estate available and held for sale

Return of deposits on Ground Lease investments

Return of cash collateral for debt obligations

Funding of cash collateral for debt obligations

Proceeds received from derivative transaction

Proceeds received from derivative transactions

Proceeds received from the settlement of derivative transactions

Other investing activities

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Cash flows from financing activities:

Proceeds from issuance of common stock

Proceeds from debt obligations

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Payments for withholding taxes upon vesting for stock-based compensation

Redemption of redeemable noncontrolling interests

Redemption of noncontrolling interests

Distributions to noncontrolling interests

Contributions from noncontrolling interests

Acquisition of noncontrolling interest

Other financing activities

Cash flows provided by (used in) financing activities

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Total cash and cash equivalents and restricted cash

Supplemental disclosure of cash flow information:

Supplemental disclosure of non-cash investing and financing activity:

Debt obligations assumed (refer to Note 3)

Issuance of common stock for acquisition of assets (refer to Note 3)

Dividends declared to common shareholders

Non-cash interest accrued to debt balances

Accrued offering costs

Real estate transferred to real estate available and held for sale

Accruals for payments of withholding taxes upon vesting for stock-based compensation

Accrued finance costs

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

3 unchanged sentences

Business —On March 31, 2023, Safehold Inc.

(“Old SAFE”) merged with and into iStar (see Merger Transaction below), at which time Old SAFE ceased to exist and iStar continued as the surviving corporation and changed its name to “Safehold Inc.” (the “Merger”).

References to iStar refer to iStar prior to the Merger.

For accounting purposes, the Merger is treated as a “reverse acquisition” in which iStar is considered the legal acquirer and Old SAFE is considered the accounting acquirer.

(“Old Safe”) merged with and into iStar Inc.

(“iStar”), at which time Old Safe ceased to exist and iStar continued as the surviving corporation and changed its name to “Safehold Inc.” (the “Merger”).

Unless context otherwise requires, references to “the Company” refer to the business and operations of Old Safe and its consolidated subsidiaries prior to the Merger, and to Safehold Inc.

(formerly known as iStar) and its consolidated subsidiaries following the consummation of the Merger.

The Company operates its business through one reportable segment by acquiring, managing and capitalizing ground leases.

The Company also manages entities focused on ground leases (refer to Note 7) and a wholly-owned subsidiary of the Company serves as external manager to Star Holdings (“Star Holdings”), a Maryland statutory trust that holds the legacy non-ground lease assets previously held by iStar.

(formerly iStar) and its consolidated subsidiaries following the consummation of the Merger.

The Company is internally managed and operates its business through one reportable segment by acquiring, managing and capitalizing ground leases.

Ground leases are long-term contracts between the landlord (the Company) and a tenant or leaseholder.

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The Company believes that the Ground Lease structure provides an opportunity for potential value accretion through the reversion to the Company, as the Ground Lease owner, of the buildings and improvements on the land at the expiration or earlier termination of the lease, for no additional consideration from the Company.

Prior to the Merger, Old SAFE was managed by SFTY Manager, LLC (the “Former Manager”), a wholly-owned subsidiary of iStar, pursuant to a management agreement.

Old SAFE had no employees, as the Former Manager provided all services to it.

Old SAFE relied on the extensive investment origination and sourcing platform of its Former Manager to actively promote the benefits of the Ground Lease structure to prospective Ground Lease tenants.

Subsequent to the Merger, the Company is internally managed.

Organization —The Company is a Maryland corporation and its common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “SAFE.” The Company (then known as iStar) elected to be treated as a real estate investment trust (“REIT”) for U.S.

federal income tax purposes, commencing with the tax year ended December 31, 1998.

Safehold Inc.

Notes to Consolidated Financial Statements

As part of a restructuring in connection with the Merger (the “Caret Restructuring”), Safehold Operating Partnership LP converted into a Delaware limited liability company and renamed itself “Safehold GL Holdings LLC” (“Portfolio Holdings”), with the Company as its managing member.

The Company conducts all of its business and owns all of its properties through Portfolio Holdings.

In addition, holders of Caret units in Old SAFE’s subsidiary, Caret Ventures LLC (“Caret Ventures”), contributed their interests in Caret Ventures to Portfolio Holdings in return for Caret units issued by Portfolio Holdings.

Following the restructuring, 100 % of the equity interests in Caret Ventures is held by Portfolio Holdings.

The Company, management of the Company, employees and former employees of the Company, affiliates of MSD Partners (as defined below) and other outside investors own the issued and outstanding equity of Portfolio Holdings.

Merger Transaction —On August 10, 2022, Old SAFE entered into an Agreement and Plan of Merger (the “Merger Agreement”) with iStar, and on March 31, 2023, the Merger was completed in accordance with the terms of the Merger Agreement.

For accounting purposes, the Merger was accounted for as a business combination using the acquisition method of accounting under Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”) and treated as a “reverse acquisition” in which iStar is considered the legal acquirer and Old SAFE is considered the accounting acquirer.

The Company considered the following relevant facts for this determination:

● At the time of the Merger closing, Old SAFE shareholders, excluding the Old SAFE shares held directly by iStar, members of iStar management and Star Holdings, control a majority of the voting interests in the Company and the combined company operates under the name “Safehold Inc.;”

● The composition of the combined company’s board of directors, which includes three directors from Old SAFE, two directors from iStar, and two management members of both Old SAFE and iStar;

● Old SAFE was the larger entity by size when comparing the key metrics of total assets, total revenue and net income (loss) from continuing operations and allocable to common shareholders;

● Substantially all of the assets and liabilities of the Company consist of the historical assets and liabilities of Old SAFE, and the go-forward business plan of the Company is to conduct the Ground Lease business conducted by Old SAFE prior to the Merger.

As a result, the historical financial statements of Old SAFE become the historical financial statements of the Company.

Immediately before the closing of the Merger, iStar separated its remaining legacy non-ground lease assets and businesses, approximately $ 50.0 million of cash, exclusive of working capital reserves and restricted cash, and approximately 13.5 million shares of Old SAFE common stock into Star Holdings by distributing to iStar’s stockholders, on a pro rata basis, the issued and outstanding equity interests of Star Holdings (the “Spin-Off”).

Other Merger related transactions

On August 10, 2022, iStar entered into an agreement (the “MSD Stock Purchase Agreement”) with MSD Partners, L.P.

(“MSD Partners”) pursuant to which MSD Partners agreed to purchase 5,405,406 shares of Old SAFE’s common stock then owned by iStar (the “MSD Stock Purchase”) for an aggregate purchase price of approximately $ 200 million, or $ 37.00 per share, payable in cash.

MSD Partners’ rights and obligations under the MSD Stock Purchase Agreement were subsequently assigned to certain of its affiliates.

The MSD Stock Purchase closed on March 31, 2023, shortly before the closing of the Merger.

MSD Partners has the right to designate an observer to the board of directors of the Company, a top-up right on future equity issuances (subject to certain exceptions) and registration rights.

MSD Partners is subject to a customary standstill and certain restrictions on sales of its shares of the Company’s common stock.

The Company conducts all of its business and owns all of its properties through Safehold GL Holdings LLC (“Portfolio Holdings”), which, prior to its conversion into a Delaware limited liability company in connection with the Merger, was named Safehold Operating Partnership LP.

The Company, management of the Company, employees and former employees of the Company, affiliates of MSD Partners, L.P.

(“MSD Partners”) and other outside investors own the issued and outstanding equity of Portfolio Holdings.

Safehold Management Services Inc.

(“SpinCo Manager”), a Delaware corporation and a subsidiary of the Company, is party to a management agreement with Star Holdings dated as of March 31, 2023, as amended, pursuant to

Safehold Inc.

Notes to Consolidated Financial Statements

On August 10, 2022, MSD Partners also agreed to purchase 100,000 Caret units (refer to Note 12) from the Company for an aggregate purchase price of $ 20.0 million (the “MSD Caret Purchase”).

MSD Partners received a credit against their purchase price for Caret units equal to the amount they would have received had they held Caret units at the time of a December 2022 distribution to other Caret unit holders, which was equal to $ 0.6 million.

MSD Partners’ rights and obligations under the purchase agreement were subsequently assigned to certain of its affiliates.

The closing of the MSD Caret Purchase took place in conjunction with the closing of the Merger on March 31, 2023.

Star Holdings was capitalized in part with an 8.0 %, four-year term loan from the Company having an initial principal amount of $ 115.0 million, as well as SOFR plus 3.00 % bank debt with an initial principal balance of $ 140.0 million from Morgan Stanley Bank, N.A.

which is secured by approximately 13.5 million shares of the Company (refer to Note 6).

In connection with the Spin-Off, Safehold Management Services Inc.

(“SpinCo Manager”), a Delaware corporation and a subsidiary of the Company, entered into a management agreement with Star Holdings effective as of March 31, 2023, pursuant to which SpinCo Manager will continue to operate and pursue the orderly monetization of Star Holding’s assets.

Star Holdings paid SpinCo Manager an annual management fee of $ 25.0 million for the term ended March 31, 2024, and will pay an annual fee of $ 15.0 million for the term ended March 31, 2025.

The annual fee declines to $ 10.0 million and $ 5.0 million, respectively, for each of the following annual terms, and adjusts to 2.0 % of the gross book value of Star Holdings’ assets, excluding shares of the Company’s common stock, thereafter.

which SpinCo Manager will operate and pursue the orderly monetization of Star Holding’s assets.

Star Holdings paid SpinCo Manager an annual management fee of $ 25.0 million for the term ended March 31, 2024 and $ 15.0 million for the term ended March 31, 2025.

The annual fee declines to $ 10.0 million and $ 7.5 million (refer to Note 14), respectively, for each of the following annual terms, and adjusts to 2.0 % of the gross book value of Star Holdings’ assets, excluding shares of the Company’s common stock held by Star Holdings, thereafter.

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.

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Actual results could differ from those estimates.

Certain prior year amounts have been reclassified in the Company's consolidated financial statements and the related notes to conform to the current period presentation.

In the opinion of management, the accompanying consolidated financial statements contain all adjustments consisting of normal recurring adjustments necessary for a fair statement of the results for the interim periods presented.

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

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

As of March 31, 2025, the total assets of these consolidated VIEs were $ 77.1 million and total liabilities were $ 30.1 million.

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.

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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 September 30, 2024.

Safehold Inc.

Notes to Consolidated Financial Statements

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.

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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

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).

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).

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 September 30, 2024

As of March 31, 2025

As of December 31, 2024

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(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 .

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).

Redeemable Noncontrolling Interests —In February 2022, the Company sold 108,571 Caret units of Portfolio Holdings (refer to Note 12) for $ 19.0 million to third-party investors and received a commitment from an existing shareholder (which was 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).

As part of the sale, the Company agreed to use commercially reasonable efforts to provide public market liquidity for such Caret units by seeking to provide a listing of the Caret units, or securities into which they may be exchanged, within two years of the sale.

Because public market liquidity was not achieved by February 2024, the investors in the February 2022 transaction had the right to cause their Caret units purchased in February 2022 to be redeemed by Portfolio Holdings at their original purchase price less the amount of distributions previously made on such units.

Safehold Inc.

Notes to Consolidated Financial Statements

During the three months ended March 31, 2024, the redemption option was extended to April 2024.

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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.

Under ASC 805, an acquisition does not qualify as a business when (i) substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets;

(ii) the acquisition does not include a substantive process in the form of an acquired workforce;

or (iii) there is an acquired contract that cannot be replaced without significant cost, effort or delay.

Acquisitions of a business are accounted for as business combinations and other acquisition transactions are accounted for as asset acquisitions.

Transaction costs related to asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs related to business combinations are expensed as incurred.

The Company’s acquisition of iStar in 2023 was accounted for as a business combination.

For business combinations, the Company recognizes and measures identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the Company’s consolidated balance sheets.

I n a business combination, the difference, if any, between the purchase consideration and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain.

Fair values are based on available information including discounted cash flow analysis or similar fair value models.

Fair value estimates are also made using significant assumptions such as capitalization rates, discount rates, fair market lease rates and other market data.

The fair value of the Company’s interests in equity investments acquired is calculated using the fair value of the investments held by the venture, which are valued using methods as described above, and considers the Company’s economics in the venture.

The fair value of financial instruments, which could include loans receivable or net investment in sales-type leases, is based on current market conditions and loan or lease agreements in place.

The fair value of tangible assets, which could include land, buildings, building improvements and tenant improvements is determined as if these assets are vacant.

Intangible assets may include the value of right of use lease assets, above-market leases and in-place leases.

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 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.

The table below shows the Company’s purchase consideration for the acquisition of iStar ($ in thousands):

Total Company shares as purchase price (1)

Stock price of the Company’s common stock (2)

Fair value of the Company's stock transferred

Cash consideration paid by the Company to iStar

Purchase consideration

(1) The total post-Merger shares of the Company to be held by iStar shareholders includes 12.7 million shares that were issued as consideration for the investment in Old SAFE previously held by iStar as of March 30, 2023 that were retired in connection with the Merger.

Accordingly, these shares are excluded from the purchase consideration as they are reflected as a treasury stock repurchase and retirement by Old SAFE.

(2) Based on the closing price of Old SAFE’s common stock as of March 30, 2023, representing the final closing price prior to the effective time of the Merger.

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 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.

Safehold Inc.

Notes to Consolidated Financial Statements

The following table sets forth the preliminary allocation as of March 31, 2023 of the purchase consideration to the fair values of identifiable tangible and intangible assets acquired and liabilities assumed, recognized as a result of the acquisition described in Note 1 above, measurement period adjustments and a final allocation of the purchase consideration ($ in thousands):

Purchase Price

Cash and cash equivalents

Equity investments (1)

Deferred tax asset (2)

Deferred expenses and other assets (2)(3)

Total assets acquired

Accounts payable, accrued expenses and other liabilities (2)(4)

Debt obligations (5)

Total liabilities assumed

Net identifiable (liabilities assumed) assets acquired

Purchase consideration

net identifiable liabilities assumed

(1) Equity investments were valued using discount rates between 7.2 % and 13.9 % and are classified as Level 3 within the fair value hierarchy.

(2) During the three months ended June 30, 2023, the Company recorded a deferred tax asset in the amount of $ 6.3 million, net of a valuation allowance in the amount of $ 2.8 million, and reduced goodwill by $ 6.3 million.

The net deferred tax asset relates to net operating loss carryovers to which the Company’s taxable REIT subsidiary is a successor and were finalized upon filing tax returns subsequent to the Merger for periods prior to the Merger.

During the three months ended September 30, 2023, the Company recognized $ 6.5 million of deferred expenses and other assets related to final state tax receivables and $ 2.3 million in accounts payable, accrued expenses and other liabilities as a result of finalizing its tax returns which produced additional information not available at the time of the Merger.

The following table presents a rollforward of the Company’s goodwill:

Balance at December 31, 2022

Goodwill recognized at Merger

Reduction to goodwill resulting from measurement period adjustments

Balance at December 31, 2023

(3) Deferred expenses and other assets includes $ 11.0 million attributable to operating lease right of use assets , $ 4.7 million attributable to prepaid expenses resulting from the settlement of iStar’s compensation plans, $ 2.1 million attributable to in-place prepaid contracts, $ 1.3 million attributable to office furniture and equipment and $ 6.3 million attributable to other receivables.

(4) Accounts payable, accrued expenses and other liabilities primarily includes a $ 14.2 million operating lease liability .

In addition, under the Merger Agreement, iStar was required to fund its share of merger-related costs and to provide sufficient cash to fund any unresolved corporate obligations and accrued liabilities or costs yet-to-be incurred prior to the Merger.

Accounts payable, accrued expenses and other liabilities includes approximately $ 8.7 million of obligations assumed from iStar, which are offset with corresponding amounts in cash and cash equivalents and amounts receivable in deferred expenses and other assets, net sufficient to settle such obligations.

(5) Debt obligations were valued using a discount rate of 6.7 % and are classified as Level 3 within the fair value hierarchy.

(6) Goodwill is calculated as the excess of purchase consideration over the fair value of the net identifiable assets acquired and primarily relates to the acquisition of iStar’s workforce and future synergies expected to be realized after the completion of the Merger.

Safehold Inc.

Notes to Consolidated Financial Statements

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

Nine Months Ended

September 30, 2023

Pro forma revenues

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):

Recognition and Initial Measurement (“ASU 2023-05”).

ASU 2023-05 requires a joint venture to initially measure all contributions received upon its formation at fair value and is effective for all joint venture entities with a formation date on or after January 1, 2025.

ASU 2023-05 is to be applied on a prospective basis, while retrospective application can be elected for joint ventures formed before the effective date.

The Company is currently evaluating ASU 2023-05 but does not expect this standard to have a material impact on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 improves disclosures for reportable segments primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective on a retrospective basis for annual periods beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating ASU 2023-07 but does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 requires greater disaggregation of information in the rate reconciliation, income taxes paid disaggregated by jurisdiction and certain other amendments to improve income tax disclosures.

The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

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

7 unchanged sentences

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 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.

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.

On August 30, 2024, the Company acquired its partners’ share of the outstanding commitment for all existing Ground Leases in the venture for $ 48.3 million.

The excess of the purchase price and related transaction 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.

The venture remains in place, and 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).

Safehold Inc.

Notes to Consolidated Financial Statements

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

September 30, 2024

March 31, 2025

December 31, 2024

6 unchanged sentences

Net investment in sales-type leases

(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.

(1) As of March 31, 2025, total discounted cash flows were approximately $ 3,447 million and the discounted unguaranteed estimated residual value was $ 32.3 million.

As of December 31, 2024, total discounted cash flows were approximately $ 3,430 million and the discounted unguaranteed estimated residual value was $ 32.0 million.

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 nine months ended September 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 three months ended March 31, 2025 and 2024 ($ in thousands):

Net Investment in

Sales-type Leases

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Beginning balance

4 unchanged sentences

Sales-type Leases

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Beginning balance

Impact from adoption of new accounting standard

Origination/acquisition/fundings (1)

3 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 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.

(2) As of March 31, 2025 and December 31, 2024, all of the Company’s net investment in sales-type leases and Ground Lease receivables were current in their payment status.

As of March 31, 2025, the Company’s weighted average accrual rate for its net investment in sales-type leases and Ground Lease receivables was 5.3 % and 5.6 % , respectively.

As of March 31, 2025, the weighted average remaining life of the Company’s 41 Ground Lease receivables was 97.0 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 nine months ended September 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 months ended March 31, 2025 and 2024 were as follows ($ in thousands):

Net investment in sales-type leases

Three Months Ended September 30, 2024

Allowance for credit losses at beginning of period

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

Three Months Ended September 30, 2023

Allowance for credit losses at beginning of period

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Allowance for credit losses at beginning of period

1 unchanged sentence

Allowance for credit losses at end of period (2)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Allowance for credit losses at beginning of period

Impact from adoption of new accounting standard (3)

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

(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.

(1) During the three months ended March 31, 2025, the Company recorded a provision for credit losses on net investment in sales-type leases of $ 0.9 million.

The provision for credit losses for the three months ended March 31, 2025 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 December 31, 2024, and growth in the carrying value of the portfolio during the period.

During the three months ended March 31, 2024, the Company recorded a provision for credit losses on net investment in sales-type leases of $ 0.5 million.

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 December 31, 2023.

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

(3) On January 1, 2023, the Company recorded an allowance for credit losses on net investment in sales-type leases of $ 0.4 million upon the adoption of ASU 2016-13, of which an aggregate of $ 6 thousand related to expected credit losses for unfunded commitments and was recorded in "Accounts payable, accrued expenses and other liabilities."

Safehold Inc.

Notes to Consolidated Financial Statements

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):

Changes in the Company’s allowance for credit losses on Ground Lease receivables for the three months ended March 31, 2025 and 2024 were as follows ($ in thousands):

Ground Lease receivables

Three Months Ended September 30, 2024

Allowance for credit losses at beginning of period

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

Three Months Ended September 30, 2023

Allowance for credit losses at beginning of period

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Allowance for credit losses at beginning of period

1 unchanged sentence

Allowance for credit losses at end of period (2)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Allowance for credit losses at beginning of period

Impact from adoption of new accounting standard (3)

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

(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.

(1) During the three months ended March 31, 2025, the Company recorded a provision for credit losses on Ground Lease receivables of $ 1.5 million.

During the three months ended March 31, 2024, the Company recorded a provision for credit losses on Ground Lease receivables of $ 0.3 million.

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

(3) On January 1, 2023, the Company recorded an allowance for credit losses on Ground Lease receivables of $ 0.3 million upon the adoption of ASU 2016-13, of which an aggregate of $ 0.1 million related to expected credit losses for unfunded commitments and was recorded in "Accounts payable, accrued expenses and other liabilities."

Safehold Inc.

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 September 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 September 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 March 31, 2025, are as follows by year ($ in thousands):

with Inflation

2024 (remaining three months)

2025 (remaining nine months)

Total undiscounted cash flows

1 unchanged sentence

Notes to Consolidated Financial Statements

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 September 30, 2024

Total interest income from sales-type leases

Net Investment

in Sales-type

Three Months Ended September 30, 2023

Total interest income from sales-type leases

During the three months ended March 31, 2025 and 2024, the Company recognized interest income from sales-type leases in its consolidated statements of operations as follows ($ in thousands):

Net Investment

in Sales-type

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Total interest income from sales-type leases

1 unchanged sentence

in Sales-type

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Total interest income from sales-type leases

3 unchanged sentences

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

September 30, 2024

March 31, 2025

December 31, 2024

7 unchanged sentences

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

As of September 30, 2024

As of March 31, 2025

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 nine months ended September 30, 2024 and 2023 ($ in thousands):

Income Statement

For the Three Months Ended September 30,

Intangible asset

Above-market lease assets (decrease to income)

Operating lease income

In-place lease assets (decrease to income)

Depreciation and amortization

Other intangible assets (decrease to income)

Operating lease income

The amortization of real estate-related intangible assets had the following impact on the Company’s consolidated statements of operations for the three months ended March 31, 2025 and 2024 ($ in thousands):

Income Statement

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

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 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.

2025 (remaining nine months)

(1) As of March 31, 2025, the weighted average amortization period for the Company’s real estate-related intangible assets was approximately 81.4 years.

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

As of September 30, 2024

As of March 31, 2025

Below-market lease liabilities (1)

5 unchanged sentences

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 September 30,

Intangible liability

Below-market lease liabilities (increase to income)

Operating lease income

The amortization of real estate-related intangible liabilities had the following impact on the Company’s consolidated statements of operations for the three months ended March 31, 2025 and 2024 ($ in thousands):

Income Statement

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Intangible liability

1 unchanged sentence

Operating lease income

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.

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 March 31, 2025, are as follows by year ($ in thousands):

2025 (remaining nine months)

(1) During the three months ended March 31, 2025 and 2024, the Company recognized $ 4.9 million and $ 4.6 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 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.

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 and March 28, 2025, 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 months ended March 31, 2025 and 2024, the Company recorded $ 2.3 million and $ 2.4 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 each of March 31, 2025 and December 31, 2024, the Star Holdings Term Loan Facility had a principal balance of $ 115.0 million.

The Star Holdings Term Loan Facility is a secured credit facility.

Borrowings under the Star Holdings Term Loan Facility bear interest at a fixed rate of 8.00 % per annum, which may increase to 10.00 % per annum if any loans remain outstanding under the Incremental Term Loan Facility.

The Star Holdings Term Loan Facility has a maturity date of March 31, 2027.

On March 28, 2025, the Company and Star Holdings entered into an amendment to the Star Holdings Term Loan Facility that extended the maturity date by one year to March 31, 2028, provides that Star Holdings may re-borrow amounts that have been repaid on the Incremental Term Loan Facility and permits Star Holdings to repurchase up to $ 10.0 million in shares of its common stock, subject to certain conditions.

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 nine months after closing, within five

Starting in the first quarter of 2024, within five business days after Star Holdings has delivered its unaudited quarterly financial statements, Star Holdings must apply any unrestricted cash on its balance sheet in excess of the aggregate of (i) an operating reserve; and (ii) $ 50 million, to prepay the 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.

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 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.

capital expenditure and projected interest expense on the margin loan facility with Morgan Stanley Bank, N.A., which is secured by Star Holdings’ shares of the Company’s common stock, and the 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.

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 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

During the three months ended March 31, 2025 and 2024, the Company recorded a recovery of credit losses of $ 0.1 million 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 March 31, 2025 and December 31, 2024.

The Company did not have any accrued interest receivable from the Star Holdings Term Loan Facility as of March 31, 2025 and December 31, 2024.

The Company did not reverse any accrued interest on its loan asset during the three months ended March 31, 2025 and 2024.

Note 7—Equity Investments

1 unchanged sentence

Earnings (losses) from

Carrying Value

Equity Method Investments

Equity Method Investments (1)

For The Three Months Ended

For the Nine Months Ended

September 30,

Equity investment

2 unchanged sentences

Leasehold Loan Fund (2)

(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.

(1) As of March 31, 2025, the Company has a basis difference of $ 19.5 million in the Ground Lease Plus Fund that will be amortized over a weighted average remaining term of 105.3 years using the effective interest method.

During the three months ended March 31, 2025 and 2024, ($ 0.1 ) million and $ 0.2 million, respectively, of the basis difference was amortized as a (decrease) increase to earnings from equity method investments.

(2) As of March 31, 2025, the Company has a basis difference of $ 5.8 million in the Leasehold Loan Fund that will be amortized over a weighted average remaining term of 2.0 years using the effective interest method.

During the three months ended March 31, 2025 and 2024, $ 0.7 million and $ 1.0 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.

1 unchanged sentence

The Company has a 54.8 % noncontrolling equity interest in the venture and is the manager of the venture.

iStar was the manager prior to the Merger.

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.

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”).

Safehold Inc.

Notes to Consolidated Financial Statements

Ground Lease Plus Fund —The Company manages a 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”).

The Company owns a 53.2 % noncontrolling equity interest in the Ground Lease Plus Fund.

5 unchanged sentences

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.

In January 2022, iStar sold the two Ground Leases to the Ground Lease Plus Fund, which remain subject to the June 2021 agreement with the Company.

Leasehold Loan Fund —In connection with the Merger, the Company acquired from iStar an investment fund that iStar managed that targets customers that may require a mortgage leasehold loan as well as a Ground Lease (the “Leasehold Loan Fund”).

Leasehold Loan Fund —The Company manages a fund that targets customers that may require a mortgage leasehold loan as well as a Ground Lease (the “Leasehold Loan Fund”).

The Company owns a 53.2 % noncontrolling equity interest in the Leasehold Loan Fund.

2 unchanged sentences

The Company is also entitled to a promote payment on certain investments in the Leasehold Loan Fund.

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

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

In September 2021, the construction loan commitment was transferred to the Leasehold Loan Fund.

The construction loan was repaid in full in April 2024.

The Leasehold Loan Fund funded $ 69.4 million of the commitment prior to its repayment.

In February 2022, the Leasehold Loan Fund committed to provide a $ 130.0 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 life science property.

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

As of March 31, 2025, the Leasehold Loan Fund funded $ 4.7 million 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 September 30, 2024, the Leasehold Loan Fund funded $ 40.8 million of the commitment.

As of March 31, 2025, the Leasehold Loan Fund funded $ 42.4 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.

As of March 31, 2025, the Leasehold Loan Fund funded $ 1.4 million of the commitment.

Safehold Inc.

2 unchanged sentences

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

September 30, 2024

March 31, 2025

December 31, 2024

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 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.

During both the three months ended March 31, 2025 and 2024, 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.

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 $ 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.

The Company also has operating leases for office space.

(2) Accumulated amortization of deferred finance costs was $ 4.7 million and $ 3.5 million as of March 31, 2025 and December 31, 2024, respectively.

(3) As of March 31, 2025 and December 31, 2024, includes $ 3.5 million and $ 3.7 million, respectively, of management fees due from Star Holdings.

Through March 31, 2025, the Company has earned $ 39.8 million of management fees from Star Holdings and as of March 31, 2025, $ 10.2 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):

September 30, 2024

March 31, 2025

December 31, 2024

6 unchanged sentences

(1) Refer to Note 10.

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

(2) As of March 31, 2025 and December 31, 2024, 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):

September 30, 2024

March 31, 2025

December 31, 2024

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5.65 % senior notes

3.98 % senior notes

February 2052

2 unchanged sentences

Adjusted SOFR

2021 Unsecured Revolver

Adjusted SOFR

Trust preferred securities

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(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 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 % .

As of March 31, 2025, the weighted average cash interest rate for the Company’s consolidated mortgage debt, based on interest rates in effect at that date, was 3.42 % .

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 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.

As of March 31, 2025, 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 4.18 % and 3.80 % , respectively.

(2) Represents the extended maturity date for all 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.

(3) As of March 31, 2025, $ 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 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.

As of March 31, 2025, 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”).

30 unchanged sentences

Notes to Consolidated Financial Statements

In November 2024, Portfolio Holdings (as issuer) and the Company (as guarantor) issued $ 400.0 million aggregate principal amount of 5.65 % senior notes due January 2035 (the “ 5.65 % Notes”).

The 5.65 % Notes were issued at 98.812 % of the principal amount.

The Company may redeem the 5.65 % Notes in whole at any time or in part from time to time prior to October 15, 2034, at the Company’s option and sole discretion, at a redemption price equal to the greater of:

(i) 100 % of the principal amount of the 5.65 % Notes being redeemed;

and (ii) a make-whole premium calculated in accordance with the indenture, plus, in each case, accrued and unpaid interest thereon to, but not including, the applicable redemption date.

If the 5.65 % Notes are redeemed on or after October 15, 2034, the redemption price will be equal to 100 % of the principal amount of the 5.65 % Notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the applicable redemption date.

2024 Unsecured Revolver —In April 2024, the Company entered into a $ 2.0 billion unsecured revolving credit facility (the “2024 Unsecured Revolver”), which replaced the Company’s 2021 Unsecured Revolver (see below) and 2023 Unsecured Revolver (see below), each of which were terminated.

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

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

As of March 31, 2025, there was $ 1.3 billion 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.

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Commercial Paper Program — In June 2024, Portfolio Holdings, as issuer, entered into a new U.S.

commercial paper program (the “Commercial Paper Program”) on a private placement basis, pursuant to which the Company may issue up to $ 750.0 million of short-term, unsecured commercial paper notes (the “Notes”) outstanding at any time, which are guaranteed by the Company.

Under the Commercial Paper Program, the Company may issue the Notes from time to time and will use the proceeds for general corporate purposes.

commercial paper program (the “Commercial Paper Program”) on a private placement basis, pursuant to which the Company may issue up to $ 750.0 million of short-term, unsecured commercial paper notes outstanding at any time, which are guaranteed by the Company.

Under the Commercial Paper Program, the Company may issue the commercial paper notes from time to time and will use the proceeds for general corporate purposes.

The Commercial Paper Program is backed by the Company’s 2024 Unsecured Revolver.

The Notes will be sold under customary terms in the commercial paper market and will rank pari passu with all of Portfolio Holding’s other unsecured senior indebtedness.

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

The commercial paper notes will be sold under customary terms in the commercial paper market and will rank pari passu with all of Portfolio Holding’s other unsecured senior indebtedness.

The interest rates will vary based on the ratings assigned to the commercial paper notes by credit rating agencies and market conditions at the

Safehold Inc.

Notes to Consolidated Financial Statements

time of issuance.

As of March 31, 2025, the Company had no outstanding balance under the Commercial Paper Program.

Borrowings reduce amounts otherwise available under the 2024 Unsecured Revolver.

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In addition, the 2024 Unsecured Revolver contains customary affirmative and negative covenants.

Safehold Inc.

Notes to Consolidated Financial Statements

other things, these covenants may restrict the Company or certain of its subsidiaries’ ability to incur additional debt or liens, engage in certain mergers, consolidations and other fundamental changes, make other investments or pay dividends.

The Company’s 2.80 % Notes, 2.85 % Notes, 3.98 % Notes, 5.15 % Notes and 6.10 % Notes are subject to a financial covenant requiring a ratio of unencumbered assets to unsecured debt of at least 1.25 x and contain customary affirmative and negative covenants.

The Company’s 6.10 % Notes are also subject to a financial covenant limiting the incurrence of any secured debt that would cause the Company’s secured debt to total assets ratio to exceed 50 %.

Among other things, these covenants may restrict the Company or certain of its subsidiaries’ ability to incur additional debt or liens, engage in certain mergers, consolidations and other fundamental changes, make other investments or pay dividends.

The Company’s 2.80 % Notes, 2.85 % Notes, 3.98 % Notes, 5.15 % Notes, 6.10 % Notes and 5.65 % Notes are subject to a financial covenant requiring a ratio of unencumbered assets to unsecured debt of at least 1.25 x and contain customary affirmative and negative covenants.

The Company’s 6.10 % Notes and 5.65 % Notes are also subject to a financial covenant limiting the incurrence of any secured debt that would cause the Company’s secured debt to total assets ratio to exceed 50 %.

The Company’s 3.98 % Notes and 5.15 % Notes contain a provision whereby they will be deemed to include additional financial covenants and negative covenants to the extent such covenants are incorporated into Portfolio Holdings’ and/or the Company’s existing or future material credit facilities, including the 2024 Unsecured Revolver, and to the extent such covenants are more favorable to the lenders under such material credit facilities than the covenants contained in the 3.98 % Notes and 5.15 % Notes.

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

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)

As of March 31, 2025, the Company was in compliance with all of its financial covenants.

Future Scheduled Maturities —As of March 31, 2025, future scheduled maturities of outstanding debt obligations, assuming all extensions that can be exercised at the Company’s option, are as follows ($ in thousands):

2025 (remaining nine months)

Total principal maturities

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Total debt obligations, net

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

(1) As of March 31, 2025, the Company’s weighted average maturity for its secured mortgages was 26.3 years.

Safehold Inc.

1 unchanged sentence

Note 10—Commitments and Contingencies

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)

Lease Commitments —Future minimum lease obligations under non-cancelable operating leases as of March 31, 2025 are as follows ($ in thousands):

2025 (remaining nine months)

Total undiscounted cash flows (1)

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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 5.6 % and the weighted average remaining lease term is 11.4 years.

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 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.

During the three months ended March 31, 2025 and 2024, the Company made payments of $ 1.4 million and $ 1.4 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 September 30, 2024, the Company had $ 70.6 million of such commitments, excluding commitments to be funded by noncontrolling interests.

As of March 31, 2025, the Company had $ 32.2 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 September 30, 2024, the Company had an aggregate $ 150.3 million of such commitments.

As of March 31, 2025, 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 .

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We refer to these arrangements as performance-based commitments.

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

As of March 31, 2025, the Company had $ 116.0 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 September 30, 2024 and December 31, 2023 ($ in thousands):

September 30, 2024

The table below presents the Company’s derivatives as well as their classification on the consolidated balance sheets as of March 31, 2025 and December 31, 2024 ($ in thousands):

March 31, 2025

December 31, 2024

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Deferred expenses and other assets, net

Interest rate swaps

Accounts payable, accrued expenses and other liabilities

(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.

(1) As of March 31, 2025, 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 two 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 $ 250.0 million notional amount and 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 .

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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 nine months ended September 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 months ended March 31, 2025 and 2024 ($ in thousands):

Amount of Gain

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Derivatives Designated in Hedging Relationships

For the Three Months Ended September 30, 2024

Interest rate swaps

Interest expense

For the Three Months Ended September 30, 2023

Interest rate swaps

Interest expense

For the Nine Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

Interest rate swaps

Interest expense

For the Nine Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

Interest rate swaps

Interest expense

Safehold Inc.

Notes to Consolidated Financial Statements

Note 12—Equity

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

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

Securities and Exchange Commission (the “SEC”) an automatic shelf registration statement on Form S-3ASR.

In addition, the Company and Portfolio Holdings entered into an ATM Equity Offering Sales Agreement (the “Primary Sales Agreement”) with the sales agents named therein pursuant to which the Company may sell, from time to time, shares of its common stock, $ 0.01 par value per share (“Common Stock”), having an aggregate gross sales price of up to $ 300.0 million (the “Primary Shares”) through or to the sales agents.

Common Stock —As of March 31, 2025, the Company has one class of common stock outstanding.

In April 2023, the Company and Portfolio Holdings entered into an ATM Equity Offering Sales Agreement (the “Primary Sales Agreement”) with the sales agents named therein pursuant to which the Company may sell, from time to time, shares of its common stock having an aggregate gross sales price of up to $ 300.0 million (the “Primary Shares”) through or to the sales agents.

The Company may sell the Primary Shares in amounts and at times to be determined by the Company from time to time but has no obligation to sell any of the Primary Shares.

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 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.

The Company’s Chief Executive Officer purchased $ 1.4 million in shares, or 65,420 shares, from the underwriters in the offering.

The underwriters received the same underwriting discount with respect to these shares as they did from other shares of common stock sold to the public in the underwritten offering.

Concurrently with the public offering, the Company sold $ 12.8 million in shares, or 599,983 shares, of its common stock to affiliates of MSD Partners in a private placement.

The Company incurred a total of approximately $ 6.6 million of offering costs in connection with these transactions which were recorded as a reduction to additional paid-in capital.

Equity Plans —Old SAFE adopted an equity incentive plan to provide equity incentive opportunities to members of the Former Manager’s management team and employees who performed services for Old SAFE, Old SAFE’s non-management directors, advisers, consultants and other personnel (the “2017 Equity Incentive Plan”).

The 2017 Equity Incentive Plan provided for grants of stock options, shares of restricted common stock, phantom shares, dividend equivalent rights and other equity-based awards, including long-term incentive plan units.

Grants under the 2017 Equity Incentive Plan were recognized as compensation costs ratably over the applicable vesting period and recorded in “General and administrative” in the Company’s consolidated statements of operations.

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 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.

The LTIP is designed to provide incentive compensation for officers, key employees, directors and advisors of the Company.

Actual sales, if any, will depend on a

Safehold Inc.

Notes to Consolidated Financial Statements

variety of factors to be determined by the Company from time to time, including, among other things, market conditions, the trading price of the Company’s common stock, capital needs and determinations by the Company of the appropriate sources of its funding.

Through March 31, 2025, the Company has no t sold any shares of its common stock through the Primary Sales Agreement.

On February 4, 2025, the Company’s board of directors authorized the repurchase of up to $ 50.0 million of the Company’s common stock.

The Company has no obligation to repurchase additional shares, and the timing, actual number and value of the shares that are repurchased, if any, will be at the discretion of management and will depend on a number of factors, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate.

Repurchases may be suspended, terminated or modified at any time for any reason.

The share repurchase program does not have an expiration date.

Any repurchased shares will be returned to the status of authorized but unissued shares of common stock.

As of March 31, 2025, the Company had no t repurchased any of its outstanding common stock.

Equity Plans — The Company has a Long-Term Incentive Program (the “LTIP”), originally adopted by iStar’s board of directors and approved by iStar’s stockholders in 2021, designed to provide incentive compensation for officers, key employees, directors and advisors of the Company.

The LTIP provides for awards of stock options, shares of restricted stock, phantom shares, restricted stock units, dividend equivalent rights and other share-based performance awards.

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Grants under the LTIP are recognized as compensation costs ratably over the applicable vesting period and recorded in “General and administrative” in the Company’s consolidated statements of operations.

In March 2023, the Company granted awards to employees with an aggregate grant date fair value of $ 25.0 million, or $ 28.89 per share.

In June 2023, the Company issued an aggregate 24,336 vested shares of its common stock with a grant date fair value of $ 23.58 per share to its directors in

Safehold Inc.

Notes to Consolidated Financial Statements

consideration for their annual service as directors.

On June 20, 2023, the LTIP was further amended to, among other things, increase the aggregate number of shares of common stock available for issuance.

In May 2024, the Company issued an aggregate 32,300 shares of its common stock with a grant date fair value of $ 20.78 per share to its directors that vest after one year in consideration for their annual service as directors.

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

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”).

Under the Original Caret Performance Incentive Plan, 1,500,000 Caret units were reserved for grants of performance-based awards to Original Caret Performance Incentive Plan participants, including certain of executives of iStar, and Old SAFE’s directors and service providers.

Grants under the Original Caret Performance Incentive Plan were subject to vesting based on time-based service conditions and hurdles relating to Old SAFE’s common stock price, all of which have been satisfied.

In connection with the Merger, certain of Old SAFE’s former executive officers, entered into re-vesting agreements pursuant to which the executives agreed to subject 25 % of their previously vested Caret units to additional vesting conditions which will be satisfied on the second anniversary of the Merger, subject to the applicable executive’s continued employment through such date.

In the event of a termination of the executive’s employment by the Company without “cause”, or due to the executive’s death, disability or retirement, the unvested Caret units shall continue to vest as and when the vesting conditions described above are satisfied.

In connection with the consummation of the Merger and the Caret Restructuring, Old SAFE, Caret Ventures and CARET Management Holdings LLC assigned each Award Agreement (as defined in the Original Caret Performance Incentive Plan) relating to outstanding Caret unit awards to Portfolio Holdings pursuant to the Omnibus Assignment, Assumption and Amendment Agreement, dated as of March 31, 2023 (the “Caret Assignment Agreement”).

Following the effectiveness of the Caret Assignment Agreement, Old SAFE amended and restated the Original Caret Performance Incentive Plan (the “Amended Caret Performance Incentive Plan”).

Prior to the Merger, the Old SAFE compensation committee, and following the Merger, the Company’s compensation committee, approved the award of 76,801 new Caret units with an estimated grant date fair value of $ 8.1 million to executive officers and other employees, other than the Company’s Chief Executive Officer and the Company’s President and Chief Investment Officer, including 15,000 Caret units to the Company’s Chief Financial Officer.

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 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,

As of March 31, 2025, an aggregate of 806,054 shares of the Company’s common stock remains available for issuance under the LTIP.

As of March 31, 2025, there was $ 7.1 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 1.9 years .

Caret Performance Incentive Plan — The Company has a Caret performance incentive plan pursuant to which Caret units of Portfolio Holdings are reserved for grants of performance-based awards to participants, including certain officers, key employees, directors and service providers (the “Caret Performance Incentive Plan”).

As of March 31, 2025, all outstanding Caret units awarded under the Caret Performance Incentive Plan are fully vested except for grants awarded in connection with the Merger to executive officers and other employees, which are subject to cliff vesting on March 31, 2027 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 since the grant date, and certain awards granted to a former employee that vest in December 2025, subject to certain conditions.

As of March 31, 2025, there was $ 2.8 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 2.0 years.

As of March 31, 2025, Caret Performance Incentive Plan participants held 1,371,254 Caret units, representing 14.4 % of the outstanding Caret units and 11.4 % of the authorized Caret units, and 128,746 Caret units remain available for issuance under the Caret Performance Incentive Plan.

During the three months ended March 31, 2025 and 2024, the Company recognized $ 0.3 million and $ 0.5 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.

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

All employees are eligible to participate in the 401(k) Plan following completion of three months of

Safehold Inc.

Notes to Consolidated Financial Statements

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.

All employees are eligible to participate in the 401(k) Plan following completion of three months of continuous service with the Company.

continuous service with the Company.

Each participant may contribute on a pretax basis up to the maximum percentage of compensation and dollar amount permissible under Section 402(g) of the Internal Revenue Code not to exceed the limits of Code Sections 401(k), 404 and 415.

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 nine months ended September 30, 2024.

The Company made gross contributions of $ 0.4 million and $ 0.4 million, respectively, for the three months ended March 31, 2025 and 2024.

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

Noncontrolling Interests —Noncontrolling interests includes unrelated third-party equity interests in ventures that are consolidated in the Company’s consolidated financial statements and Caret units that have been sold to third-parties (refer to Note 1) or have been granted to employees of the Company’s Former Manager.

Noncontrolling Interests —Noncontrolling interests includes unrelated third-party equity interests in ventures that are consolidated in the Company’s consolidated financial statements and Caret units that have been sold to third-parties or have been granted to employees or former employees.

See also “ Redeemable Noncontrolling Interests” in Note 3.

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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 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.

During the three months ended March 31, 2025 and 2024, the Company declared cash dividends on its common stock of $ 12.7 million, or $ 0.177 per share, and $ 12.7 million, or $ 0.177 per share, respectively.

Safehold Inc.

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Earnings attributable to common shares:

13 unchanged sentences

common shareholders - diluted

(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.

(1) For the three months ended March 31, 2024, the effect of 22 thousand of the Company’s restricted stock units were antidilutive.

Note 14—Related Party Transactions

Prior to the Merger, the Company was externally managed by an affiliate of iStar.

iStar was an active real estate investor for over 20 years and had an extensive network for sourcing investments, which included relationships with brokers, corporate tenants and developers that it has established over its long operating history.

Safehold Inc.

Notes to Consolidated Financial Statements

Management Agreement

A summary of the terms of the management agreement with iStar prior to the Merger is below:

SFTY Manager, LLC, a wholly-owned subsidiary of iStar Inc.

Management Fee

Annual fee of 1.00 % of total equity (up to $ 1.5 billion)

Annual fee of 1.25 % of total equity (for incremental equity of $ 1.5 billion to $ 3.0 billion)

Annual fee of 1.375 % of total equity (for incremental equity of $ 3.0 billion to $ 5.0 billion) and

Annual fee of 1.5 % of total equity (for incremental equity over $ 5.0 billion)

Management Fee Consideration

At the discretion of the Company’s independent directors, payment will be made in cash or in shares of the Company’s common stock (valued at the greater of:

(i) the volume weighted average market price during a specified pricing period;

or (ii) the initial public offering price of $ 20.00 per share)

Restriction from selling common stock received for management fees for two years from the date of such issuance (restriction will terminate in the event of and effective with the termination of the management agreement)

Incentive Fee

Non-terminable through June 30, 2023, except for cause.

Automatic annual renewals thereafter, subject to non-renewal upon certain findings by the Company’s independent directors and payment of termination fee.

Termination Fee

3 x prior year’s management fee

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.

Expense Reimbursements

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 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.

Acquisitions and Commitments

Prior to the Merger, iStar participated in certain of the Company’s investment transactions, as the Company’s tenant or either as a seller of land or by providing financing to the Company’s Ground Lease tenants.

Following is a list of transactions in which the Company and iStar or other persons deemed to be related parties have participated for the periods

Following is a list of transactions in which the Company and other persons deemed to be related parties have participated for the periods presented.

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 and through March 31, 2025, the Company funded $ 1.5 million of the commitment amount.

At inception in April 2024, the Company incurred $ 0.4 million of costs creating the entity formed to own the leasehold interest, which resulted in a total investment balance of $ 1.9 million and was included in “Deferred expenses and other assets” on the Company’s consolidated balance

Safehold Inc.

Notes to Consolidated Financial Statements

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

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.

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

In December 2021, iStar contributed the Ground Lease to the Ground Lease Plus Fund (refer to Note 7).

sheet as of December 31, 2024.

In May 2025, the leasehold interest was acquired by a new sponsor and the Company determined its investment was likely not recoverable, which resulted in a $ 1.9 million write-off of the Company’s preferred equity investment as of March 31, 2025.

The write-off is included in “Other expense” in the Company’s consolidated statement of operations.

The Company has recognized $ 1.7 million of interest income from sales-type leases from the Ground Lease in its consolidated statements of operations for the three months ended March 31, 2025.

The Company has a noncontrolling interest in the Ground Lease Plus Fund and an affiliate of an existing shareholder (which is affiliated with one of the Company’s independent directors) has a noncontrolling interest in the Ground Lease Plus Fund.

The terms of the Company’s commitment under the agreement did not change upon iStar’s contribution of the Ground Lease to the Ground Lease Plus Fund.

In January 2024, the Company acquired the Ground Lease from the Ground Lease Plus Fund for $ 38.3 million.

The Company has entered into certain agreements to acquire certain land and related Ground Leases from the Ground Lease Plus Fund when certain construction-related conditions are met by a specified time period.

In January 2024, the Company acquired one Ground Lease from the Ground Lease Plus Fund for $ 38.3 million pursuant to one such agreement.

In addition, the Ground Lease documents contain future funding obligations to the Ground Lease tenant of approximately $ 51.8 million of leasehold improvement allowance upon achievement of certain milestones.

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 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.

Under the option agreement, the Company had the right to acquire for $ 215.0 million a property that is under a separate option for the benefit of a third party, whereby such third party has the right to enter into a Ground Lease and develop approximately 1.1 million square feet of office space.

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.

The purchase price to be paid for each is $ 42.0 million, plus an amount necessary for iStar to achieve the greater of a 1.25 x multiple and a 9 % return on its investment.

In addition, each Ground Lease provides for a leasehold improvement allowance up to a maximum of $ 83.0 million, which obligation would be assumed by the Company upon acquisition.

In January 2022, iStar sold the Ground Leases to the Ground Lease Plus Fund in which the Company owns a noncontrolling interest and an existing shareholder (which is affiliated with one of the Company’s independent directors) owns a noncontrolling interest.

One of the agreements expired in June 2024.

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).

In addition, an affiliate of an existing shareholder (which is affiliated with one of the Company’s independent directors) made a commitment to purchase 28,571 Caret units, or 0.29 % of the then-authorized Caret units, for a purchase price of $ 5.0 million.

As part of the sale, Old SAFE agreed to use commercially reasonable efforts to provide public market liquidity for such Caret units by seeking to provide a listing of the Caret units (or securities into which they may be exchanged) on a public exchange within two years of the sale.

As of March 31, 2025, the $ 51.8 million leasehold improvement allowance has been fully funded.

The Company is also party to an agreement pursuant to which it agreed to acquire land and a related Ground Lease from the Ground Lease Plus Fund when certain construction related conditions are met by a specified time period.

The purchase price to be paid is $ 42.0 million, plus an amount necessary for the Ground Lease Plus Fund to achieve the greater of a 1.25 x multiple and a 9 % return on its investment.

In addition, the Ground Lease provides for a leasehold improvement allowance up to a maximum of $ 83.0 million, which obligation would be assumed by the Company upon acquisition.

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

In February 2022, the Company 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).

In addition, an affiliate of an existing shareholder (which was affiliated with one of the Company’s independent directors) made a commitment to purchase 28,571 Caret units, or 0.29 % of the then-authorized Caret units, for a purchase price of $ 5.0 million.

As part of the sale, the Company agreed to use commercially reasonable efforts to provide public market liquidity for such Caret units by seeking to provide a listing of the Caret units (or securities into which they may be exchanged) on a public exchange within two years of the sale.

Because public market liquidity was not achieved by February 2024, the investors in the February 2022 transaction had the right to cause their Caret units purchased in February 2022 to be redeemed by Portfolio Holdings at such purchase price less the amount of distributions previously made on such units.

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

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.

On March 31, 2023, in conjunction with the closing of the Merger, affiliates of MSD Partners also purchased 100,000 Caret units (refer to Note 12) from the Company for an aggregate purchase price of $ 20.0 million.

Additionally, on March 31, 2023, existing third-party Caret unit holders purchased an aggregate of 22,500 Caret units from the Company for an aggregate $ 4.5 million.

Star Holdings

On March 31, 2023, immediately prior to the closing of the Merger, the Company (then known as iStar Inc.) completed the Spin-Off, resulting in the spin-off of its remaining legacy assets and certain other assets pursuant to a separation and distribution agreement (the “Separation and Distribution Agreement”), dated as of March 31, 2023, by and between the Company and Star Holdings.

On March 31, 2023, immediately prior to the closing of the Merger, the Company (then known as iStar Inc.) spun-off of its remaining legacy assets and certain other assets (the “Spin-Off”) pursuant to a separation and distribution agreement (the “Separation and Distribution Agreement”), dated as of March 31, 2023, by and between the Company and Star Holdings.

The Separation and Distribution Agreement sets forth, among other things, Star Holdings’ agreements with the Company regarding the principal transactions necessary to separate Star Holdings from the Company.

It also sets forth other agreements that govern certain aspects of Star Holdings’ relationship with the Company after the Spin-Off relating to the transfer of assets and assumption of liabilities, cash assets, release of claims, insurance, non-solicitation, segregation of accounts and other matters.

The Separation and Distribution Agreement also includes a mutual release by Star Holdings, on the one hand, and the Company, on the other hand, of the other party from certain specified liabilities, as well as mutual indemnification covenants pursuant to which Star Holdings and the Company have agreed to indemnify each other from certain specified liabilities.

SpinCo Manager has entered into a management agreement with Star Holdings, pursuant to which it will operate and pursue the orderly monetization of Star Holding’s assets.

Pursuant to the management agreement, Star Holdings paid to SpinCo Manager an annual management fee of $ 25.0 million for the term ended March 31, 2024.

The annual fee declines to $ 15.0 million, $ 10.0 million and $ 5.0 million, respectively, in each of the following annual terms, and adjusts to 2.0 % of the gross book value of Star Holding's assets, excluding shares of the Company’s common stock, thereafter.

The management agreement had an initial one-year term and automatically renews for successive one-year terms each anniversary date thereafter unless previously terminated.

The management agreement may be terminated by Star Holdings without cause by not less than one hundred eighty days ’ written notice to SpinCo Manager upon the affirmative vote of at least two-thirds of Star Holdings’ independent directors, provided, however, that if the date of termination occurs prior to the fourth anniversary of the Spin-Off, the termination will be subject to payment of the applicable termination fee to SpinCo Manager.

Star Holdings may also terminate the management agreement at any time with 30 days ’ prior written notice from Star Holdings’ board of trustees for “cause,” as defined in the management agreement.

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

Safehold Inc.

Notes to Consolidated Financial Statements

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.

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.

indemnification covenants pursuant to which Star Holdings and the Company have agreed to indemnify each other from certain specified liabilities.

SpinCo Manager is party to a management agreement with Star Holdings, pursuant to which it will operate and pursue the orderly monetization of Star Holding’s assets.

On March 28, 2025, the Company and Star Holdings entered into an amendment to the Management Agreement that increased the management fee payable in year four of the contract from $ 5.0 million to $ 7.5 million and increased the termination fee payable by Star Holdings in certain circumstances from $ 50.0 million to $ 55.0 million.

Pursuant to the management agreement, Star Holdings paid to SpinCo Manager an annual management fee of $ 25.0 million for the term ended March 31, 2024 and $ 15.0 million for the term ended March 31, 2025.

The annual fee declines to $ 10.0 million and $ 7.5 million, respectively, in each of the following annual terms, and adjusts to 2.0 % of the gross book value of Star Holding's assets, excluding shares of the Company’s common stock held by Star Holdings, thereafter.

The management agreement had an initial one-year term and automatically renews for successive one-year terms each anniversary date thereafter unless previously terminated.

The management agreement may be terminated by Star Holdings without cause by not less than one hundred eighty days ’ written notice to SpinCo Manager upon the affirmative vote of at least two-thirds of Star Holdings’ independent directors, provided, however, that if the date of termination occurs prior to March 31, 2027, the termination will be subject to payment of the applicable termination fee to SpinCo Manager.

In the event of a termination without cause by Star Holdings prior to March 31, 2027, Star Holdings will pay SpinCo Manager a termination fee of $ 55.0 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 March 31, 2026, the amount of the management fee that would have been payable for the next succeeding annual term, or if the termination date occurs after March 31, 2026, 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 $ 5.0 million if the termination occurs in the third year, plus the balance of any unpaid portion of the annual management fee for the applicable year.

During the three months ended March 31, 2025 and 2024, the Company recorded $ 3.6 million and $ 5.5 million, respectively, in management fees from Star Holdings.

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

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

As of March 31, 2025, 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.

Star Investment Holdings may sell the Selling Stockholder Shares in amounts and at times to be determined by the Star Investment Holdings, subject to receiving the Company’s consent, from time to time but has no obligation to sell any of the Selling Stockholder Shares.

Star Investment Holdings may sell the Selling Stockholder Shares in amounts and at times to be determined by Star Investment Holdings, subject to receiving the

Safehold Inc.

Notes to Consolidated Financial Statements

Company’s consent, from time to time but has no obligation to sell any of the Selling Stockholder Shares.

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

Note 15—Segment Reporting

The Company conducts its business through one reportable and one operating segment by acquiring, managing and capitalizing Ground Leases, which the Company believes provides an opportunity for safe, growing income.

The Company’s chief executive officer is the chief operating decision maker (“CODM”) and uses net income (loss), as reported on the consolidated statements of comprehensive income (loss), to measure segment operating performance.

All of the Company’s expenses are included in segment operating performance and are reviewed regularly.

However, the CODM reviews interest expense and general and administrative expense on a more disaggregated basis.

The CODM reviews interest expense in more detail because the Company uses its cost of capital to price its investments.

The CODM also reviews general and administrative expense, which includes public company costs consisting of compensation, occupancy, and other corporate costs, in more detail to ensure its resources are in line with its business and operating needs.

The measure of segment assets is reported on the Company’s consolidated balance sheets as total assets.

The CODM also reviews assets and asset level metrics such as rent coverage, GAAP and cash asset yields, Ground Lease cost to value ratios, unrealized capital appreciation and certain other metrics on a regular basis.

The following table presents the Company’s expenses that are reviewed in more detail by the CODM for the three months ended March 31, 2025 and 2024 ($ in thousands):

For the Three Months Ended

Interest expense

Subtotal interest expense

General and administrative (1)

Public company and other costs

Stock-based compensation

Subtotal general and administrative

(1) The CODM also considers management fees earned from Star Holdings (refer to Note 14) in their review of general and administrative expense because many of the Company’s employees spend time and resources performing basic functions for the management of Star Holdings.

During the three months ended March 31, 2025 and 2024, the Company earned $ 3.6 million and $ 5.5 million, respectively, in management fees from Star Holdings.

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

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