What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-01 compared with 2025-11-06 · 101 added, 180 removed, 199 unchanged (59% of the section changed)

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Business Overview

We acquire, manage and capitalize Ground Leases and report our business as a single reportable segment.

We believe owning a portfolio of Ground Leases affords our investors the opportunity for safe, growing income.

Our primary business is the acquisition, management and capitalization of Ground Leases and we believe owning a portfolio of Ground Leases affords our investors the opportunity for safe, growing income.

Safety is derived from a Ground Lease’s senior position in the commercial real estate capital structure.

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Capital appreciation is realized though appreciation in the value of the land over time and through our typical rights as landlord to acquire the commercial buildings on our land at the end of a Ground Lease, which may yield substantial value to us.

As of September 30, 2025, the percentage breakdown of the gross book value of our portfolio was 41% multi-family, 40% office, 11% hotels, 6% life science and 2% mixed use and other.

As of March 31, 2026, the percentage breakdown of the gross book value of our Ground Lease portfolio was 43% multi-family, 40% office, 9% hotels, 6% life science and 2% mixed use and other.

The diversification by geographic location, property type and sponsor in our portfolio further reduces risk and enhances potential upside.

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however, in the event cumulative inflation growth for the lookback period exceeds the cap, these rent adjustments may not keep up fully with changes in inflation.

To combat the increase in inflation over the past few years, the Federal Reserve raised interest rates and has kept interest rates generally high.

This increase in interest rates produced progress on inflation and in September 2024, the Federal Reserve reduced the federal funds rate by 50 basis points, which marked the first interest rate cut in four years.

The Federal Reserve further reduced the federal funds rate by 25 basis points in each of November 2024, December 2024 and September 2025.

To combat the increase in inflation over the past few years, the Federal Reserve raised interest rates and has kept interest rates generally high, although recently they began to reduce rates.

The Federal Reserve has indicated that the economic outlook, which could include any potential impact on the economy from changes to U.S.

trade policy or the U.S.

government shutdown, is uncertain and it will continue to monitor incoming data on unemployment and inflation before adjusting monetary policy;

however, high interest rates have, and any future increase in interest rates may continue to result in a reduction in the availability or an increase in costs of leasehold financing for Ground Lease tenants, which is critical to the growth of a robust Ground Lease market.

The rise in interest rates and increased investment spreads to treasury bonds in the Ground Lease market may also attract new competitors, which may result in higher costs for properties, lower returns and impact our ability to grow.

trade policy and/or the consequences of heightened geopolitical tensions, including the armed conflict in the Middle East, is uncertain and it will continue to monitor incoming data on unemployment and inflation before adjusting monetary policy;

however, high interest rates have continued to, and any future increase in interest rates may continue to result in a reduction in the availability or an increase in costs of leasehold financing for Ground Lease tenants, which is critical to the growth of a robust Ground Lease market.

Elevated interest rates and increased investment spreads to treasury bonds in the Ground Lease market may also attract new competitors, which may result in higher costs for properties, lower returns and impact our ability to grow.

The rise in interest rates has also adversely affected the U.S.

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Moreover, certain office assets currently have material vacancies.

If our Ground Lease tenants at such assets fail to re-tenant the building, such Ground Leases may

default and we may suffer losses.

We have entered into a forbearance agreement with a tenant under a significant New York office asset.

If the tenant defaults on such agreement, we may experience delays in enforcing our rights as a landlord, may suffer losses and may incur substantial costs in protecting our investment.

If our Ground Lease tenants at such assets fail to re-tenant the building, such Ground Leases may default and we may suffer losses.

We entered into a forbearance agreement with a tenant under a significant New York office asset in connection with the tenant’s failure to pay real estate taxes.

The tenant defaulted on such agreement and we

made a $8.3 million protective tax advance.

We may experience delays in enforcing our rights as landlord including any potential termination under the Ground Lease and may suffer losses and incur substantial costs in protecting our investment.

See the "Risk Factors" section of our 2025 Annual Report for additional discussion of certain potential risks to our business related to competition and industry concentrations.

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Ground Leases typically provide growing income streams through contractual base rent escalators that may compound over the duration of the lease.

These rent escalators may be based on fixed increases, a CPI or a combination thereof, and may also include a participation in the gross revenues of the property.

These rent escalators may be based on fixed increases, CPI or a combination thereof, and may also include a participation in the gross revenues of the property.

We believe that this growth in the lease rate over time can mitigate the effects of inflation and capture anticipated increases in land values over time, as well as serving as a basis for growing our dividend.

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We believe that, similar to a loan to value metric, tracking changes in the value of our owned residual portfolio is useful as an indicator of the quality of our cash flows and the safety of our position in a tenant’s capital structure, which, in turn, supports our objective to pay and grow dividends over time.

Observing changes in our owned residual portfolio

value also helps us monitor changes in the value of the real estate portfolio that reverts to us under the terms of the leases, either at the expiration or earlier termination of the lease.

Observing changes in our owned residual portfolio value also helps us monitor changes in the value of the real estate portfolio that reverts to us under the terms of the leases,

either at the expiration or earlier termination of the lease.

The value may be realized by us at the relevant time by entering into a new lease reflecting then current market terms and values, selling the building, selling the building with the land, or operating the building directly and leasing the spaces to tenants at prevailing market rates.

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We calculate this estimated value by subtracting our original aggregate cost basis in the Ground Leases from our estimated aggregate Combined Property Value, based on estimates by the valuation firm and by management.

The table below shows the current estimated UCA in our owned residual portfolio as of September 30, 2025 and December 31, 2024 ($ in millions):

September 30, 2025

The table below shows the current estimated UCA in our owned residual portfolio as of March 31, 2026 and December 31, 2025 ($ in millions):

March 31, 2026

December 31, 2025

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Unrealized Capital Appreciation in Our Owned Residual Portfolio

(1) Please review our Current Report on Form 8-K filed on November 5, 2025 for a discussion of the valuation methodology used and important limitations and qualifications of the calculation of UCA.

(1) Please review our Current Report on Form 8-K filed on April 30, 2026 for a discussion of the valuation methodology used and important limitations and qualifications of the calculation of UCA.

See “Risk Factors- Certain tenant rights under our Ground Leases may limit the value and the UCA we are able to realize upon lease expiration, sale of our land and Ground Leases or other events ” included in “Risk Factors” of our 2025 Annual Report for a discussion of certain tenant rights and other terms of the leases that may limit our ability to realize value from the UCA.

(2) Combined Property Value includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $288.3 million and $319.8 million related to transactions with remaining unfunded commitments as of September 30, 2025 and December 31, 2024, respectively.

(2) Combined Property Value includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $682.4 million and $616.2 million related to transactions with remaining unfunded commitments as of March 31, 2026 and December 31, 2025, respectively.

Combined Property Value excludes the term loan to Star Holdings, the assets in the Leasehold Loan Fund (refer to Note 8 to the consolidated financial statements), the assets in the Ground Lease Plus Fund and amounts attributable to noncontrolling interests.

Ground Lease Cost includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $84.5 million and $46.2 million of unfunded commitments as of September 30, 2025 and December 31, 2024, respectively.

Ground Lease Cost includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $137.0 million and $142.3 million of unfunded commitments as of March 31, 2026 and December 31, 2025, respectively.

Ground Lease Cost excludes the term loan to Star Holdings, our leasehold loans, the assets in the Leasehold Loan Fund, the assets in the Ground Lease Plus Fund and amounts attributable to noncontrolling interests.

As of September 30, 2025, our gross book value as a percentage of combined property value was 52%.

As of March 31, 2026, our gross book value as a percentage of combined property value was 51%.

Our Caret Program (as defined below) is designed to recognize the two distinct components of value in our Ground Lease portfolio by separating them into:

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The SAFE Caret Amendment Proposal” in our Registration Statement on Form S-4, filed with the SEC on December 16, 2022, for more information on the Caret Program.

We have a Caret Performance Incentive Plan (the “Caret Performance Incentive Plan”) pursuant to which Caret units are reserved for grants of performance-based awards to participants including certain employees of the Company, directors and service providers.

As of September 30, 2025, all outstanding Caret units awarded under the Caret Performance Incentive Plan are fully vested except for grants awarded in connection with the merger between Safehold Inc.

We have the Caret Performance Incentive Plan (the “Caret Performance Incentive Plan”) pursuant to which Caret units are reserved for grants of performance-based awards to participants, including certain employees of the Company, directors and service providers.

As of March 31, 2026, all outstanding Caret units awarded under the Caret Performance Incentive Plan are fully vested except for grants awarded in connection with the merger between Safehold Inc.

and iStar Inc.

on March 31, 2023 to executive officers and other employees, which are subject to cliff vesting on March 31, 2027 if our common stock has traded at an average 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 September 30, 2025, vested and unvested Caret units beneficially owned by our officers and other employees represent approximately 14.4% of the outstanding Caret units and 11.4% of the authorized Caret units, including 6.1% held directly and indirectly by Jay Sugarman, our Chairman and Chief Executive Officer, and approximately 128,971 Caret units remain available for issuance under the Caret Performance Incentive Plan.

In addition to the Caret units awarded or reserved for issuance under our Caret Performance Incentive Plan, we have sold 122,500 Caret units to third-party investors, including affiliates of MSD Partners, that remain outstanding as of September 30, 2025.

As of September 30, 2025, the Company owned 84.3% of the outstanding Caret units.

In connection with the sale of 137,142 Caret units in February 2022 (28,571 of which were committed to be purchased at the time, but did not close), we 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 at the original purchase price less the amount of distributions previously made on such units.

on March 31, 2023 to executive officers and other employees, which are subject to cliff vesting on March 31, 2027 if our common stock has traded at an average price of $60.00 or more for at least 30 consecutive trading days since the grant date, and 50,000 Caret units granted to an employee in December 2025 that will vest pro rata annually over a five-year period, subject to continued employment and service conditions.

As of March 31, 2026, vested and unvested Caret units beneficially owned by our officers and other employees represent approximately 14.8% of the outstanding Caret units and 11.8% of the authorized Caret units, including 6.1% held directly and indirectly by Jay Sugarman, our Chairman and Chief Executive Officer, and approximately 78,996 Caret units remain available for issuance under the Caret Performance Incentive Plan.

As of March 31, 2026, the Company owned 83.9% of the outstanding Caret units.

Market Opportunity :

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We further believe that Ground Leases generally represent an attractive source of capital for our tenants and may allow them to generate superior returns on their invested equity as compared to utilizing alternative sources of capital.

Additionally, we have created additional channels and products that allows us to build a larger, captive pipeline.

We have interests in two Ground Lease ecosystem funds, the Ground Lease Plus Fund and the Leasehold Loan Fund (refer to Note 8 to the consolidated financial statements).

Additionally, we have created additional channels and products that allow us to build a larger, captive pipeline.

We have interests in two Ground Lease ecosystem funds, the Ground Lease Plus Fund and the Leasehold Loan Fund (refer to Note 8 to the consolidated financial statements), and in 2025, we also began originating leasehold loans individually.

The Ground Lease Plus Fund includes two assets and targets high quality projects in pre-construction development phase with institutional developers.

The Leasehold Loan Fund currently includes three assets and allows for customers to receive their full capital structure needs in one place.

We have also recently begun to originate leasehold loans individually.

The Leasehold Loan Fund currently includes three assets and allows customers to receive their full capital structure needs in one place.

Customers are able to receive a mortgage leasehold loan as well as a Ground Lease through us.

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Additionally, our product “SAFExSELL” provides clients with an opportunity to enter into a Ground Lease at the time of the sale of a real estate asset, generating greater proceeds than would normally be expected in connection with a fee simple sale.

Additionally, from time to time we may own and operate commercial properties that revert to us, as occurred on January 1, 2026 when we became responsible for operating two hotel properties, which is reflected in our Hotel Operations segment (refer to Note 16 to the consolidated financial statements).

Our Portfolio

Our portfolio of properties is diversified by property type and region.

Our portfolio is comprised of Ground Leases, leasehold loans and one master lease (relating to five hotel assets that we refer to as our “Park Hotels Portfolio”) that has many of the characteristics of a Ground Lease.

The tenant under our Park Hotels Portfolio elected to extend the leases underlying three of the five hotels past the initial maturity of December 2025 (see the "Risk Factors - We may be unable to renew expiring Ground Leases, re-lease the land or sell the properties on favorable terms or at all , - Percentage rent

payable under our master lease relating to the Park Hotels Portfolio is calculated on an aggregate portfolio-wide basis , - We are the tenant of a Ground Lease underlying a majority of our Doubletree Seattle Airport property " in our 2024 Annual Report for a discussion of our Park Hotels Portfolio).

On October 22, 2025, we sent the tenant under the Park Hotels master lease a termination notice for all five hotels and commenced litigation against our tenant and Park Intermediate Holdings LLC, guarantor under the master lease, for certain breaches, among other things, related to the maintenance and operations of the hotels.

Our portfolio is comprised of Ground Leases, leasehold loans, hotel properties that we operate and one master lease (relating to three hotel assets that we refer to as our “Park Hotels Portfolio”) that has many of the characteristics of a Ground Lease.

The tenant under our Park Hotels Portfolio elected to extend the leases underlying three of the five hotels past the initial lease maturity of December 2025 (see the "Risk Factors - We may be unable to renew expiring Ground Leases, re-lease the land or sell the properties on favorable terms or at all , - Percentage rent payable under our master lease relating to the Park Hotels Portfolio is calculated on an aggregate portfolio-wide basis , - We are the tenant of a Ground Lease underlying a majority of our Doubletree Seattle Airport property " in our 2025 Annual Report for a discussion of our Park Hotels Portfolio).

22, 2025, we sent the tenant under the Park Hotels master lease a termination notice for all five hotels and commenced litigation against our tenant and Park Intermediate Holdings LLC, guarantor under the master lease, for certain breaches, among other things, related to the maintenance and operations of the hotels.

There are no assurances that we will be able to terminate the master lease or prevail in our litigation.

As of September 30, 2025, our estimated portfolio Ground Rent Coverage was 3.4x (see the "Risk Factors - Our estimated UCA, Combined Property Value and Ground Rent Coverage, may not reflect current market values, including the decline in office values, and may decline materially in future periods , - We rely on Property NOI as reported to us by our tenants, -Our estimates of Ground Rent Coverage for properties in development or transition, or for which we do not receive current tenant financial information, may prove to be incorrect " in our 2024 Annual Report for a discussion of our estimated Ground Rent Coverage).

Below is an overview of the top 10 Ground Leases in our portfolio as of September 30, 2025 (based on gross book value and excluding unfunded commitments):

As of March 31, 2026, our estimated portfolio Ground Rent Coverage was 3.4x (see the "Risk Factors - Our estimated UCA, Combined Property Value and Ground Rent Coverage, may not reflect current market values, including the decline in office values, and may decline materially in future periods , - We rely on Property NOI as reported to us by our tenants, -Our estimates of Ground Rent Coverage for properties in development or transition, or for which we do not receive current tenant financial information, may prove to be incorrect " in our 2025 Annual Report for a discussion of our estimated Ground Rent Coverage).

Below is an overview of the top 10 Ground Leases in our portfolio as of March 31, 2026 (based on gross book value and excluding unfunded commitments):

Rent Escalation

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Fixed with Inflation Adjustments

Park Hotels Portfolio (3)

685 Third Avenue

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Fixed with Inflation Adjustments

San Francisco, CA

Fixed with Inflation Adjustments

(1) Gross book value represents the historical purchase price plus accrued interest on sales-type leases.

(2) Gross book value for this property represents our pro rata share of the gross book value of our unconsolidated venture (refer to Note 8 to the consolidated financial statements).

(3) The Park Hotels Portfolio consists of five properties and is subject to a single master lease, but with individual asset extension rights.

A majority of the land underlying one of these properties is owned by a third party and is ground leased to us through 2044 subject to changes in the CPI;

however, our tenant at the property pays this cost directly to the third party.

There are no assurances that we will be able to terminate the master lease or prevail in our litigation.

The following tables show our portfolio by top 10 markets and property type as of September 30, 2025, excluding unfunded commitments:

The following tables show our Ground Lease portfolio by top 10 markets and property type as of March 31, 2026, excluding unfunded commitments:

Manhattan (1)

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We have unfunded commitments to certain of our Ground Lease tenants related to leasehold improvement allowances that we expect to fund upon the completion of certain conditions.

As of September 30, 2025, we had $84.5 million of such commitments, excluding commitments to be funded by noncontrolling interests.

We also have an unfunded forward commitment of $35.0 million related to an agreement that we entered into for the addition to an existing Ground Lease if certain conditions are met (refer to Note 15 to the consolidated financial

There can be no assurance that the conditions for closing this transaction will be satisfied and that we will fund the addition to the Ground Lease.

As of March 31, 2026, we had $137.0 million of such commitments, excluding commitments to be funded by noncontrolling interests.

We also fund construction and development loans and build-outs of space in real estate assets over a period of time, both individually and through the Leasehold Loan Fund, if and when the borrowers and tenants meet established milestones and other performance criteria.

We refer to these arrangements as performance-based commitments.

As of September 30, 2025, we had $106.3 million of such commitments.

We also entered into a discretionary commitment to fund up to $9.0 million of preferred equity in an entity that owned the leasehold interest under one of our office Ground Leases located in Washington, DC and through March 31, 2025, we funded $1.5 million of the commitment amount.

At inception in April 2024, we 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 our consolidated balance sheet as of December 31, 2024.

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

The write-off is included in “Other expense” in our consolidated statement of operations.

We recognized $5.2 million of interest income from sales-type leases from the Ground Lease in our consolidated statements of operations for the nine months ended September 30, 2025.

Results of Operations for the Three Months Ended September 30, 2025 compared to the Three Months Ended September 30, 2024

As of March 31, 2026, we had $150.3 million of such commitments.

Results of Operations for the Three Months Ended March 31, 2026 compared to the Three Months Ended March 31, 2025

For the Three Months Ended

September 30,

(in thousands)

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Operating lease income

Hotel revenues

Interest income

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Interest expense

Hotel expenses

Real estate expense

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Net income (loss)

Interest income from sales-type leases increased to $72.4 million for the three months ended September 30, 2025 from $67.1 million for the same period in 2024.

(1) For the three months ended March 31, 2026 and 2025, general and administrative was partially offset by $2.1 million and $3.6 million, respectively, of management fees earned from Star Holdings, which are included in “Other income” in our consolidated statements of operations.

Interest income from sales-type leases increased to $75.0 million for the three months ended March 31, 2026 from $69.7 million for the same period in 2025.

The increase was due primarily to originations of Ground Leases and additional fundings on existing Ground Leases classified as sales-type leases and Ground Lease receivables.

Operating lease income was $17.0 million and $16.7 million, respectively, for the three months ended September 30, 2025 and 2024.

Operating lease income was $20.2 million and $21.4 million, respectively, for the three months ended March 31, 2026 and 2025.

Operating lease income consists of rent from our operating leases and percentage rent from certain properties, including our Park Hotels portfolio.

Interest income relates to the Star Holdings Term Loan Facility (refer to Note 7 to the consolidated financial statements) and leasehold loans we originated during 2025 in connection with Ground Leases.

The increase in 2025 was due primarily to the origination of leasehold loans.

Other income for the three months ended September 30, 2025 and 2024 includes $2.7 million and $3.7 million, respectively, of management fees from Star Holdings.

Other income for both the three months ended September 30, 2025 and 2024 also includes $0.1 million of other income relating to a Ground Lease in which we are the lessee but our tenant at the property pays this expense directly under the terms of a master lease.

Other income for the three months ended September 30, 2025 and 2024 also includes $0.9 million and 0.8 million, respectively, of other ancillary income from our investments.

The decrease in 2026 was due primarily to us taking over hotel operations at two hotels on January 1, 2026 (refer to Note 3 to the consolidated financial statements) and a decrease in percentage rent from our Park Hotels portfolio.

Hotel revenues were $9.9 million for the three months ended March 31, 2026 and relate to two hotels that we became responsible for operating on January 1, 2026 (refer to Note 3 to the consolidated financial statements).

Interest income relates to the Star Holdings Term Loan Facility (refer to Note 7 to the consolidated financial statements) and leasehold loans we originated in connection with Ground Leases.

The increase in 2026 was due primarily to the origination of leasehold loans beginning in the second quarter of 2025.

Other income for the three months ended March 31, 2026 and 2025 includes $2.1 million and $3.6 million, respectively, of management fees from Star Holdings (refer to Note 15 to the consolidated financial statements).

Other income for the three months ended March 31, 2025 also includes $0.1 million of other income relating to a Ground Lease in which we are the lessee.

Other income for the three months ended March 31, 2026 and 2025 also includes $0.6 million and $0.6 million, respectively, of other ancillary income from our investments.

Other ancillary income primarily includes sublease income, recoverable expenses and interest income earned on our cash balances.

During the three months ended September 30, 2025 and 2024, we incurred interest expense from our debt obligations of $52.5 million and $50.0 million, respectively.

During the three months ended March 31, 2026 and 2025, we incurred interest expense from our debt obligations of $53.5 million and $50.4 million, respectively.

The increase in 2026 was primarily the result of increased indebtedness to fund acquisition activity.

During the three months ended September 30, 2025 and 2024, we incurred real estate expense of $1.4 million and $1.0 million, respectively, which consisted primarily of the amortization of an operating lease right-of-use asset, legal fees, property taxes and insurance expense.

In addition, during both the three months ended September 30, 2025 and 2024, we also recorded $0.1 million of real estate expense relating to a Ground Lease in which we are the lessee but our tenant at the property pays this expense directly under the terms of a master lease.

The increase in 2025 was due primarily to legal and consulting fees.

Depreciation and amortization during the three months ended September 30, 2025 and 2024 was $2.1 million and $2.5 million, respectively.

Hotel expenses were $12.2 million for the three months ended March 31, 2026 and relates to two hotels that we became responsible for operating on January 1, 2026 (refer to Note 3 to the consolidated financial statements).

During the three months ended March 31, 2026 and 2025, we incurred real estate expense of $1.3 million and $1.2 million, respectively, which consisted primarily of the amortization of an operating lease right-of-use asset, legal fees, property taxes and insurance expense.

In addition, during the three months ended March 31, 2025, we also recorded $0.1 million of real estate expense relating to a Ground Lease in which we are the lessee.

Depreciation and amortization during the three months ended March 31, 2026 and 2025 was $1.8 million and $2.2 million, respectively.

Depreciation and amortization primarily relates to our ownership of the Park Hotels Portfolio and a multi-family property, the amortization of in-place lease assets and depreciation of corporate fixed assets.

The decrease in 2025 was primarily the result of the tenant under our Park Hotels Portfolio electing to extend the leases underlying three of the five hotels under the lease past the initial lease maturity of December 2025.

The decrease in 2026 was primarily the result of the full amortization of lease intangible assets.

General and administrative expenses primarily includes public company costs such as compensation (including equity-based compensation), occupancy and other costs.

The following table presents our general and administrative expenses for the three months ended September 30, 2025 and 2024 ($ in thousands):

The following table presents our general and administrative expenses for the three months ended March 31, 2026 and 2025 ($ in thousands):

For the Three Months Ended

September 30,

Public company and other costs (1)

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Total general and administrative expenses (2)

(1) For the three months ended September 30, 2025 and 2024, public company and other costs primarily includes compensation, legal, insurance and occupancy costs.

(2) For the three months ended September 30, 2025 and 2024, general and administrative expenses were partially offset by $2.7 million and $3.7 million, respectively, of management fees earned from Star Holdings, which are included in “Other income” in our consolidated statements of operations.

During the three months ended September 30, 2025, we recorded a provision for credit losses of $1.0 million.

The provision for credit losses was due primarily to current market conditions, including an increase in our Ground Lease cost to value ratios on certain of our assets, and growth in the carrying value of the Ground Lease portfolio during the period.

During the three months ended September 30, 2024, we recorded a provision for credit losses of $7.1 million.

The provision for credit losses for the three months ended September 30, 2024 was due primarily to enhancements to our general provision for credit loss methodology, current market conditions and growth in the portfolio during the period.

D uring the three months ended September 30, 2025, other expense consists primarily of fees incurred related to our debt obligations, legal fees and costs incurred with real estate available and held for sale.

During the three months ended September 30, 2024, other expense consists primarily of costs related to our debt obligations.

During both the three months ended September 30, 2025 and 2024, earnings from equity method investments (refer to Note 8 to the consolidated financial statements) was $4.7 million .

During the three months ended September 30, 2025, we recorded consolidated income tax expense of $0.2 million, which was primarily attributable to current and deferred tax expense at our taxable REIT subsidiary (“TRS”).

Included in our consolidated income tax expense for the three months ended September 30, 2025, our TRS recorded current income tax in the amount of $0.4 million and a deferred income tax benefit in the amount of $0.2 million .

During the three months ended September 30, 2024, we recorded consolidated income tax expense of $0.7 million, which was attributable to our TRS.

Included in our consolidated income tax expense, our TRS recorded current tax expense of $0.8 million and a deferred benefit of $0.1 million.

The deferred tax expense relates primarily to equity-based compensation expense and utilization of net operating loss carryovers to which our TRS is a successor.

Results of Operations for the Nine Months Ended September 30, 2025 compared to the Nine Months Ended September 30, 2024

For the Nine Months Ended

September 30,

(in thousands)

Interest income from sales-type leases

Operating lease income

Interest income

Total revenues

Costs and expenses:

Interest expense

Real estate expense

Depreciation and amortization

General and administrative

Provision for (recovery of) credit losses

Other expense

Total costs and expenses

Earnings (losses) from equity method investments

Net income (loss) before income taxes

Income tax expense

Net income (loss)

Interest income from sales-type leases increased to $212.7 million for the nine months ended September 30, 2025 from $195.6 million for the same period in 2024.

The increase was due primarily to originations of Ground Leases and additional fundings on existing Ground Leases classified as sales-type leases and Ground Lease receivables.

Operating lease income increased to $55.1 million for the nine months ended September 30, 2025 from $54.3 million for the same period in 2024.

Operating lease income consists of rent from our operating leases and percentage rent from certain properties, including our Park Hotels Portfolio.

The increase was primarily the result of a $0.3 million increase in percentage rent at our Park Hotels Portfolio.

Interest income relates to the Star Holdings Term Loan Facility (refer to Note 7 to the consolidated financial statements) and leasehold loans we originated during the nine months ended September 30, 2025 in connection with Ground Leases.

The increase in 2025 was due primarily to the origination of leasehold loans.

Other income for the nine months ended September 30, 2025 and 2024 includes $9.0 million and $13.6 million, respectively, of management fees from Star Holdings.

Other income for both the nine months ended September 30, 2025 and 2024 also includes $0.4 million of other income relating to a Ground Lease in which we are the lessee but our tenant at the property pays this expense directly under the terms of a master lease.

Other income for the nine months ended

September 30, 2025 and 2024 also includes $2.3 million and 2.8 million, respectively, of other ancillary income from our investments.

Other ancillary income primarily includes sublease income, recoverable expenses and interest income earned on our cash balances.

During the nine months ended September 30, 2025 and 2024, we incurred interest expense from our debt obligations of $154.2 million and $147.7 million, respectively.

The increase in 2025 was primarily the result of increased indebtedness to fund acquisition activity.

During the nine months ended September 30, 2025 and 2024, we incurred real estate expense of $3.4 million and $3.2 million, respectively, which consisted primarily of the amortization of an operating lease right-of-use asset, legal fees, property taxes and insurance expense.

In addition, during both the nine months ended September 30, 2025 and 2024, we also recorded $0.4 million of real estate expense relating to a Ground Lease in which we are the lessee but our tenant at the property pays this expense directly under the terms of a master lease.

The increase in 2025 was due primarily to legal and consulting fees.

Depreciation and amortization during the nine months ended September 30, 2025 and 2024 was $6.4 million and $7.5 million, respectively.

General and administrative expenses primarily includes public company costs such as compensation (including equity-based compensation), occupancy and other costs.

The following table presents our general and administrative expenses for the nine months ended September 30, 2025 and 2024 ($ in thousands):

For the Nine Months Ended

September 30,

Public company and other costs (1)

Stock-based compensation

Total general and administrative expenses (2)

(1) For the nine months ended September 30, 2025 and 2024, public company and other costs primarily includes compensation, legal, insurance and occupancy costs.

(2) For the nine months ended September 30, 2025 and 2024, general and administrative expenses were partially offset by $9.0 million and $13.6 million, respectively, of management fees earned from Star Holdings, which are included in “Other income” in our consolidated statements of operations.

During the nine months ended September 30, 2025, we recorded a provision for credit losses of $5.7 million.

The provision for credit losses was due primarily to the origination of leasehold loans (refer to Note 6 to the consolidated financial statements) during the nine months ended September 30, 2025 and current market conditions, including an increase in our Ground Lease cost to value ratios on certain of our assets, and growth in the carrying value of the Ground Lease portfolio during the period.

During the nine months ended September 30, 2024, we recorded a provision for credit losses of $8.4 million.

The provision for credit losses for the nine months ended September 30, 2024 was due primarily to enhancements to our general provision for credit loss methodology, current market conditions and growth in the portfolio during the period.

D uring the nine months ended September 30, 2025, other expense consists primarily of a full write-off of a $1.9 million preferred equity investment in an entity that owned the leasehold interest under one of our Ground Leases (refer to Note 15 to the consolidated financial statements) and costs related to our debt obligations.

During the nine months ended September 30, 2024, other expense consists primarily of costs related to our debt obligations.

During the nine months ended September 30, 2025, earnings from equity method investments (refer to Note 8 to the consolidated financial statements) decreased to $14.6 million from $18.1 million for the same period in 2024.

The decrease in 2025 was due primarily to loan repayments at the Leasehold Loan Fund and us buying one asset from the Ground Lease Plus Fund in January 2024.

During the nine months ended September 30, 2025, we recorded consolidated income tax expense of $2.0 million, which was primarily attributable to current and deferred tax expense at our TRS.

Included in our consolidated income tax expense for the nine months ended September 30, 2025, our TRS recorded current and deferred tax expense in the amounts of $0.6 million and $1.4 million, respectively.

During the nine months ended September 30, 2024, we recorded consolidated income tax expense of $2.0 million, which was attributable to our TRS.

Included in our consolidated income tax expense for the nine months ended September 30, 2024, our TRS recorded deferred tax expense in the amount of $0.9 million.

The net deferred tax expense relates primarily to equity-based compensation expense and utilization net operating loss carryovers to which our TRS is a successor.

(1) For the three months ended March 31, 2026 and 2025, public company and other costs primarily includes compensation, occupancy, legal, insurance and other office related costs.

(2) For the three months ended March 31, 2026 and 2025, general and administrative expenses were partially offset by $2.1 million and $3.6 million, respectively, of management fees earned from Star Holdings, which are included in “Other income” in our consolidated statements of operations.

During the three months ended March 31, 2026, we recorded a provision for credit losses of $0.5 million.

The provision for credit losses was due primarily to growth in the carrying value of the Ground Lease portfolio during the period and current market conditions, which was partially offset by a decrease in our Ground Lease cost to value ratios .

During the three months ended March 31, 2025, we recorded a provision for credit losses of $2.3 million.

D uring the three months ended March 31, 2026, other expense consists primarily of costs incurred with real estate available and held for sale.

During the three months ended March 31, 2025, other expense consists primarily of a full write-off of a $1.9 million preferred equity investment in an entity that owned the leasehold interest under one of our Ground Leases.

During the three months ended March 31, 2026 and 2025, earnings from equity method investments (refer to Note 8 to the consolidated financial statements) was $4.0 million and $5.0 million, respectively .

During the three months ended March 31, 2026, we recorded consolidated income tax expense of $0.7 million, which was primarily attributable to current and deferred tax expense at our taxable REIT subsidiary (“TRS”).

Included in our consolidated income tax expense for the three months ended March 31, 2026, our TRS recorded current income tax expense in the amount of $0.6 million and a deferred income tax expense in the amount of $0.1 million .

During the three months ended March 31, 2025, we recorded consolidated income tax expense of $0.9 million, which was primarily attributable to a deferred tax expense at our TRS and relates to equity-based compensation expense and utilization of net operating loss carryovers to which our TRS is a successor.

Liquidity and Capital Resources

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We expect to make quarterly cash distributions to our shareholders sufficient to meet REIT qualification requirements.

We believe the strong credit profile we have established utilizing our modern Ground Leases and our current investment-grade credit ratings from Moody's Investors Services of A3, Fitch Ratings of A- and S&P Global Ratings of BBB+ facilitate our ability to bring commercial real estate owners, developers and sponsors more efficiently priced capital and allows us significant operational and financial flexibility and supports our ability to scale our Ground Lease platform.

In November 2025, we received a credit ratings upgrade from S&P Global Ratings to A- (from BBB+).

We believe the strong credit profile we have established utilizing our modern Ground Leases and our current investment-grade credit ratings from Moody's Investors Services of A3, Fitch Ratings of A- and S&P Global Ratings of A- facilitates our ability to bring commercial real estate owners, developers and sponsors more efficiently priced capital and allows us significant operational and financial flexibility and supports our ability to scale our Ground Lease platform.

Also in November 2025, we closed on a $400.0 million unsecured term loan with an extended maturity date of November 15, 2030, which includes two one-year extension options (the “2025 Unsecured Term Loan”).

The 2025 Unsecured Term Loan replaced the $227.0 million principal amount of debt obligations we defeased in October 2025 that was scheduled to mature in April 2027 and partially repaid the 2024 Unsecured Revolver (as defined below).

The 2025 Unsecured Term Loan has a borrowing rate of SOFR plus 0.90%, subject to our credit ratings.

The 2025 Unsecured Term Loan also includes an accordion feature to increase the loan up to a maximum amount of $600.0 million, subject to certain conditions.

On February 4, 2025, our Board authorized the repurchase of up to $50.0 million of our common stock.

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

During the three months ended March 31, 2026, we repurchased 0.2 million shares of our outstanding common stock for $3.4 million, representing an average cost of $14.39 per share, including fees.

As of March 31, 2026, we had $46.6 million remaining under the total share repurchase authorization.

In November 2024 and February 2024, Portfolio Holdings (as issuer) and we (as guarantor), issued an aggregate $700.0 million principal amount of senior notes.

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

The Commercial Paper Program is backed by our 2024 Unsecured Revolver (see below).

As of September 30, 2025, we had no outstanding balance under the Commercial Paper Program.

The Commercial Paper

Program is backed by our 2024 Unsecured Revolver (see below).

As of March 31, 2026, we had no outstanding balance under the Commercial Paper Program.

Borrowings under the Commercial Paper Program reduce amounts otherwise available under the 2024 Unsecured Revolver.

In April 2024, we closed on a new $2.0 billion unsecured revolving credit facility (the “2024 Unsecured Revolver”), which replaced our 2021 Unsecured Revolver and 2023 Unsecured Revolver (refer to Note 10 to the consolidated financial statements), each of which were terminated.

At the time of termination, $916 million was drawn on the 2021 Unsecured Revolver, all of which rolled over into the 2024 Unsecured Revolver.

In April 2024, we closed on a new $2.0 billion unsecured revolving credit facility (the “2024 Unsecured Revolver”).

At the time, $916 million of existing indebtedness was drawn on then existing unsecured credit facilities, all of which rolled over into the 2024 Unsecured Revolver.

The 2024 Unsecured Revolver has an extended maturity date of May 1, 2029, which includes two six-month extension options.

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The 2024 Unsecured Revolver replaced our nearest term maturities, reduces the overall facility cost and increased our liquidity by $150 million.

Additionally, we

gained greater financial flexibility through changes to certain financial covenants.

As of September 30, 2025, there was $1.1 billion of undrawn capacity on the 2024 Unsecured Revolver.

Additionally, we gained greater financial flexibility through changes to certain financial covenants.

As of March 31, 2026, there was $1.1 billion of undrawn capacity on the 2024 Unsecured Revolver.

In April 2023, we entered into an at-the-market equity offering (the “ATM”) pursuant to which we may sell shares of our common stock up to an aggregate purchase price of $300.0 million.

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

As of September 30, 2025, we had not sold any shares under the ATM.

As of September 30, 2025, we had $12.1 million of unrestricted cash.

As of March 31, 2026, we had not sold any shares under the ATM.

As of March 31, 2026, we had $19.3 million of unrestricted cash.

We also have an aggregate $1.1 billion of undrawn capacity on our 2024 Unsecured Revolver (refer to Note 10 to the consolidated financial statements).

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Our primary uses of cash to date have been the acquisition/origination of Ground Leases, repayments on our debt facilities and distributions to our shareholders.

We expect our short-term liquidity requirements to include debt service on our debt obligations (refer to Note 10 to the consolidated financial statements), distributions to our shareholders, working capital, new acquisitions and originations of Ground Lease and leasehold loan investments and additional fundings on existing Ground Leases and leasehold loan investments.

We expect our short-term liquidity requirements to include debt service on our debt obligations (refer to Note 10 to the consolidated financial statements), distributions to our shareholders, working capital (including for our hotel operations), new acquisitions and originations of Ground Lease and leasehold loan investments and additional fundings on existing Ground Leases and leasehold loan investments.

We expect our long-term liquidity requirements to include debt service on our debt obligations (refer to Note 10 to the consolidated financial statements), distributions to our shareholders, working capital, new acquisitions and originations of Ground Lease and leasehold loan investments (including in respect of unfunded commitments – refer to Note 11 to the consolidated financial statements) and debt maturities.

Our primary sources of liquidity going forward will generally consist of cash on hand and cash flows from operations, new financings, funds from our joint venture partners, unused borrowing capacity under our 2024 Unsecured Revolver (subject to the conditions set forth in the applicable loan agreement) and Commercial Paper Program, and common and/or preferred equity issuances.

Our primary sources of liquidity going forward will generally consist of cash on hand and cash flows from operations, new financings, asset sales, funds from our joint venture partners, unused borrowing capacity under our 2024 Unsecured Revolver (subject to the conditions set forth in the applicable loan agreement) and Commercial Paper Program, and common and/or preferred equity issuances.

We expect that we will be able to meet our liquidity requirements over the next 12 months and beyond.

The following table outlines our cash flows provided by (used in) operating activities, cash flows used in investing activities and cash flows provided by financing activities for the nine months ended September 30, 2025 and 2024 ($ in thousands):

For the Nine Months Ended

September 30,

The following table outlines our cash flows provided by (used in) operating activities, cash flows used in investing activities and cash flows provided by financing activities for the three months ended March 31, 2026 and 2025 ($ in thousands):

For the Three Months Ended

Cash flows provided by (used in) operating activities

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Cash flows provided by (used in) financing activities

The increase in cash flows provided by operating activities during 2025 was due primarily to proceeds received from the settlement of derivatives and from an increase in accrued expenses, primarily interest expense, that were not yet paid as of September 30, 2025, which was partially offset by a decrease in distributions from equity method investments.

The decrease in cash flows used in investing activities during 2025 was due primarily to a decrease in the origination of Ground Leases in 2025, which was partially offset by the origination of leasehold loans in 2025 and a decrease in distributions from equity method investments in 2025.

The increase in cash flows provided by financing activities during 2025 was due primarily to activity in 2024, including the acquisition of a noncontrolling interest and the payment of finance costs, which was partially offset by a decrease in contributions from noncontrolling interests.

The decrease in cash flows from operating activities during 2026 was due primarily to an increase of cash payments for debt service and costs associated with two hotels that we became responsible for operating on January 1, 2026 (refer to Note 3 to the consolidated financial statements).

The increase in cash flows used in investing activities during 2026 was due primarily to an increase in the origination and additional fundings of Ground Leases and the origination and fundings of loans receivable.

The increase in cash flows provided by financing activities during 2026 was due primarily to an increase in net borrowings on debt obligations, which was partially offset by the repurchase of common stock.

Supplemental Guarantor Disclosure

In March 2020, the Securities and Exchange Commission (“SEC”) adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities.

amendments became effective on January 4, 2021.

The amendments became effective on January 4, 2021.

In April 2023, we and Portfolio Holdings filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of Portfolio Holdings, which will be fully and unconditionally guaranteed by us.

As of September 30, 2025, Portfolio Holdings had issued and outstanding four tranches of unsecured senior notes with varying fixed-rates and maturities ranging from June 2031 to January 2035, which were registered on the Form S-3 filed in April 2023 or on a Form S-3 filed by Safehold Inc.

As of March 31, 2026, Portfolio Holdings had issued and outstanding four tranches of unsecured senior notes with varying fixed-rates and maturities ranging from June 2031 to January 2035, which were registered on the Form S-3 filed in April 2023 or on a Form S-3 filed by Safehold Inc.

and Portfolio Holdings (then known as Safehold Operating Partnership LP) prior to its merger with the Company (then known as iStar Inc.).

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The guarantee is full and unconditional, and Portfolio Holdings is a consolidated subsidiary of ours.

In March 2026, we and Portfolio Holdings filed a registration statement on Form S-3 with the SEC to replace the registration statement filed in April 2023.

Any debt securities of Portfolio Holdings registered under this registration statement will be fully and unconditionally guaranteed by us.

As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information.

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For all of these estimates, we caution that future events rarely develop exactly as forecasted, and, therefore, routinely require adjustment.

Loans receivable, net —Loans receivable, net includes senior mortgages that we originated to certain of our Ground Lease tenants in connection with Ground Leases (refer to Note 6 to the consolidated financial statements).

Our loans receivable are classified as held-for-investment and are reported at their outstanding unpaid principal balance net of any unamortized acquisition premiums or discounts, unamortized deferred loan costs or fees and credit loss allowances.

We perform a quarterly analysis of our loans receivable that incorporates management’s current judgments about credit quality based on all known and relevant internal and external factors that may affect collectability.

We consider, among other things, payment status, lien position, borrower financial resources and investment collateral, collateral type, project economics and other economic factors.

We estimate the expected loss on our loans receivable (including unfunded commitments) based on relevant information including current market conditions and reasonable and supportable forecasts that affect the collectability of our investments.

The estimate of our expected loss requires significant judgment.

We calculate our expected loss through the use of third-party historical market data for loans with similar characteristics to our loan portfolio.

We also utilize a third-party to provide forecasts to incorporate current and future economic conditions that may impact the performance of the commercial real estate assets securing our investments.

For a discussion of our remaining critical accounting policies, refer to Note 3 to the consolidated financial statements of our 2024 Annual Report.

For a discussion of our critical accounting policies, refer to Note 3 to the consolidated financial statements of our 2025 Annual Report.

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 2. Management’s Discussion and Analysis