What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-31 compared with 2026-05-01 · 153 added, 76 removed, 224 unchanged (51% of the section changed)

14 unchanged sentences

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 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.

As of June 30, 2026, the percentage breakdown of the gross book value of our Ground Lease portfolio was 44% multi-family, 39% 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, 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.

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

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

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;

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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.

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

The tenant defaulted on such agreement

and we sent the tenant a lease termination notice in May 2026.

The tenant filed a countersuit and a temporary restraining order has been granted on our lease termination efforts (refer to Note 11 to the consolidated financial statements).

As such, 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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and (3) increases and decreases in the Combined Property Value of the portfolio that reverts to us pursuant to such residual rights.

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.

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.

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 March 31, 2026 and December 31, 2025 ($ in millions):

March 31, 2026

The table below shows the current estimated UCA in our owned residual portfolio as of June 30, 2026 and December 31, 2025 ($ in millions):

June 30, 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 April 30, 2026 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 July 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 $682.4 million and $616.2 million related to transactions with remaining unfunded commitments as of March 31, 2026 and December 31, 2025, respectively.

(2) Combined Property Value includes our applicable percentage interests in our unconsolidated Ground Lease ventures , the two properties whose leases recently expired and which we became responsible for operating and $1,007.6 million and $616.2 million related to transactions with remaining unfunded commitments as of June 30, 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 $137.0 million and $142.3 million of unfunded commitments as of March 31, 2026 and December 31, 2025, respectively.

Ground Lease Cost includes our applicable percentage interests in our unconsolidated Ground Lease ventures , the two properties whose leases recently expired and which we became responsible for operating and $188.5 million and $142.3 million of unfunded commitments as of June 30, 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 March 31, 2026, our gross book value as a percentage of combined property value was 51%.

As of June 30, 2026, our gross book value as a percentage of combined property value was 52%.

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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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.

As of June 30, 2026, all outstanding Caret units awarded under the Caret Performance Incentive Plan are fully vested except for (i) Caret units granted 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 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.

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 March 31, 2026.

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

(ii) Caret units granted to one employee in December 2025 that will vest pro rata annually over a five-year period, subject to continued employment and service conditions;

(iii) Caret units granted to one employee in May 2026 that will vest pro rata annually over a five-year period, subject to continued employment and service conditions;

and (iv) Caret units granted to employees in May 2026 that will cliff vest on May 15, 2031, subject to continued employment and service conditions.

As of June 30, 2026, vested and unvested Caret units beneficially owned by our officers and other employees represent approximately 15.4% of the outstanding Caret units and 12.3% of the authorized Caret units, including 6.1% held directly and indirectly by Jay Sugarman, our Chairman and Chief Executive Officer, and approximately 14,396 Caret units remain available for issuance under the Caret Performance Incentive Plan.

As of June 30, 2026, the Company owned 83.4% of the outstanding Caret units.

Market Opportunity :

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

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 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):

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

As of June 30, 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 June 30, 2026 (based on gross book value and excluding unfunded commitments):

Rent Escalation

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(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).

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

The tenant at 135 West 50 th Street defaulted on a forbearance agreement in connection with the tenant’s failure to pay property taxes, and we sent the tenant a lease termination notice in May 2026.

The tenant filed a countersuit and a temporary restraining order has been granted on our lease termination efforts (refer to Note 11 to the consolidated financial statements).

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

Additionally, the tenant under our Park Hotels Portfolio elected to extend the leases underlying three of the original 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).

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 (refer to Note 11 to the consolidated financial statements).

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

The following tables show our Ground Lease portfolio by top 10 markets and property type as of June 30, 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 March 31, 2026, we had $137.0 million of such commitments, excluding commitments to be funded by noncontrolling interests.

As of June 30, 2026, we had $188.5 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 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

As of June 30, 2026, we had $143.8 million of such commitments.

Results of Operations for the Three Months Ended June 30, 2026 compared to the Three Months Ended June 30, 2025

For the Three Months Ended

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Net income (loss)

(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.

(1) For the three months ended June 30, 2026 and 2025, general and administrative was partially offset by $1.9 million and $2.7 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 $76.9 million for the three months ended June 30, 2026 from $70.6 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 $20.2 million and $21.4 million, respectively, for the three months ended March 31, 2026 and 2025.

Operating lease income was $15.8 million and $16.7 million, respectively, for the three months ended June 30, 2026 and 2025.

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

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).

Hotel revenues were $15.9 million for the three months ended June 30, 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 income for the three months ended June 30, 2026 and 2025 includes $1.9 million and $2.7 million, respectively, of management fees from Star Holdings (refer to Note 15 to the consolidated financial statements).

Other income for the three months ended June 30, 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 June 30, 2026 and 2025 also includes $0.8 million and $1.0 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 March 31, 2026 and 2025, we incurred interest expense from our debt obligations of $53.5 million and $50.4 million, respectively.

During the three months ended June 30, 2026 and 2025, we incurred interest expense from our debt obligations of $55.2 million and $51.3 million, respectively.

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

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.

Hotel expenses were $13.9 million for the three months ended June 30, 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 June 30, 2026 and 2025, we incurred real estate expense of $0.8 million and $0.9 million, respectively, which consisted primarily of the amortization of an operating lease right-of-use asset, recoverable franchise taxes, legal fees, property taxes and insurance expense.

In addition, during the three months ended June 30, 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 June 30, 2026 and 2025 was $1.8 million and $2.1 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.

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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 March 31, 2026 and 2025 ($ in thousands):

The following table presents our general and administrative expenses for the three months ended June 30, 2026 and 2025 ($ in thousands):

For the Three Months Ended

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Total general and administrative expenses (2)

(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.

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 portfolio during the period.

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.

(1) For the three months ended June 30, 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 June 30, 2026 and 2025, general and administrative expenses were partially offset by $1.9 million and $2.7 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 June 30, 2026, we recorded a provision for credit losses of $0.3 million.

The provision for credit losses was due primarily to growth in the carrying value of the Ground Lease portfolio during the period, which was partially offset by an improving macroeconomic forecast since March 31, 2026 .

During the three months ended June 30, 2025, we recorded a provision for credit losses of $2.4 million.

The provision for credit losses was due primarily to the origination of three leasehold loans (refer to Note 6 to the consolidated financial statements) during the three months ended June 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.

D uring the three months ended June 30, 2026, other expense consisted primarily of costs incurred with derivative transactions.

During the three months ended June 30, 2025, other expense consisted primarily of legal fees

During the three months ended June 30, 2026 and 2025, earnings from equity method investments (refer to Note 8 to the consolidated financial statements) was $3.9 million and $4.9 million, respectively .

The decrease in 2026 was primarily the result of a decrease in earnings from our Ground Lease Plus Fund and 32 Old Slip (refer to Note 8 to the consolidated financial statements).

During the three months ended June 30, 2026, we recorded consolidated income tax expense of $1.4 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 June 30, 2026, our TRS recorded current income tax expense in the amount of $1.2 million and a deferred income tax expense in the amount of $0.2 million .

During the three months ended June 30, 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.

Included in our consolidated income tax expense for the three

months ended June 30, 2025, our TRS recorded current and deferred income tax expense in the amounts of $0.2 million and $0.7 million, respectively.

Results of Operations for the Six Months Ended June 30, 2026 compared to the Six Months Ended June 30, 2025

For the Six Months Ended

(in thousands)

Interest income from sales-type leases

Operating lease income

Hotel revenues

Interest income

Total revenues

Costs and expenses:

Interest expense

Hotel expenses

Real estate expense

Depreciation and amortization

General and administrative (1)

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)

(1) For the six months ended June 30, 2026 and 2025, general and administrative was partially offset by $4.0 million and $6.3 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 $151.9 million for the six months ended June 30, 2026 from $140.3 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 $36.0 million and $38.1 million, respectively, for the six months ended June 30, 2026 and 2025.

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

Hotel revenues were $25.8 million for the six months ended June 30, 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 six months ended June 30, 2026 and 2025 includes $4.0 million and $6.3 million, respectively, of management fees from Star Holdings (refer to Note 15 to the consolidated financial statements).

Other income for the six months ended June 30, 2025 also includes $0.3 million of other income relating to a Ground Lease in which we are the lessee.

Other income for the six months ended June 30, 2026 and 2025 also includes $1.4 million and

$1.5 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 six months ended June 30, 2026 and 2025, we incurred interest expense from our debt obligations of $108.7 million and $101.7 million, respectively.

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

Hotel expenses were $26.1 million for the six months ended June 30, 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 six months ended June 30, 2026 and 2025, we incurred real estate expense of $2.1 million and $2.0 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 the six months ended June 30, 2025, we also recorded $0.3 million of real estate expense relating to a Ground Lease in which we are the lessee.

Depreciation and amortization during the six months ended June 30, 2026 and 2025 was $3.7 million and $4.3 million, respectively.

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 six months ended June 30, 2026 and 2025 ($ in thousands):

For the Six Months Ended

Public company and other costs (1)

Stock-based compensation

Total general and administrative expenses (2)

(1) For the six months ended June 30, 2026 and 2025, public company and other costs primarily includes compensation, occupancy, legal, insurance and other office related costs.

(2) For the six months ended June 30, 2026 and 2025, general and administrative expenses were partially offset by $4.0 million and $6.3 million, respectively, of management fees earned from Star Holdings, which are included in “Other income” in our consolidated statements of operations.

During the six months ended June 30, 2026, we recorded a provision for credit losses of $0.8 million.

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

During the six months ended June 30, 2025, we recorded a provision for credit losses of $4.6 million.

The provision for credit losses was due primarily to the origination of three leasehold loans (refer to Note 6 to the consolidated financial statements) during the six months ended June 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.

D uring the six months ended June 30, 2026, other expense consisted primarily of costs incurred with real estate available and held for sale.

During the six months ended June 30, 2025, other expense consisted 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 six months ended June 30, 2026 and 2025, earnings from equity method investments (refer to Note 8 to the consolidated financial statements) was $7.9 million and $9.9 million, respectively .

The decrease in 2026 was primarily the result of a decrease in earnings from our Ground Lease Plus Fund and 32 Old Slip (refer to Note 8 to the consolidated financial statements).

During the six months ended June 30, 2026, we recorded consolidated income tax expense of $2.1 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 six months ended June 30, 2026, our TRS recorded current income tax expense in the amount of $1.8 million and a deferred income tax expense in the amount of $0.3 million .

During the six months ended June 30, 2025, we recorded consolidated income tax expense of $1.7 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.

Included in our consolidated income tax expense for the six months ended June 30, 2025, our TRS recorded current and deferred tax expense in the amounts of $0.2 million and $1.5 million, respectively.

Liquidity and Capital Resources

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

In June 2026, November 2024 and February 2024, Portfolio Holdings (as issuer) and we (as guarantor), issued an aggregate $925.0 million principal amount of senior notes.

In June 2026, we issued $225.0 million aggregate principal amount of 6.615% senior notes due August 2056 (the “6.615% Notes”).

In November 2024, we 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.

In February 2024, we issued $300.0 million aggregate principal amount of 6.10% senior notes due April 2034 (the “6.10% Notes”).

The 6.10% Notes were issued at 98.957% of the principal amount.

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

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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.

In November 2024, we 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.

In February 2024, we issued $300.0 million aggregate principal amount of 6.10% senior notes due April 2034 (the “6.10% Notes”).

The 6.10% Notes were issued at 98.957% of the principal amount.

During the six months ended June 30, 2026, we repurchased 1.1 million shares of our outstanding common stock for $16.3 million, representing an average cost of $15.00 per share, including fees.

As of June 30, 2026, we had $33.7 million remaining under the total share repurchase authorization.

In June 2024, we entered into a U.S.

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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 March 31, 2026, 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 June 30, 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”).

In April 2024, we closed on a $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.

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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.

As of June 30, 2026, there was $1.4 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 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.

As of June 30, 2026, we had not sold any shares under the ATM.

As of June 30, 2026, we had $15.9 million of unrestricted cash.

We also have an aggregate $1.4 billion of undrawn capacity on our 2024 Unsecured Revolver (refer to Note 10 to the consolidated financial statements).

We refer to this unrestricted cash and additional borrowing capacity on our 2024 Unsecured Revolver as our “equity” liquidity which can be used for general corporate purposes or leveraged to acquire or originate new Ground Lease assets.

Our primary sources of cash to date have been proceeds from equity offerings and private placements, proceeds from our initial capitalization by iStar and two institutional investors and borrowings from our debt facilities, unsecured notes, Commercial Paper Program and mortgages.

Our primary sources of cash to date have been proceeds from equity offerings and private placements, proceeds from our initial capitalization and borrowings from our debt facilities, unsecured notes, Commercial Paper Program and mortgages.

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.

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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 three months ended March 31, 2026 and 2025 ($ in thousands):

For the Three Months Ended

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 six months ended June 30, 2026 and 2025 ($ in thousands):

For the Six Months Ended

Cash flows provided by (used in) operating activities

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Cash flows provided by (used in) financing activities

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).

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.

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

Supplemental Guarantor Disclosure

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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 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.

As of June 30, 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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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