Safehold Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are included with respect to, among other things, Safehold Inc.’s (the “Company’s”) current business plan, business strategy, portfolio management, prospects and liquidity. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results or outcomes to differ materially from those contained in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in this Form 10-Q and the uncertainties and risks described in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), all of which could affect our future results of operations, financial condition and liquidity. The discussion below should be read in conjunction with our consolidated financial statements and related notes in this quarterly report on Form 10-Q and our 2025 Annual Report. These historical financial statements may not be indicative of our future performance. Business Overview 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. Growth is realized through long-term leases with contractual periodic increases in rent. 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 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. In 2022, the Consumer Price Index (“CPI”) rose to its highest rate in over 40 years. Many of our Ground Leases have CPI lookbacks, generally starting between years 11 and 21 of the lease term, to mitigate the effects of inflation that are typically capped between 3.0% - 3.5%; 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. 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; 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. office sector, along with office vacancies and a decline in market liquidity that began with the onset of the COVID-19 pandemic, all of which could negatively impact our tenants, Ground Rent Coverages and estimated Combined Property Values. 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 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 37 Table of Contents 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. We have chosen to focus on Ground Leases because we believe they meet an important need in the real estate capital markets for our customers. We also believe Ground Leases offer a unique combination of safety, income growth and the potential for capital appreciation for investors for the following reasons: High Quality Long-Term Cash Flow : We believe that a Ground Lease represents a safe position in a property’s capital structure. The combined value of the land and buildings and improvements thereon subject to a Ground Lease (the “Combined Property Value”) typically significantly exceeds the Ground Lease landlord’s investment in the Ground Lease; therefore, even if the landlord takes over the property following a tenant default or upon expiration of the Ground Lease, the landlord may recover substantially all of its Ground Lease investment, and possibly amounts in excess of its investment, depending upon prevailing market conditions. Additionally, the typical structure of a Ground Lease provides the landlord with a residual right to regain possession of its land and take ownership of the buildings and improvements thereon upon a tenant default. The landlord’s residual right provides a strong incentive for a Ground Lease tenant or its leasehold lender to make the required Ground Lease rent payments. Income Growth : 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, 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. Opportunity for Capital Appreciation: The opportunity for capital appreciation comes in two forms. First, as the ground rent grows over time, the value of the Ground Lease should grow under market conditions in which capitalization rates remain flat. Second, our residual right to regain possession of the land underlying the Ground Lease and take title to the buildings and other improvements thereon at lease expiration or earlier termination of the lease for no additional consideration creates additional potential value to our shareholders. We generally target Ground Lease investments in which the initial cost of the Ground Lease represents 30% to 45% of the Combined Property Value as if the Ground Lease did not exist. If the initial cost of a Ground Lease is equal to 35% of the Combined Property Value, the remaining 65% of the Combined Property Value represents potential excess value over the amount of our investment that would be turned over to us upon the reversion of the property, assuming no intervening change in the Combined Property Value. In our view, there is a strong correlation between inflation and commercial real estate values over time, which supports our belief that the value of our owned residual portfolio should increase over time as inflation increases, although our ability to recognize value in certain cases may be limited by the rights of our tenants under some of our Ground Leases, including tenant rights to purchase our land in certain circumstances and the right of one tenant to demolish improvements prior to the expiration of the lease. See “Risk Factors” in our 2025 Annual Report for additional discussion of these tenant rights. Owned Residual Portfolio : We believe that the residual right is a unique feature distinguishing Ground Leases from other fixed income investments and property types. We refer to the value of the land and improvements subject to a Ground Lease in excess of our investment basis as unrealized capital appreciation (“UCA”). We track the UCA in our owned residual portfolio over our basis because we believe it provides relevant information with regard to the three key investment characteristics of our Ground Leases: (1) the safety of our position in a tenant’s capital structure; (2) the quality of the long-term cash flows generated by our portfolio rent that increases over time; 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, 38 Table of Contents 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. We have engaged an independent valuation firm to prepare: (a) initial reports of the Combined Property Value associated with our Ground Lease portfolio; and (b) periodic updates of such reports, which we use, in part, to determine the current estimated value of our owned residual portfolio. 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 June 30, 2026 and December 31, 2025 ($ in millions): (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2026 ​ ​ ​ December 31, 2025 Combined Property Value (2) ​ $ 16,676 ​ $ 15,947 Ground Lease Cost (2) ​ 6,906 ​ 6,675 Unrealized Capital Appreciation in Our Owned Residual Portfolio ​ 9,770 ​ 9,272 (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 , 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 , 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 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: ​ ● the “bond component,” which consists of the bond-like income stream we receive from contractual rent payments under our Ground Leases, plus the return of our investment basis in each asset; and ● the “Caret component,” which consists of the UCA above our investment basis in our Ground Leases due to our ownership of the land and improvements at the end of the term of the applicable Ground Lease. ​ Portfolio Holdings’ two classes of limited liability company interests are designed to track these two components: “GL units” are intended to track the bond component and “Caret units” are designed to track the Caret component (the “Caret Program”). We currently hold all of the issued and outstanding GL units of Portfolio Holdings. ​ In general, all of our Ground Leases are subject to the Caret Program, except for non-commercial Ground Leases and pre-development Ground Leases. Holders of Caret units are generally entitled to amounts equal to the net proceeds from the disposition of a Ground Lease asset in excess of the cost borne by us to acquire such asset (including amounts paid to the tenant in connection with the initial development of improvements at the properties). However, we are entitled to deduct (i) unrecovered acquisition costs borne by Portfolio Holdings following the termination of an applicable Ground Lease by reason of defaults of tenants; (ii) accrued unpaid rent under the applicable Ground Lease; and (iii) unrecovered costs relating to the issuance, maintenance and management of Caret units as a separate security, among other costs, from the amount payable to the holders of Caret units on account of such net proceeds. See “SAFE Proposal 2: 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. ​ 39 Table of Contents 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 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; (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. ​ 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 June 30, 2026. As of June 30, 2026, the Company owned 83.4% of the outstanding Caret units. ​ Market Opportunity : We believe that there is a significant market opportunity for a dedicated provider of Ground Lease capital like us. We believe that the market for existing Ground Leases is fragmented with ownership comprised primarily of high net worth individuals, pension funds, life insurance companies, estates and endowments. However, while we intend to pursue acquisitions of existing Ground Leases, our investment thesis is predicated, in part, on what we believe is an untapped market opportunity to expand the use of Ground Leases to a broader component of the approximately $7.0 trillion institutional commercial property market in the U.S. We intend to capture this market opportunity by utilizing multiple sourcing and origination channels, including manufacturing new Ground Leases with third-party owners and developers of commercial real estate and originating Ground Leases to provide capital for development and redevelopment. 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 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 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. We also created “SAFExSWAP,” which is a program that allows real estate investors with existing ground leases to swap into one of our Ground Leases. 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, 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 40 Table of Contents 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): (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease ​ ​ ​ ​ ​ ​ Property ​ ​ ​ Expiration / ​ Rent Escalation ​ % of Gross ​ Property Name ​ ​ ​ Type ​ ​ ​ Location ​ ​ ​ As Extended ​ ​ ​ Structure ​ ​ ​ Book Value ​ 425 Park Avenue (2) Office New York, NY 2090 / 2090 Fixed with Inflation Adjustments 5.2 % 135 West 50th Street Office New York, NY 2123 / 2123 Fixed with Inflation Adjustments 5.0 % 195 Broadway Office New York, NY 2118 / 2118 Fixed with Inflation Adjustments 4.4 % 20 Cambridgeside ​ Life Science ​ Cambridge, MA ​ 2121 / 2121 ​ Fixed with Inflation Adjustments ​ 4.2 % Alohilani Hotel Honolulu, HI 2118 / 2118 Fixed with Inflation Adjustments 3.2 % 685 Third Avenue Office New York, NY 2123 / 2123 Fixed with Inflation Adjustments 2.9 % Columbia Center ​ Office ​ Washington, DC ​ 2120 / 2120 ​ Fixed ​ 2.2 % 1111 Pennsylvania Avenue Office Washington, DC 2117 / 2117 Fixed with Inflation Adjustments 2.1 % 100 Cambridgeside ​ Mixed Use and Other ​ Cambridge, MA ​ 2121 / 2121 ​ Fixed with Inflation Adjustments ​ 2.1 % Skylark ​ Multifamily ​ San Francisco, CA ​ 2121 / 2121 ​ Fixed with Inflation Adjustments ​ 1.9 % (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). ​ 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. 41 Table of Contents The following tables show our Ground Lease portfolio by top 10 markets and property type as of June 30, 2026, excluding unfunded commitments: ​ ​ ​ ​ ​ ​ ​ % of Gross Market ​ ​ ​ Book Value ​ Manhattan (1) 21 % Washington, DC 10 ​ Boston 8 ​ Los Angeles 7 ​ San Francisco 4 ​ Denver ​ 4 ​ Honolulu ​ 3 ​ Nashville ​ 3 ​ Miami ​ 3 ​ Atlanta 2 ​ (1) Total New York metropolitan statistical area including areas outside of Manhattan makes up 28% of gross book value. ​ ​ ​ ​ ​ ​ ​ % of Gross Property Type ​ ​ ​ Book Value ​ Multifamily 44 % Office 39 ​ Hotel 9 ​ Life Science ​ 6 ​ Mixed Use and Other 2 ​ ​ Unfunded Commitments 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 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 June 30, 2026, we had $143.8 million of such commitments. 42 Table of Contents 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ 2026 ​ 2025 ​ $ Change ​ ​ ​ (in thousands) ​ Revenues: ​ ​ ​ ​ ​ ​ Interest income from sales-type leases ​ $ 76,902 ​ $ 70,642 ​ $ 6,260 ​ Operating lease income ​ ​ 15,806 ​ ​ 16,706 ​ ​ (900) ​ Hotel revenues ​ ​ 15,937 ​ ​ — ​ ​ 15,937 ​ Interest income ​ ​ 3,291 ​ ​ 2,712 ​ ​ 579 ​ Other income ​ 2,710 ​ 3,782 ​ (1,072) ​ Total revenues ​ 114,646 ​ 93,842 ​ 20,804 ​ Costs and expenses: ​ ​ ​ ​ ​ ​ ​ Interest expense ​ 55,188 ​ 51,265 ​ 3,923 ​ Hotel expenses ​ ​ 13,932 ​ ​ — ​ ​ 13,932 ​ Real estate expense ​ 770 ​ 881 ​ (111) ​ Depreciation and amortization ​ 1,849 ​ 2,127 ​ (278) ​ General and administrative (1) ​ 14,343 ​ 12,954 ​ 1,389 ​ Provision for (recovery of) credit losses ​ ​ 270 ​ ​ 2,350 ​ ​ (2,080) ​ Other expense ​ 38 ​ 346 ​ (308) ​ Total costs and expenses ​ 86,390 ​ 69,923 ​ 16,467 ​ Earnings (losses) from equity method investments ​ 3,861 ​ 4,912 ​ (1,051) ​ Net income (loss) before income taxes ​ ​ 32,117 ​ 28,831 ​ 3,286 ​ Income tax expense ​ ​ (1,394) ​ ​ (862) ​ ​ (532) ​ Net income (loss) ​ $ 30,723 ​ $ 27,969 ​ $ 2,754 ​ (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 $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 $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 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. 43 Table of Contents 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 $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 $2.1 million, respectively. Depreciation and amortization primarily relates to our ownership of the Park Hotels Portfolio and a multi-family property, the amortization of in-place lease assets and depreciation of corporate fixed assets. The decrease in 2026 was primarily the result of the full amortization of lease intangible assets. General and administrative expenses primarily includes public company costs such as compensation (including equity-based compensation), occupancy and other costs. The following table presents our general and administrative expenses for the three months ended June 30, 2026 and 2025 ($ in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ June 30, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Public company and other costs (1) ​ $ 10,954 ​ $ 9,873 Stock-based compensation ​ 3,389 ​ 3,081 Total general and administrative expenses (2) ​ $ 14,343 ​ $ 12,954 (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 44 Table of Contents 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ 2026 ​ 2025 ​ $ Change ​ ​ (in thousands) Revenues: ​ ​ ​ ​ ​ ​ Interest income from sales-type leases ​ $ 151,936 ​ $ 140,306 ​ $ 11,630 Operating lease income ​ 35,962 ​ 38,088 ​ (2,126) Hotel revenues ​ ​ 25,801 ​ ​ — ​ ​ 25,801 Interest income ​ ​ 6,400 ​ ​ 5,045 ​ ​ 1,355 Other income ​ 5,401 ​ 8,080 ​ (2,679) Total revenues ​ 225,500 ​ 191,519 ​ 33,981 Costs and expenses: ​ ​ ​ ​ ​ ​ Interest expense ​ 108,703 ​ 101,691 ​ 7,012 Hotel expenses ​ ​ 26,127 ​ ​ — ​ ​ 26,127 Real estate expense ​ 2,080 ​ 2,039 ​ 41 Depreciation and amortization ​ 3,697 ​ 4,323 ​ (626) General and administrative (1) ​ 29,646 ​ 27,086 ​ 2,560 Provision for (recovery of) credit losses ​ ​ 768 ​ ​ 4,646 ​ ​ (3,878) Other expense ​ 676 ​ 2,514 ​ (1,838) Total costs and expenses ​ 171,697 ​ 142,299 ​ 29,398 Earnings (losses) from equity method investments ​ 7,896 ​ 9,904 ​ (2,008) Net income (loss) before income taxes ​ 61,699 ​ 59,124 ​ 2,575 Income tax expense ​ ​ (2,079) ​ ​ (1,745) ​ ​ (334) Net income (loss) ​ $ 59,620 ​ $ 57,379 ​ $ 2,241 (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. 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 $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 45 Table of Contents $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 $4.3 million, respectively. Depreciation and amortization primarily relates to our ownership of the Park Hotels Portfolio and a multi-family property, the amortization of in-place lease assets and depreciation of corporate fixed assets. The decrease in 2026 was primarily the result of the full amortization of lease intangible assets. General and administrative expenses primarily includes public company costs such as compensation (including equity-based compensation), occupancy and other costs. The following table presents our general and administrative expenses for the six months ended June 30, 2026 and 2025 ($ in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ ​ June 30, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Public company and other costs (1) ​ $ 22,478 ​ $ 20,518 Stock-based compensation ​ 7,168 ​ 6,568 Total general and administrative expenses (2) ​ $ 29,646 ​ $ 27,086 (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 46 Table of Contents 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 Liquidity is a measure of our ability to meet potential cash requirements, including to pay interest and repay borrowings, fund and maintain our assets and operations, complete acquisitions and originations of investments, make distributions to our shareholders and meet other general business needs. In order to qualify as a REIT, we are required under the Internal Revenue Code of 1986 to distribute to our shareholders, on an annual basis, at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. 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+). 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. W e have no obligation to repurchase additional shares, and the timing, actual number and value of the shares that are repurchased, if any, will be at the discretion of management and will depend on a number of factors, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. Repurchases may be suspended, terminated or modified at any time for any reason. The share repurchase program does not have an expiration date. Any repurchased shares will be returned to the status of authorized but unissued shares of common stock. 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. commercial paper program (the “Commercial Paper Program”) on a private placement basis, pursuant to which we may issue up to $750.0 million of short-term, unsecured commercial paper notes outstanding at any time, which are guaranteed by us. 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 June 30, 2026, we had no outstanding balance 47 Table of Contents 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 $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. On September 12, 2025, the Company entered into an amendment to the 2024 Unsecured Revolver that modified the applicable interest rate thereunder by removing the credit spread adjustment to SOFR. As a result of that amendment, the 2024 Unsecured Revolver has a borrowing rate of SOFR plus 0.85%, subject to our credit ratings. 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 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. We may sell such shares in amounts and at times to be determined by us from time to time, but we have no obligation to sell any of the shares. 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 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 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. 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, 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 six months ended June 30, 2026 and 2025 ($ in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ ​ ​ June 30, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Cash flows provided by (used in) operating activities ​ $ 26,035 ​ $ 36,902 ​ Cash flows provided by (used in) investing activities ​ (208,596) ​ (123,961) ​ Cash flows provided by (used in) financing activities ​ 177,929 ​ 92,878 ​ ​ 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, 48 Table of Contents 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 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 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. 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 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.). The obligations of Portfolio Holdings to pay principal, premiums, if any, and interest on these unsecured senior notes are guaranteed on a senior basis by us. 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. Accordingly, separate consolidated financial statements of Portfolio Holdings have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for Portfolio Holdings because the assets, liabilities and results of operations of Portfolio Holdings are not materially different than the corresponding amounts in our consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors. Critical Accounting Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and judgments in certain circumstances that affect amounts reported as assets, liabilities, revenues and expenses. We have established detailed policies and control procedures intended to ensure that valuation methods, including any judgments made as part of such methods, are well controlled, reviewed and applied consistently from period to period. We base our estimates on historical corporate and industry experience and various other assumptions that we believe to be appropriate under the circumstances. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and, therefore, routinely require adjustment. For a discussion of our critical accounting policies, refer to Note 3 to the consolidated financial statements of our 2025 Annual Report.