What changed in this filing

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Item 1. Financial Statements

2023-08-01 compared with 2023-04-28 · 310 added, 193 removed, 805 unchanged (38% of the section changed)

3 unchanged sentences

(In thousands)

Net investment in sales-type leases ($ 325 and $ 0 of allowances as of March 31, 2023 and December 31, 2022, respectively)

Ground Lease receivables, net ($ 195 and $ 0 of allowances as of March 31, 2023 and December 31, 2022, respectively)

Net investment in sales-type leases ($ 336 and $ 0 of allowances as of June 30, 2023 and December 31, 2022, respectively)

Ground Lease receivables, net ($ 221 and $ 0 of allowances as of June 30, 2023 and December 31, 2022, respectively)

Real estate, at cost

2 unchanged sentences

Real estate-related intangible assets, net

Real estate available and held for sale

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

Loans receivable, net - related party ($ 2,300 of allowances as of March 31, 2023)

Total real estate, net and real estate-related intangible assets, net

Loans receivable, net - related party ( $ 2,311 of allowances as of June 30, 2023)

Equity investments

1 unchanged sentence

Restricted cash

Deferred tax asset, net

Deferred operating lease income receivable

9 unchanged sentences

shareholders' equity:

Common stock, $ 0.01 par value, 400,000 shares authorized, 63,941 and 62,397 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value, 400,000 shares authorized, 63,966 and 62,397 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

6 unchanged sentences

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

(2) As of March 31, 2023, includes $ 2.9 million due from related parties.

(3) As of March 31, 2023 and December 31, 2022, includes $ 0.8 million and $ 8.5 million, respectively, due to related parties.

(2) As of June 30, 2023, includes $ 8.1 million due from related parties.

(3) As of December 31, 2022, includes $ 8.5 million due to related parties.

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

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Interest income from sales-type leases (1)

Operating lease income

Interest income - related party (2)

Other income (3)

Total revenues

9 unchanged sentences

Earnings from equity method investments

Net (income) attributable to noncontrolling interests

Net income before income taxes

Income tax expense

Net (income) loss attributable to noncontrolling interests

Net income attributable to Safehold Inc.

2 unchanged sentences

Weighted average number of common shares:

(1) For the three months ended March 31, 2022, the Company recorded $ 2.1 million of “Interest income from sales-type leases” in its consolidated statements of operations from Ground Leases with iStar Inc.

(2) For the three months ended March 31, 2023 and 2022, includes $ 8.3 million and $ 7.9 million, respectively, of general and administrative expenses incurred to related parties that includes management fees, expense reimbursements to the Former Manager (refer to Note 1) and equity-based compensation.

(1) For the six months ended June 30, 2022, the Company recorded $ 2.1 million of “Interest income from sales-type leases” in its consolidated statements of operations from Ground Leases with iStar Inc.

(2) Refer to Note 3.

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

(4) For the three months ended June 30, 2023 and 2022, includes $ 8.0 million and $ 9.5 million, respectively, of general and administrative expenses incurred to related parties that includes management fees, expense reimbursements to the Former Manager (refer to Note 1) and equity-based compensation (including equity-based compensation to employees).

For the six months ended June 30, 2023 and 2022, includes $ 21.0 million and $ 17.4 million, respectively, of general and administrative expenses incurred to related parties that includes management fees, expense reimbursements to the Former Manager (refer to Note 1) and equity-based compensation (including equity-based compensation to employees).

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

3 unchanged sentences

For the Three Months Ended

Other comprehensive income (loss):

Reclassification of losses on derivatives into earnings

Unrealized gain (loss) on derivatives

For the Six Months Ended

Other comprehensive income:

Reclassification of (gains) losses on derivatives into earnings

Unrealized gain on derivatives

Other comprehensive income (loss):

11 unchanged sentences

Income (Loss)

Balance at March 31, 2023

Issuance of common stock, net / amortization

Dividends declared ($ 0.177 per share)

Change in accumulated other comprehensive income

Contributions from noncontrolling interests

Distributions to noncontrolling interests

Balance at June 30, 2023

Balance at March 31, 2022

Issuance of common stock, net / amortization

Dividends declared ($ 0.177 per share)

Change in accumulated other comprehensive income

Distributions to noncontrolling interests

Balance at June 30, 2022

Balance at December 31, 2022

6 unchanged sentences

Merger consideration (refer to Note 1)

Balance at March 31, 2023

Balance at June 30, 2023

Balance at December 31, 2021

5 unchanged sentences

Additional paid in capital attributable to redeemable noncontrolling interests

Balance at March 31, 2022

Balance at June 30, 2022

(1) Refer to Note 3.

3 unchanged sentences

(In thousands)

For the Three Months Ended

For the Six Months Ended

Cash flows from operating activities:

23 unchanged sentences

Funding reserves received from Ground Lease tenant net of disbursements

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

Deposits on Ground Lease investments

Other investing activities

23 unchanged sentences

Dividends declared to common shareholders

Non-cash interest accrued to debt balances

Accrued finance costs

12 unchanged sentences

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

The Company also manages entities focused on ground leases (refer to Note 6) and serves as external manager to Star Holdings, a Maryland statutory trust that holds the legacy non-ground lease assets previously held by iStar (“Star Holdings”).

The Company also manages entities focused on ground leases (refer to Note 6) and a wholly-owned subsidiary of the Company serves as external manager to Star Holdings (“Star Holdings”), a Maryland statutory trust that holds the legacy non-ground lease assets previously held by iStar.

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

8 unchanged sentences

and (iii) the Ground Lease contains contractual rent escalation clauses or percentage rent that participates in gross revenues generated by the commercial real estate on the land.

A Ground Lease lessor (the Company) typically has the right to regain possession of its land and take ownership of the buildings and improvements thereon upon tenant default and the termination of the Ground Lease on account of such default.

As a Ground Lease lessor, the Company typically has the right to regain possession of its land and take ownership of the buildings and improvements thereon upon tenant default and the termination of the Ground Lease on account of such default.

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

15 unchanged sentences

The Company considered the following relevant facts for this determination:

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

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

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

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

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

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

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

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

29 unchanged sentences

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

As of March 31, 2023, the total assets of these consolidated VIEs were $ 71.9 million and total liabilities were $ 30.0 million.

As of June 30, 2023, the total assets of these consolidated VIEs were $ 72.6 million and total liabilities were $ 30.1 million.

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

4 unchanged sentences

Notes to Consolidated Financial Statements

financial support to VIEs that it was not previously contractually required to provide and did not have any unfunded commitments related to consolidated VIEs as of March 31, 2023.

financial support to VIEs that it was not previously contractually required to provide and did not have any unfunded commitments related to consolidated VIEs as of June 30, 2023.

Note 3—Summary of Significant Accounting Policies

Significant Accounting Policies

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

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

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

34 unchanged sentences

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

As of March 31, 2023

As of June 30, 2023

As of December 31, 2022

9 unchanged sentences

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

Safehold Inc.

Notes to Consolidated Financial Statements

Redeemable Noncontrolling Interests —In February 2022, the Company sold 108,571 Caret units (refer to Note 11) for $ 19.0 million to third-party investors and received a commitment from an existing shareholder (which is affiliated with one of the Company’s independent directors) for the purchase of 28,571 Caret units for $ 5.0 million.

8 unchanged sentences

In the case of the Company’s redeemable Caret units, the carrying amount equals both the initial carrying amount and the redemption value.

Safehold Inc.

Notes to Consolidated Financial Statements

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

5 unchanged sentences

in the Company’s consolidated statements of operations.

Income taxes — The Company (then known as iStar) elected to be taxed as a REIT under sections 856 through 859 of the Internal Revenue Code of 1986, as amended (the "Code") beginning with its taxable year ended December 31, 1998.

The Company operates its business in a manner consistent with its election to be taxed as a REIT.

As such, the consolidated financial statements of the Company have been prepared consistent with the Company’s qualification as a REIT for the periods presented.

The Company will be subject to federal and state income taxation at corporate rates on its net taxable income;

the Company, however, may claim a deduction for the amount of dividends paid to its shareholders.

Amounts distributed as dividends by the Company will be subject to taxation at the stockholder level only.

While the Company must distribute at least 90% of its net taxable income to qualify as a REIT, the Company intends to distribute all of its net taxable income, if any, and eliminate federal and state taxes on undistributed net taxable income.

Certain states may impose minimum franchise taxes.

In addition, the Company is allowed certain other non-cash deductions or adjustments, such as depreciation expense, when computing its net taxable income and distribution requirement.

These deductions permit the Company to reduce its dividend payout requirement under federal tax laws.

The Company’s tax years from 2019 through 2021 remain subject to examination by major tax jurisdictions The Company has two taxable REIT subsidiaries (“TRS”), one of which was formed during the year ended December 31, 2018 and had no material activity during the periods presented.

Accordingly, no provision for income taxes was required.

The second TRS provides management services to Star Holdings and internally to the REIT.

The second TRS was acquired in the Company’s acquisition of iStar and first had activity during the three months ended June 30, 2023.

For the three months ended June 30, 2023, the Company recorded current and deferred income tax expense in the amounts of $ 0.4 million and $ 0.1 million, respectively, with respect to the TRS.

In addition, the Company paid franchise and other state and local income taxes in the amount of $ 50 thousand during the three months ended June 30, 2023.

Safehold Inc.

Notes to Consolidated Financial Statements

Loans receivable, net – related party —Loans receivable, net – related party includes the four-year term loan that the Company originated to Star Holdings (refer to Note 4).

1 unchanged sentence

The Company performs a quarterly analysis of its loan receivable that incorporates management’s current judgments about credit quality based on all known and relevant internal and external factors that may affect collectability.

The Company considers, among other things, payment status, lien position, borrower financial resources and investment collateral, collateral type, project economics and geographical location as well as national and regional economic factors.

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

The Company estimates its Expected Loss on its loans receivable based on relevant information including current market conditions and reasonable and supportable forecasts that affect the collectability of its investments.

6 unchanged sentences

Non-accrual loans will be returned to accrual status when they have become contractually current and management believes all amounts contractually owed will be received.

Safehold Inc.

Notes to Consolidated Financial Statements

The Company made the accounting policy election to record accrued interest on its loan asset separate from its loans receivable and to exclude accrued interest from its amortized cost basis disclosures.

Any accrued interest receivable is recorded in “Deferred expenses and other assets, net” on the Company’s consolidated balance sheets.

As of March 31, 2023, the Company did not have any accrued interest on its consolidated balance sheets.

The Company will place loans on non-accrual status once interest on the loan becomes 90 days delinquent and will reverse any accrued interest as a reduction to interest income or recognizes a credit loss expense at such time.

As of June 30, 2023, the Company had $ 26 thousand of accrued interest on its consolidated balance sheets.

The Company will place its loan on non-accrual status once interest on the loan becomes 90 days delinquent and will reverse any accrued interest as a reduction to interest income or recognizes a credit loss expense at such time.

As such, the Company elected the practical expedient to not record an allowance against accrued interest receivable.

During the three months ended March 31, 2023, the Company did not reverse any accrued interest on its loan asset.

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

Equity Investments —Equity investments are accounted for pursuant to the equity method of accounting if the Company can significantly influence the operating and financial policies of the investee.

7 unchanged sentences

In connection with the acquisition, the Company has basis differences in these equity interests that are amortized to income over the life of the underlying assets (refer to Note 6).

Interest Income on Loans Receivable, net – related party —Interest income on loans receivable, net - related party is recognized on an accrual basis using the effective interest method.

Interest Income – related party —Interest income - related party (refer to Note 4) is recognized on an accrual basis using the effective interest method and is recorded in “Interest income – related party” in the Company’s consolidated statements of operations.

Management fees —The Company earns management fees through SpinCo Manager’s management agreement with Star Holdings pursuant to which SpinCo Manager operates and pursues the orderly monetization of Star Holding’s assets (refer to Note 1).

Effective March 31, 2023, Star Holdings will pay SpinCo Manager an annual management fee of $ 25.0 million in year one, $ 15.0 million in year two, $ 10.0 million in year three, $ 5.0 million in year four and 2.0 % of the gross book value of Star Holdings’ assets, excluding shares of the Company’s common stock, for each annual term thereafter.

The Company recognizes management fee income in accordance with ASC 606:

Revenue from Contracts with

Safehold Inc.

Notes to Consolidated Financial Statements

Customers (“ASC 606”).

Pursuant to ASC 606, the Company estimated the total transaction price of the management agreement and allocated the transaction price to its performance obligations under the management agreement.

The Company determined that the management contract represents a single continuing performance obligation and will measure its progress toward satisfying its performance obligation using an input method to evaluate the level of effort expended to complete its obligations.

The Company recognizes management fee income as it satisfies the performance obligations of the contract and records management fees in “Other income” in the Company’s consolidated statements of operations.

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

13 unchanged sentences

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

Right of use lease assets and lease liabilities are measured at the present value of lease payments not yet paid, discounted at the implied rate charged by the lessor if that rate is readily determinable, or if that rate is not readily determinable, the

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

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

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

Safehold Inc.

Notes to Consolidated Financial Statements

Company's incremental borrowing rate, as of the date of the acquisition.

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

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

Intangible liabilities may also include below-market leases, which are recorded at their fair values and included in “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets.

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

4 unchanged sentences

Purchase consideration

(1) The total post-Merger shares of the Company to be held by iStar shareholders includes 12.7 million shares that were issued as consideration for the investment in Old SAFE previously held by iStar as of December 31, 2022 that were retired in connection with the Merger.

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

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

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

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

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

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

During the six months ended June 30, 2023, the Company also recorded $ 0.9 million of related non-recurring charges in “Other expense” and a provision for credit losses of $ 2.3 million on the Secured Term Loan Facility (refer to Note 4) which was originated at the time of the Merger in conjunction with the Spin-Off.

Excluding $ 3.0 million of related non-recurring charges and the $ 2.3 million provision for credit losses on the Secured Term Loan Facility, through June 30, 2023, the Company has incurred $ 26.5 million of Merger expenses.

Safehold Inc.

Notes to Consolidated Financial Statements

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

The Company recorded $ 18.7 million of merger expenses during the three months ended March 31, 2023, of which $ 13.9 million was recorded in “Other expense” and $ 4.8 million was recorded in “General and administrative” in the Company’s consolidated statements of operations.

The Company also recorded $ 0.6 of related non-recurring charges in “Other expense,” and a provision for credit losses of $ 2.3 million on the Secured Term Loan Facility (refer to Note 4) which was originated at the time of the Merger in conjunction with the Spin-Off.

Excluding $ 2.7 million of related non-recurring charges and the $ 2.3 million provision for credit losses on the Secured Term Loan Facility, through March 31, 2023, the Company has incurred $ 26.4 million of merger expenses.

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

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

Purchase Price

Cash and cash equivalents

Equity investments (1)

Deferred tax asset (2)

Deferred expenses and other assets (3)

3 unchanged sentences

Total liabilities assumed

Net identifiable liabilities assumed

Net identifiable (liabilities assumed) assets acquired

Purchase consideration

1 unchanged sentence

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

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

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

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

6 unchanged sentences

Notes to Consolidated Financial Statements

The following table summarizes the Company's pro forma revenues and net income (loss) for the three months ended March 31, 2023 and 2022 as if the Merger described in Note 1 was completed on January 1, 2022 ($ in thousands):

For the Three Months Ended March 31,

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

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Pro forma revenues

1 unchanged sentence

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

For the three months March 31, 2022, pro forma net loss includes $ 46.7 million of merger expenses (including $ 20.3 million of merger expenses borne by iStar) and a $ 42.1 million loss on extinguishment of debt, both of which are non-recurring in nature.

Due to the Merger closing on March 31, 2023, the revenue and net income of the acquiree for the three months ended March 31, 2023 had an immaterial impact on the Company’s total revenues and net income for the three months ended March 31, 2023.

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

Goodwill is not subject to amortization but is tested annually for impairment or more frequently should potential triggering events be identified that may indicate potential impairment.

For the six months ended June 30, 2022, pro forma net loss includes $ 47.7 million of merger expenses (including $ 20.3 million of merger expenses borne by iStar), which are non-recurring in nature.

For the three and six months ended June 30, 2022, pro forma net loss includes $ 116.6 million and $ 158.7 million, respectively, of losses on extinguishment of debt, which are non-recurring in nature.

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

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

Goodwill is not subject to amortization but is tested annually for impairment or more frequently should potential triggering events be identified that may indicate potential impairment, such as when a company’s market capitalization is below its book value.

Any full or partial impairment of goodwill would flow through the Company’s income statement as a non-cash charge and would adversely affect the Company’s net income for the period in which the impairment is recognized.

The Company does not expect goodwill to have any tax impact on its financial statements.

25 unchanged sentences

$ 9.5 million of the gain was attributable to noncontrolling interests, of which $ 0.7 million was attributable to redeemable noncontrolling interests.

In May 2023, the Company entered into a joint venture with a sovereign wealth fund, which is also an existing shareholder, focused on new acquisitions for certain Ground Lease investments.

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

Each party’s commitment is discretionary.

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

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

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

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

The investment period will be the earlier of 18 months and the full deployment of commitments.

During the six months ended June 30, 2023, the joint venture acquired two Ground Leases for an aggregate purchase price of $ 38.5 million, of which $ 14.5 million has been funded as of June 30, 2023.

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

March 31, 2023

June 30, 2023

December 31, 2022

6 unchanged sentences

Net investment in sales-type leases (1)

(1) As of June 30, 2023, $ 6.5 million was attributable to noncontrolling interests.

Safehold Inc.

Notes to Consolidated Financial Statements

The following table presents a rollforward of the Company’s net investment in sales-type leases and Ground Lease receivables for the three months ended March 31, 2023 and 2022 ($ in thousands):

The following table presents a rollforward of the Company’s net investment in sales-type leases and Ground Lease receivables for the six months ended June 30, 2023 and 2022 ($ in thousands):

Net Investment in

Sales-type Leases

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Beginning balance

1 unchanged sentence

Origination/acquisition/fundings (1)

Recovery of credit losses

(Provision for) recovery of credit losses

Ending balance (2)

1 unchanged sentence

Sales-type Leases

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Beginning balance

3 unchanged sentences

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

(2) As of March 31, 2023 and December 31, 2022, all of the Company’s net investment in sales-type leases and Ground Lease receivables were current in their payment status.

As of March 31, 2023, the Company’s weighted average accrual rate for its net investment in sales-type leases and Ground Lease receivables was 5.1 % and 5.4 % , respectively.

As of March 31, 2023, the weighted average remaining life of the Company’s 33 Ground Lease receivables was 98.7 years.

(2) As of June 30, 2023 and December 31, 2022, all of the Company’s net investment in sales-type leases and Ground Lease receivables were current in their payment status.

As of June 30, 2023, the Company’s weighted average accrual rate for its net investment in sales-type leases and Ground Lease receivables was 5.1 % and 5.4 % , respectively.

As of June 30, 2023, the weighted average remaining life of the Company’s 34 Ground Lease receivables was 98.5 years.

Safehold Inc.

Notes to Consolidated Financial Statements

Allowance for Credit Losses —Changes in the Company’s allowance for credit losses on net investment in sales-type leases and Ground Lease receivables for the three months ended March 31, 2023 were as follows ($ in thousands):

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

Net investment in sales-type leases

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Allowance for credit losses at beginning of period

Provision for credit losses (1)

Allowance for credit losses at end of period (2)

Ground Lease receivables

Three Months Ended June 30, 2023

Allowance for credit losses at beginning of period

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

Net investment in sales-type leases

Six Months Ended June 30, 2023

Allowance for credit losses at beginning of period

Impact from adoption of new accounting standard (refer to Note 3) (3)

Recovery of credit losses (2)

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

Ground Lease receivables

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Allowance for credit losses at beginning of period

Impact from adoption of new accounting standard (refer to Note 3) (3)

(Recovery of) provision for credit losses (2)

Provision for (recovery of) credit losses (1)

Allowance for credit losses at end of period (2)

(1) On January 1, 2023, the Company recorded an allowance for credit losses on net investment in sales-type leases of $ 0.4 million and an allowance for credit losses on Ground Lease receivables of $ 0.2 million upon the adoption of ASU 2016-13, of which an aggregate of $ 0.1 million related to expected credit losses for unfunded commitments and was recorded in "Accounts payable, accrued expenses and other liabilities."

(2) During the three months ended March 31, 2023, the Company recorded a recovery of credit losses on net investment in sales-type leases and Ground Lease receivables of $ 31 thousand and $ 25 thousand, respectively.

The recovery of credit losses was due primarily to an improving macroeconomic forecast since December 31, 2022.

(1) During the three months ended June 30, 2023, the Company recorded a provision for credit losses on net investment in sales-type leases and Ground Lease receivables of $ 11 thousand and $ 23 thousand, respectively.

The provision for credit losses was due primarily to a declining macroeconomic forecast since March 31, 2023.

During the six months ended June 30, 2023, the Company recorded a recovery of credit losses on net investment in sales-type leases and Ground Lease receivables of $ 20 thousand and $ 2 thousand, respectively.

The recovery of credit losses on net investment in leases and Ground Lease receivables was due primarily to an improving macroeconomic forecast since December 31, 2022.

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

The Company’s amortized cost basis in Ground Lease receivables, presented by year of origination and by stabilized or development status, was as follows as of March 31, 2023 ($ in thousands):

(3) On January 1, 2023, the Company recorded an allowance for credit losses on net investment in sales-type leases of $ 0.4 million and an allowance for credit losses on Ground Lease receivables of $ 0.2 million upon the adoption of ASU 2016-13, of which an aggregate of $ 0.1 million related to expected credit losses for unfunded commitments and was recorded in "Accounts payable, accrued expenses and other liabilities."

Safehold Inc.

Notes to Consolidated Financial Statements

The Company’s amortized cost basis in Ground Lease receivables, presented by year of origination and by stabilized or development status, was as follows as of June 30, 2023 ($ in thousands):

Year of Origination

3 unchanged sentences

Development properties

Safehold Inc.

Notes to Consolidated Financial Statements

Future Minimum Lease Payments under Sales-type Leases —Future minimum lease payments to be collected under sales-type leases accounted for under ASC 842 - Leases, excluding lease payments that are not fixed and determinable, in effect as of March 31, 2023, are as follows by year ($ in thousands):

Future Minimum Lease Payments under Sales-type Leases —Future minimum lease payments to be collected under sales-type leases accounted for under ASC 842 - Leases, excluding lease payments that are not fixed and determinable, in effect as of June 30, 2023, are as follows by year ($ in thousands):

with Inflation

2023 (remaining nine months)

2023 (remaining six months)

Total undiscounted cash flows

During the three months ended March 31, 2023 and 2022, the Company recognized interest income from sales-type leases in its consolidated statements of operations as follows ($ in thousands):

During the three and six months ended June 30, 2023 and 2022, the Company recognized interest income from sales-type leases in its consolidated statements of operations as follows ($ in thousands):

Net Investment

in Sales-type

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Total interest income from sales-type leases

1 unchanged sentence

in Sales-type

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Total interest income from sales-type leases

Net Investment

in Sales-type

Six Months Ended June 30, 2023

Total interest income from sales-type leases

Safehold Inc.

Notes to Consolidated Financial Statements

Net Investment

in Sales-type

Six Months Ended June 30, 2022

Total interest income from sales-type leases

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

As of March 31, 2023, the Star Holdings Term Loan Facility had a principal balance of $ 115.0 million and a carrying value of $ 112.2 million.

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

As of June 30, 2023, the Star Holdings Term Loan Facility had a principal balance of $ 115.0 million and a carrying value of $ 112.2 million.

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

3 unchanged sentences

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

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

Safehold Inc.

Notes to Consolidated Financial Statements

of any prepayment of the Star Holdings Term Loan Facility.

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

1 unchanged sentence

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

During the three months ended March 31, 2023, the Company recorded a provision for credit losses of $ 2.3 million on the Secured Term Loan Facility which was originated at the time of the Merger in conjunction with the Spin-Off.

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

Safehold Inc.

2 unchanged sentences

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

March 31, 2023

June 30, 2023

December 31, 2022

4 unchanged sentences

Real estate-related intangible assets, net

Real estate available and held for sale (1)

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

(1) As of March 31, 2023, the Company had $ 1.5 million of residential homes acquired from iStar that were classified as available for sale.

Total real estate, net and real estate-related intangible assets, net (1)

(1) During the three and six months ended June 30, 2023, the Company sold $ 1.5 million of residential homes that were acquired from iStar that were classified as available for sale.

The Company recognized $ 0.1 million of gains on the sales, which is recorded in “Other income” in the Company’s consolidated statements of operations.

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

As of March 31, 2023

As of June 30, 2023

Above-market lease assets, net (1)

11 unchanged sentences

Notes to Consolidated Financial Statements

The amortization of real estate-related intangible assets had the following impact on the Company’s consolidated statements of operations for the three months ended March 31, 2023 and 2022 ($ in thousands):

The amortization of real estate-related intangible assets had the following impact on the Company’s consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 ($ in thousands):

Income Statement

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Intangible asset

5 unchanged sentences

Operating lease income

Income Statement

For the Six Months Ended June 30,

Intangible asset

Above-market lease assets (decrease to income)

Operating lease income

In-place lease assets (decrease to income)

Depreciation and amortization

Other intangible assets (decrease to income)

Operating lease income

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

2023 (remaining nine months)

(1) As of March 31, 2023, the weighted average amortization period for the Company’s real estate-related intangible assets was approximately 80.1 years.

2023 (remaining six months)

(1) As of June 30, 2023, the weighted average amortization period for the Company’s real estate-related intangible assets was approximately 80.2 years.

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

As of March 31, 2023

As of June 30, 2023

Below-market lease liabilities (1)

3 unchanged sentences

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

The amortization of real estate-related intangible liabilities had the following impact on the Company’s consolidated statements of operations for the three months ended March 31, 2023 and 2022 ($ in thousands):

Safehold Inc.

Notes to Consolidated Financial Statements

The amortization of real estate-related intangible liabilities had the following impact on the Company’s consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 ($ in thousands):

Income Statement

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Intangible liability

1 unchanged sentence

Operating lease income

Income Statement

For the Six Months Ended June 30,

Intangible liability

Below-market lease liabilities (increase to income)

Operating lease income

Future Minimum Operating Lease Payments —Future minimum lease payments to be collected under non-cancelable operating leases, excluding lease payments that are not fixed and determinable, in effect as of June 30, 2023, are as follows by year ($ in thousands):

2023 (remaining six months)

(1) During the three months ended June 30, 2023 and 2022, the Company recognized $ 0.3 million and $ 0.2 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.

During the six months ended June 30, 2023 and 2022, the Company recognized $ 4.0 million and $ 0.9 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.

Safehold Inc.

Notes to Consolidated Financial Statements

Future Minimum Operating Lease Payments —Future minimum lease payments to be collected under non-cancelable operating leases, excluding lease payments that are not fixed and determinable, in effect as of March 31, 2023, are as follows by year ($ in thousands):

2023 (remaining nine months)

(1) During the three months ended March 31, 2023 and 2022, the Company recognized $ 3.7 million and $ 0.8 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.

Note 6—Equity Investments

1 unchanged sentence

Earnings from

Carrying Value

Equity Method Investments

Equity Method Investments (1)

For the Three Months Ended

For the Six Months Ended

Equity investment

1 unchanged sentence

Ground Lease Plus Fund (1)

Leasehold Loan Fund (2)

(1) As of March 31, 2023, the Company has a basis difference of $ 19.7 million in the Ground Lease Plus Fund that will be amortized over a weighted average remaining term of 102.6 years using the effective interest method.

(2) As of March 31, 2023, the Company has a basis difference of $ 15.0 million in the Leasehold Loan Fund that will be amortized over a weighted average remaining term of 3.7 years using the effective interest method.

Loan Plus Fund (2)

(1) As of June 30, 2023, the Company has a basis difference of $ 21.0 million in the Ground Lease Plus Fund that will be amortized over a weighted average remaining term of 96.7 years using the effective interest method.

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

(2) As of June 30, 2023, the Company has a basis difference of $ 13.8 million in the Leasehold Loan Fund that will be amortized over a weighted average remaining term of 3.5 years using the effective interest method.

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

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

3 unchanged sentences

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

Ground Lease Plus Fund —In connection with Merger, the Company acquired from iStar an investment fund that targets the origination and acquisition of Ground Leases for commercial real estate projects that are in a pre-development phase (the “Ground Lease Plus Fund”).

Ground Lease Plus Fund —In connection with Merger, the Company acquired from iStar an investment fund that iStar managed that targets the origination and acquisition of Ground Leases for commercial real estate projects that are in a pre-development phase (the “Ground Lease Plus Fund”).

The Company owns a 53 % noncontrolling equity interest in the Ground Lease Plus Fund.

The Company does not have a controlling interest in the Ground Lease Plus Fund due to the substantive

Safehold Inc.

Notes to Consolidated Financial Statements

participating rights of its partner and accounts for this investment as an equity method investment.

The Company does not have a controlling interest in the Ground Lease Plus Fund due to the substantive participating rights of its partner and accounts for this investment as an equity method investment.

The Company receives a fee from its partner in exchange for managing the entity and is also entitled to a promote payment on investments in the Ground Lease Plus Fund.

The Ground Lease Plus Fund has first look rights through December 2023 on qualifying pre-development projects that the Company has elected to not originate.

In November 2021, iStar acquired land for $ 33.3 million and simultaneously structured and entered into a Ground Lease on which a multi-family project will be constructed.

In November 2021, iStar acquired land for $ 33.3 million and simultaneously structured and entered into a Ground Lease on which a multi-family project will be constructed (refer also to Note 13).

In December 2021, iStar sold the Ground Lease to the Ground Lease Plus Fund and recognized no gain or loss on the sale.

1 unchanged sentence

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

Safehold Inc.

Notes to Consolidated Financial Statements

In January 2022, iStar sold the two Ground Leases to the Ground Lease Plus Fund, which remain subject to the June 2021 agreement with the Company, and recognized an aggregate $ 0.5 million of gains on the sale.

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

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

The Company owns a 53.0 % noncontrolling equity interest in the Leasehold Loan Fund.

4 unchanged sentences

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

As of June 30, 2023, the Company has not funded any of the commitment.

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

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

Safehold Inc.

Notes to Consolidated Financial Statements

As of June 30, 2023, $ 37.5 million of the commitment has been funded.

Note 7—Deferred Expenses and Other Assets, Net and Accounts Payable, Accrued Expenses and Other Liabilities

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

March 31, 2023

June 30, 2023

December 31, 2022

2 unchanged sentences

Deferred finance costs, net (2)

Other assets (3)

Purchase deposits

6 unchanged sentences

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

During both the three months ended March 31, 2023 and 2022, the Company recognized $ 0.1 million in “Real estate expense” and $ 0.1 million in “Other income” from its operating lease right-of-use asset.

During both the three months ended June 30, 2023 and 2022, the Company recognized $ 0.1 million in “Real estate expense” and $ 0.1 million in “Other income” from its operating lease right-of-use asset.

During the six months ended June 30, 2023 and 2022, the Company recognized $ 0.3 million and $ 0.2 million, respectively, in “Real estate expense” and $ 0.3 million and $ 0.2 million, respectively, in “Other income” from its operating lease right-of-use asset.

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

The Company also has operating leases for office space that it assumed from iStar in connection with the Merger (refer to Note 9).

(2) Accumulated amortization of deferred finance costs was $ 7.0 million and $ 5.7 million as of March 31, 2023 and December 31, 2022, respectively.

(2) Accumulated amortization of deferred finance costs was $ 8.3 million and $ 5.7 million as of June 30, 2023 and December 31, 2022, respectively.

(3) As of June 30, 2023, includes $ 7.2 million of management fees due from Star Holdings.

Safehold Inc.

Notes to Consolidated Financial Statements

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

March 31, 2023

June 30, 2023

December 31, 2022

5 unchanged sentences

Accrued expenses (3)

Interest rate hedge liabilities

Accounts payable, accrued expenses and other liabilities

1 unchanged sentence

(2) Refer to Note 9.

(3) As of March 31, 2023, accrued expenses includes merger costs and transfer taxes resulting from the Merger and also includes accrued legal, audit and property expenses.

As of December 31, 2022, accrued expenses primarily includes accrued legal, audit and property expenses.

(3) As of June 30, 2023, accrued expenses includes accrued compensation, legal, audit and property expenses.

As of December 31, 2022, accrued expenses includes accrued legal, audit and property expenses.

Safehold Inc.

2 unchanged sentences

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

March 31, 2023

June 30, 2023

December 31, 2022

20 unchanged sentences

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

As of March 31, 2023, the weighted average cash interest rate for the Company’s consolidated mortgage debt, based on interest rates in effect at that date, was 3.27 % .

As of June 30, 2023, the weighted average cash interest rate for the Company’s consolidated mortgage debt, based on interest rates in effect at that date, was 3.29 % .

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

As of March 31, 2023, the Company’s combined weighted average stated interest rate and combined weighted average cash interest rate of the Company’s consolidated mortgage debt, the mortgage debt of the Company’s unconsolidated ventures (applying the Company’s percentage interest in the ventures - refer to Note 6), unsecured senior notes and trust preferred securities were 3.82 % and 3.29 % , respectively.

As of June 30, 2023, the Company’s combined weighted average stated interest rate and combined weighted average cash interest rate of the Company’s consolidated mortgage debt, the mortgage debt of the Company’s unconsolidated ventures (applying the Company’s percentage interest in the ventures - refer to Note 6), unsecured senior notes and trust preferred securities were 3.84 % and 3.31 % , respectively.

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

(3) As of March 31, 2023, $ 2.0 billion of real estate, at cost, net investment in sales-type leases and Ground Lease receivables served as collateral for the Company’s debt obligations.

(3) As of June 30, 2023, $ 2.0 billion of real estate, at cost, net investment in sales-type leases and Ground Lease receivables served as collateral for the Company’s debt obligations.

(4) Effective July 1, 2023, LIBOR was replaced with a rate equal to three-month Term SOFR plus 0.26161 % .

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

As of March 31, 2023, the Company’s mortgages are full term interest only, bear interest at a weighted average interest rate of 3.99 % and have maturities between April 2027 and November 2069.

As of June 30, 2023, the Company’s mortgages are full term interest only, bear interest at a weighted average interest rate of 3.99 % and have maturities between April 2027 and November 2069.

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

27 unchanged sentences

In January 2023, t he Company amended the 2021 Unsecured Revolver primarily to transition from LIBOR to Adjusted SOFR, as defined in the applicable agreement.

As of March 31, 2023, there was $ 380.0 million of undrawn capacity on the 2021 Unsecured Revolver.

As of June 30, 2023, there was $ 302.0 million of undrawn capacity on the 2021 Unsecured Revolver.

Safehold Inc.

2 unchanged sentences

The 2023 Unsecured Revolver has a current borrowing rate of Adjusted SOFR, as defined in the applicable agreement, plus 100 basis points, with a maturity of July 31, 2025.

As of March 31, 2023, there was $ 500.0 million of undrawn capacity on the 2023 Unsecured Revolver.

As of June 30, 2023, there was $ 500.0 million of undrawn capacity on the 2023 Unsecured Revolver.

Trust Preferred Securities —The Company assumed trust preferred securities from iStar in connection with Merger.

The trust preferred securities bear interest at LIBOR plus 1.50 % and mature in October 2035.

Effective July 1, 2023, LIBOR was replaced with a rate equal to three-month Term SOFR plus 0.26161 % .

Debt Covenants —The Company is subject to financial covenants under the 2021 Unsecured Revolver and the 2023 Unsecured Revolver, including maintaining:

6 unchanged sentences

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

As of March 31, 2023, the Company was in compliance with all of its financial covenants.

Future Scheduled Maturities —As of March 31, 2023, future scheduled maturities of outstanding debt obligations, assuming all extensions that can be exercised at the Company’s option, are as follows ($ in thousands):

2023 (remaining nine months)

As of June 30, 2023, the Company was in compliance with all of its financial covenants.

Future Scheduled Maturities —As of June 30, 2023, future scheduled maturities of outstanding debt obligations, assuming all extensions that can be exercised at the Company’s option, are as follows ($ in thousands):

2023 (remaining six months)

Total principal maturities

1 unchanged sentence

Total debt obligations, net

(1) As of March 31, 2023, the Company’s weighted average maturity for its secured mortgages was 28.3 years.

(1) As of June 30, 2023, the Company’s weighted average maturity for its secured mortgages was 28.0 years.

Safehold Inc.

1 unchanged sentence

Note 9—Commitments and Contingencies

Lease Commitments —Future minimum lease obligations under non-cancelable operating leases as of March 31, 2023 are as follows ($ in thousands):

2023 (remaining nine months)

Lease Commitments —Future minimum lease obligations under non-cancelable operating leases as of June 30, 2023 are as follows ($ in thousands):

2023 (remaining six months)

Total undiscounted cash flows

4 unchanged sentences

For operating leases, lease liabilities were discounted at the Company’s weighted average incremental secured borrowing rate for similar collateral estimated to be 5.8 % and the weighted average remaining lease term is 3.1 years.

The Company assumed its operating leases from iStar in connection with the Merger and therefore did not directly make any payments under its operating leases for the three months ended March 31, 2023 and 2022.

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

(2) Other adjustments relates to a property that is majority-owned by a third party and is ground leased to the Company.

2 unchanged sentences

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

As of March 31, 2023, the Company had $ 238.3 million of such commitments.

As of June 30, 2023, the Company had $ 250.6 million of such commitments, excluding commitments to be funded by noncontrolling interests.

The Company also has unfunded forward commitments related to agreements that it entered into for the acquisition of new Ground Leases or additions to existing Ground Leases if certain conditions are met (refer to Note 13).

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

As of March 31, 2023, the Company had an aggregate $ 319.6 million of such commitments.

As of June 30, 2023, the Company had an aggregate $ 271.2 million of such commitments.

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

1 unchanged sentence

We refer to these arrangements as performance-based commitments.

As of March 31, 2023, the Company had $ 139.8 million of such commitments.

As of June 30, 2023, the Company had $ 127.7 million of such commitments.

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

Based on its current knowledge, and after consultation with legal counsel, the Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding that would have a material adverse effect on the Company’s consolidated financial statements.

however, the Company is a party to the following legal proceedings:

Following the announcement of the Merger, two purported stockholders of the Company filed complaints against the Company and each member of the Board of Directors alleging, as the case may be, that the Registration Statement filed on December 16, 2022 and the Schedule 14A Definitive Proxy statement filed on January 31, 2023 omitted material

Safehold Inc.

Notes to Consolidated Financial Statements

information with respect to the Merger and that, as a result, all defendants violated the federal securities laws.

In addition, two purported stockholders of the Company sent demand letters and one purported stockholder sent a draft complaint alleging similar deficiencies in the Registration Statement and Proxy Statement as those alleged in the lawsuits.

As of March 16, 2023, all plaintiffs had voluntarily dismissed their complaints without any consideration given by the Company.

Note 10—Risk Management and Derivatives

11 unchanged sentences

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s debt.

If a derivative includes an other-than-insignificant financing element at inception, when the Company is deemed to be the lender all cash inflows and outflows of the derivative are considered cash flows from investing activities in the Company’s consolidated statements of cash flows and when the Company is deemed to be the borrower all cash inflows and outflows of the derivative are considered cash flows from financing activities in the Company’s consolidated statements of cash flows.

For the Company’s derivatives not designated as hedges, the changes in the fair value of the derivatives are reported in “Interest expense” in the Company’s consolidated statements of operations.

2 unchanged sentences

Notes to Consolidated Financial Statements

The table below presents the Company’s derivatives as well as their classification on the consolidated balance sheets as of March 31, 2023 and December 31, 2022 ($ in thousands):

March 31, 2023

The table below presents the Company’s derivatives as well as their classification on the consolidated balance sheets as of June 30, 2023 and December 31, 2022 ($ in thousands):

June 30, 2023

December 31, 2022

3 unchanged sentences

Deferred expenses and other assets, net

Interest rate swaps

Accounts payable, accrued expenses and other liabilities

(1) Over the next 12 months, the Company expects that $ 3.8 million related to cash flow hedges will be reclassified from “Accumulated other comprehensive income (loss)” as an increase to interest expense.

(1) Over the next 12 months, the Company expects that $ 5.4 million related to cash flow hedges will be reclassified from “Accumulated other comprehensive income (loss)” as a decrease to interest expense.

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

1 unchanged sentence

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

As of March 31, 2023, the Company had one interest rate hedge that was in a liability position for which the Company has not posted any collateral.

The table below presents the effect of the Company’s derivative financial instruments in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) for the three months ended March 31, 2023 and 2022 ($ in thousands):

As of June 30, 2023, the Company had one interest rate hedge that was in a liability position for which the Company has not posted any collateral.

The table below presents the effect of the Company’s derivative financial instruments in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) for the three and months ended June 30, 2023 and 2022 ($ in thousands):

Amount of Gain

9 unchanged sentences

Derivatives Designated in Hedging Relationships

For the Three Months Ended March 31, 2023

For the Three Months Ended June 30, 2023

Interest rate swaps

Interest expense

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

Interest rate swaps

Interest expense

For the Six Months Ended June 30, 2023

Interest rate swaps

Interest expense

For the Six Months Ended June 30, 2022

Interest rate swaps

Interest expense

Note 11—Equity

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

As of March 31, 2023, the Company has one class of common stock outstanding.

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

The 2017 Equity

As of June 30, 2023, the Company has one class of common stock outstanding.

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

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

In addition, the Company and Portfolio Holdings entered into an ATM

Safehold Inc.

Notes to Consolidated Financial Statements

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

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

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

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

Through June 30, 2023, the Company has no t sold any shares of its common stock through the Primary Sales Agreement.

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

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

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

As of March 31, 2023, there were no shares available for issuance for future awards under Old SAFE’s 2017 Equity Incentive Plan.

As of June 30, 2023, there were no shares available for issuance for future awards under Old SAFE’s 2017 Equity Incentive Plan.

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

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

As of March 31, 2023, an aggregate of 267,094 shares of the Company’s common stock remain available for awards under the LTIP.

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

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

As of June 30, 2023, an aggregate of 435,205 shares of the Company’s common stock remain available for awards under the LTIP.

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

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Grants under the Original Caret Performance Incentive Plan were subject to vesting based on time-based service conditions and hurdles relating to Old SAFE’s common stock price, all of which were satisfied as of December 31, 2022, except with respect to approximately 850 Caret units that are scheduled to vest on December 31, 2023.

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

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

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

Safehold Inc.

Notes to Consolidated Financial Statements

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

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

Safehold Inc.

Notes to Consolidated Financial Statements

Subsequent to the closing of the Merger, and after giving effect to the Caret Restructuring and the post-Merger Caret unit awards, Amended Caret Performance Incentive Plan participants held 1,499,757 Caret units, representing 15.41 % of the then-outstanding Caret units and 12.50 % of the then-authorized Caret units.

The Company did not incur expense from Caret units during the three months ended March 31, 2023.

During the three months ended March 31, 2022, the Company recognized $ 0.3 million in expense from Caret units, which is recorded in “General and administrative” in the Company’s consolidated statements of operations and “Noncontrolling interests” on the Company’s consolidated balance sheets.

As of June 30, 2023, and after giving effect to the Caret Restructuring and the post-Merger Caret unit awards, Amended Caret Performance Incentive Plan participants held 1,499,432 Caret units, representing 15.41 % of the then-outstanding Caret units and 12.50 % of the then-authorized Caret units.

During the six months ended June 30, 2023 and 2022, the Company recognized $ 0.5 million and $ 0.3 million in expense from Caret units, which is recorded in “General and administrative” in the Company’s consolidated statements of operations and “Noncontrolling interests” on the Company’s consolidated balance sheets.

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

1 unchanged sentence

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

Dividends —The Company elected to be taxed as a REIT beginning with its taxable year ended December 31, 1998.

Dividends —The Company (then known as iStar) elected to be taxed as a REIT beginning with its taxable year ended December 31, 1998.

To qualify as a REIT, the Company must annually distribute, at a minimum, an amount equal to 90% of its taxable income, excluding net capital gains, and must distribute 100% of its taxable income (including net capital gains) to eliminate corporate federal income taxes payable by the REIT.

Because taxable income differs from cash flow from operations due to non-cash revenues and expenses (such as depreciation and other items), in certain circumstances, the Company may generate operating cash flow in excess of its dividends, or alternatively, may need to make dividend payments in excess of operating cash flows.

During the three months ended March 31, 2023 and 2022, the Company declared cash dividends on its common stock of $ 11.1 million, or $ 0.177 per share, and $ 10.5 million, or $ 0.17 per share, respectively.

During the six months ended June 30, 2023 and 2022, the Company declared cash dividends on its common stock of $ 22.6 million, or $ 0.354 per share, and $ 21.5 million, or $ 0.347 per share, respectively.

Safehold Inc.

Notes to Consolidated Financial Statements

Note 12—Earnings Per Share

2 unchanged sentences

Three Months Ended

Six Months Ended

Net (income) attributable to noncontrolling interests

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common shareholders for basic and diluted earnings per common share

Safehold Inc.

Notes to Consolidated Financial Statements

Three Months Ended

Six Months Ended

Earnings attributable to common shares:

6 unchanged sentences

Weighted average common shares outstanding for basic earnings per common share

Effect of assumed shares under treasury stock method for restricted stock units

Weighted average common shares outstanding for diluted earnings per common share

4 unchanged sentences

common shareholders - diluted

(1) For the three months ended March 31, 2023, the effect of 4,650 shares related to restricted stock awards were antidilutive.

For the three months ended March 31, 2022, weighted average shares outstanding and earnings per share have been recast in accordance with ASC 805 to reflect the exchange ratio used in the reverse acquisition.

(1) For the three and six months ended June 30, 2023, the effect of 452 shares and 456 shares related to restricted stock awards, respectively, were antidilutive.

For the three and six months ended June 30, 2022, weighted average shares outstanding and earnings per share have been recast in accordance with ASC 805 to reflect the exchange ratio used in the reverse acquisition.

Note 13—Related Party Transactions

21 unchanged sentences

3 x prior year’s management fee

During the three months ended March 31, 2023 and 2022, the Company recorded $ 5.2 million and $ 4.5 million, respectively, in management fees to the Former Manager.

The Company did no t incur management fees to the Former Manager for the three months ended June 30, 2023.

During the three months ended June 30, 2022, the Company recorded $ 5.2 million in management fees to the Former Manager.

During the six months ended June 30, 2023 and 2022, the Company recorded $ 5.2 million and $ 9.7 million, respectively, in management fees to the Former Manager.

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

1 unchanged sentence

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

During the three months ended March 31, 2023 and 2022, the Company was allocated $ 3.1 million and $ 3.1 million, respectively, in expenses from iStar.

The Company was no t allocated any expenses from iStar for the three months ended June 30, 2023.

During the three months ended June 30, 2022, the Company was allocated $ 3.1 million in expenses from iStar.

During the six months ended June 30, 2023 and 2022, the Company was allocated $ 3.1 million and $ 6.2 million, respectively, in expenses from iStar.

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

Acquisitions and Commitments

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

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

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

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

Safehold Inc.

Notes to Consolidated Financial Statements

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

In July 2022, the Company, pursuant to an agreement with iStar and upon certain construction related conditions being met, acquired an existing Ground Lease from iStar for $ 36.4 million inclusive of closing costs (refer to Note 4).

19 unchanged sentences

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

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

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

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

As of June 30, 2023, the Company funded $6.2 million of the leasehold improvement allowance.

Safehold Inc.

Notes to Consolidated Financial Statements

15 unchanged sentences

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

Safehold Inc.

Notes to Consolidated Financial Statements

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

1 unchanged sentence

The management agreement has an initial one-year term and will be automatically renewed for successive one-year terms each anniversary date thereafter unless previously terminated.

Safehold Inc.

Notes to Consolidated Financial Statements

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

3 unchanged sentences

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

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

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

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

As of March 31, 2023, Star Holdings owned approximately 21.2 % of the Company’s common stock outstanding through a wholly-owned subsidiary.

Note 14—Subsequent Events

On April 4, 2023, the Company filed with the U.S.

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

On April 5, 2023, the Company and Portfolio Holdings entered into an ATM Equity Offering SM Sales Agreement (the “Primary Sales Agreement”) with the sales agents named therein pursuant to which the Company may sell, from time to time, shares of its common stock, $ 0.01 par value per share (“Common Stock”), having an aggregate gross sales price of up to $ 300.0 million (the “Primary Shares”) through or to the sales agents.

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

On April 5, 2023, the Company, Portfolio Holdings and Star Investment Holdings SPV LLC (“Star Investment Holdings”), a subsidiary of Star Holdings, entered into an ATM Equity Offering SM Sales Agreement (the “Selling Stockholder Sales Agreement”) with the sales agents named therein pursuant to which Star Investment Holdings may sell, from time to time, subject to receiving the Company’s consent, up to 1,000,000 shares of the Company’s common stock (the “Selling Stockholder Shares”) through or to the sales agents.

As of June 30, 2023, Star Holdings owned approximately 21.1 % of the Company’s common stock outstanding through a wholly-owned subsidiary.

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

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

Actual sales, if any, will depend on a variety of factors to be determined by Star Investment Holdings from time to time, including, among

Safehold Inc.

Notes to Consolidated Financial Statements

other things, market conditions, the trading price of the Company’s common stock, capital needs and determinations by Star Investment Holdings of the appropriate sources of its funding.

On April 5, 2023, the Company announced that it entered into a joint venture arrangement with a sovereign wealth fund, which is also an existing shareholder, focused on new acquisitions for certain Ground Lease investments.

Each party’s commitment is discretionary.

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

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

The investment period will be the earlier of 18 months and the full deployment of commitments.

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements