Safehold Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Safehold Inc. has filed its Q1 2024 10-Q, detailing financial positions and executive compensation.</b>

AI Summary

Safehold Inc. (SAFE) filed a Quarterly Report (10-Q) with the SEC on May 7, 2024. Safehold Inc. filed its 10-Q report for the period ending March 31, 2024. The filing includes financial data for the first quarter of 2024. Key financial statement items such as Retained Earnings, Common Stock, Additional Paid-In Capital, and Accumulated Other Comprehensive Income are detailed for various periods. The report references specific accounting standards including Deferred Costs and Other Assets, and Accounts Payable and Accrued Liabilities. Information regarding executive compensation plans, including the Long-Term Incentive Plan and Equity Incentive Plan, is also present.

Why It Matters

For investors and stakeholders tracking Safehold Inc., this filing contains several important signals. This 10-Q provides investors with the latest quarterly financial performance and position of Safehold Inc., crucial for evaluating investment decisions. The detailed breakdown of equity accounts and references to specific accounting standards offer transparency into the company's financial reporting and valuation methods.

Risk Assessment

Risk Level: medium — Safehold Inc. shows moderate risk based on this filing. The filing is a standard quarterly report (10-Q), which is routine for public companies. However, the specific financial details and disclosures within the report could reveal medium-term risks or opportunities.

Analyst Insight

Review the detailed financial statements and disclosures in the 10-Q to assess Safehold Inc.'s current financial health and identify any emerging trends or risks.

Executive Compensation

Key Numbers

• 2024-03-31 — Report Period End Date (Conformed period of report)
• 2024-05-07 — Filing Date (Filed as of date)
• 71077000 — Value (Related to P30Y, likely a financial metric)
• 71435000 — Value (Related to P30Y, likely a financial metric)
• 916000000 — Value (Likely a financial metric)

Key Players & Entities

• Safehold Inc. (company) — Filer of the 10-Q report
• 2024-03-31 (date) — Conformed period of report
• 2024-05-07 (date) — Filed as of date
• 1114 AVENUE OF THE AMERICAS (address) — Business and mailing address
• ISTAR INC. (company) — Former company name
• ISTAR FINANCIAL INC (company) — Former company name
• STARWOOD FINANCIAL INC (company) — Former company name
• Safehold Inc. Old Safe (company) — Entity reference in equity plan

FAQ

Risk Factors

• Deferred Costs and Other Assets [medium — regulatory]: The filing references FASB standards for Deferred Costs and Other Assets, indicating potential accounting treatments and disclosures related to these items.
• Accounts Payable and Accrued Liabilities [medium — regulatory]: The filing references FASB standards for Accounts Payable and Accrued Liabilities, Current and Noncurrent, highlighting the company's short-term and long-term obligations.

Key Dates

• 2024-03-31: Quarterly Report Period End — Marks the end of the reporting period for the 10-Q filing.

Key Financial Figures

• $0.01 — 6, 2024, there were 71,435,142 shares, $0.01 par value per share, of Safehold Inc. c

Filing Documents

• safe-20240331x10q.htm (10-Q) — 2485KB
• safe-20240331xex22d1.htm (EX-22.1) — 3KB
• safe-20240331xex31d0.htm (EX-31.0) — 20KB
• safe-20240331xex32d0.htm (EX-32.0) — 13KB
• 0001095651-24-000016.txt (&nbsp;) — 13914KB
• safe-20240331.xsd (EX-101.SCH) — 109KB
• safe-20240331_cal.xml (EX-101.CAL) — 100KB
• safe-20240331_def.xml (EX-101.DEF) — 428KB
• safe-20240331_lab.xml (EX-101.LAB) — 845KB
• safe-20240331_pre.xml (EX-101.PRE) — 667KB
• safe-20240331x10q_htm.xml (XML) — 2991KB

Financial Statements

Financial Statements: Consolidated Balance Sheets (unaudited) as of March 31, 2024 and December 31, 2023 1 Consolidated Statements of Operations (unaudited)—For the three months ended March 31, 2024 and 2023 2 Consolidated Statements of Comprehensive Income (Loss) (unaudited)—For the three months ended March 31, 2024 and 2023 3 Consolidated Statements of Changes in Equity (unaudited)—For the three months ended March 31, 2024 and 2023 4 Consolidated Statements of Cash Flows (unaudited)—For the three months ended March 31, 2024 and 2023 5

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 50 Item 4.

Controls and Procedures

Controls and Procedures 50 PART II Other Information 52 Item 1.

Legal Proceedings

Legal Proceedings 52 Item 1A.

Risk Factors

Risk Factors 52 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 52 Item 3. Defaults Upon Senior Securities 52 Item 4. Mine Safety Disclosures 52 Item 5. Other Information 52 Item 6. Exhibits 53

SIGNATURES

SIGNATURES 54 Table of Contents

CONSOLIDATED FINANCIAL INFORMATION

PART I. CONSOLIDATED FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Safehold Inc. Consolidated Balance Sheets (1) (In thousands) (unaudited) As of March 31, 2024 December 31, 2023 ASSETS Net investment in sales-type leases ($ 907 and $ 465 of allowances as of March 31, 2024 and December 31, 2023, respectively) $ 3,341,658 $ 3,255,195 Ground Lease receivables, net ($ 692 and $ 369 of allowances as of March 31, 2024 and December 31, 2023, respectively) 1,661,063 1,622,298 Real estate Real estate, at cost 743,423 744,337 Less: accumulated depreciation ( 41,907 ) ( 40,400 ) Real estate, net 701,516 703,937 Real estate-related intangible assets, net 212,657 211,113 Real estate available and held for sale 10,625 9,711 Total real estate, net and real estate-related intangible assets, net and real estate available and held for sale 924,798 924,761 Loans receivable, net - related party ($ 2,392 and $ 2,429 of allowances as of March 31, 2024 and December 31, 2023, respectively) 112,179 112,111 Equity investments 275,295 310,320 Cash and cash equivalents 11,284 18,761 Restricted cash 27,891 27,979 Deferred tax asset, net 6,744 7,619 Deferred operating lease income receivable 187,750 180,032 Deferred expenses and other assets, net (2) 124,877 89,238 Total assets $ 6,673,539 $ 6,548,314 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Liabilities: Accounts payable, accrued expenses and other liabilities $ 118,593 $ 134,518 Real estate-related intangible liabilities, net 63,546 63,755 Debt obligations, net 4,142,878 4,054,365 Total liabilities 4,325,017 4,252,638 Commitments and contingencies (refer to Note 10) Redeemable noncontrolling interests (refer to Note 3) 19,011 19,011 Equity: Safehold Inc. shareholders' equity: Common stock, $ 0.01 par value, 400,000 shares authorized, 71,435 and 71,077 shares issued and outstanding as of March 31, 2024 and December 31, 2023, re

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) Note 1—Business and Organization Business —On March 31, 2023, Safehold Inc. ("Old SAFE") merged with and into iStar (see Merger Transaction below), at which time Old SAFE ceased to exist and iStar continued as the surviving corporation and changed its name to "Safehold Inc." (the "Merger"). References to iStar refer to iStar prior to the Merger. For accounting purposes, the Merger is treated as a "reverse acquisition" in which iStar is considered the legal acquirer and Old SAFE is considered the accounting acquirer. Unless context otherwise requires, references to the "Company" refer to the business and operations of Old SAFE and its consolidated subsidiaries prior to the Merger and to Safehold Inc. (formerly known as iStar) and its consolidated subsidiaries following the consummation of the Merger. The Company operates its business through one reportable segment by acquiring, managing and capitalizing ground leases. The Company also manages entities focused on ground leases (refer to Note 7) and a wholly-owned subsidiary of the Company serves as external manager to Star Holdings ("Star Holdings"), a Maryland statutory trust that holds the legacy non-ground lease assets previously held by iStar. Ground leases are long-term contracts between the landlord (the Company) and a tenant or leaseholder. Ground leases generally represent ownership of the land underlying commercial real estate projects that is net leased by the fee owner of the land to the owners/operators of the real estate projects built thereon ("Ground Leases"). Under a Ground Lease, the tenant is generally responsible for all property operating expenses, such as maintenance, real estate taxes and insurance and is also responsible for development costs and capital expenditures. Ground Leases are typically long-term (base terms ranging from 30 to 99 years , often with tenant renewal options) and have contractual base rent increases (either at a s

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) As part of a restructuring in connection with the Merger (the "Caret Restructuring"), Safehold Operating Partnership LP converted into a Delaware limited liability company and renamed itself "Safehold GL Holdings LLC" ("Portfolio Holdings"), with the Company as its managing member. The Company conducts all of its business and owns all of its properties through Portfolio Holdings. In addition, holders of Caret units in Old SAFE's subsidiary, Caret Ventures LLC ("Caret Ventures"), contributed their interests in Caret Ventures to Portfolio Holdings in return for Caret units issued by Portfolio Holdings. Following the restructuring, 100 % of the equity interests in Caret Ventures is held by Portfolio Holdings. The Company, management of the Company, employees and former employees of the Company, affiliates of MSD Partners (as defined below) and other outside investors own the issued and outstanding equity of Portfolio Holdings. Merger Transaction —On August 10, 2022, Old SAFE entered into an Agreement and Plan of Merger (the "Merger Agreement") with iStar, and on March 31, 2023, the Merger was completed in accordance with the terms of the Merger Agreement. For accounting purposes, the Merger was accounted for as a business combination using the acquisition method of accounting under Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805") and treated as a "reverse acquisition" in which iStar is considered the legal acquirer and Old SAFE is considered the accounting acquirer. The Company considered the following relevant facts for this determination: At the time of the Merger closing, Old SAFE shareholders, excluding the Old SAFE shares held directly by iStar, members of iStar management and Star Holdings, control a majority of the voting interests in the Company and the combined company operates under the name "Safehold Inc.;" The composition of the combined company's board of direct

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) On August 10, 2022, MSD Partners also agreed to purchase 100,000 Caret units (refer to Note 12) from the Company for an aggregate purchase price of $ 20.0 million (the "MSD Caret Purchase"). MSD Partners received a credit against their purchase price for Caret units equal to the amount they would have received had they held Caret units at the time of a December 2022 distribution to other Caret unit holders, which was equal to $ 0.6 million. MSD Partners' rights and obligations under the purchase agreement were subsequently assigned to certain of its affiliates. The closing of the MSD Caret Purchase took place in conjunction with the closing of the Merger on March 31, 2023. Star Holdings was capitalized in part with an 8.0 %, four-year term loan from the Company having an initial principal amount of $ 115.0 million, as well as SOFR plus 3.00 % bank debt with an initial principal balance of $ 140.0 million from Morgan Stanley Bank, N.A. which is secured by approximately 13.5 million shares of the Company (refer to Note 6). In connection with the Spin-Off, Safehold Management Services Inc. ("SpinCo Manager"), a Delaware corporation and a subsidiary of the Company, entered into a management agreement with Star Holdings effective as of March 31, 2023, pursuant to which SpinCo Manager will continue to operate and pursue the orderly monetization of Star Holding's assets. Star Holdings paid SpinCo Manager an annual management fee of $ 25.0 million for the term ended March 31, 2024. The annual fee declines to $ 15.0 million, $ 10.0 million and $ 5.0 million, respectively, for each of the following annual terms, and adjusts to 2.0 % of the gross book value of Star Holdings' assets, excluding shares of the Company's common stock, thereafter. 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 Hol

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) 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. The classifications of liabilities are primarily within "Debt obligations, net" and "Accounts payable, accrued expenses and other liabilities" on the Company's consolidated balance sheets. The liabilities of these VIEs are non-recourse to the Company and can only be satisfied from each VIE's respective assets. The Company has provided no financial support to VIEs that it was not previously contractually required to provide and did not have any unfunded commitments related to consolidated VIEs as of March 31, 2024. Note 3—Summary of Significant Accounting Policies Significant Accounting Policies Fair Values —The Company is required to disclose fair value information with regard to its financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practical to estimate fair value. The Financial Accounting Standards Board ("FASB") guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy prioritizes the inputs to be used in valuation techniques to measure fair value: Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, fo

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