Safehold Inc. Files Q2 2024 10-Q

TL;DR

**SAFEhold Q2 10-Q filed. Financials look steady. REIT.**

AI Summary

Safehold Inc. filed its 10-Q for the period ending June 30, 2024, reporting financial results. The company, formerly known as iStar Inc., is a real estate investment trust. Key financial figures like retained earnings, common stock, and additional paid-in capital as of June 30, 2024, are detailed in the filing.

Why It Matters

This filing provides investors with a detailed look at Safehold Inc.'s financial health and operational performance for the second quarter of 2024, crucial for investment decisions.

Risk Assessment

Risk Level: low — This is a standard quarterly financial filing with no immediate red flags or significant negative news.

Key Numbers

• 71,077,000 — Retained Earnings (As of June 30, 2024)
• 71,435,000 — Common Stock (As of June 30, 2024)

Key Players & Entities

• Safehold Inc. (company) — Filer of the 10-Q
• iStar Inc. (company) — Former name of Safehold Inc.
• 2024-06-30 (date) — End of reporting period
• 20240730 (date) — Filing date

FAQ

Key Financial Figures

• $0.01 — 29, 2024, there were 71,435,951 shares, $0.01 par value per share, of Safehold Inc. c

Filing Documents

• safe-20240630x10q.htm (10-Q) — 3167KB
• safe-20240630xex22d1.htm (EX-22.1) — 3KB
• safe-20240630xex31d0.htm (EX-31.0) — 20KB
• safe-20240630xex32d0.htm (EX-32.0) — 13KB
• 0001095651-24-000022.txt ( ) — 16040KB
• safe-20240630.xsd (EX-101.SCH) — 109KB
• safe-20240630_cal.xml (EX-101.CAL) — 105KB
• safe-20240630_def.xml (EX-101.DEF) — 429KB
• safe-20240630_lab.xml (EX-101.LAB) — 870KB
• safe-20240630_pre.xml (EX-101.PRE) — 671KB
• safe-20240630x10q_htm.xml (XML) — 3726KB

Financial Statements

Financial Statements: Consolidated Balance Sheets (unaudited) as of June 30, 2024 and December 31, 2023 1 Consolidated Statements of Operations (unaudited)—For the three and six months ended June 30, 2024 and 2023 2 Consolidated Statements of Comprehensive Income (Loss) (unaudited)—For the three and six months ended June 30, 2024 and 2023 3 Consolidated Statements of Changes in Equity (unaudited)—For the three and six months ended June 30, 2024 and 2023 4 Consolidated Statements of Cash Flows (unaudited)—For the six months ended June 30, 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 41 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 54 Item 4.

Controls and Procedures

Controls and Procedures 54 PART II Other Information 56 Item 1.

Legal Proceedings

Legal Proceedings 56 Item 1A.

Risk Factors

Risk Factors 56 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56 Item 3. Defaults Upon Senior Securities 56 Item 4. Mine Safety Disclosures 56 Item 5. Other Information 56 Item 6. Exhibits 57

SIGNATURES

SIGNATURES 58 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 June 30, 2024 December 31, 2023 ASSETS Net investment in sales-type leases ($ 1,522 and $ 465 of allowances as of June 30, 2024 and December 31, 2023, respectively) $ 3,380,007 $ 3,255,195 Ground Lease receivables, net ($ 773 and $ 369 of allowances as of June 30, 2024 and December 31, 2023, respectively) 1,746,567 1,622,298 Real estate Real estate, at cost 740,971 744,337 Less: accumulated depreciation ( 43,414 ) ( 40,400 ) Real estate, net 697,557 703,937 Real estate-related intangible assets, net 210,988 211,113 Real estate available and held for sale 9,654 9,711 Total real estate, net and real estate-related intangible assets, net and real estate available and held for sale 918,199 924,761 Loans receivable, net - related party ($ 2,356 and $ 2,429 of allowances as of June 30, 2024 and December 31, 2023, respectively) 112,247 112,111 Equity investments 243,302 310,320 Cash and cash equivalents 13,418 18,761 Restricted cash 8,604 27,979 Deferred tax asset, net 6,607 7,619 Deferred operating lease income receivable 195,444 180,032 Deferred expenses and other assets, net (2) 144,571 89,238 Total assets $ 6,768,966 $ 6,548,314 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Liabilities: Accounts payable, accrued expenses and other liabilities $ 132,582 $ 134,518 Real estate-related intangible liabilities, net 63,338 63,755 Debt obligations, net 4,190,587 4,054,365 Total liabilities 4,386,507 4,252,638 Commitments and contingencies (refer to Note 10) Redeemable noncontrolling interests (refer to Note 3) — 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 June 30, 2024 and December 31, 2023, respectively

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, and will pay an annual fee of $ 15.0 million for the term ended March 31, 2025. The annual fee declines to $ 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 tr

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