8-K
Safehold Inc. (SAFE)
8-K
2021-08-03
For: 2021-08-03
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April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 2021
iStar Inc.
(Exact name of registrant as specified in its charter)
| | | |
|---|---|---|
| Maryland | 1-15371 | 95-6881527 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1114 Avenue of the Americas , 39th Floor
New York , New York **** 10036
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: ( 212 ) 930-9400
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| | | | |
|---|---|---|---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
| Common Stock, 0.001 par value | STAR | New York Stock Exchange | |
| 8.00% Series D Cumulative Redeemable Preferred Stock, 0.001 par value | STAR-PD | | New York Stock Exchange |
| 7.65% Series G Cumulative Redeemable Preferred Stock, 0.001 par value | STAR-PG | | New York Stock Exchange |
| 7.50% Series I Cumulative Redeemable Preferred Stock, 0.001 par value | STAR-PI | | New York Stock Exchange |
All values are in US Dollars.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Item 2.02Results of Operations and Financial Condition.
On August 3, 2021, iStar Inc. issued an earnings release and made available on its website an earnings presentation for the quarter ended June 30, 2021. A copy of the earnings release and earnings presentation are attached as Exhibit 99.1 and Exhibit 99.2, respectively, hereto and incorporated herein by reference.
The information in this Current Report, including the exhibits hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.
Item 7.01Regulation FD Disclosure.
On August 3, 2021, iStar Inc. made available on its website an earnings presentation for the quarter ended June 30, 2021. A copy of the earnings presentation is attached as Exhibit 99.2 hereto and incorporated by reference.
The earnings presentation, including Exhibit 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.
Item 9.01Financial Statements and Exhibits.
Exhibit 99.1Earnings Release
Exhibit 99.2Earnings Presentation
Exhibit 104Inline XBRL for the cover page of this Current Report on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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|---|---|---|---|
| | | | iStar Inc. |
| | | | |
| Date: | August 3, 2021 | By: | /s/ GARETT ROSENBLUM |
| | | | Garett Rosenblum |
| | | | Chief Accounting Officer |
| | | | (principal financial officer) |
Press Release
iStar Reports Second Quarter 2021 Results
NEW YORK, August 3, 2021
iStar Inc. (NYSE: STAR) today reported results for the second quarter ended June 30, 2021.
Highlights for the quarter include:
| o | Net income (loss) of ($19.5) million or ($0.27) per diluted common share |
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| o | Adjusted earnings of $12.0 million or $0.15 per diluted common share |
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| o | Unrealized gain on Safehold investment increased by $289 million during the second quarter to $1.7 billion |
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| o | Fitch credit rating upgrade to BB |
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| o | $34 million of legacy asset sales proceeds |
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| o | $167 million of legacy asset sales proceeds closed subsequent to the end of the quarter |
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“We have made substantial progress on our strategy so far this year by further expanding the ground lease ecosystem, increasing our balance sheet strength, and making significant inroads with legacy asset monetization,” said Jay Sugarman, Chairman and Chief Executive Officer. “We remain focused on executing our ‘Scale-Strengthen-Streamline’ strategy and look forward to building on our growing momentum.”
The Company published a presentation detailing its results and a reconciliation of non-GAAP financial metrics, which can be found on its website, in the "Investors" section.
1114 Avenue of the Americas
New York, NY 10036 T 212.930.9400 E investors@istar.com
The Company will host an earnings conference call reviewing this presentation beginning at 10:00 a.m. ET. This conference call will be broadcast live and can be accessed by all interested parties through iStar's website and by using the dial-in information listed below:
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|---|---|
| Dial-In: | 844.867.6169 |
| International: | 409.207.6975 |
| Access Code: | 2952269 |
A replay of the call will be archived on the Company’s website. Alternatively, the replay can be accessed via dial-in from 1:00 p.m. ET on August 3, 2021 through 12:00 a.m. ET on August 17, 2021 by calling:
| Replay: | 866.207.1041 |
|---|---|
| International: | 402.970.0847 |
| Access Code: | 2859281 |
iStar Inc. (NYSE: STAR) is focused on reinventing the ground lease sector, unlocking value for real estate owners throughout the country by providing modern, more efficient ground leases on institutional quality properties. As the founder, investment manager and largest shareholder of Safehold Inc. (NYSE: SAFE), the creator of the modern ground lease industry, iStar is using its national investment platform and its historic strengths in finance and net lease to expand the use of modern ground leases within the $7 trillion institutional commercial real estate market. Recognized as a consistent innovator in the real estate markets, iStar specializes in identifying and scaling newly discovered opportunities and has completed more than $40 billion of transactions over the past two decades. Additional information on iStar is available on its website at www.istar.com.
Company Contact:
Jason Fooks
Senior Vice President
Investor Relations & Marketing
T 212.930.9400
E investors@istar.com
1114 Avenue of the Americas
New York, NY 10036 T 212.930.9400
E investors@istar.com
Exhibit 99.2
| Q2 ‘21<br>Earnings Results<br>(NYSE: STAR) |
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| Statements in this presentation which are not historical fact may be deemed forward-looking statements within the meaning of<br>Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although iStar believes the<br>expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no<br>assurance that its expectations will be attained. The Company undertakes no obligation to update or publicly revise any<br>forward-looking statement, whether as a result of new information, future events or otherwise.<br>This presentation should be read in conjunction with our consolidated financial statements and related notes in our Quarterly<br>Report on Form 10-Q for the quarter ended June 30, 2021 and our Annual Report on Form 10-K for the year ended December 31,<br>2020. In assessing all forward-looking statements herein, readers are urged to read carefully all cautionary statements in our<br>Form 10-K.<br>Factors that could cause actual results to differ materially from iStar’s expectations include general economic conditions and<br>conditions in the commercial real estate and credit markets, the effect of the COVID-19 pandemic on our business and growth<br>prospects, the performance of SAFE, the Company’s ability to grow its ground lease business directly and through SAFE, sales<br>of all or a portion of its net lease portfolio, the Company’s ability to generate liquidity and to repay indebtedness as it comes<br>due, additional loan loss provisions and asset impairments, the market demand for legacy assets the Company seeks to sell<br>and the pricing and timing of such sales, changes in NPLs, repayment levels, the Company's ability to make new investments,<br>the Company’s ability to maintain compliance with its debt covenants, the Company’s ability to generate income and gains<br>from its portfolio and other risks detailed in “Risk Factors” in our 2020 Annual Report on Form 10-K, and any updates thereto<br>made in our subsequent fillings with the SEC.<br>Important Note re COVID-19: Readers of this presentation are cautioned that, due to the uncertainty created by the COVID-19<br>pandemic, our results for the first quarter may not be indicative of our future results. Readers are urged to read our Quarterly<br>Report on Form 10-Q for the quarter ended June 30, 2021 when it is filed with the SEC for a more fulsome discussion of our first<br>quarter results, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and<br>"Risk Factors" sections included therein.<br>Note: Please refer to the “Glossary” section in the Appendix for a list of defined terms and metrics.<br>Forward-Looking Statements and Other Matters<br>1<br>Investor Relations Contact<br>Jason Fooks<br>Senior Vice President<br>212.930.9400<br>investors@istar.com |
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| I. Q2 ‘21 Highlights<br>2 |
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| Highlights<br>3<br>(1) Market value of iStar’s investment in Safehold is $2,764m, calculated as iStar’s ownership of 35.2m shares of SAFE at the June 30, 2021 closing stock price of $78.50. Unrealized gain is<br>calculated as the difference between the $2,764m market value and the $1,018m Gross Book Value of iStar’s investment in Safehold.<br>(2) Calculated using market value of iStar’s ownership of SAFE of 35.2m shares at the June 30, 2021 closing stock price of $78.50.<br>$5.1b<br>Unencumbered Assets(2)<br>BB<br>Credit Rating Upgrade<br>by Fitch<br>$34m<br>Legacy Asset<br>Sales Proceeds<br>$167m<br>Legacy Asset Sales Proceeds<br>Subsequent to Quarter End<br>$1.7b<br>Unrealized Gain(1)<br>$222m<br>Investment Activity<br>at Safehold<br>Scale<br>Safehold<br>Strengthen<br>Balance Sheet<br>Simplify<br>Business |
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| $1.9b<br>Market Value(1)<br>$2.8b<br>Market Value(1)<br>$0.9b<br>Gross Book<br>Value<br>$1.0b<br>Gross Book<br>Value<br>Q2 '20 Q2 '21<br>Safehold Progress<br>4<br>$684m<br>Unrealized Gain<br>Increase<br>(1) Q2 ‘21 market value of iStar’s investment in Safehold is $2,764m calculated as iStar’s ownership of 35.2m shares of SAFE at the June 30, 2021 closing stock price of $78.50. Q2 ‘20 market value<br>of iStar’s investment in Safehold is $1,923m, calculated as iStar’s ownership of 33.4m shares of SAFE at the June 30, 2020 closing stock price of $57.49.<br>$1.7b<br>Unrealized<br>Gain<br>iStar’s<br>Investment in<br>Safehold<br>$222m<br>Q2 ‘21 New<br>Investment Activity at<br>Safehold<br>$400m<br>of 2.8% Senior Notes<br>due 2031 Issued by<br>Safehold<br>$374m<br>Q2 ‘21<br>UCA Growth<br>Ground<br>Lease<br>Plus<br>$1.1b<br>Unrealized<br>Gain |
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| Asbury Park<br>$252m<br>55%<br>Magnolia Green<br>$110m<br>24%<br>Grand Vista<br>$97m<br>21%<br>GBV<br>Land & Development $266m<br>Operating Properties $193m<br>Legacy Asset Progress<br>Short-Term Assets Long-Term Assets<br>5<br>$34m<br>Q2 ‘21 Legacy Asset<br>Sales Proceeds<br>$167m<br>Sales Proceeds<br>Subsequent to Quarter End<br>Count: 17 Assets<br>Avg. GBV: $12m<br>GBV<br>Land & Development $140m<br>Operating Properties $59m<br>$459m<br>Gross Book Value<br>$199m<br>Gross Book Value<br>Assets highlighted in green have been sold subsequent to the end of the second quarter |
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| Investment Activity<br>6<br>$111m<br>Ground Lease Plus,<br>Loan and Net Lease<br>Fundings<br>$20m<br>STAR Share<br>Repurchases<br>$7m<br>Legacy<br>CapEx<br>$25m<br>Investment<br>in SAFE<br>$163m |
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| $6.5b Diversified Portfolio<br>Note: Figures based on Gross Book Value of the Company’s total investment portfolio and includes 100% of the assets of iStar’s consolidated joint ventures and the carrying value of iStar’s<br>investment in non-consolidated joint ventures and affiliates.<br>(1) SAFE market value is calculated as iStar’s ownership of 35.2m shares of SAFE at the June 30, 2021 closing stock price of $78.50.<br>7<br>SAFE<br>$2,764m<br>43%<br>Net Lease<br>$2,369m<br>36%<br>RE Finance<br>$460m<br>7%<br>Land &<br>Development<br>$406m<br>6%<br>Operating<br>Properties<br>$307m<br>5%<br>Cash<br>$155m<br>2%<br>Strategic<br>Investments<br>$87m<br>1%<br>Business Line(1)<br>Northeast<br>$2,142m<br>33%<br>West<br>$1,124m<br>17%<br>Mid Atlantic<br>$976m<br>15%<br>Southwest<br>$717m<br>11%<br>Southeast<br>$649m<br>10%<br>Central<br>$595m<br>9%<br>Various<br>$190m<br>3%<br>Cash<br>$155m<br>2%<br>Geographic<br>Region(1)<br>Ground Leases<br>$2,869m<br>44%<br>Entertainment /<br>Leisure<br>$1,048m<br>16%<br>Office<br>$871m<br>13%<br>Industrial / Lab<br>$587m<br>9%<br>Land<br>$330m<br>5%<br>Hotel<br>$231m<br>3%<br>Multifamily<br>$178m<br>3%<br>Cash<br>$155m<br>2%<br>Condo<br>$137m<br>2%<br>Retail<br>$103m<br>2%<br>Other<br>$39m<br>1%<br>Property<br>Type(1) |
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| Earnings Results<br>8<br>Q2 ‘21 Q2 ‘20 Y/Y ∆<br>Net Income (Loss)<br>(Allocable to Common Shareholders) ($19.5m) ($23.3m) +$3.8m<br>W.A. Shares<br>(Diluted) 72.9m 76.2m<br>EPS (Loss)<br>(Diluted) ($0.27) ($0.31) +$0.04<br>Adj. Earnings (Loss)<br>(Allocable to Common Shareholders) $12.0m ($2.9m) +$14.9m<br>W.A. Shares<br>(Diluted) 77.8m 76.2m<br>AEPS (Loss)<br>(Diluted) $0.15 ($0.04) +$0.19<br>Note: Please refer to the “Adjusted Earnings Reconciliation” section of the Appendix for more information with regard to the calculation of this metric. |
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| Equity Value per Share<br>Adj. Common Equity per Share(1)<br>(Gross of Depreciation, Amortization and CECL Allowance)<br>Common Equity per Share(1)<br>(Net of Depreciation, Amortization and CECL Allowance)<br>(w/ SAFE MTM)<br>(2)<br>Note: Q2 ‘21 SAFE mark-to-market value of iStar’s investment in Safehold is $2,764m, calculated as iStar’s ownership of 35.2m shares of SAFE at the June 30, 2021 closing stock price of $78.50. Q2<br>‘20 SAFE mark-to-market value of iStar’s investment in Safehold is $1,923m calculated as iStar’s ownership of 33.4m shares of SAFE at the June 30, 2020 closing stock price of $57.49.<br>(1) Presented diluted for the 2022 3.125% convertible notes which were “in the money” on June 30, 2021 based on the conversion ratio of 71.2325 shares per $1,000 of principal (a strike price of<br>$14.04 per share) using the Q2 ’21 average closing stock price. The convertible notes were “out of the money” on June 30, 2020 .<br>(2) A portion of the profits realized on iStar’s investment portfolio, including its investment in SAFE, is allocable to iPip, iStar’s shareholder-approved long-term incentive plan. Additional information<br>on iStar’s iPip can be found in the 2020 Annual Report on Form 10-K and its 2021 Proxy Statement, both of which are available on our website.<br>9<br>(w/ SAFE MTM)<br>(2)<br>(w/ SAFE MTM)<br>(2)<br>(w/ SAFE MTM)<br>(2)<br>$26.79<br>$34.37<br>$12.72<br>$11.72<br>Q2 '20 Q2 '21<br>$22.50<br>$29.59<br>$8.16<br>$6.57<br>Q2 '20 Q2 '21 |
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| II. Portfolio<br>Overview<br>10 |
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| Safehold (NYSE: SAFE)<br>11<br>Note: $ in millions. Graphs of SAFE’s underlying portfolio are presented in Gross Book Value totaling $3,524m and excludes $23m of forward commitments. Please refer to the SAFE<br>Earnings Presentation dated July 22, 2021, available on SAFE’s website for a Glossary of defined terms.<br>(1) iStar’s discretionary voting in SAFE is capped at 41.9% and will vote remaining shares with respect to any matter in the same proportions as SAFE’s non-iStar shareholders.<br> iStar’s investment in SAFE<br>— 35.2m shares (66.0% of shares outstanding)(1)<br>— Gross Book Value of $1,018m or $28.90 per share<br>— Market value of SAFE shares owned by iStar is $2.8b<br>based on closing price of $78.50 per share on June 30, 2021<br>Q2 ‘21<br>Revenue $44.2m<br>Net Income $14.7m<br>EPS $0.28<br>SAFE Earnings<br>>60 yrs<br>90%<br><20 yrs<br>6%<br>20-60 yrs<br>4%<br>Lease Term<br>Remaining<br>(w/ Extensions)<br>Office<br>$1,921m<br>54%<br>Multifamily<br>$997m<br>28%<br>Hotel<br>$586m<br>17%<br>Other<br>$20m<br>1%<br>Property Type<br>Northeast<br>$1,457m<br>41% West<br>$787m<br>22%<br>Mid Atlantic<br>$594m<br>17%<br>Southeast<br>$342m<br>10%<br>Southwest<br>$261m<br>7%<br>Central<br>$83m<br>3%<br>Geographic<br>Region |
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| Note: $ in millions. Please refer to the “Glossary” section of the Appendix for additional details regarding definitions and calculations.<br>Net Lease Consolidated Assets<br>12<br>Wholly-Owned<br>(100% Ownership)<br>Net Lease<br>Venture I<br>(51.9% Ownership)<br>Total<br>Consolidated<br>Gross Book Value $1,367m $908m $2,275m<br>Occupancy 98.9% 100.0% 99.3%<br>Square Feet (000s) 9,671 5,749 15,420<br>W.A. Remaining<br>Lease Term 19.5 yrs 15.8 yrs 18.0 yrs<br>W.A. Yield 7.4% 8.1% 7.7%<br>< 1 year<br>1%<br>1-5 years<br>14%<br>5-10 years<br>6%<br>> 10 years<br>79%<br>W.A.<br>Remaining<br>Lease Term<br>Northeast<br>$528m<br>23%<br>Southwest<br>$414m<br>18%<br>Central<br>$406m<br>18%<br>Mid Atlantic<br>$371m<br>16% Southeast<br>$285m<br>13%<br>West<br>$264m<br>12%<br>Various<br>$7m<br>0%<br>Geographic<br>Region<br>Entertainment<br>/ Leisure<br>$1,031m<br>45%<br>Office<br>$807m<br>35%<br>Industrial / Lab<br>$332m<br>15%<br>Ground Lease<br>$105m<br>5%<br>Property Type |
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| Note: $ in millions. Table and pie charts presented at the venture level. Please refer to the “Glossary” section of the Appendix for additional details regarding definitions and calculations.<br>Net Lease Venture II<br>13<br>Net Lease<br>Venture II<br>(51.9% Ownership)<br>Gross Book Value $324m<br>Occupancy 100.0%<br>Square Feet (000s) 3,302<br>W.A. Remaining Lease Term 12.6 yrs<br>W.A. Yield 9.1%<br>Net Lease Venture II is<br>unconsolidated and 51.9%<br>owned by iStar. Presented<br>here at the venture level.<br>Southeast<br>$171m<br>53% Mid Atlantic<br>$84m<br>26%<br>West<br>$69m<br>21%<br>Geographic<br>Region<br>Industrial /<br>Lab<br>$286m<br>88%<br>Office<br>$38m<br>12%<br>Property<br>Type<br>1-5 years<br>39%<br>5-10 years<br>10%<br>> 10 years<br>51%<br>W.A.<br>Remaining<br>Lease Term |
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| Top Net Lease Assets<br>14<br>Tenant (Sorted by GBV) Property<br>Type Location Portfolio Inv.<br>Grade<br>Lease Term<br>Remaining<br>Annualized<br>Base Rent<br>Contractual Rent<br>Escalator<br>Bowlero (2 Master Leases) Entertainment 148 Locations Wholly-Owned 25.9 yrs $32.6m(1)<br>Fixed Bumps<br>Bowlero (Master Lease) Entertainment 58 Locations NLJV I 23.3 yrs $18.4m Fixed Bumps<br>McCormick & Co. Office Cockeysville, MD NLJV I * 12.8 yrs $11.2m Fixed Bumps<br>Cox Automotive Office North Hills, NY NLJV I * 13.0 yrs $8.2m Fixed Bumps<br>w/ CPI Adjustments<br>Indeed Office Austin, TX Wholly-Owned * 12.5 yrs $10.6m Fixed Bumps<br>AMC Theaters (Master Lease) Entertainment 4 Locations Wholly-Owned 13.6 yrs $8.1m Fixed Bumps +<br>% Rent<br>NYSE-Listed Transportation Services Company Industrial 2 Locations NLJV II 24.4 yrs $7.9m Fixed Bumps<br>Leading Financial Services Company Office Jersey City, NJ Wholly-Owned * 11.5 yrs $10.1m Fixed Bumps<br>AT&T Office Oakton, VA NLJV I * 4.4 yrs $7.2m Fixed Bumps<br>Bellisio Foods Industrial Jackson, OH NLJV I 24.4 yrs $6.7m Capped<br>CPI Adjustments<br>Total/W.A. 19.1 yrs $121.2m<br>Top 10 net lease assets, which represent a total of $1.7b of Gross Book Value, or 64% of the<br>aggregate $2.6b of Gross Book Value of the combined wholly-owned, NLJV I and NLJV II portfolios<br>Note: Sorted by Gross Book Value, based on the value of the asset assuming 100% ownership. Annualized Base Rent (ABR) represents annualized cash rent assuming 100% ownership. iStar’s<br>equity interest in each of NLJV I and II is 51.9%.<br>(1) Bowlero’s annualized base rent (ABR) represents the contractual annualized base rent under the terms of the current lease. iStar reached an agreement with Bowlero to defer a total of $23<br>million of rent owed during the period from October 2020 to June 2021, of which $7.6m of rent was deferred in Q2 ‘21. The deferred rent will accrue with interest to be repaid over two years<br>commencing January 1, 2023. The ABR is presented as the next twelve-month rent following the deferral period. |
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| Real Estate Finance<br>Note: $ in millions. Excludes loan receivable included in other lending investments and CECL allowances. Please refer to the “Glossary” section of the Appendix for additional details<br>regarding definitions and calculations.<br>(1) Includes $47m pro rata share of loans held within a joint venture.<br>(2) Excludes nonperforming loans.<br>15<br>Loans ($)<br>W.A.<br>W.A.<br>Yield<br>W.A. Maturity Last $<br>LTV (yrs)<br>First mortgages / Senior debt (1) $231m 65% 8.7% 0.6<br>Mezzanine / Subordinated debt 51m 69% 9.7% 6.3<br>Other lending investments 122m - 6.6% 7.5<br>Total Performing Loans $404m 66% 8.2% 3.4<br>NPL 56m<br>Total Real Estate Finance $460m<br>Hotel<br>$147m<br>32%<br>Multifamily<br>$119m<br>26%<br>Retail<br>$60m<br>13%<br>Office<br>$52m<br>11%<br>Condo<br>$42m<br>9%<br>Other<br>$28m<br>6%<br>Land<br>$12m<br>3%<br>Property<br>Type<br>Floating<br>57%<br>Fixed<br>43%<br>Rate<br>Type(2)<br>Northeast<br>$151m<br>33%<br>West<br>$139m<br>30%<br>Various<br>$94m<br>21%<br>Central<br>$47m<br>10%<br>Southeast<br>$29m<br>6%<br>Geographic<br>Region |
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| III. Capital<br>Structure<br>16 |
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| Credit Metrics<br>17<br>Note: Figures are presented using the SAFE mark-to-market value of iStar’s investment in Safehold. Q2 ‘21 market value is $2,764m, calculated as iStar’s ownership of 35.2m shares of SAFE at the<br>June 30, 2021 closing stock price of $78.50.<br>(1) Leverage is calculated as the ratio of debt, net of cash, to adjusted total equity gross of non-controlling interests, or “NCI”, and applying the SAFE MTM adjustment. Please refer to the “Capital<br>Structure Overview” section of the presentation for more information.<br>(2) Includes only iStar’s share of NLJV I debt.<br>Unencumbered<br>Asset Base<br>Unsecured Debt /<br>Total Debt(2) UA / UD Leverage(1)<br>$5.1b 2.4x 1.2x<br>1.6x<br>1.0x 69% |
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| Capital Structure Overview<br>Note: Please refer to the “Adjusted Common Equity Reconciliation” section of the Appendix for more information.<br>(1) SAFE mark-to-market calculations based on the June 30, 2021 closing stock price of $78.50 with respect to 35.2m shares held by iStar.<br>(2) Corporate leverage is the ratio of total debt less cash and cash equivalents divided by Adjusted Total Equity, gross of NCI.<br>(3) Includes accumulated depreciation, amortization, CECL allowance, and iStar’s proportionate share of accumulated depreciation and amortization relating to equity method investments.<br>(4) Includes $41m of the proportionate share of accumulated depreciation and amortization relating to noncontrolling interests.<br>(5) Represents liquidation preference of preferred equity.<br>(6) Presented diluted for the 2022 3.125% convertible notes which were “in the money” on June 30, 2021 based on their current conversion ratio of 71.2325 shares per $1,000 of principal, which represents a strike price of $14.04 per<br>share using the Q2 ‘21 average closing stock price.<br>(7) Includes $481m of consolidated, asset-specific non-recourse mortgage debt of NLJV I.<br>(8) Debt is presented net of fees and discounts.<br>Preferred Equity - $305m(5)<br>Adjusted<br>Total Equity<br>$1.4b<br>Total Debt<br>$3.3b(8)<br>Noncontrolling Interest - $238m(4)<br>Adjusted<br>Common<br>Equity<br>$904m<br>Secured<br>Debt<br>$1.2b(7)<br>18<br>Common Equity<br>$507m<br>Acc. D&A/CECL Allow. - $397m(3)<br>Credit Metrics 6/30/21 SAFE MTM(1)<br>Cash $155m $155m<br>Debt, net of cash $3,135m $3,135m<br>Total Equity, gross of NCI $1,009m $2,784m<br>Adj. Total Equity, gross of NCI $1,447m $3,193m<br>Leverage(2) 2.2x 1.0x<br>Shares<br>Shares Outstanding(6) 77.1m 77.1m<br>Common Equity $507m $2,282m<br>Common Equity per Share $6.57 $29.59<br>Adj. Common Equity $904m $2,650m<br>Adj. Common Equity per Share $11.72 $34.37<br>Liquidity<br>Cash $155m<br>Revolving Credit Facility<br>Availability $342m<br>Total Liquidity $497m<br>Senior<br>Unsecured Debt<br>$2.1b<br>As of 6/30/21 |
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| $775m<br>$550m<br>$400m<br>$100m<br>$492m<br>$288m<br>Unsecured Debt Secured Term Loan Convertible Notes<br>Debt Profile<br>2022(1)<br>Sep. $288m 3.125%<br>2023<br>Jun. $492m L + 275<br>2024<br>Oct. $775m 4.75%<br>2025<br>Aug. $550m 4.25%<br>2026<br>Feb. $400m 5.50%<br>2035<br>Oct. $100m L + 150<br>Non-Recourse Mortgage Financings(2)<br>Various / W.A. $710m 4.43%<br>Total / W.A.(3) $3,315m 4.17%<br>Corporate Debt Maturity Profile<br>Note: $ in millions. Excludes extension options and revolving credit facility which was undrawn as of June 30, 2021.<br>(1) The 2022 3.125% convertible notes were “in the money” on June 30, 2021 with a conversion price of $14.04 per share and a conversion of 71.2325 shares per $1,000 of principal using the Q2 ‘21<br>average closing stock price.<br>(2) Represents individual non-recourse mortgages on net lease assets, including consolidated mortgage debt on assets held by NLJV I.<br>(3) Rates presented after giving effect to interest rate hedges.<br>19<br>BB<br>Fitch Credit<br>Rating Upgrade<br>Stable<br>S&P Upwardly<br>Revised Outlook<br>3.8 years<br>w.a. debt<br>maturity |
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| IV. Appendix<br>20 |
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| Consolidated Statements of Operations<br>Note: $ in thousands.<br>21<br>Three Months Six Months<br>Ended June 30, Ended June 30,<br>2021 2020 2021 2020<br>Revenues<br>Operating lease income $45,544 $46,812 $92,988 $94,158<br>Interest income 8,973 15,439 19,623 32,655<br>Interest income from sales-type leases 8,689 8,295 17,316 16,650<br>Other income 10,064 10,292 24,354 30,660<br>Land development revenue 32,318 15,577 64,567 95,752<br>Total revenues $105,588 $96,415 $218,848 $269,875<br>Cost and Expenses<br>Interest expense $39,417 $41,950 $78,980 $85,341<br>Real estate expense 18,289 14,276 35,183 36,774<br>Land development cost of sales 30,803 16,287 60,126 93,346<br>Depreciation and amortization 14,660 14,300 30,115 28,786<br>General and administrative 15,603 14,254 31,534 32,256<br>General and administrative – stock-based compensation 14,791 4,744 20,299 21,014<br>(Recovery of) provision for loan losses (2,263) 2,067 (6,057) 6,070<br>(Recovery of) provision for losses on net investment in leases (265) 534 (1,866) 1,826<br>Impairment of assets - 4,783 1,785 6,491<br>Other expense 211 203 464 277<br>Total costs and expenses $131,246 $113,398 $250,563 $312,181<br>Income from sales of real estate 2,210 62 2,822 62<br>Loss from operations before earnings from equity method<br>investments and other items ($23,448) ($16,921) ($28,893) ($42,244)<br>Earnings from equity method investments 12,697 2,586 25,466 19,198<br>Income tax expense (665) (28) - (88)<br>Loss on early extinguishment of debt, net - - - (4,115)<br>Net loss ($11,416) ($14,363) ($3,427) ($27,249)<br>Net (income) attributable to noncontrolling interests (2,253) (3,098) (4,773) (5,789)<br>Net loss attributable to iStar ($13,669) ($17,461) ($8,200) ($33,038)<br>Preferred dividends (5,874) (5,874) (11,748) (11,748)<br>Net loss allocable to common shareholders ($19,543) ($23,335) ($19,948) ($44,786) |
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| Earnings per Share<br>Note: In thousands, except per share data.<br>(1) Allocable to common shareholders after the effect of preferred dividends, non-controlling interests and income from sales of real estate. 22<br>Three Months Six Months<br>Ended June 30, Ended June 30,<br>Earnings Information for Common Shares 2021 2020 2021 2020<br>Net income (loss)(1)<br>Basic ($0.27) ($0.31) ($0.27) ($0.58)<br>Diluted ($0.27) ($0.31) ($0.27) ($0.58)<br>Adjusted earnings (loss)<br>Basic $0.16 ($0.04) $0.47 $0.10<br>Diluted $0.15 ($0.04) $0.45 $0.10<br>Weighted average shares outstanding<br>Basic 72,872 76,232 73,374 76,838<br>Diluted (for net income) 72,872 76,232 73,374 76,838<br>Diluted (for adjusted earnings) 77,774 76,232 77,369 76,995<br>Common shares outstanding at the end of period 72,419 75,559 72,419 75,559 |
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| Adjusted Earnings Reconciliation<br>23<br>Three Months Six Months<br>Ended June 30, Ended June 30,<br>2021 2020 2021 2020<br>Net income (loss) allocable to common shareholders ($19,543) ($23,335) ($19,948) ($44,786)<br>Add: Depreciation and amortization 16,712 15,675 34,341 30,731<br>Add: Stock-based compensation expense 14,791 4,744 20,299 21,014<br>Add: Non-cash loss on early extinguishment of debt/preferred - - - 799<br>Adjusted earnings (loss) allocable to common shareholders $11,960 ($2,916) $34,692 $7,758<br>Note: $ in thousands.<br>In 2019, we announced a new business strategy that would focus our management personnel and our investment resources primarily on scaling our Ground Lease platform. As part of this<br>strategy, we accelerated the monetization of legacy assets, reducing our legacy portfolio to approximately 14% of our overall portfolio as of June 30, 2021, and deployed a substantial portion of<br>the proceeds into additional investments in SAFE and new loan and net lease originations relating to the Ground Lease business. Adjusted earnings is a non-GAAP metric management uses to<br>assess our execution of this strategy and the performance of our operations. Adjusted earnings reflects impairment charges and loan provisions in the same period in which they are recognized<br>in net income (loss) prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”).<br>Adjusted earnings is used internally as a supplemental performance measure adjusting for certain items to give management a view of income more directly derived from operating activities in<br>the period in which they occur. Adjusted earnings is calculated as net income (loss) allocable to common shareholders, prior to the effect of depreciation and amortization, including our<br>proportionate share of depreciation and amortization from equity method investments and excluding depreciation and amortization allocable to noncontrolling interests, stock-based<br>compensation expense, the non-cash portion of loss on early extinguishment of debt and the liquidation preference recorded as a premium above book value on the redemption of preferred<br>stock (“Adjusted Earnings”).<br>Adjusted Earnings should be examined in conjunction with net income (loss) as shown in our consolidated statements of operations. Adjusted Earnings should not be considered as an<br>alternative to net income (loss) (determined in accordance with GAAP), or to cash flows from operating activities (determined in accordance with GAAP), as a measure of our liquidity, nor is<br>Adjusted Earnings indicative of funds available to fund our cash needs or available for distribution to shareholders. Rather, Adjusted Earnings is an additional measure we use to analyze our<br>business performance because it excludes the effects of certain non-cash charges that we believe are not necessarily indicative of our operating performance. It should be noted that our<br>manner of calculating Adjusted Earnings may differ from the calculations of similarly-titled measures by other companies. |
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| Consolidated Balance Sheets<br>Note: $ in thousands.<br>24<br>As of As of<br>June 30, 2021 December 31, 2020<br>Assets<br>Real Estate<br>Real estate, at cost $1,657,173 $1,752,053<br>Less: accumulated depreciation (290,167) (267,772)<br>Real estate, net 1,367,006 1,484,281<br>Real estate available and held for sale 99,201 5,212<br>Total real estate 1,466,207 1,489,493<br>Net investment in leases 477,798 429,101<br>Land and development, net 381,719 430,663<br>Loans receivable and other lending investments, net 454,960 732,330<br>Loan receivable held for sale 62,525 -<br>Other investments 1,275,954 1,176,560<br>Cash and cash equivalents 154,941 98,633<br>Finance lease right of use assets 142,985 143,727<br>Accrued interest and operating lease income receivable, net 7,328 10,061<br>Deferred operating lease income receivable, net 63,339 58,128<br>Deferred expenses and other assets, net 279,894 293,112<br>Total Assets $4,767,650 $4,861,808<br>Liabilities and Equity<br>Accounts payable, accrued expenses, and other liabilities $315,337 $317,402<br>Finance lease liabilities 151,925 150,520<br>Liabilities associated with properties held for sale 2,201 27<br>Loan participations payable, net - 42,501<br>Debt obligations, net 3,289,481 3,286,975<br>Total Liabilities $3,758,944 $3,797,425<br>Total iStar shareholders’ equity $811,554 $870,969<br>Noncontrolling interests 197,152 193,414<br>Total Equity $1,008,706 $1,064,383<br>Total Liabilities and Equity $4,767,650 $4,861,808 |
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| Adjusted Common Equity Reconciliation<br>Note: Amounts in thousands, except for per share data. Q2 ‘21 SAFE mark-to-market value of iStar’s investment in Safehold is $2,764m, calculated as iStar’s ownership of 35.2m shares of SAFE at the June 30, 2021<br>closing stock price of $78.50. Q2 ‘20 SAFE mark-to-market value of iStar’s investment in Safehold is $1,923m calculated as iStar’s ownership of 33.4m shares of SAFE at the June 30, 2020 closing stock price of $57.49.<br>We use adjusted common equity, a non-GAAP financial measure, as a supplemental measure to give management a view of equity allocable to common shareholders prior to the impact of certain non-cash GAAP<br>measures. Management believes that adjusted common equity provides a useful measure for investors to consider in addition to total shareholders equity because cumulative effect of depreciation and<br>amortization expenses and CECL allowances calculated under GAAP may not necessarily reflect an actual reduction in the value of the Company’s assets. Adjusted common equity should be examined in<br>conjunction with total shareholders’ equity as shown on the Company’s consolidated balance sheet. Adjusted common equity should not be considered an alternative to total shareholders’ equity (determined in<br>accordance with GAAP), nor is adjusted common equity indicative of funds available for distribution to shareholders. It should be noted that our manner of calculating adjusted common equity may differ from the<br>calculations of similarly-titled measures by other companies.<br>(1) Net of amounts allocable to non-controlling interests and includes accumulated depreciation and amortization associated with real estate available and held for sale.<br>(2) Presented diluted for the 2022 3.125% convertible notes which were “in the money” on June 30, 2021 based on their current conversion ratio of 71.2325 shares per $1,000 of principal, which represents a strike<br>price of $14.04 per share using the Q2 ‘21 average closing stock price. The convertible notes were “out of the money” on June 30, 2020. 25<br>As of<br>June 30, 2021<br>As of<br>June 30, 2020<br>Total shareholders' equity $811,554 $921,932<br>Less: Liquidation preference of preferred stock (305,000) (305,000)<br>Common shareholders equity $506,554 $616,932<br>Add: Accumulated depreciation and amortization(1) 318,840 278,455<br>Add: Proportionate share of depreciation and amortization within equity method investments 61,757 38,784<br>Add: CECL allowance 16,557 27,213<br>Adjusted common equity $903,708 $961,384<br>Common shares outstanding – basic 72,419 75,559<br>Common shares outstanding – convertible dilution(2)<br>77,120 75,559<br>Common equity per share with convertible dilution(2)<br>$6.57 $8.16<br>Common equity per share with SAFE MTM and convertible dilution(2)<br>$29.59 $22.50<br>Adjusted common equity per share with convertible dilution(2)<br>$11.72 $12.72<br>Adjusted common equity per share with SAFE MTM and convertible dilution(2)<br>$34.37 $26.79 |
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| Q2 ‘21 Gross Book Value Reconciliation<br>Note: $ in millions. Figures in this table may not foot due to rounding.<br>(1) Market value of iStar’s investment in Safehold is $2,764m, calculated as iStar’s ownership of 35.2m shares of SAFE at the June 30, 2021 closing stock price of $78.50. Unrealized gain is<br>calculated as the difference between the $2,764m market value and the $1,018m Gross Book Value of iStar’s investment in Safehold. 26<br>Real Estate<br>Finance<br>Net<br>Lease<br>Operating<br>Properties<br>Land &<br>Development<br>Corporate /<br>Other Total<br>Real estate, net - $1,273 $94 - - $1,367<br>Real estate available and held for sale - - 99 - - 99<br>Net investment in leases - 478 - - - 478<br>Land and development, net - - - 382 - 382<br>Loans receivable and other lending<br>investments, net 408 47 - - - 455<br>Loan receivable held for sale - 63 - - - 63<br>Real estate-related intangibles, net - 102 3 - - 105<br>Other investments 47 1,073 55 14 87 1,276<br>Net Book Value $455 $3,036 $251 $395 $87 $4,224<br>Add: Accumulated depreciation and CECL<br>allowance 6 280 20 11 - 317<br>Add: Accumulated amortization related to<br>intangibles - 32 12 - - 44<br>Add: Proportionate share of joint venture<br>accumulated depreciation and amortization - 38 24 - - 62<br>Gross Book Value $460 $3,387 $307 $406 $87 $4,646<br>Add: Cash - - - - 155 155<br>Add: SAFE MTM(1)<br>- 1,747 - - - 1,747<br>Portfolio Gross Book Value $460 $5,133 $307 $406 $242 $6,548 |
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| Glossary<br>Annualized Base Rent (ABR) Contractual cash base rent for the current quarter, annualized.<br>Funding / Capex<br>(Net Lease, Operating Properties, Land & Development)<br>Acquisition price, capitalized acquisition costs, capital expenditures, contributions to equity method investments,<br>capitalized payroll and capitalized interest.<br>Funding / Capex<br>(Real Estate Finance)<br>Cash funded on loans, plus deferred interest capitalized to the loan balance, exclusive of original issued discount,<br>origination and arrangement fees held back at origination.<br>Gross Book Value<br>(Net Lease, Operating Properties, Land & Development)<br>Basis assigned to physical real estate property (land & building), net of any impairments taken after acquisition<br>date and net of basis reductions associated with unit / parcel sales, plus our basis in equity method investments,<br>plus lease related intangibles, capitalized leasing costs and excluding accumulated depreciation and<br>amortization, and for equity method investments, excluding the effect of our share of accumulated depreciation<br>and amortization.<br>Gross Book Value<br>(Real Estate Finance)<br>Principal funded including any deferred capitalized interest receivable, plus protective advances, exit fee<br>receivables and any unamortized origination / modification costs, plus our basis in equity method investments, less<br>purchase discounts and specific reserves. This amount is not reduced for CECL allowances.<br>Net Book Value<br>(Net Lease, Operating Properties, Land & Development)<br>Gross Book Value net of accumulated depreciation and amortization.<br>Net Book Value<br>(Real Estate Finance)<br>Gross Book Value for Real Estate Finance less CECL allowances.<br>Proceeds<br>(Net Lease, Operating Properties, Land & Development)<br>Includes sales price for assets sold, less selling costs, less seller financing plus return of capital and distributed<br>proceeds arising from sales within our equity method investments.<br>Proceeds<br>(Real Estate Finance)<br>Collection of principal, deferred and capitalized interest, exit fees, origination fees previously netted against<br>principal at inception, or original issue discount. Includes proceeds from sales of securities.<br>Yield<br>(Net Lease)<br>Calculated as GAAP operating lease income less operating expenses for the quarter, annualized, divided by the<br>average Gross Book Value during the quarter.<br>Yield<br>(Real Estate Finance)<br>Interest income, for the quarter, annualized, divided by the average Gross Book Value of Real Estate Finance.<br>27<br>Disclaimer: Set forth in the Glossary are the current definitions of certain items that we use in this presentation. This<br>Glossary is intended to facilitate a reader’s understanding of this presentation. There can be no assurance that we<br>will not modify these terms in future presentations as we deem necessary or appropriate. |
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