Safehold Inc 10-Q for FY2025 Q2
Safehold Inc. (SAFE)
About this 10-Q
Safehold Inc filed this 10-Q on August 6, 2025, covering the quarter ended June 30, 2025 (FY2025 Q2).
Headline figures
Quarter ended June 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $93.84M
- up 4.4% from $89.9M a year earlier
- Net income
- $27.95M
- down 5.8% from net income of $29.67M a year earlier
- Diluted EPS
- $0.39
- down 7.1% from $0.42 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File No.
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of August 4, 2025, there were
TABLE OF CONTENTS
PART I. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Financial Statements
Safehold Inc.
Consolidated Balance Sheets(1)
(In thousands)
(unaudited)
| | June 30, | | December 31, | ||
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| 2025 |
| 2024 | ||
ASSETS |
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Net investment in sales-type leases ($ | | $ | | | $ | |
Ground Lease receivables, net ($ | |
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Real estate |
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Real estate, at cost | | | | | | |
Less: accumulated depreciation | |
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Real estate, net | |
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Real estate-related intangible assets, net | |
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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 | |
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Loans receivable, net ($ | | | | | | — |
Loans receivable, net - related party ($ | | | | | | |
Equity investments | |
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Cash and cash equivalents | |
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Restricted cash | |
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Deferred tax asset, net | | | | | | |
Deferred operating lease income receivable | |
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Deferred expenses and other assets, net(2) | |
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Total assets | | $ | | | $ | |
LIABILITIES AND EQUITY | |
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Liabilities: | |
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Accounts payable, accrued expenses and other liabilities | | $ | | | $ | |
Real estate-related intangible liabilities, net | |
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Debt obligations, net | |
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Total liabilities | |
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Commitments and contingencies (refer to Note 11) | |
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Equity: | |
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Safehold Inc. shareholders' equity: | |
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Common stock, $ | |
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Additional paid-in capital | |
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Retained earnings | |
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Accumulated other comprehensive income (loss) | |
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Total Safehold Inc. shareholders' equity | |
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Noncontrolling interests | |
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Total equity | |
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Total liabilities and equity | | $ | | | $ | |
| (1) |
| (2) |
The accompanying notes are an integral part of the consolidated financial statements.
1
Safehold Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
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| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Revenues: |
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Interest income from sales-type leases | | $ | | | $ | | | $ | | | $ | |
Operating lease income | | | | | | | | | | | | |
Interest income(1) | | | | | | | | | | | | |
Other income(2) | |
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Total revenues | |
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Costs and expenses: | |
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Interest expense | |
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Real estate expense | |
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Depreciation and amortization | |
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General and administrative | |
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Provision for (recovery of) credit losses | | | | | | | | | | | | |
Other expense | |
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Total costs and expenses | |
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Income (loss) from operations before other items | |
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Earnings (losses) from equity method investments | |
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Net income (loss) before income taxes | |
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Income tax expense | | | ( | | | ( | | | ( | | | ( |
Net income (loss) | | | | | | | | | | | | |
Net (income) loss attributable to noncontrolling interests | |
| ( | |
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| ( | |
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Net income (loss) attributable to Safehold Inc. common shareholders | | $ | | | $ | | | $ | | | $ | |
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Per common share data: | |
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Net income (loss) | |
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Basic | | $ | | | $ | | | $ | | | $ | |
Diluted | | $ | | | $ | | | $ | | | $ | |
Weighted average number of common shares: | |
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Basic | |
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Diluted | |
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| (1) |
| (2) |
The accompanying notes are an integral part of the consolidated financial statements.
2
Safehold Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(unaudited)
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
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| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Net income (loss) | | $ | | | $ | | | $ | | | $ | |
Other comprehensive income (loss): | |
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Reclassification of (gains) losses on derivatives into earnings | |
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Unrealized gain (loss) on derivatives | |
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Other comprehensive income (loss): | |
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Comprehensive income (loss) | |
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Comprehensive (income) loss attributable to noncontrolling interests | |
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Comprehensive income (loss) attributable to Safehold Inc. | | $ | | | $ | | | $ | | | $ | |
The accompanying notes are an integral part of the consolidated financial statements.
3
Safehold Inc.
Consolidated Statements of Changes in Equity
(In thousands)
(unaudited)
| | | | | | | | | | | | Retained | | Accumulated | | | | | | | ||
| | Redeemable | | | Common | | Additional | | Earnings | | Other | | | | | | | |||||
| | Noncontrolling | | | Stock at | | Paid-In | | (Accumulated | | Comprehensive | | Noncontrolling | | Total | |||||||
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| Interests(1) |
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| Par |
| Capital |
| Deficit) |
| Income (Loss) |
| Interests |
| Equity | |||||||
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Balance at March 31, 2025 | | $ | — | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net income (loss) | |
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Issuance of common stock, net / amortization | |
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Dividends declared ($ | |
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| ( | |
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Change in accumulated other comprehensive income (loss) | |
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Distributions to noncontrolling interests | | | — | | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance at June 30, 2025 | | $ | — | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
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Balance at March 31, 2024 | | $ | | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net income (loss) | |
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Issuance of common stock, net / amortization | |
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| ( | |
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Dividends declared ($ | |
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| ( | |
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Change in accumulated other comprehensive income (loss) | |
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Contributions from noncontrolling interests | | | — | | | | — | | | — | | | — | | | — | | | | | | |
Distributions to noncontrolling interests | |
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Redemption of noncontrolling interests | | | ( | | | | — | | | — | | | — | | | — | | | — | | | — |
Balance at June 30, 2024 | | $ | — | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
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Balance at December 31, 2024 | | $ | — | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net income (loss) | | | — | | |
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Issuance of common stock, net / amortization | | | — | | |
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Dividends declared ($ | | | — | | |
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Change in accumulated other comprehensive income (loss) | | | — | | |
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Distributions to noncontrolling interests | | | — | | |
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Redemption of noncontrolling interests | | | — | | | | — | | | ( | | | — | | | — | | | ( | | | ( |
Balance at June 30, 2025 | | $ | — | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
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Balance at December 31, 2023 | | $ | | | | $ | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Net income (loss) | | | ( | | |
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Issuance of common stock, net / amortization | | | — | | |
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Dividends declared ($ | | | — | | |
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| ( |
Change in accumulated other comprehensive income (loss) | | | — | | |
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Contribution from noncontrolling interests | | | — | | | | — | | | — | | | — | | | — | | | | | | |
Distributions to noncontrolling interests | | | — | | |
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Redemption of noncontrolling interests | | | ( | | | | — | | | — | | | — | | | — | | | — | | | — |
Balance at June 30, 2024 | | $ | — | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
| (1) |
The accompanying notes are an integral part of the consolidated financial statements.
4
Safehold Inc.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
| | For the Six Months Ended | | ||||
| | June 30, | | ||||
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| 2025 |
| 2024 |
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Cash flows from operating activities: |
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Net income (loss) | | $ | | | $ | | |
Adjustments to reconcile net income to cash flows from operating activities: | |
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Depreciation and amortization | |
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Stock-based compensation expense | |
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Deferred operating lease income | |
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Non-cash interest income from sales-type leases | |
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Non-cash interest expense | |
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Amortization of real estate-related intangibles, net | |
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Write-off of investment in preferred equity | | | | | | — | |
Provision for credit losses | | | | | | | |
Earnings from equity method investments | |
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Distributions from operations of equity method investments | |
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Amortization of premium, discount and deferred financing costs on debt obligations, net | |
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Other operating activities | |
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Changes in assets and liabilities: | |
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Changes in deferred expenses and other assets, net | |
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Changes in accounts payable, accrued expenses and other liabilities | |
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Cash flows provided by (used in) operating activities | |
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Cash flows from investing activities: | |
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Origination/acquisition of net investment in sales-type leases and Ground Lease receivables | |
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Origination of loans receivable, net | | | ( | | | — | |
Contributions to equity method investments | | | ( | | | ( | |
Distributions from equity method investments | | | | | | | |
Net proceeds received from sale of real estate available and held for sale | | | | | | | |
Return of deposits on Ground Lease investments | |
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Funding of cash collateral for debt obligations | | | — | | | ( | |
Proceeds received from derivative transactions | | | | | | | |
Proceeds received from the settlement of derivative transactions | | | — | | | | |
Other investing activities | |
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Cash flows provided by (used in) investing activities | |
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Cash flows from financing activities: | |
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Proceeds from debt obligations | |
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Repayments of debt obligations | |
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Payments for deferred financing costs | |
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Dividends paid to common shareholders | |
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Payment of offering costs | |
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Payments for withholding taxes upon vesting for stock-based compensation | | | ( | | | ( | |
Redemption of noncontrolling interests | | | ( | | | ( | |
Distributions to noncontrolling interests | |
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Contributions from noncontrolling interests | |
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Cash flows provided by (used in) financing activities | |
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Changes in cash, cash equivalents and restricted cash | |
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Cash, cash equivalents and restricted cash at beginning of period | |
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Cash, cash equivalents and restricted cash at end of period | | $ | | | $ | | |
Reconciliation of cash and cash equivalents and restricted cash presented on the consolidated statements of cash flows | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Restricted cash | | | | | | |
Total cash and cash equivalents and restricted cash | | $ | | | $ | |
Supplemental disclosure of non-cash investing and financing activity: | |
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Dividends declared to common shareholders | | $ | | | $ | |
Non-cash interest accrued to debt balances | |
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Accrued finance costs | |
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Accrued loan acquisition costs | |
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Real estate transferred to real estate available and held for sale | | | — | | | |
The accompanying notes are an integral part of the consolidated financial statements.
5
Note 1—Business and Organization
Business—On March 31, 2023, Safehold Inc. (“Old Safe”) merged with and into iStar Inc. (“iStar”), at which time Old Safe ceased to exist and iStar continued as the surviving corporation and changed its name to “Safehold Inc.” (the “Merger”). 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 iStar) and its consolidated subsidiaries following the consummation of the Merger. The Company is internally managed and operates its business through
The Company intends to target investments in long-term Ground Leases in which: (i) the initial cost of its Ground Lease represents
Organization—The Company is a Maryland corporation and its common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “SAFE.” The Company (then known as iStar) elected to be treated as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, commencing with the tax year ended December 31, 1998.
The Company conducts all of its business and owns all of its properties through Safehold GL Holdings LLC (“Portfolio Holdings”), which, prior to its conversion into a Delaware limited liability company in connection with the Merger, was named Safehold Operating Partnership LP. The Company, management of the Company, employees and former employees of the Company, affiliates of MSD Partners, L.P. (“MSD Partners”) and other outside investors own the issued and outstanding equity of Portfolio Holdings.
Safehold Management Services Inc. (“SpinCo Manager”), a Delaware corporation and a subsidiary of the Company, is party to a management agreement with Star Holdings dated as of March 31, 2023, as amended, pursuant to
6
which SpinCo Manager is operating and pursuing the orderly monetization of Star Holding’s assets. Star Holdings paid SpinCo Manager an annual management fee of $
Note 2—Basis of Presentation and Principles of Consolidation
Basis of Presentation—The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10-01 of Regulation S-X for interim financial statements. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. These unaudited consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”).
The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain prior year amounts have been reclassified in the Company's consolidated financial statements and the related notes to conform to the current period presentation.
In the opinion of management, the accompanying consolidated financial statements contain all adjustments consisting of normal recurring adjustments necessary for a fair statement of the results for the interim periods presented. Such operating results may not be indicative of the expected results for any other interim periods or the entire year.
Principles of Consolidation—The consolidated financial statements include the accounts and operations of the Company, its wholly-owned subsidiaries and VIEs for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
Consolidated VIEs—The Company consolidates VIEs for which it is considered the primary beneficiary. As of June 30, 2025, the total assets of these consolidated VIEs were $
7
Note 3—Summary of Significant Accounting Policies
Significant Accounting Policies
Loans receivable, net—Loans receivable, net includes senior mortgages that the Company originated to certain of its Ground Lease tenants in connection with Ground Leases (refer to Note 6). The Company’s loans receivable are classified as held-for-investment and are reported at their outstanding unpaid principal balance net of any unamortized acquisition premiums or discounts, unamortized deferred loan costs or fees and credit loss allowances.
The Company performs a quarterly analysis of its loans 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 other economic factors. The Company estimates its expected loss on its loans receivable (including unfunded commitments) based on relevant information including current market conditions and reasonable and supportable forecasts that affect the collectability of its investments. The estimate of the Company’s expected loss requires significant judgment. The Company calculates its expected loss through the use of third-party historical market data for loans with similar characteristics to the Company’s loan portfolio. The Company also utilizes a third-party to provide forecasts to incorporate current and future economic conditions that may impact the performance of the commercial real estate assets securing its investments.
The Company will consider a loan to be non-performing and place it on non-accrual status at such time as: (1) interest payments become 90 days delinquent; (2) it has a maturity default; or (3) management determines it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan. 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.
The Company made the accounting policy election to record accrued interest on its loans receivable 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 June 30, 2025, the Company had $
Interest Income—Interest income on the Company’s loans receivable (refer to Note 6) is recognized on an accrual basis using the effective interest method and is recorded in “Interest income” in the Company’s consolidated statements of operations.
8
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, for substantially the full term of the asset or liability; and Level 3: prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The Company determines the estimated fair values of financial assets and liabilities based on a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the Company and the Company’s own assumptions about market participant assumptions.
The following table presents the carrying value and fair value for the Company’s financial instruments ($ in millions):
| | As of June 30, 2025 | | As of December 31, 2024 | ||||||||
| | Carrying | | Fair | | Carrying | | Fair | ||||
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| Value |
| Value |
| Value |
| Value | ||||
Assets | | | | | | | | | | | | |
Net investment in sales-type leases(1) | | $ | | | $ | | | $ | | | $ | |
Ground Lease receivables(1) | |
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Loans receivable, net(1) | | | | | | | | | — | | | — |
Loans receivable, net - related party(1) | | | | | | | | | | | | |
Cash and cash equivalents(2) | |
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Restricted cash(2) | |
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Liabilities | | | | | | | | | | | | |
Debt obligations, net(1) | |
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Level 1 | | | | | | | | | | | | |
Level 3 | | | | | | | | | | | | |
Total debt obligations, net | | | | |
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| (1) | The fair value of the Company’s net investment in sales-type leases, Ground Lease receivables, loans receivable, net and loans receivable, net – related party are classified as Level 3 within the fair value hierarchy. The fair value of the Company’s debt obligations traded in secondary markets are classified as Level 1 within the fair value hierarchy and the fair value of the Company’s debt obligations not traded in secondary markets are classified as Level 3 within the fair value hierarchy. |
| (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. |
Redeemable Noncontrolling Interests—In February 2022, the Company sold
9
The Company classified these redeemable Caret units in accordance with Accounting Standards Codification (“ASC”) 480: Distinguishing Liabilities from Equity. ASC 480-10-S99-3A requires that equity securities redeemable at the option of the holder be classified outside of permanent stockholders’ equity. The Company classified redeemable Caret units as “Redeemable noncontrolling interests” in its consolidated balance sheets and consolidated statements of changes in equity. The redeemable noncontrolling interest’s carrying amount was equal to the higher of (i) the initial carrying amount, increased or decreased for the redeemable noncontrolling interest’s share of net income or loss and dividends; or (ii) the redemption value.
Note 4—Net Investment in Sales-type Leases and Ground Lease Receivables
The Company classifies certain of its Ground Leases as sales-type leases and records the leases within “Net investment in sales-type leases” on the Company’s consolidated balance sheets and records interest income in “Interest income from sales-type leases” in the Company’s consolidated statements of operations. In addition, the Company may enter into transactions whereby it acquires land and enters into Ground Leases directly with the seller. These Ground Leases qualify as sales-type leases and, as such, do not qualify for sale leaseback accounting and are accounted for as financing receivables in accordance with ASC 310 - Receivables and are included in “Ground Lease receivables” on the Company’s consolidated balance sheets. The Company records interest income from Ground Lease receivables in “Interest income from sales-type leases” in the Company’s consolidated statements of operations.
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 $
In January 2024, the Company acquired a Ground Lease from the Ground Lease Plus Fund for $
10
The Company’s net investment in sales-type leases were comprised of the following ($ in thousands):
|
| June 30, 2025 |
| December 31, 2024 | ||
Total undiscounted cash flows(1) | | $ | | | $ | |
Unguaranteed estimated residual value(1) | |
| | |
| |
Present value discount | |
| ( | |
| ( |
Allowance for credit losses | | | ( | | | ( |
Net investment in sales-type leases | | $ | | | $ | |
| (1) | As of June 30, 2025, total discounted cash flows were approximately $ |
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, 2025 and 2024 ($ in thousands):
| | Net Investment in | | Ground Lease | | | | ||
|
| Sales-type Leases |
| Receivables |
| Total | |||
Six Months Ended June 30, 2025 |
| |
|
| |
|
| |
|
Beginning balance | | $ | | | $ | | | $ | |
Origination/acquisition/fundings(1) | |
| | |
| | |
| |
Accretion | |
| | |
| | |
| |
(Provision for) recovery of credit losses | | | ( | | | ( | | | ( |
Ending balance(2) | | $ | | | $ | | | $ | |
| | Net Investment in | | Ground Lease | | | | ||
|
| Sales-type Leases |
| Receivables |
| Total | |||
Six Months Ended June 30, 2024 |
| |
|
| |
|
| |
|
Beginning balance | | $ | | | $ | | | $ | |
Origination/acquisition/fundings(1) | |
| | |
| | |
| |
Accretion | | | | | | | | | |
(Provision for) recovery of credit losses | |
| ( | |
| ( | |
| ( |
Ending balance(2) | | $ | | | $ | | | $ | |
| (1) | The net investment in sales-type leases is initially measured at the present value of the fixed and determinable lease payments, including any guaranteed or unguaranteed estimated residual value of the asset at the end of the lease, discounted at the rate implicit in the lease. 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 June 30, 2025 and December 31, 2024, 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, 2025, the Company’s weighted average accrual rate for its net investment in sales-type leases and Ground Lease receivables was |
11
Allowance for Credit Losses—Changes in the Company’s allowance for credit losses on net investment in sales-type leases for the three and six months ended June 30, 2025 and 2024 were as follows ($ in thousands):
|
| Net investment in sales-type leases | ||||||||||
| | Stabilized | | Development | | Unfunded | | | ||||
Three Months Ended June 30, 2025 | | Properties | | Properties | | Commitments | | Total | ||||
Allowance for credit losses at beginning of period | | $ | | | $ | | | $ | — | | $ | |
Provision for (recovery of) credit losses(1) | | | | |
| | |
| | |
| |
Allowance for credit losses at end of period(2) | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Three Months Ended June 30, 2024 | | | | | | | | | ||||
Allowance for credit losses at beginning of period | | $ | | | $ | | | $ | | | $ | |
Provision for (recovery of) credit losses(1) | | | | |
| ( | |
| ( | |
| |
Allowance for credit losses at end of period(2) | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Six Months Ended June 30, 2025 | | | | | | | | | ||||
Allowance for credit losses at beginning of period | | $ | | | $ | | | $ | — | | $ | |
Provision for (recovery of) credit losses(1) | | | | |
| | |
| | |
| |
Allowance for credit losses at end of period(2) | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Six Months Ended June 30, 2024 | | | | | | | | | ||||
Allowance for credit losses at beginning of period | | $ | | | $ | | | $ | — | | $ | |
Provision for (recovery of) credit losses(1) | | | | |
| | |
| | |
| |
Allowance for credit losses at end of period(2) | | $ | | | $ | | | $ | | | $ | |
| (1) | During the three months ended June 30, 2025 and 2024, the Company recorded a provision for credit losses on net investment in sales-type leases of $ |
| (2) | Allowance for credit losses on unfunded commitments is recorded in “Accounts payable and accrued expenses” on the Company’s consolidated balance sheets. |
12
Changes in the Company’s allowance for credit losses on Ground Lease receivables for the three and six months ended June 30, 2025 and 2024 were as follows ($ in thousands):
|
| Ground Lease receivables | ||||||||||
| | Stabilized | | Development | | Unfunded | | | ||||
Three Months Ended June 30, 2025 | | Properties | | Properties | | Commitments | | Total | ||||
Allowance for credit losses at beginning of period | | $ | | | $ | | | $ | | | $ | |
Provision for (recovery of) credit losses(1) | | | | |
| | |
| | |
| |
Allowance for credit losses at end of period(2) | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Three Months Ended June 30, 2024 | | | | | | | | | ||||
Allowance for credit losses at beginning of period | | $ | | | $ | | | $ | | | $ | |
Provision for (recovery of) credit losses(1) | | | | |
| ( | |
| ( | |
| |
Allowance for credit losses at end of period(2) | | $ | | | $ | | | $ | | | $ | |
|
| | ||||||||||
Six Months Ended June 30, 2025 | | | | | | | | | ||||
Allowance for credit losses at beginning of period | | $ | | | $ | | | $ | | | $ | |
Provision for (recovery of) credit losses(1) | | | | |
| | |
| | |
| |
Allowance for credit losses at end of period(2) | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Six Months Ended June 30, 2024 | | | | | | | | | ||||
Allowance for credit losses at beginning of period | | $ | | | $ | | | $ | | | $ | |
Provision for (recovery of) credit losses(1) | | | | |
| | |
| ( | |
| |
Allowance for credit losses at end of period(2) | | $ | | | $ | | | $ | | | $ | |
| (1) | During the three months ended June 30, 2025 and 2024, the Company recorded a provision for credit losses on Ground Lease receivables of $ |
| (2) | Allowance for credit losses on unfunded commitments is recorded in “Accounts payable and accrued expenses” on the Company’s consolidated balance sheets. |
13
The Company’s amortized cost basis in net investment in sales-type leases and Ground Lease receivables, presented by year of origination and by stabilized or development status, was as follows as of June 30, 2025 ($ in thousands):
|
| Year of Origination |
|
| | ||||||||||||||||
|
| 2025 |
| 2024 |
| 2023 |
| 2022 |
| 2021 |
| Prior to 2021 |
| Total | |||||||
Net investment in sales-type leases | | | | | | | | | | | | | | | | | | | | | |
Stabilized properties | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Development properties | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Total | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
|
| Year of Origination |
|
| | ||||||||||||||||
|
| 2025 |
| 2024 |
| 2023 |
| 2022 |
| 2021 |
| Prior to 2021 |
| Total | |||||||
Ground Lease receivables | | | | | | | | | | | | | | | | | | | | | |
Stabilized properties | | $ | | | $ | — | | $ | | | $ | | | $ | | | $ | | | $ | |
Development properties | |
| | |
| | |
| | |
| | |
| | |
| — | |
| |
Total | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
The Company’s amortized cost basis in net investment in sales-type leases and Ground Lease receivables, presented by year of origination and by stabilized or development status, was as follows as of December 31, 2024 ($ in thousands):
|
| Year of Origination |
|
| | ||||||||||||||||
|
| 2024 |
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| Prior to 2020 |
| Total | |||||||
Net investment in sales-type leases | | | | | | | | | | | | | | | | | | | | | |
Stabilized properties | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Development properties | |
| | |
| | |
| | |
| | |
| — | |
| | |
| |
Total | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
|
| Year of Origination |
|
| | ||||||||||||||||
|
| 2024 |
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| Prior to 2020 |
| Total | |||||||
Ground Lease receivables | | | | | | | | | | | | | | | | | | | | | |
Stabilized properties | | $ | — | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Development properties | |
| | |
| | |
| | |
| | |
| — | |
| — | |
| |
Total | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
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, 2025, are as follows by year ($ in thousands):
| | | |
| | |
| Fixed Bumps |
| | | |
| | Fixed Bumps | | | | | with | | | | ||
| | with Inflation | | Fixed | | Percentage | | | | |||
|
| Adjustments |
| Bumps |
| Rent |
| Total | ||||
2025 (remaining six months) | | $ | | | $ | | | $ | | | $ | |
2026 | |
| | |
| | |
| | |
| |
2027 | |
| | |
| | |
| | |
| |
2028 | |
| | |
| | |
| | |
| |
2029 | | | | | | | | | | | | |
Thereafter | |
| | |
| | |
| | |
| |
Total undiscounted cash flows | | $ | | | $ | | | $ | | | $ | |
14
During the three and six months ended June 30, 2025 and 2024, the Company recognized interest income from sales-type leases in its consolidated statements of operations as follows ($ in thousands):
| | Net Investment | | Ground | | | | ||
| | in Sales-type | | Lease | | | | ||
Three Months Ended June 30, 2025 |
| Leases |
| Receivables |
| Total | |||
Cash | | $ | | | $ | | | $ | |
Non-cash | |
| | |
| | |
| |
Total interest income from sales-type leases | | $ | | | $ | | | $ | |
|
| Net Investment |
| Ground |
| | | ||
| | in Sales-type | | Lease | | | | ||
Three Months Ended June 30, 2024 | | Leases | | Receivables | | Total | |||
Cash | | $ | | | $ | | | $ | |
Non-cash | |
| | |
| | |
| |
Total interest income from sales-type leases | | $ | | | $ | | | $ | |
| | Net Investment | | Ground | | | | ||
| | in Sales-type | | Lease | | | | ||
Six Months Ended June 30, 2025 |
| Leases |
| Receivables |
| Total | |||
Cash | | $ | | | $ | | | $ | |
Non-cash | |
| | |
| | |
| |
Total interest income from sales-type leases | | $ | | | $ | | | $ | |
|
| Net Investment |
| Ground |
| | | ||
| | in Sales-type | | Lease | | | | ||
Six Months Ended June 30, 2024 | | Leases | | Receivables | | Total | |||
Cash | | $ | | | $ | | | $ | |
Non-cash | |
| | |
| | |
| |
Total interest income from sales-type leases | | $ | | | $ | | | $ | |
15
Note 5—Real Estate, Real Estate-Related Intangibles and Real Estate Available and Held for Sale
The Company’s real estate assets consist of the following ($ in thousands):
| | As of | ||||
|
| June 30, 2025 |
| December 31, 2024 | ||
Land and land improvements, at cost | | $ | | | $ | |
Buildings and improvements, at cost | |
| | |
| |
Less: accumulated depreciation | |
| ( | |
| ( |
Total real estate, net | | $ | | | $ | |
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 | | $ | | | $ | |
Real estate-related intangible assets, net consist of the following items ($ in thousands):
|
| As of June 30, 2025 | |||||||
| | Gross | | Accumulated | | Carrying | |||
| | Intangible | | Amortization | | Value | |||
Above-market lease assets, net(1) | | $ | | | $ | ( | | $ | |
In-place lease assets, net(2) | |
| | |
| ( | |
| |
Other intangible assets, net | |
| | |
| ( | |
| |
Total | | $ | | | $ | ( | | $ | |
| | As of December 31, 2024 | |||||||
| | Gross | | Accumulated | | Carrying | |||
|
| Intangible |
| Amortization |
| Value | |||
Above-market lease assets, net(1) | | $ | | | $ | ( | | $ | |
In-place lease assets, net(2) | |
| | |
| ( | |
| |
Other intangible assets, net | |
| | |
| ( | |
| |
Total | | $ | | | $ | ( | | $ | |
| (1) | Above-market lease assets are recognized during asset acquisitions when the present value of market rate rental cash flows over the term of a lease is less than the present value of the contractual in-place rental cash flows. Above-market lease assets are amortized over the non-cancelable term of the leases. |
| (2) | In-place lease assets are recognized during asset acquisitions and are estimated based on the value associated with the costs avoided in originating leases comparable to the acquired in-place leases as well as the value associated with lost rental revenue during the assumed lease-up period. In-place lease assets are amortized over the non-cancelable term of the leases. |
16
Real estate-related intangible liabilities, net consist of the following items ($ in thousands):
|
| As of June 30, 2025 | |||||||
| | Gross | | Accumulated | | Carrying | |||
| | Intangible | | Amortization | | Value | |||
Below-market lease liabilities(1) | | $ | | | $ | ( | | $ | |
|
| As of December 31, 2024 | |||||||
| | Gross | | Accumulated | | Carrying | |||
| | Intangible | | Amortization | | Value | |||
Below-market lease liabilities(1) | | $ | | | $ | ( | | $ | |
| (1) | Below-market lease liabilities are recognized during asset acquisitions when the present value of market rate rental cash flows over the term of a lease exceeds the present value of the contractual in-place rental cash flows. Below-market lease liabilities are amortized over the non-cancelable term of the leases |
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, 2025 and 2024 ($ in thousands):
| | Income Statement | | For the Three Months Ended June 30, | | ||||
Intangible asset |
| Location |
| 2025 |
| 2024 | | ||
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 | |
| | |
| | |
| | Income Statement | | For the Six Months Ended June 30, | ||||
Intangible asset |
| Location |
| 2025 |
| 2024 | ||
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):(1)
Year |
| Amount | |
2025 (remaining six months) | | $ | |
2026 | | | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
| (1) | As of June 30, 2025, the weighted average amortization period for the Company’s real estate-related intangible assets was approximately |
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, 2025 and 2024 ($ in thousands):
| | Income Statement |
| For the Three Months Ended June 30, | | ||||
Intangible liability |
| Location |
| 2025 |
| 2024 |
| ||
Below-market lease liabilities (increase to income) |
| Operating lease income | | $ | | | $ | |
|
| | Income Statement |
| For the Six Months Ended June 30, | ||||
Intangible liability |
| Location |
| 2025 |
| 2024 | ||
Below-market lease liabilities (increase to income) |
| Operating lease income | | $ | | | $ | |
17
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, 2025, are as follows by year ($ in thousands):
| | | |
| Fixed Bumps |
| | |
| | |
| Fixed |
| | | ||
| | | | | with | | | | | | | | Bumps with | | | | ||
| | Inflation- | | Inflation | | Fixed | | Percentage | | Percentage | | | | |||||
Year |
| Linked |
| Adjustments |
| Bumps |
| Rent(1) |
| Rent |
| Total | ||||||
2025 (remaining six months) | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
2026 | |
| | |
| | |
| | |
| | |
| | |
| |
2027 | |
| | |
| | |
| | | | | |
| | |
| |
2028 | |
| | |
| | | | | | | | | | | |
| |
2029 | | | | | | | | | | | | | | | — | | | |
Thereafter | |
| | |
| | |
| | |
| | |
| — | |
| |
| (2) | During the three months ended June 30, 2025 and 2024, the Company recognized $ |
Note 6—Loans Receivable, net
In the second quarter of 2025, the Company originated leasehold loans in conjunction with its Ground Leases. These leasehold loans allow the Company’s Ground Lease tenants to receive their full capital structure needs from one source. As of June 30, 2025, the Company had
Credit Characteristics—As part of the Company’s process for monitoring the credit quality of its leasehold loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans. Risk ratings, which range from 1 (lower risk) to 5 (higher risk), are based on judgments which are inherently uncertain, and there can be no assurance that actual performance will be similar to current expectations. The Company designates loans as non-performing at such time as: (1) interest payments become 90 days delinquent; (2) the loan has a maturity default; or (3) management determines it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan. All non-performing loans, if any, are placed on non-accrual status and income is only recognized in certain cases upon actual cash receipt. As of June 30, 2025, all of the Company’s leasehold loans were current in their payment status and had a risk rating of 3.
Allowance for Credit Losses—During the three and six months ended June 30, 2025, the Company recorded a provision for credit losses (refer to Note 3) of $
Unfunded Commitments—The Company has commitments to fund construction and development loans over a period of time if and when its borrowers meet established milestones and other performance criteria. The Company refers to these arrangements as performance-based commitments. As of June 30, 2025, the Company had $
18
Note 7—Loan 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, which was amended on October 4, 2023 and March 28, 2025, in an aggregate principal amount of $
The Star Holdings Term Loan Facility is a secured credit facility. Borrowings under the Star Holdings Term Loan Facility bear interest at a fixed rate of
The Star Holdings Term Loan Facility contains certain customary covenants, including affirmative covenants on reporting, maintenance of property, continued ownership of interests in the Company as well as negative covenants relating to investments, indebtedness and liens, fundamental changes, asset dispositions, repayments, distributions and affiliate transactions. 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 June 30, 2025 and 2024, the Company recorded a provision for (recovery of) credit losses of $
19
Note 8—Equity Investments
The Company’s equity investments and its proportionate share of earnings (losses) from equity investments were as follows ($ in thousands):
| | | | | | | | Earnings from | Earnings from | |||||||||
| | Carrying Value | | Equity Method Investments | Equity Method Investments(1) | |||||||||||||
| | as of | | For The Three Months Ended | For the Six Months Ended | |||||||||||||
| | June 30, | | December 31, | | June 30, | June 30, | |||||||||||
| | 2025 |
| 2024 |
| 2025 |
| 2024 | | 2025 |
| 2024 | ||||||
Equity investment | | |
|
| |
| | |
| | |
| | |
|
| |
|
425 Park Avenue | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
32 Old Slip | |
| | |
| | |
| | |
| | |
| | |
| |
Ground Lease Plus Fund(1) | | | | | | | | | | | | | | | | | | |
Leasehold Loan Fund(2) | | | | | | | | | | | | | | | | | | |
Total | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
| (1) | As of June 30, 2025, the Company has a basis difference of $ |
| (2) | As of June 30, 2025, the Company has a basis difference of $ |
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. The venture acquired the Ground Lease in November 2019. The Company has a
32 Old Slip—In June 2021, the Company acquired a
Ground Lease Plus Fund—The Company manages a 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”). The Company owns a
In November 2021, iStar acquired land for $
20
Leasehold Loan Fund—The Company manages a fund that targets customers that may require a mortgage leasehold loan as well as a Ground Lease (the “Leasehold Loan Fund”). The Company owns a
In February 2022, the Leasehold Loan Fund committed to provide a $
In June 2022, the Leasehold Loan Fund committed to provide a $
In July 2024, the Leasehold Loan Fund committed to provide a $
Note 9—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):
| | As of | ||||
|
| June 30, 2025 |
| December 31, 2024 | ||
| $ | | | $ | | |
Interest rate hedge assets | |
| | |
| |
Deferred finance costs, net(2) | |
| | |
| |
Other assets(3) | |
| | |
| |
Purchase deposits | |
| — | |
| |
Leasing costs, net | |
| | |
| |
Corporate furniture, fixtures and equipment, net | | | | | | |
Deferred expenses and other assets, net | | $ | | | $ | |
| (1) | Operating lease right-of-use asset (and operating lease liability below) relates primarily to a property that is majority-owned by a third party and is ground leased to the Company. The Company is obligated to pay the owner of the property $ |
| (2) | Accumulated amortization of deferred finance costs was $ |
| (3) | As of June 30, 2025 and December 31, 2024, includes $ |
21
Accounts payable, accrued expenses and other liabilities consist of the following items ($ in thousands):
|
| As of | ||||
|
| June 30, 2025 |
| December 31, 2024 | ||
Interest payable | | $ | | | $ | |
Other liabilities | |
| | |
| |
Dividends declared and payable | |
| | |
| |
|
| | |
| | |
Accrued expenses(2) | |
| | |
| |
Accounts payable, accrued expenses and other liabilities | | $ | | | $ | |
| (1) | Refer to Note 11. |
| (2) | As of June 30, 2025 and December 31, 2024, accrued expenses includes accrued compensation, legal, audit and property expenses. |
Note 10—Debt Obligations, net
The Company’s outstanding debt obligations consist of the following ($ in thousands):
| | As of |
| Interest |
| Scheduled | ||||
|
| June 30, 2025 |
| December 31, 2024 |
| Rate(1) |
| Maturity Date(2) | ||
Secured credit financing: |
| |
|
| |
|
|
|
|
|
Mortgages | | $ | | | $ | |
| | % | April 2027 to November 2069 |
Total secured credit financing(3) | |
| | |
| |
|
|
|
|
Unsecured financing: | | | | | | | | | | |
| | | | | | | | % | June 2031 | |
| | | | | | | | % | January 2032 | |
| | | | | | | | % | April 2034 | |
| | | | | | | | % | January 2035 | |
| | | | | | | | % | February 2052 | |
| | | | | | | | % | May 2052 | |
2024 Unsecured Revolver | | | | | | | | Adjusted SOFR | % | May 2029 |
Trust preferred securities | | | | | | | | Adjusted SOFR | % | October 2035 |
Total unsecured financing | | | | | | | | | | |
Total debt obligations | |
| | |
| |
|
|
|
|
Debt premium, discount and deferred financing costs, net | |
| ( | |
| ( |
|
|
|
|
Total debt obligations, net | | $ | | | $ | |
|
|
|
|
| (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 June 30, 2025, the weighted average cash interest rate for the Company’s consolidated mortgage debt, based on interest rates in effect at that date, was |
| (2) | Represents the extended maturity date for all debt obligations. |
| (3) | As of June 30, 2025, $ |
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Mortgages—Mortgages consist of asset specific non-recourse borrowings that are secured by the Company’s real estate and Ground Leases. As of June 30, 2025, the Company’s mortgages are full term interest only, bear interest at a weighted average interest rate of
Unsecured Notes—In May 2021, Portfolio Holdings, then known as Safehold Operating Partnership LP, (as issuer) and the Company (as guarantor), issued $
In November 2021, Portfolio Holdings, then known as Safehold Operating Partnership LP, (as issuer) and the Company (as guarantor), issued $
In January 2022, Portfolio Holdings, then known as Safehold Operating Partnership LP, (as issuer) and the Company (as guarantor), issued $
In May 2022, Portfolio Holdings, then known as Safehold Operating Partnership LP, (as issuer) and the Company (as guarantor), issued $
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In February 2024, Portfolio Holdings (as issuer) and the Company (as guarantor) issued $
In November 2024, Portfolio Holdings (as issuer) and the Company (as guarantor) issued $
2024 Unsecured Revolver—In April 2024, the Company entered into a $
2021 Unsecured Revolver—In March 2021, Portfolio Holdings, then known as Safehold Operating Partnership LP, (as borrower) and the Company (as guarantor), entered into an unsecured revolving credit facility with an initial maximum aggregate principal amount of up to $
2023 Unsecured Revolver—In January 2023, Portfolio Holdings, then known as Safehold Operating Partnership LP (as borrower) and the Company (as guarantor) entered into a $
Trust Preferred Securities—The Company assumed trust preferred securities from iStar in connection with the Merger. The trust preferred securities bear interest at three-month Adjusted Term plus
24
Commercial Paper Program— In June 2024, Portfolio Holdings, as issuer, entered into a new U.S. commercial paper program (the “Commercial Paper Program”) on a private placement basis, pursuant to which the Company may issue up to $
Under the Commercial Paper Program, the Company may issue the commercial paper notes from time to time and will use the proceeds for general corporate purposes. The Commercial Paper Program is backed by the Company’s 2024 Unsecured Revolver. The commercial paper notes will be sold under customary terms in the commercial paper market and will rank pari passu with all of Portfolio Holding’s other unsecured senior indebtedness. The interest rates will vary based on the ratings assigned to the commercial paper notes by credit rating agencies and market conditions at the time of issuance. As of June 30, 2025, the Company had
The documents governing the Commercial Paper Program contain customary representations, warranties, covenants, defaults and indemnification provisions, and provide the terms under which the Notes will be sold pursuant to an exemption from the federal and state securities laws.
Debt Covenants—The Company is subject to financial covenants under the 2024 Unsecured Revolver, including maintaining: (i) a ratio of total unencumbered assets to total unsecured debt of at least
25
Future Scheduled Maturities—As of June 30, 2025, future scheduled maturities of outstanding debt obligations, assuming all extensions that can be exercised at the Company’s option, are as follows ($ in thousands):
| | Secured(1) | | Unsecured | | Total | |||
2025 (remaining six months) |
| $ | — |
| $ | — |
| $ | — |
2026 | | | — | | | — |
| | — |
2027 | |
| | |
| — | |
| |
2028 | |
| | |
| — | |
| |
2029 | |
| — | |
| | |
| |
Thereafter | |
| | |
| | |
| |
Total principal maturities | |
| | |
| | |
| |
Debt premium, discount and deferred financing costs, net | |
| ( | |
| ( | |
| ( |
Total debt obligations, net | | $ | | | $ | | | $ | |
| (1) | As of June 30, 2025, the Company’s weighted average maturity for its secured mortgages was |
Note 11—Commitments and Contingencies
Lease Commitments—Future minimum lease obligations under non-cancelable operating leases as of June 30, 2025 are as follows ($ in thousands):(1)
2025 (remaining six months) | | $ | |
2026 | |
| |
2027 | |
| |
2028 | |
| |
2029 | |
| |
Thereafter | |
| |
Total undiscounted cash flows(1) | |
| |
Present value discount(2) | |
| ( |
Lease liabilities | | $ | |
| (1) | Includes cash flows that relate to a property that is majority-owned by a third party and is ground leased to the Company. The Company is obligated to pay the owner of the property $ |
| (2) | The lease liability equals the present value of the minimum rental payments due under the lease discounted at the rate implicit in the lease or the Company’s incremental secured borrowing rate for similar collateral. For operating leases, lease liabilities were discounted at the Company’s weighted average incremental secured borrowing rate for similar collateral estimated to be |
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 June 30, 2025, the Company had $
The Company also has an unfunded forward commitment of $
26
that the conditions for closing this transaction will be satisfied and that the Company will fund the addition to the Ground Lease.
Other Commitments—The Company funds construction and development loans and build-outs of space in real estate assets over a period of time, both individually and through the Leasehold Loan Fund, if and when the borrowers and tenants meet established milestones and other performance criteria. We refer to these arrangements as performance-based commitments. As of June 30, 2025, the Company had $
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.
Note 12—Risk Management and Derivatives
In the normal course of its ongoing business operations, the Company encounters credit risk. Credit risk is the risk of default on the Company’s leases that result from a tenant’s inability or unwillingness to make contractually required payments.
Risk concentrations—Concentrations of credit risks arise when the Company has multiple leases with a particular tenant or credit party, or a number of the Company’s tenants are engaged in similar business activities, or activities in the same geographic region, or have similar economic features, such that their ability to meet contractual obligations, including those to the Company, could be similarly affected by changes in economic conditions.
Although the Company’s Ground Leases are geographically diverse and the tenants operate in a variety of industries and property types, to the extent the Company has a significant concentration of interest income from sales-type leases or operating lease income from any tenant, the inability of that tenant to make its payment could have a material adverse effect on the Company. The Company did not have a significant concentration of interest income from sales-type leases or operating lease income from any tenant for the periods presented.
Derivative instruments and hedging activity—The Company’s use of derivative financial instruments has been associated with debt issuances and primarily limited to the utilization of interest rate swaps, interest rate caps and treasury locks to manage interest rate risk exposure. The Company does not enter into derivatives for trading purposes.
The Company recognizes derivatives, if any, as either assets or liabilities on the Company’s consolidated balance sheets at fair value. Interest rate hedge assets are recorded in “Deferred expenses and other assets, net” and interest rate hedge liabilities are recorded in “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets. If certain conditions are met, a derivative may be specifically designated as a hedge of the exposure to changes in the fair value of a recognized asset or liability, a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability.
For the Company’s derivatives designated and qualifying as cash flow hedges, changes in the fair value of the derivatives are reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings. 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 an interest rate hedge is terminated prior to maturity it could result in a net derivative instrument gain or loss that continues to be reported in accumulated other comprehensive (loss) and is reclassified into earnings over the period of the original forecasted hedged transaction. However, if it is probable that the
27
original forecasted hedged transaction will not occur by the end of the original specified time period, the derivative instrument gain or loss reported in accumulated other comprehensive income (loss) will be reclassified into earnings immediately. 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. Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements.
The table below presents the Company’s derivatives as well as their classification on the consolidated balance sheets as of June 30, 2025 and December 31, 2024 ($ in thousands):(1)(2)(3)
| | June 30, 2025 |
| December 31, 2024 |
| | ||
| | Fair | | Fair | | Balance Sheet | ||
Derivative Type |
| Value | | Value |
| Location | ||
Assets |
| |
|
| |
|
|
|
Interest rate swaps | | $ | | | $ | |
| Deferred expenses and other assets, net |
Total | | $ | | | $ | | | |
| (1) | As of June 30, 2025, the Company has |
| (2) | Over the next 12 months, the Company expects that $ |
| (3) | 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. |
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Credit Risk-Related Contingent Features—The Company reports derivative instruments, if any, on a gross basis in its consolidated financial statements. 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.
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 six months ended June 30, 2025 and 2024 ($ in thousands):
| | | | | | | Amount of Gain | |
| | | | Amount of Gain | | (Loss) Reclassified | ||
| | | | (Loss) Recognized | | from Accumulated | ||
| | | | in Accumulated | | Other | ||
| | Location of Gain (Loss) | | Other | | Comprehensive | ||
| | When Recognized in | | Comprehensive | | Income into | ||
Derivatives Designated in Hedging Relationships | | Income |
| Income |
| Earnings | ||
For the Three Months Ended June 30, 2025 |
|
|
| |
|
| |
|
Interest rate swaps |
| Interest expense | | $ | | | $ | |
For the Three Months Ended June 30, 2024 | |
|
| |
|
| |
|
Interest rate swaps |
| Interest expense | | $ | | | $ | |
For the Six Months Ended June 30, 2025 | |
|
| |
|
| |
|
Interest rate swaps |
| Interest expense | | $ | ( | | $ | |
For the Six Months Ended June 30, 2024 | |
|
| |
|
| |
|
Interest rate swaps |
| Interest expense | | $ | | | $ | |
Note 13—Equity
Common Stock—As of June 30, 2025, the Company has
In April 2023, the Company and Portfolio Holdings entered into an ATM 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 having an aggregate gross sales price of up to $
On February 4, 2025, the Company’s board of directors authorized the repurchase of up to $
Equity Plans—The Company has a Long-Term Incentive Program (the “LTIP”), originally adopted by iStar’s board of directors and approved by iStar’s stockholders in 2021, designed to provide incentive compensation for officers,
29
key employees, directors and advisors of the Company. The LTIP provides for awards of stock options, shares of restricted stock, phantom shares, restricted stock units, dividend equivalent rights and other share-based performance awards. All awards under the LTIP are made at the discretion of the Company’s Board of Directors. 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. In May 2025, the Company issued an aggregate
Caret Performance Incentive Plan—The Company has a Caret performance incentive plan pursuant to which Caret units of Portfolio Holdings are reserved for grants of performance-based awards to participants, including certain officers, key employees, directors and service providers (the “Caret Performance Incentive Plan”). As of June 30, 2025, all outstanding Caret units awarded under the Caret Performance Incentive Plan are fully vested except for grants awarded in connection with the Merger to executive officers and other employees, which are subject to cliff vesting on March 31, 2027 if the Company’s common stock has traded at an average per share price of $
As of June 30, 2025, Caret Performance Incentive Plan participants held
During the three months ended June 30, 2025 and 2024, the Company recognized $
401(K) Plan—The Company has a savings and retirement plan (the "401(k) Plan"), which is a voluntary, defined contribution plan. All employees are eligible to participate in the 401(k) Plan following completion of
Accumulated Other Comprehensive Income (Loss)—Accumulated other comprehensive income (loss) consists of net unrealized gains (losses) on the Company’s derivative transactions.
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 or have been granted to employees or former employees. See also “Redeemable Noncontrolling Interests” in Note 3.
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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 six months ended June 30, 2025 and 2024, the Company declared cash dividends on its common stock of $
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Note 14—Earnings Per Share
Earnings per share (“EPS”) is calculated by dividing net income attributable to common shareholders by the weighted average number of shares outstanding for the period.
| | Three Months Ended | | Six Months Ended | | ||||||||
| | June 30, | | June 30, | | ||||||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 |
| ||||
Net income (loss) | | $ | | | $ | | | $ | | | $ | | |
Net (income) loss attributable to noncontrolling interests | |
| ( | |
| | |
| ( | |
| ( | |
Net income (loss) attributable to Safehold Inc. common shareholders for basic and diluted earnings per common share | | $ | | | $ | | | $ | | | $ | | |
| | Three Months Ended | | Six Months Ended | | ||||||||
| | June 30, | | June 30, | | ||||||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 |
| ||||
Earnings attributable to common shares: |
| |
|
| |
|
| |
|
| |
|
|
Numerator for basic and diluted earnings per share: |
| |
|
| |
|
| |
|
| |
|
|
Net income (loss) attributable to Safehold Inc. common shareholders - basic | | $ | | | $ | | | $ | | | $ | | |
Net income (loss) attributable to Safehold Inc. common shareholders - diluted | | $ | | | $ | | | $ | | | $ | | |
| | | | | | | | | | | | | |
Denominator for basic and diluted earnings per share:(1) | |
|
| |
|
| |
|
| |
|
| |
Weighted average common shares outstanding for basic earnings per common share | |
| | |
| | |
| | |
| | |
Add: Effect of assumed shares under treasury stock method for restricted stock units | |
| | |
| | |
| | |
| | |
Weighted average common shares outstanding for diluted earnings per common share | |
| | |
| | |
| | |
| | |
| | | | | | | | | | | | | |
Basic and diluted earnings per common share:(1) | |
|
| |
|
| |
|
| |
|
| |
Net income (loss) attributable to Safehold Inc. common shareholders - basic | | $ | | | $ | | | $ | | | $ | | |
Net income (loss) attributable to Safehold Inc. common shareholders - diluted | | $ | | | $ | | | $ | | | $ | | |
| (1) | For the three and six months ended June 30, 2024, the effect of |
Note 15—Related Party Transactions
Acquisitions and Commitments
Following is a list of transactions in which the Company and 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.
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The Company entered into a discretionary commitment to fund up to $
The Company has a noncontrolling interest in the Ground Lease Plus Fund and an affiliate of an existing shareholder (which is affiliated with
Caret units
In February 2022, the Company sold an aggregate of
Star Holdings
On March 31, 2023, immediately prior to the closing of the Merger, the Company (then known as iStar Inc.) spun-off of its remaining legacy assets and certain other assets (the “Spin-Off”) pursuant to a separation and distribution agreement (the “Separation and Distribution Agreement”), dated as of March 31, 2023, by and between the Company and Star Holdings. The Separation and Distribution Agreement sets forth, among other things, Star Holdings’ agreements with the Company regarding the principal transactions necessary to separate Star Holdings from the Company. It also sets forth
33
other agreements that govern certain aspects of Star Holdings’ relationship with the Company after the Spin-Off relating to the transfer of assets and assumption of liabilities, cash assets, release of claims, insurance, non-solicitation, segregation of accounts and other matters. 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.
SpinCo Manager is party to a management agreement with Star Holdings, pursuant to which it will operate and pursue the orderly monetization of Star Holding’s assets. On March 28, 2025, the Company and Star Holdings entered into an amendment to the Management Agreement that increased the management fee payable in year four of the contract from $
In the event of a termination without cause by Star Holdings prior to March 31, 2027, Star Holdings will pay SpinCo Manager a termination fee of $
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 $
During the three months ended June 30, 2025 and 2024, the Company recorded $
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 June 30, 2025, Star Holdings owned approximately
34
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
Note 16—Segment Reporting
The Company conducts its business through
The following table presents the Company’s expenses that are reviewed in more detail by the CODM for the three and six months ended June 30, 2025 and 2024 ($ in thousands):
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Interest expense | |
| | | | | | | | | | |
Cash | | $ | | | $ | | | $ | | | $ | |
Non-cash | | | | | | | | | | | | |
Subtotal interest expense | | | | | | | | | | | | |
General and administrative(1) | | | | | | | | | | | | |
Public company and other costs | | | | | | | | | | | | |
Stock-based compensation | | | | | | | | | | | | |
Subtotal general and administrative | |
| | |
| | |
| | |
| |
| (1) | The CODM also considers management fees earned from Star Holdings (refer to Note 15) in their review of general and administrative expense because many of the Company’s employees spend time and resources performing basic functions for the management of Star Holdings. During the three months ended June 30, 2025 and 2024, the Company earned $ |
35
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are included with respect to, among other things, Safehold Inc.’s (the “Company’s”) current business plan, business strategy, portfolio management, prospects and liquidity. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results or outcomes to differ materially from those contained in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in this Form 10-Q and the uncertainties and risks described in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”), all of which could affect our future results of operations, financial condition and liquidity.
The discussion below should be read in conjunction with our consolidated financial statements and related notes in this quarterly report on Form 10-Q and our 2024 Annual Report. These historical financial statements may not be indicative of our future performance.
Business Overview
We acquire, manage and capitalize Ground Leases and report our business as a single reportable segment. We believe owning a portfolio of Ground Leases affords our investors the opportunity for safe, growing income. Safety is derived from a Ground Lease’s senior position in the commercial real estate capital structure. Growth is realized through long-term leases with contractual periodic increases in rent. Capital appreciation is realized though appreciation in the value of the land over time and through our typical rights as landlord to acquire the commercial buildings on our land at the end of a Ground Lease, which may yield substantial value to us. As of June 30, 2025, the percentage breakdown of the gross book value of our portfolio was 41% multi-family, 40% office, 11% hotels, 6% life science and 2% mixed use and other. The diversification by geographic location, property type and sponsor in our portfolio further reduces risk and enhances potential upside.
In 2022, the Consumer Price Index (“CPI”) rose to its highest rate in over 40 years. Many of our Ground Leases have CPI lookbacks, generally starting between years 11 and 21 of the lease term, to mitigate the effects of inflation that are typically capped between 3.0% - 3.5%; however, in the event cumulative inflation growth for the lookback period exceeds the cap, these rent adjustments may not keep up fully with changes in inflation. To combat the increase in inflation over the past few years, the Federal Reserve raised interest rates and has kept interest rates generally high. This increase in interest rates has produced progress on inflation and in September 2024, the Federal Reserve reduced the federal funds rate by 50 basis points, which marked the first interest rate cut in four years. The Federal Reserve further reduced the federal funds rate by 25 basis points in each of November 2024 and December 2024. The Federal Reserve has indicated that the economic outlook, including any potential impact on the economy from changes to U.S. trade policy, is uncertain and it will continue to monitor incoming data on unemployment and inflation before adjusting monetary policy; however, high interest rates have, and any future increase in interest rates may continue to result in a reduction in the availability or an increase in costs of leasehold financing for Ground Lease tenants, which is critical to the growth of a robust Ground Lease market. The rise in interest rates and increased investment spreads to treasury bonds in the Ground Lease market may also attract new competitors, which may result in higher costs for properties, lower returns and impact our ability to grow.
The rise in interest rates has also adversely affected the U.S. office sector, along with office vacancies and a decline in market liquidity that began with the onset of the COVID-19 pandemic, all of which could negatively impact our tenants, Ground Rent Coverages and estimated Combined Property Values. Moreover, certain office assets currently have material vacancies. If our Ground Lease tenants at such assets fail to re-tenant the building, such Ground Leases may
36
default and we may suffer losses. We have entered into a forbearance agreement with a tenant under a significant New York office asset. If the tenant defaults on such agreement, we may experience delays in enforcing our rights as a landlord, may suffer losses and may incur substantial costs in protecting our investment. See the "Risk Factors" section of our 2024 Annual Report for additional discussion of certain potential risks to our business related to competition and industry concentrations.
We have chosen to focus on Ground Leases because we believe they meet an important need in the real estate capital markets for our customers. We also believe Ground Leases offer a unique combination of safety, income growth and the potential for capital appreciation for investors for the following reasons:
High Quality Long-Term Cash Flow: We believe that a Ground Lease represents a safe position in a property’s capital structure. The combined value of the land and buildings and improvements thereon subject to a Ground Lease (the “Combined Property Value”) typically significantly exceeds the Ground Lease landlord’s investment in the Ground Lease; therefore, even if the landlord takes over the property following a tenant default or upon expiration of the Ground Lease, the landlord may recover substantially all of its Ground Lease investment, and possibly amounts in excess of its investment, depending upon prevailing market conditions. Additionally, the typical structure of a Ground Lease provides the landlord with a residual right to regain possession of its land and take ownership of the buildings and improvements thereon upon a tenant default. The landlord’s residual right provides a strong incentive for a Ground Lease tenant or its leasehold lender to make the required Ground Lease rent payments.
Income Growth: Ground Leases typically provide growing income streams through contractual base rent escalators that may compound over the duration of the lease. These rent escalators may be based on fixed increases, a CPI or a combination thereof, and may also include a participation in the gross revenues of the property. We believe that this growth in the lease rate over time can mitigate the effects of inflation and capture anticipated increases in land values over time, as well as serving as a basis for growing our dividend.
Opportunity for Capital Appreciation: The opportunity for capital appreciation comes in two forms. First, as the ground rent grows over time, the value of the Ground Lease should grow under market conditions in which capitalization rates remain flat. Second, our residual right to regain possession of the land underlying the Ground Lease and take title to the buildings and other improvements thereon at lease expiration or earlier termination of the lease for no additional consideration creates additional potential value to our shareholders.
We generally target Ground Lease investments in which the initial cost of the Ground Lease represents 30% to 45% of the Combined Property Value as if the Ground Lease did not exist. If the initial cost of a Ground Lease is equal to 35% of the Combined Property Value, the remaining 65% of the Combined Property Value represents potential excess value over the amount of our investment that would be turned over to us upon the reversion of the property, assuming no intervening change in the Combined Property Value. In our view, there is a strong correlation between inflation and commercial real estate values over time, which supports our belief that the value of our owned residual portfolio should increase over time as inflation increases, although our ability to recognize value in certain cases may be limited by the rights of our tenants under some of our Ground Leases, including tenant rights to purchase our land in certain circumstances and the right of one tenant to demolish improvements prior to the expiration of the lease. See “Risk Factors” in our 2024 Annual Report for additional discussion of these tenant rights.
Owned Residual Portfolio: We believe that the residual right is a unique feature distinguishing Ground Leases from other fixed income investments and property types. We refer to the value of the land and improvements subject to a Ground Lease in excess of our investment basis as unrealized capital appreciation (“UCA”). We track the UCA in our owned residual portfolio over our basis because we believe it provides relevant information with regard to the three key investment characteristics of our Ground Leases: (1) the safety of our position in a tenant’s capital structure; (2) the quality of the long-term cash flows generated by our portfolio rent that increases over time; and (3) increases and decreases in the Combined Property Value of the portfolio that reverts to us pursuant to such residual rights.
We believe that, similar to a loan to value metric, tracking changes in the value of our owned residual portfolio is useful as an indicator of the quality of our cash flows and the safety of our position in a tenant’s capital structure, which, in turn, supports our objective to pay and grow dividends over time. Observing changes in our owned residual portfolio
37
value also helps us monitor changes in the value of the real estate portfolio that reverts to us under the terms of the leases, either at the expiration or earlier termination of the lease. The value may be realized by us at the relevant time by entering into a new lease reflecting then current market terms and values, selling the building, selling the building with the land, or operating the building directly and leasing the spaces to tenants at prevailing market rates.
We have engaged an independent valuation firm to prepare: (a) initial reports of the Combined Property Value associated with our Ground Lease portfolio; and (b) periodic updates of such reports, which we use, in part, to determine the current estimated value of our owned residual portfolio. We calculate this estimated value by subtracting our original aggregate cost basis in the Ground Leases from our estimated aggregate Combined Property Value, based on estimates by the valuation firm and by management.
The table below shows the current estimated UCA in our owned residual portfolio as of June 30, 2025 and December 31, 2024 ($ in millions):(1)
|
| June 30, 2025 |
| December 31, 2024 | ||
Combined Property Value(2) | | $ | 15,577 | | $ | 15,523 |
Ground Lease Cost(2) | |
| 6,521 | |
| 6,395 |
Unrealized Capital Appreciation in Our Owned Residual Portfolio | |
| 9,056 | |
| 9,128 |
| (1) | Please review our Current Report on Form 8-K filed on August 5, 2025 for a discussion of the valuation methodology used and important limitations and qualifications of the calculation of UCA. See “Risk Factors-Certain tenant rights under our Ground Leases may limit the value and the UCA we are able to realize upon lease expiration, sale of our land and Ground Leases or other events” included in “Risk Factors” of our 2024 Annual Report for a discussion of certain tenant rights and other terms of the leases that may limit our ability to realize value from the UCA. |
| (2) | Combined Property Value includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $291.1 million and $319.8 million related to transactions with remaining unfunded commitments as of June 30, 2025 and December 31, 2024, respectively. Combined Property Value excludes the term loan to Star Holdings, the assets in the Leasehold Loan Fund (refer to Note 8 to the consolidated financial statements), the assets in the Ground Lease Plus Fund and amounts attributable to noncontrolling interests. Ground Lease Cost includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $90.5 million and $46.2 million of unfunded commitments as of June 30, 2025 and December 31, 2024, respectively. Ground Lease Cost excludes the term loan to Star Holdings, our leasehold loans, the assets in the Leasehold Loan Fund, the assets in the Ground Lease Plus Fund and amounts attributable to noncontrolling interests. As of June 30, 2025, our gross book value as a percentage of combined property value was 52%. |
Our Caret Program (as defined below) is designed to recognize the two distinct components of value in our Ground Lease portfolio by separating them into:
| ● | the “bond component,” which consists of the bond-like income stream we receive from contractual rent payments under our Ground Leases, plus the return of our investment basis in each asset; and |
| ● | the “Caret component,” which consists of the UCA above our investment basis in our Ground Leases due to our ownership of the land and improvements at the end of the term of the applicable Ground Lease. |
Portfolio Holdings’ two classes of limited liability company interests are designed to track these two components: “GL units” are intended to track the bond component and “Caret units” are designed to track the Caret component (the “Caret Program”). We currently hold all of the issued and outstanding GL units of Portfolio Holdings.
In general, all of our Ground Leases are subject to the Caret Program, except for non-commercial Ground Leases and pre-development Ground Leases. Holders of Caret units are generally entitled to amounts equal to the net proceeds from the disposition of a Ground Lease asset in excess of the cost borne by us to acquire such asset (including amounts paid to the tenant in connection with the initial development of improvements at the properties). However, we are entitled to deduct (i) unrecovered acquisition costs borne by Portfolio Holdings following the termination of an applicable Ground Lease by reason of defaults of tenants; (ii) accrued unpaid rent under the applicable Ground Lease; and (iii) unrecovered costs relating to the issuance, maintenance and management of Caret units as a separate security, among other costs, from the amount payable to the holders of Caret units on account of such net proceeds. See “SAFE Proposal 2: The SAFE Caret Amendment Proposal” in our Registration Statement on Form S-4, filed with the SEC on December 16, 2022, for more information on the Caret Program.
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We have a Caret Performance Incentive Plan (the “Caret Performance Incentive Plan”) pursuant to which Caret units are reserved for grants of performance-based awards to participants including certain employees of the Company, directors and service providers. As of June 30, 2025, all outstanding Caret units awarded under the Caret Performance Incentive Plan are fully vested except for grants awarded in connection with the merger between Safehold Inc. and iStar Inc. on March 31, 2023 to executive officers and other employees, which are subject to cliff vesting on March 31, 2027 if our common stock has traded at an average price of $60.00 or more for at least 30 consecutive trading days since the grant date, and certain awards granted to a former employee that vest in December 2025, subject to certain conditions. As of June 30, 2025, vested and unvested Caret units beneficially owned by our officers and other employees represent approximately 14.4% of the outstanding Caret units and 11.4% of the authorized Caret units, including 6.1% held directly and indirectly by Jay Sugarman, our Chairman and Chief Executive Officer, and approximately 128,871 Caret units remain available for issuance under the Caret Performance Incentive Plan.
In addition to the Caret units awarded or reserved for issuance under our Caret Performance Incentive Plan, we have sold 122,500 Caret units to third-party investors, including affiliates of MSD Partners, that remain outstanding as of June 30, 2025. As of June 30, 2025, the Company owned 84.3% of the outstanding Caret units. In connection with the sale of 137,142 Caret units in February 2022 (28,571 of which were committed to be purchased at the time, but did not close), we agreed to use commercially reasonable efforts to provide public market liquidity for such Caret units by seeking to provide a listing of the Caret units (or securities into which they may be exchanged) on a public exchange within two years of the sale. Because public market liquidity was not achieved by February 2024, the investors in the February 2022 transaction had the right to cause their Caret units purchased in February 2022 to be redeemed by Portfolio Holdings at such purchase price less the amount of distributions previously made on such units. In April 2024, all of the investors in the February 2022 transaction exercised this right and elected to have their Caret units redeemed at the original purchase price less the amount of distributions previously made on such units.
Market Opportunity: We believe that there is a significant market opportunity for a dedicated provider of Ground Lease capital like us. We believe that the market for existing Ground Leases is fragmented with ownership comprised primarily of high net worth individuals, pension funds, life insurance companies, estates and endowments. However, while we intend to pursue acquisitions of existing Ground Leases, our investment thesis is predicated, in part, on what we believe is an untapped market opportunity to expand the use of Ground Leases to a broader component of the approximately $7.0 trillion institutional commercial property market in the U.S. We intend to capture this market opportunity by utilizing multiple sourcing and origination channels, including manufacturing new Ground Leases with third-party owners and developers of commercial real estate and originating Ground Leases to provide capital for development and redevelopment. We further believe that Ground Leases generally represent an attractive source of capital for our tenants and may allow them to generate superior returns on their invested equity as compared to utilizing alternative sources of capital.
Additionally, we have created additional channels and products that allows us to build a larger, captive pipeline. We have interests in two Ground Lease ecosystem funds, the Ground Lease Plus Fund and the Leasehold Loan Fund (refer to Note 8 to the consolidated financial statements). The Ground Lease Plus Fund includes two assets and targets high quality projects in pre-construction development phase with institutional developers. The Leasehold Loan Fund currently includes three assets and allows for customers to receive their full capital structure needs in one place. We have also recently begun to originate leasehold loans individually. Customers are able to receive a mortgage leasehold loan as well as a Ground Lease through us. We also created “SAFExSWAP,” which is a program that allows real estate investors with existing ground leases to swap into one of our Ground Leases. Additionally, our product “SAFExSELL” provides clients with an opportunity to enter into a Ground Lease at the time of the sale of a real estate asset, generating greater proceeds than would normally be expected in connection with a fee simple sale.
Our Portfolio
Our portfolio of properties is diversified by property type and region. Our portfolio is comprised of Ground Leases, leasehold loans and one master lease (relating to five hotel assets that we refer to as our “Park Hotels Portfolio”) that has many of the characteristics of a Ground Lease. The tenant under our Park Hotels Portfolio elected to extend the leases underlying three of the five hotels past the initial lease maturity of December 2025 (see the "Risk Factors -We may be unable to renew expiring Ground Leases, re-lease the land or sell the properties on favorable terms or at all, -
39
Percentage rent payable under our master lease relating to the Park Hotels Portfolio is calculated on an aggregate portfolio-wide basis, -We are the tenant of a Ground Lease underlying a majority of our Doubletree Seattle Airport property" in our 2024 Annual Report for a discussion of our Park Hotels Portfolio). As of June 30, 2025, our estimated portfolio Ground Rent Coverage was 3.5x (see the "Risk Factors -Our estimated UCA, Combined Property Value and Ground Rent Coverage, may not reflect current market values, including the decline in office values, and may decline materially in future periods, -We rely on Property NOI as reported to us by our tenants, -Our estimates of Ground Rent Coverage for properties in development or transition, or for which we do not receive current tenant financial information, may prove to be incorrect" in our 2024 Annual Report for a discussion of our estimated Ground Rent Coverage).
Below is an overview of the top 10 Ground Leases in our portfolio as of June 30, 2025 (based on gross book value and excluding unfunded commitments):(1)
| | | | | | Lease | | | | |
|
| | Property | | | | Expiration / | | Rent Escalation | | % of Gross | |
Property Name |
| Type |
| Location |
| As Extended |
| Structure |
| Book Value | |
425 Park Avenue(2) |
| Office |
| New York, NY |
| 2090 / 2090 |
| Fixed with Inflation Adjustments |
| 5.3 | % |
135 West 50th Street |
| Office |
| New York, NY |
| 2123 / 2123 |
| Fixed with Inflation Adjustments |
| 4.7 | % |
195 Broadway |
| Office |
| New York, NY |
| 2118 / 2118 |
| Fixed with Inflation Adjustments |
| 4.5 | % |
20 Cambridgeside | | Life Science | | Cambridge, MA | | 2121 / 2121 | | Fixed with Inflation Adjustments | | 4.3 | % |
Alohilani |
| Hotel |
| Honolulu, HI |
| 2118 / 2118 |
| Fixed with Inflation Adjustments |
| 3.3 | % |
Park Hotels Portfolio(3) |
| Hotel |
| Various |
| 2025 / 2035 |
| % Rent |
| 3.2 | % |
685 Third Avenue |
| Office |
| New York, NY |
| 2123 / 2123 |
| Fixed with Inflation Adjustments |
| 2.9 | % |
1111 Pennsylvania Avenue |
| Office |
| Washington, DC |
| 2117 / 2117 |
| Fixed with Inflation Adjustments |
| 2.2 | % |
Columbia Center | | Office | | Washington, DC | | 2120 / 2120 | | Fixed | | 2.2 | % |
100 Cambridgeside | | Mixed Use and Other | | Cambridge, MA | | 2121 / 2121 | | Fixed with Inflation Adjustments | | 2.2 | % |
| (1) | Gross book value represents the historical purchase price plus accrued interest on sales-type leases. |
| (2) | Gross book value for this property represents our pro rata share of the gross book value of our unconsolidated venture (refer to Note 8 to the consolidated financial statements). |
| (3) | The Park Hotels Portfolio consists of five properties and is subject to a single master lease, but with individual asset extension rights. A majority of the land underlying one of these properties is owned by a third party and is ground leased to us through 2044 subject to changes in the CPI; however, our tenant at the property pays this cost directly to the third party. |
The following tables show our portfolio by top 10 markets and property type as of June 30, 2025, excluding unfunded commitments:
| | % of Gross |
|
Market |
| Book Value | |
Manhattan(1) |
| 21 | % |
Washington, DC |
| 10 | |
Boston |
| 8 | |
Los Angeles |
| 7 | |
San Francisco |
| 4 | |
Denver | | 4 | |
Honolulu | | 3 | |
Nashville | | 3 | |
Miami | | 3 | |
Atlanta |
| 2 | |
| (1) | Total New York metropolitan statistical area including areas outside of Manhattan makes up 28% of gross book value. |
| | % of Gross |
|
Property Type |
| Book Value | |
Multifamily |
| 41 | % |
Office |
| 40 | |
Hotel |
| 11 | |
Life Science | | 6 | |
Mixed Use and Other |
| 2 | |
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Unfunded Commitments
We have unfunded commitments to certain of our Ground Lease tenants related to leasehold improvement allowances that we expect to fund upon the completion of certain conditions. As of June 30, 2025, we had $90.5 million of such commitments, excluding commitments to be funded by noncontrolling interests.
We also have an unfunded forward commitment of $35.0 million related to an agreement that we entered into for the addition to an existing Ground Lease if certain conditions are met (refer to Note 15 to the consolidated financial statements). There can be no assurance that the conditions for closing this transaction will be satisfied and that we will fund the addition to the Ground Lease.
We also fund construction and development loans and build-outs of space in real estate assets over a period of time, both individually and through the Leasehold Loan Fund, if and when the borrowers and tenants meet established milestones and other performance criteria. We refer to these arrangements as performance-based commitments. As of June 30, 2025, we had $195.9 million of such commitments.
We also entered into a discretionary commitment to fund up to $9.0 million of preferred equity in an entity that owned the leasehold interest under one of our office Ground Leases located in Washington, DC and through March 31, 2025, we funded $1.5 million of the commitment amount. At inception in April 2024, we incurred $0.4 million of costs creating the entity formed to own the leasehold interest, which resulted in a total investment balance of $1.9 million and was included in “Deferred expenses and other assets” on our consolidated balance sheet as of December 31, 2024. In May 2025, the leasehold interest was acquired by a new sponsor and we determined our investment was not recoverable, which resulted in a $1.9 million write-off of our preferred equity investment as of March 31, 2025. The write-off is included in “Other expense” in our consolidated statement of operations. We recognized $3.4 million of interest income from sales-type leases from the Ground Lease in our consolidated statements of operations for the six months ended June 30, 2025.
Results of Operations for the Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024
|
| For the Three Months Ended |
| | |
| ||||
| | June 30, | | | | | ||||
| | 2025 | | 2024 | | $ Change | | |||
| | (in thousands) | | |||||||
Revenues: |
| |
|
| |
|
| |
|
|
Interest income from sales-type leases | | $ | 70,642 | | $ | 65,235 | | $ | 5,407 | |
Operating lease income | | | 16,706 | | | 16,691 | | | 15 | |
Interest income | | | 2,712 | | | 2,357 | | | 355 | |
Other income | |
| 3,782 | |
| 5,612 | |
| (1,830) | |
Total revenues | |
| 93,842 | |
| 89,895 | |
| 3,947 | |
Costs and expenses: | |
|
| |
|
| |
| | |
Interest expense | |
| 51,265 | |
| 49,107 | |
| 2,158 | |
Real estate expense | |
| 881 | |
| 1,041 | |
| (160) | |
Depreciation and amortization | |
| 2,127 | |
| 2,490 | |
| (363) | |
General and administrative | |
| 12,954 | |
| 12,276 | |
| 678 | |
Provision for (recovery of) credit losses | | | 2,350 | | | 626 | | | 1,724 | |
Other expense | |
| 346 | |
| 359 | |
| (13) | |
Total costs and expenses | |
| 69,923 | |
| 65,899 | |
| 4,024 | |
Earnings (losses) from equity method investments | |
| 4,912 | |
| 6,469 | |
| (1,557) | |
Net income (loss) before income taxes | | | 28,831 | |
| 30,465 | |
| (1,634) | |
Income tax expense | | | (862) | | | (910) | | | 48 | |
Net income (loss) | | $ | 27,969 | | $ | 29,555 | | $ | (1,586) | |
Interest income from sales-type leases increased to $70.6 million for the three months ended June 30, 2025 from $65.2 million for the same period in 2024. The increase was due primarily to originations of Ground Leases and additional fundings on existing Ground Leases classified as sales-type leases and Ground Lease receivables.
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Operating lease income was $16.7 million for both the three months ended June 30, 2025 and 2024. Operating lease income consists of rent from our operating leases and percentage rent from certain properties, including our Park Hotels Portfolio.
Interest income relates to the Star Holdings Term Loan Facility (refer to Note 7 to the consolidated financial statements) and three leasehold loans we originated during the three months ended June 30, 2025 in connection with Ground Leases. The increase in 2025 was due primarily to the origination of leasehold loans.
Other income for the three months ended June 30, 2025 and 2024 includes $2.7 million and $4.4 million, respectively, of management fees from Star Holdings. Other income for both the three months ended June 30, 2025 and 2024 also includes $0.1 million of other income relating to a Ground Lease in which we are the lessee but our tenant at the property pays this expense directly under the terms of a master lease. Other income for the three months ended June 30, 2025 and 2024 also includes $1.0 million and 1.1 million, respectively, of other ancillary income from our investments. Other ancillary income primarily includes sublease income, recoverable expenses and interest income earned on our cash balances.
During the three months ended June 30, 2025 and 2024, we incurred interest expense from our debt obligations of $51.3 million and $49.1 million, respectively. The increase in 2025 was primarily the result of increased indebtedness to fund acquisition activity.
During the three months ended June 30, 2025 and 2024, we incurred real estate expense of $0.9 million and $1.0 million, respectively, which consisted primarily of the amortization of an operating lease right-of-use asset, legal fees, property taxes and insurance expense. In addition, during both the three months ended June 30, 2025 and 2024, we also recorded $0.1 million of real estate expense relating to a Ground Lease in which we are the lessee but our tenant at the property pays this expense directly under the terms of a master lease.
Depreciation and amortization during the three months ended June 30, 2025 and 2024 was $2.1 million and $2.5 million, respectively. Depreciation and amortization primarily relates to our ownership of the Park Hotels Portfolio and a multi-family property, the amortization of in-place lease assets and depreciation of corporate fixed assets. The decrease in 2025 was primarily the result of the tenant under our Park Hotels Portfolio electing to extend the leases underlying three of the five hotels under the lease past the initial lease maturity of December 2025.
General and administrative expenses primarily includes public company costs such as compensation (including equity-based compensation), occupancy and other costs. The following table presents our general and administrative expenses for the three months ended June 30, 2025 and 2024 ($ in thousands):
| | For the Three Months Ended | ||||
| | June 30, | ||||
|
| 2025 |
| 2024 | ||
Public company and other costs(1) | | $ | 9,873 | | $ | 10,383 |
Stock-based compensation | |
| 3,081 | |
| 1,893 |
Total general and administrative expenses(2) | | $ | 12,954 | | $ | 12,276 |
| (1) | For the three months ended June 30, 2025 and 2024, public company and other costs primarily includes compensation, legal, insurance and occupancy costs. |
| (2) | For the three months ended June 30, 2025 and 2024, general and administrative expenses were partially offset by $2.7 million and $4.4 million, respectively, of management fees earned from Star Holdings, which are included in “Other income” in our consolidated statements of operations. |
During the three months ended June 30, 2025, we recorded a provision for credit losses of $2.4 million. The provision for credit losses was due primarily to the origination of three leasehold loans (refer to Note 6 to the consolidated financial statements) during the three months ended June 30, 2025 and current market conditions, including an increase in our Ground Lease cost to value ratios on certain of our assets, and growth in the carrying value of the Ground Lease portfolio during the period. During the three months ended June 30, 2024, we recorded a provision for credit losses of $0.6 million. The provision was primarily the result of current market conditions, including an increase in our Ground Lease cost to value ratios on our Ground Lease portfolio.
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During the three months ended June 30, 2025, other expense consists primarily of legal fees. During the three months ended June 30, 2024, other expense consists primarily of costs related to our debt obligations.
During the three months ended June 30, 2025, earnings from equity method investments (refer to Note 8 to the consolidated financial statements) decreased to $4.9 million from $6.5 million for the same period in 2024. The decrease in 2025 was due primarily to a loan repayment at the Leasehold Loan Fund in March 2025.
During the three months ended June 30, 2025, we recorded consolidated income tax expense of $0.9 million, which was primarily attributable to a deferred tax expense at our taxable REIT subsidiary (“TRS”) and relates to equity-based compensation expense and utilization of net operating loss carryovers to which our TRS is a successor. Included in our consolidated income tax expense for the three months ended June 30, 2025, our TRS recorded current and deferred income tax expense in the amounts of $0.2 million and $0.7 million, respectively. During the three months ended June 30, 2024, we recorded consolidated income tax expense of $0.9 million, which was attributable to our TRS. Included in our consolidated income tax expense for the three months ended June 30, 2024, our TRS recorded current and deferred tax expense in the amounts of $0.7 million and $0.2 million, respectively. The deferred tax expense relates primarily to equity-based compensation expense and utilization of net operating loss carryovers to which our TRS is a successor.
Results of Operations for the Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024
|
| For the Six Months Ended |
|
| | ||||
| | June 30, | | | | ||||
| | 2025 | | 2024 | | $ Change | |||
| | (in thousands) | |||||||
Revenues: |
| |
|
| |
|
| |
|
Interest income from sales-type leases | | $ | 140,306 | | $ | 128,453 | | $ | 11,853 |
Operating lease income | |
| 38,088 | |
| 37,694 | |
| 394 |
Interest income | | | 5,045 | | | 4,714 | | | 331 |
Other income | |
| 8,080 | |
| 12,247 | |
| (4,167) |
Total revenues | |
| 191,519 | |
| 183,108 | |
| 8,411 |
Costs and expenses: | |
|
| |
|
| |
| |
Interest expense | |
| 101,691 | |
| 97,738 | |
| 3,953 |
Real estate expense | |
| 2,039 | |
| 2,120 | |
| (81) |
Depreciation and amortization | |
| 4,323 | |
| 4,977 | |
| (654) |
General and administrative | |
| 27,086 | |
| 27,904 | |
| (818) |
Provision for (recovery of) credit losses | | | 4,646 | | | 1,335 | | | 3,311 |
Other expense | |
| 2,514 | |
| 450 | |
| 2,064 |
Total costs and expenses | |
| 142,299 | |
| 134,524 | |
| 7,775 |
Earnings (losses) from equity method investments | |
| 9,904 | |
| 13,381 | |
| (3,477) |
Net income (loss) before income taxes | |
| 59,124 | |
| 61,965 | |
| (2,841) |
Income tax expense | | | (1,745) | | | (1,381) | | | (364) |
Net income (loss) | | $ | 57,379 | | $ | 60,584 | | $ | (3,205) |
Interest income from sales-type leases increased to $140.3 million for the six months ended June 30, 2025 from $128.5 million for the same period in 2024. The increase was due primarily to originations of Ground Leases and additional fundings on existing Ground Leases classified as sales-type leases and Ground Lease receivables.
Operating lease income increased to $38.1 million for the six months ended June 30, 2025 from $37.7 million for the same period in 2024. Operating lease income consists of rent from our operating leases and percentage rent from certain properties, including our Park Hotels Portfolio. The increase was primarily the result of a $0.3 million increase in percentage rent at our Park Hotels Portfolio.
Interest income relates to the Star Holdings Term Loan Facility (refer to Note 7 to the consolidated financial statements) and three leasehold loans we originated during the six months ended June 30, 2025 in connection with Ground Leases. The increase in 2025 was due primarily to the origination of leasehold loans.
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Other income for the six months ended June 30, 2025 and 2024 includes $6.3 million and $9.9 million, respectively, of management fees from Star Holdings. Other income for both the six months ended June 30, 2025 and 2024 also includes $0.3 million of other income relating to a Ground Lease in which we are the lessee but our tenant at the property pays this expense directly under the terms of a master lease. Other income for the six months ended June 30, 2025 and 2024 also includes $1.5 million and 2.0 million, respectively, of other ancillary income from our investments. Other ancillary income primarily includes sublease income, recoverable expenses and interest income earned on our cash balances.
During the six months ended June 30, 2025 and 2024, we incurred interest expense from our debt obligations of $101.7 million and $97.7 million, respectively. The increase in 2025 was primarily the result of increased indebtedness to fund acquisition activity.
During the six months ended June 30, 2025 and 2024, we incurred real estate expense of $2.0 million and $2.1 million, respectively, which consisted primarily of the amortization of an operating lease right-of-use asset, legal fees, property taxes and insurance expense. In addition, during both the six months ended June 30, 2025 and 2024, we also recorded $0.3 million of real estate expense relating to a Ground Lease in which we are the lessee but our tenant at the property pays this expense directly under the terms of a master lease.
Depreciation and amortization during the six months ended June 30, 2025 and 2024 was $4.3 million and $5.0 million, respectively. Depreciation and amortization primarily relates to our ownership of the Park Hotels Portfolio and a multi-family property, the amortization of in-place lease assets and depreciation of corporate fixed assets. The decrease in 2025 was primarily the result of the tenant under our Park Hotels Portfolio electing to extend the leases underlying three of the five hotels under the lease past the initial lease maturity of December 2025.
General and administrative expenses primarily includes public company costs such as compensation (including equity-based compensation), occupancy and other costs. The following table presents our general and administrative expenses for the six months ended June 30, 2025 and 2024 ($ in thousands):
| | For the Six Months Ended | ||||
| | June 30, | ||||
|
| 2025 |
| 2024 | ||
Public company and other costs(1) | | $ | 20,518 | | $ | 21,246 |
Stock-based compensation | |
| 6,568 | |
| 6,658 |
Total general and administrative expenses(2) | | $ | 27,086 | | $ | 27,904 |
| (1) | For the six months ended June 30, 2025 and 2024, public company and other costs primarily includes compensation, legal, insurance and occupancy costs. |
| (2) | For the six months ended June 30, 2025 and 2024, general and administrative expenses were partially offset by $6.3 million and $9.9 million, respectively, of management fees earned from Star Holdings, which are included in “Other income” in our consolidated statements of operations. |
During the six months ended June 30, 2025, we recorded a provision for credit losses of $4.6 million. The provision for credit losses was due primarily to the origination of three leasehold loans (refer to Note 6 to the consolidated financial statements) during the six months ended June 30, 2025 and current market conditions, including an increase in our Ground Lease cost to value ratios on certain of our assets, and growth in the carrying value of the Ground Lease portfolio during the period. During the six months ended June 30, 2024, we recorded a provision for credit losses of $1.3 million. The provision in 2024 was primarily the result of current market conditions, including an increase in our Ground Lease to cost value ratios on our Ground Lease portfolio.
During the six months ended June 30, 2025, other expense consists primarily of a full write-off of a $1.9 million preferred equity investment in an entity that owned the leasehold interest under one of our Ground Leases (refer to Note 15 to the consolidated financial statements). During the six months ended June 30, 2024, other expense consists primarily of costs related to our debt obligations.
During the six months ended June 30, 2025, earnings from equity method investments (refer to Note 8 to the consolidated financial statements) decreased to $9.9 million from $13.4 million for the same period in 2024. The decrease
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in 2025 was due primarily to loan repayments at the Leasehold Loan Fund and us buying one asset from the Ground Lease Plus Fund in January 2024.
During the six months ended June 30, 2025, we recorded consolidated income tax expense of $1.7 million, which was primarily attributable to a deferred tax expense at our TRS and relates to equity-based compensation expense and utilization of net operating loss carryovers to which our TRS is a successor. Included in our consolidated income tax expense for the six months ended June 30, 2025, our TRS recorded current and deferred tax expense in the amounts of $0.2 million and $1.5 million, respectively. During the six months ended June 30, 2024, we recorded consolidated income tax expense of $1.4 million, of which $1.3 million was attributable to our TRS. Included in our consolidated income tax expense for the six months ended June 30, 2024, our TRS recorded a deferred tax expense in the amount of $1.0 million. The net deferred tax expense relates primarily to equity-based compensation expense and utilization of net operating loss carryovers to which our TRS is a successor.
Liquidity and Capital Resources
Liquidity is a measure of our ability to meet potential cash requirements, including to pay interest and repay borrowings, fund and maintain our assets and operations, complete acquisitions and originations of investments, make distributions to our shareholders and meet other general business needs. In order to qualify as a REIT, we are required under the Internal Revenue Code of 1986 to distribute to our shareholders, on an annual basis, at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. We expect to make quarterly cash distributions to our shareholders sufficient to meet REIT qualification requirements.
We believe the strong credit profile we have established utilizing our modern Ground Leases and our current investment-grade credit ratings from Moody's Investors Services of A3, Fitch Ratings of A- and S&P Global Ratings of BBB+ facilitate our ability to bring commercial real estate owners, developers and sponsors more efficiently priced capital and allows us significant operational and financial flexibility and supports our ability to scale our Ground Lease platform.
On February 4, 2025, our Board authorized the repurchase of up to $50.0 million of our common stock. We have no obligation to repurchase additional shares, and the timing, actual number and value of the shares that are repurchased, if any, will be at the discretion of management and will depend on a number of factors, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. Repurchases may be suspended, terminated or modified at any time for any reason. The share repurchase program does not have an expiration date. Any repurchased shares will be returned to the status of authorized but unissued shares of common stock.
In November 2024 and February 2024, Portfolio Holdings (as issuer) and we (as guarantor), issued an aggregate $700.0 million principal amount of senior notes. In November 2024, we issued $400.0 million aggregate principal amount of 5.65% senior notes due January 2035 (the “5.65% Notes”). The 5.65% Notes were issued at 98.812% of the principal amount. In February 2024, we issued $300.0 million aggregate principal amount of 6.10% senior notes due April 2034 (the “6.10% Notes”). The 6.10% Notes were issued at 98.957% of the principal amount.
In June 2024, we entered into a U.S. commercial paper program (the “Commercial Paper Program”) on a private placement basis, pursuant to which we may issue up to $750.0 million of short-term, unsecured commercial paper notes outstanding at any time, which are guaranteed by us. Under the Commercial Paper Program, we may issue the commercial paper notes from time to time and intend to use the proceeds for general corporate purposes. The Commercial Paper Program is backed by our 2024 Unsecured Revolver (see below). As of June 30, 2025, we had no outstanding balance under the Commercial Paper Program. Borrowings under the Commercial Paper Program reduce amounts otherwise available under the 2024 Unsecured Revolver.
In April 2024, we closed on a new $2.0 billion unsecured revolving credit facility (the “2024 Unsecured Revolver”), which replaced our 2021 Unsecured Revolver and 2023 Unsecured Revolver (refer to Note 10 to the consolidated financial statements), each of which were terminated. At the time of termination, $916 million was drawn on the 2021 Unsecured Revolver, all of which rolled over into the 2024 Unsecured Revolver. The 2024 Unsecured Revolver has a borrowing rate of Adjusted SOFR, as defined in the applicable agreement, plus 0.85%, subject to our credit ratings,
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with an extended maturity date of May 1, 2029, which includes two six-month extension options. The 2024 Unsecured Revolver replaced our nearest term maturities, reduces the overall facility cost and increased our liquidity by $150 million. Additionally, we gained greater financial flexibility through changes to certain financial covenants. As of June 30, 2025, there was $1.2 billion of undrawn capacity on the 2024 Unsecured Revolver.
In April 2023, we entered into an at-the-market equity offering (the “ATM”) pursuant to which we may sell shares of our common stock up to an aggregate purchase price of $300.0 million. We may sell such shares in amounts and at times to be determined by us from time to time, but we have no obligation to sell any of the shares. Actual sales, if any, will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the trading price of our common stock, capital needs, and our determinations of the appropriate sources of funding. As of June 30, 2025, we had not sold any shares under the ATM.
As of June 30, 2025, we had $13.9 million of unrestricted cash. We also have an aggregate $1.2 billion of undrawn capacity on our 2024 Unsecured Revolver (refer to Note 10 to the consolidated financial statements). We refer to this unrestricted cash and additional borrowing capacity on our 2024 Unsecured Revolver as our “equity” liquidity which can be used for general corporate purposes or leveraged to acquire or originate new Ground Lease assets. Our primary sources of cash to date have been proceeds from equity offerings and private placements, proceeds from our initial capitalization by iStar and two institutional investors and borrowings from our debt facilities, unsecured notes, Commercial Paper Program and mortgages. Our primary uses of cash to date have been the acquisition/origination of Ground Leases, repayments on our debt facilities and distributions to our shareholders.
We expect our short-term liquidity requirements to include debt service on our debt obligations (refer to Note 10 to the consolidated financial statements), distributions to our shareholders, working capital, new acquisitions and originations of Ground Lease and leasehold loan investments and additional fundings on existing Ground Leases and leasehold loan investments. We expect our long-term liquidity requirements to include debt service on our debt obligations (refer to Note 10 to the consolidated financial statements), distributions to our shareholders, working capital, new acquisitions and originations of Ground Lease and leasehold loan investments (including in respect of unfunded commitments – refer to Note 11 to the consolidated financial statements) and debt maturities. Our primary sources of liquidity going forward will generally consist of cash on hand and cash flows from operations, new financings, funds from our joint venture partners, unused borrowing capacity under our 2024 Unsecured Revolver (subject to the conditions set forth in the applicable loan agreement) and Commercial Paper Program, and common and/or preferred equity issuances. We expect that we will be able to meet our liquidity requirements over the next 12 months and beyond.
The following table outlines our cash flows provided by (used in) operating activities, cash flows used in investing activities and cash flows provided by financing activities for the six months ended June 30, 2025 and 2024 ($ in thousands):
| | For the Six Months Ended | | ||||
| | June 30, | | ||||
|
| 2025 |
| 2024 |
| ||
Cash flows provided by (used in) operating activities | | $ | 36,902 | | $ | 21,695 | |
Cash flows provided by (used in) investing activities | |
| (123,961) | |
| (136,823) | |
Cash flows provided by (used in) financing activities | |
| 92,878 | |
| 90,410 | |
The increase in cash flows provided by operating activities during 2025 was due primarily to proceeds received from the settlement of derivatives and from an increase in accrued expenses, primarily interest expense, that were not yet paid as of June 30, 2025. The decrease in cash flows used in investing activities during 2025 was due primarily to a decrease in the origination of Ground Leases in 2025 and the payment of temporary cash collateral for debt obligations in 2024, which was partially offset by the origination of leasehold loans in 2025 and a decrease in distributions from equity method investments in 2025. The increase in cash flows provided by financing activities during 2025 was due primarily to activity in 2024, including the redemption of noncontrolling interests and the payment of finance costs, which was partially offset by a decrease in contributions from noncontrolling interests.
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Supplemental Guarantor Disclosure
In March 2020, the Securities and Exchange Commission (“SEC”) adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The amendments became effective on January 4, 2021. In April 2023, we and Portfolio Holdings filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of Portfolio Holdings, which will be fully and unconditionally guaranteed by us. As of June 30, 2025, Portfolio Holdings had issued and outstanding four tranches of unsecured senior notes with varying fixed-rates and maturities ranging from June 2031 to January 2035, which were registered on the Form S-3 filed in April 2023 or on a Form S-3 filed by Safehold Inc. and Portfolio Holdings (then known as Safehold Operating Partnership LP) prior to its merger with the Company (then known as iStar Inc.). The obligations of Portfolio Holdings to pay principal, premiums, if any, and interest on these unsecured senior notes are guaranteed on a senior basis by us. The guarantee is full and unconditional, and Portfolio Holdings is a consolidated subsidiary of ours.
As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of Portfolio Holdings have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for Portfolio Holdings because the assets, liabilities and results of operations of Portfolio Holdings are not materially different than the corresponding amounts in our consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
Critical Accounting Estimates
The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and judgments in certain circumstances that affect amounts reported as assets, liabilities, revenues and expenses. We have established detailed policies and control procedures intended to ensure that valuation methods, including any judgments made as part of such methods, are well controlled, reviewed and applied consistently from period to period. We base our estimates on historical corporate and industry experience and various other assumptions that we believe to be appropriate under the circumstances. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and, therefore, routinely require adjustment.
Loans receivable, net—Loans receivable, net includes senior mortgages that we originated to certain of our Ground Lease tenants in connection with Ground Leases (refer to Note 6 to the consolidated financial statements). Our loans receivable are classified as held-for-investment and are reported at their outstanding unpaid principal balance net of any unamortized acquisition premiums or discounts, unamortized deferred loan costs or fees and credit loss allowances.
We perform a quarterly analysis of our loans receivable that incorporates management’s current judgments about credit quality based on all known and relevant internal and external factors that may affect collectability. We consider, among other things, payment status, lien position, borrower financial resources and investment collateral, collateral type, project economics and other economic factors. We estimate the expected loss on our loans receivable (including unfunded commitments) based on relevant information including current market conditions and reasonable and supportable forecasts that affect the collectability of our investments. The estimate of our expected loss requires significant judgment. We calculate our expected loss through the use of third-party historical market data for loans with similar characteristics to our loan portfolio. We also utilize a third-party to provide forecasts to incorporate current and future economic conditions that may impact the performance of the commercial real estate assets securing our investments.
For a discussion of our remaining critical accounting policies, refer to Note 3 to the consolidated financial statements of our 2024 Annual Report.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market Risks
Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market prices and interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. One of the principal market risks facing us is interest rate risk on our floating rate indebtedness.
Subject to qualifying and maintaining our qualification as a REIT for U.S. federal income tax purposes, we may mitigate the risk of interest rate volatility through the use of hedging instruments, such as interest rate swap agreements and interest rate cap agreements. Our primary objectives when undertaking hedging transactions will be to reduce our floating rate exposure and to fix a portion of the interest rate for anticipated financing and refinancing transactions. However, we can provide no assurances that our efforts to manage interest rate volatility will successfully mitigate the risks of such volatility on our portfolio. Our current portfolio is not subject to foreign currency risk.
Our objectives with respect to interest rate risk are to limit the impact of interest rate changes on operations and cash flows, and to lower our overall borrowing costs. To achieve these objectives, we may borrow at fixed rates and may enter into hedging instruments such as interest rate swap agreements and interest rate cap agreements in order to mitigate our interest rate risk on a related floating rate financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes.
As of June 30, 2025, we had $3.6 billion principal amount of fixed-rate debt outstanding and $0.9 billion principal amount of floating-rate debt outstanding. The following table quantifies the potential changes in annual net income should interest rates decrease or increase by 10, 50 and 100 basis points, assuming no change in our interest earning assets, interest bearing liabilities, derivative contracts or the shape of the yield curve (i.e., relative interest rates). Actual results could differ significantly from those estimated in the table.
Estimated Change In Net Income
($ in thousands)(1)
Change in Interest Rates |
| Net Income (Loss) | |
-100 Basis Points | | $ | 3,478 |
-50 Basis Points | | | 1,700 |
-10 Basis Points | | | 339 |
Base Interest Rate | |
| — |
+10 Basis Points | |
| (338) |
+ 50 Basis Points | |
| (1,689) |
+100 Basis Points | |
| (3,378) |
| (1) | The table above includes the effect of our floating-rate debt obligations, interest rate swaps, floating-rate loans and our share of the impact of floating-rate loans in our Leasehold Loan Fund. |
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Item 4. Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and its Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company has formed a disclosure committee that is responsible for considering the materiality of information and determining the disclosure obligations of the Company on a timely basis. The disclosure committee reports directly to the Company’s Chief Executive Officer and Chief Financial Officer.
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the disclosure committee and other members of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) or Rule 15d-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.
There have been no changes in the Company’s internal control over financial reporting during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently party to any pending legal proceedings that we believe could have a material adverse effect on our business or financial condition. However, we may be subject to various claims and legal actions arising in the ordinary course of business from time to time.
Item 1A. Risk Factors
There were no material changes from the risk factors previously disclosed in our 2024 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
We did not have any sales of unregistered shares of our common stock during the three months ended June 30, 2025.
Issuer Purchases of Equity Securities
|
| |
| | |
| Total Number of Shares |
| Maximum Dollar Value | |
| | | | | | | Purchased as Part of a | | of Shares that May Yet | |
| | Total Number of | | Average Price | | Publicly Announced | | be Purchased Under the | ||
| | Shares Purchased | | Paid per Share | | Plans or Programs | | Plans or Programs(1) | ||
April 1 to April 30 |
| — | | $ | — |
| — | | $ | 50,000,000 |
May 1 to May 31 |
| — | | $ | — |
| — | | $ | 50,000,000 |
June 1 to June 30 |
| — | | $ | — |
| — | | $ | 50,000,000 |
| (1) | On February 4, 2025, our Board authorized the repurchase of up to $50.0 million of our common stock. We have no obligation to repurchase additional shares, and the timing, actual number and value of the shares that are repurchased, if any, will be at the discretion of management and will depend on a number of factors, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. Repurchases may be suspended, terminated or modified at any time for any reason. The share repurchase program does not have an expiration date. Any repurchased shares will be returned to the status of authorized but unissued shares of common stock. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 6. Exhibits
INDEX TO EXHIBITS
| | |
Exhibit |
| Document Description |
2.1 | | |
3.1 | | |
3.2 | | |
22.1* | | |
31.0* | | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act. |
32.0** | | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act. |
101.INS | | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | | Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | | Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Safehold Inc. | |
| Registrant | |
| | |
Date: | August 6, 2025 | /s/ JAY SUGARMAN |
| Jay Sugarman | |
| Chairman of the Board of Directors and Chief | |
| Executive Officer (principal executive officer) | |
| | |
| | |
| | |
| Safehold Inc. | |
| Registrant | |
| | |
Date: | August 6, 2025 | /s/ BRETT ASNAS |
| Brett Asnas | |
| Chief Financial Officer | |
| (principal financial officer) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
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Exhibit 22.1
List of Issuers of Guaranteed Securities
As of June 30, 2025, the following subsidiary was the issuer of the 2.80% senior notes due June 2031, the 2.85% senior notes due January 2032, the 6.10% senior notes due April 2034 and the 5.65% senior notes due January 2035 guaranteed by Safehold Inc.
Name of Subsidiary | Jurisdiction of Organization |
Safehold GL Holdings LLC | Delaware |
Exhibit 31.0
CERTIFICATION
I, Jay Sugarman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Safehold Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: | August 6, 2025 | By: | /s/ JAY SUGARMAN | |
| | Name: | Jay Sugarman | |
| | Title: | Chief Executive Officer | |
CERTIFICATION
I, Brett Asnas, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Safehold Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: | August 6, 2025 | By: | /s/ BRETT ASNAS | |
| | Name: | Brett Asnas | |
| | Title: | Chief Financial Officer (principal financial officer) | |
Exhibit 32.0
Certification of Chief Executive Officer
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
The undersigned, the Chief Executive Officer of Safehold Inc. (the "Company"), hereby certifies on the date hereof, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (the "Form 10-Q"), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: | August 6, 2025 | By: | /s/ JAY SUGARMAN | |
| | Name: | Jay Sugarman | |
| | Title: | Chief Executive Officer | |
Certification of Principal Financial Officer
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
The undersigned, the Chief Financial Officer of Safehold Inc. (the "Company"), hereby certifies on the date hereof, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (the "Form 10-Q"), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: | August 6, 2025 | By: | /s/ BRETT ASNAS | |
| | Name: | Brett Asnas | |
| | Title: | Chief Financial Officer (principal financial officer) | |