0001688852--12-312022Q2false5661900062054000P30Y58800000P12M3.000001688852srt:DirectorMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:A2017EquityIncentivePlanMember2022-04-012022-06-300001688852srt:DirectorMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:A2017EquityIncentivePlanMember2021-04-012021-06-300001688852safe:EmployeeOfManagerMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:A2017EquityIncentivePlanMember2019-01-012019-03-310001688852us-gaap:RetainedEarningsMember2022-06-300001688852us-gaap:NoncontrollingInterestMember2022-06-300001688852us-gaap:CommonStockMember2022-06-300001688852us-gaap:AdditionalPaidInCapitalMember2022-06-300001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001688852us-gaap:RetainedEarningsMember2022-03-310001688852us-gaap:NoncontrollingInterestMember2022-03-310001688852us-gaap:CommonStockMember2022-03-310001688852us-gaap:AdditionalPaidInCapitalMember2022-03-310001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001688852us-gaap:RetainedEarningsMember2021-12-310001688852us-gaap:NoncontrollingInterestMember2021-12-310001688852us-gaap:CommonStockMember2021-12-310001688852us-gaap:AdditionalPaidInCapitalMember2021-12-310001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001688852us-gaap:RetainedEarningsMember2021-06-300001688852us-gaap:NoncontrollingInterestMember2021-06-300001688852us-gaap:CommonStockMember2021-06-300001688852us-gaap:AdditionalPaidInCapitalMember2021-06-300001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001688852us-gaap:RetainedEarningsMember2021-03-310001688852us-gaap:NoncontrollingInterestMember2021-03-310001688852us-gaap:CommonStockMember2021-03-310001688852us-gaap:AdditionalPaidInCapitalMember2021-03-310001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100016888522021-03-310001688852us-gaap:RetainedEarningsMember2020-12-310001688852us-gaap:NoncontrollingInterestMember2020-12-310001688852us-gaap:CommonStockMember2020-12-310001688852us-gaap:AdditionalPaidInCapitalMember2020-12-310001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001688852srt:DirectorMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:A2017EquityIncentivePlanMember2022-06-300001688852us-gaap:IPOMember2022-06-300001688852srt:DirectorMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:A2017EquityIncentivePlanMember2021-06-300001688852safe:EmployeeOfManagerMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:A2017EquityIncentivePlanMember2019-03-310001688852safe:EmployeeOfManagerMembersafe:CaretUnitsMembersafe:EquityPlanMember2020-03-310001688852safe:EmployeeOfManagerMembersafe:CaretUnitsMembersafe:EquityPlanMember2020-02-290001688852safe:CaretUnitsMembersafe:EquityPlanMember2018-09-300001688852safe:NetInvestmentinSalestypeLeasesMemberus-gaap:CashMember2022-04-012022-06-300001688852safe:NetInvestmentinSalestypeLeasesMembersafe:NoncashMember2022-04-012022-06-300001688852safe:GroundLeaseReceivablesNetMemberus-gaap:CashMember2022-04-012022-06-300001688852safe:GroundLeaseReceivablesNetMembersafe:NoncashMember2022-04-012022-06-300001688852us-gaap:CashMember2022-04-012022-06-300001688852safe:NoncashMember2022-04-012022-06-300001688852safe:NetInvestmentinSalestypeLeasesMember2022-04-012022-06-300001688852safe:GroundLeaseReceivablesNetMember2022-04-012022-06-300001688852safe:NetInvestmentinSalestypeLeasesMemberus-gaap:CashMember2022-01-012022-06-300001688852safe:NetInvestmentinSalestypeLeasesMembersafe:NoncashMember2022-01-012022-06-300001688852safe:GroundLeaseReceivablesNetMemberus-gaap:CashMember2022-01-012022-06-300001688852safe:GroundLeaseReceivablesNetMembersafe:NoncashMember2022-01-012022-06-300001688852us-gaap:CashMember2022-01-012022-06-300001688852safe:NoncashMember2022-01-012022-06-300001688852safe:NetInvestmentinSalestypeLeasesMember2022-01-012022-06-300001688852safe:GroundLeasesWithIstarIncMember2022-01-012022-06-300001688852safe:GroundLeaseReceivablesNetMember2022-01-012022-06-300001688852safe:NetInvestmentinSalestypeLeasesMemberus-gaap:CashMember2021-04-012021-06-300001688852safe:NetInvestmentinSalestypeLeasesMembersafe:NoncashMember2021-04-012021-06-300001688852safe:GroundLeaseReceivablesNetMemberus-gaap:CashMember2021-04-012021-06-300001688852safe:GroundLeaseReceivablesNetMembersafe:NoncashMember2021-04-012021-06-300001688852us-gaap:CashMember2021-04-012021-06-300001688852safe:NoncashMember2021-04-012021-06-300001688852safe:NetInvestmentinSalestypeLeasesMember2021-04-012021-06-300001688852safe:GroundLeasesWithIstarIncMember2021-04-012021-06-300001688852safe:GroundLeaseReceivablesNetMember2021-04-012021-06-300001688852safe:NetInvestmentinSalestypeLeasesMemberus-gaap:CashMember2021-01-012021-06-300001688852safe:NetInvestmentinSalestypeLeasesMembersafe:NoncashMember2021-01-012021-06-300001688852safe:GroundLeaseReceivablesNetMemberus-gaap:CashMember2021-01-012021-06-300001688852safe:GroundLeaseReceivablesNetMembersafe:NoncashMember2021-01-012021-06-300001688852us-gaap:CashMember2021-01-012021-06-300001688852safe:NoncashMember2021-01-012021-06-300001688852safe:NetInvestmentinSalestypeLeasesMember2021-01-012021-06-300001688852safe:GroundLeasesWithIstarIncMember2021-01-012021-06-300001688852safe:GroundLeaseReceivablesNetMember2021-01-012021-06-300001688852safe:CaretUnitsMember2022-01-012022-06-300001688852safe:IStarInc.Memberus-gaap:PrivatePlacementMember2022-03-012022-03-310001688852safe:IStarInc.Memberus-gaap:GeneralAndAdministrativeExpenseMember2022-04-012022-06-300001688852safe:ManagerMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:IncentiveFeeMember2022-01-012022-06-300001688852safe:IStarInc.Memberus-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-06-300001688852safe:IStarInc.Memberus-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001688852safe:IStarInc.Memberus-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001688852safe:PublicOfferingMember2022-03-012022-03-310001688852us-gaap:LandMember2022-03-012022-03-310001688852us-gaap:LandMember2021-12-012021-12-310001688852srt:MultifamilyMembersafe:MultiFamilyProjectUnderConstructionMembersafe:IStarInc.Member2021-09-012021-09-300001688852safe:PublicOfferingAndPrivatePlacementMember2022-03-012022-03-310001688852safe:AtMarketEquityOfferingMember2021-02-012022-06-300001688852safe:LifeScienceOfficePropertyDevelopmentMember2022-06-300001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-300001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001688852us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-300001688852us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestExpenseMember2021-04-012021-06-300001688852us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestExpenseMember2022-04-012022-06-300001688852us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestExpenseMember2022-01-012022-06-300001688852us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestExpenseMember2021-01-012021-06-300001688852safe:PercentageRentMember2022-04-012022-06-300001688852safe:PercentageRentMember2022-01-012022-06-300001688852safe:PercentageRentMember2021-04-012021-06-300001688852safe:PercentageRentMember2021-01-012021-06-300001688852us-gaap:OtherIncomeMember2022-04-012022-06-300001688852safe:RealEstateExpenseMember2022-04-012022-06-300001688852us-gaap:OtherIncomeMember2022-01-012022-06-300001688852safe:RealEstateExpenseMember2022-01-012022-06-300001688852us-gaap:OtherIncomeMember2021-04-012021-06-300001688852safe:RealEstateExpenseMember2021-04-012021-06-300001688852us-gaap:OtherIncomeMember2021-01-012021-06-300001688852safe:RealEstateExpenseMember2021-01-012021-06-300001688852us-gaap:GeneralAndAdministrativeExpenseMember2022-04-012022-06-300001688852us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-06-300001688852us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001688852us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001688852us-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001688852us-gaap:FairValueInputsLevel1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001688852us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001688852us-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001688852us-gaap:FairValueInputsLevel1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001688852us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001688852safe:SafeholdOperatingPartnershipLPMember2022-01-012022-06-300001688852safe:PropertyAt425ParkAvenueNewYorkCityMemberus-gaap:CorporateJointVentureMember2022-04-012022-06-300001688852safe:OfficePropertyNewYorkCityMember2022-04-012022-06-300001688852safe:PropertyAt425ParkAvenueNewYorkCityMemberus-gaap:CorporateJointVentureMember2022-01-012022-06-300001688852safe:OfficePropertyNewYorkCityMember2022-01-012022-06-300001688852safe:PropertyAt425ParkAvenueNewYorkCityMemberus-gaap:CorporateJointVentureMember2021-04-012021-06-300001688852safe:OfficePropertyNewYorkCityMember2021-04-012021-06-300001688852safe:PropertyAt425ParkAvenueNewYorkCityMemberus-gaap:CorporateJointVentureMember2021-01-012021-06-300001688852safe:OfficePropertyNewYorkCityMember2021-01-012021-06-300001688852safe:ExpensesWithRelatedPartyEquityBasedCompensationMember2022-04-012022-06-300001688852safe:ExpensesWithRelatedPartyEquityBasedCompensationMember2022-01-012022-06-300001688852safe:ExpensesWithRelatedPartyEquityBasedCompensationMember2021-04-012021-06-300001688852safe:ExpensesWithRelatedPartyEquityBasedCompensationMember2021-01-012021-06-300001688852us-gaap:OtherIntangibleAssetsMember2022-06-300001688852us-gaap:LeasesAcquiredInPlaceMember2022-06-300001688852us-gaap:AboveMarketLeasesMember2022-06-300001688852us-gaap:OtherIntangibleAssetsMember2021-12-310001688852us-gaap:LeasesAcquiredInPlaceMember2021-12-310001688852us-gaap:AboveMarketLeasesMember2021-12-310001688852safe:OfficePropertyNewYorkCityMember2022-06-300001688852safe:PropertyAt425ParkAvenueNewYorkCityMemberus-gaap:CorporateJointVentureMember2021-12-310001688852safe:OfficePropertyNewYorkCityMember2021-12-310001688852safe:PropertyAt425ParkAvenueNewYorkCityMemberus-gaap:CorporateJointVentureMember2022-06-300001688852safe:OfficePropertyNewYorkCityMember2021-06-300001688852us-gaap:OtherLiabilitiesMember2022-06-300001688852us-gaap:OtherLiabilitiesMember2021-12-310001688852us-gaap:RetainedEarningsMember2022-04-012022-06-300001688852us-gaap:RetainedEarningsMember2022-01-012022-06-300001688852us-gaap:RetainedEarningsMember2021-04-012021-06-300001688852us-gaap:RetainedEarningsMember2021-01-012021-06-300001688852safe:ReclassificationOfLeaseToSalesTypeLeaseMember2021-09-300001688852safe:SeniorNotes2.85PercentMemberus-gaap:UnsecuredDebtMember2022-06-300001688852safe:SeniorNotes2.80PercentMemberus-gaap:UnsecuredDebtMember2022-06-300001688852safe:SeniorNotes2.85PercentMemberus-gaap:UnsecuredDebtMember2021-12-310001688852safe:SeniorNotes2.80PercentMemberus-gaap:UnsecuredDebtMember2021-12-310001688852safe:SeniorNotes2.85PercentMemberus-gaap:UnsecuredDebtMember2021-06-300001688852safe:SeniorNotes2.80PercentMemberus-gaap:UnsecuredDebtMember2021-06-300001688852safe:SeniorNotes3.980PercentDue2052Memberus-gaap:UnsecuredDebtMember2022-01-310001688852safe:SeniorNotes2.85PercentMemberus-gaap:UnsecuredDebtMember2021-11-300001688852safe:SeniorNotes2.80PercentMemberus-gaap:UnsecuredDebtMember2021-05-310001688852us-gaap:RevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2022-06-300001688852safe:SeniorNotes5.15PercentDueMay2052Memberus-gaap:UnsecuredDebtMember2022-06-300001688852safe:SeniorNotes3.980PercentDue2052Memberus-gaap:UnsecuredDebtMember2022-06-300001688852us-gaap:RevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2021-12-310001688852us-gaap:MortgagesMemberus-gaap:SecuredDebtMember2021-12-310001688852us-gaap:UnsecuredDebtMember2021-12-310001688852us-gaap:SecuredDebtMember2021-12-310001688852us-gaap:RevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-06-300001688852us-gaap:RevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-03-012021-03-310001688852us-gaap:RevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-01-012021-12-310001688852us-gaap:RestrictedStockUnitsRSUMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:A2017EquityIncentivePlanMember2022-06-300001688852us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001688852us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001688852us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-06-300001688852us-gaap:OtherIntangibleAssetsMembersafe:OperatingLeaseIncomeMember2022-04-012022-06-300001688852us-gaap:LeasesAcquiredInPlaceMembersafe:DepreciationandAmortizationMember2022-04-012022-06-300001688852us-gaap:AboveMarketLeasesMembersafe:OperatingLeaseIncomeMember2022-04-012022-06-300001688852us-gaap:OtherIntangibleAssetsMembersafe:OperatingLeaseIncomeMember2022-01-012022-06-300001688852us-gaap:LeasesAcquiredInPlaceMembersafe:DepreciationandAmortizationMember2022-01-012022-06-300001688852us-gaap:AboveMarketLeasesMembersafe:OperatingLeaseIncomeMember2022-01-012022-06-300001688852us-gaap:OtherIntangibleAssetsMembersafe:OperatingLeaseIncomeMember2021-04-012021-06-300001688852us-gaap:LeasesAcquiredInPlaceMembersafe:DepreciationandAmortizationMember2021-04-012021-06-300001688852us-gaap:AboveMarketLeasesMembersafe:OperatingLeaseIncomeMember2021-04-012021-06-300001688852us-gaap:OtherIntangibleAssetsMembersafe:OperatingLeaseIncomeMember2021-01-012021-06-300001688852us-gaap:LeasesAcquiredInPlaceMembersafe:DepreciationandAmortizationMember2021-01-012021-06-300001688852us-gaap:AboveMarketLeasesMembersafe:OperatingLeaseIncomeMember2021-01-012021-06-300001688852safe:CaretUnitsMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:EquityPlanMember2022-01-012022-06-300001688852safe:CaretUnitsMemberus-gaap:GeneralAndAdministrativeExpenseMembersafe:EquityPlanMember2021-01-012021-06-300001688852safe:OtherLiabilityDueToRelatedPartyMember2022-06-300001688852safe:OtherLiabilityDueToRelatedPartyMember2021-12-310001688852safe:IStarInc.Membersrt:MaximumMember2022-06-300001688852safe:MultiFamilyProjectUnderConstructionMemberus-gaap:LandMembersafe:IStarInc.Member2021-03-012021-03-310001688852safe:SeniorNotes5.15PercentDueMay2052Memberus-gaap:UnsecuredDebtMember2022-05-310001688852srt:MaximumMembersafe:CaretUnitsMembersafe:EquityPlanMember2022-06-300001688852safe:EmployeeOfManagerMembersafe:CaretUnitsMembersafe:EquityPlanMember2022-01-012022-06-300001688852safe:EquityPlanMember2022-01-012022-06-300001688852safe:FixedBumpswithPercentageRentMember2022-06-300001688852safe:FixedBumpswithInflationAdjustmentsMember2022-06-300001688852safe:FixedBumpsMember2022-06-300001688852safe:AtMarketEquityOfferingMember2022-06-300001688852srt:MaximumMembersafe:AtMarketEquityOfferingMember2021-02-012021-02-280001688852srt:MinimumMember2022-06-300001688852srt:MaximumMember2022-06-300001688852safe:VentureOfIstarAndShareholderAffiliateMembersafe:MixedUseMembersafe:IstarAffiliateMember2022-06-300001688852safe:GroundLeaseTenantMembersafe:LifeScienceOfficePropertyDevelopmentMembersafe:IstarAffiliateMember2022-02-280001688852srt:MaximumMembersafe:LandAndRelatedGroundLeaseMembersafe:IStarInc.Member2021-06-300001688852safe:OfficeSpaceDevelopmentPropertyMember2021-06-300001688852safe:CaretUnitsMember2021-12-012021-12-010001688852safe:CaretUnitsMember2021-08-012021-08-310001688852safe:IStarInc.Member2022-03-012022-03-310001688852safe:IStarInc.Member2021-06-012021-06-300001688852safe:MixedUseMembersafe:IstarAffiliateMember2022-06-012022-06-300001688852safe:LifeScienceOfficePropertyDevelopmentMembersafe:IstarAffiliateMember2022-02-012022-02-280001688852safe:IStarInc.Membersafe:MultiFamilyProjectUnderConstructionMemberus-gaap:LandMember2021-03-012022-06-300001688852safe:IStarInc.Membersafe:SAFEMember2022-06-3000016888522021-09-3000016888522022-03-310001688852safe:IStarInc.Member2022-03-310001688852srt:DirectorMember2022-03-012022-03-310001688852safe:CaretUnitsMember2022-02-012022-02-280001688852safe:IstarAffiliateMember2022-02-012022-02-280001688852safe:IStarInc.Membersafe:MultiFamilyProjectUnderConstructionMemberus-gaap:LandMember2021-03-012021-03-310001688852safe:MixedUseMembersafe:IstarShareholderAffiliateMember2022-06-012022-06-300001688852safe:EmployeeOfManagerMembersafe:CaretUnitsMembersafe:EquityPlanMember2020-03-012020-03-310001688852safe:IStarInc.Membersafe:MultiFamilyProjectUnderConstructionMemberus-gaap:LandMember2021-03-310001688852us-gaap:MortgagesMemberus-gaap:SecuredDebtMember2022-01-012022-06-300001688852us-gaap:UnsecuredDebtMember2022-06-300001688852us-gaap:SecuredDebtMember2022-06-300001688852safe:PercentageRentMember2022-06-300001688852safe:InflationLinkedEscalationsMember2022-06-300001688852safe:FixedBumpswithPercentageRentMember2022-06-300001688852safe:FixedBumpswithInflationAdjustmentsMember2022-06-300001688852safe:FixedBumpsMember2022-06-300001688852safe:ReclassificationOfLeaseToSalesTypeLeaseMember2021-09-012021-09-300001688852us-gaap:NoncontrollingInterestMember2022-04-012022-06-300001688852us-gaap:CommonStockMember2022-04-012022-06-300001688852us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000016888522022-04-012022-06-300001688852us-gaap:NoncontrollingInterestMember2022-01-012022-06-300001688852us-gaap:CommonStockMember2022-01-012022-06-300001688852us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-300001688852us-gaap:NoncontrollingInterestMember2021-04-012021-06-300001688852us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-3000016888522021-04-012021-06-300001688852us-gaap:NoncontrollingInterestMember2021-01-012021-06-300001688852us-gaap:CommonStockMember2021-01-012021-06-300001688852us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-300001688852safe:OfficeSpaceDevelopmentPropertyMember2021-06-012021-06-300001688852srt:WeightedAverageMember2022-01-012022-06-300001688852us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001688852us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001688852us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001688852us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-3100016888522021-12-3100016888522021-06-3000016888522020-12-310001688852srt:MinimumMember2022-01-012022-06-300001688852srt:MaximumMember2022-01-012022-06-300001688852safe:MixedUseMember2022-06-012022-06-300001688852safe:IStarInc.Membersafe:MultiFamilyProjectUnderConstructionMember2021-03-012021-03-310001688852srt:HotelMembersafe:GroundLeaseTenantForRecapitalizationOfExistingHotelPropertyMembersafe:IStarInc.Member2021-02-012021-02-280001688852safe:IStarInc.Memberus-gaap:SubsequentEventMember2022-07-012022-07-310001688852safe:IStarInc.Member2022-04-012022-04-300001688852safe:AccountsPayableAccruedExpensesandOtherLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-01-012021-06-300001688852safe:SeniorNotes5.15PercentDueMay2052Memberus-gaap:UnsecuredDebtMember2022-05-012022-05-310001688852safe:SeniorNotes3.980PercentDue2052Memberus-gaap:UnsecuredDebtMember2022-01-012022-01-310001688852us-gaap:RevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2021-03-310001688852safe:SeniorNotes2.85PercentMemberus-gaap:UnsecuredDebtMember2021-11-012021-11-300001688852safe:SeniorNotes2.80PercentMemberus-gaap:UnsecuredDebtMember2021-05-012021-05-310001688852us-gaap:RevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2021-03-012021-03-310001688852srt:MinimumMemberus-gaap:SeniorNotesMemberus-gaap:UnsecuredDebtMember2022-06-300001688852srt:MinimumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2022-06-300001688852us-gaap:MortgagesMemberus-gaap:SecuredDebtMember2022-06-300001688852safe:ConsolidatedMortgageDebtUnconsolidatedMortgageDebtAndUnsecuredSeniorNotesMember2022-06-300001688852safe:IStarInc.Member2022-01-012022-06-3000016888522021-12-012021-12-0100016888522021-08-012021-08-3100016888522021-01-012021-06-300001688852safe:BelowMarketLeasesMember2022-06-300001688852safe:BelowMarketLeasesMember2021-12-310001688852safe:BelowMarketLeasesMembersafe:OperatingLeaseIncomeMember2022-04-012022-06-300001688852safe:OperatingLeaseIncomeMember2022-01-012022-06-300001688852safe:BelowMarketLeasesMembersafe:OperatingLeaseIncomeMember2021-04-012021-06-300001688852safe:OperatingLeaseIncomeMember2021-01-012021-06-300001688852srt:MaximumMembersafe:LandAndRelatedGroundLeaseMembersafe:IStarInc.Member2022-01-310001688852safe:LandAndRelatedGroundLeaseMembersafe:IStarInc.Member2022-01-012022-01-310001688852safe:LandAndRelatedGroundLeaseMembersafe:IStarInc.Member2021-11-012021-11-300001688852safe:LandAndRelatedGroundLeaseMembersafe:IStarInc.Member2021-06-012021-06-300001688852safe:LandAndRelatedGroundLeaseMembersafe:IStarInc.Member2022-01-310001688852safe:LandAndRelatedGroundLeaseMembersafe:IStarInc.Member2021-11-300001688852safe:LandAndRelatedGroundLeaseMembersafe:IStarInc.Member2021-06-3000016888522022-06-3000016888522022-08-0100016888522022-01-012022-06-30safe:leasesafe:propertysafe:segmentxbrli:sharessafe:employeexbrli:pureiso4217:USDiso4217:USDxbrli:sharessafe:itemutr:sqftsafe:agreementsafe:director

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to            

Commission File No. 001-38122

Safehold Inc.

(Exact name of registrant as specified in its charter)

Maryland

30-0971238

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

1114 Avenue of the Americas

 

39th Floor

New York

,

NY

10036

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (212930-9400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

SAFE

 

NYSE

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. Yes  No 

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 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 

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.

Large Accelerated filer

  

Accelerated filer

  

Non-accelerated filer

  

Smaller reporting company

  

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes     No 

As of August 1, 2022, there were 62,187,433 shares, $0.01 par value per share, of Safehold Inc. common stock outstanding.

Table of Contents

TABLE OF CONTENTS

 

 

Page

PART I

Consolidated Financial Information

Item 1.

Financial Statements:

Consolidated Balance Sheets (unaudited) as of June 30, 2022 and December 31, 2021

1

Consolidated Statements of Operations (unaudited)—For the three and six months ended

June 30, 2022 and 2021

2

Consolidated Statements of Comprehensive Income (Loss) (unaudited)—For the three and six months ended June 30, 2022 and 2021

3

Consolidated Statements of Changes in Equity (unaudited)—For the three and six months ended June 30, 2022 and 2021

4

Consolidated Statements of Cash Flows (unaudited)—For the six months ended June 30, 2022 and 2021

6

Notes to Consolidated Financial Statements (unaudited)

7

Item 2.

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

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

38

PART II

Other Information

40

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3.

Defaults Upon Senior Securities

40

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

40

Item 6.

Exhibits

41

SIGNATURES

42

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,

    

2022

    

2021

ASSETS

 

  

 

  

Net investment in sales-type leases

$

2,911,681

$

2,412,716

Ground Lease receivables

 

1,235,744

 

796,252

Real estate

 

  

 

  

Real estate, at cost

740,971

740,971

Less: accumulated depreciation

 

(31,357)

 

(28,343)

Real estate, net

 

709,614

 

712,628

Real estate-related intangible assets, net

 

223,304

 

224,182

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

 

932,918

 

936,810

Equity investments in Ground Leases

 

176,854

 

173,374

Cash and cash equivalents

 

25,002

 

29,619

Restricted cash

 

86,623

 

8,897

Deferred operating lease income receivable

 

133,123

 

117,311

Deferred expenses and other assets, net

 

40,588

 

40,747

Total assets

$

5,542,533

$

4,515,726

LIABILITIES AND EQUITY

 

  

 

  

Liabilities:

 

  

 

  

Accounts payable, accrued expenses and other liabilities(2)

$

147,775

$

67,592

Real estate-related intangible liabilities, net

 

65,010

 

65,429

Debt obligations, net

 

3,273,419

 

2,697,503

Total liabilities

 

3,486,204

 

2,830,524

Commitments and contingencies (refer to Note 9)

 

  

 

  

Redeemable noncontrolling interests (refer to Note 3)

19,000

Equity:

 

  

 

  

Safehold Inc. shareholders' equity:

 

  

 

  

Common stock, $0.01 par value, 400,000 shares authorized, 62,054 and 56,619 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

621

 

566

Additional paid-in capital

 

1,975,933

 

1,663,324

Retained earnings

 

85,405

 

59,368

Accumulated other comprehensive loss

 

(27,950)

 

(40,980)

Total Safehold Inc. shareholders' equity

 

2,034,009

 

1,682,278

Noncontrolling interests

 

3,320

 

2,924

Total equity

 

2,037,329

 

1,685,202

Total liabilities, redeemable noncontrolling interests and equity

$

5,542,533

$

4,515,726

(1)Refer to Note 2 for details on the Company’s consolidated variable interest entities (“VIEs”).
(2)As of June 30, 2022 and December 31, 2021, includes $8.6 million and $6.2 million, respectively, due to related parties.

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

1

Table of Contents

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, 

    

2022

    

2021

    

2022

    

2021

    

Revenues:

 

  

 

  

 

  

 

  

 

Interest income from sales-type leases(1)

$

48,247

$

27,126

$

91,278

$

53,100

Operating lease income

16,452

16,964

33,418

34,374

Other income

 

185

 

123

 

551

 

246

Total revenues

 

64,884

 

44,213

 

125,247

 

87,720

Costs and expenses:

 

  

 

  

 

  

 

  

Interest expense

 

30,266

 

19,160

 

55,586

 

36,327

Real estate expense

 

699

 

722

 

1,407

 

1,319

Depreciation and amortization

 

2,406

 

2,385

 

4,808

 

4,770

General and administrative(2)

 

10,458

 

8,074

 

19,651

 

14,729

Other expense

 

596

 

21

 

705

 

391

Total costs and expenses

 

44,425

 

30,362

 

82,157

 

57,536

Income from operations before other items

 

20,459

 

13,851

 

43,090

 

30,184

Loss on early extinguishment of debt

 

 

 

 

(216)

Earnings from equity method investments

 

2,252

 

929

 

4,528

 

1,768

Net income

 

22,711

 

14,780

 

47,618

 

31,736

Net income attributable to noncontrolling interests

 

(33)

 

(48)

 

(67)

 

(96)

Net income attributable to Safehold Inc. common shareholders

$

22,678

$

14,732

$

47,551

$

31,640

Per common share data:

 

  

 

  

 

  

 

  

Net income

 

  

 

  

 

  

 

  

Basic

$

0.37

$

0.28

$

0.79

$

0.59

Diluted

$

0.37

$

0.28

$

0.79

$

0.59

Weighted average number of common shares:

 

  

 

  

  

Basic

 

62,011

 

53,309

 

60,077

 

53,271

Diluted

 

62,011

 

53,321

 

60,077

 

53,283

(1)For the three months ended June 30, 2021, the Company recorded $2.1 million of “Interest income from sales-type leases” in its consolidated statements of operations from its Ground Leases with iStar Inc. (“iStar”). For the six months ended June 30, 2022 and 2021, the Company recorded $2.1 million and $4.2 million, respectively, of “Interest income from sales-type leases” in its consolidated statements of operations from its Ground Leases with iStar.
(2)For the three months ended June 30, 2022 and 2021, includes $9.5 million and $6.6 million, respectively, of general and administrative expenses incurred to related parties that includes management fees, expense reimbursements to the Company’s Manager and equity-based compensation. For the six months ended June 30, 2022 and 2021, includes $17.4 million and $12.1 million, respectively, of general and administrative expenses incurred to related parties that includes management fees, expense reimbursements to the Company’s Manager and equity-based compensation

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

2

Table of Contents

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, 

    

2022

    

2021

    

2022

    

2021

    

Net income

$

22,711

$

14,780

$

47,618

$

31,736

Other comprehensive income (loss):

 

  

 

  

 

  

 

  

Reclassification of losses on derivatives into earnings

 

969

 

764

 

2,002

 

1,122

Unrealized gain on derivatives

 

6,772

 

 

11,028

 

13,290

Other comprehensive income (loss)

 

7,741

 

764

 

13,030

 

14,412

Comprehensive income

 

30,452

 

15,544

 

60,648

 

46,148

Comprehensive income attributable to noncontrolling interests

 

(33)

 

(48)

 

(67)

 

(96)

Comprehensive income attributable to Safehold Inc.

$

30,419

$

15,496

$

60,581

$

46,052

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

3

Table of Contents

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

    

Interests(1)

    

    

Par

    

Capital

    

Deficit)

    

Income (Loss)

    

Interests

    

Equity

Balance at March 31, 2022

$

19,000

$

619

$

1,970,443

$

73,711

$

(35,691)

$

3,245

$

2,012,327

Net income

 

 

 

 

22,678

 

 

33

 

22,711

Issuance of common stock, net / amortization

 

 

2

 

5,490

 

 

 

53

 

5,545

Dividends declared ($0.177 per share)

 

 

 

 

(10,984)

 

 

 

(10,984)

Change in accumulated other comprehensive income (loss)

 

 

 

 

 

7,741

 

 

7,741

Distributions to noncontrolling interests

 

 

 

 

 

 

(11)

 

(11)

Balance at June 30, 2022

$

19,000

$

621

$

1,975,933

$

85,405

$

(27,950)

$

3,320

$

2,037,329

Balance at March 31, 2021

$

$

533

$

1,416,583

$

32,208

$

(43,813)

$

2,361

$

1,407,872

Net income

 

 

 

 

14,732

 

 

48

 

14,780

Issuance of common stock, net / amortization

 

 

 

4,602

 

 

 

56

 

4,658

Dividends declared ($0.17 per share)

 

 

 

 

(9,070)

 

 

 

(9,070)

Change in accumulated other comprehensive income (loss)

 

 

 

 

 

764

 

 

764

Distributions to noncontrolling interests

 

 

 

 

 

 

(11)

 

(11)

Balance at June 30, 2021

$

$

533

$

1,421,185

$

37,870

$

(43,049)

$

2,454

$

1,418,993

4

Table of Contents

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

    

Interests(1)

Par

    

Capital

    

Deficit)

    

Income (Loss)

    

Interests

    

Equity

Balance at December 31, 2021

$

$

566

$

1,663,324

$

59,368

$

(40,980)

$

2,924

$

1,685,202

Net income

 

 

 

 

47,551

 

 

67

 

47,618

Issuance of common stock, net / amortization

 

 

55

 

312,780

 

 

 

333

 

313,168

Dividends declared ($0.347 per share)

 

 

 

 

(21,514)

 

 

 

(21,514)

Change in accumulated other comprehensive income (loss)

 

 

 

 

 

13,030

 

 

13,030

Contributions from noncontrolling interests, net

18,829

18

18

Distributions to noncontrolling interests

 

 

 

 

 

 

(22)

 

(22)

Additional paid in capital attributable to redeemable noncontrolling interests

171

(171)

(171)

Balance at June 30, 2022

$

19,000

$

621

$

1,975,933

$

85,405

$

(27,950)

$

3,320

$

2,037,329

Balance at December 31, 2020

$

$

532

$

1,412,107

$

23,945

$

(57,461)

$

2,180

$

1,381,303

Net income

 

 

 

 

31,640

 

 

96

 

31,736

Issuance of common stock, net / amortization

 

 

1

 

9,078

 

 

 

199

 

9,278

Dividends declared ($0.33224 per share)

 

 

 

 

(17,715)

 

 

 

(17,715)

Change in accumulated other comprehensive income (loss)

 

 

 

 

 

14,412

 

 

14,412

Distributions to noncontrolling interests

 

 

 

 

 

 

(21)

 

(21)

Balance at June 30, 2021

$

$

533

$

1,421,185

$

37,870

$

(43,049)

$

2,454

$

1,418,993

(1)Refer to Note 3.

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

5

Table of Contents

Safehold Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

For the Six Months Ended

June 30, 

    

2022

    

2021

    

Cash flows from operating activities:

 

  

 

  

 

Net income

$

47,618

$

31,736

Adjustments to reconcile net income to cash flows from operating activities:

 

  

 

Depreciation and amortization

 

4,808

 

4,770

Stock-based compensation expense

 

1,465

 

1,399

Deferred operating lease income

 

(15,812)

 

(17,369)

Non-cash interest income from sales-type leases

 

(33,659)

 

(19,477)

Non-cash interest expense

 

5,977

 

6,039

Amortization of real estate-related intangibles, net

 

1,152

 

1,242

Loss on early extinguishment of debt

 

 

216

Earnings from equity method investments

 

(4,528)

 

(1,768)

Distributions from operations of equity method investments

 

1,051

 

865

Amortization of premium, discount and deferred financing costs on debt obligations, net

 

2,676

 

1,596

Non-cash management fees

 

9,666

 

6,996

Other operating activities

 

2,496

 

1,906

Changes in assets and liabilities:

 

  

 

Changes in deferred expenses and other assets, net

 

263

 

847

Changes in accounts payable, accrued expenses and other liabilities

 

23,492

 

(17,909)

Cash flows provided by operating activities

 

46,665

 

1,089

Cash flows from investing activities:

 

  

 

  

Origination/acquisition of net investment in sales-type leases and Ground Lease receivables

 

(907,281)

 

(210,580)

Contributions to equity method investments

(2)

(39,283)

Funding reserves received from Ground Lease tenant net of disbursements

58,768

Deposits on Ground Lease investments

 

(2,250)

 

(2,667)

Other investing activities

 

72

 

1,617

Cash flows used in investing activities

 

(850,693)

 

(250,913)

Cash flows from financing activities:

 

  

 

  

Proceeds from issuance of common stock

 

309,160

 

1,065

Proceeds from debt obligations

 

1,460,000

 

536,508

Repayments of debt obligations

 

(880,000)

 

(320,000)

Payments for deferred financing costs

 

(5,034)

 

(8,933)

Dividends paid to common shareholders

 

(20,200)

 

(17,270)

Payment of offering costs

 

(4,815)

 

(259)

Payments for withholding taxes upon vesting of stock-based compensation

(970)

Distributions to noncontrolling interests

 

(22)

 

(21)

Contributions from noncontrolling interests

 

18

 

Contributions from redeemable noncontrolling interests

19,000

Cash flows provided by financing activities

 

877,137

 

191,090

Changes in cash, cash equivalents and restricted cash

 

73,109

 

(58,734)

Cash, cash equivalents and restricted cash at beginning of period

 

38,516

 

96,467

Cash, cash equivalents and restricted cash at end of period

$

111,625

$

37,733

Reconciliation of cash and cash equivalents and restricted cash presented on the consolidated statements of cash flows

Cash and cash equivalents

$

25,002

$

33,949

Restricted cash

86,623

3,784

Total cash and cash equivalents and restricted cash

$

111,625

$

37,733

Supplemental disclosure of non-cash investing and financing activity:

 

  

 

  

Dividends declared to common shareholders

$

10,984

$

9,118

Accrued finance costs

 

76

 

749

Accrued offering costs

 

536

 

551

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

6

Table of Contents

Safehold Inc.

Notes to Consolidated Financial Statements

(unaudited)

Note 1—Business and Organization

Business—Safehold Inc. (the “Company”) operates its business through one reportable segment by acquiring, managing and capitalizing ground leases. Ground leases are long-term contracts between the landlord (the Company) and a tenant or leaseholder. The Company believes that it is the first publicly-traded company formed primarily to acquire, own, manage, finance and capitalize ground leases. Ground leases generally represent ownership of the land underlying commercial real estate projects that is net leased by the fee owner of the land to the owners/operators of the real estate projects built thereon (“Ground Leases”). Under a Ground Lease, the tenant is generally responsible for all property operating expenses, such as maintenance, real estate taxes and insurance and is also responsible for development costs and capital expenditures. Ground Leases are typically long-term (base terms ranging from 30 to 99 years, often with tenant renewal options) and have contractual base rent increases (either at a specified percentage or consumer price index (“CPI”) based, or both) and sometimes include percentage rent participations. The Company’s CPI lookbacks are generally capped between 3.0% - 3.5%. 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.

The Company intends to target investments in long-term Ground Leases in which: (i) the initial cost of its Ground Lease represents 30% to 45% of the combined value of the land and buildings and improvements thereon as if there was no Ground Lease on the land (“Combined Property Value”); (ii) the ratio of property net operating income to the Ground Lease payment due the Company (“Ground Rent Coverage”) is between 2.0x to 4.5x, and for this purpose the Company uses estimates of the stabilized property net operating income if it does not receive current tenant information and for properties under construction or in transition, in each case based on leasing activity at the property and available market information, including leasing activity at comparable properties in the relevant market; and (iii) the Ground Lease contains contractual rent escalation clauses or percentage rent that participates in gross revenues generated by the commercial real estate on the land. A Ground Lease lessor (the Company) typically has the right to regain possession of its land and take ownership of the buildings and improvements thereon upon tenant default and the termination of the Ground Lease on account of such default. The Company believes that the Ground Lease structure provides an opportunity for potential value accretion through the reversion to the Company, as the Ground Lease owner, of the buildings and improvements on the land at the expiration or earlier termination of the lease, for no additional consideration from the Company.

The Company is managed by SFTY Manager, LLC (the “Manager”), a wholly-owned subsidiary of iStar Inc. (“iStar”), the Company’s largest shareholder, pursuant to a management agreement. The Company has no employees, as the Manager provides all services to it. The Company draws on the extensive investment origination and sourcing platform of its Manager to actively promote the benefits of the Ground Lease structure to prospective Ground Lease tenants.

Organization—The Company is a Maryland corporation and completed its initial public offering in June 2017. The Company’s common stock is listed on the New York Stock Exchange under the symbol “SAFE.” The Company elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, commencing with the tax year ended December 31, 2017. The Company is structured as an Umbrella Partnership REIT (“UPREIT”). As such, all of the Company’s properties are owned through a subsidiary partnership, Safehold Operating Partnership LP (the “Operating Partnership”). As of June 30, 2022, the Company owned 100% of the limited partner interests in the Operating Partnership and a wholly-owned subsidiary of the Company owned 100% of the general partner interests in the Operating Partnership. The UPREIT structure may afford the Company certain benefits as it seeks to acquire properties from third parties who may want to defer taxes by contributing their Ground Leases to the Company.

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

7

Table of Contents

Safehold Inc.

Notes to Consolidated Financial Statements

(unaudited)

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, 2021 (the “2021 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.

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, 2022, the total assets of these consolidated VIEs were $70.0 million and total liabilities were $29.8 million. The classifications of these assets are primarily within “Net investment in sales-type leases,” “Real estate, net,” “Real estate-related intangible assets, net” and “Deferred operating lease income receivable” on the Company’s consolidated balance sheets. The classifications of liabilities are primarily within “Debt obligations, net” and “Accounts payable, accrued expenses and other liabilities” on the Company’s consolidated balance sheets. The liabilities of these VIEs are non-recourse to the Company and can only be satisfied from each VIE’s respective assets. The Company has provided no financial support to VIEs that it was not previously contractually required to provide and did not have any unfunded commitments related to consolidated VIEs as of June 30, 2022.

Note 3—Summary of Significant Accounting Policies

Fair Values—The Company is required to disclose fair value information with regard to its financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practical to estimate fair value. The Financial Accounting Standards Board (“FASB”) guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy prioritizes the inputs to be used in valuation techniques to measure fair value: Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, 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.

8

Table of Contents

Safehold Inc.

Notes to Consolidated Financial Statements

(unaudited)

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

As of June 30, 2022

As of December 31, 2021

Carrying 

Fair

Carrying 

Fair

    

Value

    

Value

    

Value

    

Value

Assets

Net investment in sales-type leases(1)

$

2,912

$

2,941

$

2,413

$

2,704

Ground Lease receivables(1)

 

1,236

 

1,224

 

796

 

893

Cash and cash equivalents(2)

 

25

 

25

 

30

 

30

Restricted cash(2)

 

87

 

87

 

9

 

9

Liabilities

Debt obligations, net(1)

 

Level 1

737

607

738

741

Level 3

2,536

2,149

1,960

2,118

Total debt obligations, net

3,273

 

2,756

 

2,698

2,859