[PART I](index=3&type=section&id=PART%20I) This part details iStar Inc.'s business as a REIT, its strategic shift towards Ground Lease investments, and initial disclosures on risks, properties, legal matters, and corporate governance [Item 1. Business](index=3&type=section&id=Item%201.%20Business) iStar Inc. operates as a REIT, financing, investing in, and developing real estate and related projects, transitioning its portfolio to focus primarily on Ground Lease and Ground Lease adjacent investments - iStar Inc. finances, invests in, and develops real estate and real estate-related projects, also managing entities focused on ground lease and net lease investments[12](index=12&type=chunk) - The company's primary reportable business segments are net lease, real estate finance, operating properties, and land and development[12](index=12&type=chunk) - The company's strategy is to transition its portfolio to be primarily focused on Ground Lease and Ground Lease adjacent investments, held directly and through its investment in SAFE, and to simplify its portfolio through sales of other assets[17](index=17&type=chunk)[25](index=25&type=chunk) Total Investment Portfolio Characteristics (as of December 31, 2021) | Property/Collateral Types | Net Lease ($) | Real Estate Finance ($) | Operating Properties ($) | Land & Development ($) | Corporate ($) | Total ($) | % of Total | | :------------------------ | :------------ | :---------------------- | :----------------------- | :--------------------- | :------------ | :---------- | :--------- | | Ground Leases | 1,305,384 | — | — | — | — | 1,305,384 | 28.9 % | | Entertainment / Leisure | 1,024,538 | — | 16,302 | — | — | 1,040,840 | 23.1 % | | Office | 852,471 | 52,163 | — | — | — | 904,634 | 20.0 % | | Industrial / Lab | 450,440 | — | — | — | — | 450,440 | 10.0 % | | Land and Development | — | 11,909 | — | 233,959 | — | 245,868 | 5.4 % | | Hotel | — | 109,295 | 82,881 | — | — | 192,176 | 4.3 % | | Multifamily | — | 107,383 | 48,095 | — | — | 155,478 | 3.4 % | | Retail | — | 62,120 | 31,594 | 8,340 | — | 102,054 | 2.3 % | | Condominium | — | 14,939 | 301 | 56,418 | — | 71,658 | 1.6 % | | Other Property Types | — | 28,090 | — | — | 17,908 | 45,998 | 1.0 % | | **Total** | **3,632,833** | **385,899** | **179,173** | **298,717** | **17,908** | **4,514,530** | **100.0 %** | | **Percentage of Total** | **80%** | **9%** | **4%** | **7%** | **<1%** | **100%** | | [Overview](index=3&type=section&id=Overview) iStar Inc. operates as a REIT, financing and investing in real estate, with primary revenue from rent, interest, land development, asset sales, and management fees - iStar Inc. finances, invests in, and develops real estate and real estate-related projects, also managing entities focused on ground lease and net lease investments[12](index=12&type=chunk) - Primary revenue sources in 2021 included rent and reimbursements, interest on loans, land development revenue, asset sales, and management fees/equity investments[13](index=13&type=chunk) [Net Lease](index=4&type=section&id=Net%20Lease) The net lease portfolio includes traditional net lease investments and Ground Lease investments through Safehold Inc. (SAFE), where iStar holds a significant stake - As of December 31, 2021, the net lease portfolio includes traditional net lease investments and Ground Lease investments made through Safehold Inc. (SAFE), a publicly traded REIT focused exclusively on Ground Leases, in which iStar owns approximately **64.6%** of outstanding common stock[16](index=16&type=chunk) [Pending Net Lease Sale](index=4&type=section&id=Pending%20Net%20Lease%20Sale) iStar is selling a portfolio of net lease properties for approximately $3.07 billion, aligning with its strategy to focus on Ground Lease investments - In February 2022, iStar entered into a definitive agreement to sell a portfolio of net lease properties for approximately **$3.07 billion**, with an expected net cash proceeds of approximately **$1.1 billion** after repayments and expenses[17](index=17&type=chunk)[18](index=18&type=chunk) - The sale is consistent with the company's strategy to grow its Ground Lease and Ground Lease adjacent businesses and simplify its portfolio[17](index=17&type=chunk) - The portfolio being sold consists of office, entertainment, and industrial properties (**18.3 million** square feet) and includes wholly-owned assets and interests in two joint ventures[18](index=18&type=chunk) [Real Estate Finance](index=4&type=section&id=Real%20Estate%20Finance) The real estate finance portfolio offers various loan types, including leasehold, preferred equity, and senior/subordinated loans to business entities - The real estate finance portfolio comprises leasehold loans (including to SAFE's tenants), preferred equity investments, and senior/subordinated loans to business entities, which can be secured or unsecured, fixed-rate or variable-rate[20](index=20&type=chunk) [Operating Properties](index=4&type=section&id=Operating%20Properties) The operating properties portfolio comprises diverse commercial and residential assets, with a strategy to reposition or redevelop transitional properties for value maximization - The operating properties portfolio includes commercial and residential properties across various geographies and types, with a strategy to reposition or redevelop transitional properties to maximize value[21](index=21&type=chunk) [Land & Development](index=4&type=section&id=Land%20%26%20Development) The land and development portfolio consists of entitled land for master-planned communities and urban infill parcels, which the company develops or sells - The land and development portfolio primarily consists of land entitled for master-planned communities and waterfront/urban infill parcels, which the company may develop itself, in partnership, or sell[22](index=22&type=chunk)[23](index=23&type=chunk) [Investment Strategy](index=5&type=section&id=Investment%20Strategy) iStar's investment strategy emphasizes custom-tailored commercial real estate solutions, currently prioritizing Ground Lease investments for attractive risk-adjusted returns - iStar's investment strategy focuses on custom-tailored solutions in commercial real estate, with a current emphasis on Ground Lease and Ground Lease adjacent investments due to attractive risk-adjusted returns[24](index=24&type=chunk)[25](index=25&type=chunk) - Proceeds from asset sales, including the Net Lease Sale, are expected to be used for Ground Lease investments, debt repayment, and general corporate purposes[25](index=25&type=chunk) [Financing Strategy](index=5&type=section&id=Financing%20Strategy) The company utilizes leverage through unsecured bonds, credit facilities, and mortgage loans, with future capital raising plans including debt, asset sales, and equity issuances - The company uses leverage, primarily through unsecured bonds, a revolving credit facility, a term loan, and mortgage loans, with no corporate debt maturities through September 2022[26](index=26&type=chunk) - Future capital raising may include debt financing, refinancings, asset sales (like the Net Lease Sale), equity issuances, and joint ventures[27](index=27&type=chunk) [Underwriting Process](index=5&type=section&id=Underwriting%20Process) iStar employs a proprietary 'Six Point Methodology' to screen potential investments, evaluating opportunity source, collateral quality, and investment liquidity - iStar employs a proprietary 'Six Point Methodology' for screening potential investments, evaluating opportunity source, collateral quality, borrower equity, transaction structure, alternative investment tests, and investment liquidity[28](index=28&type=chunk) [Hedging Strategy](index=5&type=section&id=Hedging%20Strategy) The company uses derivative instruments like interest rate swaps and foreign exchange contracts to manage interest rate and currency exposure, aiming to match variable-rate assets and liabilities - The company uses derivative instruments (interest rate swaps, caps, foreign exchange contracts) to manage interest rate and currency exposure, aiming to match variable-rate assets and liabilities[29](index=29&type=chunk)[30](index=30&type=chunk) [Investment Restrictions or Limitations](index=6&type=section&id=Investment%20Restrictions%20or%20Limitations) There are no prescribed investment allocations, with a focus on credit underwriting and risk/reward analysis, while maintaining REIT qualification - There are no prescribed allocations among investments; the focus is on credit underwriting and risk/reward analysis[31](index=31&type=chunk) - The company intends to operate as a REIT and avoid regulation as an investment company[32](index=32&type=chunk) [Competition](index=6&type=section&id=Competition) The company operates in a highly competitive market, facing various financing and leasing sources - The company operates in a competitive market, facing various financing and leasing sources[33](index=33&type=chunk) [Regulation](index=6&type=section&id=Regulation) iStar's operations are subject to state and federal regulations, and it intends to maintain its REIT qualification, requiring specific income distribution - iStar's operations are subject to state and federal regulations concerning credit granting, interest rates, disclosures, secured transactions, collection practices, privacy, and anti-money laundering[34](index=34&type=chunk) - The company has elected and expects to maintain its REIT qualification, requiring distribution of at least **90%** of net taxable income (excluding capital gains) to shareholders annually[36](index=36&type=chunk) [Code of Conduct](index=6&type=section&id=Code%20of

iStar Inc. (STAR) Q4 2021 Earnings Conference Call February 24, 2022 10:00 AM ET Company Participants Jay Sugarman – Chairman & Chief Executive Officer Marcos Alvarado – President & Chief Investment Officer Jason Fooks – Senior Vice President of Investor Relations & Marketing Conference Call Participants Nate Crossett – Berenberg Stephen Laws – Raymond James Jade Rahmani – KBW Matt Howlett – B. Riley Operator Ladies and gentlemen, thank you for standing by. Good morning and welcome to iStar's Fourth Quarter ...

Safehold 04 2 RNINGS RESULTS Forward-Looking Statements and Other Matters This presentation may contain forward-looking statements. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements can be identified by the use of words such as "illustrative", "representative", "expect", "plan", "will", "estimate", "project", "intend", "believe", and other similar expressions that do not relate to historical matters. These forward-looking statements refl ...

Part I [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements%3A) This section presents iStar Inc.'s unaudited consolidated financial statements for Q3 and YTD 2021, covering key financial statements and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2021, iStar Inc. reported total assets of **$4.80 billion**, a slight decrease from **$4.86 billion** at year-end 2020, with total liabilities also decreasing to **$3.74 billion** from **$3.80 billion** Consolidated Balance Sheet Highlights (in thousands) | | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$4,802,165** | **$4,861,808** | | Total real estate | $1,358,907 | $1,489,493 | | Loans receivable and other lending investments, net | $405,509 | $732,330 | | Other investments | $1,419,766 | $1,176,560 | | Cash and cash equivalents | $298,886 | $98,633 | | **Total Liabilities** | **$3,735,940** | **$3,797,425** | | Debt obligations, net | $3,282,598 | $3,286,975 | | **Total Equity** | **$1,066,225** | **$1,064,383** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For Q3 2021, iStar reported a net income of **$131.0 million**, a significant turnaround from **$6.5 million** in Q3 2020, driven by higher land development revenue, increased earnings from equity method investments, and gains on real estate sales Key Operating Results (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $195,485 | $115,054 | $414,335 | $384,930 | | Earnings from equity method investments | $89,209 | $6,805 | $114,675 | $26,003 | | **Net income (loss)** | **$130,994** | **$6,451** | **$127,567** | **($20,793)** | | Net income (loss) allocable to common shareholders | $121,856 | ($2,069) | $101,908 | ($46,850) | | Diluted EPS | $1.51 | ($0.03) | $1.30 | ($0.61) | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2021, cash used in operating activities was **$4.7 million**, while investing activities provided **$373.7 million**, resulting in a net increase in cash to **$354.8 million** Cash Flow Summary for the Nine Months Ended Sep 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Cash flows used in operating activities | ($4,741) | ($6,178) | | Cash flows provided by (used in) investing activities | $373,722 | ($5,668) | | Cash flows used in financing activities | ($164,620) | ($204,376) | | **Changes in cash, cash equivalents and restricted cash** | **$204,235** | **($216,232)** | | Cash, cash equivalents and restricted cash at end of period | $354,801 | $135,974 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail iStar's accounting policies and financial results, including its REIT structure, significant investment in Safehold Inc., **$3.3 billion** debt obligations, and a stock repurchase program, with a subsequent event noting exploration of net lease asset sales - The company's primary reportable business segments are **Net Lease, Real Estate Finance, Operating Properties, and Land and Development**[24](index=24&type=chunk)[165](index=165&type=chunk) - The company adopted ASU 2020-06 on January 1, 2021, which impacted the accounting for its **3.125% senior convertible notes** by eliminating the separate accounting for the conversion feature, resulting in an adjustment to debt, retained earnings, and additional paid-in capital[33](index=33&type=chunk) - As of September 30, 2021, the company owned approximately **63.6% of Safehold Inc. (SAFE) common stock**, a key equity method investment. Earnings from SAFE included a significant dilution gain of **$60.2 million** in Q3 2021[72](index=72&type=chunk)[74](index=74&type=chunk) - During the nine months ended September 30, 2021, the company repurchased **4.2 million shares** of its common stock for **$91.9 million**. As of September 30, 2021, **$30.9 million** remained authorized for future repurchases[132](index=132&type=chunk) - Subsequent to the quarter-end, the company obtained holder consents to amend indentures for its senior notes to align with the potential sale of its net lease assets, a process which is ongoing[170](index=170&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting improved conditions, significant net income growth, and a strong liquidity position [Portfolio Overview](index=44&type=section&id=Portfolio%20Overview) As of September 30, 2021, iStar's total investment portfolio had a gross book value of **$4.54 billion**, diversified by asset type and geography, with major concentrations in Ground Leases, Entertainment/Leisure, and Office properties Portfolio by Property/Collateral Type (as of Sep 30, 2021) | Property/Collateral Types | Gross Book Value ($ thousands) | % of Total | | :--- | :--- | :--- | | Ground Leases | $1,229,403 | 27.1% | | Entertainment / Leisure | $1,047,291 | 23.0% | | Office | $872,155 | 19.2% | | Industrial / Lab | $532,244 | 11.7% | | Land and Development | $247,647 | 5.4% | | Hotel | $189,797 | 4.2% | | Multifamily | $182,824 | 4.0% | | Other | $144,270 | 3.2% | | **Total** | **$4,544,751** | **100.0%** | - The company announced in July 2021 its intention to explore market interest for the potential sale of its net lease assets to simplify its portfolio and focus on its Ground Lease business[178](index=178&type=chunk)[179](index=179&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) For Q3 2021, total revenue increased by **$80.4 million** to **$195.5 million**, primarily due to a **$72.9 million** increase in land development revenue and an **$82.4 million** increase in earnings from equity method investments, leading to a significant net income turnaround for both the quarter and year-to-date periods Comparison of Results for the Three Months Ended September 30 (in thousands) | Item | 2021 | 2020 | $ Change | | :--- | :--- | :--- | :--- | | Total revenue | $195,485 | $115,054 | $80,431 | | Land development revenue | $93,369 | $20,502 | $72,867 | | Earnings from equity method investments | $89,209 | $6,805 | $82,404 | | Income from sales of real estate | $25,611 | $6,055 | $19,556 | | **Net income** | **$130,994** | **$6,451** | **$124,543** | Comparison of Results for the Nine Months Ended September 30 (in thousands) | Item | 2021 | 2020 | $ Change | | :--- | :--- | :--- | :--- | | Total revenue | $414,335 | $384,930 | $29,405 | | (Recovery of) provision for loan losses | ($7,613) | $4,093 | ($11,706) | | Earnings from equity method investments | $114,675 | $26,003 | $88,672 | | **Net income (loss)** | **$127,567** | **($20,793)** | **$148,360** | - The decrease in General & Administrative expenses in Q3 2021 was primarily due to a **$1.8 million** decrease in performance-based compensation and a **$0.9 million** decrease in payroll and related costs[216](index=216&type=chunk) [Adjusted Earnings (Non-GAAP)](index=54&type=section&id=Adjusted%20Earnings) Adjusted Earnings, a non-GAAP metric, significantly increased to **$141.3 million** for Q3 2021 and **$176.0 million** for the nine-month period, reflecting adjustments for non-cash items to provide a clearer view of operating income Adjusted Earnings Reconciliation (in thousands) | | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) allocable to common shareholders | $121,856 | ($2,069) | $101,908 | ($46,850) | | Add: Depreciation and amortization | $16,449 | $15,795 | $50,790 | $46,526 | | Add: Stock-based compensation expense | $3,001 | $5,661 | $23,300 | $26,675 | | **Adjusted earnings allocable to common shareholders** | **$141,306** | **$22,059** | **$175,998** | **$29,821** | [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2021, iStar maintained a strong liquidity position with **$299 million** in unrestricted cash and **$340 million** available under its Revolving Credit Facility, expecting to meet obligations through cash on hand, operating income, loan repayments, and asset sales - As of September 30, 2021, the company had **$299 million** of unrestricted cash and **$340 million** of borrowing capacity available under its Revolving Credit Facility[259](index=259&type=chunk) - The company has **$287.5 million** in convertible notes maturing in September 2022 and maximum unfunded commitments of **$118.4 million**[260](index=260&type=chunk) - The company is in compliance with its key debt covenants, which include maintaining a ratio of unencumbered assets to unsecured debt of at least **1.2x** and a fixed charge coverage ratio[262](index=262&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with a sensitivity analysis indicating that a **100 basis point** increase in interest rates would decrease annual net income by an estimated **$2.2 million** - The primary market risk for the company is **interest rate risk**, which affects the spread between interest-earning assets and interest-bearing liabilities[272](index=272&type=chunk) Estimated Change in Net Income from Interest Rate Shifts (in thousands) | Change in Interest Rates | Estimated Change in Net Income | | :--- | :--- | | +10 Basis Points | ($234) | | +50 Basis Points | ($1,159) | | +100 Basis Points | ($2,237) | [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures are effective at providing reasonable assurance of timely and accurate SEC reporting, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Accounting Officer concluded that the Company's disclosure controls and procedures are effective to provide reasonable assurance of timely and accurate reporting[279](index=279&type=chunk) - There were no changes during the last fiscal quarter in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, these controls[280](index=280&type=chunk) Part II [Item 1. Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company is party to various routine litigation matters incidental to its business, none of which are expected to have a material adverse effect on its consolidated financial statements - The Company is not a party to any pending legal proceeding that is expected to have a material adverse effect on its financial statements[284](index=284&type=chunk) [Item 1A. Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to risk factors were reported from the company's 2020 Annual Report[285](index=285&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2021, the company repurchased **2.39 million shares** of its common stock at an average price of approximately **$24.85** per share, and in September 2021, the board increased the stock repurchase program authorization to **$50.0 million** Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 1 to July 31 | 730,194 | $23.28 | | August 1 to August 31 | 915,591 | $25.50 | | September 1 to September 30 | 744,981 | $25.66 | - In September 2021, the board of directors authorized an increase to the stock repurchase program to **$50.0 million**[287](index=287&type=chunk) [Item 3. Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[288](index=288&type=chunk) [Item 4. Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[289](index=289&type=chunk) [Item 5. Other Information](index=59&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[290](index=290&type=chunk) [Item 6. Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including supplemental indentures related to senior notes and certifications pursuant to the Sarbanes-Oxley Act - Exhibits filed include supplemental indentures for the **4.75% Senior Notes due 2024, 4.25% Senior Notes due 2025, and 5.50% Senior Notes due 2026**[294](index=294&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act were also filed as exhibits[294](index=294&type=chunk)

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 | Accelerated | Non‑accelerated Filer | Smaller Reporting Company | Emerging Growth | | --- | --- | --- | --- | --- | | Filer | Filer | | | Company ...

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 March 31, 2021 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. 1-15371 _____________________________ ...

PART I [Business](index=4&type=section&id=Item%201.%20Business) iStar Inc. is a REIT focused on financing, investing, and developing real estate, increasingly emphasizing its Ground Lease business through Safehold Inc. - The company operates through four primary reportable business segments: Net Lease, Real Estate Finance, Operating Properties, and Land and Development[13](index=13&type=chunk) - A key part of iStar's strategy is its focus on the Ground Lease sector through its subsidiary Safehold Inc. (SAFE), in which it owned approximately **65.4%** of the common stock as of December 31, 2020[16](index=16&type=chunk)[19](index=19&type=chunk) - The company is actively working to reduce its "legacy assets," primarily properties acquired from defaulting borrowers during the financial crisis, with the intention of reinvesting the proceeds into its net lease business, including Ground Leases[20](index=20&type=chunk) - As of February 19, 2021, the company had **143 employees**, with substantially all of the workforce working remotely for several months in 2020 due to the COVID-19 pandemic[33](index=33&type=chunk)[35](index=35&type=chunk) [Risk Factors](index=9&type=section&id=Item%201a.%20Risk%20Factors) The company faces material risks including the COVID-19 pandemic's impact, significant commitment to its Ground Lease strategy, and financial risks like debt covenants and REIT status maintenance. - The COVID-19 pandemic has adversely affected the business, particularly in the entertainment/leisure (**20.7%** of gross book value) and hotel (**5.7%** of gross book value) sectors, and has constrained the company's ability to monetize legacy assets and scale SAFE's portfolio[42](index=42&type=chunk)[43](index=43&type=chunk) - The company's future success is heavily dependent on its Ground Lease strategy through SAFE, which is subject to risks including market acceptance, interest rate changes, and potential conflicts of interest between iStar and SAFE[43](index=43&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - The company's debt contains covenants that could limit operational flexibility, including maintaining a ratio of unencumbered assets to unsecured debt of at least **1.2x** and restrictions on new debt incurrence based on a fixed charge coverage ratio[76](index=76&type=chunk) - Failure to maintain qualification as a REIT would subject the company to U.S. federal income tax at regular corporate rates, significantly reducing cash available for distribution to shareholders[95](index=95&type=chunk)[96](index=96&type=chunk) [Unresolved Staff Comments](index=21&type=section&id=Item%201b.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC. - There are no unresolved staff comments[108](index=108&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties) The company's principal executive offices are in New York, NY, with regional offices, and detailed property listings are in Schedule III of the financial statements. - The company's main executive offices are located at 1114 Avenue of the Americas, New York, NY 10036[109](index=109&type=chunk) [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various routine litigation matters incidental to its business, none of which are expected to have a material adverse effect on its financial statements. - The company is involved in ordinary routine litigation incidental to its business, which is not expected to have a material adverse effect on its financial statements[110](index=110&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company. - Not applicable[111](index=111&type=chunk) PART II [Market for Registrant's Equity and Related Stock Matters](index=22&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Equity%20and%20Related%20Stock%20Matters) The company's common stock trades on the NYSE, and it repurchased shares in Q4 2020, with an increased stock repurchase program authorized in February 2021. Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | October 2020 | 456,000 | $12.04 | | November 2020 | — | $— | | December 2020 | 101,111 | $14.85 | - In February 2021, the company's board of directors increased the authorization for its stock repurchase program to **$50.0 million**[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) iStar's 2020 financial performance was significantly impacted by the COVID-19 pandemic, resulting in a net loss and declining adjusted earnings, despite maintaining strong liquidity and a strategic focus on Ground Leases. [Executive Overview](index=23&type=section&id=Executive%20Overview) The company reported a **net loss of $65.9 million** for 2020, a significant decline from 2019, while maintaining strong rent collection and a healthy liquidity position. Key Financial Results (Year Ended Dec 31) | Metric | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Net Income (Loss) allocable to common shareholders | ($65.9M) | $291.5M | | Adjusted Earnings allocable to common shareholders | $40.8M | $388.0M | - During the fourth quarter of 2020, the company collected **99%** of rent from net lease tenants, **89%** of interest payments from its real estate finance portfolio, and **85%** of rent from its operating properties[121](index=121&type=chunk) - As of December 31, 2020, the company had **$99 million** of cash and **$350 million** of credit facility availability, with no corporate debt maturities through September 2022[124](index=124&type=chunk) [Portfolio Overview](index=24&type=section&id=Portfolio%20Overview) As of December 31, 2020, iStar's total investment portfolio had a **gross book value of $4.76 billion**, diversified across property types and segments with significant concentrations in Office, Entertainment/Leisure, and Ground Leases. Portfolio Composition by Property/Collateral Type (as of Dec 31, 2020) | Property/Collateral Type | Gross Book Value ($ thousands) | % of Total | | :--- | :--- | :--- | | Office | $989,019 | 20.8% | | Entertainment / Leisure | $984,074 | 20.7% | | Ground Leases | $962,386 | 20.2% | | Industrial | $444,708 | 9.3% | | Land and Development | $422,320 | 8.9% | | Condominium | $289,150 | 6.1% | | Hotel | $270,799 | 5.7% | | Multifamily | $206,909 | 4.3% | | Retail | $156,984 | 3.3% | | Other | $32,223 | 0.7% | | **Total** | **$4,758,572** | **100.0%** | Portfolio Composition by Segment (as of Dec 31, 2020) | Segment | Gross Book Value ($ thousands) | % of Total | | :--- | :--- | :--- | | Net Lease | $3,209,066 | 68% | | Real Estate Finance | $698,209 | 15% | | Land & Development | $472,401 | 10% | | Operating Properties | $308,986 | 6% | | Corporate | $69,910 | 1% | | **Total** | **$4,758,572** | **100%** | [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Total revenues increased in 2020, but a significant decrease in real estate sales income and the absence of prior-year sales-type lease profit led to a **net loss of $30.9 million** compared to a net income in 2019. Comparison of Operations (Years Ended Dec 31, in thousands) | Line Item | 2020 ($ thousands) | 2019 ($ thousands) | $ Change ($ thousands) | | :--- | :--- | :--- | :--- | | **Total revenue** | **$530,949** | **$479,496** | **$51,453** | | Total costs and expenses | $597,973 | $575,897 | $22,076 | | Income from sales of real estate | $6,318 | $236,623 | ($230,305) | | Selling profit from sales-type leases | $— | $180,416 | ($180,416) | | **Net income (loss)** | **($30,853)** | **$334,325** | **($365,178)** | - Operating lease income decreased by **$17.7 million** in 2020, primarily due to asset sales and a decrease in percentage rent at certain properties impacted by the COVID-19 pandemic[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - Interest income decreased by **$17.5 million** in 2020, mainly due to a lower average balance of performing loans and a decrease in the weighted average yield to **7.7%** from **8.8%** in 2019[167](index=167&type=chunk)[171](index=171&type=chunk) - The significant drop in 'Income from sales of real estate' from **$236.6 million** in 2019 to **$6.3 million** in 2020 was a primary driver of the net loss, with the 2019 figure boosted by the sale of a large portfolio of net lease assets[184](index=184&type=chunk) [Adjusted Earnings](index=36&type=section&id=Adjusted%20Earnings) The company's non-GAAP 'Adjusted Earnings' allocable to common shareholders sharply declined to **$40.8 million in 2020** from $388.0 million in 2019, reflecting a challenging operating environment. Adjusted Earnings Reconciliation (in thousands) | | 2020 ($ thousands) | 2019 ($ thousands) | | :--- | :--- | :--- | | Net income (loss) allocable to common shareholders | ($65,937) | $291,547 | | Add: Depreciation and amortization | $63,882 | $58,925 | | Add: Stock-based compensation expense | $39,354 | $30,436 | | Add: Non-cash portion of loss on early extinguishment of debt | $3,470 | $7,118 | | **Adjusted earnings allocable to common shareholders** | **$40,769** | **$388,026** | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2020, the company maintained a strong liquidity position with **$99 million in cash and $350 million in credit facility availability**, having refinanced debt to extend maturities. - As of December 31, 2020, the company had **$99 million** of unrestricted cash and **$350 million** of borrowing capacity available under its Revolving Credit Facility[195](index=195&type=chunk) - In August 2020, the company issued **$400.0 million** of **5.50%** senior unsecured notes due 2026, using the proceeds to repay notes due in September 2022[200](index=200&type=chunk) Unfunded Commitments (as of Dec 31, 2020, in thousands) | Category | Amount ($ thousands) | | :--- | :--- | | Performance-Based Commitments | $91,591 | | Strategic Investments | $12,810 | | **Total** | **$104,401** | - During 2020, the company repurchased **4.2 million shares** of its common stock for **$48.4 million** at an average price of **$11.48 per share**[207](index=207&type=chunk) [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) Management identifies the allowance for loan losses and impairment of long-lived assets as critical accounting estimates, requiring significant judgment and incorporating the new CECL standard. - The company adopted the new credit loss standard (ASU 2016-13) on January 1, 2020, which requires estimating current expected credit losses (CECL) for its financial instruments[211](index=211&type=chunk) - Impairment of real estate held for use is recognized only if the estimated aggregate future undiscounted cash flows are less than the asset's carrying value[216](index=216&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%207a.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk, with a net variable-rate liability position, where a **100 basis point increase in rates would decrease annual net income by an estimated $2.6 million**. Estimated Change in Annual Net Income from Interest Rate Changes | Change in Interest Rates | Estimated Change in Net Income ($ thousands) | | :--- | :--- | | -10 Basis Points | $278 | | +10 Basis Points | ($278) | | +50 Basis Points | ($1,364) | | +100 Basis Points | ($2,616) | [Financial Statements and Supplementary Data](index=42&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for the fiscal year ended December 31, 2020, including balance sheets, statements of operations, and comprehensive notes. Consolidated Balance Sheet Highlights (as of Dec 31, in thousands) | | 2020 ($ thousands) | 2019 ($ thousands) | | :--- | :--- | :--- | | Total real estate | $1,489,493 | $1,535,869 | | Loans receivable and other lending investments, net | $732,330 | $827,861 | | Other investments | $1,176,560 | $907,875 | | **Total assets** | **$4,861,808** | **$5,085,109** | | Debt obligations, net | $3,286,975 | $3,387,080 | | **Total liabilities** | **$3,797,425** | **$3,847,149** | | **Total equity** | **$1,064,383** | **$1,237,960** | Consolidated Statement of Operations Highlights (Year ended Dec 31, in thousands) | | 2020 ($ thousands) | 2019 ($ thousands) | | :--- | :--- | :--- | | Total revenues | $530,949 | $479,496 | | Total costs and expenses | $597,973 | $575,897 | | **Net income (loss)** | **($30,853)** | **$334,325** | | Net income (loss) allocable to common shareholders | ($65,937) | $291,547 | | **Diluted EPS** | **($0.87)** | **$3.73** | [Changes and Disagreements with Registered Public Accounting Firm on Accounting and Financial Disclosure](index=108&type=section&id=Item%209.%20Changes%20and%20Disagreements%20with%20Registered%20Public%20Accounting%20Firm%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no disagreements with its registered public accounting firm regarding accounting principles, financial disclosure, or auditing scope. - None reported[569](index=569&type=chunk) [Controls and Procedures](index=108&type=section&id=Item%209a.%20Controls%20and%20Procedures) The company's management concluded that its disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2020, with no material changes. - The company's management concluded that its disclosure controls and procedures and its internal control over financial reporting were effective as of December 31, 2020[571](index=571&type=chunk)[573](index=573&type=chunk) [Other Information](index=108&type=section&id=Item%209b.%20Other%20Information) The company reported no other information for this item. - None[575](index=575&type=chunk) PART III [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=109&type=section&id=Items%2010-14) Information for these items is incorporated by reference from the company's definitive proxy statement for its 2021 annual meeting of shareholders. - The information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting[578](index=578&type=chunk)[579](index=579&type=chunk)[580](index=580&type=chunk) PART IV [Exhibits, Financial Statement Schedules, and Reports on Form 8-K](index=109&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules%20and%20Reports%20on%20Form%208-K) This section lists the financial statements, schedules, and exhibits included in the Form 10-K report, noting no content for Item 16. - This section provides an index to the financial statements and schedules contained in Item 8 and a list of exhibits filed with the report[584](index=584&type=chunk)[587](index=587&type=chunk) - Item 16, Form 10-K Summary, is noted as having no content[592](index=592&type=chunk)