iStar provides spin-off details as part of condition for planned Safehold merger SAFE

iStar provides spin-off details as part of condition for planned Safehold merger SAFE

Other members made decisions about whether to hold SAFE or STAR going forward. SAFE seems the more secure choice, with lots to go right and little to go wrong. But STAR will pay off more strongly if the disposition of those legacy assets is faster or more lucrative than the base plan describes. At the valuation of $2B, this translates to $27 per share (59% of the close for SAFE last Friday.) And you can bet that MSD Partners sees the Caret units as undervalued and likely to increase in value from here.

  • Under a ground lease, the lessee has use of the land for a very long time, like 99 years, after which the land and everything on it returns to the landlord.
  • Whatever value the get from the legacy assets, net of debt, will be small compared to likely appreciation of their SAFE holdings.
  • In reality, it is much more than just a passive portfolio and therefore, its inflation protection should not be judged alone based on the characteristics of its current portfolio.
  • You will find on SA, now and later, other comments on this combination.
  • SAFE proved this point over the past quarter by selling 1.37% of its UCA at a $1.75 billion valuation to a group of leading private equity, sovereign wealth, and high net worth investors.
  • None of them will reflect the time spent, depth of research, or degree of communication with management that lie behind what you find here.

According to Daniel Scott, some years provide a window into what the Canadian winter will look like in the future. Experts believe the fate of the Rideau Canal Skateway is a portent for all winter sports in Canada. The average skating season on the canal is 50 days but has been getting shorter over the years as temperatures rise. Last year, for the first time in the Skateway’s 52-year history, there was no skating season on the canal. On Tuesday, the NCC put out an alert for residents to keep off the ice, as winter is not quite here yet.

iStar And Safehold Seek Simplicity

Overall, the industry employs over 35,000 people and rakes in around $4 billion annually. Others have seemed to think that those units were entirely owned by management as a vehicle to rip off the shareholders, or that they granted shares of common SAFE stock to management This is not correct. As described in my previous articles, writing such ground leases creates a lot of value.

  • The share price of SAFE has dropped significantly over the past months and it has also dragged STAR’s shares lower.
  • SAFE finances its ground lease investments with only ~35-40% equity and the rest comes from fixed-rate long-term debt financing.
  • Most investors appear to believe that the “UCA” is a lie and that its real value is close to zero.
  • In its macroscopic sense, ISTAR is a practice that links several battlefield functions together to assist a combat force in employing its sensors and managing the information they gather.
  • R Paul Drake spent decades developing data-driven models in his work as a physicist, and now brings the perspective of a retiree to his investing and writing.

The CEO also noted that this recent transaction is the “first of many” as they will seek to unlock its value by closing new transactions and educating the market. If SAFE borrows a million dollars today, it will still need to pay back only a million 30 years from now despite all the inflation. In real terms, the same million will be worth a lot less of course. In a recent exclusive interview with iStar Inc.’s CEO (STAR), we noted that the shares of the company had been one of our worst performers in 2022. The chart shows the growth of an initial investment of $10,000 in iStar Inc., comparing it to the performance of the S&P 500 index or another benchmark. “Whether you’re a farmer or whether you’re managing tourism assets, one of the things that we’ve said for quite sometime is look, 500 km or 1000 km south.

Safehold Declares Second Quarter 2023 Common Stock Dividend

In reality, it is much more than just a passive portfolio and therefore, its inflation protection should not be judged alone based on the characteristics of its current portfolio. That’s very significant when compared to the company’s $2.5 billion market cap. It essentially means that they estimate that their “UCA” is worth a multiple of their current share price, and that still does not give any value to their current cash flow. As a ground lease investor, you only own the land and rent this land to a building owner who has the ownership and control of the improvements on top of the land during the entire lease term. Ski resorts are a crucial part of Canada’s tourism industry, with 237 ski areas currently operating across the country hosting an average of 18.2 million visitors a year, including 2.7 million international visitors.

1 Wall Street analysts have issued “buy,” “hold,” and “sell” ratings for iStar in the last twelve months. The consensus among Wall Street analysts is that investors should “hold” STAR shares. A hold rating indicates that analysts believe investors should maintain any existing positions they have in STAR, but not buy additional shares or sell existing shares. Paul is one of the analysts at the investing group High Yield Landlord, one of the largest real estate investment communities on Seeking Alpha, with thousands of members. It offers exclusive research on the global REIT sector, multiple real money portfolios, an active chat room, and direct access to the analysts. It is the same as saying that a trust fund that you will receive sometime in the future has no value today because you don’t have access to it.

The company invests in projects such as office, retail, land and development, leisure, multifamily, hotel, and luxury condominiums. No action is required by iStar stockholders in order to receive shares of Star Holdings in the distribution. Stockholders will receive cash in lieu of fractional shares of Star Holdings. The distribution is subject to the satisfaction or waiver of certain conditions, including iStar and Safehold having confirmed that the closing conditions to the merger have been satisfied or waived. An information statement will be made available to iStar’s stockholders regarding the terms of the distribution.

More On MarketWatch

The Caret units hold the rights to the value of the eventual return of assets to Safehold. (More precisely, they hold rights to all earnings of Safehold beyond that from the ground-lease rents.) Common shareholders of SAFE will own, after that sale, about 83% of the Caret units. Existing holders of STAR shares will own 37% of Safehold directly, and 14% indirectly through SpinCo. Whatever value the get from the legacy assets, net of debt, will be small compared to likely appreciation of their SAFE holdings. Safehold will be almost entirely a pure-play, ground-lease company and soon should have a credit rating at the A level. They will issue debt and equity and use those funds to grow their ground-lease portfolio.

Heavy Industry & Manufacturing

SAFE undertakes no obligation to update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. This press release should be read in conjunction with our consolidated financial statements and related notes in our Annual Report on Form 10-K, as amended by Form 10K/A (“Form 10-K”), for the year ended December 31, 2022. A modern ground lease has to protect the interest of four parties, the landlord, the building owner, and one lender for each of them.

Prior to the distribution, shares of iStar common stock that trade in the “regular way” market on the New York Stock Exchange (“NYSE”) will trade with the right to receive Star Holdings common shares on the distribution date. After completion of the distribution and the merger, Star Holdings’ common shares will begin trading regular way on the Nasdaq and New Safe common stock will begin trading regular way on the NYSE. Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although SAFE believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained.

Related Stocks

We have long been convinced that the real value of SAFE, and by implication of STAR, has been far above its present price. In our view, thinking accurately about the current assets, the value of their growth, and the value of the Caret units makes this pretty obvious. In addition to the pure ground-lease business, Safehold will be the General Partner for two supporting Funds, holding only a minority of the Limited Partner interests. These funds will provide financing and loans to support the firms that employ ground leases as they work toward construction. IStar established Safehold in 2017, to establish and grow the modern ground-lease business. The intent was to use the assets of iStar to support the explosive growth of Safehold to a self-sufficient size.

Laisser un commentaire

Votre adresse courriel ne sera pas publiée. Les champs obligatoires sont indiqués avec *