Safehold, iStar to combine in a deal valuing iStar at nearly $1 6 billion

Safehold Inc (Safehold), formerly iStar Inc, is a real estate finance and investment company. It develops, finances and invests in real estate and commercial real estate-related projects. The company provides financing to private and corporate owners of real estate. Safehold’s portfolio includes senior and mezzanine real estate loans, senior and subordinated loans to corporations, whole loans, loan participations and debt securities. It also offers management services for its ground lease investments.

None of them will reflect the time spent, depth of research, or degree of communication with management that lie behind what you find here. This article to the public site, delayed a few days, is focused on the main points and the end of the story. It may help you decide whether to invest, or whether to come learn more details from the article linked above and future coverage. Yes, today, inflation is way higher at 8%+, but this is largely due to temporary issues caused by the pandemic and war in Ukraine, which won’t last forever. The market is only worrying about the asset side of the balance sheet and forgetting about the liabilities, which in this case provides a great inflation hedge.

• The Company undertakes no obligation to update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise.
• 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.
• Where they ended up does not please everyone, but that will soon be water under the bridge.
• A maximum drawdown is a measure of risk, indicating the largest reduction in portfolio value due to a series of losing trades.

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 https://forexbroker-listing.com/ 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.

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He said early winter and spring, in particular, will get fewer winter sports days. A report authored by Scott and his colleagues Natalie Knowles and Robert Steiger in June of this year predicted that ski resorts in Canada would have to rely more and more https://forex-reviews.org/ on machine-made snow. The three main legacy assets will be Asbury Park, Magnolia Green, and an oceanfront parcel in the entertainment district of Coney Island. Existing holders of SAFE shares will retain their current fractional ownership of Safehold.

• For one, the market isn’t giving any credit for the value of the UCA and so whatever they can do to unlock its value should have a positive impact on SAFE’s future share price.
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• According to 7 analysts, the average rating for SAFE stock is “Buy.” The 12-month stock price forecast is $28.33, which is an increase of 29.42% from the latest price.
• After all, what’s the present value of a building that you will receive 99 years from now?
• Tens of billions of dollars have all gone to money heaven, spent by EV start-ups that don’t have profits on their near-term horizons.

This applies every bit as much to businesses using real estate as to those using computers. Ground leases reduce the capital needed to buy or construct the buildings https://broker-review.org/ needed by a business, increasing the return on equity. 29% is obviously far greater than the current inflation rate so that’s additional protection.

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.

Safehold has a ground lease portfolio approaching 6 $B in investments. 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. The land and all structures also return to the landlord in the event of default, making ground-lease payments extremely secure.

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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.

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Michael Dell’s family office is one of the most respected investors out there in the landscape, and certainly in the family office space. And they are investing 200 million into New Safehold, via their purchase of iStar SAFE shares. The bottom line is that STAR enjoys better inflation protection than the market is giving it credit for. The market is focused on the fixed rent hikes but appears to ignore or at least overlook how the 2-1 fixed rate leverage, CPI lookback, the UCA, and spread investing offer additional inflation hedging benefits. This press release should be read in conjunction with our consolidated financial statements and related notes in our Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2022.

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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.

Safehold will also get a bit of income as a management fee from SpinCo, discussed next, during the years it takes to wind that down. And if you exclude the value of the shares of SAFE it holds, the book value of iStar is negative (see the Q Earnings Call Presentation). This made it time to internalize the management of Safehold and find a way to liquidate iStar. The share price of SAFE has dropped significantly over the past months and it has also dragged STAR’s shares lower. There is one more factor that provides long-term inflation protection.

Where they ended up does not please everyone, but that will soon be water under the bridge. Ground leases have been used for centuries by the wealthy in Europe and especially Britain. They have enabled landowners to protect their assets while taking income from them. You will find on SA, now and later, other comments on this combination.

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.