UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
~~(Mark One)~~ ☒
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~September 30, 2017~~
OR March 31, 2022
o 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

iStar Inc.

(Exact name of registrant as specified in its charter)



Maryland		95-6881527
(State or other jurisdiction of incorporation or organization)		~~95-6881527~~ (I.R.S. Employer Identification Number)
1114 Avenue of the Americas, 39th39th Floor
New York , NY		10036
(Address of principal executive offices)		~~10036~~ (Zip code)

~~Registrant's~~

Registrant’s telephone number, including area code: ~~(212)~~ (212) 930-9400

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, $0.001 par value	STAR	New York Stock Exchange
8.00% Series D Cumulative Redeemable Preferred Stock, $0.001 par value	STAR-PD	New York Stock Exchange
7.65% Series G Cumulative Redeemable Preferred Stock, $0.001 par value	STAR-PG	New York Stock Exchange
7.50% Series I Cumulative Redeemable Preferred Stock, $0.001 par value	STAR-PI	New York Stock Exchange

Indicate by check mark whether the registrant: ~~(i)~~(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 ~~(ii)~~(2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No o

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ý☒ No o

☐

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~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.



Large ~~accelerated filer~~ ýAccelerated Filer	Accelerated ~~filer~~ o Filer	~~Non-accelerated filer~~ o Non‑accelerated Filer ~~(Do not check if a~~ ~~smaller reporting company)~~	Smaller ~~reporting company~~ oReporting Company	Emerging ~~growth company~~ oGrowth Company
☒	☐	☐	☐	☐

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

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. o

☐

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

As of ~~November 1, 2017,~~April 29, 2022, there were ~~68,200,015~~82,847,755 shares, $0.001 par value per share, of iStar Inc. common stock outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
		~~Page~~
PART I	Consolidated Financial Information	1
Item 1.	Financial Statements:	1
	Consolidated Balance Sheets (unaudited) as of ~~September 30, 2017 (unaudited)~~March 31, 2022 and December 31, ~~2016~~2021	1 2
	Consolidated Statements of Operations (unaudited)—For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	2 3
	Consolidated Statements of Comprehensive Income (Loss) (unaudited)—For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	3 4
	Consolidated Statements of Changes in Equity (unaudited)—For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	4 5
	Consolidated Statements of Cash Flows (unaudited)—For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	5 6
	Notes to Consolidated Financial Statements (unaudited)	6 8
Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	42 39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61 50
Item 4.	Controls and Procedures	61 51
PART II	Other Information	63 52
Item 1.	Legal Proceedings	63 52
Item 1A.	Risk Factors	63 52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63 52
Item 3.	Defaults Upon Senior Securities	63 52
Item 4.	Mine Safety Disclosures	63 52
Item 5.	Other Information	63 52
Item 6.	Exhibits	64 53
SIGNATURES		65 54

Table of Contents

PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Financial Statements

iStar Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

⁽¹⁾

(unaudited)


	As of
	March 31,		December 31,
	2022		2021
ASSETS
Real estate
Real estate, at cost	$	113,679	$	113,510
Less: accumulated depreciation		(22,245)		(21,360)
Real estate, net		91,434		92,150
Real estate available and held for sale		301		301
Total real estate		91,735		92,451
Real estate and other assets available and held for sale and classified as discontinued operations⁽²⁾		226,309		2,299,711
Net investment in leases ($281 and $0 of allowances as of March 31, 2022 and December 31, 2021, respectively)		28,131		43,215
Land and development, net		277,421		286,810
Loans receivable and other lending investments, net ($4,932 and $4,769 of allowances as of March 31, 2022 and December 31, 2021, respectively)		331,839		332,844
Loans receivable held for sale		—		43,215
Other investments		1,526,019		1,297,281
Cash and cash equivalents		1,500,203		339,601
Accrued interest and operating lease income receivable, net		1,666		1,813
Deferred operating lease income receivable, net		3,046		3,159
Deferred expenses and other assets, net		97,682		100,434
Total assets	$	4,084,051	$	4,840,534
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	198,886	$	236,732
Liabilities associated with real estate held for sale and classified as discontinued operations⁽²⁾		15,963		968,419
Liabilities associated with properties held for sale		—		3
Debt obligations, net		2,084,252		2,572,174
Total liabilities		2,299,101		3,777,328
Commitments and contingencies (refer to Note 11)
Equity:
iStar Inc. shareholders' equity:
Preferred Stock Series D, G and I, liquidation preference $25.00 per share		12		12
Common Stock, $0.001 par value, 200,000 shares authorized, 69,096 and 68,870 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		69		69
Additional paid-in capital		3,100,665		3,100,015
Accumulated deficit		(1,625,086)		(2,227,213)
Accumulated other comprehensive loss		(21,224)		(21,587)
Total iStar Inc. shareholders' equity		1,454,436		851,296
Noncontrolling interests		330,514		211,910
Total equity		1,784,950		1,063,206
Total liabilities and equity	$	4,084,051	$	4,840,534

(1)	Refer to Note 2 for details on the Company’s consolidated variable interest entities (“VIEs”).

(2)	Refer to Note 3 - Net Lease Sale and Discontinued Operations.

As of
September 30, 2017 (unaudited) December 31,
2016
ASSETS
Real estate
Real estate, at cost $ 1,687,318
$ 1,740,893
Less: accumulated depreciation (363,456 ) (353,619 )
Real estate, net 1,323,862
1,387,274
Real estate available and held for sale 65,658
237,531
Total real estate 1,389,520
1,624,805
Land and development, net 861,507
945,565
Loans receivable and other lending investments, net 1,109,442
1,450,439
Other investments 289,037
214,406
Cash and cash equivalents 1,912,448
328,744
Accrued interest and operating lease income receivable, net 10,849
11,254
Deferred operating lease income receivable, net 87,696
88,189
Deferred expenses and other assets, net 134,720
162,112
Total assets $ 5,795,219
$ 4,825,514
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 466,374
$ 211,570
Loan participations payable, net 122,489
159,321
Debt obligations, net 4,278,954
3,389,908
Total liabilities 4,867,817
3,760,799
Commitments and contingencies (refer to Note 11) —
—
Redeemable noncontrolling interests 3,513
5,031
Equity:
iStar Inc. shareholders' equity:
Preferred Stock Series D, E, F, G and I, liquidation preference $25.00 per share (refer to Note 13) 12
22
Convertible Preferred Stock Series J, liquidation preference $50.00 per share (refer to Note 13) 4
4
Common Stock, $0.001 par value, 200,000 shares authorized, 68,200 and 72,042 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 68
72
Additional paid-in capital 3,357,489
3,602,172
Retained earnings (deficit) (2,465,654 ) (2,581,488 )
Accumulated other comprehensive income (loss) (refer to Note 13) (3,830 ) (4,218 )
Total iStar Inc. shareholders' equity 888,089
1,016,564
Noncontrolling interests 35,800
43,120
Total equity 923,889
1,059,684
Total liabilities and equity $ 5,795,219
$ 4,825,514

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

Table of Contents

iStar Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)


	For the Three Months Ended March 31,
	2022		2021
Revenues:
Operating lease income	$	3,109	$	4,931
Interest income		4,948		9,789
Interest income from sales-type leases		356		—
Other income		8,640		13,015
Land development revenue		14,900		32,249
Total revenues		31,953		59,984
Costs and expenses:
Interest expense		29,243		28,809
Real estate expense		10,117		8,719
Land development cost of sales		14,496		29,323
Depreciation and amortization		1,357		2,401
General and administrative		1,375		21,439
Provision for (recovery of) loan losses		135		(3,642)
Provision for losses on net investment in leases		281		—
Impairment of assets		—		257
Other expense		930		253
Total costs and expenses		57,934		87,559
Income from sales of real estate		492		612
Loss from operations before earnings from equity method investments and other items		(25,489)		(26,963)
Loss on early extinguishment of debt, net		(1,428)		0
Earnings from equity method investments		25,032		11,768
Net loss from continuing operations before income taxes		(1,885)		(15,195)
Income tax (expense) benefit		(3)		698
Net loss from continuing operations		(1,888)		(14,497)
Net income from discontinued operations⁽¹⁾		797,688		22,486
Net income		795,800		7,989
Net loss from continuing operations attributable to noncontrolling interests		18		44
Net (income) from discontinued operations attributable to noncontrolling interests		(179,089)		(2,564)
Net income attributable to iStar Inc.		616,729		5,469
Preferred dividends		(5,874)		(5,874)
Net income (loss) allocable to common shareholders	$	610,855	$	(405)
Per common share data:
Net income (loss) allocable to common shareholders
Basic and diluted	$	8.85	$	(0.01)
Net loss from continuing operations and allocable to common shareholders:
Basic and diluted	$	(0.11)	$	(0.28)
Net income from discontinued operations and allocable to common shareholders:
Basic and diluted	$	8.96	$	0.27
Weighted average number of common shares:
Basic and diluted		69,037		73,901

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Operating lease income $ 47,806
$ 46,800
$ 142,155
$ 147,270
Interest income 25,442
32,258
83,145
99,877
Other income 20,662
13,442
172,037
35,079
Land development revenue 25,962
31,554
178,722
74,389
Total revenues 119,872
124,054
576,059
356,615
Costs and expenses:
Interest expense 48,732
55,105
148,684
168,173
Real estate expense 36,280
35,243
106,554
104,815
Land development cost of sales 27,512
22,004
165,888
50,842
Depreciation and amortization 11,846
12,201
37,297
39,781
General and administrative 20,955
19,666
73,347
62,433
(Recovery of) provision for loan losses (2,600 ) (14,955 ) (8,128 ) (12,749 )
Impairment of assets 595
8,741
15,292
11,753
Other expense 2,704
819
20,849
4,741
Total costs and expenses 146,024
138,824
559,783
429,789
Income (loss) before earnings from equity method investments and other items (26,152 ) (14,770 ) 16,276
(73,174 )
Loss on early extinguishment of debt, net (616 ) (36 ) (4,142 ) (1,618 )
Earnings from equity method investments 2,461
26,540
13,677
74,254
Income (loss) from continuing operations before income taxes (24,307 ) 11,734
25,811
(538 )
Income tax (expense) benefit 1,278
8,256
(972 ) 9,859
Income (loss) from continuing operations (23,029 ) 19,990
24,839
9,321
Income from discontinued operations —
3,721
4,939
10,934
Gain from discontinued operations —
—
123,418
—
Income tax expense from discontinued operations —
—
(4,545 ) —
Income from sales of real estate⁽¹⁾
19,313
34,444
28,267
88,387
Net income (loss) (3,716 ) 58,155
176,918
108,642
Net (income) loss attributable to noncontrolling interests 160
967
(4,450 ) (6,915 )
Net income (loss) attributable to iStar Inc. (3,556 ) 59,122
172,468
101,727
Preferred dividends (30,974 ) (12,830 ) (56,634 ) (38,490 )
Net (income) loss allocable to Participating Security holders⁽²⁾
—
—
—
(27 )
Net income (loss) allocable to common shareholders $ (34,530 ) $ 46,292
$ 115,834
$ 63,210
Per common share data:
Income (loss) attributable to iStar Inc. from continuing operations:
Basic $ (0.48 ) $ 0.60
$ (0.11 ) $ 0.70
Diluted $ (0.48 ) $ 0.41
$ (0.11 ) $ 0.57
Net income (loss) attributable to iStar Inc.:
Basic $ (0.48 ) $ 0.65
$ 1.61
$ 0.85
Diluted $ (0.48 ) $ 0.44
$ 1.61
$ 0.66
Weighted average number of common shares:
Basic 71,713
71,210
71,972
74,074
Diluted 71,713
115,666
71,972
118,590


(1)	~~Income from sales of real estate represents gains from sales of real estate that do not qualify as discontinued operations.~~


~~(2)~~	Participating Security holders are non-employee directors who hold common stock equivalents ("CSEs") and restricted stock awards granted under the Company's Long Term Incentive Plans that are eligible to participate in dividends (referRefer to Note 143 - Net Lease Sale and ~~Note 15).~~Discontinued Operations.

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

Table of Contents

iStar Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(unaudited)


	For the Three Months Ended March 31,
	2022		2021
Net income	$	795,800	$	7,989
Other comprehensive income (loss):
Reclassification of losses on cash flow hedges into earnings upon realization⁽¹⁾		621		2,338
Unrealized losses on available-for-sale securities		(3,013)		(1,031)
Unrealized gains on cash flow hedges		2,755		11,973
Other comprehensive income		363		13,280
Comprehensive income		796,163		21,269
Comprehensive (income) attributable to noncontrolling interests⁽²⁾		(179,071)		(4,978)
Comprehensive income attributable to iStar Inc.	$	617,092	$	16,291

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Net income (loss) $ (3,716 ) $ 58,155
$ 176,918
$ 108,642
Other comprehensive income (loss):
Reclassification of (gains)/losses on cash flow hedges into earnings upon realization⁽¹⁾
56
112
(135 ) 487
Unrealized gains/(losses) on available-for-sale securities (116 ) (202 ) 450
263
Unrealized gains/(losses) on cash flow hedges (56 ) 249
338
(1,070 )
Unrealized gains/(losses) on cumulative translation adjustment (36 ) (249 ) (265 ) (259 )
Other comprehensive income (loss) (152 ) (90 )
388
(579 )
Comprehensive income (loss) (3,868 ) 58,065
177,306
108,063
Comprehensive (income) loss attributable to noncontrolling interests 160
967
(4,450 ) (6,915 )
Comprehensive income (loss) attributable to iStar Inc. $ (3,708 ) $ 59,032
$ 172,856
$ 101,148

(1)

Reclassified to ~~"Interest expense"~~“Net income from discontinued operations” in the ~~Company's~~Company’s consolidated statements of operations ~~are $16 and $76~~ for the three ~~and nine~~ months ended ~~September 30, 2017, respectively, and $20 and $202 for the three and nine months ended September 30, 2016, respectively.~~March 31, 2021 is $2,104. Reclassified to ~~"Earnings~~“Earnings from equity method ~~investments"~~investments” in the ~~Company's~~Company’s consolidated statements of operations ~~are $40 and $204~~ for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2022 and ~~$92~~2021 are $621 and ~~$285 for~~$234, respectively.

(2)	For the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2022 and 2021, $179.1 million and $5.0 million, respectively, of comprehensive income attributable to noncontrolling interests was from discontinued operations.

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

Table of Contents

iStar Inc.

Consolidated Statements of Changes in Equity

~~For the Nine Months Ended September 30, 2017 and 2016~~

(In thousands)

(unaudited)


	iStar Inc. Shareholders' Equity
										Accumulated
				Common		Additional		Retained		Other
		Preferred		Stock at		Paid-In		Earnings		Comprehensive		Noncontrolling	Total
		Stock⁽¹⁾		Par		Capital		(Deficit)		Income (Loss)		Interests	Equity
Balance as of December 31, 2021	$	12	$	69	$	3,100,015	$	(2,227,213)	$	(21,587)	$	211,910	$	1,063,206
Dividends declared—preferred		—		—		—		(5,874)		—		—		(5,874)
Dividends declared—common ($0.125 per share)		—		—		—		(8,728)		—		—		(8,728)
Issuance of stock/restricted stock unit amortization, net⁽²⁾		—		—		650		—		—		1,350		2,000
Net income		—		—		—		616,729		—		179,071		795,800
Change in accumulated other comprehensive income (loss)		—		—		—		—		363		—		363
Contributions from noncontrolling interests		—		—		—		—		—		7,893		7,893
Distributions to noncontrolling interests		—		—		—		—		—		(69,710)		(69,710)
Balance as of March 31, 2022	$	12	$	69	$	3,100,665	$	(1,625,086)	$	(21,224)	$	330,514	$	1,784,950

Balance as of December 31, 2020	$	12	$	74	$	3,240,535	$	(2,316,972)	$	(52,680)	$	193,414	$	1,064,383
Impact from adoption of new accounting standards		—		—		(25,869)		15,850		—		—		(10,019)
Dividends declared—preferred		—		—		—		(5,874)		—		—		(5,874)
Dividends declared—common ($0.11 per share)		—		—		—		(8,236)		—		—		(8,236)
Issuance of stock/restricted stock unit amortization, net⁽²⁾		—		—		2,572		—		—		1,370		3,942
Net income		—		—		—		5,469		—		2,520		7,989
Change in accumulated other comprehensive income (loss)		—		—		—		—		10,822		2,458		13,280
Repurchase of stock		—		(1)		(12,376)		—		—		—		(12,377)
Contributions from noncontrolling interests		—		—		—		—		—		64		64
Distributions to noncontrolling interests		—		—		—		—		—		(2,145)		(2,145)
Balance as of March 31, 2021	$	12	$	73	$	3,204,862	$	(2,309,763)	$	(41,858)	$	197,681	$	1,051,007

iStar Inc. Shareholders' Equity

Preferred
Stock⁽¹⁾

Preferred Stock Series J⁽¹⁾

Common
Stock at
Par

Additional
Paid-In
Capital

Retained
Earnings
(Deficit)

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling
Interests

Total
Equity
Balance as of December 31, 2016 $ 22
$ 4
$ 72
$ 3,602,172
$ (2,581,488 ) $ (4,218 ) $ 43,120
$ 1,059,684
Dividends declared—preferred —
—
—
—
(38,490 ) —
—
(38,490 )
Issuance of stock/restricted stock unit amortization, net —
—
—
2,248
—
—
—
2,248
Net income for the period⁽²⁾
—
—
—
—
172,468
—
5,785
178,253
Change in accumulated other comprehensive income (loss) —
—
—
—
—
388
—
388
Repurchase of stock —
—
(4 ) (45,924 ) —
—
—
(45,928 )
Issuance of senior unsecured convertible notes (refer to Note 10) —
—
—
22,487
—
—
—
22,487
Dividends declared and payable — Series E and Series F Preferred Stock

—
—
—
—
(1,830 ) —
—
(1,830 )
Redemption of Series E and F Preferred Stock

(10 ) —
—
(223,676 ) (16,314 ) —
—
(240,000 )
Change in additional paid in capital attributable to redeemable noncontrolling interest —
—
—
182
—
—
—
182
Contributions from noncontrolling interests —
—
—
—
—
—
12
12
Distributions to noncontrolling interests —
—
—
—
—
—
(13,117 ) (13,117 )
Balance as of September 30, 2017 $ 12
$ 4
$ 68
$ 3,357,489
$ (2,465,654 ) $ (3,830 ) $ 35,800
$ 923,889

Balance as of December 31, 2015 $ 22
$ 4
$ 81
$ 3,689,330
$ (2,625,474 ) $ (4,851 ) $ 42,218
$ 1,101,330
Dividends declared—preferred —
—
—
—
(38,490 ) —
—
(38,490 )
Issuance of stock/restricted stock unit amortization, net —
—
—
1,675
—
—
—
1,675
Net income for the period⁽²⁾
—
—
—
—
101,727
—
10,908
112,635
Change in accumulated other comprehensive income (loss) —
—
—
—
—
(579 ) —
(579 )
Repurchase of stock —
—
(10 ) (98,419 ) —
—
—
(98,429 )
Change in additional paid in capital attributable to redeemable noncontrolling interest —
—
—
124
—
—
—
124
Contributions from noncontrolling interests —
—
—
—
—
—
513
513
Change in noncontrolling interest⁽³⁾
—
—
—
—
—
—
(7,292 ) (7,292 )
Balance as of September 30, 2016 $ 22
$ 4
$ 71
$ 3,592,710
$ (2,562,237 ) $ (5,430 ) $ 46,347
$ 1,071,487


(1)	Refer to Note 13 for details on the ~~Company's~~Company’s Preferred Stock.


(2)	~~For the nine months ended~~ ~~September 30, 2017~~ ~~and 2016, net income (loss) shown above excludes $(1,335) and $(3,993)~~Net of ~~net loss attributable to redeemable noncontrolling interests.~~


~~(3)~~	~~Includes a payment to acquire a noncontrolling interest (refer to Note 5).~~payments for withholding taxes upon vesting of stock-based compensation.

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

Table of Contents

iStar Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	For the Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	795,800	$	7,989
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Provision for (recovery of) loan losses		135		(3,794)
Provision for losses on net investment in leases		281		(1,601)
Impairment of assets		1,492		1,785
Depreciation and amortization		1,357		15,455
Non-cash interest income from sales-type leases		(1,580)		(9,388)
Stock-based compensation (income) expense		(12,427)		5,508
Amortization of discounts/premiums and deferred financing costs on debt obligations, net		2,930		2,016
Amortization of discounts/premiums and deferred interest on loans, net		(2,785)		(3,379)
Deferred interest on loans received		0		23,703
Earnings from equity method investments		(152,161)		(12,769)
Distributions from operations of other investments		16,429		10,598
Deferred operating lease income		(2,373)		(2,684)
Income from sales of real estate		(684,229)		(612)
Land development revenue in excess of cost of sales		(404)		(2,926)
Loss on early extinguishment of debt, net		42,836		0
Other operating activities, net		(9,940)		(3,917)
Changes in assets and liabilities:
Origination and fundings of loans receivable held for sale		0		(16,086)
Changes in accrued interest and operating lease income receivable		1,368		1,945
Changes in deferred expenses and other assets, net		(1,735)		1,776
Changes in accounts payable, accrued expenses and other liabilities		(25,618)		(17,414)
Cash flows used in operating activities		(30,624)		(3,795)
Cash flows from investing activities:
Originations and fundings of loans receivable, net		(4,000)		(50,670)
Capital expenditures on real estate assets		(741)		(648)
Capital expenditures on land and development assets		(4,803)		(4,134)
Acquisitions of real estate, net investments in leases and land assets		(28,309)		0
Repayments of and principal collections on loans receivable and other lending investments, net		4,612		109,926
Net proceeds from sales of loans receivable		96,202		79,560
Net proceeds from sales of real estate		1,981,599		2,967
Net proceeds from sales of land and development assets		14,407		30,801
Net proceeds from sales of net investment in leases		563,495		0
Net proceeds from net investment in leases		0		6,575
Distributions from other investments		46,073		20,032
Contributions to and acquisition of interest in other investments		(255,182)		(59,866)
Other investing activities, net		4,514		3,092
Cash flows provided by investing activities		2,417,867		137,635
Cash flows from financing activities:
Borrowings from debt obligations		50,000		25,000
Repayments and repurchases of debt obligations		(965,592)		(32,308)
Purchase of marketable securities in connection with the defeasance of mortgage notes payable		(252,571)		0
Preferred dividends paid		(5,874)		(5,874)
Common dividends paid		(8,956)		(8,216)
Repurchase of stock		0		(10,775)
Payments for deferred financing costs		0		(75)
Payments for withholding taxes upon vesting of stock-based compensation		(3,808)		(2,085)
Contributions from noncontrolling interests		7,893		64
Distributions to noncontrolling interests		(35,476)		(2,145)
Payments for debt prepayment or extinguishment costs		(15,608)		0
Cash flows used in financing activities		(1,229,992)		(36,414)
Effect of exchange rate changes on cash		3		(111)
Changes in cash, cash equivalents and restricted cash		1,157,254		97,315
Cash, cash equivalents and restricted cash at beginning of period		393,996		150,566
Cash, cash equivalents and restricted cash at end of period	$	1,551,250	$	247,881

~~(unaudited)~~

Table of Contents

For the Nine Months Ended September 30,
2017 2016
Cash flows from operating activities:
Net income $ 176,918
$ 108,642
Adjustments to reconcile net income to cash flows from operating activities:
(Recovery of) provision for loan losses (8,128 ) (12,749 )
Impairment of assets 15,292
11,753
Depreciation and amortization 38,198
42,184
Non-cash expense for stock-based compensation 12,730
7,644
Amortization of discounts/premiums and deferred financing costs on debt obligations, net 9,793
12,954
Amortization of discounts/premiums on loans, net (10,098 ) (10,835 )
Deferred interest on loans, net 1,162
(5,632 )
Gain from discontinued operations (123,418 ) —
Earnings from equity method investments (13,677 ) (74,254 )
Distributions from operations of other investments 39,076
44,893
Deferred operating lease income (4,870 ) (7,340 )
Income from sales of real estate (28,775 ) (88,387 )
Land development revenue in excess of cost of sales (12,834 ) (23,547 )
Loss on early extinguishment of debt, net 1,392
1,618
Debt discount on repayments of debt obligations

(6,634 ) (5,369 )
Other operating activities, net 12,210
4,115
Changes in assets and liabilities:
Changes in accrued interest and operating lease income receivable, net 2,533
5,715
Changes in deferred expenses and other assets, net (8,271 ) (14,194 )
Changes in accounts payable, accrued expenses and other liabilities (5,792 ) (11,773 )
Cash flows provided by (used in) operating activities 86,807
(14,562 )
Cash flows from investing activities:
Originations and fundings of loans receivable, net (177,952 ) (226,012 )
Capital expenditures on real estate assets (24,891 ) (55,385 )
Capital expenditures on land and development assets (84,966 ) (87,891 )
Acquisitions of real estate assets —
(4,740 )
Repayments of and principal collections on loans receivable and other lending investments, net 491,680
243,780
Net proceeds from sales of real estate 201,939
412,335
Net proceeds from sales of land and development assets 174,979
64,159
Net proceeds from sales of other investments —
39,810
Distributions from other investments 40,772
25,795
Contributions to and acquisition of interest in other investments (181,279 ) (45,635 )
Changes in restricted cash held in connection with investing activities 5,491
(603 )
Other investing activities, net 646
(14,265 )
Cash flows provided by investing activities 446,419
351,348
Cash flows from financing activities:
Borrowings from debt obligations and convertible notes 1,903,643
696,401
Repayments and repurchases of debt obligations (726,795 ) (1,065,253 )
Proceeds from loan participations payable —
22,844
Preferred dividends paid (38,490 ) (38,490 )
Repurchase of stock (45,928 ) (99,335 )
Payments for deferred financing costs (27,972 ) (8,930 )
Payments for withholding taxes upon vesting of stock-based compensation (511 ) (1,203 )
Distributions to noncontrolling interests

(12,889 ) (7,248 )
Other financing activities, net (599 ) 821
Cash flows provided by (used in) financing activities 1,050,459
(500,393 )
Effect of exchange rate changes on cash 19
16
Changes in cash and cash equivalents 1,583,704
(163,591 )
Cash and cash equivalents at beginning of period 328,744
711,101
Cash and cash equivalents at end of period $ 1,912,448
$ 547,510
Supplemental disclosure of non-cash investing and financing activity:
Fundings and repayments of loan receivables and loan participations, net

$ (37,405 ) $ 31,030
Accrual for redemption of preferred stock and preferred stock dividends 241,830
—
Accounts payable for capital expenditures on land and development assets 5,700
3,187
Accounts payable for capital expenditures on real estate assets 2,574
—
Acquisitions of real estate and land and development assets through deed-in-lieu —
9,083
Developer fee payable —
9,478
Accrued financing costs 3,031
—


	For the Three Months Ended March 31,
	2022		2021
Reconciliation of cash and cash equivalents and restricted cash presented on the consolidated statements of cash flows
Cash and cash equivalents	$	1,500,203	$	193,852
Restricted cash included in deferred expenses and other assets, net		51,047		54,029
Total cash and cash equivalents and restricted cash	$	1,551,250	$	247,881
Supplemental disclosure of non-cash investing and financing activity:
Fundings and (repayments) of loan receivables and loan participations, net	$	—	$	(42,501)
Accrued repurchase of stock		—		1,802
Distributions to noncontrolling interests		34,467		—
Defeasance of mortgage notes payable		230,452		—
Marketable securities transferred in connection with the defeasance of mortgage notes payable		252,571		—
Accounts payable for capital expenditures on land and development and real estate assets		2,053		—
Assumption of mortgage by third party		62,825		—

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

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements

(unaudited)

Table of Contents

Note 1—Business and Organization

Business—iStar Inc. (the ~~"Company"~~“Company”)~~, doing business as "iStar,"~~ finances, invests in and develops real estate and real estate related projects as part of its fully-integrated investment platform. The Company also ~~provides management services for its~~manages entities focused on ground lease ~~and net lease equity method~~ investments (refer to Note 7)8). The Company has invested ~~more than $35 billion~~capital over the past two decades and is structured as a real estate investment trust ~~("REIT"~~(“REIT”) with a diversified portfolio focused on larger assets located in major metropolitan markets. The ~~Company's~~Company’s primary reportable business segments are net lease (refer to Note 3 - Net Lease Sale and Discontinued Operations), real estate finance, ~~net lease,~~ operating properties and land and development (refer to Note 17).

Organization—The Company began its business in 1993 through the management of private investment funds and became publicly traded in 1998. Since that time, the Company has grown through the origination of new investments ~~as well as through~~and corporate acquisitions.

Note 2—Basis of Presentation and Principles of Consolidation

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10-01 of Regulation S-X for interim financial statements. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America ~~("GAAP"~~(“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~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 (the ~~"2016~~“2021 Annual ~~Report"~~Report”).

The preparation of 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. Certain prior year amounts have been reclassified in the ~~Company's~~Company’s consolidated financial statements and the related notes (refer to Note 3 – Net Lease Sale and Discontinued Operations) to conform to the current period presentation.

Principles of Consolidation—The consolidated financial statements include the financial statements of the Company, its wholly owned subsidiaries, controlled partnerships and ~~variable interest entities ("VIEs")~~VIEs for which the Company is the primary beneficiary. All ~~significant~~ intercompany balances and transactions have been eliminated in consolidation. The ~~Company's~~Company’s involvement with VIEs affects its financial performance and cash flows primarily through amounts recorded in ~~"Operating~~“Net income from discontinued operations,” “Operating lease income,~~" "Interest~~” “Interest income,~~" "Earnings~~” “Earnings from equity method investments,~~" "Real~~” “Real estate ~~expense"~~expense” and ~~"Interest expense"~~“Interest expense” in the ~~Company's~~Company’s consolidated statements of operations. The Company has ~~not~~ provided no financial support to those VIEs that it was not previously contractually required to provide.

Consolidated VIEs—~~As of September 30, 2017, the~~The Company consolidates VIEs for which it is considered the primary beneficiary. As of September 30, 2017, the total assets of these consolidated VIEs were $331.4 million and total liabilities were $74.2 million. The classifications of these assets are primarily within "Land and development, net" and "Real estate, net" on the Company's consolidated balance sheets. The classifications of liabilities are primarily within "Accounts payable, accrued expenses and other liabilities" and "debt obligations, net" 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~~VIE’s respective assets. The Company did not have any unfunded commitments related to consolidated VIEs as of ~~September 30, 2017.~~March 31, 2022 and December 31,

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

2021. The following table presents the assets and liabilities of the Company’s consolidated VIEs as of March 31, 2022 and December 31, 2021 ($ in thousands):


	As of
	March 31, 2022		December 31, 2021
ASSETS
Real estate
Real estate, at cost	$	93,592	$	93,477
Less: accumulated depreciation		(15,761)		(14,987)
Real estate, net		77,831		78,490
Real estate and other assets available and held for sale and classified as discontinued operations		—		886,845
Land and development, net		168,458		176,833
Cash and cash equivalents		730,820		23,908
Accrued interest and operating lease income receivable, net		541		—
Deferred operating lease income receivable, net		5		3
Deferred expenses and other assets, net		5,371		5,001
Total assets	$	983,026	$	1,171,081
LIABILITIES
Accounts payable, accrued expenses and other liabilities	$	28,529	$	24,744
Liabilities associated with real estate held for sale and classified as discontinued operations		—		493,739
Total liabilities		28,529		518,483

Unconsolidated VIEs—~~As of September 30, 2017, the~~The Company has investments in VIEs where it is not the primary beneficiary and accordingly the VIEs have not been consolidated in the ~~Company's~~Company’s consolidated financial statements. As of ~~September 30, 2017,~~March 31, 2022, the ~~Company's~~Company’s maximum exposure to loss from these investments does not exceed the sum of the ~~$65.8~~$58.7 million carrying value of the investments, which are classified in ~~"Other investments" and "Loans receivable and other lending investments, net"~~“Other investments” on the ~~Company's~~Company’s consolidated balance sheets, and ~~$80.7~~$2.3 million of related unfunded commitments.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

Note 3—Summary of Significant Accounting Policies

~~On January 1, 2017,~~

Net Lease Sale and Discontinued Operations—A discontinued operation represents: (i) a component of the Company ~~adopted Accounting Standards Update ("ASU") 2016-09,~~ ~~Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting~~ ~~("ASU 2016-09"), which was issued to simplify several aspects~~or group of ~~the accounting~~components that has been disposed of or is classified as held for ~~share-based payment transactions, including income tax, classification of awards as either equity~~sale in a single transaction and represents a strategic shift that has or ~~liabilities and classification on the statement of cash flows. The adoption of ASU 2016-09 did not have a material impact on the Company's consolidated financial statements.~~

~~As of September 30, 2017, the remainder of the Company's significant accounting policies, which are detailed in the Company's 2016 Annual Report, have not changed materially.~~

~~New Accounting Pronouncements~~—In August 2017, the FASB issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. ASU 2017-12 expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. ASU 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. Management does not believe the guidance will have a ~~material impact~~major effect on the ~~Company's consolidated~~Company’s operations and financial ~~statements.~~

~~In February 2017, the FASB issued ASU 2017-05,~~ ~~Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets~~ ("ASU 2017-05"), to clarify the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and to add guidance for partial sales of nonfinancial assets. The amendments in ASU 2017-05 simplify GAAP by eliminating several accounting differences between transactions involving assets and transactions involving businesses. The amendments in ASU 2017-05 requireresults or (ii) an ~~entity to initially measure a retained noncontrolling interest in a nonfinancial asset at fair value consistent with how a retained noncontrolling interest in a~~acquired business ~~is measured. Also, if an entity transfers ownership interests in a consolidated subsidiary~~ that is ~~within~~classified as held for sale on the ~~scope~~date of ~~ASC 610-20~~acquisition.

Net Lease Sale—In March 2022, the Company, through certain subsidiaries of and ~~continues~~entities managed by the Company, closed on a definitive purchase and sale agreement to ~~have~~sell a ~~controlling financial interest~~portfolio of net lease properties owned and managed by such subsidiaries and entities to a third party for an aggregate gross sales price of approximately $3.07 billion and recognized a gain of $663.7 million in ~~that subsidiary, ASU 2017-05 requires~~“Net income from discontinued operations” in the ~~entity~~Company’s consolidated statements of operations. The Company refers to ~~account for the~~this transaction as ~~an equity transaction, which~~the "Net Lease Sale" in this report. The Net Lease Sale is consistent with ~~how changes in ownership interests in a consolidated subsidiary that~~the Company’s stated corporate strategy which is ~~a business are recorded when a parent retains a controlling financial interest in the business. ASU 2017-05 is effective for interim~~to grow its Ground Lease and annual reporting periods beginning after December 15, 2017. Early adoption is permitted beginning January 1, 2017. Management is evaluating the impact of the guidance on the Company's consolidated financial statements and expects to adopt the retrospective approach, which would require the Company to recast revenue and expenses for all prior periods presented in the year of adoption of the new standard. The Company expects that transactions in assets andGround Lease adjacent businesses ~~in which the Company retains an ownership interest, such as the sale of a controlling interest in its GL business~~ (refer to Note ~~4), will be impacted~~8) and simplify its portfolio through sales of other assets.

The portfolio sold consisted of office, entertainment and industrial properties located in the United States comprising approximately 18.3 million square feet. It included assets wholly-owned by ~~this guidance. As a result, under the retrospective approach, in 2018,~~ the Company expects to record an incremental gain of $55.5 million in its consolidated statements of operations for the nine months ended September 30, 2017, bringing the Company's full gain on the sale of its GL business to approximately $178.9 million.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations: Clarifying the Definition of a Business~~ ~~("ASU 2017-01"), to provide a more robust framework to use in determining when a set of~~and assets owned by 2 joint ventures (see Net Lease Venture and activities is a business. The amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The Company's real estate acquisitions have historically been accounted for as a business combination or an asset acquisition. Under ASU 2017-01, certain transactions previously accounted for as business combinations under the existing guidance would be accounted for as asset acquisitions under the new guidance. As a result,Net Lease Venture II below) managed by the Company ~~expects more transaction costs to be capitalized under real estate acquisitions~~ and less transaction costs to be expensed under business combinations. ASU 2017-01 is effective for interim and annual reporting periods beginning after December 15, 2017. Early application is permitted. Management is evaluatingin which it owned 51.9% interests. At the ~~impact~~time of closing, the portfolio was encumbered by an aggregate of $702 million of mortgage indebtedness, including indebtedness from equity method investments, which was repaid with proceeds from the sale. After repayment of the ~~guidance on~~mortgage indebtedness and prepayment penalties, a senior term loan secured by certain of the ~~Company's consolidated financial statements.~~assets (refer to Note 10), payments to terminate derivative contracts, payments to joint venture partners, and payments of promotes, transaction expenses and amounts due under employee incentive plans, the Company retained net cash proceeds

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows: Restricted Cash~~ ("ASU 2016-18"), which requires that restricted cash be included with cash and cash equivalents when reconciling beginning and ending cash and cash equivalents on the statement of cash flows. In addition, ASU 2016-18 requires disclosure of what is included in restricted cash. ASU 2016-18 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. Management does not believe the guidance will have a material impact on the Company's consolidated financial statements.

~~In August 2016~~, ~~theFASB issued ASU 2016-15,~~ ~~Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments~~ ~~("ASU 2016-15"), which was issued to reduce diversity in practice in how certain cash receipts and cash payments,~~

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

~~including debt prepayment or debt extinguishment costs, distributions~~

of $1.2 billion from ~~equity method investees,~~the transaction. In addition, as part of the transaction, the buyer sold 3 of the properties to Safehold Inc. (“SAFE”) for $122.0 million and ~~other separately identifiable cash flows, are presented and classified~~entered into 3 Ground Leases with SAFE. NaN net lease properties were sold to different third parties in the ~~statement~~first quarter of ~~cash flows. ASU 2016-15 is effective for interim~~2022 and ~~annual reporting periods beginning after December 15, 2017. Early adoption is permitted. Management does~~the Company’s net lease assets associated with its Ground Lease businesses were not ~~believe~~included in the ~~guidance will have a material impact on the Company's consolidated financial statements.~~

~~In June 2016~~, ~~theFASB issued ASU 2016-13,~~ ~~Financial Instruments—Credit Losses:Measurement of Credit Losses on Financial Instruments~~ ("ASU 2016-13"), which was issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments held by a reporting entity. This amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.sale. The Company ~~currently records a general reserve that covers performing loans and reserves for loan losses are recorded when (i) available information as~~received net cash proceeds of each balance sheet date indicates that it is probable a loss has occurred in the portfolio and (ii) the amount of the loss can be reasonably estimated. The formula-based general reserve is derived from estimated principal default probabilities and loss severities applied to groups of loans based upon risk ratings assigned to loans with similar risk characteristics during our quarterly loan portfolio assessment. The Company estimates loss rates based on historical realized losses experienced within its portfolio and take into account current economic conditions affecting the commercial real estate market when establishing appropriate time frames to evaluate loss experience. The Company believes this general reserve component of its total loan loss reserves should minimize the impact of ASU 2016-13. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Management does not believe the guidance will have a material impact on the Company's consolidated financial statements.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~ ("ASU 2016-02"), which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. For operating leases, a lessee will be required to do the following: (i) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; (ii) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis and (iii) classify all cash payments within operating activities in the statement of cash flows. For operating lease arrangements for which the Company is the lessee, primarily the lease of office space, the Company expects the impact of ASU 2016-02 to be the recognition of a right-of-use asset and lease liability on its consolidated balance sheets. The accounting applied by the Company as a lessor will be largely unchanged from that applied under previous GAAP. However, in certain instances, a new long-term lease of land subsequent to adoption could be classified as a sales-type lease, which could result in the Company derecognizing the underlying asset from its books and recording a profit or loss on sale and the net investment in the lease. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. Management is evaluating the impact of the guidance on the Company's consolidated financial statements.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments - Overall:Recognition and Measurement of Financial Assets and Financial Liabilities~~ ("ASU 2016-01"), which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. Management is evaluating the impact of the guidance on the Company's consolidated financial statements.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ ~~("ASU 2014-09"), which supersedes existing industry-specific guidance, including ASC 360-20,~~ ~~Real Estate Sales~~. The new standard is principles-based and requires more estimates and judgment than current guidance. Certain contracts with customers, including lease contracts and financial instruments and other contractual rights, are not within the scope of the new guidance. Although most of the Company's revenue is operating lease income generated from lease contracts and interest income generated from financial instruments, certain other of the Company's revenue streams will be impacted by the new guidance. The Company currently expects that income$33.9 million from the sale of ~~residential condominiums, land development revenue~~the 2 net lease properties and recognized a gain of $23.9 million in “Net income from discontinued operations” in the Company’s consolidated statements of operations.

Net Lease Venture—In February 2014, the Company partnered with a sovereign wealth fund to form a venture to acquire and develop net lease assets (the “Net Lease Venture”) and gave a right of first offer to the venture on all new net lease investments. The Company was responsible for sourcing new opportunities and managing the venture and its assets in exchange for a management fee and incentive fee. Several of the Company’s senior executives whose time was substantially devoted to the Net Lease Venture owned a total of 0.6% equity ownership in the venture via co-investment. These senior executives were also entitled to an amount equal to 50% of any incentive fee received based on the 47.5% external partner’s interest. Net Lease Venture was part of the Net Lease Sale. As of March 31, 2022, $316.6 million of “Noncontrolling interests” was attributable to the Net Lease Venture and represented proceeds from the Net Lease Sale that were not yet distributed to the Company’s partners in the venture as of March 31, 2022.

Net Lease Venture II—In July 2018, the Company entered into a new venture (the “Net Lease Venture II”) with an investment strategy similar to the Net Lease Venture. The Company was responsible for managing the venture in exchange for a management fee and incentive fee. During the three months ended March 31, 2022 and 2021, the Company recorded $0.4 million and $0.4 million, respectively, of management fees from Net Lease Venture II in “Net income from discontinued operations” in the Company’s consolidated statements of operations. Net Lease Venture II was part of the Net Lease Sale. As of March 31, 2022, $216.3 million of “Real estate and other ~~income will be impacted by ASU 2014-09. The Company does not expect income~~assets available and held for sale and classified as discontinued operations” was attributable to the Net Lease Venture II and represented proceeds from the ~~sales~~Net Lease Sale that were not yet distributed to the Company as of March 31, 2022.

Discontinued Operations—The Company’s net lease ~~or commercial operating properties to be impacted by ASU 2014-09. In August 2015,~~assets and liabilities included in the ~~FASB issued ASU 2015-14,~~ ~~Revenue from Contracts~~Net Lease Sale and the Company’s other 2 net lease assets are classified as “Real estate and other assets available and held for sale and classified as discontinued operations” and “Liabilities associated with ~~Customers - Deferral of the Effective Date, to defer the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective~~real estate held for ~~interim~~sale and ~~annual reporting periods beginning after December 15, 2017. Early adoption is permitted beginning January 1, 2017. Management is evaluating the impact of the guidance~~classified as discontinued operations,” respectively, on the Company’s consolidated ~~financial statements~~balance sheets as of December 31, 2021. For the three months ended March 31, 2022 and ~~expects to adopt~~2021, the ~~full retrospective approach, which would require the Company to recast revenue and expenses for all prior periods presented~~operations of such assets are classified in “Net income from discontinued operations” in the ~~year~~Company’s consolidated statements of ~~adoption of the new standard.~~operations.

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

The following table presents the Company’s consolidated assets and liabilities recorded in “Real estate and other assets available and held for sale and classified as discontinued operations” and “Liabilities associated with real estate held for sale and classified as discontinued operations,” respectively, on the Company’s consolidated balance sheets as of March 31, 2022 and December 31, 2021 ($ in thousands).


	As of
	March 31,		December 31,
	2022		2021
ASSETS
Real estate
Real estate, at cost	$	—	$	1,537,655
Less: accumulated depreciation		—		(271,183)
Total real estate, net		—		1,266,472
Net investment in leases		—		486,389
Loans receivable held for sale		—		48,675
Other investments		216,309		103,229
Finance lease right of use assets		—		150,099
Accrued interest and operating lease income receivable, net		1,018		2,997
Deferred operating lease income receivable, net		—		63,156
Deferred expenses and other assets, net		8,982		178,694
Total real estate and other assets available and held for sale and classified as discontinued operations	$	226,309	$	2,299,711

LIABILITIES
Accounts payable, accrued expenses and other liabilities	$	15,963	$	92,865
Finance lease liabilities		—		161,258
Debt obligations, net		—		714,296
Total liabilities associated with real estate held for sale and classified as discontinued operations	$	15,963	$	968,419

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

The transaction described above involving the Company's net lease business qualified for discontinued operations and the following table summarizes net income from discontinued operations for the three months ended March 31, 2022 and 2021 ($ in thousands):


	For the Three Months Ended March 31,
	2022		2021
Revenues:
Operating lease income	$	35,596	$	42,513
Interest income		885		861
Interest income from sales-type leases		8,803		8,627
Other income		4,292		1,275
Total revenues		49,576		53,276
Costs and expenses:
Interest expense⁽¹⁾		7,484		10,754
Real estate expense		5,072		8,175
Depreciation and amortization⁽¹⁾		—		13,054
Recovery of loan losses		—		(152)
Recovery of losses on net investment in leases		—		(1,601)
Impairment of assets		1,492		1,528
Other expense⁽²⁾		(5,669)		—
Total costs and expenses		8,379		31,758
Income from sales of real estate		683,738		—
Income from discontinued operations before earnings from equity method investments and other items		724,935		21,518
Earnings from equity method investments		127,129		1,001
Loss on early extinguishment of debt, net		(41,408)		—
Net income from discontinued operations before income taxes		810,656		22,519
Income tax expense		(12,968)		(33)
Net income from discontinued operations		797,688		22,486
Net (income) from discontinued operations attributable to noncontrolling interests		(179,089)		(2,564)
Net income from discontinued operations attributable to iStar Inc.	$	618,599	$	19,922

(1)

For the three months ended March 31, 2022, the Company recorded $1.3 million of “Interest expense” in its consolidated statements of operations from its Ground Leases with SAFE. For the three months ended March 31, 2021, the Company recorded $2.1 million and $0.4 million, respectively, of “Interest expense” and “Depreciation and amortization” in its consolidated statements of operations from its Ground Leases with SAFE.

(2)	Represents the reversal of other expenses recognized in connection with the settlement of interest rate hedges during the three months ended March 31, 2022.

The following table presents cash flows provided by operating activities and cash flows used in investing activities from discontinued operations for the three months ended March 31, 2022 and 2021 ($ in thousands).


	For the Three Months Ended March 31,
	2022		2021
Cash flows provided by operating activities	$	22,571	$	20,847
Cash flows provided by investing activities		2,553,349		566

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

Note 4—Real Estate

The ~~Company's~~Company’s real estate assets were comprised of the following ($ in thousands):


As of March 31, 2022
Land, at cost	$	6,830
Buildings and improvements, at cost		106,849
Less: accumulated depreciation		(22,245)
Real estate, net		91,434
Real estate available and held for sale⁽¹⁾		301
Total real estate	$	91,735
As of December 31, 2021
Land, at cost	$	6,831
Buildings and improvements, at cost		106,679
Less: accumulated depreciation		(21,360)
Real estate, net		92,150
Real estate available and held for sale⁽¹⁾		301
Total real estate	$	92,451

Net Lease⁽¹⁾

Operating
Properties
Total
As of September 30, 2017
Land, at cost $ 223,764
$ 209,068
$ 432,832
Buildings and improvements, at cost 926,912
327,574
1,254,486
Less: accumulated depreciation (306,183 ) (57,273 ) (363,456 )
Real estate, net 844,493
479,369
1,323,862
Real estate available and held for sale ⁽²⁾
—
65,658
65,658
Total real estate $ 844,493
$ 545,027
$ 1,389,520
As of December 31, 2016
Land, at cost $ 231,506
$ 211,054
$ 442,560
Buildings and improvements, at cost 987,050
311,283
1,298,333
Less: accumulated depreciation (307,444 ) (46,175 ) (353,619 )
Real estate, net 911,112
476,162
1,387,274
Real estate available and held for sale ⁽²⁾
155,051
82,480
237,531
Total real estate $ 1,066,163
$ 558,642
$ 1,624,805

(1)

In 2014, the Company partnered with a sovereign wealth fund to form a venture to acquire and develop net lease assets (the "Net Lease Venture") and gave a right of first refusal to the Net Lease Venture on all new net lease investments (refer to Note 7 for more information on the Net Lease Venture). The Company is responsible for sourcing new opportunities and managing the Net Lease Venture and its assets in exchange for a promote and management fee.

~~(2)~~

As of ~~December~~March 31, 2016, net lease includes the Company's ground lease ("GL") assets that were reclassified to "Real estate available and held for sale" (refer to "Dispositions" below). As of December 31, 2016, the carrying value of the Company's GL assets were previously classified as $104.5 million in "Real estate, net," $37.5 million in "Deferred expenses and other assets, net," $8.2 million in "Deferred operating lease income receivable, net" and $3.5 million in "Accrued interest and operating lease income receivable, net" on the Company's consolidated balance sheet. As of September 30, 20172022 and December 31, ~~2016,~~2021, the Company had ~~$65.7~~$0.3 million and ~~$82.5~~$0.3 million, respectively, of residential ~~properties~~condominiums available for sale in its operating properties portfolio.

In the third quarter 2017, in conjunction with the modification of two master leases, the Company exchanged real property with the tenant. The fair value of the property exchanged exceeded the Company's cost basis by approximately $1.5 million which will be deferred and amortized to "Operating lease income" in the Company's consolidated statements of operations over the remaining master lease terms.

~~Real Estate Available and Held for Sale—~~During the nine months ended September 30, 2017, the Company transferred one net lease asset with a carrying value of $0.9 million to held for sale due to an executed contract with a third party. During the nine months ended September 30, 2016, the Company transferred one net lease asset with a carrying value of $0.7 million and one commercial operating property with a carrying value of $16.1 million to held for sale due to executed contracts with third parties. During the nine months ended September 30, 2016, the Company also acquired a residential operating property for $0.8 million that had no operations and was sold as of September 30, 2017.

During the nine months ended September 30, 2016, the Company acquired land for $3.9 million and simultaneously entered into a 99 year ground lease with the seller. This asset was one of the 12 properties comprising the Company's GL business that was disposed of in April 2017 (see "Disposition of Ground Lease Business" below).

~~Disposition of Ground Lease Business—~~In April 2017, institutional investors acquired a controlling interest in the Company's GL business through the merger of a Company subsidiary and related transactions (the "Acquisition Transactions"). The Company's GL business was a component of the Company's net lease segment and consisted of 12 properties subject to long-term net leases including seven GLs and one master lease (covering five properties). The acquiring entity was a newly formed unconsolidated entity named Safety, Income & Growth Inc. ("SAFE"). The carrying value of the Company's GL assets was approximately $161.1 million. Shortly before the Acquisition Transactions, the Company completed the $227.0 million 2017 Secured Financing on its GL assets (refer

Dispositions—Refer to Note ~~10). The Company received all of the proceeds of the 2017 Secured Financing.~~

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

The Company received an additional $113.0 million of proceeds in the Acquisition Transactions, including $55.5 million that the Company contributed to SAFE in its initial capitalization. As a result of the Acquisition Transactions, the Company deconsolidated the 12 properties3 - Net Lease Sale and the associated 2017 Secured Financing. The Company accounts for its investment in SAFE as an equity method investment (refer to Note 7). The Company accounted for this transaction as an in substance sale of real estate and recognized a gain of $123.4 million, reflecting the aggregate gain less the fair value of the Company's retained interest in SAFE (refer to Note 2 - Summary of Significant Accounting Policies). The carrying value of the 12 properties is classified in "Real estate available and held for sale" on the Company's consolidated balance sheet as of December 31, 2016 and the gain was recorded in "Gain from discontinued operations" in the Company's consolidated statements of operations.

Discontinued ~~Operations—~~The transactions described above involving the Company's GL business qualified for discontinued operations and the following table summarizes income from discontinued operations for the three and nine months ended September 30, 2017 and 2016 ($ in thousands)⁽¹⁾⁽²⁾:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Revenues $ —
$ 4,614
$ 6,430
$ 13,600
Expenses —
(893 ) (1,491 ) (2,666 )
Income from discontinued operations $ —
$ 3,721
$ 4,939
$ 10,934

Operations.


~~(1)~~	The transactions closed on April 14, 2017 and revenues, expenses and income from discontinued operations excludes the period from April 14, 2017 to September 30, 2017. Revenues primarily consisted of operating lease income and expenses primarily consisted of depreciation and amortization and real estate expense.

~~(2)~~

For the nine months ended September 30, 2017, cash flows provided by operating activities and cash flows used in investing activities from discontinued operations was $5.7 million and $0.5 million, respectively. For the nine months ended September 30, 2016, cash flows provided by operating activities and cash flows used in investing activities from discontinued operations was $12.9 million and $5.6 million, respectively.

~~Other Dispositions—~~During the nine months ended September 30, 2017 and 2016, the Company sold residential condominiums for total net proceeds of $21.8 million and $74.9 million, respectively, and recorded income from sales of real estate totaling $3.3 million and $23.3 million, respectively. During the nine months ended September 30, 2017 and 2016, the Company received net proceeds related to net lease asset sales of $61.7 million and $108.5 million, respectively, resulting in gains of $25.0 million and $15.9 million, respectively. During the nine months ended September 30, 2016, the Company also sold commercial operating properties for net proceeds of $229.1 million resulting in gains of $49.2 million. The gains are recorded in "Income from sales of real estate" in the Company's consolidated statements of operations.

~~Impairments—~~During the nine months ended September 30, 2017, the Company recorded an impairment of $4.4 million on a real estate asset held for sale due to shifting demand in the local condominium market along with a change in the Company's exit strategy and an impairment of $0.6 million in connection with the sale of an outparcel located at a commercial operating property. During the nine months ended September 30, 2016, the Company recorded impairments of $7.9 million comprised of $3.0 million on a residential operating property resulting from a slowdown in the local condominium real estate market and $4.9 million on the sale of net lease assets.

~~Other Developments—~~The Company identified properties that sustained damages associated with the recent hurricanes in the United States. The Company has insurance policies in place to cover damages in excess of the Company's deductibles. As of September 30, 2017, the Company has recorded approximately $1.2 million to "Real estate expense" in the Company's consolidated statements of operations to cover expected losses at the properties.

Tenant Reimbursements—The Company receives reimbursements from tenants for certain facility operating expenses including common area costs, insurance, utilities and real estate taxes. Tenant expense reimbursements were ~~$6.1~~$0.7 million and ~~$17.0~~$0.7 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively. Tenant expense reimbursements were $6.2 million~~March 31, 2022 and ~~$18.4 million for the three and nine months ended September 30, 2016, respectively.~~2021, respectively. These amounts are included in ~~"Operating~~“Operating lease ~~income"~~income” in the ~~Company's~~Company’s consolidated statements of operations.

Allowance for Doubtful Accounts—As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, the allowance for doubtful accounts related to real estate tenant receivables was ~~$1.2~~$0.1 million and ~~$1.3~~$0.1 million, ~~respectively, and the allowance for doubtful accounts related to deferred operating lease income was $1.1 million and $1.3 million as of September 30, 2017 and December 31, 2016,~~

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

respectively. These amounts are included in ~~"Accrued~~“Accrued interest and operating lease income receivable, ~~net" and "Deferred~~net” on the Company’s consolidated balance sheets.

Future Minimum Operating Lease Payments—Future minimum operating lease ~~income receivable, net," respectively,~~payments to be collected under non-cancelable operating leases, excluding customer reimbursements of expenses, in effect as of March 31, 2022, are as follows by year ($ in thousands):


	Operating
Year	Properties
2022 (remaining nine months)	$	4,843
2023		6,293
2024		6,195
2025		5,600
2026		5,125
Thereafter		4,361

Note 5—Net Investment in Leases

In June 2021, the Company acquired 2 parcels of land for $42.0 million each and simultaneously entered into 2 Ground Leases with the respective tenants. Each Ground Lease also provides for a leasehold improvement allowance up to a maximum of $83.0 million. The Company also concurrently entered into an agreement pursuant to which SAFE would

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

acquire the Ground Leases from the Company. If certain construction conditions are not met within a specified time period, SAFE will have 0 obligation to acquire the Ground Leases or fund the leasehold improvement allowances. The Company classified 1 of the Ground Leases as a sales-type lease and it is recorded in “Net investment in leases” on the ~~Company's~~Company’s consolidated balance sheets. For the three months ended March 31, 2022, the Company recognized $0.2 million of non-cash interest income in "Interest income from sales-type leases" in the Company’s consolidated statements of operations. In January 2022, the Company sold the Ground Lease to an investment fund in which the Company owns a 53% noncontrolling interest (refer to Note 8 – Ground Lease Plus Fund).

NaN Ground Lease was entered into with the seller of the land and did not qualify for sale leaseback accounting, and as such, was accounted for as a financing transaction and $42.0 million was recorded in “Loans receivable held for sale” on the Company’s consolidated balance sheet at the time of acquisition. There can be no assurance that the conditions to closing will be satisfied and that SAFE will acquire the properties and Ground Leases from the Company. In January 2022, the Company sold the Ground Lease to the Ground Lease Plus Fund (refer to Note 8).

In January 2022, the Company entered into a commitment to acquire land for $36.0 million and simultaneously structured and entered into a Ground Lease as part of the Ground Lease tenant’s recapitalization of an existing multifamily property. As of March 31, 2022, the Company had funded $28.2 million of this commitment. SAFE (refer to Note 8) waived its right of first refusal on this investment but entered into an agreement with the Company pursuant to which SAFE would acquire the land and related Ground Lease when certain construction related conditions are met.

The Company’s net investment in leases were comprised of the following as of March 31, 2022 and December 31, 2021 ($ in thousands):


	March 31, 2022		December 31, 2021
Total undiscounted cash flows	$	356,338	$	524,712
Unguaranteed estimated residual value		21,750		42,000
Present value discount		(349,676)		(523,497)
Allowance for losses on net investment in leases		(281)		—
Net investment in leases⁽¹⁾	$	28,131	$	43,215

(1)	As of March 31, 2022 and December 31, 2021, the Company’s net investment in lease was current in its payment status and performing in accordance with the terms of the lease. As of March 31, 2022, the risk rating on the Company’s net investment in leases was 1.0.

Dispositions— During the three months ended March 31, 2021, the Company sold net lease assets for net proceeds of $6.6 million and recognized an aggregate impairment of $1.5 million in connection with the sales which is recorded in “Net income from discontinued operations” in the Company’s consolidated statements of operations.

Future Minimum Lease Payments under Sales-type Leases—Future minimum lease payments to be collected under sales-type leases, excluding lease payments that are not fixed and determinable, in effect as of March 31, 2022, are as follows by year ($ in thousands):


	Amount
2022 (remaining nine months)	$	688
2023		934
2024		1,194
2025		1,240
2026		1,264
Thereafter		351,018
Total undiscounted cash flows	$	356,338

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

Allowance for Losses on Net Investment in Leases—Changes in the Company’s allowance for losses on net investment in leases for the three months ended March 31, 2022 and 2021 were as follows ($ in thousands):


	Three Months Ended
	March 31, 2022		March 31, 2021
Allowance for losses on net investment in leases at beginning of period⁽¹⁾	$	—	$	10,871
Provision for (recovery of) losses on net investment in leases ⁽²⁾		281		(1,601)
Allowance for losses on net investment in leases at end of period⁽¹⁾	$	281	$	9,270

(1)	All 2021 amounts were for net investment in leases included in the Net Lease Sale (refer to Note 3 – Net Lease Sale and Discontinued Operations).

(2)

During the three months ended March 31, 2022, the Company recorded a provision for losses on net investment in leases of $0.3 million due primarily to the macroeconomic forecast on commercial real estate markets. During the three months ended March 31, 2021, the Company recorded a recovery of losses on net investment in leases of $1.6 million (which is included in “Net income from discontinued operations’) due primarily to an improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

Note 5—6—Land and Development

The ~~Company's~~Company’s land and development assets were comprised of the following ($ in thousands):

As of
September 30, December 31,
2017 2016
Land and land development, at cost⁽¹⁾
$ 869,331
$ 952,051
Less: accumulated depreciation (7,824 ) (6,486 )
Total land and development, net $ 861,507
$ 945,565


	As of
	March 31,		December 31,
	2022		2021
Land and land development, at cost	$	288,460	$	297,621
Less: accumulated depreciation		(11,039)		(10,811)
Total land and development, net	$	277,421	$	286,810


~~(1)~~	~~During the nine months September 30, 2017, the Company funded capital expenditures on land and development assets of $85.0 million.~~

Dispositions—During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022 and 2021, the Company sold ~~one~~ land ~~parcel totaling 1,250 acres (see following paragraph)~~parcels and residential lots and units and recognized land development revenue of ~~$178.7~~$14.9 million ~~from its land~~ and ~~development portfolio.~~$32.2 million, respectively. During the ~~nine~~three months ended ~~September 30, 2016, the Company sold residential lots~~March 31, 2022 and ~~units and recognized land development revenue of $74.4 million from its land and development portfolio. During the nine months ended September 30, 2017 and 2016,~~2021, the Company recognized land development cost of sales of ~~$165.9~~$14.5 million and ~~$50.8~~$29.3 million, respectively, from its land and development portfolio.

In connection with the resolution of litigation involving a dispute over the purchase and sale of approximately 1,250 acres of land in Prince George’s County, Maryland ("Bevard"), during the nine months ended September 30, 2017, the Company recognized $114.0 million of land development revenue and $106.3 million of land development cost of sales (refer to Note 11). In 2016, the Company acquired an additional 10.7% interest in Bevard for $10.8 million and owned 95.7% of Bevard at the time of resolution.

~~Impairments—~~During the nine months ended September 30, 2017, the Company recorded an impairment of $10.1 million on a land asset due to a change in the Company's exit strategy. During the nine months ended September 30, 2016, the Company recorded an impairment of $3.8 million equal to the carrying value on a land asset resulting from a change in business strategy.

~~Redeemable Noncontrolling Interest—~~The Company has a majority interest in a strategic venture that provides the third party minority partner an option to redeem their interest at fair value. The Company has reflected the partner's noncontrolling interest in this venture as a component of redeemable noncontrolling interest within its consolidated balance sheets. Changes in fair value are being accreted over the term from the date of issuance of the redemption option to the earliest redemption date using the interest method. As of September 30, 2017 and December 31, 2016, this interest had a carrying value of zero and $1.3 million, respectively. As of September 30, 2017 and December 31, 2016, this interest did not have a redemption value.

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

Note 6—7—Loans Receivable and Other Lending Investments, net

The following is a summary of the ~~Company's~~Company’s loans receivable and other lending investments by class ($ in thousands):


	As of
	March 31, 2022		December 31, 2021
Construction loans
Senior mortgages	$	186,094	$	184,643
Corporate/Partnership loans		0		618
Subtotal - gross carrying value of construction loans⁽¹⁾		186,094		185,261
Loans
Senior mortgages		14,724		14,965
Subordinate mortgages		12,670		12,457
Subtotal - gross carrying value of loans		27,394		27,422
Other lending investments
Held-to-maturity debt securities		98,419		96,838
Available-for-sale debt securities		24,864		28,092
Subtotal - other lending investments		123,283		124,930
Total gross carrying value of loans receivable and other lending investments		336,771		337,613
Allowance for loan losses		(4,932)		(4,769)
Total loans receivable and other lending investments, net	$	331,839	$	332,844

(1)	As of March 31, 2022, 100% of gross carrying value of construction loans had completed construction.

As of
Type of Investment September 30,
2017 December 31,
2016
Senior mortgages $ 594,081
$ 940,738
Corporate/Partnership loans 495,066
490,389
Subordinate mortgages 9,335
24,941
Total gross carrying value of loans 1,098,482
1,456,068
Reserves for loan losses (76,189 ) (85,545 )
Total loans receivable, net 1,022,293
1,370,523
Other lending investments—securities 87,149
79,916
Total loans receivable and other lending investments, net $ 1,109,442
$ 1,450,439

~~Reserve~~

Allowance for Loan Losses—Changes in the ~~Company's reserve~~Company’s allowance for loan losses were as follows for the three months ended March 31, 2022 and 2021 ($ in thousands):


		General Allowance
						Held to
		Construction				Maturity Debt		Specific
Three Months Ended March 31, 2022		Loans		Loans		Securities		Allowance		Total
Allowance for loan losses at beginning of period		$	1,213	$	676	$	2,304	$	576	$	4,769
Provision for (recovery of) loan losses⁽¹⁾			39		(2)		111		15		163
Allowance for loan losses at end of period		$	1,252	$	674	$	2,415	$	591	$	4,932

Three Months Ended March 31, 2021
Allowance for loan losses at beginning of period	��	$	6,541	$	1,643	$	3,093	$	743	$	12,020
(Recovery of) provision for loan losses⁽¹⁾			(3,648)		172		(408)		(76)		(3,960)
Allowance for loan losses at end of period		$	2,893	$	1,815	$	2,685	$	667	$	8,060

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Reserve for loan losses at beginning of period $ 78,789
$ 110,371
$ 85,545
$ 108,165
(Recovery of) provision for loan losses⁽¹⁾
(2,600 ) (14,955 ) (8,128 ) (12,749 )
Charge-offs —
—
(1,228 ) —
Reserve for loan losses at end of period $ 76,189
$ 95,416
$ 76,189
$ 95,416

(1)

~~For~~During the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2022 and 2021, the Company recorded a provision for (recovery of) loan losses of $0.1 million and ($3.6) million, respectively, in its consolidated statements of operations. The provision in 2022 was due primarily to accretion on the Company’s held-to-maturity debt security. The recovery in 2021 was due primarily to the repayment of loans during the three months ended March 31, 2021 and an improving macroeconomic forecast on commercial real estate markets since December 31, 2020. Of this amount, $0.3 million related to a provision for loan losses ~~includes recoveries of previously~~for unfunded loan commitments and is recorded ~~asset-specific loan loss reserves of $11.7 million.~~as a reduction to "Accounts payable, accrued expenses and other liabilities.”

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

The ~~Company's recorded~~Company’s investment in loans ~~(comprised of a loan's carrying value plus accrued interest)~~and other lending investments and the associated ~~reserve~~allowance for loan losses were as follows as of March 31, 2022 and December 31, 2021 ($ in thousands):


	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment⁽¹⁾		Impairment		Total
As of March 31, 2022
Construction loans⁽²⁾	$	59,642	$	126,452	$	186,094
Loans⁽²⁾		0		27,394		27,394
Held-to-maturity debt securities		0		98,419		98,419
Available-for-sale debt securities⁽³⁾		0		24,864		24,864
Less: Allowance for loan losses		(591)		(4,341)		(4,932)
Total	$	59,051	$	272,788	$	331,839
As of December 31, 2021
Construction loans⁽²⁾	$	59,640	$	125,621	$	185,261
Loans⁽²⁾		0		27,422		27,422
Held-to-maturity debt securities		0		96,838		96,838
Available-for-sale debt securities⁽³⁾		0		28,092		28,092
Less: Allowance for loan losses		(576)		(4,193)		(4,769)
Total	$	59,064	$	273,780	$	332,844

Individually
Evaluated for
Impairment⁽¹⁾

Collectively
Evaluated for
Impairment⁽²⁾
Total
As of September 30, 2017
Loans $ 238,155
$ 865,953
$ 1,104,108
Less: Reserve for loan losses (60,989 ) (15,200 ) (76,189 )
Total⁽³⁾
$ 177,166
$ 850,753
$ 1,027,919
As of December 31, 2016
Loans $ 253,941
$ 1,209,062
$ 1,463,003
Less: Reserve for loan losses (62,245 ) (23,300 ) (85,545 )
Total⁽³⁾
$ 191,696
$ 1,185,762
$ 1,377,458

(1)

The carrying value of ~~these loans include~~this loan includes an unamortized ~~discounts, premiums, deferred fees and costs totaling net discounts~~discount of ~~$0.7~~$0.8 million and ~~$0.4~~$0.8 million as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively. The ~~Company's~~Company’s loans individually evaluated for impairment ~~primarily~~ represent loans on non-accrual status and ~~therefore,~~ the unamortized amounts associated with these loans are not currently being amortized into income.


(2)	The carrying value of these loans ~~include~~includes unamortized discounts, premiums, deferred fees and costs totaling net ~~premiums~~discounts of ~~$6.2~~$0.2 million and ~~$1.9~~$0.2 million as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively.

(3)

The Company's recorded investment in loans as of September 30, 2017 and December 31, 2016 includes accrued interest of $5.6 million and $6.9 million, respectively, which are included in "Accrued interest and operating lease income receivable, net" on the Company's consolidated balance sheets. As of September 30, 2017 and December 31, 2016, the total excludes $87.1 million and $79.9 million, respectively, ofAvailable-for-sale debt securities ~~that~~ are evaluated for impairment under ASC ~~320.~~326-30 – Financial Instruments-Credit Losses.

Credit Characteristics—As part of the ~~Company's~~Company’s process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans. Risk ratings, which range from 1 (lower risk) to 5 (higher risk), are based on judgments which are inherently uncertain, and there can be no assurance that actual performance will be similar to current expectation. The Company designates loans as non-performing at such time as: (1) ~~the loan becomes~~interest payments become 90 days delinquent; (2) the loan has a maturity default; or (3) management determines it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan. All non-performing loans are placed on non-accrual status and income is only recognized in certain cases upon actual cash receipt.

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

The ~~Company's recorded investment~~Company’s amortized cost basis in performing senior mortgages, corporate/partnership loans and subordinate mortgages, presented by ~~class~~year of origination and by credit quality, as indicated by risk rating, ~~was~~as of March 31, 2022 were as follows ($ in thousands):


	Year of Origination
	2022		2021		2020		2019		2018		Prior to 2018		Total
Senior mortgages
Risk rating
1.0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
1.5		0		0		0		0		0		0		0
2.0		0		0		0		0		11,899		0		11,899
2.5		0		0		0		0		52,336		0		52,336
3.0		0		0		0		0		62,912		2,826		65,738
3.5		0		0		0		0		11,203		0		11,203
4.0		0		0		0		0		0		0		0
4.5		0		0		0		0		0		0		0
5.0		0		0		0		0		0		0		0
Subtotal⁽¹⁾	$	0	$	0	$	0	$	0	$	138,350	$	2,826	$	141,176
Subordinate mortgages
Risk rating
1.0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
1.5		0		0		0		0		0		0		0
2.0		0		0		0		0		0		0		0
2.5		0		0		0		0		0		0		0
3.0		0		0		0		0		0		12,670		12,670
3.5		0		0		0		0		0		0		0
4.0		0		0		0		0		0		0		0
4.5		0		0		0		0		0		0		0
5.0		0		0		0		0		0		0		0
Subtotal	$	0	$	0	$	0	$	0	$	0	$	12,670	$	12,670
Total	$	0	$	0	$	0	$	0	$	138,350	$	15,496	$	153,846

(1)	As of March 31, 2022, excludes $59.6 million for 1 loan on non-accrual status.

As of September 30, 2017 As of December 31, 2016

Performing
Loans

Weighted
Average
Risk Ratings

Performing
Loans

Weighted
Average
Risk Ratings
Senior mortgages $ 515,610
2.47
$ 859,250
3.12
Corporate/Partnership loans 340,980
2.76
335,677
3.09
Subordinate mortgages 9,363
3.00
14,135
3.00
Total $ 865,953
2.59
$ 1,209,062
3.11

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

The ~~Company's recorded investment~~Company’s amortized cost basis in loans, aged by payment status and presented by class, was as follows ($ in thousands):


			Less Than		Greater
			or Equal		Than		Total
	Current		to 90 Days		90 Days		Past Due		Total
As of March 31, 2022
Senior mortgages	$	141,176	$	0	$	59,642		59,642	$	200,818
Subordinate mortgages		12,670		0		0		0		12,670
Total	$	153,846	$	0	$	59,642	$	59,642	$	213,488
As of December 31, 2021
Senior mortgages	$	139,968	$	0	$	59,640		59,640	$	199,608
Corporate/Partnership loans		618		0		0		0		618
Subordinate mortgages		12,457		0		0		0		12,457
Total	$	153,043	$	0	$	59,640	$	59,640	$	212,683

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

Current
Less Than
and Equal
to 90 Days

Greater
Than
90 Days⁽¹⁾

Total
Past Due
Total
As of September 30, 2017
Senior mortgages $ 521,610
$ —
$ 75,732
$ 75,732
$ 597,342
Corporate/Partnership loans 340,980
—
156,423
156,423
497,403
Subordinate mortgages 9,363
—
—
—
9,363
Total $ 871,953
$ —
$ 232,155
$ 232,155
$ 1,104,108
As of December 31, 2016
Senior mortgages $ 868,505
$ —
$ 76,677
$ 76,677
$ 945,182
Corporate/Partnership loans 335,677
—
157,146
157,146
492,823
Subordinate mortgages 24,998
—
—
—
24,998
Total $ 1,229,180
$ —
$ 233,823
$ 233,823
$ 1,463,003

~~(1)~~

As of September 30, 2017, the Company had four loans, which were greater than 90 days delinquent, and were in various stages of resolution, including legal proceedings, environmental concerns and foreclosure-related proceedings, and ranged from 1.0 to 8.0 years outstanding. As of December 31, 2016, the Company had four loans, which were greater than 90 days delinquent, and were in various stages of resolution, including legal proceedings, environmental concerns and foreclosure-related proceedings, and ranged from 1.0 to 8.0 years outstanding.

Impaired Loans—The ~~Company's recorded investment in~~Company’s impaired ~~loans, presented by class,~~loan was as follows ($ in thousands)⁽¹⁾:


	As of March 31, 2022						As of December 31, 2021
			Unpaid						Unpaid
	Amortized		Principal		Related		Amortized		Principal		Related
	Cost		Balance		Allowance		Cost		Balance		Allowance
With an allowance recorded:
Senior mortgages⁽¹⁾	$	59,642	$	58,892	$	(591)	$	59,640	$	58,888	$	(576)
Total	$	59,642	$	58,892	$	(591)	$	59,640	$	58,888	$	(576)

As of September 30, 2017 As of December 31, 2016

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance
With no related allowance recorded:
Subordinate mortgages $ —
$ —
$ —
$ 10,862
$ 10,846
$ —
Subtotal —
—
—
10,862
10,846
—
With an allowance recorded:
Senior mortgages 81,732
81,848
(48,518 ) 85,933
85,780
(49,774 )
Corporate/Partnership loans 156,423
145,849
(12,471 ) 157,146
146,783
(12,471 )
Subtotal 238,155
227,697
(60,989 ) 243,079
232,563
(62,245 )
Total:
Senior mortgages 81,732
81,848
(48,518 ) 85,933
85,780
(49,774 )
Corporate/Partnership loans 156,423
145,849
(12,471 ) 157,146
146,783
(12,471 )
Subordinate mortgages —
—
—
10,862
10,846
—
Total $ 238,155
$ 227,697
$ (60,989 ) $ 253,941
$ 243,409
$ (62,245 )


(1)	~~All~~The Company has 1 non-accrual loan as of ~~the Company's non-accrual loans are~~March 31, 2022 and December 31, 2021 that is considered impaired and included in the table above. The Company did 0t record any interest income on impaired loans for the three months ended March 31, 2022 and 2021.

Loans receivable held for sale—In March 2021, the Company acquired land and simultaneously structured and entered into with the seller a Ground Lease on which a multi-family project will be constructed. The Company funded $16.1 million at closing and the Ground Lease documents provided for future funding obligations to the Ground Lease tenant of approximately $11.9 million of deferred purchase price and $52.0 million of leasehold improvement allowance upon achievement of certain milestones. At closing, the Company entered into an agreement with SAFE pursuant to which, subject to certain conditions being met, SAFE would acquire the ground lessor entity from the Company. The Company determined that the transaction did not qualify as a sale leaseback transaction and recorded the Ground Lease in “Loans receivable held for sale” on the Company’s consolidated balance sheet. Subsequent to closing, the Company funded approximately $6.0 million of the deferred purchase price to the Ground Lease tenant. The Company sold the ground lessor entity (and SAFE assumed all future funding obligations to the Ground Lease tenant) to SAFE in September 2021 for $22.1 million and recorded 0 gain or loss on the sale.

In June 2021, the Company acquired a parcel of land for $42.0 million and simultaneously entered into a Ground Lease (refer to Note 5). The Company also concurrently entered into an agreement pursuant to which SAFE would acquire the Ground Lease from the Company. The Ground Lease was entered into with the seller of the land and did not qualify for sale leaseback accounting, and as such, was accounted for as a financing transaction and $42.0 million was recorded in “Loans receivable held for sale” on the Company’s consolidated balance sheet at the time of acquisition. In January 2022, the Company sold its loan receivable held for sale to the Ground Lease Plus Fund (refer to Note 8).

Other lending investments—Other lending investments includes the following securities ($ in thousands):


					Net				Net
			Amortized		Unrealized		Estimated		Carrying
	Face Value		Cost Basis		Gain		Fair Value		Value
As of March 31, 2022
Available-for-Sale Securities
Municipal debt securities	$	23,640	$	23,640	$	1,224	$	24,864	$	24,864
Held-to-Maturity Securities
Debt securities		100,000		98,419		—		98,419		98,419
Total	$	123,640	$	122,059	$	1,224	$	123,283	$	123,283
As of December 31, 2021
Available-for-Sale Securities
Municipal debt securities	$	23,855	$	23,855	$	4,237	$	28,092	$	28,092
Held-to-Maturity Securities
Debt securities		100,000		96,838		—		96,838		96,838
Total	$	123,855	$	120,693	$	4,237	$	124,930	$	124,930

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

~~The Company's average recorded investment in impaired loans and interest income recognized, presented by class,~~

As of March 31, 2022, the contractual maturities of the Company’s securities were as follows ($ in thousands):

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Average
Recorded
Investment Interest
Income
Recognized Average
Recorded
Investment Interest
Income
Recognized
Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized
With no related allowance recorded:
Senior mortgages $ —
$ —
$ 4,608
$ 114
$ —
$ —
$ 4,575
$ 226
Subordinate mortgages 5,501
385
11,567
—
8,227
385
5,784
—
Subtotal 5,501
385
16,175
114
8,227
385
10,359
226
With an allowance recorded:
Senior mortgages 82,007
—
127,494
—
83,100
—
127,169
—
Corporate/Partnership loans 156,399
—
81,108
—
156,811
—
43,339
—
Subtotal 238,406
—
208,602
—
239,911
—
170,508
—
Total:
Senior mortgages 82,007
—
132,102
114
83,100
—
131,744
226
Corporate/Partnership loans 156,399
—
81,108
—
156,811
—
43,339
—
Subordinate mortgages 5,501
385
11,567
—
8,227
385
5,784
—
Total $ 243,907
$ 385
$ 224,777
$ 114
$ 248,138
$ 385
$ 180,867
$ 226

~~Securities—Other lending investments—securities include the following ($ in thousands):~~

Face
Value
Amortized Cost Basis Net Unrealized Gain (Loss) Estimated Fair Value Net Carrying Value
As of September 30, 2017
Available-for-Sale Securities
Municipal debt securities $ 21,230
$ 21,230
$ 875
$ 22,105
$ 22,105
Held-to-Maturity Securities
Debt securities 65,007
65,044
1,158
66,202
65,044
Total $ 86,237
$ 86,274
$ 2,033
$ 88,307
$ 87,149
As of December 31, 2016
Available-for-Sale Securities
Municipal debt securities $ 21,240
$ 21,240
$ 426
$ 21,666
$ 21,666
Held-to-Maturity Securities
Debt securities 58,454
58,250
2,753
61,003
58,250
Total $ 79,694
$ 79,490
$ 3,179
$ 82,669
$ 79,916


	Held-to-Maturity Debt Securities				Available-for-Sale Debt Securities
	Amortized		Estimated		Amortized		Estimated
	Cost Basis		Fair Value		Cost Basis		Fair Value
Maturities
Within one year	$	0	$	0	$	0	$	0
After one year through 5 years		98,419		98,419		0		0
After 5 years through 10 years		0		0		0		0
After 10 years		0		0		23,640		24,864
Total	$	98,419	$	98,419	$	23,640	$	24,864

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

Note 7—8—Other Investments

The ~~Company's~~Company’s other investments and its proportionate share of earnings (losses) from equity method investments were as follows ($ in thousands):


					Earnings (Losses) from
	Carrying Value				Equity Method Investments
	as of				For the Three Months Ended
	March 31,		December 31,		March 31,
	2022		2021		2022		2021
Real estate equity investments
Safehold Inc. ("SAFE")⁽¹⁾	$	1,388,657	$	1,168,532	$	17,029	$	11,412
Ground Lease Plus Fund		64,548		17,630		769		—
Other real estate equity investments		43,441		44,349		3,611		(602)
Subtotal		1,496,646		1,230,511		21,409		10,810
Other strategic investments⁽²⁾		29,373		66,770		3,623		958
Total	$	1,526,019	$	1,297,281	$	25,032	$	11,768

Equity in Earnings
Carrying Value as of For the Three Months Ended September 30, For the Nine Months
Ended September 30,
September 30, 2017 December 31, 2016 2017 2016 2017 2016
Real estate equity investments
iStar Net Lease I LLC ("Net Lease Venture") $ 110,153
$ 92,669
$ 962
$ 723
$ 2,975
$ 2,613
Safety, Income & Growth Inc. ("SAFE")⁽¹⁾
75,023
—
340
—
388
—
Marina Palms, LLC ("Marina Palms") 5,369
35,185
494
6,182
4,794
19,583
Other real estate equity investments⁽²⁾
79,768
53,202
55
16,289
4,304
43,187
Subtotal 270,313
181,056
1,851
23,194
12,461
65,383
Other strategic investments⁽³⁾
18,724
33,350
610
3,346
1,216
8,871
Total $ 289,037
$ 214,406
$ 2,461
$ 26,540
$ 13,677
$ 74,254

(1)

~~Equity~~As of March 31, 2022, the Company owned 40.1 million shares of SAFE common stock which, based on the closing price of $55.45 on March 31, 2022, had a market value of $2.2 billion. Pursuant to ASC 323-10-40-1, an equity method investor shall account for a share issuance by an investee as if the investor had sold a proportionate share of its investment. Any gain or loss to the investor resulting from an investee’s share issuance shall be recognized in earnings. For the three months ended March 31, 2022 and 2021, equity in earnings ~~is for the period~~includes dilution gains of $0.9 million and $0.5 million, respectively, resulting from ~~April 14, 2017 to September 30, 2017.~~SAFE equity offerings.

(2)

~~In June 2016, a majority-owned consolidated subsidiary of~~During the three months ended March 31, 2021, the Company ~~sold~~identified observable price changes in an equity security held by the Company as evidenced by orderly private issuances of similar securities by the same issuer. In accordance with ASC 321 – Investments – Equity Securities, the Company remeasured its ~~interest in a real estate~~ equity ~~method~~ investment ~~for net proceeds of $39.8 million~~at fair value and recognized a mark-to-market gain of ~~$31.5~~$5.1 million in “Other income” in the Company’s consolidated statements of ~~which $10.1 million~~operations. The Company’s equity security was redeemed at its carrying value in the fourth quarter of the gain was attributable to the noncontrolling interest. In September 2016, the Company received a distribution from one of its real estate equity method investments and recognized equity in earnings during the three and nine months ended September 30, 2016 of $15.8 million and $11.6 million, respectively.2021.


~~(3)~~	In conjunction with the sale of the Company's interests in Oak Hill Advisors, L.P. in 2011, the Company retained a share of the carried interest related to various funds. During the three and nine months ended September 30, 2016, the Company recognized $0.6 million and $4.3 million, respectively, of carried interest income.

~~Net Lease Venture~~

Safehold Inc.—~~In February 2014,~~SAFE is a publicly-traded company formed by the Company ~~partnered with a sovereign wealth fund to form the Net Lease Venture~~primarily to acquire, own, manage, finance and ~~develop~~capitalize ground leases. Ground leases generally represent ownership of the land underlying commercial real estate projects that is net ~~lease assets and gave a right~~leased by the fee owner of ~~first refusal~~the land to the Net Lease Venture on all new net lease investments. The Company has an equity interest in the Net Lease Venture of approximately 51.9%. The partners plan to contribute up to an aggregate $500 million of equity to acquire and develop net lease assets over time. The Company is responsible for sourcing new opportunities and managing the venture and its assets in exchange for a promote and management fee. Severalowners/operators of the Company's senior executives whose time is substantially devoted to the Net Lease Venture own a total of 0.6% equity ownership in the venture via co-investment. These senior executives are also entitled to an amount equal to 50% of any promote payment received based on the 47.5% partner's interest. During the nine months ended September 30, 2017, the Net Lease Venture acquired industrial properties for $59.0 million. During the nine months ended September 30, 2017, the Company sold a net lease asset for proceeds of $6.2 million, which approximated its carrying value net of financing, to the Net Lease Venture and derecognized the associated $18.9 million financing. During the nine months ended September 30, 2017, the Company made contributions of $37.7 million to the Net Lease Venture and received distributions of $23.7 million from the Net Lease Venture. During the nine months ended September 30, 2016, the Net Lease Venture acquired two office properties and the Company made contributions to the Net Lease Venture of $35.6 million and received distributions of $3.9 million.

~~As of September 30, 2017 and December 31, 2016, the venture's carrying value of total assets was $635.1 million and $511.3 million, respectively.~~real estate projects built thereon (“Ground Leases”). During the three ~~and nine~~ months ended September 30, 2017, the Company recorded management fees of $0.6 million and $1.5 million, respectively, and $0.4 million and $1.2 million for the three and nine months ended September 30, 2016, respectively, from the Net Lease Venture which are included in "Other income" in the Company's consolidated statements of operations. This entity is not a VIE and the Company does not have controlling interest due to the substantive participating rights of its partner.

~~Safety, Income & Growth Inc.~~—The Company along with two institutional investors capitalized SIGI Acquisition, Inc. ("SIGI") on April 14, 2017 to acquire, manage and capitalize Ground Leases. The Company contributed $55.5 million for an initial

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

49% noncontrolling interest in SIGI and the two institutional investors contributed an aggregate $57.5 million for an initial 51% controlling interest in SIGI. A wholly-owned subsidiary of the Company that held the Company's GL business and assets merged with and into SIGI on April 14, 2017 with SIGI surviving the merger and being renamed Safety, Income & Growth Inc. ("SAFE"). Through this merger and related transactions, the institutional investors acquired a controlling interest in the Company's GL business. The Company's carrying value of the GL assets was approximately $161.1 million. Shortly before the Acquisition Transactions, the Company completed the $227.0 million 2017 Secured Financing on its GL assets (refer to Note 10). The Company received all of the proceeds of the 2017 Secured Financing. The Company received an additional $113.0 million of proceeds in the Acquisition Transactions, including $55.5 million that the Company contributed to SAFE in its initial capitalization. As a result of the Acquisition Transactions, the Company deconsolidated the 12 properties and the associated 2017 Secured Financing. The Company accounted for this transaction as an in substance sale of real estate and recognized a gain of $123.4 million, reflecting the aggregate gain less the fair value of the Company's retained interest in SAFE. The carrying value of the 12 properties are classified in "Real estate available and held for sale" on the Company's consolidated balance sheet as of DecemberMarch 31, ~~2016 and the gain was recorded in "Gain from discontinued operations" in the Company's consolidated statements of operations.~~

On June 27, 2017, SAFE completed its initial public offering (the "Offering") raising $205.0 million in gross proceeds and concurrently completed a $45.0 million private placement to the Company. In addition, the Company paid or accrued $18.9 million in organization and offering costs of the up to $25.0 million in organization and offering costs it has agreed to pay in connection with the Offering and concurrent private placement through September 30, 2017, including commissions payable to the underwriters and other offering expenses. The Company expensed the portion of offering costs that was attributable to other investors in "Other expense" in the Company's consolidated statements of operations and capitalized the portion of offering costs attributable to the Company's ownership interest in "Other investments" on the Company's consolidated balance sheets. Subsequent to the initial public offering,2022, the Company purchased ~~1.3~~0.2 million shares of SAFE's common stock for ~~$24.5~~$10.5 million, atfor an average cost of ~~$19.20~~$66.83 per share, ~~pursuant to a 10b5-1 plan~~in open market purchases made in accordance with Rules 10b5-1 and 10b-18 under the Securities and Exchange Act of 1934, as amended. In March 2022, the Company acquired 3,240,000 shares of SAFE’s common stock in a private placement for $191.2 million. As of ~~September 30, 2017,~~March 31, 2022, the Company ~~had utilized all of the availability authorized in the 10b5-1 Plan and~~ owned approximately ~~34.6%~~64.7% of ~~SAFE's~~SAFE’s common stock outstanding.

In ~~addition, subsequent to SAFE's initial public offering, trusts established by Jay Sugarman,~~January 2019, the ~~Company's Chairman and Chief Executive Officer, and Geoffrey Jervis,~~Company purchased 12.5 million newly designated limited partnership units (the “Investor Units”) in SAFE’s operating partnership (“SAFE OP”), at a purchase price of $20.00 per unit, for a total purchase price of $250.0 million. In May 2019, after the ~~Company's Chief Operating Officer and Chief Financial Officer, purchased 26 thousand~~approval of SAFE’s shareholders, the Investor Units were exchanged for shares ~~in the aggregate~~ of ~~SAFE's~~SAFE’s common stock ~~for an aggregate $0.5 million, at an average cost~~on a 1-for-one basis. Following the exchange, the Investor Units were retired.

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of ~~$19.20 per share, pursuant to a 10b5-1 plan in accordance~~Contents

In connection with ~~Rules 10b5-1 and 10b-18 under~~ the Securities and Exchange Act of 1934, as amended. As of September 30, 2017, the trusts established by Jay Sugarman, the Company's Chairman and Chief Executive Officer, and Geoffrey Jervis, the Company's Chief Operating Officer and Chief Financial Officer, had utilized allCompany’s purchase of the ~~availability authorized in the 10b5-1 Plan.~~Investor Units, it entered into a Stockholder’s Agreement with SAFE on January 2, 2019. The Stockholder’s Agreement:

●

limits the Company’s discretionary voting power to 41.9% of the outstanding voting power of SAFE’s common stock until its aggregate ownership of SAFE common stock is less than 41.9%;

●

subjects the Company to certain standstill provisions; and

●

provides the Company certain preemptive rights.

A wholly-owned subsidiary of the Company is the external manager of SAFE and is entitled to a management ~~fee, payable solely in shares of SAFE's common stock, equal to~~fee. In addition, the ~~sum of 1.0% of SAFE's total equity up to $2.5 billion and 0.75% of SAFE's total equity in excess of $2.5 billion. The~~ Company is ~~not entitled~~also the external manager of a venture in which SAFE is a member. Following are the key terms of the management agreement with SAFE:

●

The Company receives a fee equal to 1.0% of total SAFE equity (as defined in the management agreement) up to $1.5 billion; 1.25% of total SAFE equity (for incremental equity of $1.5 billion - $3.0 billion); 1.375% of total SAFE equity (for incremental equity of $3.0 billion - $5.0 billion); and 1.5% of total SAFE equity (for incremental equity over $5.0 billion);

●

Fee to be paid in cash or in shares of SAFE common stock, at the discretion of SAFE’s independent directors;

●

The stock is locked up for two years, subject to certain restrictions;

●

There is no additional performance or incentive fee;

●

The management agreement is non-terminable by SAFE through June 30, 2023, except for cause; and

●

Automatic annual renewals thereafter, subject to non-renewal upon certain findings by SAFE’s independent directors and payment of termination fee equal to 3 times the prior year’s management fee.

During the three months ended March 31, 2022 and 2021, the Company recorded $4.5 million and $3.5 million, respectively, of management fees pursuant to ~~receive any performance or incentive compensation.~~ its management agreement with SAFE.

The Company is also entitled to receive certain expense reimbursements, ~~payable solely in shares~~including for the allocable costs of ~~SAFE's common stock, for~~ its personnel that perform certain legal, accounting, due diligence tasks and other services that third-party professionals or outside consultants otherwise would perform. Historically, pursuant to the Company’s option under the management agreement, the Company has elected to not seek reimbursement for certain expenses. This historical election is not a waiver of reimbursement for similar expenses in future periods and the Company has started to elect to seek, and may further seek in the future, reimbursement of such additional expenses that it has not previously sought, including, without limitation, rent, overhead and certain personnel costs.

During the three months ended March 31, 2022 and 2021, the Company recognized $3.1 million and $1.9 million, respectively, of expense reimbursements pursuant to its management agreement with SAFE.

The Company has an exclusivity agreement with SAFE pursuant to which it agreed, subject to ~~waive both~~certain exceptions, that it will not acquire, originate, invest in, or provide financing for a third party’s acquisition of, a Ground Lease unless it has first offered that opportunity to SAFE and a majority of its independent directors has declined the ~~management fee~~opportunity.

Following is a list of investments that the Company has transacted with SAFE, all of which were approved by the Company’s and ~~certain~~SAFE’s independent directors, for the periods presented:

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of ~~the expense reimbursements through June 30, 2018.~~Contents

In ~~August~~October 2017, the Company ~~committed~~closed on a 99-year Ground Lease and a $80.5 million construction financing commitment to ~~provide~~support the ground-up development of a ~~$24.0~~to-be-built luxury multi-family project. The transaction included a combination of: (i) a newly created Ground Lease and a $7.2 million leasehold improvement allowance, which was fully funded; and (ii) an $80.5 million leasehold first mortgage. The Company sold the Ground Lease to SAFE in September 2020 for $34.0 million and in January 2021 sold the leasehold first mortgage to an entity in which the Company has a 53% noncontrolling equity interest (refer to “Other strategic investments” below) for $63.3 million.

In June 2020, Net Lease Venture II (see below) acquired the leasehold interest in an office laboratory property in Honolulu, HI and simultaneously entered into a 99-year Ground Lease with SAFE. In November 2021, the Company acquired the property from Net Lease Venture II. The Company paid $0.6 million to its partner to acquire its equity interest in the property and assumed a $44.4 million mortgage on the property. The Company sold the property in the first quarter of 2022. Prior to the sale, SAFE paid $0.3 million to terminate a purchase option that allowed the Company to purchase the land at the expiration of the Ground Lease.

In February 2021, the Company provided a $50.0 million loan to the ground lessee of a ~~ground lease~~Ground Lease originated at SAFE. The loan ~~has an initial term~~was for the Ground Lease tenant’s recapitalization of ~~one year~~a hotel property. The Company received $1.9 million of consideration from SAFE in connection with this transaction. The Company sold the loan in July 2021 and recorded 0 gain or loss on the sale.

In March 2021, the Company acquired land and simultaneously structured and entered into with the seller a Ground Lease on which a multi-family project will be ~~used~~constructed. At closing, the Company entered into an agreement with SAFE pursuant to which, subject to certain conditions being met, SAFE would acquire the ground lessor entity from the Company. The Company sold the ground lessor entity to SAFE in September 2021 and recognized 0 gain or loss on the sale (refer to Note 7 - Loans receivable held for sale). The Company also committed to provide a $75.0 million construction loan to the Ground Lease tenant. The Company received $2.7 million of consideration from SAFE in connection with this transaction. In September 2021, the construction loan commitment and the $2.7 million of consideration was transferred to the Loan Fund (refer to “Other strategic investments” below).

In June 2021, the Company sold to SAFE its rights under a purchase option agreement for $1.2 million. The Company had previously acquired such purchase option agreement from a third-party property owner for $1.0 million and incurred $0.2 million of expenses. Under the option agreement, upon certain conditions being met by an outside developer who may become the Ground Lease tenant, SAFE has the right to acquire for $215.0 million a property and hold a Ground Lease under approximately 1.1 million square feet of office space that may be developed on the property. NaN gain or loss was recognized by the Company as a result of the sale.

In June 2021, the Company and SAFE entered into 2 agreements pursuant to each of which SAFE would acquire land and a related Ground Lease originated by the Company when certain construction related conditions are met by a specified time period. The purchase price to be paid for each is $42.0 million, plus an amount necessary for the ~~renovation~~Company to achieve the greater of a ~~medical office building~~1.25x multiple and a 9% return on its investment. In addition, each Ground Lease provides for a leasehold improvement allowance up to a maximum of $83.0 million, which obligation would be assumed by SAFE upon acquisition. If certain construction conditions are not met within a specified time period, SAFE will have no obligation to acquire the Ground Leases or fund the leasehold improvement allowances. In January 2022, the Company sold the Ground Leases to the Ground Lease Plus Fund (see below). There can be no assurance that the conditions to closing will be satisfied and that SAFE will acquire the properties and Ground Leases from the Ground Lease Plus Fund.

In November 2021, the Company and SAFE entered into an agreement pursuant to which SAFE would acquire land and a related Ground Lease originated by the Company when certain construction related conditions are met by a specified time period. The purchase price to be paid is $33.3 million, plus an amount necessary for the Company to achieve the greater of a 1.25x multiple and a 12% return on its investment. In addition, the Ground Lease provides for a leasehold improvement allowance up to a maximum of $51.8 million, which obligation would be assumed by SAFE upon acquisition. If certain construction conditions are not met within a specified time period, SAFE will have no obligation to acquire the Ground Lease or fund the leasehold improvement allowance. There can be no assurance that the conditions to

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

closing will be satisfied and that SAFE will acquire the land and Ground Lease from the Ground Lease Plus Fund (refer to Ground Lease Plus Fund below).

In December 2021, the Company’s partner in ~~Atlanta, GA. $5.1 million~~a venture recapitalized an existing multifamily property, which included a Ground Lease provided by SAFE. As part of the ~~loan was funded as of September 30, 2017.~~

~~Marina Palms—As of September 30, 2017,~~recapitalization, the ~~Company owned a 47.5%~~Company’s partner acquired its 50% equity interest in ~~Marina Palms,~~the entity and the mezzanine loan held by the Company was repaid in full. During the three months ended March 31, 2021, the Company recorded $0.6 million of interest income on the mezzanine loan.

In January 2022, the Company and SAFE entered into an agreement pursuant to which SAFE would acquire land and a ~~468 unit, two tower residential condominium development~~related Ground Lease originated by the Company when certain construction related conditions are met. The purchase price to be paid is a maximum of $36.0 million (refer to Note 5), plus an amount necessary for the Company to achieve the greater of a 1.05x multiple and a 10% return on its investment. There can be no assurance that the conditions to closing will be satisfied and that SAFE will acquire the land and Ground Lease from the Company.

In February 2022, the Loan Fund (refer to Other Strategic Investments below) committed to provide a $130.0 million loan to the ground lessee of a Ground Lease originated at SAFE. The loan is for the Ground Lease tenant’s recapitalization of a life science office property. The Loan Fund received $9.0 million of consideration from SAFE in ~~North Miami Beach, Florida.~~ connection with this transaction.

Ground Lease Plus Fund—The ~~234 unit north tower has one unit remaining~~Company formed and manages an investment fund that targets the origination and acquisition of Ground Leases for ~~sale as of September 30, 2017.~~commercial real estate projects that are in a pre-development phase (the “Ground Lease Plus Fund”). The ~~234 unit south tower is 85% sold or pre-sold (based on unit count) as of September 30, 2017. This entity is not~~Company owns a ~~VIE and~~53% noncontrolling equity interest in the Ground Lease Plus Fund. The Company does not have a controlling interest in the Ground Lease Plus Fund due to ~~shared control~~the substantive participating rights of its partner and accounts for this investment as an equity method investment. In addition, the ~~entity with its partner. As~~Ground Lease Plus Fund has first look rights through December 2023 on qualifying pre-development projects that SAFE has elected to not originate.

In January 2022, the Company sold 2 Ground Leases to the Ground Lease Plus Fund (refer to Note 5) and recognized an aggregate $0.5 million of ~~September 30, 2017~~gains in “Income from sales of real estate” on the sale. The Company and ~~December 31, 2016,~~SAFE entered into an agreement pursuant to which SAFE would acquire the ~~venture's carrying value of total assets was $43.5~~land properties and related Ground Leases from the Ground Lease Plus Fund when certain construction related conditions are met by a specified time period (refer to “Safehold Inc.” above).

In November 2021, the Company acquired land for $33.3 million and ~~$201.8 million, respectively.~~

simultaneously structured and entered into a Ground Lease on which a multi-family project will be constructed. In December 2021, the Company sold the Ground Lease to the Ground Lease Plus Fund and recognized 0 gain or loss on the sale. The Company and SAFE entered into an agreement pursuant to which SAFE would acquire the land and related Ground Lease from the Ground Lease Plus Fund when certain construction related conditions are met by a specified time period (refer to “Safehold Inc.” above).

Other real estate equity investments—As of ~~September 30, 2017,~~March 31, 2022, the ~~Company's~~Company’s other real estate equity investments ~~included~~include equity interests in real estate ventures ranging from ~~20%~~48% to 95%, comprised of investments of ~~$21.8~~$43.2 million in operating

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

properties and ~~$57.9~~$0.2 million in land assets. As of December 31, ~~2016,~~2021, the ~~Company's~~Company’s other real estate equity investments included ~~$3.6~~$43.3 million in operating properties and ~~$49.6~~$1.1 million in land assets.

In December 2016, the Company sold a land and development asset to a newly formed unconsolidated entity in which the Company owns a 50.0% equity interest. This entity is a VIE and the Company does not have a controlling interest due to shared control

Other strategic investments—As of the entity with its partner. The Company and its partner each made a $7.0 million contribution to the venture and the Company provided financing to the entity in the form of a $27.0 million senior loan commitment, which had a carrying value of $24.3 million and $22.7 million as of September 30, 2017March 31, 2022 and December 31, 2016, respectively, and is included in "Loans receivable and other lending investments, net" on the Company's consolidated balance sheets. During the three and nine months ended September 30, 2017, the Company recorded $0.5 million and $1.4 million of interest income, respectively, on the senior loan.

~~Other strategic investments—As of September 30, 2017,~~2021, the Company also had investments in real estate related funds and other strategic investments in ~~several other entities that were accounted~~real estate entities.

In January 2021, the Company sold 2 loans for ~~under~~$83.4 million to a newly formed entity in which the Company owns a 53.0% noncontrolling equity interest (the “Loan Fund”). The Company did 0t recognize any gain or loss on the sales. In September 2021, the Company transferred a $75.0 million construction loan commitment to the Loan Fund. The Company does not have a controlling interest in the Loan Fund due to the substantive participating rights of its partner. The Company accounts for this investment as an equity method ~~or cost method. As~~investment and receives a fixed annual fee in exchange for managing the entity.

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of ~~September 30, 2017 and December 31, 2016,~~Contents

In February 2022, the ~~carrying value~~Loan Fund committed to provide a $130.0 million loan to the ground lessee of a Ground Lease originated at SAFE. The loan was for the ~~Company's cost method investments was $0.8 million and $1.4 million, respectively.~~

Ground Lease tenant’s recapitalization of a life science office property.

Summarized investee financial information—The following table presents the investee level summarized financial information offor the ~~Company's~~Company’s equity method ~~investments, which were~~investment that was significant ~~subsidiaries for the nine months ended September 30, 2017 and 2016~~as of March 31, 2022 ($ in thousands):

Revenues Expenses Net Income Attributable to Parent Entities
For the Nine Months Ended September 30, 2017
Marina Palms $ 37,668
$ (24,209 ) $ 13,459

For the Nine Months Ended September 30, 2016
Marina Palms $ 129,697
$ (72,736 ) $ 56,961


	Revenues		Expenses		Net Income Attributable to Parent
For the Three Months Ended March 31, 2022
SAFE	$	60,363	$	37,732	$	24,873

For the Three Months Ended March 31, 2021
SAFE	$	43,507	$	27,174	$	16,908

Note 8—9—Other Assets and Other Liabilities

Deferred expenses and other assets, net, consist of the following items ($ in thousands):

⁽¹⁾


	As of
	March 31, 2022		December 31, 2021
Intangible assets, net⁽²⁾	$	1,156	$	1,209
Restricted cash		51,047		54,395
Operating lease right-of-use assets⁽³⁾		19,349		20,437
Other assets⁽⁴⁾		19,444		16,040
Other receivables		3,648		5,054
Leasing costs, net⁽⁵⁾		789		818
Corporate furniture, fixtures and equipment, net⁽⁶⁾		1,832		1,852
Deferred financing fees, net		417		629
Deferred expenses and other assets, net	$	97,682	$	100,434

As of
September 30, 2017 December 31, 2016
Intangible assets, net⁽¹⁾
$ 23,801
$ 30,727
Other receivables⁽²⁾
45,321
52,820
Other assets 28,799
35,189
Restricted cash 21,690
25,883
Leasing costs, net⁽³⁾
10,303
11,802
Corporate furniture, fixtures and equipment, net⁽⁴⁾
4,806
5,691
Deferred expenses and other assets, net $ 134,720
$ 162,112


(1)	Certain items have been reclassified to “Real estate and other assets available and held for sale and classified as discontinued operations” (refer to Note 3).

(2)

Intangible assets, net includes above market and in-place lease assets and lease incentives related to the acquisition of real estate assets. Accumulated amortization on intangible assets, net was ~~$34.1~~$9.2 million and ~~$31.9~~$10.2 million as of ~~September 30, 2017~~March 31, 2022 and December 31, 2016, respectively. The amortization of above market leases and lease incentive assets decreased operating lease income in the Company's consolidated statements of operations by $0.5 million and $2.0 million for the three and nine months ended September 30, 2017, respectively, and $0.8 million and $3.0 million for the three and nine months ended September 30, 2016,2021, respectively. These intangible lease assets are amortized over the remaining term of the lease. The amortization expense for in-place leases was ~~$0.3 million and $1.5~~$0.6 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively, and $0.4 million and $1.5 million for the three and nine months ended September 30, 2016, respectively. These amounts are~~March 31, 2021. This amount is included in ~~"Depreciation~~“Depreciation and ~~amortization"~~amortization” in the ~~Company's~~Company’s consolidated statements of operations. As of March 31, 2022, the weighted average remaining amortization period for the Company’s intangible assets was approximately 5.6 years.

(3)

~~(2)~~

~~As of September 30, 2017 and December 31, 2016, included $26.0 million of receivables related~~Right-of-use lease assets relate primarily to the ~~construction~~Company’s leases of office space. Right-of use lease assets initially equal the lease liability. For operating leases, rent expense is recognized on a straight-line basis over the term of the lease and ~~development~~is recorded in “General and administrative” and “Real estate expense” in the Company’s consolidated statements of ~~an amphitheater.~~operations. During the three months ended March 31, 2022 and 2021, the Company recognized $1.2 million and $1.2 million, respectively, in "General and administrative" and $0.1 million and $0.2 million, respectively, in "Real estate expense" in its consolidated statements of operations relating to operating leases.

(4)	Other assets primarily includes prepaid expenses, deposits for certain real estate assets and management fees and expense reimbursements due from SAFE (refer to Note 8).

~~(3)~~(5)

Accumulated amortization of leasing costs was ~~$6.6~~$0.9 million and ~~$6.7~~$1.1 million as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively.

(6)
~~(4)~~	Accumulated depreciation on corporate furniture, fixtures and equipment was ~~$10.2~~$14.9 million and ~~$9.0~~$14.8 million as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively.

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

Accounts payable, accrued expenses and other liabilities consist of the following items ($ in thousands):


	As of
	March 31, 2022		December 31, 2021
Other liabilities⁽¹⁾	$	35,565		30,362
Accrued expenses		115,461		151,810
Operating lease liabilities (see table above)		21,809		23,267
Accrued interest payable		26,051		31,293
Accounts payable, accrued expenses and other liabilities	$	198,886	$	236,732

As of
September 30, 2017 December 31, 2016
Redemption of Series E and Series F preferred stock payable⁽¹⁾
$ 240,000
$ —
Series E and Series F preferred stock dividend payable⁽¹⁾
1,830
—
Other liabilities⁽²⁾
78,000
75,993
Accrued expenses⁽³⁾
93,031
72,693
Accrued interest payable 45,612
54,033
Intangible liabilities, net⁽⁴⁾
7,901
8,851
Accounts payable, accrued expenses and other liabilities $ 466,374
$ 211,570


(1)	On September 19, 2017, the Company gave irrevocable notice to redeem all of its issued and outstanding Series E and Series F preferred stock, plus accrued and unpaid dividends to the redemption date, on October 20, 2017 (refer to Note 13).

~~(2)~~

As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, other liabilities includes ~~$24.0~~$20.8 million ~~related to profit sharing arrangements with developers for certain properties sold.~~and $20.1 million, respectively, of deferred income. As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, other liabilities includes ~~$3.0~~$0.1 million and ~~$1.2~~$0.1 million, respectively, ~~associated with "Real estate available and held~~of expected credit losses for sale" on the Company's consolidated balance sheets. As of September 30, 2017 and December 31, 2016, other liabilities also includes $7.1 million and $8.5 million, respectively, related to tax increment financing bonds which were issued by government entities to fund development within two of the Company's land projects. The amount represents tax assessments associated with each project, which will decrease as the Company sells units.unfunded loan commitments.


~~(3)~~	As of September 30, 2017 and December 31, 2016, accrued expenses includes $2.6 million and $1.7 million, respectively, associated with "Real estate available and held for sale" on the Company's consolidated balance sheets.

~~(4)~~

Intangible liabilities, net includes below market lease liabilities related to the acquisition of real estate assets. Accumulated amortization on below market lease liabilities was $7.6 million and $6.4 million as of September 30, 2017 and December 31, 2016, respectively. The amortization of below market leases increased operating lease income in the Company's consolidated statements of operations by $0.2 million and $1.2 million for the three and nine months ended September 30, 2017, respectively, and $0.3 million and $0.9 million for the three and nine months ended September 30, 2016, respectively.

~~Deferred tax assets and liabilities of the Company's taxable REIT subsidiaries were as follows ($ in thousands):~~

As of
September 30, 2017 December 31, 2016
Deferred tax assets (liabilities) $ 90,883
$ 66,498
Valuation allowance (90,883 ) (66,498 )
Net deferred tax assets (liabilities) $ —
$ —

~~Note 9—Loan Participations Payable, net~~

~~The Company's loan participations payable, net were as follows ($ in thousands):~~

Carrying Value as of
September 30, 2017 December 31, 2016
Loan participations payable⁽¹⁾
$ 122,846
$ 160,251
Debt discounts and deferred financing costs, net (357 ) (930 )
Total loan participations payable, net $ 122,489
$ 159,321


~~(1)~~	As of September 30, 2017, the Company had two loan participations payable with a weighted average interest rate of 6.2%. As of December 31, 2016, the Company had three loan participations payable with a weighted average interest rate of 4.8%.

Loan participations represent transfers of financial assets that did not meet the sales criteria established under ASC Topic 860 and are accounted for as loan participations payable, net. As of September 30, 2017 and December 31, 2016, the corresponding loan receivable balances were $122.2 million and $159.1 million, respectively, and are included in "Loans receivable and other lending investments, net" on the Company's consolidated balance sheets. The principal and interest due on these loan participations payable are paid from cash flows of the corresponding loans receivable, which serve as collateral for the participations.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

Note 10—Debt Obligations, net

~~In September 2017, the Company completed a comprehensive set of capital markets transactions that addressed all parts of its capital structure, resulting in the Company having:~~

~~repaid or refinanced all of the Company's 2017 and 2018 corporate debt maturities, leaving no corporate debt maturities until July 2019;~~

~~extended its weighted average debt maturity by 1.5 years to 4.0 years;~~

~~reduced annual expenses;~~

~~lowered its cost of capital;~~

~~established new banking relationships; and~~

~~received upgrades to its corporate credit ratings from all three major ratings agencies.~~

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

The ~~Company's~~Company’s debt obligations were as follows ($ in thousands):


	Carrying Value as of				Stated		Scheduled
	March 31, 2022		December 31, 2021		Interest Rates		Maturity Date
Secured credit facilities:
Revolving Credit Facility	$	0	$	0	LIBOR + 2.00	% ⁽¹⁾	September 2022
Senior Term Loan		0		491,875	LIBOR + 2.75	% ⁽²⁾	—
Total secured credit facilities		0		491,875
Unsecured notes:
3.125% senior convertible notes⁽³⁾		287,500		287,500	3.125	%	September 2022
4.75% senior notes⁽⁴⁾		775,000		775,000	4.75	%	October 2024
4.25% senior notes⁽⁵⁾		550,000		550,000	4.25	%	August 2025
5.50% senior notes⁽⁶⁾		400,000		400,000	5.50	%	February 2026
Total unsecured notes		2,012,500		2,012,500
Other debt obligations:
Trust preferred securities		100,000		100,000	LIBOR + 1.50	%	October 2035
Total debt obligations		2,112,500		2,604,375
Debt discounts and deferred financing costs, net		(28,248)		(32,201)
Total debt obligations, net⁽⁷⁾	$	2,084,252	$	2,572,174

Carrying Value as of Stated
Interest Rates Scheduled
Maturity Date
September 30, 2017 December 31, 2016
Secured credit facilities and mortgages:
2015 $325 Million Secured Revolving Credit Facility $ —
$ —
LIBOR + 2.50%
⁽¹⁾
September 2020
2016 Senior Secured Credit Facility 400,000
498,648
LIBOR + 3.00%
⁽²⁾
October 2021
Mortgages collateralized by net lease assets 223,182
249,987
4.851% - 7.26%
⁽³⁾
Various through 2026
Total secured credit facilities and mortgages 623,182
748,635

Unsecured notes:
5.85% senior notes —
99,722
5.85 % March 2017
9.00% senior notes —
275,000
9.00 % June 2017
4.00% senior notes⁽⁴⁾
550,000
550,000
4.00 % November 2017
7.125% senior notes⁽⁵⁾
300,000
300,000
7.125 % February 2018
4.875% senior notes⁽⁶⁾
300,000
300,000
4.875 % July 2018
5.00% senior notes⁽⁷⁾
770,000
770,000
5.00 % July 2019
6.50% senior notes⁽⁸⁾
275,000
275,000
6.50 % July 2021
6.00% senior notes⁽⁹⁾
375,000
—
6.00 % April 2022
4.625% senior notes⁽¹⁰⁾
400,000
—
4.625 % September 2020
5.25% senior notes⁽¹¹⁾
400,000
—
5.25 % September 2022
3.125% senior convertible notes⁽¹²⁾
250,000
—
3.125 % September 2022
Total unsecured notes 3,620,000
2,569,722

Other debt obligations:

Trust preferred securities 100,000
100,000
LIBOR + 1.50%
October 2035
Total debt obligations 4,343,182
3,418,357

Debt discounts and deferred financing costs, net (64,228 ) (28,449 )

Total debt obligations, net⁽¹³⁾
$ 4,278,954
$ 3,389,908

(1)

The ~~loan~~Revolving Credit Facility bears interest at the ~~Company's~~Company’s election of ~~either~~either: (i) a base rate, which is the greater of (a) prime, (b) federal funds plus ~~0.5%~~0.50% or (c) LIBOR plus 1.0% and subject to a margin ranging from ~~1.25%~~1.00% to ~~1.75%,~~1.50%; or (ii) LIBOR subject to a margin ranging from ~~2.25%~~2.00% to ~~2.75%~~2.50%. At maturity, the Company may convert outstanding borrowings to a one year term loan which matures in quarterly installments through ~~October 2021.~~September 2023.


(2)	The loan ~~bears~~accrued interest at the ~~Company's~~Company’s election of ~~either~~either: (i) a base rate, which is the greater of (a) prime, (b) federal funds plus ~~0.5%~~0.50% or (c) LIBOR plus 1.0% and subject to a margin of ~~2.00%~~1.75%; or (ii) LIBOR subject to a margin of ~~3.00% with a minimum LIBOR rate of 0.75%~~2.75%.


(3)	~~As of September 30, 2017 and December 31, 2016, includes a loan with a floating rate of LIBOR plus 2.0%. As of September 30, 2017, the weighted average interest rate of these loans is 5.2%.~~


~~(4)~~	The ~~Company prepaid these senior notes in October 2017 without penalty.~~


~~(5)~~	~~The Company prepaid these senior notes in October 2017 and incurred a make whole premium of $5.25 million.~~


~~(6)~~	~~The Company prepaid these senior notes in October 2017 and incurred a make whole premium of $3.66 million.~~


~~(7)~~	~~The Company can prepay these senior notes without penalty beginning July 1, 2018.~~


~~(8)~~	~~The Company can prepay these senior notes without penalty beginning July 1, 2020.~~


~~(9)~~	~~The Company can prepay these senior notes without penalty beginning April 1, 2021.~~


~~(10)~~	~~The Company can prepay these senior notes without penalty beginning June 15, 2020.~~


~~(11)~~	~~The Company can prepay these senior notes without penalty beginning September 15, 2021.~~

~~(12)~~

~~The Company's~~Company’s 3.125% senior convertible fixed rate notes due September 2022 ("(“3.125% Convertible ~~Notes"~~Notes”) are convertible at the option of the holders ~~at a conversion rate of 64.36 shares per $1,000 principal amount of 3.125% Convertible Notes, which equals a conversion price of $15.54 per share,~~(refer to Note 18) at any time prior to the close of business on the business day immediately preceding September 15, 2022. The conversion rate as of March 31, 2022 was 72.3126 shares per $1,000 principal amount of 3.125% Convertible Notes, which equals a conversion price of $13.83 per share. The conversion rate is subject to adjustment from time to time for specified events. Upon conversion, the Company will pay or deliver, as the case may be, a combination of cash and shares of its common stock. ~~As such, at issuance~~During both the three months ended March 31, 2022 and 2021, the Company ~~valued the liability component at $221.8~~recognized $2.2 million ~~net~~ of ~~fees, and the equity component of the conversion feature at $22.5 million, net of fees, and recorded the equity component in "Additional paid-in capital"~~contractual interest on the ~~Company's consolidated balance sheet.~~3.125% Convertible Notes.

(4)	The Company can prepay these senior notes without penalty beginning July 1, 2024.

~~(13)~~(5)

The Company can prepay these senior notes without penalty beginning May 1, 2025.

(6)	The Company can prepay these senior notes without penalty beginning August 15, 2024.

(7)

The Company capitalized interest relating to development activities of ~~$2.1~~$0.3 million and ~~$6.1~~$0.2 million during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2022 and ~~$1.4 million and $4.2 million during the three and nine months ended September 30, 2016,~~2021, respectively.

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

Future Scheduled Maturities—As of ~~September 30, 2017~~,March 31, 2022, future scheduled maturities of outstanding debt obligations are as follows ($ in thousands):


	Unsecured Debt		Secured Debt		Total
2022 (remaining nine months)⁽¹⁾	$	287,500	$	0	$	287,500
2023		0		0		0
2024		775,000		0		775,000
2025		550,000		0		550,000
2026		400,000		0		400,000
Thereafter		100,000		0		100,000
Total principal maturities		2,112,500		0		2,112,500
Unamortized discounts and deferred financing costs, net		(28,248)		0		(28,248)
Total debt obligations, net	$	2,084,252	$	0	$	2,084,252

Unsecured Debt Secured Debt Total
2017 (remaining three months) $ 550,000
⁽¹⁾
$ —
$ 550,000
2018 600,000
⁽¹⁾
9,523
609,523
2019 770,000
27,924
797,924
2020 400,000
—
400,000
2021 275,000
517,506
792,506
Thereafter 1,125,000
68,229
1,193,229
Total principal maturities 3,720,000
623,182
4,343,182
Unamortized discounts and deferred financing costs, net (56,331 ) (7,897 ) (64,228 )
Total debt obligations, net $ 3,663,669
$ 615,285
$ 4,278,954


(1)	~~Subsequent~~Refer to September 30, 2017, the Company repaid the $550.0 million principal amount outstanding of the 4.0% senior unsecured notes due November 2017, the $300.0 million principal amount outstanding of the 7.125% senior unsecured notes due February 2018 and the $300.0 million principal amount outstanding of the 4.875% senior unsecured notes due July 2018.Note 18.

~~2017 Secured Financing~~

Senior Term Loan—~~In March 2017, the~~The Company ~~(through wholly-owned subsidiaries conducting the Company's GL business) entered into~~had a ~~$227.0~~$650.0 million ~~secured financing transaction~~senior term loan (the ~~"2017 Secured Financing"~~“Senior Term Loan”) that accrued interest at ~~3.795%~~LIBOR plus 2.75% per annum and ~~matures~~matured in ~~April 2027.~~June 2023. The ~~2017 Secured Financing~~Senior Term Loan was ~~collateralized~~secured by pledges of equity of certain subsidiaries that own a defined pool of assets. The Senior Term Loan permitted substitution of collateral, subject to overall collateral pool coverage and concentration limits, over the ~~12 properties comprising~~life of the ~~Company's GL business, including seven GLs~~facility. The Company repaid the Senior Term Loan in full in March 2022 using proceeds from the Net Lease Sale (refer to Note 3 - Net Lease Sale and ~~one master lease (covering~~Discontinued Operations). During the ~~accounts~~three months ended March 31, 2022, the Company incurred a “Loss on extinguishment of ~~five properties). In~~debt” of $1.4 million in connection with the 2017 Secured Financing, the Company incurred $7.3 million of lender and third-party fees, substantially all of which was capitalized in "Debt obligations, net" on the Company's consolidated balance sheets. In April 2017, the Company derecognized the 2017 Secured Financing when third parties acquired a controlling interest in the Company's GL business (refer to Note 4).

The Company is providing a limited recourse guaranty and environmental indemnity under the 2017 Secured Financing that will remain in effect until SAFE has achieved either an equity market capitalization of at least $500.0 million (inclusiverepayment of the initial portfolio that the Company contributed to SAFE) or a net worth of at least $250.0 million (exclusive of the initial portfolio that the Company contributed to SAFE), and SAFE or another replacement guarantor provides similar guaranties and indemnities to the lenders. The management agreement with SAFE provides that SAFE may not terminate the management agreement unless a successor guarantor reasonably acceptable to the Company has agreed to replace the Company as guarantor and indemnitor or has provided the Company with a reasonably acceptable indemnity for any losses suffered by the Company as guarantor and indemnitor. SAFE has generally agreed to indemnify the Company for any amounts the Company is required to pay, or other losses the Company may suffer, under the limited recourse guaranty and environmental indemnity.

~~2016 Secured~~Senior Term ~~Loan~~—In December 2016, the Company arranged a $170.0 million delayed draw secured term loan (the "2016 Secured Term Loan"). In March 2017, the Company allowed the 2016 Secured Term Loan to expire and replaced the 2016 Secured Term Loan with the 2017 Secured Financing. The 2016 Secured Term Loan was collateralized by the 12 properties that served as collateral for the 2017 Secured Financing.

~~2016 Senior Secured Credit Facility~~—In June 2016, the Company entered into a senior secured credit facility of $450.0 million (the "2016 Senior Secured Credit Facility"). In August 2016, the Company upsized the facility to $500.0 million. The initial $450.0 million of the 2016 Senior Secured Credit Facility was issued at 99% of par and the upsize was issued at par. In January 2017, the Company repriced the 2016 Senior Secured Credit Facility to LIBOR plus 3.75% with a 1.00% LIBOR floor from LIBOR plus 4.50% with a 1.00% LIBOR floor. In September 2017, the Company reduced, repriced and extended the 2016 Senior Secured Credit Facility to $400.0 million priced at LIBOR plus 3.00% with a 0.75% LIBOR floor and maturing in October 2021. These transactions resulted in an aggregate 1.50% reduction in price.

The 2016 Senior Secured Credit Facility is collateralized 1.25x by a first lien on a fixed pool of assets. Proceeds from principal repayments and sales of collateral are applied to amortize the 2016 Senior Secured Credit Facility. Proceeds received for interest, rent, lease payments and fee income are retained by the Company. The Company may also make optional prepayments, subject to prepayment fees, and is required to repay 0.25% of the principal amount on the first business day of each quarter.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

Proceeds from the 2016 Senior Secured Credit Facility, together with cash on hand, were primarily used to repay other secured debt. In connection with the 2016 Senior Secured Credit Facility, the Company incurred $4.5 million of lender fees, substantially all of which was capitalized in "Debt obligations, net" on the Company's consolidated balance sheets. The Company also incurred $6.2 million in third party fees, of which $4.3 million was capitalized in “Debt obligations, net” on the Company's consolidated balance sheets and $1.9 million was recognized in “Other expense” in the Company's consolidated statements of operations. In connection with the repricing of the 2016 Senior Secured Credit Facility in January 2017, the Company incurred an additional $0.8 million in fees, substantially all of which was recognized in "Other expense" in the Company's consolidated statements of operations. In connection with the repricing of the 2016 Senior Secured Credit Facility in September 2017, the Company incurred an additional $2.6 million in fees, of which $1.5 million was recognized in "Other expense" in the Company's consolidated statements of operations and $1.1 million was capitalized in "Debt obligations, net" on the Company's consolidated balance sheets.

During the three and nine months ended September 30, 2017, repayments of the 2016 Senior Secured Credit Facility resulted in losses on early extinguishment of debt of $0.6 million and $0.8 million, respectively.

~~2015 Secured~~ Loan.

Revolving Credit Facility—~~In March 2015, the~~The Company ~~entered into~~has a secured revolving credit facility with a maximum capacity of ~~$250.0~~$350.0 million that matures in September 2022 (the ~~"2015 Secured Revolving~~“Revolving Credit ~~Facility"~~Facility”). ~~In September 2017,~~Outstanding borrowings under the ~~Company upsized the 2015 Secured~~ Revolving Credit Facility ~~to $325.0 million, added additional lenders to~~are secured by pledges of the ~~syndicate, extended~~equity interests in the ~~maturity date to September 2020 and made certain other changes.~~Company’s subsidiaries that own a defined pool of assets. Borrowings under this credit facility bear interest at a floating rate indexed to one of several base rates plus a margin which adjusts upward or downward based upon the ~~Company's~~Company’s corporate credit ~~rating. An~~rating, ranging from 1.0% to 1.5% in the case of base rate loans and from 2.0% to 2.5% in the case of LIBOR loans. In addition, there is an undrawn credit facility commitment fee that ranges from ~~0.30%~~0.25% to ~~0.50%~~0.45%, based on corporate credit ~~ratings each quarter.~~ratings. At maturity, the Company may convert outstanding borrowings to a one year term loan which matures in quarterly installments through September ~~2021.~~2023. As of ~~September 30, 2017,~~March 31, 2022, based on the ~~Company's~~Company’s borrowing base of assets, the Company had ~~$325.0~~the ability to draw $59.9 million ~~of borrowing capacity available under~~without pledging any additional assets to the ~~2015 Secured Revolving Credit Facility.~~

facility.

Unsecured Notes—~~In September 2017,~~As of March 31, 2022, the Company ~~issued $400.0 million~~has senior unsecured notes outstanding with varying fixed-rates and maturities ranging from September 2022 to February 2026. In connection with the Net Lease Sale, in the fourth quarter 2021, the Company obtained the consents of holders of its outstanding 4.75% senior notes due 2024, 4.25% senior notes due 2025 and 5.50% senior notes due 2026 to certain amendments to the indentures governing the notes intended to align the indentures with the potential sale of the Company's net lease assets. The Company paid holders consent fees ranging from 0.75% to 1.00% of the principal amount of ~~4.625%~~consenting notes, depending on the relevant series. The Company’s senior unsecured notes due September 2020, $400.0 million principal amount of 5.25% senior unsecured notes due September 2022 and $250.0 million of 3.125% Convertible Notes due September 2022. The Company incurred approximately $17.4 million dollars in fees related to these offerings, all of which was capitalized in "Debt obligations, net" onare interest only, are generally redeemable at the Company's consolidated balance sheets. Subsequent to September 30, 2017, proceeds from these offerings, together with cash on hand, were used to repay in full the $550.0 million principal amount outstandingoption of the ~~4.0% senior unsecured notes due November 2017, the $300.0 million principal amount outstanding of the 7.125% senior unsecured notes due February 2018~~Company and the $300.0 million principal amount outstanding of the 4.875% senior unsecured notes due July 2018. In addition, subsequent to September 30, 2017, the initial purchasers of the 3.125% Convertible Notes exercised their option to purchase an additional $37.5 million aggregate principal amount of the 3.125% Convertible Notes.

In March 2017, the Company issued $375.0 million principal amount of 6.00% senior unsecured notes due April 2022. Proceeds from the offering were primarily used to repay in full the $99.7 million principal amount outstanding of the 5.85% senior unsecured notes due March 2017 and repay in full the $275.0 million principal amount outstanding of the 9.00% senior unsecured notes due June 2017 prior to maturity. In March 2016, the Company repaid its $261.4 million principal amount outstanding of the 5.875% senior unsecured notes at maturity using available cash. In addition, the Company issued $275.0 million principal amount of 6.50% senior unsecured notes due July 2021. Proceeds from the offering were primarily used to repay in full the $265.0 million principal amount outstanding of the senior unsecured notes due July 2016 and repay $5.0 million of the 2015 Secured Revolving Credit Facility.

During the nine months ended September 30, 2017, repayments of senior unsecured notes prior to maturity resulted in losses on early extinguishment of debt of $3.1 million. During the three and nine months ended September 30, 2016, repayments of unsecured notes prior to maturity resulted in losses on early extinguishment of debt of $0.1 million and $0.4 million, respectively. These amounts are included in "Loss on early extinguishment of debt, net" in the Company's consolidated statements of operations.

In November 2016, in connection with the retirement of the Company's $200.0 million principal amount of 3.0% senior unsecured convertible notes due November 2016, the Company converted $9.6 million principal amount into 0.8 million shares of our common stock.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

~~Encumbered/Unencumbered Assets~~contain certain financial covenants (see below).

Debt Covenants—The ~~carrying value of the Company's encumbered and unencumbered assets by asset type are as follows ($ in thousands):~~

As of
September 30, 2017 December 31, 2016
Encumbered Assets Unencumbered Assets Encumbered Assets Unencumbered Assets
Real estate, net $ 841,570
$ 482,292
$ 881,212
$ 506,062
Real estate available and held for sale —
65,658
—
237,531
Land and development, net 25,100
836,407
35,165
910,400
Loans receivable and other lending investments, net⁽¹⁾⁽²⁾
188,973
813,447
172,581
1,142,050
Other investments —
289,037
—
214,406
Cash and other assets —
2,145,713
—
590,299
Total $ 1,055,643
$ 4,632,554
$ 1,088,958
$ 3,600,748


~~(1)~~	~~As of~~ ~~September 30, 2017~~ ~~and December 31, 2016, the amounts presented exclude general reserves for loan losses of $15.2 million and $23.3 million, respectively.~~


~~(2)~~	~~As of September 30, 2017 and December 31, 2016, the amounts presented exclude loan participations of $122.2 million and $159.1 million, respectively.~~

~~Debt Covenants~~

~~The Company's~~Company’s outstanding unsecured debt securities contain corporate level covenants that include a covenant to maintain a ratio of unencumbered assets to unsecured indebtedness, ~~of at least~~ ~~1.2x and a covenant not to incur additional indebtedness (except for incurrences of permitted debt), if on a pro forma basis, the Company's consolidated fixed charge coverage ratio, determined~~as such terms are defined in ~~accordance with~~ the indentures governing the ~~Company's~~ debt securities, ~~is 1.5x or lower.~~of at least 1.3x and a covenant restricting certain incurrences of debt based on a fixed charge coverage ratio. If any of the ~~Company's~~Company’s covenants are breached and not cured within applicable cure periods, the breach could result in acceleration of its debt securities unless a waiver or modification is agreed upon with the requisite percentage of the bondholders. ~~If the Company's ability~~

iStar Inc.

Notes to ~~incur additional indebtedness under the fixed charge coverage ratio is limited, the Company is permitted to incur indebtedness for the purpose~~Consolidated Financial Statements (Continued)

(unaudited)

Table of ~~refinancing existing indebtedness and for other permitted purposes under the indentures.~~Contents

The ~~Company's 2016 Senior Secured Credit Facility and the 2015 Secured~~Company’s Revolving Credit Facility ~~contain~~contains certain covenants, including covenants relating to collateral coverage, ~~dividend payments,~~ restrictions on fundamental changes, transactions with affiliates, matters relating to the liens granted to the lenders and the delivery of information to the lenders. ~~In particular, the 2016 Senior Secured Credit Facility requires the Company to maintain collateral coverage of at least 1.25x outstanding borrowings on the facility.~~ The ~~2015 Secured~~ Revolving Credit Facility is secured by a borrowing base of assets and requires the Company to maintain both ~~collateral coverage~~borrowing base asset value of at least 1.5x outstanding borrowings on the facility and a consolidated ratio of cash flow to fixed charges of at least 1.5x. The ~~2015 Secured~~ Revolving Credit Facility does not require that proceeds from the borrowing base be used to pay down outstanding borrowings provided the ~~collateral coverage~~borrowing base asset value remains at least 1.5x outstanding borrowings on the facility. To satisfy this covenant, the Company has the option to pay down outstanding borrowings or substitute assets in the borrowing base. ~~In addition, for so long as~~Under the ~~Company maintains its qualification as a REIT, the 2016 Senior Secured Credit Facility and the 2015 Secured~~ Revolving Credit Facility ~~permit~~ the Company is permitted to ~~distribute 100% of its REIT taxable income on an annual basis (prior to deducting certain cumulative net operating loss ("NOL") carryforwards). The Company may not~~ pay ~~common~~ dividends ~~if it ceases to qualify as a REIT.~~

~~The Company's 2016 Senior Secured Credit Facility~~provided that no material default (as defined in the relevant agreement) has occurred and is continuing or would result therefrom and the ~~2015 Secured~~Company remains in compliance with its financial covenants after giving effect to the dividend.

The Company’s Revolving Credit Facility ~~contain~~contains cross default provisions that would allow the lenders to declare an event of default and accelerate the ~~Company's~~Company’s indebtedness to them if the Company fails to pay amounts due in respect of its other recourse indebtedness in excess of specified thresholds or if the lenders under such other indebtedness are otherwise permitted to accelerate such indebtedness for any reason. The indentures governing the ~~Company's~~Company’s unsecured public debt securities permit the bondholders to declare an event of default and accelerate the ~~Company's~~Company’s indebtedness to them if the ~~Company's~~Company’s other recourse indebtedness in excess of specified thresholds is not paid at final maturity or if such indebtedness is accelerated.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

Note 11—Commitments and Contingencies

Unfunded Commitments—The Company generally funds construction and development loans and build-outs of space in real estate assets over a period of time if and when the borrowers and tenants meet established milestones and other performance criteria. The Company refers to these arrangements as Performance-Based Commitments. In addition, the Company has committed to invest capital in several real estate funds and other ventures. These arrangements are referred to as Strategic Investments.

As of ~~September 30, 2017~~,March 31, 2022, the maximum amount of fundings the Company may be required to make under each category, assuming all performance hurdles and milestones are met under the Performance-Based Commitments and that 100% of its capital committed to Strategic Investments is drawn down, are as follows ($ in thousands):


	Loans and Other
	Lending		Real		Other
	Investments		Estate		Investments		Total
Performance-Based Commitments	$	4,235	$	8,111	$	108,650	$	120,996
Strategic Investments		0		5,061		2,325		7,386
Total	$	4,235	$	13,172	$	110,975	$	128,382

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

Other Commitments—Future minimum lease obligations under non-cancelable operating leases as of March 31, 2022 are as follows ($ in thousands):


	Operating⁽¹⁾
2022 (remaining nine months)	$	4,929
2023		6,295
2024		6,178
2025		6,166
2026		142
Thereafter		162
Total undiscounted cash flows		23,872
Present value discount⁽¹⁾		(2,063)
Lease liabilities	$	21,809

Loans and Other Lending Investments⁽¹⁾
Real Estate
Other
Investments
Total
Performance-Based Commitments $ 317,091
$ 6,136
$ 50,933
$ 374,160
Strategic Investments —
—
45,642
45,642
Total $ 317,091
$ 6,136
$ 96,575
$ 419,802

(1)

~~Excludes $115.3 million of commitments on loan participations sold that are not~~The lease liability equals the ~~obligation~~present value of the ~~Company.~~minimum rental payments due under the lease discounted at the rate implicit in the lease or the Company’s incremental secured borrowing rate for similar collateral. For operating leases, lease liabilities were discounted at the Company’s weighted average incremental secured borrowing rate for similar collateral estimated to be 4.7% and the weighted average remaining lease term is 4.4 years. During the three months ended March 31, 2022 and 2021, the Company made payments of $1.7 million and $0.8 million, respectively, related to its operating leases and $1.3 million and $1.4 million, respectively, related to its finance leases with SAFE .

Legal Proceedings—The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to the ~~Company's~~Company’s business as a finance and investment company focused on the commercial real estate industry, including ~~loan foreclosure and~~ foreclosure-related proceedings. ~~In addition to such matters, the Company is a party to the following legal proceedings:~~

~~U.S. Home Corporation ("Lennar") v. Settlers Crossing, LLC, et al. (United States District Court for the District of Maryland, Civil Action No. DKC 08-1863)~~

This litigation involved a dispute over the purchase and sale of approximately 1,250 acres of land in Prince George’s County, Maryland. Following a trial, in January 2015, the United States District Court for the District of Maryland (the District Court) entered judgment in favor of the Company, finding that the Company was entitled to specific performance of the purchase and sale agreement and awarding the Company the aggregate amount of: (i) the remaining unpaid purchase price; plus (ii) simple interest on the unpaid amount at a rate of 12% annually from 2008; plus (iii) real estate taxes paid by the Company; plus (iv) actual and reasonable attorneys' fees and costs incurred by the Company in connection with the litigation. Lennar appealed the District Court's judgment. On April 12, 2017, the United States Court of Appeals for the Fourth Circuit affirmed the judgment of the District Court in its entirety. Lennar’s petition for rehearing ~~en banc~~ ~~was summarily denied.~~

On April 21, 2017, the Company and Lennar completed the transfer of the land, pursuant to which the Company conveyed the land to Lennar and received net proceeds of $234.1 million after payment of $3.3 million in documentary transfer taxes, consisting of $114.0 million of sales proceeds, $121.8 million of interest and $1.6 million of real estate tax reimbursements. The interest and real estate tax reimbursements are recorded in "Other income" in the Company's consolidated statements of operations. The amount of attorneys’ fees and costs to be recovered by the Company will be determined through further proceedings before the District Court. The Company has applied for attorney’s fees in excess of $17.0 million. A portion of the net proceeds received by the Company has been paid to the third party which holds a 4.3% participation interest in all proceeds received by the Company.

Lennar has filed a petition for a writ of certiorari with the U.S. Supreme Court seeking review of two specific issues previously decided in the Company's favor by the lower courts. The Company filed a brief in opposition to the petition. There can be no assurance as to the outcome of Lennar’s petition or, if it is accepted, any determination or redetermination by the U.S. Supreme Court affecting this matter.

On a quarterly basis, the Company evaluates developments in legal proceedings that could require a liability to be accrued and/or disclosed. Based on its current knowledge, and after consultation with legal counsel, the Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding that would have a material adverse effect on the ~~Company's~~Company’s consolidated financial statements.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

Note 12—Derivatives

The ~~Company's~~Company’s use of derivative financial instruments ~~is primarily~~has historically been limited to the utilization of interest rate swaps, interest rate caps and foreign exchange contracts. The principal objective of such financial instruments is to minimize the risks and/or costs associated with the ~~Company's~~Company’s operating and financial structure and to manage its exposure to interest rates and foreign exchange rates. ~~Derivatives~~The Company may have derivatives that are not designated as hedges ~~are not speculative and are used to manage the Company's exposure to interest rate movements, foreign exchange rate movements, and other identified risks, but may~~because they do not meet the strict hedge accounting requirements. Although not designated as hedges, such derivatives are entered into to manage the Company’s exposure to interest rate movements and other identified risks.

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

The table below presents the fair value of the ~~Company's~~Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2022 and December 31, 2021 ($ in thousands):

⁽¹⁾


	Derivative Liabilities
	Balance Sheet	Fair
As of March 31, 2022	Location	Value
Derivatives Designated in Hedging Relationships
Interest rate swaps	Liabilities associated with real estate held for sale and classified as discontinued operations	$	0
Total		$	0

As of December 31, 2021
Derivatives Designated in Hedging Relationships
Interest rate swaps	Liabilities associated with real estate held for sale and classified as discontinued operations	$	8,395
Total		$	8,395

(1)	Over the next 12 months, the Company expects that $2.6 million related to its proportionate share of cash flow hedges held by SAFE will be reclassified from “Accumulated other comprehensive income (loss)” as a decrease to earnings from equity method investments.

Derivative Assets as of Derivative Liabilities as of
September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value
Derivatives Designated in Hedging Relationships
Foreign exchange contracts N/A $ —
N/A $ —
Other Liabilities $ 18
Other Liabilities $ 8
Interest rate swaps Other Assets 76
N/A —
N/A —
Other Liabilities 39
Total $ 76
$ —
$ 18
$ 47

Derivatives not Designated in Hedging Relationships
Foreign exchange contracts N/A $ —
Other Assets $ 702
N/A $ —
N/A $ —
Interest rate cap N/A —
Other Assets 25
N/A —
N/A —
Total $ —
$ 727
$ —
$ —

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

The ~~tables~~table below ~~present~~presents the effect of the ~~Company's~~Company’s derivative financial instruments, including the Company’s share of derivative financial instruments at certain of its equity method investments, in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) ($ in thousands):


		Amount of Gain		Amount of Gain
	Location of Gain	(Loss) Recognized in		(Loss) Reclassified
	(Loss)	Accumulated Other		from Accumulated
Derivatives Designated in	When Recognized in	Comprehensive		Other Comprehensive
Hedging Relationships	Income	Income		Income into Earnings
For the Three Months Ended March 31, 2022
Interest rate swaps	Earnings from equity method investments		2,755		(621)
For the Three Months Ended March 31, 2021
Interest rate swaps	Net income from discontinued operations	$	3,335	$	(2,104)
Interest rate swaps	Earnings from equity method investments		8,638		(234)

Derivatives Designated in Hedging Relationships
Location of Gain (Loss)
Recognized in Income
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion) Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings (Effective Portion)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings
(Ineffective Portion)
For the Three Months Ended September 30, 2017
Interest rate swaps Interest Expense 15
(16 ) N/A
Interest rate cap Earnings from equity method investments (2 ) (2 ) N/A
Interest rate swap Earnings from equity method investments (69 ) (38 ) N/A
Foreign exchange contracts Earnings from equity method investments (1 ) —
N/A
For the Three Months Ended September 30, 2016
Interest rate cap Earnings from equity method investments (1 ) (1 ) N/A
Interest rate swaps Interest Expense 126
(19 ) N/A
Interest rate swap Earnings from equity method investments 124
(92 ) N/A
Foreign exchange contracts Earnings from equity method investments (150 ) —
N/A

For the Nine Months Ended September 30, 2017

Interest rate swaps Interest Expense 439
339
N/A
Interest rate cap Earnings from equity method investments (16 ) (16 ) N/A
Interest rate swap Earnings from equity method investments (85 ) (188 ) N/A
Foreign exchange contracts Earnings from equity method investments (371 ) —
N/A

For the Nine Months Ended September 30, 2016

Interest rate cap Interest Expense —
(185 ) N/A
Interest rate cap Earnings from equity method investments (2 ) —
N/A
Interest rate swaps Interest Expense (568 ) (17 ) N/A
Interest rate swap Earnings from equity method investments (500 ) (284 ) N/A
Foreign exchange contracts Earnings from equity method investments (199 ) —
N/A

Amount of Gain (Loss)
Recognized in Income

Location of Gain
(Loss) Recognized in
Income
For the Three Months Ended September 30, For the Nine Months
Ended September 30,
Derivatives not Designated in Hedging Relationships 2017 2016 2017 2016
Interest rate cap Other Expense $ —
$ (4 ) $ 6
$ (1,059 )
Foreign exchange contracts Other Expense (199 ) 65
(970 ) 406

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

~~Foreign Exchange Contracts~~—The Company is exposed to fluctuations in foreign exchange rates on investments it holds in foreign entities. The Company uses foreign exchange contracts to hedge its exposure to changes in foreign exchange rates on its foreign investments. Foreign exchange contracts involve fixing the U.S. dollar ("USD") to the respective foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. The foreign exchange contracts are typically cash settled in USD for their fair value at or close to their settlement date.

For derivatives designated as net investment hedges, the effective portion of changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive Income as part of the cumulative translation adjustment. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts are reclassified out of Accumulated Other Comprehensive Income into earnings when the hedged foreign entity is either sold or substantially liquidated. For derivatives not designated as net investment hedges, the changes in the fair value of the derivatives are reported in the Company's consolidated statements of operations within "Other Expense." As of ~~September 30, 2017, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations that were designated ($ and Rs in thousands):~~

Derivative Type
Notional
Amount

Notional
(USD Equivalent)
Maturity
Sells Indian rupee ("INR")/Buys USD Forward ₨ 350,000
$ 5,339
October 2017

The Company marks its foreign investments each quarter based on current exchange rates and records the gain or loss through "Other expense" in its consolidated statements of operations for loan investments or "Accumulated other comprehensive income (loss)," on its consolidated balance sheets for net investments in foreign subsidiaries. The Company recorded net gains (losses) related to foreign investments of $0.1 million and $0.2 million during the three and nine months ended September 30, 2017, respectively, and $0.1 million during the three and nine months ended September 30, 2016 in its consolidated statements of operations.

~~Interest Rate Hedges~~—For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive Income (Loss). The ineffective portion of the change in fair value of the derivatives is recognized directly in the Company's consolidated statements of operations. For derivatives not designated as cash flow hedges, the changes in the fair value of the derivatives are reported in the Company's consolidated statements of operations within "Other Expense."

~~Over the next 12 months, the Company expects that $0.1 million related to cash flow hedges will be reclassified from~~

~~"Accumulated other comprehensive income (loss)" into earnings.~~

~~As of September 30, 2017, the Company had the following outstanding interest rate swap that was used to hedge its variable rate debt that was designated as a cash flow hedge ($ in thousands):~~

Derivative Type
Notional
Amount
Variable Rate Fixed Rate Effective Date Maturity
Interest rate swap $ 25,977
LIBOR + 2.00% 3.47% October 2012 November 2019

During the nine months ended September 30, 2017, the Company entered into and settled a rate lock swap in connection with the 2017 Secured Financing and a simultaneous rate lock swap with SAFE. As a result of the settlements, the Company initially recorded a $0.4 million unrealized gain in “Accumulated other comprehensive income” on the Company’s consolidated balance sheets and subsequently derecognized the gain when third parties acquired a controlling interest in the Company's GL business (refer to Note 4).

~~Credit Risk-Related Contingent Features~~—The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

The Company reports derivative instruments on a gross basis in the consolidated financial statements. In connection with its foreign currency derivatives which were in a liability position as of September 30, 2017 and December 31, 2016, the Company has posted collateral of $1.0 million and $0.4 million, respectively, and is included in "Deferred expenses and other assets, net"

Table of Contents

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

~~on the Company's consolidated balance sheets. The Company's net exposure under these contracts was zero as of September 30, 2017.~~

Note 13—Equity

Preferred Stock—The Company had the following series of Cumulative Redeemable ~~and Convertible Perpetual~~ Preferred Stock outstanding as of ~~September 30, 2017:~~

March 31, 2022 and December 31, 2021:


				Cumulative Preferential Cash
				Dividends⁽¹⁾⁽²⁾
	Shares Issued
	and							Annual		Carrying
	Outstanding	Par		Liquidation		Rate per		Dividend		Value
Series	(in thousands)	Value		Preference⁽³⁾		Annum		per share		(in thousands)
D	4,000	$	0.001	$	25.00	8.00	%	$	2.00	$	89,041
G	3,200		0.001		25.00	7.65	%		1.91		72,664
I	5,000		0.001		25.00	7.50	%		1.88		120,785
Total	12,200									$	282,490

Cumulative Preferential Cash
Dividends⁽¹⁾⁽²⁾
Series
Shares Issued and
Outstanding
(in thousands)
Par Value
Liquidation Preference⁽³⁾⁽⁴⁾
Rate per Annum
Equivalent to
Fixed Annual
Rate (per share)
D 4,000
$ 0.001
$ 25.00
8.00 % $ 2.00
G 3,200
0.001
25.00
7.65 % 1.91
I 5,000
0.001
25.00
7.50 % 1.88
J (convertible) 4,000
0.001
50.00
4.50 % 2.25
16,200

On September 19, 2017, the Company gave irrevocable notice to redeem all of its issued and outstanding Series E and Series F preferred stock on October 20, 2017. Each holder of Series E and Series F preferred stock received cash in the amount of the liquidation preference of $25.00 per share, or $240.0 million in the aggregate, plus accrued and unpaid dividends to the redemption date of $0.191406 per Series E share and $0.189583 per Series F share, or $1.8 million in the aggregate. The total carrying value of the Series E and Series F preferred stock was $223.7 million, net of discounts and fees, and was recorded in "Additional paid-in-capital" and "Preferred Stock Series D, E, F, G and I, liquidation preference $25.00 per share" on the Company's consolidated balance sheet as of December 31, 2016. The remaining liquidation premium of $16.3 million represents a return similar to a dividend to the holders of the Series E and Series F preferred stock and, as such, has been recorded in "Retained earnings (deficit)" on the Company's consolidated balance sheet as of September 30, 2017. As of September 30, 2017, the redemption and final dividend payable on the redemption of the Series E and Series F preferred stock are recorded in "Accounts payable, accrued expenses and other liabilities" on the Company's consolidated balance sheet.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

~~The Company had the following series of Cumulative Redeemable and Convertible Perpetual Preferred Stock outstanding as of December 31, 2016:~~

Cumulative Preferential Cash
Dividends⁽¹⁾⁽²⁾
Series
Shares Issued and
Outstanding
(in thousands)
Par Value
Liquidation Preference⁽³⁾⁽⁴⁾
Rate per Annum
Equivalent to
Fixed Annual
Rate (per share)
D 4,000
$ 0.001
$25.00 8.000 % $ 2.00
E 5,600
$ 0.001
$25.00 7.875 % $ 1.97
F 4,000
$ 0.001
$25.00 7.8 % $ 1.95
G 3,200
$ 0.001
$25.00 7.65 % $ 1.91
I 5,000
$ 0.001
$25.00 7.50 % $ 1.88
J (convertible) 4,000
$ 0.001
$50.00 4.50 % $ 2.25
25,800

(1)

Holders of shares of the Series D, ~~E, F,~~ G I and JI preferred stock are entitled to receive dividends, when and as declared by the ~~Company's~~Company’s Board of Directors, out of funds legally available for the payment of dividends. Dividends are cumulative from the date of original issue and are payable quarterly in arrears on or before the 15th day of each March, June, September and December or, if not a business day, the next succeeding business day. Any dividend payable on the preferred stock for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve30-day months. Dividends will be payable to holders of record as of the close of business on the first day of the calendar month in which the applicable dividend payment date falls or on another date designated by the ~~Company's~~Company’s Board of Directors for the payment of dividends that is not more than 30 nor less than 10 days prior to the dividend payment date.

(2)

The Company declared and paid dividends of ~~$6.0~~$2.0 million, ~~$8.3 million, $5.9 million, $4.6~~$1.5 million and ~~$7.0~~$2.3 million on its Series D, ~~E, F,~~ G and I Cumulative Redeemable Preferred Stock during both the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and 2016, respectively (see paragraph below for additional dividends declared on Series E and Series F preferred stock). The Company declared and paid dividends of $6.8 million on its Series J Convertible Perpetual Preferred Stock during the nine months ended September 30, 2017 and 2016.2021. The character of the ~~2016~~2021 dividends was ~~as follows: 47.30% was a~~100% capital gain distribution, of which ~~76.15% represents~~18.31% represented unrecaptured section 1250 ~~gain and 23.85% long term capital gain, and 52.70% was ordinary income. There are no dividend arrearages on any of the preferred shares currently outstanding.~~gain.


(3)	The Company may, at its option, redeem the Series ~~E, F,~~ G and I Preferred Stock, in whole or in part, at any time and from time to time, for cash at a redemption price equal to 100% of the liquidation preference of $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

~~(4)~~

Each share of the Series J Preferred Stock is convertible at the holder's option at any time, initially into 3.9087 shares of the Company's common stock (equal to an initial conversion price of approximately $12.79 per share), subject to specified adjustments. The Company may not redeem the Series J Preferred Stock prior to March 15, 2018. On or after March 15, 2018, the Company may, at its option, redeem the Series J Preferred Stock, in whole or in part, at any time and from time to time, for cash at a redemption price equal to 100% of the liquidation preference of $50.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

Dividends—To maintain its qualification as a REIT, the Company must annually distribute, at a minimum, an amount equal to 90% of its taxable income, excluding net capital gains, and must distribute 100% of its taxable income (including net capital gains) to eliminate corporate federal income taxes payable by the REIT. The Company has recorded NOLs and may record NOLs in the future, which may reduce its taxable income in future periods and lower or eliminate entirely the ~~Company's~~Company’s obligation to pay dividends for such periods in order to maintain its REIT qualification. As of December 31, ~~2016,~~2020, the Company had ~~$948.8~~$529.6 million of NOL carryforwards at the corporate REIT level that can generally be used to offset both ordinary taxable income and capital gain net income in future years. The NOL carryforwards will begin to expire ~~beginning~~ in ~~2029~~2032 and ~~through~~will fully expire in 2036 if unused. The amount of NOL carryforwards as of December 31, 2021 will be determined upon finalization of the Company’s 2021 tax return. Because taxable income differs from cash flow from operations due to non-cash revenues and expenses (such as depreciation and certain asset impairments), in certain circumstances, the Company may generate operating cash flow in excess of its dividends, or alternatively, may need to make dividend payments in excess of operating cash flows. The ~~2016~~ Senior ~~Secured Credit Facility~~Term Loan and ~~2015 Secured~~the Revolving Credit Facility permit the Company to ~~distribute~~ ~~100%~~ ~~of its REIT taxable income on an annual basis (prior to deducting certain cumulative NOL carryforwards), as~~pay common dividends with no restrictions so long as the Company ~~maintains~~is not in default on any of its ~~REIT qualification.~~debt obligations. The ~~2016 Senior Secured Credit Facility~~Company declared common stock dividends of $8.7 million, or $0.125 per share, for the three months ended March 31, 2022 and ~~2015 Secured Revolving Credit Facility restrict~~$8.2 million, or $0.11 per share, for the three months ended March 31, 2021. The character of the 2021 dividends was 100% capital gain distribution, of which 18.31% represented unrecaptured section 1250 gain.

Stock Repurchase Program—The Company ~~from paying any common dividends if it ceases to qualify as a REIT.~~may repurchase shares in negotiated transactions or open market transactions, including through one or more trading plans. The Company did not ~~declare or pay~~repurchase any shares of its common stock ~~dividends~~during the three months ended March 31, 2022. During the three months ended March 31, 2021, the Company repurchased 0.7 million shares of its outstanding common stock for ~~the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~.

~~Stock Repurchase Program—In February 2016, after having substantially utilized the remaining availability previously~~$12.4 million, for an average cost of $17.20 per share. The Company is generally authorized ~~the Company's Board of Directors authorized a new~~to repurchase up to $50.0 million in shares of its common stock ~~repurchase program. After having substantially utilized the availability authorized~~ and in February ~~2016,~~2022, the Company's Board of Directors authorized an increase to the stock repurchase program to $50.0 million, effective August 4, 2016. The program authorizes the repurchase of common stock from time to time in open market and privately negotiated purchases, including pursuant to one or more trading plans. In connection

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

with the sale of the 3.125% Convertible Notes in September 2017 (refer to Note 10), the Company repurchased 4.0 million shares of its common stock for $45.9 million at an average cost of $11.51 per share in privately negotiated transactions with purchasers of the 3.125% Convertible Notes. During the nine months ended September 30, 2016, the Company repurchased 10.2 million shares of its outstanding common stock for $98.4 million, at an average cost of $9.67 per share.million. As of ~~September 30, 2017,~~March 31, 2022, the Company had remaining authorization to repurchase up to ~~$4.1~~$50.0 million of common stock ~~available to repurchase~~ under its stock repurchase program.

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

Accumulated Other Comprehensive Income (Loss)—~~"Accumulated~~ “Accumulated other comprehensive income (loss)"” reflected in the ~~Company's shareholders'~~Company’s shareholders’ equity is comprised of the following ($ in thousands):

As of
September 30, 2017 December 31, 2016
Unrealized gains on available-for-sale securities $ 599
$ 149
Unrealized gains on cash flow hedges 230
27
Unrealized losses on cumulative translation adjustment (4,659 ) (4,394 )
Accumulated other comprehensive income (loss) $ (3,830 ) $ (4,218 )


	As of
	March 31, 2022		December 31, 2021
Unrealized gains on available-for-sale securities	$	1,224	$	4,237
Unrealized losses on cash flow hedges		(22,448)		(25,824)
Accumulated other comprehensive loss	$	(21,224)	$	(21,587)

Note 14—Stock-Based Compensation Plans and Employee Benefits

Stock-Based Compensation—The Company recorded stock-based compensation (income) expense, including the ~~effect of~~expense related to performance incentive plans (see below), of ~~$2.9~~($12.4) million and ~~$12.7~~$5.5 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2022 and ~~$1.4 million and $7.6 million for the three and nine months ended September 30, 2016,~~2021, respectively, in ~~"General~~“General and ~~administrative"~~administrative” in the ~~Company's~~Company’s consolidated statements of operations. As of September 30, 2017, there was $2.1 million of total unrecognized compensation cost related to all unvested restricted stock units ("Units") that are expected to be recognized over a weighted average remaining vesting/service period of 1.5 years.

Performance Incentive Plans—The ~~Company's~~Company’s Performance Incentive ~~Plan ("iPIP"~~Plans (“iPIP”) isare designed to provide, primarily to senior executives and select professionals engaged in the ~~Company's~~Company’s investment activities, long-term compensation which has a direct relationship to the realized returns on investments included in the ~~plan.~~plans. Awards vest over six years, with 40% being vested at the end of the second year and 15% each year thereafter. As of March 31, 2022, there are 5 iPIP Plans, each covering a two-year investment period beginning with the 2013-2014 Plan through the 2021-2022 Plan.

2019-2022 iPIP Plans—The Company’s 2019-2020 and 2021-2022 iPIP plans are equity-classified awards which are measured at the grant date fair value and recognized as compensation cost in “General and administrative” in the Company’s consolidated statements of operations and “Noncontrolling interests” in the Company’s consolidated statements of changes in equity over the requisite service period. Investments in the 2019-2022 iPIP plans are held by consolidated subsidiaries of the Company and have 2 ownership classes, class A units and class B units. The Company owns 100% of the class A units and the class B units were issued to employees as long-term compensation. Except for certain clawback provisions, participants can retain vested class B units upon their termination of employment with the Company. The class B units are entitled to distributions from the net cash realized from the investments in the plan after the Company, through its ownership of the class A units, has received a specified return on its invested capital and a return of its invested capital. Distributions on the class B units are also subject to reductions under a total shareholder return (“TSR”) adjustment. The fair value of ~~points is~~the class B units was determined using a model that forecasts the ~~Company's projected investment performance.~~underlying cash flows from the investments within the entity to which the class B units have ownership rights. During the three months ended March 31, 2022 and 2021, the Company recorded $1.3 million and $1.4 million, respectively, of expense related to the 2019-2022 iPIP plans. Distributions on the class B units are expected to be 50% in cash and 50% in shares of the Company’s common stock; provided, however, that (a) the cash portion will be increased if the Company does not have sufficient shares available under shareholder approved equity plans; and (b) if the principal remaining material asset in a plan is unsold SAFE shares, the Company may elect to distribute SAFE shares in lieu of cash and Company stock.

The following is a summary of the status of the Company’s equity-classified iPIP plans and changes during the three months ended March 31, 2022.


	iPIP Investment Pool
	2019-2020	2021-2022
Points at beginning of period	95.20	84.75
Granted	0	7.95
Forfeited	0	(0.35)
Points at end of period	95.20	92.35

As of March 31, 2022, investments with an aggregate gross book value of $764 million, including 26.7 million shares of SAFE common stock acquired by the Company, were attributable to the 2019-2020 Plan and investments with an

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

aggregate gross book value of $416 million, including 5.0 million shares of SAFE common stock acquired by the Company, were attributable to the 2021-2022 Plan.

2013-2018 iPIP Plans—The remainder of the Company’s iPIP plans, as shown in the table below, are liability-classified ~~award which will be~~awards and are remeasured each reporting period at fair value until the awards are settled. Certain employees will be granted awards that entitle employees to receive the residual cash flows from the investments in the plans after the Company has received a specified return on its invested capital and a return of its invested capital. Awards are also subject to reductions under a TSR adjustment. The fair value of awards is determined using a model that forecasts the Company’s projected investment performance. Settlement of the awards will be 50% in cash and 50% in shares of the Company’s common stock or in shares of SAFE’s common stock owned by the Company.

The following is a summary of ~~granted~~the status of the Company’s liability-classified iPIP ~~points.~~

•~~In May 2014,~~plans and changes during the three months ended March 31, 2022.


	iPIP Investment Pool
	2013‑2014	2015‑2016	2017‑2018
Points at beginning of period	80.17	70.40	75.34
Granted	0	0	0
Points at end of period	80.17	70.40	75.34

During the three months ended March 31, 2022, the Company ~~granted 73~~recorded a $16.0 million reduction of expense related to the 2013-2018 iPIP ~~points~~plans, primarily due to a decrease in the ~~initial 2013-2014 investment pool.~~

~~In January 2015,~~price per share of SAFE common stock. During the three months ended March 31, 2021, the Company ~~granted~~recorded $2.4 million of expense related to the 2013-2018 iPIP plans.

As of March 31, 2022, investments with an ~~additional 10 iPIP points in~~aggregate gross book value of $13 million were attributable to the 2013-2014 ~~investment pool~~Plan and ~~34 iPIP points~~investments with an aggregate gross book value of $277 million, including 7.6 million shares of SAFE common stock acquired by the Company, were attributable to the 2017-2018 Plan. As of March 31, 2022 there were 0 investments attributable to the 2015-2016 Plan.

During the three months ended March 31, 2021, the Company made distributions to participants in the 2015-2016 investment pool.

~~In January 2016, the Company granted an additional 10~~ The iPIP ~~points~~participants received total distributions in the ~~2013-2014 investment pool~~amount of $2.8 million as compensation, comprised of cash and ~~an additional 40 iPIP points in~~86,807 shares of the ~~2015-2016 investment pool.~~

~~In June 2016,~~Company’s common stock with a fair value of $17.72 per share, which are fully-vested and issued under the ~~Company granted an additional~~ ~~2.5~~ ~~iPIP points in~~2009 LTIP. After deducting statutory minimum tax withholdings, a total of 51,854 shares of the ~~2015-2016 investment pool.~~

~~In February 2017, the Company granted an additional~~ 5 ~~iPIP points in the 2013-2014 investment pool, an additional~~ 18 ~~iPIP points in the 2015-2016 investment pool, and 44 iPIP points in the 2017-2018 investment pool.~~

Company’s common stock were issued.

As of ~~September 30, 2017, 11.5 iPIP points from the 2013-2014 investment pool, 10.0 iPIP points from the 2015-2016 investment pool and 4.3 iPIP points from the 2017-2018 investment pool were forfeited.~~

~~As of September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, the Company had accrued compensation costs relating to iPIP of ~~$33.1~~$102.4 million and ~~$22.4~~$116.6 million, respectively, which are included in ~~"Accounts~~“Accounts payable, accrued expenses and other ~~liabilities"~~liabilities” on the ~~Company's~~Company’s consolidated balance sheets.

Long-Term Incentive Plan—The ~~Company's~~Company’s 2009 Long-Term Incentive Plan (the ~~"2009 LTIP"~~“2009 LTIP”) is designed to provide incentive compensation for officers, key employees, directors and advisors of the Company. The 2009 LTIP provides for awards of stock options, shares of restricted stock, phantom shares, restricted stock units, dividend equivalent rights and other share-based

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

performance awards. All awards under the 2009 LTIP are made at the discretion of the ~~Company's~~Company’s Board of Directors or a committee of the Board of Directors. The ~~Company's~~Company’s shareholders approved the 2009 LTIP in 2009 and approved the performance-based provisions of the 2009 LTIP, as amended, in 2014.

In May 2021, the Company’s shareholders approved an increase in the number of shares available for issuance under the 2009 LTIP from a maximum of 8.9 million to 9.9 million and extended the expiration date of the 2009 LTIP from May 2029 to May 2031.

As of ~~September 30, 2017,~~March 31, 2022, an aggregate of ~~3.3~~2.8 million shares remain available for issuance pursuant to future awards under the ~~Company's~~Company’s 2009 LTIP.

~~Restricted Share Issuances—During the nine months ended September 30, 2017, the Company granted 97,967 shares~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of common stock to certain employees under the 2009 LTIP as part of annual incentive awards that included a mix of cash and equity awards. The shares are fully-vested and 62,704 shares were issued net of statutory minimum required tax withholdings. The employees are restricted from selling these shares for up to 18 months from the date of grant.Contents

~~2017~~

Restricted Stock Unit Activity—~~During~~A summary of the ~~nine months ended September 30, 2017, the Company granted new~~Company’s stock-based compensation awards to certain employees in the form of long-term incentive awards ~~comprised~~for the three months ended March 31, 2022, is as follows (in thousands):


Nonvested at beginning of period		754
Granted		212
Vested		(270)
Forfeited		(4)
Nonvested at end of period		692

As of March 31, 2022, there was $9.4 million of total unrecognized compensation cost related to all unvested restricted stock units that are expected to be recognized over a weighted average remaining vesting/service period of 1.78 years.

Directors’ Awards—During the ~~following:~~

~~115,571 service-based Units granted on February 22, 2017, representing~~three months ended March 31, 2022, the ~~right to receive an equivalent number of shares of the Company's~~Company issued 478 common stock (after deducting shares for minimum required statutory withholdings) if and when the Units vest. The Units will cliff vest in one installment on December 31, 2019, if the employee remains employed by the Company on the vesting date, subject to certain accelerated vesting rights. Dividends will accrue as and when dividends are declared by the Company on shares of its common stock, but will not be paid unless and until the Units vest and are settled. As of September 30, 2017, 111,642 of such service-based Units were outstanding.

~~As of September 30, 2017, the Company had the following additional stock-based compensation awards outstanding:~~

60,000 service-based Units granted on June 15, 2016, representing the right to receive an equivalent number of shares of the Company's common stock (after deducting shares for minimum required statutory withholdings) if and when the Units vest. The Units will vest in equal annual installments over four years on each anniversary of the grant date, if the employee remains employed by the Company on the vesting date, subject to certain accelerated vesting rights. Upon vesting of these Units, the holder will receive shares of the Company's common stock in the amount of the vested Units, net of statutory minimum required tax withholdings. Dividends will accrue as and when dividends are declared by the Company on shares of its common stock, but will not be paid unless and until the Units vest and are settled.

~~104,026~~ service-based Units granted on January 29, 2016, representing the right to receive an equivalent number of shares of the Company's common stock (after deducting shares for minimum required statutory withholdings) if and when the Units vest. The Units will cliff vest in one installment on December 31, 2018, if the employee remains employed by the Company on the vesting date, subject to certain accelerated vesting rights. Dividends will accrue as and when dividends are declared by the Company on shares of its common stock, but will not be paid unless and until the Units vest and are settled.

37,514 target amount of performance-based Units granted on January 30, 2015, representing the right to receive an equivalent number of shares of the Company's common stock (after deducting shares for minimum required statutory withholdings) if and when the Units vest. The performance is based on the Company's TSR, measured over a performance period ending on December 31, 2017, which is the date the awards cliff vest. Vesting will range from 0% to 200% of the target amount of the awards, depending on the Company’s TSR performance relative to the NAREIT All REITs Index (one-half of the target amount of the award) and the Russell 2000 Index (one-half of the target amount of the award) during the performance period. The Company, as well as any companies not included in each index at the beginning and end of the performance period, are excluded from calculation of the performance of such index. To the extent Units vest based on the Company's TSR performance, holders will receive an equivalent number of shares of common stock (after deducting shares for minimum required statutory withholdings), if the employee remains employed by the Company on the vesting date, subject to certain accelerated vesting rights. Dividends will accrue as and when dividends are declared by the Company on shares of its common stock, but will not be paid unless and until the Units vest and are settled. The fair values of the performance-based Units were determined by utilizing a Monte Carlo model to simulate a range of possible future stock prices for the Company's common stock. The assumptions used to estimate the fair value of these performance-based awards were 0.75% for risk-free interest rate and 28.14% for expected stock price volatility.

54,201 service-based Units granted on January 30, 2015, representing the right to receive an equivalent number of shares of the Company's common stock (after deducting shares for minimum required statutory withholdings) if and when the

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

Units vest. The Units will cliff vest in one installment on December 31, 2017, if the employee remains employed by the Company on the vesting date, subject to certain accelerated vesting rights. Dividends will accrue as and when dividends are declared by the Company on shares of its common stock, but will not be paid unless and until the Units vest and are settled.

4,751 service-based Units granted on various dates, representing the right to receive an equivalent number of shares of the Company's common stock (after deducting shares for minimum required statutory withholdings) if and when the Units vest. The Units have an original vesting term of three years. Upon vesting of these Units, holders will receive shares of the Company's common stock in the amount of the vested Units, net of statutory minimum required tax withholdings. Dividends will accrue as and when dividends are declared by the Company on shares of its common stock, but will not be paid unless and until the Units vest and are settled.

~~Directors' Awards—During the nine months ended September 30, 2017, the Company awarded to non-employee Directors 56,817 restricted shares of common stock~~equivalents (“CSEs”) at a fair value of $23.99 per ~~share~~CSE in respect of ~~$11.86 at the time of grant. The restricted shares have a vesting term of one year.~~dividend equivalents on outstanding CSEs. As of ~~September 30, 2017,~~March 31, 2022, a combined total of ~~317,664~~130,414 CSEs and restricted shares of common stock granted to members of the ~~Company's~~Company’s Board of Directors remained outstanding under the ~~Company's~~Company’s Non-Employee Directors Deferral Plan, with an aggregate intrinsic value of ~~$3.7~~$3.1 million.

401(k) Plan—The Company made ~~gross~~ contributions of ~~$0.2~~$0.8 million and ~~$1.0~~$0.5 million for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~$0.1 million and $0.9 million for~~2021, respectively, to the ~~three and nine months ended September 30, 2016, respectively.~~

Company’s 401(k) Plan.

Note 15—Earnings Per Share

Earnings per share ("EPS") is calculated using the two-class method, which allocates earnings among common stock and participating securities to calculate EPS when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

The following table presents a reconciliation of income ~~(loss)~~ from ~~continuing~~ operations used in the basic and diluted ~~EPS~~earnings per share (“EPS”) calculations ($ in thousands, except for per share data):


	For the Three Months Ended March 31,
	2022		2021
Net loss from continuing operations	$	(1,888)	$	(14,497)
Net loss from continuing operations attributable to noncontrolling interests		18		44
Preferred dividends		(5,874)		(5,874)
Net loss from continuing operations and allocable to common shareholders for basic and diluted earnings per common share	$	(7,744)	$	(20,327)

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Income (loss) from continuing operations $ (23,029 ) $ 19,990
$ 24,839
$ 9,321
Income from sales of real estate 19,313
34,444
28,267
88,387
Net (income) loss attributable to noncontrolling interests 160
967
(4,450 ) (6,915 )
Preferred dividends (12,830 ) (12,830 ) (38,490 ) (38,490 )
Preferred dividends declared and payable (1,830 ) —
(1,830 ) —
Premium above book value on redemption of preferred stock (16,314 ) —
(16,314 ) —
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders and Participating Security Holders for basic earnings per common share⁽¹⁾
$ (34,530 ) $ 42,571
$ (7,978 ) $ 52,303
Add: Effect of joint venture shares —
3
—
5
Add: Effect of 1.50% senior convertible unsecured notes —
1,123
—
3,400
Add: Effect of 3.00% senior convertible unsecured notes —
1,785
—
5,346
Add: Effect of Series J convertible perpetual preferred stock —
2,250
—
6,750
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders and Participating Security Holders for diluted earnings per common share⁽¹⁾
$ (34,530 ) $ 47,732
$ (7,978 ) $ 67,804


~~(1)~~	~~For the nine months ended September 30, 2016, includes income from continuing operations allocable to Participating Security Holders of $27 and $21 on a basic and dilutive basis.~~

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Earnings allocable to common shares:
Numerator for basic earnings per share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders $ (34,530 ) $ 42,571
$ (7,978 ) $ 52,280
Income from discontinued operations —
3,721
4,939
10,929
Gain from discontinued operations —
—
123,418
—
Income tax expense from discontinued operations —
—
(4,545 ) —
Net income (loss) attributable to iStar Inc. and allocable to common shareholders $ (34,530 ) $ 46,292
$ 115,834
$ 63,209

Numerator for diluted earnings per share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders $ (34,530 ) $ 47,732
$ (7,978 ) $ 67,786
Income from discontinued operations —
3,721
4,939
10,931
Gain from discontinued operations —
—
123,418
—
Income tax expense from discontinued operations —
—
(4,545 ) —
Net income (loss) attributable to iStar Inc. and allocable to common shareholders $ (34,530 ) $ 51,453
$ 115,834
$ 78,717

Denominator for basic and diluted earnings per share:
Weighted average common shares outstanding for basic earnings per common share 71,713
71,210
71,972
74,074
Add: Effect of assumed shares issued under treasury stock method for restricted stock units —
87
—
65
Add: Effect of joint venture shares —
298
—
298
Add: Effect of 1.50% senior convertible unsecured notes —
11,444
—
11,526
Add: Effect of 3.00% senior convertible unsecured notes —
16,992
—
16,992
Add: Effect of series J convertible perpetual preferred stock —
15,635
—
15,635
Weighted average common shares outstanding for diluted earnings per common share 71,713
115,666
71,972
118,590

Basic earnings per common share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders $ (0.48 ) $ 0.60
$ (0.11 ) $ 0.70
Income from discontinued operations —
0.05
0.07
0.15
Gain from discontinued operations —
—
1.71
—
Income tax expense from discontinued operations —
—
(0.06 ) —
Net income (loss) attributable to iStar Inc. and allocable to common shareholders $ (0.48 ) $ 0.65
$ 1.61
$ 0.85

Table of Contents

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~


	For the Three Months Ended March 31,
	2022		2021
Earnings allocable to common shares:
Numerator for basic and diluted earnings per share:
Net loss from continuing operations and allocable to common shareholders	$	(7,744)	$	(20,327)
Net income from discontinued operations		797,688		22,486
Net (income) from discontinued operations attributable to noncontrolling interests		(179,089)		(2,564)
Net income (loss) allocable to common shareholders	$	610,855	$	(405)

Denominator for basic and diluted earnings per share:
Weighted average common shares outstanding for basic and diluted earnings per common share		69,037		73,901

Basic and diluted earnings per common share:⁽¹⁾
Net loss from continuing operations and allocable to common shareholders	$	(0.11)	$	(0.28)
Net income from discontinued operations and allocable to common shareholders		8.96		0.27
Net income (loss) allocable to common shareholders	$	8.85	$	(0.01)

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Diluted earnings per common share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders $ (0.48 ) $ 0.41
$ (0.11 ) $ 0.57
Income from discontinued operations —
0.03
0.07
0.09
Gain from discontinued operations —
—
1.71
—
Income tax expense from discontinued operations —
—
(0.06 ) —
Net income (loss) attributable to iStar Inc. and allocable to common shareholders $ (0.48 ) $ 0.44
$ 1.61
$ 0.66

~~The following shares were not included in the diluted EPS calculation because they were anti-dilutive (in thousands)~~⁽¹⁾:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Series J convertible perpetual preferred stock 15,635
—
15,635
—
Joint venture shares 298
—
298
—

(1)

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2022 and 2021, the effect of ~~3 and 22 unvested time and performance-based Units~~certain of the Company’s restricted stock awards were anti-dilutive ~~respectively.~~due to the Company having a net loss from continuing operations and allocable to common shareholders for the period. For the three ~~and nine~~ months ended ~~September 30, 2016, the effect of 25~~March 31, 2022 and ~~128 unvested time~~2021, 8,829,274 and ~~performance-based Units were anti-dilutive, respectively. The Company will settle conversions~~2,893,787 shares, respectively, of the 3.125% Convertible Notes by paying the conversion value in cash up to the original principal amount of the notes being converted and shares of common stock to the extent of any conversion premium. The amount of cash and shares of common stock, if any, due upon conversion will bewere antidilutive based ~~on a daily conversion value calculated for each trading day in a 40 consecutive day observation period. Based~~ upon the conversion price of the 3.125% Convertible Notes, no shares of common stock would have been issuable upon conversion of the 3.125% Convertible Notes for the three and nine months ended September 30, 2017 and therefore the 3.125% Convertible Notes had no effect on diluted EPS for such periods.

Note 16—Fair Values

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at 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).

Certain of the ~~Company's~~Company’s assets and liabilities are recorded at fair value either on a recurring or non-recurring basis. Assets required to be marked-to-market and reported at fair value every reporting period are classified as being valued on a recurring basis. Assets not required to be recorded at fair value every period may be recorded at fair value if a specific provision or other impairment is recorded within the period to mark the carrying value of the asset to market as of the reporting date. Such assets are classified as being valued on a non-recurring basis.

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

The following fair value hierarchy table summarizes the ~~Company's~~Company’s assets and liabilities recorded at fair value on a recurring and non-recurring basis by the above categories ($ in thousands):


	Fair Value Using
			Quoted
			market		Significant
			prices in		other		Significant
			active		observable		unobservable
			markets		inputs		inputs
	Total		(Level 1)		(Level 2)		(Level 3)
As of March 31, 2022
Recurring basis:
Available-for-sale securities⁽¹⁾	$	24,864	$	—	$	—	$	24,864
As of December 31, 2021
Recurring basis:
Derivative liabilities⁽¹⁾	$	8,395	$	—	$	8,395	$	—
Available-for-sale securities⁽¹⁾		28,092		—		—		28,092

Fair Value Using
Total
Quoted market
prices in
active markets
(Level 1)

Significant other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)
As of September 30, 2017
Recurring basis:
Derivative assets⁽¹⁾
$ 76
$ —
$ 76
$ —
Derivative liabilities⁽¹⁾
18
—
18
—
Available-for-sale securities⁽¹⁾
22,105
—
—
22,105

As of December 31, 2016
Recurring basis:
Derivative assets⁽¹⁾
$ 727
$ —
$ 727
$ —
Derivative liabilities⁽¹⁾
47
—
47
—
Available-for-sale securities⁽¹⁾
21,666
—
—
21,666
Non-recurring basis:
Impaired loans⁽²⁾
7,200
—
—
7,200
Impaired real estate⁽³⁾
3,063
—
—
3,063

(1)

The fair value of the ~~Company's~~Company’s derivatives are based upon widely accepted valuation techniques utilized by a third-party specialist using observable inputs such as interest rates and contractual cash flow and are classified as Level 2. The fair value of the ~~Company's~~Company’s available-for-sale securities are based upon unadjusted third-party broker quotes and are classified as Level 3.3


~~(2)~~	The Company recorded a provision for loan losses on one loan with a fair value of $5.2 million using an appraisal based on market comparable sales. In addition, the Company recorded a recovery of loan losses on one loan with a fair value of $2.0 million based on proceeds to be received.


~~(3)~~	~~The Company recorded an impairment on one real estate asset with a fair value of $3.1 million based on a discount rate of 11% using discounted cash flows over a two year sellout period.~~

The following table summarizes changes in Level 3 available-for-sale securities reported at fair value on the ~~Company's~~Company’s consolidated balance sheets for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 ($ in thousands):


	2022		2021
Beginning balance	$	28,092	$	25,274
Repayments		(215)		(200)
Unrealized losses recorded in other comprehensive income		(3,013)		(1,031)
Ending balance	$	24,864	$	24,043

2017 2016
Beginning balance $ 21,666
$ 1,161
Purchases —
4,366
Repayments (10 ) (10 )
Unrealized gains recorded in other comprehensive income 449
263
Ending balance $ 22,105
$ 5,780

~~Fair values of financial instruments—~~The Company's estimated fair values of its loans receivable and other lending investments and outstanding debt was $1.1 billion and $4.5 billion, respectively, as of September 30, 2017 and $1.5 billion and $3.6 billion, respectively, as of December 31, 2016. The Company determined that the significant inputs used to value its loans receivable and other lending investments and debt obligations fall within Level 3 of the fair value hierarchy. The carrying value of other financial instruments including cash and cash equivalents, restricted cash, accrued interest receivable and accounts payable, approximate the fair values of the instruments. Cash and cash equivalents and restricted cash values are considered Level 1 on the fair value hierarchy. The fair value of other financial instruments, including derivative assets and liabilities, is included in the fair value hierarchy table above.

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

~~(unaudited)~~

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


	As of March 31, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Assets
Net investment in leases (refer to Note 5)⁽¹⁾	$	28	$	28	$	43	$	43
Loans receivable and other lending investments, net⁽¹⁾		332		342		333		345
Loans receivable held for sale⁽¹⁾		0		0		43		43
Cash and cash equivalents⁽²⁾		1,500		1,500		340		340
Restricted cash⁽²⁾		51		51		54		54

Liabilities
Debt obligations, net⁽¹⁾⁽³⁾
Level 1		1,985		2,228		2,473		2,799
Level 3		99		101		99		104
Total debt obligations, net		2,084		2,329		2,572		2,903

(1)	The fair value of the Company’s net investment in leases, loans receivable and other lending investments, net, loans receivable held for sale and certain debt obligations are classified as Level 3 within the fair value hierarchy.

(2)

The Company determined the carrying values of its cash and cash equivalents and restricted cash approximated their fair values. Restricted cash is recorded in “Deferred expenses and other assets, net” on the Company’s balance sheet. The fair value of the Company’s cash and cash equivalents and restricted cash are classified as Level 1 within the fair value hierarchy.

(3)

As of March 31, 2022 and December 31, 2021, the fair value of the Company’s unsecured notes is classified as Level 1 in the fair value hierarchy. As of March 31, 2022 and December 31, 2021, the fair value of the Company’s 3.125% Senior Convertible Notes was $497.5 million and $527.5 million, respectively (refer to Note 18).

Note 17—Segment Reporting

The Company has determined that it has ~~four~~4 reportable segments based on how management reviews and manages its business. These reportable segments include: Net Lease, Real Estate Finance, ~~Net Lease,~~ Operating Properties and Land and Development. The Net Lease segment (refer to Note 3 - Net Lease Sale and Discontinued Operations) includes the Company’s investments in SAFE and its Ground Lease adjacent businesses (refer to Note 8). The Real Estate Finance segment includes all of the ~~Company's~~Company’s activities related to senior and mezzanine real estate loans and real estate related securities. The ~~Net Lease segment includes the Company's activities and operations related to the ownership of properties generally leased to single corporate tenants. The~~ Operating Properties segment includes the ~~Company's~~Company’s activities and operations related to its commercial and residential properties. The Land and Development segment includes the ~~Company's~~Company’s activities related to its developable land portfolio.

~~Table of Contents~~

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

The Company evaluates ~~performance based~~performance-based on the following financial measures for each segment. The ~~Company's~~Company’s segment information is as follows ($ in thousands):


	Net		Real Estate		Operating		Land and		Corporate/		Company
	Lease⁽¹⁾		Finance		Properties		Development		Other⁽²⁾		Total
Three Months Ended March 31, 2022
Operating lease income	$	—	$	—	$	2,974	$	135	$	—	$	3,109
Interest income		75		4,873		—		—		—		4,948
Interest income from sales-type leases		356		—		—		—		—		356
Other income		4,459		11		2,661		1,317		192		8,640
Land development revenue		—		—		—		14,900		—		14,900
Earnings from equity method investments		17,800		1,015		45		3,566		2,606		25,032
Income from sales of real estate		492		—		—		—		—		492
Total revenue and other earnings		23,182		5,899		5,680		19,918		2,798		57,477
Real estate expense		(177)		—		(5,891)		(4,049)		—		(10,117)
Land development cost of sales		—		—		—		(14,496)		—		(14,496)
Other expense		(471)		(119)		—		(82)		(258)		(930)
Allocated interest expense		(16,215)		(3,140)		(1,341)		(4,243)		(4,304)		(29,243)

Real Estate Finance Net Lease Operating Properties Land and Development
Corporate/Other⁽¹⁾
Company Total
Three Months Ended September 30, 2017:
Operating lease income $ —
$ 31,503
$ 16,048
$ 255
$ —
$ 47,806
Interest income 25,442
—
—
—
—
25,442
Other income 1,298
953
14,097
1,174
3,140
20,662
Land development revenue —
—
—
25,962
—
25,962
Earnings from equity method investments —
1,302
(399 ) 948
610
2,461
Income from sales of real estate —
18,765
548
—
—
19,313
Total revenue and other earnings 26,740
52,523
30,294
28,339
3,750
141,646
Real estate expense —
(4,423 ) (23,185 ) (8,672 ) —
(36,280 )
Land development cost of sales —
—
—
(27,512 ) —
(27,512 )
Other expense (261 ) —
—
—
(2,443 ) (2,704 )
Allocated interest expense (9,165 ) (12,255 ) (4,860 ) (6,529 ) (15,923 ) (48,732 )
Allocated general and administrative⁽²⁾
(3,334 ) (4,315 ) (1,866 ) (3,706 ) (4,800 ) (18,021 )
Segment profit (loss)⁽³⁾
$ 13,980
$ 31,530
$ 383
$ (18,080 ) $ (19,416 ) $ 8,397
Other significant items:
Recovery of loan losses $ (2,600 ) $ —
$ —
$ —
$ —
$ (2,600 )
Impairment of assets —
—
595
—
—
595
Depreciation and amortization —
6,623
4,343
546
334
11,846
Capitalized expenditures —
2,384
7,644
33,788
—
43,816

Three Months Ended September 30, 2016:
Operating lease income $ —
$ 32,287
$ 14,407
$ 106
$ —
$ 46,800
Interest income 32,258
—
—
—
—
32,258
Other income 1,052
412
10,793
658
527
13,442
Land development revenue —
—
—
31,554
—
31,554
Earnings from equity method investments —
723
630
21,841
3,346
26,540
Income from discontinued operations —
3,721
—
—
—
3,721
Income from sales of real estate —
6,629
27,815
—
—
34,444
Total revenue and other earnings 33,310
43,772
53,645
54,159
3,873
188,759
Real estate expense —
(4,707 ) (21,129 ) (9,407 ) —
(35,243 )
Land development cost of sales —
—
—
(22,004 ) —
(22,004 )
Other expense (794 ) —
—
—
(25 ) (819 )
Allocated interest expense (14,544 ) (16,330 ) (5,110 ) (9,013 ) (10,108 ) (55,105 )
Allocated general and administrative⁽²⁾
(3,995 ) (4,526 ) (1,502 ) (3,495 ) (4,714 ) (18,232 )
Segment profit (loss)⁽³⁾
$ 13,977
$ 18,209
$ 25,904
$ 10,240
$ (10,974 ) $ 57,356
Other significant items:
Recovery of loan losses $ (14,955 ) $ —
$ —
$ —
$ —
$ (14,955 )
Impairment of assets —
4,829
112
3,800
—
8,741
Depreciation and amortization —
7,829
3,798
298
276
12,201
Capitalized expenditures —
934
15,902
25,938
—
42,774

~~Table of Contents~~

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Real Estate Finance Net Lease Operating Properties Land and Development
Corporate/Other⁽¹⁾
Company Total
Nine Months Ended September 30, 2017:
Operating lease income $ —
$ 93,606
$ 47,977
$ 572
$ —
$ 142,155
Interest income 83,145
—
—
—
—
83,145
Other income 1,854
2,009
37,720
125,430
5,024
172,037
Land development revenue —
—
—
178,722
—
178,722
Earnings from equity method investments —
3,363
702
8,396
1,216
13,677
Income from discontinued operations —
4,939
—
—
—
4,939
Gain from discontinued operations —
123,418
—
—
—
123,418
Income from sales of real estate —
24,977
3,290
—
—
28,267
Total revenue and other earnings 84,999
252,312
89,689
313,120
6,240
746,360
Real estate expense —
(13,062 ) (67,356 ) (26,136 ) —
(106,554 )
Land development cost of sales —
—
—
(165,888 ) —
(165,888 )
Other expense (1,263 ) —
—
—
(19,586 ) (20,849 )
Allocated interest expense (31,561 ) (41,659 ) (15,472 ) (21,769 ) (38,223 ) (148,684 )
Allocated general and administrative⁽²⁾
(11,621 ) (14,878 ) (5,985 ) (12,636 ) (15,497 ) (60,617 )
Segment profit (loss)⁽³⁾
$ 40,554
$ 182,713
$ 876
$ 86,691
$ (67,066 ) $ 243,768
Other significant non-cash items:
Recovery of loan losses $ (8,128 ) $ —
$ —
$ —
$ —
$ (8,128 )
Impairment of assets —
219
5,009
10,064
—
15,292
Depreciation and amortization —
21,662
13,305
1,337
993
37,297
Capitalized expenditures —
4,071
24,210
90,666
—
118,947

Nine Months Ended September 30, 2016:
Operating lease income $ —
$ 95,636
$ 51,317
$ 317
$ —
$ 147,270
Interest income 99,877
—
—
—
—
99,877
Other income 2,672
924
25,351
2,889
3,243
35,079
Land development revenue —
—
—
74,389
—
74,389
Earnings from equity method investments —
2,613
31,564
31,189
8,888
74,254
Income from discontinued operations —
10,934
—
—
—
10,934
Income from sales of real estate —
15,896
72,491
—
—
88,387
Total revenue and other earnings 102,549
126,003
180,723
108,784
12,131
530,190
Real estate expense —
(13,770 ) (63,046 ) (27,999 ) —
(104,815 )
Land development cost of sales —
—
—
(50,842 ) —
(50,842 )
Other expense (1,634 ) —
—
—
(3,107 ) (4,741 )
Allocated interest expense (43,877 ) (49,030 ) (17,579 ) (26,040 ) (31,647 ) (168,173 )
Allocated general and administrative⁽²⁾
(11,612 ) (13,135 ) (5,010 ) (10,092 ) (14,940 ) (54,789 )
Segment profit (loss)⁽³⁾
$ 45,426
$ 50,068
$ 95,088
$ (6,189 ) $ (37,563 ) $ 146,830
Other significant non-cash items:
Recovery of loan losses $ (12,749 ) $ —
$ —
$ —
$ —
$ (12,749 )
Impairment of assets —
4,829
3,124
3,800
—
11,753
Depreciation and amortization —
23,857
14,103
997
824
39,781
Capitalized expenditures —
3,410
44,145
92,212
—
139,767

Table of Contents

~~iStar Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(unaudited)~~

Allocated general and administrative⁽³⁾		(5,016)		(1,124)		(478)		(2,255)		(4,929)		(13,802)
Segment profit (loss)⁽⁴⁾	$	1,303	$	1,516	$	(2,030)	$	(5,207)	$	(6,693)	$	(11,111)
Other significant items:
Provision for loan losses	$	—	$	135	$	—	$	—	$	—	$	135
Provision for losses on net investment in leases		281		—		—		—		—		281
Depreciation and amortization		—		—		986		228		143		1,357
Capitalized expenditures		(211)		—		220		4,922		—		4,931

Three Months Ended March 31, 2021
Operating lease income	$	—	$	—	$	4,837	$	94	$	—	$	4,931
Interest income		17		9,772		—		—		—		9,789
Interest income from sales-type leases		—		—		—		—		—		—
Other income		3,476		99		2,337		1,389		5,714		13,015
Land development revenue		—		—		—		32,249		—		32,249
Earnings (losses) from equity method investments		11,412		466		(3,747)		3,146		491		11,768
Income from sales of real estate		—		—		612		—		—		612
Total revenue and other earnings		14,905		10,337		4,039		36,878		6,205		72,364
Real estate expense		(458)		—		(3,799)		(4,462)		—		(8,719)
Land development cost of sales		—		—		—		(29,323)		—		(29,323)
Other expense		—		(64)		—		—		(189)		(253)
Allocated interest expense		(14,325)		(4,578)		(2,043)		(3,938)		(3,925)		(28,809)
Allocated general and administrative⁽³⁾		(5,937)		(1,459)		(660)		(2,428)		(5,447)		(15,931)
Segment profit (loss)⁽⁴⁾	$	(5,815)	$	4,236	$	(2,463)	$	(3,273)	$	(3,356)	$	(10,671)
Other significant items:
Recovery of loan losses	$	—	$	(3,642)	$	—	$	—	$	—	$	(3,642)
Impairment of assets		—		—		257		—		—		257
Depreciation and amortization		—		—		1,988		218		195		2,401
Capitalized expenditures		1,268		—		57		4,739		—		6,064

As of March 31, 2022
Real estate, net	$	—	$	—	$	91,434	$	—	$	—	$	91,434
Real estate available and held for sale		—		—		301		—		—		301
Total real estate		—		—		91,735		—		—		91,735
Real estate and other assets available and held for sale and classified as discontinued operations⁽¹⁾		226,309		—		—		—		—		226,309
Net investment in leases		28,131		—		—		—		—		28,131
Land and development, net		—		—		—		277,421		—		277,421
Loans receivable and other lending investments, net		—		331,839		—		—		—		331,839
Loan receivable held for sale		—		—		—		—		—		—
Other investments		1,453,205		4,627		43,251		190		24,746		1,526,019
Total portfolio assets		1,707,645		336,466		134,986		277,611		24,746		2,481,454
Cash and other assets												1,602,597
Total assets											$	4,084,051

As of December 31, 2021
Real estate, net	$	—	$	—	$	92,150	$	—	$	—	$	92,150
Real estate available and held for sale		—		—		301		—		—		301
Total real estate		—		—		92,451		—		—		92,451
Real estate and other assets available and held for sale and classified as discontinued operations⁽¹⁾		2,299,711		—		—		—		—		2,299,711
Net investment in leases		43,215		—		—		—		—		43,215
Land and development, net		—		—		—		286,810		—		286,810
Loans receivable and other lending investments, net		—		332,844		—		—		—		332,844
Loan receivable held for sale		43,215		—		—		—		—		43,215
Other investments		1,186,162		48,862		43,252		1,096		17,909		1,297,281
Total portfolio assets	$	3,572,303	$	381,706	$	135,703	$	287,906	$	17,909		4,395,527
Cash and other assets												445,007
Total assets											$	4,840,534

Real Estate Finance Net Lease Operating Properties Land and Development
Corporate/Other⁽¹⁾
Company Total

As of September 30, 2017
Real estate

Real estate, net $ —
$ 844,493
$ 479,369
$ —
$ —
$ 1,323,862
Real estate available and held for sale —
—
65,658
—
—
65,658
Total real estate —
844,493
545,027
—
—
1,389,520
Land and development, net —
—
—
861,507
—
861,507
Loans receivable and other lending investments, net 1,109,442
—
—
—
—
1,109,442
Other investments —
185,176
21,828
63,308
18,725
289,037
Total portfolio assets $ 1,109,442
$ 1,029,669
$ 566,855
$ 924,815
$ 18,725
3,649,506
Cash and other assets 2,145,713
Total assets

$ 5,795,219

As of December 31, 2016
Real estate

Real estate, net $ —
$ 911,112
$ 476,162
$ —
$ —
$ 1,387,274
Real estate available and held for sale —
155,051
82,480
—
—

237,531
Total real estate —
1,066,163
558,642
—
—
1,624,805
Land and development, net —
—
—
945,565
—
945,565
Loans receivable and other lending investments, net 1,450,439
—
—
—
—
1,450,439
Other investments —
92,669
3,583
84,804
33,350
214,406
Total portfolio assets $ 1,450,439
$ 1,158,832
$ 562,225
$ 1,030,369
$ 33,350
4,235,215
Cash and other assets 590,299
Total assets

$ 4,825,514


(1)	Refer to Note 3 – Net Lease Sale and Discontinued Operations.

(2)

Corporate/Other represents all corporate level and unallocated items including any intercompany eliminations necessary to reconcile to consolidated Company totals. This caption also includes the ~~Company's~~Company’s joint venture investments and strategic investments that are not included in the other reportable segments above.

iStar Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Table of Contents

(3)
~~(2)~~	General and administrative excludes stock-based compensation (income) expense of ~~$2.9~~($12.4) million and ~~$12.7~~$5.5 million for the three ~~and nine~~ months ended ~~September 30, 2017 respectively,~~March 31, 2022 and ~~$1.4 million and $7.6 million for the three and nine months ended September 30, 2016,~~2021, respectively.

(4)
~~(3)~~	The following is a reconciliation of segment profit to net income (loss) ($ in thousands):


	For the Three Months Ended March 31,
	2022		2021
Segment loss	$	(11,111)	$	(10,671)
Less: (Provision for) recovery of loan losses		(135)		3,642
Less: Provision for losses on net investment in leases		(281)		0
Less: Impairment of assets		0		(257)
Less: Stock-based compensation income (expense)		12,427		(5,508)
Less: Depreciation and amortization		(1,357)		(2,401)
Less: Income tax (expense) benefit		(3)		698
Less: Loss on early extinguishment of debt, net		(1,428)		0
Less: Net income from discontinued operations		797,688		22,486
Net income	$	795,800	$	7,989

Note 18—Subsequent Events

On April 8, 2022, the Company completed separate, privately-negotiated transactions with holders of $194 million aggregate principal amount of the Company's 3.125% Convertible Notes (refer to Note 10) in which the noteholders exchanged their convertible notes with the Company for 13.75 million newly issued shares of the Company's common stock and aggregate cash payments of $14 million. The 3.125% Convertible Senior Notes received by the Company were retired.

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Segment profit $ 8,397
$ 57,356
$ 243,768
$ 146,830
Less: Recovery of (provision for) loan losses 2,600
14,955
8,128
12,749
Less: Impairment of assets (595 ) (8,741 ) (15,292 ) (11,753 )
Less: Stock-based compensation expense (2,934 ) (1,434 ) (12,730 ) (7,644 )
Less: Depreciation and amortization (11,846 ) (12,201 ) (37,297 ) (39,781 )
Less: Income tax (expense) benefit 1,278
8,256
(972 ) 9,859
Less: Income tax expense from discontinued operations —
—
(4,545 ) —
Less: Loss on early extinguishment of debt, net (616 ) (36 ) (4,142 ) (1,618 )
Net income (loss) $ (3,716 ) $ 58,155
$ 176,918
$ 108,642

Table of Contents

Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are ~~"forward-looking statements"~~“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the ~~"Securities Act"~~“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the ~~"Exchange Act"~~“Exchange Act”). Forward-looking statements are included with respect to, among other things, iStar Inc.'s’s (the ~~"Company's"~~“Company’s”) current business plan, business strategy, portfolio management, prospects and liquidity. These forward-looking statements generally are identified by the words ~~"believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "plan," "may," "should," "will," "would," "will~~“believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,~~" "will~~” “will continue,~~" "will~~” “will likely result,"” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results or outcomes to differ materially from those contained in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in this Form 10-Q and the uncertainties and risks described in Item 1A—"Risk ~~Factors"~~Factors’’ in our ~~2016~~2021 Annual Report, all of which could affect our future results of operations, financial condition and liquidity. For purposes of ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, the terms ~~"we," "our"~~“we,” “our” and ~~"us"~~“us” refer to iStar Inc. and its consolidated subsidiaries, unless the context indicates otherwise.

The discussion below should be read in conjunction with our consolidated financial statements and related notes in this quarterly report on Form 10-Q and our ~~2016~~2021 Annual Report. These historical financial statements may not be indicative of our future performance.

Executive Overview

Corporate Strategy. We ~~have reclassified~~continue to execute our stated corporate strategy which is to grow our Ground Lease and Ground Lease adjacent businesses and simplify our portfolio through sales of other assets. In March 2022, we, through certain ~~items in~~subsidiaries of ours and entities managed by us, sold our ~~consolidated financial statements~~portfolio of ~~prior periods to conform to our current financial statements presentation.~~

~~Introduction~~

iStar Inc., doing business as "iStar," finances, invests in and develops real estate and real estate related projects as part of its fully-integrated investment platform. We also provide management services for our ground lease and net lease assets for an aggregate gross sales price of $3.07 billion (the “Net Lease Sale”).

The portfolio sold consisted of office, entertainment and industrial properties located in the United States comprising approximately 18.3 million square feet. It included assets wholly-owned by us and assets owned by two joint ventures managed by us and in which we owned 51.9% interests. At the time of the sale, the portfolio was encumbered by an aggregate of $702 million of mortgage indebtedness, including indebtedness of equity method ~~investments. We have invested more than $35 billion over~~investments, which was repaid with proceeds from the ~~past two decades~~sale. After repayment of the mortgage indebtedness and are structured as a real estate investment trust ("REIT") with a diversified portfolio focused on larger assets located in major metropolitan markets. Our primary business segments are real estate finance, net lease, operating properties and land and development.

~~Executive Overview~~

During the three months ended September 30, 2017, we received upgrades to our corporate credit ratings from all three major ratings agencies when we completed a transformative set of capital markets transactions designed to enhance our capital structure and improve our earnings profile. Our capital markets transactions will allow us to continue to focus on our net lease and real estate finance businesses to find selective investment opportunities in these core businesses. We also continue to make significant additional progress in monetizing our commercial and residential operating properties as well as our land portfolio. In our continuing effort to find untapped investment opportunities in real estate, we recently conceived and ultimately launched a new, publicly traded REIT focused exclusively on the ground lease ("GL") asset class.

~~Capital Markets Activity~~

~~In September 2017, we completed a comprehensive set of capital markets transactions that addressed all parts~~prepayment penalties, repayment of our ~~capital structure, resulting in us having:~~

~~repaid or refinanced all of our 2017 and 2018 corporate debt maturities, leaving no corporate debt maturities for the next 21 months;~~

~~extended our weighted average debt maturity by 1.5 years to 4.0 years;~~

~~reduced annual expenses underlying earnings by approximately $37 million, or $0.43 per diluted share;~~

~~lowered our cost of capital by approximately 35 basis points;~~

~~established new banking relationships;~~

~~increased liquidity to pursue new investment opportunities; and~~

received upgrades in our corporate credit ratings from all three major ratings agencies, which we expect will positively impact the marginal cost of our future borrowings and broaden our set of investment opportunities.

~~The table below summarizes the components, sources and uses of the capital markets transactions (in millions) (refer also to Liquidity and Capital Resources):~~

Uses Amount Sources Amount
Repay 2016 Senior Secured Credit Facility $ 473
Amended 2016 Senior Secured Credit Facility $ 400
Repay 4.0% senior unsecured notes due November 2017⁽¹⁾
550
Issue 4.625% senior unsecured notes due September 2020 400
Repay 7.125% senior unsecured notes due February 2018⁽¹⁾
300
Issue 5.25% senior unsecured notes due September 2022 400
Repay 4.875% senior unsecured notes due July 2018⁽¹⁾
300
Issue 3.125% senior unsecured convertible notes due September 2022 250
Redeem 7.875% series E preferred stock⁽²⁾
140
Cash 510
Redeem 7.8% series F preferred stock⁽²⁾
100

Repurchase common stock 46

Fees, expenses, interest and dividends 51

Total uses $ 1,960
Total sources $ 1,960


~~(1)~~	We repaid the $550.0 million principal amount outstanding of our 4.0% senior unsecured notes due November 2017, the $300.0 million principal amount outstanding of our 7.125% senior unsecured notes due February 2018 and the $300.0 million principal amount outstanding of our 4.875% senior unsecured notes due July 2018 in October 2017.


~~(2)~~	~~We redeemed our Series E and Series F preferred stock at par in October 2017.~~

As of September 30, 2017, we had $1.9 billion of cash, of which $1.4 billion was used to repay senior unsecured notes and redeem preferred equity subsequent to quarter end, and the remainder of which we expect to use primarily to fund future investment activities. In addition, we have additional borrowing capacity of $325.0 million at September 30, 2017.

~~Safety, Income & Growth Inc.~~

We believe that Safety, Income & Growth Inc. ("SAFE") 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"). Ground Leases afford investors the opportunity for safe, growing income derived from (i) a Ground Lease's senior position in the commercial real estate capital structure; (ii) long-term leases with periodic contractual increases in rent; and (iii) growth in the value of the ground over time. Capital appreciation is realized when, at the end of the life of the lease, the commercial real estate property reverts back to the lessor, as landlord, and it is able to realize the value of the leasehold, which may be substantial. Ground Leases share similarities with triple net leases in that typically the lessor is not responsible for any operating or capital expenses over the life of the lease, making the management of a Ground Lease portfolio relatively simple, with limited working capital needs.

In April 2017, institutional investors acquired a controlling interest in our GL business through the merger of one of our subsidiaries and related transactions (the "Acquisition Transactions"). Our GL business was a component of our net lease segment and consisted of 12 properties subject to long-term net leases including seven GLs and one master lease (covering five properties). The acquiring entity was a newly formed unconsolidated entity named Safety, Income & Growth Inc. The carrying value of our GL assets was approximately $161.1 million. Shortly before the Acquisition Transactions, we completed the $227.0 million 2017 Secured Financing on our GL assetsSenior Term Loan (refer to Note ~~10). We received all~~10 to the consolidated financial statements), payments to terminate derivative contracts, payments to joint venture partners, and payments of ~~the~~promotes, transaction expenses and amounts due under employee incentive plans, we retained net cash proceeds of $1.2 billion from the ~~2017 Secured Financing. We received an additional $113.0 million of proceeds~~transaction. Two net lease properties were not included in the ~~Acquisition Transactions, including $55.5 million that we contributed~~sale but were sold to ~~SAFE~~other third parties in ~~its initial capitalization. As a result~~the first quarter 2022. Our net lease assets associated with our Ground Lease businesses were not included in the sale.

Table of the Acquisition Transactions, we deconsolidated the 12 properties and the associated 2017 Secured Financing. We account for our investment in SAFE as an equity method investment (refer to Note 7). We accounted for this transaction as an in substance sale of real estate and recognized a gain of $123.4 million, reflecting the aggregate gain less the fair value of our retained interest in SAFE.Contents

On June 27, 2017, SAFE completed its initial public offering raising $205.0 million in gross proceeds and concurrently completed a $45.0 million private placement to us, its largest shareholder. We paid organization and offering costs in connection with these transactions, including commissions payable to the underwriters and other offering expenses.

Portfolio Overview

As of September 30, 2017, we owned 34.6% of SAFE and our investment had a market value of $117.4 million. In addition, one of our wholly-owned subsidiaries is the external manager of SAFE, our Chairman and Chief Executive Officer is a director and the Chairman and Chief Executive Officer of SAFE and our other executive officers hold similarly titled positions with SAFE.

~~Bevard~~

In April 2017, we received a favorable judgment from the U.S. Court of Appeals for the Fourth Circuit, affirming a prior district court judgment relating to a dispute with Lennar over the purchase and sale of Bevard, a master planned community located in Maryland. On April 21, we conveyed the property to Lennar and received $234.3 million of net proceeds after payment of $3.3 million in documentary transfer taxes, comprised of the remaining purchase price of $114.0 million and $123.4 million of interest and real estate taxes, net of costs. We have applied for attorney’s fees in excess of $17.0 million. A portion of the net proceeds received by us has been paid to the third party which holds a 4.3% participation interest in all proceeds received by us.

Lennar has filed a petition for a writ of certiorari with the U.S. Supreme Court seeking review of two specific issues previously decided in our favor by the lower courts. We have filed a brief in opposition to the petition. There can be no assurance as to the outcome of Lennar’s petition or, if it is accepted, any determination or redetermination by the U.S. Supreme Court affecting this matter.

~~Operating Results~~

During the three months ended September 30, 2017, three of our four business segments contributed positively to our earnings. We continue to work on repositioning or redeveloping our transitional operating properties and progressing on the entitlement and development of our land and development assets in order to maximize their value. We intend to continue these efforts, with the objective of increasing the contribution of these assets to our earnings in the future. For the three months ended September 30, 2017, we recorded a net loss allocable to common shareholders of $34.5 million, compared to net income of $46.3 million during the same period in the prior year. Adjusted income (loss) allocable to common shareholders for the three months ended September 30, 2017 was $(3.6) million, compared to $49.1 million during the same period in the prior year (see "Adjusted Income" for a reconciliation of adjusted income to net income).

~~Portfolio Overview~~

~~As of September 30, 2017,~~March 31, 2022, based on ~~carrying values gross of accumulated depreciation and general loan loss reserves,~~ our ~~$4.1 billion investment portfolio has the following characteristics:~~

~~(1)Represents the market~~book value, ~~of our equity method investment in SAFE.~~

~~As of September 30, 2017, based on carrying values gross of accumulated depreciation and general loan loss reserves,~~ our total investment portfolio has the following property/collateral type and geographic characteristics ($ in thousands):


Property/Collateral	Net		Real Estate		Operating		Land &						% of
Types	Lease		Finance		Properties		Development		Corporate		Total		Total
Ground Leases	$	1,481,337	$	—	$	—	$	—	$	—	$	1,481,337	65.7	%
Land and Development		—		11,607		—		223,191		—		234,798	10.4	%
Hotel		—		108,362		67,712		—		—		176,074	7.8	%
Multifamily		—		72,151		38,837		—		—		110,988	4.9	%
Retail		—		61,807		13,600		8,340		—		83,747	3.7	%
Condominium		—		11,092		301		46,080		—		57,473	2.5	%
Office		—		46,583		—		—		—		46,583	2.1	%
Entertainment / Leisure		—		—		14,534		—		—		14,534	0.6	%
Other Property Types		—		24,863		—		—		24,747		49,610	2.2	%
Total	$	1,481,337	$	336,465	$	134,984	$	277,611	$	24,747	$	2,255,144	100.0	%
Percentage of Total		66%		15%		6%		12%		<1%		100%


	Net		Real Estate		Operating		Land &						% of
Geographic Region	Lease		Finance		Properties		Development		Corporate		Total		Total
Northeast	$	567,442	$	91,039	$	77,831	$	173,058	$	—	$	909,370	40.3	%
West		359,451		108,463		32,374		8,970		—		509,258	22.6	%
Mid-Atlantic		217,016		—		4,841		95,393		—		317,250	14.1	%
Southeast		154,800		29,868		4,414		190		—		189,272	8.4	%
Southwest		140,891		—		—		—		—		140,891	6.2	%
Central		41,737		11,092		15,524		—		—		68,353	3.0	%
Various		—		96,003		—		—		24,747		120,750	5.4	%
Total	$	1,481,337	$	336,465	$	134,984	$	277,611	$	24,747	$	2,255,144	100.0	%

Net Lease

Prior to the Net Lease Sale, our net lease business created stable cash flows through long-term net leases primarily to single tenants on our properties. We targeted mission-critical facilities leased on a long-term basis to tenants, offering structured solutions that combined our capabilities in underwriting, lease structuring, asset management and build-to-suit construction. Leases typically provide for expenses at the facility to be paid by the tenant on a triple net lease basis. Under a typical net lease agreement, the tenant agrees to pay a base monthly operating lease payment and most or all of the facility operating expenses (including taxes, utilities, maintenance and insurance).

After the Net Lease Sale, the net lease segment includes our Ground Lease investments made primarily through SAFE and our Ground Lease adjacent businesses.

Table of Contents

As of March 31, 2022, our net lease portfolio consisted primarily of our equity method investments in SAFE and the Ground Lease Plus Fund. The table below provides certain statistics for our net lease portfolio.


	Wholly- Owned			SAFE			Ground Lease Plus Fund
Ownership %		100.0	%		64.7	%		53.0	%
Book value (millions)⁽¹⁾	$	28		$	1,389		$	65

% Leased		100.0	%		100.0	%		100.0	%
Weighted average lease term (years)⁽²⁾		98.9			90.9			105.0
Weighted average yield⁽³⁾		5.2	%		4.9	%		5.7	%

Property/Collateral Types Real Estate Finance Net Lease Operating Properties Land & Development Total % of
Total
Land and Development $ —
$ —
$ —
$ 932,639
$ 932,639
22.9 %
Office / Industrial 46,157
719,364
122,868
—
888,389
21.8 %
Entertainment / Leisure —
484,117
—
—
484,117
11.9 %
Mixed Use / Mixed Collateral 260,424
—
186,542
—
446,966
11.0 %
Hotel 332,514
—
103,424
—
435,938
10.7 %
Condominium 263,721
—
65,674
—
329,395
7.9 %
Retail 26,029
57,348
136,859
—
220,236
5.4 %
Other Property Types 195,797
—
8,761
—
204,558
5.0 %
Ground Leases⁽¹⁾
—
117,448
—
—
117,448
2.9 %
Strategic Investments —
—
—
—
18,725
0.5 %
Total $ 1,124,642
$ 1,378,277
$ 624,128
$ 932,639
$ 4,078,411
100.0 %

Geographic Region Real Estate Finance Net Lease Operating Properties Land & Development Total % of
Total
Northeast $ 502,904
$ 401,384
$ 47,257
$ 260,867
$ 1,212,412
29.7 %
West 63,971
296,348
51,772
368,088
780,179
19.1 %
Southeast 180,265
252,787
148,881
121,103
703,036
17.2 %
Southwest 79,341
161,341
244,544
22,412
507,638
12.4 %
Central 204,068
79,392
76,962
31,500
391,922
9.6 %
Mid-Atlantic —
153,092
44,572
128,669
326,333
8.0 %
Various⁽²⁾
94,093
33,933
10,140
—
138,166
3.5 %
Strategic Investments⁽²⁾
—
—
—
—
18,725
0.5 %
Total $ 1,124,642
$ 1,378,277
$ 624,128
$ 932,639
$ 4,078,411
100.0 %


(1)	~~Represents~~Wholly-owned includes amounts recorded as net investment in leases (refer to Note 5 to the ~~market value~~consolidated financial statements). SAFE includes its pro rata share of ~~our~~its unconsolidated equity method ~~investment in SAFE.~~investments.

(2)	Weighted average lease term is calculated using GAAP rent and the initial maturity and does not include extension options. SAFE includes its pro rata share of its unconsolidated equity method investments.

(3)	Yield for SAFE is calculated over the trailing twelve months and excludes dilution gains (refer to Note 8 to the consolidated financial statements) and management fees earned by us.

~~(2)Combined, strategic~~

SAFE—SAFE is a publicly-traded company that originates and acquires Ground Leases in order to generate attractive long-term risk-adjusted returns from its investments. We believe its business has characteristics comparable to a high-grade fixed income investment business, but with certain unique advantages. Relative to alternative fixed income investments generally, SAFE’s Ground Leases typically benefit from built-in growth derived from contractual rent escalators that may compound over the duration of the lease. These rent escalators may be based on fixed increases, a CPI lookback or a combination thereof, and may also include a participation in the ~~various category include $9.0 million~~gross revenues of ~~international assets.~~

the property. SAFE also has the opportunity to realize value from its right to regain possession of the buildings and other improvements on its land upon expiration or earlier termination of the lease at no additional cost. We believe that these features offer us the opportunity through our ownership in SAFE to realize superior risk-adjusted total returns when compared to certain alternative highly-rated investments. As of March 31, 2022, we owned approximately 64.7% of SAFE’s common stock outstanding.

We account for our investment in SAFE as an equity method investment (refer to Note 8 to the consolidated financial statements). We act as SAFE’s external manager pursuant to a management agreement, and we have an exclusivity agreement with SAFE pursuant to which we agreed, subject to certain exceptions, that we will not acquire, originate, invest in, or provide financing for a third party’s acquisition of, a Ground Lease unless we have first offered that opportunity to SAFE and a majority of its independent directors has declined the opportunity.

Ground Lease Plus Fund—The Company formed and manages an investment fund that targets the origination and acquisition of Ground Leases for commercial real estate projects that are in a pre-development phase (the “Ground Lease Plus Fund”). We own a 53% noncontrolling interest in the Ground Lease Plus Fund. We do not have a controlling interest in the Ground Lease Plus Fund due to the substantive participating rights of our partner and account for this investment as an equity method investment. In addition, the Ground Lease Plus Fund has first look rights on qualifying pre-development projects through December 2023.

Real Estate Finance

Our real estate finance business targets sophisticated and innovative owner/operators of real estate and real estate related projects by providing one-stop capabilities that encompass financing alternatives ranging from full envelope senior loans to mezzanine and preferred equity capital positions. AsOur real estate finance portfolio consists of ~~September 30, 2017,~~leasehold loans to Ground Lease tenants, including tenants of SAFE, senior mortgage loans that are secured by commercial and residential real estate assets where we are the first lien holder, subordinated mortgage loans that are secured by second lien or junior interests in commercial and residential real estate assets, and corporate/partnership loans, which represent mezzanine or subordinated loans to entities for which we do not have a lien on the underlying asset, but may have a pledge of underlying equity ownership of such assets. Our real estate finance portfolio includes Ground Leases, loans on stabilized and

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transitional properties and ground-up construction projects. In addition, we also own loans through equity method investments and have preferred equity investments and debt securities classified as other lending investments.

The tables below shows certain statistics for our real estate finance portfolio ~~including securities, totaled $1.1 billion, gross of general loan loss reserves. The portfolio included $860.3 million of performing loans with a weighted average maturity of 1.4 years.~~

~~The tables below summarize our loans and the reserves for loan losses associated with our loans~~ ($ in thousands):


	March 31, 2022
									Allowance for
		Gross		Allowance					Loan Losses as
	Number	Book		for Loan		Net Book		% of	a % of Gross
	of Loans	Value		Losses		Value		Total	Book Value
Performing loans⁽¹⁾	7	$	153,846	$	(1,925)	$	151,921	45.8%	1.3%
Non-performing loans	1		59,642		(591)		59,051	17.8%	1.0%
Other lending investments	2		123,283		(2,416)		120,867	36.4%	2.0%
Total	10	$	336,771	$	(4,932)	$	331,839	100.0%	1.5%

September 30, 2017
Number of Loans Gross Carrying Value Reserve for Loan Losses Carrying Value % of Total Reserve for Loan Losses as a % of Gross Carrying Value
Performing loans 35
$ 860,327
$ (15,200 ) $ 845,127
82.7% 1.8%
Non-performing loans 5
238,155
(60,989 ) 177,166
17.3% 25.6%
Total 40
$ 1,098,482
$ (76,189 ) $ 1,022,293
100.0% 6.9%

December 31, 2016
Number of Loans Gross Carrying Value Reserve for Loan Losses Carrying Value % of Total Reserve for Loan Losses as a % of Gross Carrying Value
Performing loans 35
$ 1,202,127
$ (23,300 ) $ 1,178,827
86.0% 1.9%
Non-performing loans 6
253,941
(62,245 ) 191,696
14.0% 24.5%
Total 41
$ 1,456,068
$ (85,545 ) $ 1,370,523
100.0% 5.9%

(1)	As of March 31, 2022, our performing loans had a weighted average maturity of 3.3 years and, excluding one performing loan with a maturity of September 2057, had a weighted average maturity of 0.4 years.


	December 31, 2021
									Allowance for
		Gross		Allowance					Loan Losses as
	Number	Book		for Loan		Net Book		% of	a % of Gross
	of Loans	Value		Losses		Value		Total	Book Value
Performing loans	8	$	153,043	$	(1,888)	$	151,155	45.4%	1.2%
Non-performing loans	1		59,640		(576)		59,064	17.7%	1.0%
Other lending investments	2		124,930		(2,305)		122,625	36.8%	1.8%
Total	11	$	337,613	$	(4,769)	$	332,844	100.0%	1.4%

Performing Loans—The table below summarizes our performing loans ~~gross~~exclusive of ~~reserves~~allowances ($ in thousands):


	March 31, 2022		December 31, 2021
Senior mortgages	$	141,176	$	139,968
Corporate/Partnership loans		—		618
Subordinate mortgages		12,670		12,457
Total	$	153,846	$	153,043

Weighted average LTV		61%		60%
Yield - year to date⁽¹⁾		7.1%		7.5%

(1)	Yields presented are for the three months ended March 31, 2022 and 2021 and represent the yields on performing loans and other lending investments.

September 30, 2017 December 31, 2016
Senior mortgages $ 512,349
$ 854,805
Corporate/Partnership loans 338,643
333,244
Subordinate mortgages 9,335
14,078
Total $ 860,327
$ 1,202,127

Weighted average LTV 61 % 64 %
Yield 10.1 % 8.9 %

Non-Performing Loans—We designate loans as non-performing at such time as: (1) ~~the loan becomes~~interest payments become 90 days delinquent; (2) the loan has a maturity default; or (3) management determines it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan. All non-performing loans are placed on non-accrual status and income is only recognized in certain cases upon actual cash receipt. As of ~~September 30, 2017,~~March 31, 2022 and December 31, 2021, we had one non-performing ~~loans~~loan with ~~an aggregate~~a carrying value of ~~$177.2 million compared to non-performing loans with an aggregate carrying value of $191.7 million as of December 31, 2016.~~$59.1 million. We expect that our level of non-performing loans will fluctuate from period to period.

~~Reserve~~

Allowance for Loan Losses—The ~~reserve~~allowance for loan losses was ~~$76.2~~$4.9 million as of ~~September 30, 2017,~~March 31, 2022, or ~~6.9%~~1.5% of total loans and other lending investments, compared to ~~$85.5~~$4.8 million, or ~~5.9%~~1.4%, as of December 31, 2016. For the nine months ended September 30, 2017, the recovery of loan losses included a reduction in the general reserve of $8.1 million due to an overall improvement in the risk ratings and a decrease in size of our loan portfolio.2021. We expect that our level of ~~reserve for loan losses~~Expected Losses will fluctuate from period to period. Due to the volatility of the commercial real estate market, the process of estimating collateral values and ~~reserves~~Expected Losses requires the use of significant judgment. We currently believe there is adequate collateral and ~~reserves~~allowances to support the carrying values of the ~~loans.~~loans and other lending investments.

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The ~~reserve~~allowance for loan losses includes an asset-specific component and a formula-based component. An asset-specific ~~reserve~~allowance is established for an impaired loan when the estimated fair value of the ~~loan's~~loan’s collateral less costs to sell is lower than the carrying value of the loan. As of ~~September 30, 2017, asset-specific reserves decreased to $61.0 million compared to $62.2 million as of~~March 31, 2022 and December 31, ~~2016.~~

~~The formula-based general reserve is derived from estimated principal default probabilities~~2021, asset-specific allowances were $0.6 million and loss severities applied to groups of performing loans based upon risk ratings assigned to loans with similar risk characteristics during our quarterly loan portfolio assessment. During this assessment, we perform a comprehensive analysis of our loan portfolio and assign risk ratings to loans that incorporate management's current judgments and future expectations about their credit quality based on all known and relevant factors that may affect collectability. We consider, among other things, payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographical location as well as national and regional

~~economic factors. This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss.~~ $0.6 million, respectively.

We estimate ~~loss rates~~the formula-based component based on historical realized losses experienced within our portfolio and take into account current economic conditions affecting the commercial real estate market. In addition, we use third-party market ~~when establishing appropriate time frames~~data that includes forecasted economic trends, including unemployment rates.

The Expected Loss increased to ~~evaluate loss experience.~~

~~The general reserve decreased to $15.2~~$4.3 million, or ~~1.8%~~1.6%, of performing loans and other lending investments as of ~~September 30, 2017,~~March 31, 2022, compared to ~~$23.3~~$4.2 million, or ~~1.9%~~1.5%, of performing loans and other lending investments as of December 31, ~~2016.~~2021. The ~~decrease~~increase was due primarily ~~attributable~~ to ~~an overall improvement in~~ the ~~risk ratings~~accretion on our held-to-maturity security.

Operating Properties

Our operating properties represent a pool of assets across a broad range of geographies and ~~a decrease in size~~property types including hotel, multifamily, retail, condominium and entertainment/leisure properties. As of March 31, 2022, the book value of our ~~loan portfolio.~~

~~Net Lease~~

Our net lease business seeks to create stable cash flows through long-term net leases primarily to single tenants on our properties. We target mission-critical facilities leased on a long-term basis to tenants, offering structured solutions that combine our capabilities in underwriting, lease structuring, asset management and build-to-suit construction. We invest in new net lease investments primarily through our Net Lease Venture, in which we hold a 51.9% interest. The Net Lease Venture has a right of first offer on any new net lease investments that we source. In February 2017, the Net Lease Venture's investment period was extended through February 1, 2018. The term of the Net Lease Venture extends through February 13, 2022, subject to two, one-year extension options at the discretion of the Company and its partner.

In April 2017, institutional investors acquired a controlling interest in our GL business through the merger of one of our subsidiaries and related transactions. Our GL business was a component of our net lease segment and consisted of 12 properties subject to long-term net leases including seven GLs and one master lease (covering five properties). As a result, we deconsolidated the 12 properties and associated liabilities and we began to record our investment in SAFE as an equity method investment.

On June 27, 2017, SAFE completed its initial public offering raising $205.0 million in gross proceeds and concurrently completed a $45.0 million private placement to us. Subsequent to the initial public offering, we purchased 1.3 million shares of SAFE's common stock for $24.5 million at an average cost of $19.20 per share. As of September 30, 2017, we owned approximately 34.6% of SAFE's common stock outstanding which had an estimated market value of $117.4 million. In addition, a wholly-owned subsidiary of ours is the external manager of SAFE and our Chief Executive Officer is the Chairman of SAFE's board of directors.

~~As of September 30, 2017, our consolidated net lease portfolio totaled $1.15 billion gross of $306.2 million of accumulated depreciation. Our net lease~~operating property portfolio, including the carrying value of our equity method investments, ~~in SAFE and the Net Lease Venture~~ totaled ~~$1.34 billion. The table below provides certain statistics for our net lease portfolio.~~

Consolidated
Real Estate
SAFE
Net Lease
Venture
Ownership % 100.0 % 34.6 % 51.9 %
Net book value (millions) $ 844
$ 492
$ 575
Accumulated depreciation (millions) 306
5
43
Gross carrying value (millions) $ 1,150
$ 497
$ 618

Occupancy 97.9 % 100.0 % 100.0 %
Square footage (thousands) 11,486
3,849
4,005
Weighted average lease term (years) 11.0
66.5
14.3
Weighted average yield 8.9 % 3.2 % 8.5 %

~~Operating Properties~~

As of September 30, 2017, our operating property portfolio, including equity method investments, totaled $624.1 million, gross of $57.3 million of accumulated depreciation, and was comprised of $558.4 million of commercial and $65.7 million of residential real estate properties.

~~Commercial Operating Properties~~

Our commercial operating properties represent a diverse pool of assets across a broad range of geographies and collateral types including office, retail and hotel properties. We generally seek to reposition our transitional properties with the objective of

~~maximizing their values through the infusion of capital and/or intensive asset management efforts resulting in value realization upon sale.~~

~~The table below provides certain statistics for our commercial operating property portfolio.~~

Commercial Operating Property Statistics

($ in millions)

Stabilized Operating⁽¹⁾

Transitional Operating⁽¹⁾
Total
September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
Gross book value ($mm)⁽²⁾
$ 401
$ 337
$ 157
$ 189
$ 558
$ 526
Occupancy⁽³⁾
86 % 86 % 56 % 54 % 77 % 74 %
Yield 9.1 % 8.5 % 1.5 % 1.5 % 7.2 % 5.5 %

$135.0 million.


~~(1)~~	Stabilized commercial properties generally have occupancy levels above 80% and/or generate yields resulting in a sufficient return based upon the properties’ risk profiles. Transitional commercial properties are generally those properties that do not meet these criteria.


~~(2)~~	~~Gross carrying value represents carrying value gross of accumulated depreciation.~~


~~(3)~~	~~Occupancy is as of September 30, 2017 and December 31, 2016.~~

~~Residential Operating Properties~~

As of September 30, 2017, our residential operating portfolio was comprised of 32 condominium units generally located within luxury projects in major U.S. cities. The table below provides certain statistics for our residential operating property portfolio (excluding fractional units).

Residential Operating Property Statistics
($ in millions)
Nine Months Ended September 30,
2017 2016
Condominium units sold 16
80
Proceeds $ 21.4
$ 73.3
Income from sales of real estate $ 3.3
$ 23.3

Land and Development

~~As of September 30, 2017, our~~

The following table presents a land and development portfolio ~~gross of accumulated depreciation and including equity method investments, totaled $932.6 million, with eight projects in production, eight in development and 13 in~~rollforward for the ~~pre-development phase. These projects are collectively entitled for approximately 13,000 lots and units. The following tables presents certain statistics for our land and development portfolio.~~

three months ended March 31, 2022.


	Land and Development Portfolio Rollforward
	(in millions)
	Asbury Ocean
	Club and
	Asbury Park		Magnolia		All		Total
	Waterfront		Green		Others		Segment
Beginning balance⁽¹⁾	$	137.8	$	95.8	$	53.2	$	286.8
Asset sales⁽²⁾		(9.7)		(3.4)		(0.5)		(13.6)
Capital expenditures		1.4		3.5		—		4.9
Other		—		(0.6)		(0.1)		(0.7)
Ending balance⁽¹⁾	$	129.5	$	95.3	$	52.6	$	277.4

(1)	As of March 31, 2022, and December 31, 2021, Total Segment excludes $0.2 million and $1.1 million, respectively, of equity method investments.

(2)	Represents gross book value of the assets sold, rather than proceeds received.

Land and Development Portfolio Rollforward
(in millions)
Nine Months Ended September 30,
2017 2016
Beginning balance⁽¹⁾
$ 945.6
$ 1,002.0
Asset sales⁽²⁾
(160.4 ) (40.0 )
Asset transfers in (out)⁽³⁾
—
(25.4 )
Capital expenditures 91.7
92.2
Other (15.4 ) (6.7 )
Ending balance⁽¹⁾
$ 861.5
$ 1,022.1

~~(1)As of September 30, 2017 and December 31, 2016, excludes $63.3 million and $84.8 million, respectively, of equity method investments.~~

~~(2)Represents gross book value of the assets sold, rather than proceeds received.~~

~~(3)Assets transferred into land and development segment or out to another segment.~~

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Land and Development Statistics
(in millions)
Nine Months Ended September 30,
2017 2016
Land development revenue $ 178.7
$ 74.4
Land development cost of sales 165.9
50.8
Gross margin $ 12.8
$ 23.6
Earnings from land development equity method investments 8.4
31.2
Total $ 21.2
$ 54.8

Results of Operations for the Three Months Ended ~~September 30, 2017~~March 31, 2022 compared to the Three Months Ended ~~September 30, 2016~~

For the Three Months Ended September 30,
2017 2016 $ Change % Change
(in thousands)
Operating lease income $ 47,806
$ 46,800
$ 1,006
2 %
Interest income 25,442
32,258
(6,816 ) (21 )%
Other income 20,662
13,442
7,220
54 %
Land development revenue 25,962
31,554
(5,592 ) (18 )%
Total revenue 119,872
124,054
(4,182 ) (3 )%
Interest expense 48,732
55,105
(6,373 ) (12 )%
Real estate expense 36,280
35,243
1,037
3 %
Land development cost of sales 27,512
22,004
5,508
25 %
Depreciation and amortization 11,846
12,201
(355 ) (3 )%
General and administrative 20,955
19,666
1,289
7 %
(Recovery of) provision for loan losses (2,600 ) (14,955 ) 12,355
(83 )%
Impairment of assets 595
8,741
(8,146 ) (93 )%
Other expense 2,704
819
1,885
>100%
Total costs and expenses 146,024
138,824
7,200
5 %
Loss on early extinguishment of debt, net (616 ) (36 ) (580 ) >100%
Earnings from equity method investments 2,461
26,540
(24,079 ) (91 )%
Income tax (expense) benefit 1,278
8,256
(6,978 ) (85 )%
Income from discontinued operations —
3,721
(3,721 ) (100 )%
Income from sales of real estate 19,313
34,444
(15,131 ) (44 )%
Net (loss) income $ (3,716 ) $ 58,155
$ (61,871 ) >(100%)

March 31, 2021


	For the Three Months Ended
	March 31,
	2022		2021		$ Change

	(in thousands)
Operating lease income	$	3,109	$	4,931	$	(1,822)
Interest income		4,948		9,789		(4,841)
Interest income from sales-type leases		356		—		356
Other income		8,640		13,015		(4,375)
Land development revenue		14,900		32,249		(17,349)
Total revenue		31,953		59,984		(28,031)
Interest expense		29,243		28,809		434
Real estate expense		10,117		8,719		1,398
Land development cost of sales		14,496		29,323		(14,827)
Depreciation and amortization		1,357		2,401		(1,044)
General and administrative		1,375		21,439		(20,064)
Provision for (recovery of) loan losses		135		(3,642)		3,777
Provision for losses on net investment in leases		281		—		281
Impairment of assets		—		257		(257)
Other expense		930		253		677
Total costs and expenses		57,934		87,559		(29,625)
Income from sales of real estate		492		612		(120)
Loss on early extinguishment of debt, net		(1,428)		—		(1,428)
Earnings from equity method investments		25,032		11,768		13,264
Income tax (expense) benefit		(3)		698		(701)
Net income from discontinued operations		797,688		22,486		775,202
Net income	$	795,800	$	7,989	$	787,811

Revenue—Operating lease income, which primarily includes income from ~~net lease assets and~~ commercial operating properties, ~~increased~~decreased to ~~$47.8~~$3.1 million during the three months ended ~~September 30, 2017~~March 31, 2022 from ~~$46.8~~$4.9 million for the same period in ~~2016.~~

~~Operating lease~~2021. The decrease was primarily due to the sale of assets, partially offset by an increase in rent at certain of our properties.

Interest income ~~from net lease assets~~ decreased to ~~$31.5~~$4.9 million during the three months ended ~~September 30, 2017~~March 31, 2022 from ~~$32.3~~$9.8 million for the same period in 2016. The decrease was due to the sale of net lease assets since October 1, 2016. Operating lease income from same store net lease assets, defined as net lease assets we owned on or prior to July 1, 2016 and were in service through September 30, 2017, increased to $31.4 million during the three months ended September 30, 2017 and $30.1 million during the three months ended September 30, 2016. The increase was primarily due to an increase in rent per occupied square foot, which was $11.18 for the three months ended September 30, 2017 and $10.59 for the same period in 2016, and was partially offset by a decrease in the occupancy rate, which was 97.9% as of September 30, 2017 and 98.8% as of September 30, 2016.

Operating lease income from operating properties increased to $16.0 million during the three months ended September 30, 2017 from $14.4 million for the same period in 2016. The increase was primarily due to the execution of new leases. Operating lease income from same store commercial operating properties, defined as commercial operating properties, excluding hotels and marinas, which we owned on or prior to July 1, 2016 and were in service through September 30, 2017, increased to $11.9 million during the three months ended September 30, 2017 as compared to $11.6 million for the same period in 2016. The increase was due to an increase in occupancy rates, which were 75.8% as of September 30, 2017 and 71.0% as of September 30, 2016, partially offset by a decrease in rent per occupied square foot, which was $24.72 for the three months ended September 30, 2017 and $25.71 for the same period in 2016. Ancillary operating lease income from land and development assets was $0.3 million and $0.1 million during the three months ended September 30, 2017 and 2016, respectively.

~~Interest income decreased to $25.4 million during the three months ended September 30, 2017 from $32.3 million for the same period in 2016.~~2021. The decrease was due primarily to a decrease in the average balance of our performing loans and other lending investments, which ~~decreased~~

~~to $981.0~~was $279 million ~~in 2017 from $1.42 billion in 2016.~~for the three months ended March 31, 2022 and $526 million for the three months ended March 31, 2021. The weighted average yield on our performing loans ~~increased to 10.1%~~and other lending investments was 7.1% and 7.5%, respectively, for the three months ended ~~September 30, 2017~~March 31, 2022 and 2021.

Interest income from ~~9.1%~~sales-type leases was $0.4 million for the ~~same period in 2016.~~

three months ended March 31, 2022 and resulted from the acquisition of a Ground Lease that was classified as a sales-type lease (refer to Note 5 to the consolidated financial statements).

Other income ~~increased~~decreased to ~~$20.7~~$8.6 million during the three months ended ~~September 30, 2017~~March 31, 2022 from ~~$13.4~~$13.0 million for the same period in ~~2016.~~2021. Other income during the three months ended ~~September 30, 2017~~March 31, 2022 consisted primarily of income from our hotel properties, other ancillary income from our operating properties and interest income on our cash. Other income during the three months ended September 30, 2016 consisted of primarily of management fees, income from our hotel properties and other ancillary income from our land and development projects and operating properties. ~~The increase in~~Other income during the three months ended March 31, 2021 consisted primarily of a mark-to-market gain on an equity investment, management fees, other ancillary income ~~in 2017~~ from ~~2016 was due primarily to an increase in~~our land and development projects and loan portfolio, income atfrom our hotel properties, lease termination fees and ~~an increase in~~ interest income ~~earned~~ on our ~~cash.~~

cash.

Land development revenue and cost of sales—During the three months ended ~~September 30, 2017,~~March 31, 2022, we sold land parcels and residential lots and units and recognized land development revenue of $14.9 million which had associated cost of sales of $14.5 million. During the three months ended March 31, 2021, we sold residential lots and units and recognized land development revenue of ~~$26.0~~$32.2 million which had associated cost of sales of ~~$27.5~~$29.3 million. ~~During the three months ended September 30, 2016, we sold residential lots and units and recognized land development revenue~~

Table of ~~$31.6 million which had associated cost of sales of $22.0 million.~~Contents

Costs and expenses—Interest expense ~~decreased~~increased to ~~$48.7~~$29.2 million during the three months ended ~~September 30, 2017~~March 31, 2022 from ~~$55.1~~$28.8 million for the same period in ~~2016 due~~2021. Our weighted average cost of debt was 4.7% for the three months ended March 31, 2022 compared to ~~a decrease in~~4.5% for the three months ended March 31, 2021. The average balance of our ~~average~~ outstanding debt ~~which decreased to $3.71~~was $2.51 billion for the three months ended ~~September 30, 2017 from $3.96~~March 31, 2022 and $2.61 billion for the same period in ~~2016. Our weighted average cost of debt for the three months ended September 30, 2017 and 2016 was 5.4% and 5.6%, respectively.~~

2021.

Real estate ~~expenses~~expense increased to ~~$36.3~~$10.1 million during the three months ended ~~September 30, 2017~~March 31, 2022 from ~~$35.2~~$8.7 million for the same period in ~~2016.~~2021. The increase was primarily due ~~primarily~~ to an increase in expenses at ~~commercial~~certain of our hotel operating properties that have increased operations from the prior year, which increased to $21.6 million in 2017 from $18.9 million in 2016, primarily resulting from an increase in costs at our hotel properties and losses incurred at properties impacted by the recent hurricanes that hit the United States. This increase was partially offset by ~~a decrease in carry costs~~asset sales.

Depreciation and ~~other expenses on our land assets, which~~amortization decreased to ~~$8.7~~$1.4 million during the three months ended ~~September 30, 2017~~March 31, 2022 from ~~$9.4~~$2.4 million for the same period in ~~2016. Expenses for net lease assets~~2021.

General and administrative expense includes payroll and related costs, performance-based compensation, public company costs and occupancy costs. General and administrative expenses decreased to ~~$4.4~~$1.4 million during the three months ended ~~September 30, 2017~~March 31, 2022 from ~~$4.7~~$21.4 million for the same period in ~~2016. Expenses from same store net lease assets~~2021. The decrease in 2022 was ~~$4.3~~due primarily to a $19.3 million decrease in performance-based compensation. Our primary forms of performance-based compensation are our iPIP Plans and ~~$3.7 million, respectively,~~our annual bonus pool (refer to Note 14 to the consolidated financial statements for more information on the ~~three months ended September 30, 2017 and 2016. Expenses from same store commercial operating properties, excluding hotels and marinas,~~iPIP Plans). In addition, illustrative examples of our iPIP Plans may be found in our 2021 definitive proxy statement which is publicly available on the SEC’s website.

The provision for loan losses was ~~$7.5 million and $7.6~~$0.1 million for the three months ended ~~September 30, 2017 and 2016, respectively. Expenses associated with residential operating properties decreased~~March 31, 2022 as compared to ~~$1.6 million during the three months ended September 30, 2017 from $2.2~~a recovery of loan losses of $3.6 million for the same period in ~~2016 due to the sale of residential units since September 30, 2016.~~

~~Depreciation and amortization decreased to $11.8 million during~~2021. The provision for loan losses for the three months ended ~~September 30, 2017~~March 31, 2022 resulted from ~~$12.2 million for~~ the ~~same period in 2016, primarily due to the sale of net lease and commercial operating properties in since October 1, 2016.~~

General and administrative expenses increased to $21.0 million during the three months ended September 30, 2017 from $19.7 million for the same period in 2016, primarily due to a an increase in compensation expense related to performance incentive plans.

~~The net recovery of loan losses was $2.6 million during the three months ended September 30, 2017 as compared to a net recovery of loan losses of $15.0 million for the same period in 2016.~~accretion on our held-to-maturity security. The recovery of loan losses for the three months ended ~~September 30, 2017 was due to a reduction~~March 31, 2021 resulted from the reversal of Expected Loss allowances on loans that repaid in full in the ~~general reserve due to~~first quarter 2021 and from an ~~overall improvement~~improving macroeconomic forecast on commercial real estate markets since December 31, 2020.

The provision for losses on net investment in ~~the risk ratings of our loan portfolio. The net recovery of loan losses~~leases for the three months ended ~~September 30, 2016 included recoveries of specific reserves of $11.7 million and a reduction in~~March 31, 2022 resulted from the ~~general reserve of $15.8 million, partially offset by a provision~~macroeconomic forecast on ~~one non-performing loan of $12.5 million.~~

~~Impairment of assets~~commercial real estate markets.

Other expense was ~~$0.6~~$0.9 million during the three months ended ~~September 30, 2017~~March 31, 2022 and resulted from the sale of an outparcel of land located at a commercial operating property. During the three months ended September 30, 2016, we recorded an aggregate impairment of $8.7 million from the sale of net lease assets and a change in business strategy on one land asset.

~~Other expense increased to $2.7 million during the three months ended September 30, 2017 from $0.8~~$0.3 million for the same period in ~~2016. The increase was~~2021. Other expenses for the three months ended March 31, 2022 consisted primarily of legal costs.

Income from sales of real estate—During the ~~result~~three months ended March 31, 2022, we recorded $0.5 million of ~~costs incurred in connection with~~income from sales of real estate primarily from the ~~repricing~~sale of ~~our 2016 Senior Secured Credit Facility (refer to Note 10).~~

Ground Leases. During the three months ended March 31, 2021, we recorded $0.6 million of income from sales of real estate from the sale of residential condominiums.

Loss on early extinguishment of debt, net—During the three months ended ~~September 30, 2017,~~March 31, 2022, we incurred losses on early extinguishment of debt of ~~$0.6~~$1.4 million resulting from ~~repayments~~the repayment of our ~~2016 Senior Secured Credit Facility. During~~senior term loan in connection with our Net Lease Sale (refer to Note 3 to the ~~three months ended September 30, 2016, we incurred losses on the early extinguishment of debt of $36 thousand related to repayments of secured facilities and unsecured notes prior to maturity.~~

consolidated financial statements).

Earnings from equity method investments—Earnings from equity method investments ~~decreased~~increased to ~~$2.5~~$25.0 million during the three months ended ~~September 30, 2017~~March 31, 2022 from ~~$26.5~~$11.8 million for the same period in ~~2016.~~2021. During the three months ended ~~September 30, 2017,~~March 31, 2022, we recognized ~~$1.0~~$17.0 million ~~related to operations at~~of income from our ~~Net Lease Venture, $0.9~~equity method investment in SAFE and $8.0 million ~~from land development ventures and $0.6 million was~~of net aggregate income from our remaining equity method investments. During the three months ended ~~September 30, 2016,~~March 31, 2021, we recognized ~~$15.8~~$11.4 million of ~~earnings primarily~~income from ~~the distribution of non-recourse financing proceeds at one of~~ our ~~land~~ equity method ~~investments, $6.2~~investment in SAFE and $0.4 million ~~related to sales activity on a land development venture, $0.7 million related to operations at our Net Lease Venture and $3.8 million was~~of net aggregate income from our remaining equity method investments.

Income tax (expense) benefit—~~An income~~Income tax benefit of ~~$1.3~~$0.7 million was recorded ~~during the three months ended September 30, 2017 as compared to an income tax benefit of $8.3 million for the same period in 2016. The income tax benefit~~ for the three months ended ~~September 30, 2017~~March 31, 2021 and related primarily ~~resulted~~to refunds due us for alternative minimum taxes paid in prior periods.

Net income from ~~a taxable loss incurred and~~discontinued operations—In March 2022, we closed on the ~~deduction for dividends paid to preferred shareholders (refer to Note 13). The income tax benefit for~~sale of the ~~three months ended September 30, 2016 primarily related to taxable losses generated by sales of certain taxable REIT subsidiary ("TRS") properties.~~

~~Discontinued Operations—In April 2017, institutional investors acquired a controlling interest in our GL business through the merger of one~~majority of our ~~subsidiaries~~net lease properties owned directly and ~~related transactions. We received total consideration~~through ventures. Our net lease assets were comprised of ~~$340.0 million, including $113.0 million~~office, entertainment and industrial properties located in ~~cash, including $55.5 million that we contributed to SAFE~~the United States. Our net lease assets associated with our Ground Lease businesses were not included in ~~its initial capitalization, and~~ the ~~proceeds from the $227.0 million 2017 Secured Financing (refer to Note 10). Income~~sale. Net income from discontinued operations represents the operating results from the ~~12 properties comprising our GL business.~~

~~Income from sales of real estate—During the three months ended September 30, 2017, we recognized gains due to sales of~~ net lease assets ~~and residential condominiums~~that are not

Table of $18.8 million and $0.5 million, respectively. During the three months ended September 30, 2016, we recognized gains due to sales of commercial operating properties of $23.4 million, net lease assets of $6.6 million and residential condominiums of $4.4 million.Contents

~~Results of Operations for the Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016~~

For the Nine Months Ended September 30,
2017 2016 $ Change % Change
(in thousands)
Operating lease income $ 142,155
$ 147,270
$ (5,115 ) (3 )%
Interest income 83,145
99,877
(16,732 ) (17 )%
Other income 172,037
35,079
136,958
>100%
Land development revenue 178,722
74,389
104,333
>100%
Total revenue 576,059
356,615
219,444
62 %
Interest expense 148,684
168,173
(19,489 ) (12 )%
Real estate expense 106,554
104,815
1,739
2 %
Land development cost of sales 165,888
50,842
115,046
>100%
Depreciation and amortization 37,297
39,781
(2,484 ) (6 )%
General and administrative 73,347
62,433
10,914
17 %
(Recovery of) provision for loan losses (8,128 ) (12,749 ) 4,621
(36 )%
Impairment of assets 15,292
11,753
3,539
30 %
Other expense 20,849
4,741
16,108
>100%
Total costs and expenses 559,783
429,789
129,994
30 %
Loss on early extinguishment of debt, net (4,142 ) (1,618 ) (2,524 ) >100%
Earnings from equity method investments 13,677
74,254
(60,577 ) (82 )%
Income tax (expense) benefit (972 ) 9,859
(10,831 ) >(100%)
Income from discontinued operations 4,939
10,934
(5,995 ) (55 )%
Gain from discontinued operations 123,418
—
123,418
100 %
Income tax expense from discontinued operations (4,545 ) —
(4,545 ) (100 )%
Income from sales of real estate 28,267
88,387
(60,120 ) (68 )%
Net income $ 176,918
$ 108,642
$ 68,276
63 %

~~Revenue~~—Operating lease income, which primarily includes income from net lease assets and commercial operating properties, decreased to $142.2 million during the nine months ended September 30, 2017 from $147.3 million for the same period in 2016.

Operating lease income from net lease assets decreased to $93.6 million during the nine months ended September 30, 2017 from $95.6 million for the same period in 2016. The decrease was primarily due to the sale of net lease assets since October 1, 2016. Operating lease income from same store net lease assets, defined as net lease assets we owned on or prior to January 1, 2016 and were in service through September 30, 2017, increased to $90.1 million during the nine months ended September 30, 2017 from $88.6 million for the same period in 2016. This increase was primarily due to an increase in rent per occupied square foot to $10.68 for the nine months ended September 30, 2017 from $10.41 for the same period in 2016, partially offset by a decrease in the occupancy rate, which was 97.9% as of September 30, 2017 and 98.8% as of September 30, 2016.

Operating lease income from operating properties decreased to $48.0 million during the nine months ended September 30, 2017 from $51.3 million for the same period in 2016. The decrease was primarily due to commercial operating property sales since October 1, 2016, partially offset by the execution of new leases. Operating lease income from same store commercial operating properties, defined as commercial operating properties, excluding hotels and marinas, which we owned on or prior to January 1, 2016 and were in service through September 30, 2017, increased to $35.3 million during the nine months ended September 30, 2017 as compared to $34.2 million for the same period in 2016. This increase was primarily due to an increase in occupancy rates, which were 75.8% as of September 30, 2017 and 71.0% as of September 30, 2016, partially offset by a decrease in rent per occupied square foot, which was $24.47 for the nine months ended September 30, 2017 and $25.30 for the same period in 2016. Ancillary operating lease income from land and development assets was $0.6 million and $0.3 million during the nine months ended September 30, 2017 and 2016, respectively.

Interest income decreased to $83.1 million during the nine months ended September 30, 2017 from $99.9 million for the same period in 2016. The decrease was due primarily to a decrease in the average balance of

associated with our performing loans, which decreased to $1.15 billion in 2017 from $1.44 billion in 2016. The weighted average yield on our performing loans increased to 9.6% for the nine months ended September 30, 2017 from 8.9% for the same period in 2016.

Other income increased to $172.0 million during the nine months ended September 30, 2017 from $35.1 million for the same period in 2016. Other income during the nine months ended September 30, 2017 primarily consisted of interest income and real estate tax reimbursements resulting from the settlement of litigation involving a dispute over the purchase and sale of land (refer to Note11), income from our hotel properties and other ancillary income from our operating properties. Other income during the nine months ended September 30, 2016 consisted of income from our hotel properties, loan prepayment fees and property tax refunds.

~~Land development revenue and cost of sales~~—During the nine months ended September 30, 2017, we sold residential lots and units and one land parcel totaling 1,250 acres and recognized land development revenue of $178.7 million which had associated cost of sales of $165.9 million. During the nine months ended September 30, 2016, we sold residential lots and units and recognized land development revenue of $74.4 million which had associated cost of sales of $50.8 million. The increase in 2017 from 2016 was primarily due to the resolution of litigation involving a dispute over the purchase and sale of the approximately 1,250 acres of land in Prince George’s County, Maryland, which resulted in us recognizing $114.0 million of land development revenue and $106.3 million of land development cost of salesGround Lease businesses (refer to Note ~~11).~~

~~Costs and expenses~~—Interest expense decreased to $148.7 million during the nine months ended September 30, 2017 from $168.2 million for the same period in 2016 due to a decrease in the balance of our average outstanding debt, which decreased to $3.67 billion for the nine months ended September 30, 2017 from $4.09 billion for the same period in 2016. Our weighted average cost of debt for the nine months ended September 30, 2017 and 2016 was 5.6%.

Real estate expenses increased to $106.6 million during the nine months ended September 30, 2017 from $104.8 million for the same period in 2016. The increase was due to expenses for commercial operating properties, which increased to $62.3 million during the nine months ended September 30, 2017 from $56.1 million for the same period in 2016. This increase was primarily due to an increase in expenses at our hotel properties and losses incurred at properties impacted by the recent hurricanes that hit the United States, partially offset by property sales since October 1, 2016. This increase was partially offset by a decrease in carry costs and other expenses on our land assets, which decreased to $26.1 million during the nine months ended September 30, 2017 from $28.0 million for the same period in 2016. Expenses from same store commercial operating properties, excluding hotels and marinas, decreased to $22.4 million from $22.6 million for the same period in 2016. Expenses associated with residential operating properties decreased to $5.1 million during the nine months ended September 30, 2017 from $7.0 million for the same period in 2016 due3 to the sale of residential units since September 30, 2016. Expenses for net lease assets decreased to $13.1 million during the nine months ended September 30, 2017 from $13.8 million for the same period in 2016. Expenses from same store net lease assets was $12.1 millionconsolidated financial statements - Net Lease Sale and ~~$10.6 million, respectively, for the nine months ended September 30, 2017 and 2016.~~

Depreciation and amortization decreased to $37.3 million during the nine months ended September 30, 2017 from $39.8 million for the same period in 2016, primarily due to the sale of net lease and commercial operating properties in since October 1, 2016.

~~General and administrative expenses increased to $73.3 million during the nine months ended September 30, 2017 from $62.4 million for the same period in 2016, primarily due to~~Discontinued Operations).

Adjusted Earnings

In 2019, we announced a ~~an increase in compensation expense related to performance incentive plans.~~

The net recovery of loan losses was $8.1 million during the nine months ended September 30, 2017 as compared to a net recovery of loan losses of $12.7 million for the same period in 2016. The recovery of loan losses for the nine months ended September 30, 2017 resulted from a reduction in the general reserve due to an overall improvement in the risk ratings of our loan portfolio. Included in the net recovery for the nine months ended September 30, 2016 were recoveries of specific reserves of $11.7 million and a reduction in the general reserve of $14.8 million, partially offset by provisions on two non-performing loans of $13.8 million.

Impairment of assets was $15.3 million during the nine months ended September 30, 2017 and resulted primarily from an impairment on a land and development asset due to a change in our exit strategy and an impairment on a real estate asset held for sale due to shifting demand in the local condominium market along with a change in our exit strategy. During the nine months ended September 30, 2016, we recorded impairments~~of $11.8 million comprised of $3.8 million on a land asset resulting from a change in~~new business strategy ~~$3.0 million~~that would focus our management personnel and our investment resources primarily on scaling our Ground Lease platform. As part of this strategy, we accelerated the monetization of legacy assets and deployed a ~~residential operating property resulting from unfavorable local market conditions and $4.8 million on the sale~~substantial portion of ~~net lease assets.~~

Other expense increased to $20.8 million during the nine months ended September 30, 2017 from $4.7 million for the same period in 2016. The increase was primarily the result of paying organization and offering costs associated with the initial public offering of SAFE (refer to Note 7) and costs incurred in connection with the repricing of our 2016 Senior Secured Credit Facility (refer to Note 10) recorded during the nine months ended September 30, 2017.

~~Loss on early extinguishment of debt, net—~~During the nine months ended September 30, 2017, we incurred losses on early extinguishment of debt of $4.1 million resulting from repayments of unsecured notes prior to maturity and the repricing of our 2016 Senior Secured Credit Facility. During the nine months ended September 30, 2016, we incurred losses on the early extinguishment of debt of $1.6 million related to repayments of secured facilities and unsecured notes prior to maturity.

~~Earnings from equity method investments~~—Earnings from equity method investments decreased to $13.7 million during the nine months ended September 30, 2017 from $74.3 million for the same period in 2016. During the nine months ended September 30, 2017, we recognized $3.8 million primarily from profit participations on a land development venture, $4.8 million related to sales activity on a land development venture, $3.0 million related to operations at our Net Lease Venture and $2.1 million was aggregate income from our remaining equity method investments. During the nine months ended September 30, 2016, we recognized $33.2 million primarily from the sale of an equity method investment in a commercial operating property, $11.6 million of earnings primarily from the distribution of non-recourse financing proceeds at one of our land equity method investments, $19.6 million related to sales activity on a land development venture, $2.6 million related to operations at our Net Lease Venture and $7.3 million was aggregate income from our remaining equity method investments.

~~Income tax (expense) benefit~~—An income tax expense of $1.0 million was recorded during the nine months ended September 30, 2017 as compared to an income tax benefit of $9.9 million for the same period in 2016. The income tax expense for the nine months ended September 30, 2017 primarily related to federal alternative minimum taxes on REIT taxable income generated by the settlement of litigation on the sale of a land parcel. The income tax benefit for the nine months ended September 30, 2016 primarily related to taxable losses generated by sales of certain TRS properties.

~~Discontinued Operations~~—During the nine months ended September 30, 2017, institutional investors acquired a controlling interest in our GL business through the merger of one of our subsidiaries and related transactions. We received total consideration of $340.0 million, including $113.0 million in cash, including $55.5 million that we contributed to SAFE in its initial capitalization, and the proceeds ~~from the $227.0 million 2017 Secured Financing (refer to Note 10). We had a carrying value of approximately $161.1 million~~into additional investments in ~~our GL assets~~SAFE and recognized a gain from discontinued operations of $123.4 million, reflecting the aggregate gain less the fair value of our retained interest in SAFE. Income from discontinued operations represents the operating results from the 12 properties comprising our GL business.

~~Income from sales of real estate~~—During the nine months ended September 30, 2017, we recognized gains due to sales of net lease assets and residential operating properties of $25.0 and $3.3 million, respectively. During the nine months ended September 30, 2016, we recognized gains due to sales of commercial operating properties of $49.2 million, residential condominiums of $23.3 millionnew loan and net lease ~~assets of $15.9 million.~~

originations relating to the Ground Lease business. Adjusted ~~Income~~

~~In addition to net income (loss) prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"), we use adjusted income,~~earnings is a non-GAAP ~~financial measure,~~metric management uses to ~~measure~~assess our ~~operating performance.~~ execution of this strategy and the performance of our operations.

Adjusted ~~income~~earnings is used internally as a supplemental performance measure adjusting for certain ~~non-cash GAAP measures~~items to give management a view of income more directly derived from ~~current~~operating activities in the period ~~activity.~~in which they occur. Adjusted ~~income~~earnings is calculated as net income (loss) allocable to common shareholders, prior to the effect of depreciation and amortization, ~~provision for (recovery of) loan losses, impairment~~including our proportionate share of ~~assets,~~depreciation and amortization from equity method investments and excluding depreciation and amortization allocable to noncontrolling interests, stock-based compensation expense, the non-cash portion of ~~gain (loss)~~loss on early extinguishment of debt and is adjusted for the effect of gains or losses on charge-offs and dispositions on carrying value gross of loan loss reserves and impairments ("Adjusted Income"). In the third quarter 2017, we modified our presentation of Adjusted Income to exclude the effect of the amount of the liquidation preference ~~that was~~ recorded as a premium above book value on the redemption of preferred stock ~~(refer to Note 13) and the imputed non-cash interest expense recognized for the conversion feature of our senior convertible notes (refer to Note 10).~~

(“Adjusted ~~Income~~Earnings”).

Adjusted Earnings should be examined in conjunction with net income (loss) as shown in our consolidated statements of operations. Adjusted ~~Income~~Earnings should not be considered as an alternative to net income (loss) (determined in accordance with ~~GAAP)~~generally accepted accounting principles in the United States of America (“GAAP”)), or to cash flows from operating activities (determined in accordance with GAAP), as a measure of our liquidity, nor is Adjusted ~~Income~~Earnings indicative of funds available to fund our cash needs or available for distribution to shareholders. Rather, Adjusted ~~Income~~Earnings is an additional measure we use to analyze our business performance because it excludes the effects of certain non-cash charges that we believe are not necessarily indicative of our operating ~~performance while including the effect of gains or losses on investments when realized.~~performance. It should be noted that our manner of calculating Adjusted ~~Income~~Earnings may differ from the calculations of similarly-titled measures by other companies.

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
(in thousands)
Adjusted Income
Net income (loss) allocable to common shareholders $ (34,530 ) $ 46,292
$ 115,834
$ 63,210
Add: Depreciation and amortization⁽¹⁾
14,765
15,598
45,438
50,107
Add: (Recovery of) provision for loan losses (2,600 ) (14,955 ) (8,128 ) (12,749 )
Add: Impairment of assets⁽²⁾
595
8,741
15,292
12,668
Add: Stock-based compensation expense 2,934
1,434
12,730
7,644
Add: Loss on early extinguishment of debt, net 616
36
1,392
1,618
Add: Non-cash interest expense on senior convertible notes 110
—
—
110
—
Add: Premium on redemption of preferred stock 16,314
—
16,314
—
Less: Losses on charge-offs and dispositions⁽³⁾
(1,779 ) (8,039 ) (15,906 ) (12,602 )
Less: Participating Security allocation —
—
—
(21 )
Adjusted income (loss) allocable to common shareholders $ (3,575 ) $ 49,107
$ 183,076
$ 109,875


	For the Three Months Ended March 31,
	2022		2021

	(in thousands)
Adjusted Earnings
Net income (loss) allocable to common shareholders	$	610,855	$	(405)
Add: Depreciation and amortization		4,002		17,629
Add: Stock-based compensation (income) expense		(12,427)		5,508
Add: Non-cash portion of loss on early extinguishment of debt		5,109		—
Adjusted earnings allocable to common shareholders	$	607,539	$	22,732


~~(1)~~	Depreciation and amortization also includes our proportionate share of depreciation and amortization expense for equity method investments and excludes the portion of depreciation and amortization expense allocable to noncontrolling interests.


~~(2)~~	For the nine months ended September 30, 2016, impairment of assets includes impairments on equity method investments recorded in "Earnings from equity method investments" in our consolidated statements of operations.


~~(3)~~	Represents the impact of charge-offs and dispositions realized during the period. These charge-offs and dispositions were on assets that were previously impaired for GAAP and reflected in net income but not Adjusted Income.

Liquidity and Capital Resources

During the three months ended ~~September 30, 2017,~~March 31, 2022, we received net proceeds from the Net Lease Sale of approximately $1.2 billion. We invested ~~$140.4~~an aggregate $247 million ~~associated with~~in new investments, prior financing commitments ~~as well as ongoing development during the quarter. Total investments~~and real estate development. Investments included ~~$57.9~~$231 million in ~~lending~~our Ground Lease businesses (including $202 million in shares of SAFE common stock) and ~~other investments, $34.5 million to develop our land and development assets and $48.0~~$16 million of loan fundings and capital ~~to reposition or redevelop our operating properties~~expenditures on legacy and ~~invest in net lease~~strategic assets. Also during the three months ended September 30, 2017, we generated $247.0 million of proceeds from loan repayments and asset sales within our portfolio, comprised of $137.7 million from real estate finance, $7.3 million from operating properties, $61.4 million from net lease assets, $32.1 million from land and development assets and $8.5 million from other investments. These amounts are inclusive of fundings ~~and proceeds~~ from ~~both~~our consolidated investments and our pro rata share from equity method investments.

Table of Contents

The following table outlines our capital expenditures on ~~real estate~~operating properties, net lease and land and development assets as reflected in our consolidated statements of cash flows for the three months ended March 31, 2022 and 2021, by segment ($ in thousands):

For the Nine Months Ended September 30,
2017 2016
Operating Properties $ 22,308
$ 33,367
Net Lease 2,583
2,307
Total capital expenditures on real estate assets $ 24,891
$ 35,674

Land and Development $ 84,966
$ 58,961
Total capital expenditures on land and development assets $ 84,966
$ 58,961


	For the Three Months Ended March 31,
	2022		2021
Operating Properties	$	239	$	96
Net Lease		502		552
Total capital expenditures on real estate assets	$	741	$	648

Land and Development	$	4,803	$	4,134
Total capital expenditures on land and development assets	$	4,803	$	4,134

As of ~~September 30, 2017,~~March 31, 2022, we had unrestricted cash of ~~$1.9 billion; however, we used approximately $1.4~~$1.5 billion ~~subsequent to September 30, 2017 to redeem several series~~and $350 million of ~~our unsecured notes and preferred stock, as discussed above~~borrowing capacity available under ~~"Executive Overview."~~the Revolving Credit Facility. Our primary cash uses over the next 12 months are expected to be funding of investments in our Ground Lease and Ground Lease adjacent businesses, distributions to noncontrolling interests resulting from the Net Lease Sale (refer to Note 3 to the consolidated financial statements), repayment of debt obligations (refer to Note 10 to the consolidated financial statements), capital expenditures on legacy assets, distributions to shareholders through dividends and share repurchases and funding ongoing business ~~operations. Over~~operations, including operating lease payments (refer to Note 11 to the next 12 months, we currently expect to fund in the range of approximately $175.0 million to $225.0 million of capital expenditures within our portfolio. The majority of these amounts relate to our land and development and operating properties business segments and include multifamily and residential development activities which are expected to include approximately $100.0 million in vertical construction. consolidated financial statements). The amount ~~spent~~we actually invest will depend on the ~~pace~~closing of asset sales, the continuing impact of the COVID-19 pandemic, inflation, interest rate increases, market volatility and other macroeconomic factors on our business.

In April 2022, we completed separate, privately-negotiated transactions with holders of $194 million aggregate principal amount of our ~~development activities as well as~~3.125% convertible notes (refer to Note 18 to the ~~extent to~~consolidated financial statements) in which the noteholders exchanged their convertible notes with us for 13.75 million newly issued shares of our common stock and aggregate cash payments of $14 million. Our remaining $94 million aggregate principal amount of our 3.125% convertible notes mature in September 2022, and we ~~strategically partner with others to complete these projects. As~~must repay them in a combination of ~~September 30, 2017, we~~cash and shares of our common stock. We also had approximately ~~$419.8~~$128.4 million of maximum unfunded commitments associated with our investments as of March 31, 2022, of which we expect to fund the majority of over the next two years, assuming borrowers and tenants meet all milestones, performance hurdles and all other conditions to fundings (see ~~"Unfunded Commitments"~~“Unfunded Commitments” below). We also have approximately $138.4 million principal amount of scheduled real estate finance maturities over the next 12 months, exclusive of any extension options that can be exercised by our borrowers.

We expect that we will be able to meet our liquidity requirements over the next 12 months and for the reasonably foreseeable future. Our capital sources to meet such cash ~~uses through the next 12 months and beyond will primarily be~~requirements are expected to include cash on hand, including proceeds from the Net Lease Sale, Revolving Credit Facility borrowings, income from our portfolio, loan repayments from borrowers and proceeds from asset sales.

We cannot predict with certainty the specific transactions we will undertake to generate sufficient liquidity to meet our obligations as they come due. We will adjust our plans as appropriate in response to changes in our expectations and changes in market conditions. ~~While economic trends~~

We also have ~~stabilized, it~~amounts due under our liability-classified and equity-classified iPIP Plans. We currently estimate the total amount due under our iPIP Plans to be $219 million, assuming SAFE is ~~not possible for us to predict whether these trends will continue or to quantify the impact~~valued at a price of ~~these or~~$43.05 per share and our other ~~trends on~~assets perform with current underwriting expectations. Of this amount, $114 million has been accrued in our financial ~~results.~~

~~Contractual Obligations~~—The following table outlines the contractual obligations related to our long-term debt obligations, loan participations payable, operating lease obligations and accounts payable related to the redemption of our Series E and Series F preferred stock as of ~~September 30, 2017~~statements (refer to Note 1014 to the consolidated financial statements).

Amounts Due By Period
Total
Less Than 1
Year

1 - 3
Years

3 - 5
Years

5 - 10
Years

After 10
Years
(in thousands)
Long-Term Debt Obligations:

Unsecured notes⁽¹⁾
$ 3,620,000

$ 1,150,000

$ 1,170,000

$ 1,300,000

$ —

$ —
Secured credit facilities 400,000

4,000

8,000

388,000

—

—
Mortgages 223,182

17,465

39,449

116,994

49,274

—
Trust preferred securities 100,000

—

—

—

—

100,000
Total principal maturities 4,343,182

1,171,465

1,217,449

1,804,994

49,274

100,000
Interest Payable⁽²⁾
663,822

198,333

273,116

153,470

15,176

23,727
Loan Participations Payable⁽³⁾
122,846
115,243
7,603
—
—
—
Operating Lease Obligations 19,159

5,408

7,819

3,018

2,914

—
Accounts Payable⁽⁴⁾
241,830
241,830
—
—
—
—
Total $ 5,390,839

$ 1,732,279

$ 1,505,987

$ 1,961,482

$ 67,364

$ 123,727


~~(1)~~	Subsequent to September 30, 2017, we repaid the $550.0 million principal amount outstanding of our 4.0% senior unsecured notes due November 2017, the $300.0 million principal amount outstanding of our 7.125% senior unsecured notes due February 2018 and the $300.0 million principal amount outstanding of our 4.875% senior unsecured notes due July 2018.

~~(2)~~

Variable-rate debt assumes 1-month LIBOR of 1.23% and 3-month LIBOR of 1.34% that were in effect as of September 30, 2017. Interest payable includes $36.3 million of aggregate interest payable on the $550.0 million principal amount of 4.0% senior unsecured notes due November 2017, the $300.0 million principal amount of 7.125% senior unsecured notes due February 2018 and the $300.0 million principal amount of 4.875% senior unsecured notes due July 2018 that were all repaid in October 2018.


~~(3)~~	~~Refer to Note 9 to the consolidated financial statements.~~


~~(4)~~	On September 19, 2017, we gave irrevocable notice to redeem all of our issued and outstanding Series E and Series F preferred stock for the aggregate liquidation preference of $240.0 million, plus accrued and unpaid dividends of $1.8 million to the redemption date, on October 20, 2017 (refer to Note 13).

~~2017 Secured Financing~~—In March 2017, we (through wholly-owned subsidiaries conducting our GL business) entered into a $227.0 million secured financing transaction (the "2017 Secured Financing") that accrued interest at 3.795% and matures in April 2027. The 2017 Secured Financing was collateralized by the 12 properties comprising our GL business, including seven GLs and one master lease (covering the accounts of five properties). In connection with the 2017 Secured Financing, we incurred $7.3 million of lender and third-party fees, substantially all, of which ~~was capitalized~~$39 million will be paid in ~~"Debt obligations, net"~~cash and shares of our common stock in the second quarter of 2022 resulting from the Net Lease Sale. Distributions on our ~~consolidated balance sheets. In April 2017,~~iPIP Plans are expected to be 50% in cash and 50% in shares of our common stock; provided, however, that (a) the cash portion will be increased if we ~~derecognized~~do not have sufficient shares available under shareholder approved equity plans; and (b) if the ~~2017 Secured Financing when third parties acquired~~principal remaining material asset in a ~~controlling interest~~plan is unsold SAFE shares, we may elect to distribute SAFE shares in lieu of cash and our common stock. Additional information on our iPIP Plans can be found in our 2021 Annual Report and our 2021 Proxy Statement, both of which are available on our website.

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The following table outlines our cash flows provided by operating activities, cash flows used in investing activities and cash flows provided by financing activities for the three months ended March 31, 2022 and 2021 ($ in thousands):


	For the Three Months Ended March 31,
	2022		2021

Cash flows used in operating activities	$	(30,624)	$	(3,795)
Cash flows provided by investing activities		2,417,867		137,635
Cash flows used in financing activities		(1,229,992)		(36,414)

The decrease in cash flows provided by operating activities during 2022 was due primarily to a decrease in the ~~Company's GL business~~collection of deferred interest on loans. The increases in cash flows provided by investing activities and cash flows used in financing activities during 2022 was due primarily to the Net Lease Sale (refer to Note ~~4).~~

~~2016 Secured Term Loan~~—In December 2016, we arranged a $170.0 million delayed draw secured term loan (the "2016 Secured Term Loan"). In March 2017, we allowed the 2016 Secured Term Loan to expire and replaced the 2016 Secured Term Loan with the 2017 Secured Financing. The 2016 Secured Term Loan was collateralized by the 12 properties that served as collateral for the 2017 Secured Financing.

~~2016 Senior Secured Credit Facility~~—In June 2016, we entered into a senior secured credit facility of $450.0 million (the "2016 Senior Secured Credit Facility"). In August 2016, we upsized the facility to $500.0 million. The initial $450.0 million of the 2016 Senior Secured Credit Facility was issued at 99% of par and the upsize was issued at par. In January 2017, we repriced the 2016 Senior Secured Credit Facility to LIBOR plus 3.75% with a 1.00% LIBOR floor from LIBOR plus 4.50% with a 1.00% LIBOR floor. In September 2017, we downsized, repriced and extended the 2016 Senior Secured Credit Facility to $400.0 million priced at LIBOR plus 3.00% with a 0.75% LIBOR floor and maturing in October 2021. These transactions resulted in an aggregate 1.50% reduction in price.

The 2016 Senior Secured Credit Facility is collateralized 1.25x by a first lien on a fixed pool of assets. Proceeds from principal repayments and sales of collateral are applied to amortize the 2016 Senior Secured Credit Facility. Proceeds received for interest, rent, lease payments and fee income are retained by us. We may also make optional prepayments, subject to prepayment fees, and are required to repay 0.25% of the principal amount on the first business day of each quarter.

~~2015 Secured Revolving Credit Facility~~—In March 2015, we entered into a secured revolving credit facility with a maximum capacity of $250.0 million (the "2015 Secured Revolving Credit Facility"). In September 2017, we upsized the 2015 Secured Revolving Credit Facility to $325.0 million, added additional lenders3 to the syndicate, extended the maturity date to September 2020 and made certain other changes. Borrowings under this credit facility bear interest at a floating rate indexed to one of several base rates plus a margin which adjusts upward or downward based upon our corporate credit rating. An undrawn credit facility commitment fee ranges from 0.30% to 0.50%, based on corporate credit ratings each quarter. At maturity, we may convert outstanding borrowings to a one-year term loan which matures in quarterly installments through September 2021. As of September 30, 2017, based on our borrowing base of assets, we had $325.0 million of borrowing capacity available under the 2015 Secured Revolving Credit Facility.

~~Unsecured Notes~~—In September 2017, our corporate credit rating was upgraded by Moody's, S&P and Fitch and we issued $400.0 million principal amount of 4.625% senior unsecured notes due September 2020, $400.0 million principal amount of 5.25% senior unsecured notes due September 2022 and $250.0 million of 3.125% Convertible Notes due September 2022. Subsequent to September 30, 2017, proceeds from these offerings, together with cash on hand, were used to repay in full the $550.0 million principal amount outstanding of our 4.0% senior unsecured notes due November 2017, the $300.0 million principal amount outstanding of our 7.125% senior unsecured notes due February 2018 and the $300.0 million principal amount outstanding of our 4.875% senior unsecured notes due July 2018. In addition, subsequent to September 30, 2017, the initial purchasers of the 3.125% Convertible Notes exercised their option to purchase an additional $37.5 million aggregate principal amount of the 3.125% Convertible Notes.

In March 2017, we issued $375.0 million principal amount of 6.00% senior unsecured notes due April 2022. Proceeds from the offering were primarily used to repay in full the $99.7 million principal amount outstanding of our 5.85% senior unsecured notes due March 2017 and repay in full the $275.0 million principal amount outstanding of our 9.00% senior unsecured notes due June 2017. In March 2016, we repaid the $261.4 million principal amount outstanding of our 5.875% senior unsecured notes at maturity using available cash. In addition, we issued $275.0 million principal amount of 6.50% senior unsecured notes due July 2021. Proceeds from the offering were primarily used to repay in full the $265.0 million principal amount outstanding of our senior unsecured notes due July 2016 and repay $5.0 million of the 2015 Secured Revolving Credit Facility.

~~Encumbered/Unencumbered Assets—The carrying value of our encumbered and unencumbered assets by asset type are as follows ($ in thousands):~~

consolidated financial statements).


~~(1)~~	~~As of September 30, 2017 and December 31, 2016, the amounts presented exclude general reserves for loan losses of $15.2 million and $23.3 million,~~

~~respectively.~~


~~(2)~~	~~As of September 30, 2017 and December 31, 2016, the amounts presented exclude loan participations of $122.2 million and $159.1 million, respectively.~~

Debt Covenants—Our outstanding unsecured debt securities contain corporate level covenants that include a covenant to maintain a ratio of unencumbered assets to unsecured indebtedness, as such terms are defined in the indentures governing the debt securities, of at least ~~1.2~~x1.3x and a covenant ~~not to incur additional indebtedness (except for~~restricting certain incurrences of ~~permitted debt), if~~debt based on a ~~pro forma basis, our consolidated~~ fixed charge coverage ~~ratio, determined in accordance with the indentures governing our debt securities, is 1.5x or lower.~~ratio. If any of our covenants are breached and not cured within applicable cure periods, the breach could result in acceleration of our debt securities unless a waiver or modification is agreed upon with the requisite percentage of the bondholders. If our ability to incur additional indebtedness under the fixed charge coverage ratio is limited, we are permitted to incur indebtedness for the purpose of refinancing existing indebtedness and for other permitted purposes under the indentures.

The ~~2016 Senior Secured Credit Facility and the 2015 Secured~~ Revolving Credit Facility ~~contain~~contains certain covenants, including covenants relating to collateral coverage, ~~dividend payments,~~ restrictions on fundamental changes, transactions with affiliates, matters relating to the liens granted to the lenders and the delivery of information to the lenders. ~~In particular, the 2016 Senior~~

~~Secured Credit Facility requires us to maintain collateral coverage of at least 1.25x outstanding borrowings on the facility.~~ The ~~2015 Secured~~ Revolving Credit Facility is secured by a borrowing base of assets and requires us to maintain both ~~collateral coverage~~borrowing base asset value of at least 1.5x outstanding borrowings on the facility and a consolidated ratio of cash flow to fixed charges of at least 1.5x. The ~~2015 Secured~~ Revolving Credit Facility does not require that proceeds from the borrowing base be used to pay down outstanding borrowings provided the ~~collateral coverage~~borrowing base asset value remains at least 1.5x outstanding borrowings on the facility. To satisfy this covenant, we have the option to pay down outstanding borrowings or substitute assets in the borrowing base. ~~In addition, for so long as we maintain our qualification as a REIT,~~Under the ~~2016 Senior Secured Credit Facility and the 2015 Secured~~ Revolving Credit Facility ~~permit us~~we are permitted to ~~distribute 100%~~pay dividends provided that no material default (as defined in the relevant agreement) has occurred and is continuing or would result therefrom and we remain in compliance with our financial covenants after giving effect to the dividend. We declared common stock dividends of ~~our REIT taxable income on an annual basis (prior to deducting certain cumulative NOL carryforwards).~~

$8.7 million, or $0.125 per share, for the three months ended March 31, 2022.

Derivatives—Our use of derivative financial instruments, isif necessary, has primarily been limited to the utilization of interest rate swaps, interest rate caps or other instruments to manage interest rate risk exposure and foreign exchange contracts to manage our risk to changes in foreign currencies. Refer to Note 12 to the consolidated financial statements.

~~Off-Balance Sheet Arrangements~~—We are not dependent on the use of any off-balance sheet financing arrangements for liquidity. We have made investments in various unconsolidated ventures. Refer to Note 7 to the consolidated financial statements for further details of our unconsolidated investments. Our maximum exposure to loss from these investments is limited to the carrying value of our investments and any unfunded commitments (see below).

Unfunded Commitments—We generally fund construction and development loans and build-outs of space in ~~net lease~~real estate assets over a period of time if and when the borrowers and tenants meet established milestones and other performance criteria. We refer to these arrangements as Performance-Based Commitments. In addition, we have

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committed to invest capital in several real estate funds and other ventures. These arrangements are referred to as Strategic Investments.

As of ~~September 30, 2017~~,March 31, 2022, the maximum ~~amounts~~amount of ~~the~~ fundings we may be obligated to make under each category, assuming all performance hurdles and milestones are met under the Performance-Based Commitments and assuming that 100% of our capital committed to Strategic Investments is drawn down, are as follows (in thousands):


	Loans and Other
	Lending				Other
	Investments			Real Estate	Investments		Total
Performance-Based Commitments	$	4,235	$	8,111	$	108,650	$	120,996
Strategic Investments		—		5,061		2,325		7,386
Total	$	4,235	$	13,172	$	110,975	$	128,382


~~(1)~~	~~Excludes $115.3 million of commitments on loan participations sold that are not our obligation.~~

Stock Repurchase Program—~~In February 2016, after having substantially utilized~~We may repurchase shares in negotiated transactions or open market transactions, including through one or more trading plans. During the ~~remaining availability previously~~three months ended March 31, 2021, we repurchased 0.7 million shares of our outstanding common stock for $12.4 million, for an average cost of $17.20 per share. We are generally authorized ~~our Board of Directors authorized a new~~to repurchase up to $50.0 million in shares of our common stock ~~repurchase program. After having substantially utilized the availability authorized~~and in February ~~2016,~~2022, our ~~Board~~board of ~~Directors~~directors authorized an increase to the stock repurchase program to $50.0 million, effective August 4, 2016. The program authorizes the repurchase of common stock from time to time in open market and privately negotiated purchases, including pursuant to one or more trading plans. In connection with the sale of the 3.125% Convertible Notes in September 2017 (refer to Note 10 in the consolidated financial statements), we repurchased 4.0 million shares of our common stock for $45.9 million at an average cost of $11.51 per share in privately negotiated transactions with purchasers of the 3.125% Convertible Notes. During the nine months ended September 30, 2016, we repurchased 10.2 million shares of our common stock for $98.4 million, at an average cost of $9.67 per share.million. As of ~~September 30, 2017,~~March 31, 2022, we had remaining authorization to repurchase up to ~~$4.1~~$50.0 million of common stock under our stock repurchase program.

~~Preferred Equity~~—Subsequent to September 30, 2017, we redeemed our Series E and Series F preferred stock at par for the aggregate liquidation preference of $240.0 million plus accrued and unpaid dividends in the amount of $1.8 million to the redemption date (refer to Note 13 in the consolidated financial statements).

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments in certain circumstances that affect amounts reported as assets, liabilities, revenues and expenses. We have established detailed policies and control procedures intended to ensure that valuation methods, including any judgments made as part of such methods, are well controlled, reviewed and applied consistently from period to period. We base our estimates on historical corporate and industry experience and various other assumptions that we believe to be appropriate under the circumstances. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and, therefore, routinely require adjustment.

~~On January 1, 2017, we adopted Accounting Standards Update ("ASU") 2016-09,~~ ~~Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting,~~ which simplified several aspects of the accounting for share-based payment transactions, including income tax, classification of awards as either equity or liabilities and classification on the statement of cash flows. The adoption did not have a material impact on our consolidated financial statements.

~~As of September 30, 2017, the remainder of our significant accounting policies, which are detailed in our 2016 Annual Report, have not changed materially.~~

~~New Accounting Pronouncements~~—

For a discussion of ~~the impact of new~~our critical accounting ~~pronouncements on our financial condition or results of operations,~~policies, refer to Note 3 to the consolidated financial ~~statements.~~statements and our 2021 Annual Report.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risks

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices. In pursuing our business plan, the primary market risk to which we are exposed is interest rate risk. Our operating results will depend in part on the difference between the interest and related income earned on our assets and the interest expense incurred in connection with our interest-bearing liabilities. Changes in the general level of interest rates prevailing in the financial markets will affect the spread between our floating rate assets and liabilities subject to the net amount of floating rate assets/liabilities and the impact of interest rate floors and caps. Any significant compression of the spreads between interest-earning assets and interest-bearing liabilities could have a material adverse effect on us.

In the event of a significant rising interest rate environment or economic downturn, defaults could increase and cause us to incur additional credit losses which would adversely affect our liquidity and operating results. Such delinquencies or defaults would likely have a material adverse effect on the spreads between interest-earning assets and interest-bearing liabilities. In addition, an increase in interest rates could, among other things, reduce the value of our fixed-rate interest-bearing assets and our ability to realize gains from the sale of such assets.

Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control. We monitor the spreads between our interest-earning assets and interest-bearing liabilities and may implement hedging strategies to limit the effects of changes in interest rates on our operations, including engaging in interest rate swaps, interest rate caps and other interest rate-related derivative contracts. Such strategies are designed to reduce our exposure, on specific transactions or on a portfolio basis, to changes in cash flows as a result of interest rate movements in the market. We do not enter into derivative contracts for speculative purposes or as a hedge against changes in our credit risk or the credit risk of our borrowers.

While a REIT may utilize derivative instruments to hedge interest rate risk on its liabilities incurred to acquire or carry real estate assets without generating non-qualifying income, use of derivatives for other purposes will generate non-qualified income for REIT income test purposes. This includes hedging asset related risks such as credit and interest rate exposure on our loan assets. As a result, our ability to hedge these types of risks is limited. There can be no assurance that our profitability will not be materially adversely affected during any period as a result of changing interest rates.

The following table quantifies the potential changes in annual net income, assuming no change in our interest earning assets or interest bearing liabilities, should interest rates decrease by 10 basis points or increase by 10, 50 or 100 ~~basis points or decrease by 10~~ basis points, assuming no change in the shape of the yield curve (i.e., relative interest rates). The base interest rate scenario assumes the one-month LIBOR rate of ~~1.23%~~0.45% as of ~~September 30, 2017.~~March 31, 2022. Actual results could differ significantly from those estimated in the table.

Estimated Change In Net Income

($ in thousands)


Change in Interest Rates		Net Income⁽¹⁾
-10 Basis Points	$	(1,451)
Base Interest Rate		—
+10 Basis Points		1,451
+50 Basis Points		7,256
+100 Basis Points		14,512

Change in Interest Rates
Net Income⁽¹⁾
-10 Basis Points $ (2,048 )
Base Interest Rate —
+10 Basis Points 2,048
+50 Basis Points 10,242
+100 Basis Points 20,483

(1)

WeAs of March 31, 2022, we have an overall net variable-rate asset ~~position, which results in an increase in net income when rates increase and a decrease in net income when rates decrease. As~~position. In addition, as of ~~September 30, 2017, $451.5~~March 31, 2022, $138.3 million of our floating rate loans have a ~~cumulative~~ weighted average interest rate floor of ~~0.3% and $522.8 million of our floating rate debt has a cumulative weighted average interest rate floor of 0.7%~~2.1%.

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Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the ~~Company's~~Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange ~~Commission's~~Commission’s rules and forms, and that such information is accumulated and communicated to the ~~Company's~~Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company has formed a disclosure committee that is responsible for considering the materiality of information and determining the disclosure obligations of the Company on a timely basis. The disclosure committee reports directly to the ~~Company's~~Company’s Chief Executive Officer and Chief Financial Officer.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the disclosure committee and other members of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the ~~Company's~~Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) or Rule 15d-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the ~~Company's~~Company’s disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act isis: (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and ~~forms~~forms; and (ii) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

There have been no changes during the last fiscal quarter in the ~~Company's~~Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the ~~Company's~~Company’s periodic reports.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to ~~its~~the Company’s business as a finance and investment company focused on the commercial real estate ~~and real estate related business activities,~~industry, including ~~loan foreclosure and~~ foreclosure-related proceedings. ~~In addition to such matters, the~~The Company believes it is not a party to, nor are any of its properties the ~~following~~subject of, any pending legal ~~proceedings:~~

~~U.S. Home Corporation ("Lennar") v. Settlers Crossing, LLC, et al. (United States District Court for the District of Maryland, Civil Action No. DKC 08-1863)~~

~~This litigation involved~~proceeding that would have a dispute over the purchase and sale of approximately 1,250 acres of land in Prince George’s County, Maryland. Following a trial, in January 2015, the United States District Court for the District of Maryland (the District Court) entered judgment in favor of the Company, finding that the Company was entitled to specific performance of the purchase and sale agreement and awarding the Company the aggregate amount of: (i) the remaining unpaid purchase price; plus (ii) simple interestmaterial adverse effect on the unpaid amount at a rate of 12% annually from 2008; plus (iii) real estate taxes paid by the Company; plus (iv) actual and reasonable attorneys' fees and costs incurred by the Company in connection with the litigation. Lennar appealed the District Court's judgment. On April 12, 2017, the United States Court of Appeals for the Fourth Circuit affirmed the judgment of the District Court in its entirety. Lennar’s petition for rehearing ~~en banc~~ ~~was summarily denied.~~

On April 21, 2017, we and Lennar completed the transfer of the land, pursuant to which we conveyed the land to Lennar and received net proceeds of $234.1 million after payment of $3.3 million in documentary transfer taxes, consisting of $114.0 million of sales proceeds, $121.8 million of interest and $1.6 million of real estate tax reimbursements. The amount of attorneys’ fees and costs to be recovered by us will be determined through further proceedings before the District Court. We have applied for attorney’s fees in excess of $17.0 million. A portion of the net proceeds received by us has been paid to the third party which holds a 4.3% participation interest in all proceeds received by us.

Company’s consolidated financial statements.

Item ~~1a.~~1A. Risk Factors

There were no material changes from the risk factors previously disclosed in ~~the Company's 2016~~our 2021 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~The following table sets forth the information with respect to purchases made by or on behalf~~

Issuer Purchases of ~~the Company~~Equity Securities

We did not purchase any shares of ~~its~~our common stock during the three months ended ~~September 30, 2017.~~

Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan
Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans⁽¹⁾
July 1 to July 31 —
$ —
—
$ 50,000,000
August 1 to August 31 —
$ —
—
$ 50,000,000
September 1 to September 30 3,990,300
$ 11.51
3,990,300
$ 4,071,647

March 31, 2022. As of March 31, 2022, we had remaining authorization to repurchase up to $50.0 million of common stock under our stock repurchase program.


~~(1)~~	In August 2016, the Company's Board of Directors authorized an increase to $50.0 million in the stock repurchase program. The program authorizes the repurchase of common stock from time to time in open market and privately negotiated purchases, including pursuant to one or more trading plans. There is no fixed expiration date to this stock repurchase program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

~~None.~~

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Item 6. Exhibits

INDEX TO EXHIBITS


Exhibit Number		Document Description
~~Exhibit~~ ~~Number~~ 31.0	~~Document Description~~
~~10.1~~	~~$325 million Amended and Restated Credit Agreement, dated as of September 27, 2017, among iStar Inc., the Banks listed therein and JPMorgan Chase Bank, N.A., as administrative agent~~
~~31.0~~	Certifications pursuant to Section 302 of the Sarbanes-Oxley ~~Act.~~Act .
32.0		Certifications pursuant to Section 906 of the Sarbanes-Oxley ~~Act.~~Act.
101*		The following financial information from the ~~Company's~~Company’s Quarterly Report on Form 10-Q for the period ended ~~September 30, 2017~~March 31, 2022 is formatted in Inline XBRL ("(“eXtensible Business Reporting ~~Language"~~Language”): (i) the Consolidated Balance Sheets (unaudited) as of ~~September 30, 2017 (unaudited)~~March 31, 2022 and December 31, ~~2016,~~2021, (ii) the Consolidated Statements of Operations (unaudited) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, (iii) the Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, (iv) the Consolidated Statements of Changes in Equity (unaudited) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, (v) the Consolidated Statements of Cash Flows (unaudited) for ~~the nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 and (vi) the Notes to the Consolidated Financial Statements (unaudited).
104		Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)

*
*	In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Exchange Act of 1934 and otherwise is not subject to liability under these sections.

~~SIGNATURES~~

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SIGNATURES

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, ~~as amended,~~ the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		~~iStar Inc.~~	~~Registrant~~
~~Date:~~		~~November 2, 2017~~ iStar Inc. Registrant

Date:	May 4, 2022	/s/ JAY SUGARMAN
			Jay Sugarman
		Chairman of the Board of Directors and Chief
		Executive Officer (principal executive officer)




		iStar Inc. Registrant
Date:	May 4, 2022	/s/ BRETT ASNAS
		Brett Asnas
		Chief Financial Officer
		(principal financial officer)

RETT

			iStar Inc. Registrant
Date:	~~November 2, 2017~~ May 4, 2022	/s/ ~~GEOFFREY G. JERVIS~~GARETT ROSENBLUM
		Garett Rosenblum
		~~Geoffrey G. Jervis~~ Chief ~~Operating~~Accounting Officer ~~and Chief Financial Officer (principal financial and accounting officer)~~



	As of
	September 30, 2017 (unaudited)			December 31, 2016
ASSETS
Real estate
Real estate, at cost	$	1,687,318		$	1,740,893
Less: accumulated depreciation	(363,456		)	(353,619		)
Real estate, net	1,323,862			1,387,274
Real estate available and held for sale	65,658			237,531
Total real estate	1,389,520			1,624,805
Land and development, net	861,507			945,565
Loans receivable and other lending investments, net	1,109,442			1,450,439
Other investments	289,037			214,406
Cash and cash equivalents	1,912,448			328,744
Accrued interest and operating lease income receivable, net	10,849			11,254
Deferred operating lease income receivable, net	87,696			88,189
Deferred expenses and other assets, net	134,720			162,112
Total assets	$	5,795,219		$	4,825,514
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	466,374		$	211,570
Loan participations payable, net	122,489			159,321
Debt obligations, net	4,278,954			3,389,908
Total liabilities	4,867,817			3,760,799
Commitments and contingencies (refer to Note 11)	—			—
Redeemable noncontrolling interests	3,513			5,031
Equity:
iStar Inc. shareholders' equity:
Preferred Stock Series D, E, F, G and I, liquidation preference $25.00 per share (refer to Note 13)	12			22
Convertible Preferred Stock Series J, liquidation preference $50.00 per share (refer to Note 13)	4			4
Common Stock, $0.001 par value, 200,000 shares authorized, 68,200 and 72,042 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	68			72
Additional paid-in capital	3,357,489			3,602,172
Retained earnings (deficit)	(2,465,654		)	(2,581,488		)
Accumulated other comprehensive income (loss) (refer to Note 13)	(3,830		)	(4,218		)
Total iStar Inc. shareholders' equity	888,089			1,016,564
Noncontrolling interests	35,800			43,120
Total equity	923,889			1,059,684
Total liabilities and equity	$	5,795,219		$	4,825,514



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Operating lease income	$	47,806		$	46,800		$	142,155		$	147,270
Interest income	25,442			32,258			83,145			99,877
Other income	20,662			13,442			172,037			35,079
Land development revenue	25,962			31,554			178,722			74,389
Total revenues	119,872			124,054			576,059			356,615
Costs and expenses:
Interest expense	48,732			55,105			148,684			168,173
Real estate expense	36,280			35,243			106,554			104,815
Land development cost of sales	27,512			22,004			165,888			50,842
Depreciation and amortization	11,846			12,201			37,297			39,781
General and administrative	20,955			19,666			73,347			62,433
(Recovery of) provision for loan losses	(2,600		)	(14,955		)	(8,128		)	(12,749		)
Impairment of assets	595			8,741			15,292			11,753
Other expense	2,704			819			20,849			4,741
Total costs and expenses	146,024			138,824			559,783			429,789
Income (loss) before earnings from equity method investments and other items	(26,152		)	(14,770		)	16,276			(73,174		)
Loss on early extinguishment of debt, net	(616		)	(36		)	(4,142		)	(1,618		)
Earnings from equity method investments	2,461			26,540			13,677			74,254
Income (loss) from continuing operations before income taxes	(24,307		)	11,734			25,811			(538		)
Income tax (expense) benefit	1,278			8,256			(972		)	9,859
Income (loss) from continuing operations	(23,029		)	19,990			24,839			9,321
Income from discontinued operations	—			3,721			4,939			10,934
Gain from discontinued operations	—			—			123,418			—
Income tax expense from discontinued operations	—			—			(4,545		)	—
Income from sales of real estate⁽¹⁾	19,313			34,444			28,267			88,387
Net income (loss)	(3,716		)	58,155			176,918			108,642
Net (income) loss attributable to noncontrolling interests	160			967			(4,450		)	(6,915		)
Net income (loss) attributable to iStar Inc.	(3,556		)	59,122			172,468			101,727
Preferred dividends	(30,974		)	(12,830		)	(56,634		)	(38,490		)
Net (income) loss allocable to Participating Security holders⁽²⁾	—			—			—			(27		)
Net income (loss) allocable to common shareholders	$	(34,530	)	$	46,292		$	115,834		$	63,210
Per common share data:
Income (loss) attributable to iStar Inc. from continuing operations:
Basic	$	(0.48	)	$	0.60		$	(0.11	)	$	0.70
Diluted	$	(0.48	)	$	0.41		$	(0.11	)	$	0.57
Net income (loss) attributable to iStar Inc.:
Basic	$	(0.48	)	$	0.65		$	1.61		$	0.85
Diluted	$	(0.48	)	$	0.44		$	1.61		$	0.66
Weighted average number of common shares:
Basic	71,713			71,210			71,972			74,074
Diluted	71,713			115,666			71,972			118,590



	iStar Inc. Shareholders' Equity
	Preferred Stock⁽¹⁾			Preferred Stock Series J⁽¹⁾		Common Stock at Par			Additional Paid-In Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total Equity
Balance as of December 31, 2016	$	22		$	4	$	72		$	3,602,172		$	(2,581,488	)	$	(4,218	)	$	43,120		$	1,059,684
Dividends declared—preferred	—			—		—			—			(38,490		)	—			—			(38,490		)
Issuance of stock/restricted stock unit amortization, net	—			—		—			2,248			—			—			—			2,248
Net income for the period⁽²⁾	—			—		—			—			172,468			—			5,785			178,253
Change in accumulated other comprehensive income (loss)	—			—		—			—			—			388			—			388
Repurchase of stock	—			—		(4		)	(45,924		)	—			—			—			(45,928		)
Issuance of senior unsecured convertible notes (refer to Note 10)	—			—		—			22,487			—			—			—			22,487
Dividends declared and payable — Series E and Series F Preferred Stock	—			—		—			—			(1,830		)	—			—			(1,830		)
Redemption of Series E and F Preferred Stock	(10		)	—		—			(223,676		)	(16,314		)	—			—			(240,000		)
Change in additional paid in capital attributable to redeemable noncontrolling interest	—			—		—			182			—			—			—			182
Contributions from noncontrolling interests	—			—		—			—			—			—			12			12
Distributions to noncontrolling interests	—			—		—			—			—			—			(13,117		)	(13,117		)
Balance as of September 30, 2017	$	12		$	4	$	68		$	3,357,489		$	(2,465,654	)	$	(3,830	)	$	35,800		$	923,889

Balance as of December 31, 2015	$	22		$	4	$	81		$	3,689,330		$	(2,625,474	)	$	(4,851	)	$	42,218		$	1,101,330
Dividends declared—preferred	—			—		—			—			(38,490		)	—			—			(38,490		)
Issuance of stock/restricted stock unit amortization, net	—			—		—			1,675			—			—			—			1,675
Net income for the period⁽²⁾	—			—		—			—			101,727			—			10,908			112,635
Change in accumulated other comprehensive income (loss)	—			—		—			—			—			(579		)	—			(579		)
Repurchase of stock	—			—		(10		)	(98,419		)	—			—			—			(98,429		)
Change in additional paid in capital attributable to redeemable noncontrolling interest	—			—		—			124			—			—			—			124
Contributions from noncontrolling interests	—			—		—			—			—			—			513			513
Change in noncontrolling interest⁽³⁾	—			—		—			—			—			—			(7,292		)	(7,292		)
Balance as of September 30, 2016	$	22		$	4	$	71		$	3,592,710		$	(2,562,237	)	$	(5,430	)	$	46,347		$	1,071,487



	Net Lease⁽¹⁾			Operating Properties			Total
As of September 30, 2017
Land, at cost	$	223,764		$	209,068		$	432,832
Buildings and improvements, at cost	926,912			327,574			1,254,486
Less: accumulated depreciation	(306,183		)	(57,273		)	(363,456		)
Real estate, net	844,493			479,369			1,323,862
Real estate available and held for sale ⁽²⁾	—			65,658			65,658
Total real estate	$	844,493		$	545,027		$	1,389,520
As of December 31, 2016
Land, at cost	$	231,506		$	211,054		$	442,560
Buildings and improvements, at cost	987,050			311,283			1,298,333
Less: accumulated depreciation	(307,444		)	(46,175		)	(353,619		)
Real estate, net	911,112			476,162			1,387,274
Real estate available and held for sale ⁽²⁾	155,051			82,480			237,531
Total real estate	$	1,066,163		$	558,642		$	1,624,805



	As of
	September 30,			December 31,
	2017			2016
Land and land development, at cost⁽¹⁾	$	869,331		$	952,051
Less: accumulated depreciation	(7,824		)	(6,486		)
Total land and development, net	$	861,507		$	945,565



	As of
Type of Investment	September 30, 2017			December 31, 2016
Senior mortgages	$	594,081		$	940,738
Corporate/Partnership loans	495,066			490,389
Subordinate mortgages	9,335			24,941
Total gross carrying value of loans	1,098,482			1,456,068
Reserves for loan losses	(76,189		)	(85,545		)
Total loans receivable, net	1,022,293			1,370,523
Other lending investments—securities	87,149			79,916
Total loans receivable and other lending investments, net	$	1,109,442		$	1,450,439



	Individually Evaluated for Impairment⁽¹⁾			Collectively Evaluated for Impairment⁽²⁾			Total
As of September 30, 2017
Loans	$	238,155		$	865,953		$	1,104,108
Less: Reserve for loan losses	(60,989		)	(15,200		)	(76,189		)
Total⁽³⁾	$	177,166		$	850,753		$	1,027,919
As of December 31, 2016
Loans	$	253,941		$	1,209,062		$	1,463,003
Less: Reserve for loan losses	(62,245		)	(23,300		)	(85,545		)
Total⁽³⁾	$	191,696		$	1,185,762		$	1,377,458



	As of September 30, 2017			As of December 31, 2016
	Performing Loans		Weighted Average Risk Ratings	Performing Loans		Weighted Average Risk Ratings
Senior mortgages	$	515,610	2.47	$	859,250	3.12
Corporate/Partnership loans	340,980		2.76	335,677		3.09
Subordinate mortgages	9,363		3.00	14,135		3.00
Total	$	865,953	2.59	$	1,209,062	3.11



	Current		Less Than and Equal to 90 Days		Greater Than 90 Days⁽¹⁾		Total Past Due		Total
As of September 30, 2017
Senior mortgages	$	521,610	$	—	$	75,732	$	75,732	$	597,342
Corporate/Partnership loans	340,980		—		156,423		156,423		497,403
Subordinate mortgages	9,363		—		—		—		9,363
Total	$	871,953	$	—	$	232,155	$	232,155	$	1,104,108
As of December 31, 2016
Senior mortgages	$	868,505	$	—	$	76,677	$	76,677	$	945,182
Corporate/Partnership loans	335,677		—		157,146		157,146		492,823
Subordinate mortgages	24,998		—		—		—		24,998
Total	$	1,229,180	$	—	$	233,823	$	233,823	$	1,463,003



	As of September 30, 2017							As of December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance			Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Subordinate mortgages	$	—	$	—	$	—		$	10,862	$	10,846	$	—
Subtotal	—		—		—			10,862		10,846		—
With an allowance recorded:
Senior mortgages	81,732		81,848		(48,518		)	85,933		85,780		(49,774		)
Corporate/Partnership loans	156,423		145,849		(12,471		)	157,146		146,783		(12,471		)
Subtotal	238,155		227,697		(60,989		)	243,079		232,563		(62,245		)
Total:
Senior mortgages	81,732		81,848		(48,518		)	85,933		85,780		(49,774		)
Corporate/Partnership loans	156,423		145,849		(12,471		)	157,146		146,783		(12,471		)
Subordinate mortgages	—		—		—			10,862		10,846		—
Total	$	238,155	$	227,697	$	(60,989	)	$	253,941	$	243,409	$	(62,245	)



	Face Value		Amortized Cost Basis		Net Unrealized Gain (Loss)		Estimated Fair Value		Net Carrying Value
As of September 30, 2017
Available-for-Sale Securities
Municipal debt securities	$	21,230	$	21,230	$	875	$	22,105	$	22,105
Held-to-Maturity Securities
Debt securities	65,007		65,044		1,158		66,202		65,044
Total	$	86,237	$	86,274	$	2,033	$	88,307	$	87,149
As of December 31, 2016
Available-for-Sale Securities
Municipal debt securities	$	21,240	$	21,240	$	426	$	21,666	$	21,666
Held-to-Maturity Securities
Debt securities	58,454		58,250		2,753		61,003		58,250
Total	$	79,694	$	79,490	$	3,179	$	82,669	$	79,916



					Equity in Earnings
	Carrying Value as of				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	September 30, 2017		December 31, 2016		2017		2016		2017		2016
Real estate equity investments
iStar Net Lease I LLC ("Net Lease Venture")	$	110,153	$	92,669	$	962	$	723	$	2,975	$	2,613
Safety, Income & Growth Inc. ("SAFE")⁽¹⁾	75,023		—		340		—		388		—
Marina Palms, LLC ("Marina Palms")	5,369		35,185		494		6,182		4,794		19,583
Other real estate equity investments⁽²⁾	79,768		53,202		55		16,289		4,304		43,187
Subtotal	270,313		181,056		1,851		23,194		12,461		65,383
Other strategic investments⁽³⁾	18,724		33,350		610		3,346		1,216		8,871
Total	$	289,037	$	214,406	$	2,461	$	26,540	$	13,677	$	74,254



	Revenues		Expenses			Net Income Attributable to Parent Entities
For the Nine Months Ended September 30, 2017
Marina Palms	$	37,668	$	(24,209	)	$	13,459

For the Nine Months Ended September 30, 2016
Marina Palms	$	129,697	$	(72,736	)	$	56,961



	Carrying Value as of						Stated Interest Rates			Scheduled Maturity Date
	September 30, 2017			December 31, 2016			Stated Interest Rates			Scheduled Maturity Date
Secured credit facilities and mortgages:
2015 $325 Million Secured Revolving Credit Facility	$	—		$	—		LIBOR + 2.50%		⁽¹⁾	September 2020
2016 Senior Secured Credit Facility	400,000			498,648			LIBOR + 3.00%		⁽²⁾	October 2021
Mortgages collateralized by net lease assets	223,182			249,987			4.851% - 7.26%		⁽³⁾	Various through 2026
Total secured credit facilities and mortgages	623,182			748,635
Unsecured notes:
5.85% senior notes	—			99,722			5.85	%		March 2017
9.00% senior notes	—			275,000			9.00	%		June 2017
4.00% senior notes⁽⁴⁾	550,000			550,000			4.00	%		November 2017
7.125% senior notes⁽⁵⁾	300,000			300,000			7.125	%		February 2018
4.875% senior notes⁽⁶⁾	300,000			300,000			4.875	%		July 2018
5.00% senior notes⁽⁷⁾	770,000			770,000			5.00	%		July 2019
6.50% senior notes⁽⁸⁾	275,000			275,000			6.50	%		July 2021
6.00% senior notes⁽⁹⁾	375,000			—			6.00	%		April 2022
4.625% senior notes⁽¹⁰⁾	400,000			—			4.625	%		September 2020
5.25% senior notes⁽¹¹⁾	400,000			—			5.25	%		September 2022
3.125% senior convertible notes⁽¹²⁾	250,000			—			3.125	%		September 2022
Total unsecured notes	3,620,000			2,569,722
Other debt obligations:
Trust preferred securities	100,000			100,000			LIBOR + 1.50%			October 2035
Total debt obligations	4,343,182			3,418,357
Debt discounts and deferred financing costs, net	(64,228		)	(28,449		)
Total debt obligations, net⁽¹³⁾	$	4,278,954		$	3,389,908



	Unsecured Debt				Secured Debt			Total
2017 (remaining three months)	$	550,000		⁽¹⁾	$	—		$	550,000
2018	600,000			⁽¹⁾	9,523			609,523
2019	770,000				27,924			797,924
2020	400,000				—			400,000
2021	275,000				517,506			792,506
Thereafter	1,125,000				68,229			1,193,229
Total principal maturities	3,720,000				623,182			4,343,182
Unamortized discounts and deferred financing costs, net	(56,331		)		(7,897		)	(64,228		)
Total debt obligations, net	$	3,663,669			$	615,285		$	4,278,954



	Loans and Other Lending Investments⁽¹⁾		Real Estate		Other Investments		Total
Performance-Based Commitments	$	317,091	$	6,136	$	50,933	$	374,160
Strategic Investments	—		—		45,642		45,642
Total	$	317,091	$	6,136	$	96,575	$	419,802



	Derivative Assets as of						Derivative Liabilities as of
	September 30, 2017			December 31, 2016			September 30, 2017			December 31, 2016
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives Designated in Hedging Relationships
Foreign exchange contracts	N/A	$	—	N/A	$	—	Other Liabilities	$	18	Other Liabilities	$	8
Interest rate swaps	Other Assets	76		N/A	—		N/A	—		Other Liabilities	39
Total		$	76		$	—		$	18		$	47

Derivatives not Designated in Hedging Relationships
Foreign exchange contracts	N/A	$	—	Other Assets	$	702	N/A	$	—	N/A	$	—
Interest rate cap	N/A	—		Other Assets	25		N/A	—		N/A	—
Total		$	—		$	727		$	—		$	—



Derivatives Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings (Effective Portion)		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings (Ineffective Portion)
For the Three Months Ended September 30, 2017
Interest rate swaps	Interest Expense	15		(16	)	N/A
Interest rate cap	Earnings from equity method investments	(2	)	(2	)	N/A
Interest rate swap	Earnings from equity method investments	(69	)	(38	)	N/A
Foreign exchange contracts	Earnings from equity method investments	(1	)	—		N/A
For the Three Months Ended September 30, 2016
Interest rate cap	Earnings from equity method investments	(1	)	(1	)	N/A
Interest rate swaps	Interest Expense	126		(19	)	N/A
Interest rate swap	Earnings from equity method investments	124		(92	)	N/A
Foreign exchange contracts	Earnings from equity method investments	(150	)	—		N/A

For the Nine Months Ended September 30, 2017
Interest rate swaps	Interest Expense	439		339		N/A
Interest rate cap	Earnings from equity method investments	(16	)	(16	)	N/A
Interest rate swap	Earnings from equity method investments	(85	)	(188	)	N/A
Foreign exchange contracts	Earnings from equity method investments	(371	)	—		N/A

For the Nine Months Ended September 30, 2016
Interest rate cap	Interest Expense	—		(185	)	N/A
Interest rate cap	Earnings from equity method investments	(2	)	—		N/A
Interest rate swaps	Interest Expense	(568	)	(17	)	N/A
Interest rate swap	Earnings from equity method investments	(500	)	(284	)	N/A
Foreign exchange contracts	Earnings from equity method investments	(199	)	—		N/A



		Amount of Gain (Loss) Recognized in Income
	Location of Gain (Loss) Recognized in Income	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
Derivatives not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	2017			2016			2017			2016
Interest rate cap	Other Expense	$	—		$	(4	)	$	6		$	(1,059	)
Foreign exchange contracts	Other Expense	(199		)	65			(970		)	406



Derivative Type	Notional Amount		Notional (USD Equivalent)		Maturity
Sells Indian rupee ("INR")/Buys USD Forward	₨	350,000	$	5,339	October 2017



				Cumulative Preferential Cash Dividends⁽¹⁾⁽²⁾
Series	Shares Issued and Outstanding (in thousands)	Par Value		Liquidation Preference⁽³⁾⁽⁴⁾		Rate per Annum		Equivalent to Fixed Annual Rate (per share)
D	4,000	$	0.001	$	25.00	8.00	%	$	2.00
G	3,200	0.001		25.00		7.65	%	1.91
I	5,000	0.001		25.00		7.50	%	1.88
J (convertible)	4,000	0.001		50.00		4.50	%	2.25
	16,200



			Fair Value Using
	Total		Quoted market prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
As of September 30, 2017
Recurring basis:
Derivative assets⁽¹⁾	$	76	$	—	$	76	$	—
Derivative liabilities⁽¹⁾	18		—		18		—
Available-for-sale securities⁽¹⁾	22,105		—		—		22,105

As of December 31, 2016
Recurring basis:
Derivative assets⁽¹⁾	$	727	$	—	$	727	$	—
Derivative liabilities⁽¹⁾	47		—		47		—
Available-for-sale securities⁽¹⁾	21,666		—		—		21,666
Non-recurring basis:
Impaired loans⁽²⁾	7,200		—		—		7,200
Impaired real estate⁽³⁾	3,063		—		—		3,063



Uses	Amount		Sources	Amount
Repay 2016 Senior Secured Credit Facility	$	473	Amended 2016 Senior Secured Credit Facility	$	400
Repay 4.0% senior unsecured notes due November 2017⁽¹⁾	550		Issue 4.625% senior unsecured notes due September 2020	400
Repay 7.125% senior unsecured notes due February 2018⁽¹⁾	300		Issue 5.25% senior unsecured notes due September 2022	400
Repay 4.875% senior unsecured notes due July 2018⁽¹⁾	300		Issue 3.125% senior unsecured convertible notes due September 2022	250
Redeem 7.875% series E preferred stock⁽²⁾	140		Cash	510
Redeem 7.8% series F preferred stock⁽²⁾	100
Repurchase common stock	46
Fees, expenses, interest and dividends	51
Total uses	$	1,960	Total sources	$	1,960



Property/Collateral Types	Real Estate Finance		Net Lease		Operating Properties		Land & Development		Total		% of Total
Land and Development	$	—	$	—	$	—	$	932,639	$	932,639	22.9	%
Office / Industrial	46,157		719,364		122,868		—		888,389		21.8	%
Entertainment / Leisure	—		484,117		—		—		484,117		11.9	%
Mixed Use / Mixed Collateral	260,424		—		186,542		—		446,966		11.0	%
Hotel	332,514		—		103,424		—		435,938		10.7	%
Condominium	263,721		—		65,674		—		329,395		7.9	%
Retail	26,029		57,348		136,859		—		220,236		5.4	%
Other Property Types	195,797		—		8,761		—		204,558		5.0	%
Ground Leases⁽¹⁾	—		117,448		—		—		117,448		2.9	%
Strategic Investments	—		—		—		—		18,725		0.5	%
Total	$	1,124,642	$	1,378,277	$	624,128	$	932,639	$	4,078,411	100.0	%



Geographic Region	Real Estate Finance		Net Lease		Operating Properties		Land & Development		Total		% of Total
Northeast	$	502,904	$	401,384	$	47,257	$	260,867	$	1,212,412	29.7	%
West	63,971		296,348		51,772		368,088		780,179		19.1	%
Southeast	180,265		252,787		148,881		121,103		703,036		17.2	%
Southwest	79,341		161,341		244,544		22,412		507,638		12.4	%
Central	204,068		79,392		76,962		31,500		391,922		9.6	%
Mid-Atlantic	—		153,092		44,572		128,669		326,333		8.0	%
Various⁽²⁾	94,093		33,933		10,140		—		138,166		3.5	%
Strategic Investments⁽²⁾	—		—		—		—		18,725		0.5	%
Total	$	1,124,642	$	1,378,277	$	624,128	$	932,639	$	4,078,411	100.0	%



	September 30, 2017
	Number of Loans	Gross Carrying Value		Reserve for Loan Losses			Carrying Value		% of Total	Reserve for Loan Losses as a % of Gross Carrying Value
Performing loans	35	$	860,327	$	(15,200	)	$	845,127	82.7%	1.8%
Non-performing loans	5	238,155		(60,989		)	177,166		17.3%	25.6%
Total	40	$	1,098,482	$	(76,189	)	$	1,022,293	100.0%	6.9%

	December 31, 2016
	Number of Loans	Gross Carrying Value		Reserve for Loan Losses			Carrying Value		% of Total	Reserve for Loan Losses as a % of Gross Carrying Value
Performing loans	35	$	1,202,127	$	(23,300	)	$	1,178,827	86.0%	1.9%
Non-performing loans	6	253,941		(62,245		)	191,696		14.0%	24.5%
Total	41	$	1,456,068	$	(85,545	)	$	1,370,523	100.0%	5.9%



	Consolidated Real Estate			SAFE			Net Lease Venture
Ownership %	100.0		%	34.6		%	51.9		%
Net book value (millions)	$	844		$	492		$	575
Accumulated depreciation (millions)	306			5			43
Gross carrying value (millions)	$	1,150		$	497		$	618

Occupancy	97.9		%	100.0		%	100.0		%
Square footage (thousands)	11,486			3,849			4,005
Weighted average lease term (years)	11.0			66.5			14.3
Weighted average yield	8.9		%	3.2		%	8.5		%



	Commercial Operating Property Statistics
($ in millions)
	Stabilized Operating⁽¹⁾						Transitional Operating⁽¹⁾						Total
	September 30, 2017			December 31, 2016			September 30, 2017			December 31, 2016			September 30, 2017			December 31, 2016
Gross book value ($mm)⁽²⁾	$	401		$	337		$	157		$	189		$	558		$	526
Occupancy⁽³⁾	86		%	86		%	56		%	54		%	77		%	74		%
Yield	9.1		%	8.5		%	1.5		%	1.5		%	7.2		%	5.5		%



Residential Operating Property Statistics
($ in millions)
	Nine Months Ended September 30,
	2017		2016
Condominium units sold	16		80
Proceeds	$	21.4	$	73.3
Income from sales of real estate	$	3.3	$	23.3



Land and Development Portfolio Rollforward
(in millions)
	Nine Months Ended September 30,
	2017			2016
Beginning balance⁽¹⁾	$	945.6		$	1,002.0
Asset sales⁽²⁾	(160.4		)	(40.0		)
Asset transfers in (out)⁽³⁾	—			(25.4		)
Capital expenditures	91.7			92.2
Other	(15.4		)	(6.7		)
Ending balance⁽¹⁾	$	861.5		$	1,022.1