14 slides from Safehold Inc. New's merger presentation, Aug 11, 2022
Slide 1: Safehold and iStar: A Transformative Transaction
August 2022 SAFEHOLD AND ISTAR A TRANSFORMATIVE TRANSACTION
Slide 2: Forward-Looking Statements and Other Matters
2 Forward - Looking Statements and Other Matters Forward - Looking Statements Certain matters discussed in this document may be forward - looking statements within the meaning of the Private Securities Litiga tion Reform Act of 1995. We have tried, whenever possible, to identify these statements by
Slide 3: Safehold and iStar agreed to combine to create a self-managed ground lease company
3 Safehold and iStar have agreed to combine to create the only self - managed, pure - play ground lease company in the public markets. The Company, which will continue operating under the name Safehold (“New Safehold”), will: x Be internally managed Company will now employ a dedicated management tea
Slide 4: Transaction Execution
4 Transaction Execution Safehold will: Acquire Management Company Safehold internalizes and as part of the transaction effectively assumes $100m L+150 Trust Preferred due 2035 from iStar and effectively issues 1.2m of new SAFE shares to iStar (1) Launch Fund Management Business Acquire iStar’s inter
Slide 5: Transaction Rationale: A Better Safehold
5 Transaction Rationale A Better Safehold Accretive outcome that best positions New Safehold to expand its market leading position Internalizes and better aligns management team which helped revolutionize ground lease industry Enhances governance, widely distributes voting power, expands number of i
Slide 6: Structure: Proven Track Record and Deep Industry Knowledge
6 Structure: Proven Track Record and Deep Industry Knowledge iStar’s management team has successfully scaled Safehold since IPO, resulting in the creation of the only public, investment - grade ground lease company (17x portfolio growth (1) over five years). The existing management team has a vested
Slide 7: Cost & Economics: Internalized Management Creates Efficiency
7 Under identical acquisition and capitalization scenarios, internalization allows for maximized operating leverage without proportionate increase in overhead Cost & Economics: Internalized Management Creates Efficiency Note: $ in millions. Numbers are illustrative. Status Quo External assumes $1.25
Slide 8: Cost & Economics: Transitional Arrangements with SpinCo
8 2023 2024 2025 2026 Net G&A SpinCo Management Fees Cost & Economics: Transitional Arrangements with SpinCo Note: $ in millions. (1) SpinCo may borrow an additional $25m from New Safehold under certain conditions. (2) Based on SAFE shares, real estate book value and cash. $25 $15 $10 $5 $71 Gross $
Slide 9: Cost & Economics: Launch Fund Management Business
9 Cost & Economics: Launch Fund Management Business Acquiring iStar’s 53% LP interest and GP role in two separate ground lease ecosystem funds (Ground Lease Plus and Leasehold Loans) for $79m plus any future fundings before closing. These vehicles are powerful, proprietary tools that are drivers to
Slide 10: MSD Partners to Become One of New Safehold's Largest Shareholders
10 MSD Partners will buy 100,000 units of Caret from Safehold for $200 per unit (1) , implying a Caret valuation of $2.0b o New Safehold will use the $20m of proceeds to invest in more ground leases and for general corporate purposes o Valuation represents premium to prior Caret sale and does not in
Slide 11: Debt & Equity Profile: Increased Float and Broader Shareholder Base
11 Existing Safehold Shareholders 34% MSD 9% iStar Shareholders 37% Management 6% SpinCo 14% Debt & Equity Profile: Increased Float and Broader Shareholder Base Transaction more than doubles Safehold’s free float and diversifies its shareholder base New Safehold Shareholder Makeup New Safehold Free
Slide 12: Debt & Equity Profile: Strengthened Credit Profile
12 Secured Debt $1,498 JV Debt $272 Unsecured Debt $1,375 Trust Preferred $100 Debt & Equity Profile: Strengthened Credit Profile Current Post Transaction Reported Leverage 1.76x 1.78x W.A. Term 24.0 yrs 23.7 yrs W.A. Coupon (cash) 3.18% 3.19% W.A. Coupon (effective) 3.74% 3.74% In addition to stron
Slide 13: Conclusion
13 Conclusion The transaction positions New Safehold to drive the next phase of its growth x x x Better Cost & Economics Better Debt & Equity Profile Addresses related party concerns, improves governance with a more diversified shareholder base Experienced management team and intellectual property b
Slide 14: Appendix: Transaction Summary
14 Appendix: Transaction Summary Transaction Structure Safehold acquires iStar’s management platform and iStar’s interests in its two ground lease ecosystem funds iStar spins off remaining non - ground lease assets, $400m of Safehold stock and at least $50m of cash into SpinCo, a separate pub licly