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" 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"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements are included with respect to, among other things,
Safehold Inc.'s (the "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 be," "will continue," "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 "Risk Factors" filed as
Exhibit 99.3 to our Current Report on Form 8-K filed with the SEC on April 4,
2023, all of which could affect our future results of operations, financial
condition and liquidity.

The discussion below should be read in conjunction with our consolidated
financial statements and related notes in this quarterly report on Form 10-Q,
our 2022 Annual Report and our Current Report on Form 8-K filed with the SEC on
April 4, 2023. These historical financial statements may not be indicative

of
our future performance.

Merger Transaction

On August 10, 2022, Safehold Inc. ("Old SAFE") entered into an Agreement and
Plan of Merger (the "Merger Agreement") with iStar Inc. ("iStar"), and on March
31, 2023, in accordance with the terms of the Merger Agreement, Old SAFE merged
with and into iStar, at which time Old SAFE ceased to exist, and iStar continued
as the surviving corporation and changed its name to "Safehold Inc." For
accounting purposes, the Merger is treated as a "reverse acquisition" in which
iStar is considered the legal acquirer and Old SAFE is considered the accounting
acquirer. As a result, the historical financial statements of Old SAFE became
the historical financial statements of Safehold Inc. Unless the context
otherwise requires, references to "iStar" refer to iStar prior to the Merger,
and references to "we," "our" and "the Company" refer to the business and
operations of Old SAFE and its consolidated subsidiaries prior to the Merger and
to Safehold Inc. (formerly known as iStar Inc.) and its consolidated
subsidiaries following the consummation of the Merger. Periods presented prior
to the Merger date of March 31, 2023 reflect the operations of Old SAFE and
periods presented as of March 31, 2023 represent the financial statements of the
Company.

Additionally, in connection with the Merger, Safehold Operating Partnership LP
converted from a Delaware limited partnership into a Delaware limited liability
company and changed its name to "Safehold GL Holdings LLC" ("Portfolio
Holdings"), with the Company as its managing member. In addition, holders of
Caret units in Old SAFE's subsidiary, Caret Ventures, contributed their
interests in Caret Ventures to Portfolio Holdings in return for Caret units
issued by Portfolio Holdings. Following the restructuring, 100% of the equity
interests in Caret Ventures is held by Portfolio Holdings, and Portfolio
Holdings is owned by the Company, management, of the Company, employees and
former employees of the Company, affiliates of MSD Partners, and other outside
investors.

We believe that the Merger will accelerate our market leadership in the Ground
Lease industry and make us the only internally-managed, pure-play Ground Lease
company in the public markets.

Business Overview


We acquire, manage and capitalize Ground Leases and report our business as a
single reportable segment. We believe owning a portfolio of Ground Leases
affords our investors the opportunity for safe, growing income. Safety is
derived from a Ground Lease's senior position in the commercial real estate
capital structure. Growth is realized through long-term leases with contractual
periodic increases in rent. Capital appreciation is realized though appreciation
in the value of the land over time and through our typical rights as landlord to
acquire the commercial buildings on our land at

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the end of a Ground Lease, which may yield substantial value to us. As of March
31, 2023, the percentage breakdown of the gross book value of our portfolio was
44% office, 37% multi-family, 12% hotels, 4% life science and 3% mixed use and
other. The diversification by geographic location, property type and sponsor in
our portfolio further reduces risk and enhances potential upside.

Many of our Ground Leases have CPI lookbacks, generally starting between years
11 and 21 of the lease term, to mitigate the effects of inflation that are
typically capped between 3.0% - 3.5%; however, in the event cumulative inflation
growth for the lookback period exceeds the cap, these rent adjustments may not
keep up fully with changes in inflation. In January 2022, the Consumer Price
Index ("CPI") rose to its highest rate in over 40 years. Since then the Federal
Reserve has raised interest rates multiple times and it has stated that it is
likely it will continue to raise interest rates in 2023. Any increase in
interest rates may result in a reduction in the availability or an increase in
costs of leasehold financing, which is critical to the growth of a robust Ground
Lease market.

The COVID-19 pandemic is not currently materially impacting our new investment
activity, but we continue to monitor its potential impact, which could slow new
investment activity because of reduced levels of real estate transactions and
constrained conditions for equity and debt financing for real estate
transactions, including leasehold loans. See "Risk Factors" filed as Exhibit
99.3 to our Current Report on Form 8-K filed with the SEC on April 4, 2023 for
additional discussion of certain potential risks to our business arising from
the COVID 19 pandemic.

We have chosen to focus on Ground Leases because we believe they meet an
important need in the real estate capital markets for our customers. We also
believe Ground Leases offer a unique combination of safety, income growth and
the potential for capital appreciation for investors for the following reasons:

High Quality Long-Term Cash Flow: We believe that a Ground Lease represents a
safe position in a property's capital structure. The combined value of the land
and buildings and improvements thereon subject to a Ground Lease (the "Combined
Property Value") typically significantly exceeds the Ground Lease landlord's
investment in the Ground Lease; therefore, even if the landlord takes over the
property following a tenant default or upon expiration of the Ground Lease, the
landlord is reasonably likely to recover substantially all of its Ground Lease
investment, and possibly amounts in excess of its investment, depending upon
prevailing market conditions. Additionally, the typical structure of a Ground
Lease provides the landlord with a residual right to regain possession of its
land and take ownership of the buildings and improvements thereon upon a tenant
default. The landlord's residual right provides a strong incentive for a Ground
Lease tenant or its leasehold lender to make the required Ground Lease rent
payments.

Income Growth: Ground Leases typically provide growing income streams through
contractual base rent escalators that may compound over the duration of the
lease. These rent escalators may be based on fixed increases, a CPI or a
combination thereof, and may also include a participation in the gross revenues
of the property. We believe that this growth in the lease rate over time can
mitigate the effects of inflation and capture anticipated increases in land
values over time, as well as serving as a basis for growing our dividend.

Opportunity for Capital Appreciation: The opportunity for capital appreciation
comes in two forms. First, as the ground rent grows over time, the value of the
Ground Lease should grow under market conditions in which capitalization rates
remain flat. Second, our residual right to regain possession of the land
underlying the Ground Lease and take title to the buildings and other
improvements thereon at lease expiration or earlier termination of the lease for
no additional consideration creates additional potential value to our
shareholders.

We generally target Ground Lease investments in which the initial cost of the
Ground Lease represents 30% to 45% of the Combined Property Value as if the
Ground Lease did not exist. If the initial cost of a Ground Lease is equal to
35% of the Combined Property Value, the remaining 65% of the Combined Property
Value represents potential excess value over the amount of our investment that
would be turned over to us upon the reversion of the property, assuming no
intervening change in the Combined Property Value. In our view, there is a
strong correlation between inflation and commercial real estate values over
time, which supports our belief that the value of our owned residual portfolio
should increase over time as inflation increases, although our ability to
recognize value in certain cases may be limited by the rights of our tenants
under some of our Ground Leases, including tenant rights to purchase our land in
certain circumstances and the right of one tenant to demolish improvements prior
to the expiration of the lease. See "Risk Factors" filed as

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Exhibit 99.3 to our Current Report on Form 8-K filed with the SEC on April 4, 2023 for additional discussion for a discussion of these tenant rights.



Owned Residual Portfolio: We believe that the residual right is a unique feature
distinguishing Ground Leases from other fixed income investments and property
types. We refer to the value of the land and improvements subject to a Ground
Lease in excess of our investment basis as unrealized capital appreciation
("UCA").  We track the UCA in our owned residual portfolio over our basis
because we believe it provides relevant information with regard to the three key
investment characteristics of our Ground Leases: (1) the safety of our position
in a tenant's capital structure; (2) the quality of the long-term cash flows
generated by our portfolio rent that increases over time; and (3) increases and
decreases in the Combined Property Value of the portfolio that reverts to us
pursuant to such residual rights.

We believe that, similar to a loan to value metric, tracking changes in the
value of our owned residual portfolio is useful as an indicator of the quality
of our cash flows and the safety of our position in a tenant's capital
structure, which, in turn, supports our objective to pay and grow dividends over
time. Observing changes in our owned residual portfolio value also helps us
monitor changes in the value of the real estate portfolio that reverts to us
under the terms of the leases, either at the expiration or earlier termination
of the lease. The value may be realized by us at the relevant time by entering
into a new lease reflecting then current market terms and values, selling the
building, selling the building with the land, or operating the building directly
and leasing the spaces to tenants at prevailing market rates.

We have engaged an independent valuation firm to prepare: (a) initial reports of
the Combined Property Value associated with our Ground Lease portfolio; and
(b) periodic updates of such reports, which we use, in part, to determine the
current estimated value of our owned residual portfolio. We calculate this
estimated value by subtracting our original aggregate cost basis in the Ground
Leases from our estimated aggregate Combined Property Value, based on estimates
by the valuation firm and by management.

The table below shows the current estimated UCA in our owned residual portfolio as of March 31, 2023 and December 31, 2022 ($ in millions):(1)



                                                        March 31, 2023      December 31, 2022
Combined Property Value(2)                              $        16,034    $            16,529
Ground Lease Cost(2)                                              6,008                  6,008
Unrealized Capital Appreciation in Our Owned
Residual Portfolio                                               10,026                 10,521

Please review our Current Report on Form 8-K filed on April 26, 2023 for a

discussion of the valuation methodology used and important limitations and

qualifications of the calculation of UCA. See "Risk Factors-Certain tenant (1) rights under our Ground Leases may limit the value and the UCA we are able to

realize upon lease expiration, sale of our land and Ground Leases or other

events" included in Exhibit 99.3 to our Current Report on Form 8-K filed with

the SEC on April 4, 2023 for a discussion of certain tenant rights and other

terms of the leases that may limit our ability to realize value from the UCA.

Combined Property Value includes our applicable percentage interests in our

unconsolidated ventures and $1,375.4 million and $1,653.2 million related to

transactions with remaining unfunded commitments as of March 31, 2023 and (2) December 31, 2022, respectively. Ground Lease Cost includes our applicable

percentage interests in our unconsolidated ventures and $238.3 million and

$308.2 million of unfunded commitments as of March 31, 2023 and December 31,

2022, respectively. As of March 31, 2023, our gross book value as

a percentage of combined property value was 42%.




In 2018, Old SAFE established the Caret program (as defined below). The Caret
program is designed to recognize the two distinct components of value in our
Ground Lease portfolio by separating them into:

the "bond component," which consists of the bond-like income stream we receive

? from contractual rent payments under our Ground Leases, plus the return of our

investment basis in each asset; and

the "Caret component," which consists of the UCA above our investment basis in

? our Ground Leases due to our ownership of the land and improvements at the end


   of the term of the applicable Ground Lease.


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Portfolio Holdings' two classes of limited liability company interests are
designed to track these two components: "GL units" are intended to track the
bond component and "Caret units" are designed to track the Caret component (the
"Caret program"). We currently hold all of the issued and outstanding GL units
of Portfolio Holdings.

In general, all of our Ground Leases are subject to the Caret program, except
for non-commercial Ground Leases and pre-development Ground Leases. Holders of
Caret units are generally entitled to amounts equal to the net proceeds from the
disposition of a Ground Lease asset in excess of the cost borne by us to acquire
such asset (including amounts paid to the tenant in connection with the initial
development of improvements at the properties). However, we are entitled to
deduct (i) unrecovered acquisition costs borne by Portfolio Holdings following
the termination of an applicable Ground Lease by reason of defaults of tenants;
(ii) accrued unpaid rent under the applicable Ground Lease; and (iii)
unrecovered costs relating to the issuance, maintenance and management of Caret
units as a separate security, among other costs, from the amount payable to the
holders of Caret units on account of such net proceeds. See "SAFE Proposal 2:
The SAFE Caret Amendment Proposal" in our Registration Statement on Form S-4,
filed with the SEC on December 16, 2022, for more information on the Caret
program.

During the third quarter of 2018, Old SAFE adopted, and in the second quarter of
2019, its stockholders approved, the Caret Performance Incentive Plan (the
"Original Caret Performance Incentive Plan"). Under the Original Caret
Performance Incentive Plan, 1,500,000 Caret units were reserved for grants of
performance-based awards to Original Caret Performance Incentive Plan
participants, including certain executives of the Company, or its affiliates,
directors of Old SAFE and service providers of Old SAFE. Initial grants under
the Original Caret Performance Incentive Plan were subject to graduated vesting
based on time-based service conditions and hurdles of our common stock price,
all of which were satisfied as of December 31, 2022, except with respect to
approximately 1,000 Caret units scheduled to vest on December 31, 2023. In
connection with the Merger, certain of Old SAFE's executive officers have
entered into re-vesting agreements pursuant to which the executives have agreed
to subject 25% of their previously vested Caret units to additional vesting
conditions which will be satisfied on the second anniversary of the Merger,
subject to the applicable executive's continued employment through such date. In
connection with the Merger, each Award Agreement (as defined in the Original
Caret Performance Incentive Plan) related to outstanding Caret unit awards was
assigned to Portfolio Holdings, and Old SAFE amended and restated amended and
restated the Original Caret Performance Incentive Plan (the "Caret Performance
Incentive Plan"). Following the merger, 76,801 Caret units were awarded to
executive officers and other employees under such plan that are subject to cliff
vesting on the fourth anniversary of their grant date if our common stock has
traded at an average price of $60.00 or more for at least 30 consecutive trading
days during that four year period. As a result, as of immediately following the
Merger, vested and unvested Caret units beneficially owned by our officers and
other employees represent approximately 15.41% of the outstanding Caret units
and 12.50% of the authorized Caret units.

In addition to the Caret units awarded or reserved for issuance under our Caret
Performance Incentive Plan, as of March 31, 2023, Old SAFE sold or contracted to
sell an aggregate of 259,642 Caret units to third-party investors, including
affiliates of MSD Partners and an entity affiliated with one of our independent
directors. As a result, the Company currently owns the remaining 82.2% of the
outstanding Caret units. In connection with the sale of 137,142 Caret units in
February 2022 (28,571 of which were committed to be purchased at the time, but
have not yet closed), Old SAFE agreed to use commercially reasonable efforts to
provide public market liquidity for such Caret units by seeking to provide a
listing of the Caret units (or securities into which they may be exchanged) on a
public exchange within two years of the sale. In the event market liquidity of
the Caret units is not achieved within such two year period at a valuation not
less than the purchase price for the Caret units purchased in February 2022,
reduced by an amount equal to the amount of subsequent cash distributions made
to investors on account of such Caret units, then the investors in the
February 2022 transaction have the right to cause their Caret units purchased in
February 2022 to be redeemed by Portfolio Holdings at such purchase price as so
reduced.

On March 31, 2023, Old SAFE sold 100,000 Caret units to affiliates of MSD
Partners for an aggregate purchase price of $20.0 million (refer to Note 1 to
the consolidated financial statements) pursuant to a subscription agreement
entered into on August 10, 2022 and sold an aggregate of 22,500 Caret units to
third-party investors for an aggregate $4.5 million.

In September 2022, Old SAFE sold a Ground Lease in the Washington, D.C. market
for $136.0 million to a third-party purchaser. The transaction generated a net
book gain for us of approximately $46.4 million. After paying closing

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costs, establishing reserves for Caret-related expenses and deducting the
original $76.7 million cost basis to us, the remaining proceeds have been
distributed approximately 84% to Old SAFE and approximately 16% to the minority
holders of Caret units. In addition, the affiliates of MSD Partners received a
credit against their purchase price for Caret units equal to the amount they
would have received had they held Caret units at the time of the distribution.

Market Opportunity: We believe that there is a significant market opportunity
for a dedicated provider of Ground Lease capital like us. We believe that the
market for existing Ground Leases is fragmented with ownership comprised
primarily of high net worth individuals, pension funds, life insurance
companies, estates and endowments. However, while we intend to pursue
acquisitions of existing Ground Leases, our investment thesis is predicated, in
part, on what we believe is an untapped market opportunity to expand the use of
Ground Leases to a broader component of the approximately $7.0 trillion
institutional commercial property market in the U.S. We intend to capture this
market opportunity by utilizing multiple sourcing and origination channels,
including manufacturing new Ground Leases with third-party owners and developers
of commercial real estate and originating Ground Leases to provide capital for
development and redevelopment. We further believe that Ground Leases generally
represent an attractive source of capital for our tenants and may allow them to
generate superior returns on their invested equity as compared to utilizing
alternative sources of capital. Prior to the Merger, we relied on the extensive
investment origination and sourcing platform of iStar, the parent company of our
Former Manager, to actively promote the benefits of the Ground Lease structure
to prospective Ground Lease tenants. Subsequent to the Merger and the
acquisition of iStar and its employees, we are internally managed.

Additionally, we have created additional channels and products that allows us to
build a larger, captive pipeline. In connection with the Merger, Old SAFE
acquired iStar's 53% interest in iStar's two Ground Lease ecosystem funds,
Ground Lease Plus Fund and Leasehold Loan Fund (refer to Note 6 to the
consolidated financial statements). The Ground Lease Plus Fund includes 3
assets, and targets high quality projects in pre-construction development phase
with institutional developers. The Leasehold Loan Fund currently includes 4
assets and allows for customers to receive their full capital structure needs in
one place. Customers are able to receive a mortgage leasehold loan as well as a
Ground Lease through us. We also created "SAFExSWAP," which is a program that
allows real estate investors with existing ground leases to swap into one of our
Ground Leases. Additionally, our product "SAFExSELL" provides clients with an
opportunity to enter into a Ground Lease at the time of the sale of a real
estate asset, generating greater proceeds than would normally be expected in
connection with a fee simple sale.

Our Portfolio


Our portfolio of properties is diversified by property type and region. Our
portfolio is comprised of Ground Leases and a master lease (relating to five
hotel assets that we refer to as our "Park Hotels Portfolio") that has many of
the characteristics of a Ground Lease. As of March 31, 2023, our estimated
portfolio Ground Rent Coverage was 3.9x (see the "Risk Factors -Our estimated
UCA, Combined Property Value and Ground Rent Coverage, may not reflect the full
potential impact of the COVID-19 pandemic and may decline materially in future
periods, -We rely on Property NOI as reported to us by our tenants, -Our
estimates of Ground Rent Coverage for properties in development or transition,
or for which we do not receive current tenant financial information, may prove
to be incorrect" filed as Exhibit 99.3 to our Current Report on Form 8-K filed
with the SEC on April 4, 2023 for a discussion of our estimated Ground Rent

Coverage).

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Below is an overview of the top 10 assets in our portfolio as of March 31, 2023 (based on gross book value and excluding unfunded commitments):(1)



                                                                                       Lease
                                                Property                            Expiration /             Rent Escalation             % of Gross
             Property Name                        Type               Location        As Extended                Structure                Book Value
425 Park Avenue(2)                               Office            New York, NY      2090 / 2090     Fixed with Inflation Adjustments            6.0 %
135 West 50th Street                             Office            New York, NY      2123 / 2123     Fixed with Inflation Adjustments            5.1 %
195 Broadway                                     Office            New York, NY      2118 / 2118     Fixed with Inflation Adjustments            4.9 %
Park Hotels Portfolio(3)                          Hotel              Various         2025 / 2035                  % Rent                         3.7 %
Alohilani                                         Hotel           

Honolulu, HI      2118 / 2118     Fixed with Inflation Adjustments         

  3.6 %
685 Third Avenue                                 Office            New York, NY      2123 / 2123     Fixed with Inflation Adjustments            3.2 %
20 Cambridgeside                              Life Science       

Cambridge, MA      2121 / 2121     Fixed with Inflation Adjustments            3.1 %
1111 Pennsylvania Avenue                         Office           Washington, DC     2117 / 2117     Fixed with Inflation Adjustments            2.5 %
100 Cambridgeside                          Mixed Use and Other    Cambridge, MA      2121 / 2121     Fixed with Inflation Adjustments            2.4 %
Columbia Center                                  Office           Washington, DC     2120 / 2120     Fixed with Inflation Adjustments            2.4 %

(1) Gross book value represents the historical purchase price plus accrued

interest on sales-type leases.

Gross book value for this property represents our pro rata share of the gross (2) book value of our unconsolidated venture (refer to Note 6 to the consolidated


    financial statements).


    The Park Hotels Portfolio consists of five properties and is subject to a

single master lease. A majority of the land underlying one of these (3) properties is owned by a third party and is ground leased to us through 2044

subject to changes in the CPI; however, our tenant at the property pays this

cost directly to the third party.

The following tables show our portfolio by top 10 markets and property type as of March 31, 2023, excluding unfunded commitments:



                  % of Gross
Market            Book Value
Manhattan(1)               24 %
Washington, DC             11
Boston                      7
Los Angeles                 7
San Francisco               5
Denver                      4
Nashville                   4
Honolulu                    4
Miami                       3
Atlanta                     3


(1) Total New York MSA including areas outside of Manhattan makes up 29% of gross
    book value.


                       % of Gross
Property Type          Book Value
Office                          44 %
Multifamily                     37
Hotel                           12
Life Science                     4
Mixed Use and Other              3


Unfunded Commitments


We have unfunded commitments to certain of our Ground Lease tenants related to
leasehold improvement allowances that we expect to fund upon the completion of
certain conditions. As of March 31, 2023, we had $238.3 million of such
commitments.

We also have unfunded forward commitments related to agreements that we entered
into for the acquisition of new Ground Leases or additions to existing Ground
Leases if certain conditions are met (refer to Note 13 to the consolidated
financial statements). These commitments may also include leasehold improvement
allowances that will be funded to the Ground Lease tenants upon the completion
of certain conditions. As of March 31, 2023, we had an aggregate

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$319.6 million of such commitments. There can be no assurance that the conditions to closing for these transactions will be satisfied and that we will acquire the Ground Leases or fund the leasehold improvement allowances.


Through the Leasehold Loan Fund, we also fund 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. We refer to these arrangements as performance-based commitments. As of
March 31, 2023, we had $139.8 million of such commitments.

Results of Operations for the Three Months Ended March 31, 2023 compared to the Three Months Ended March 31, 2022



                                                            For the Three Months Ended
                                                                    March 31,
                                                           2023                       2022        $ Change

                                                                         (in thousands)

Interest income from sales-type leases                $        57,062
       $   43,031    $   14,031
Operating lease income                                         20,901                  16,966         3,935
Other income                                                      366                     366             -
Total revenues                                                 78,329                  60,363        17,966
Interest expense                                               40,873                  25,321        15,552
Real estate expense                                             1,206                     707           499

Depreciation and amortization                                   2,398                   2,402           (4)
General and administrative                                     15,067                   9,194         5,873
Provision for credit losses                                     2,242                       -         2,242
Other expense                                                  14,089                     108        13,981
Total costs and expenses                                       75,875                  37,732        38,143
Earnings from equity method investments                         2,262      

            2,276          (14)
Net income                                            $         4,716              $   24,907    $ (20,191)


Interest income from sales-type leases increased to $57.1 million for the
three months ended March 31, 2023 from $43.0 million for the same period in
2022. The increase was due primarily to the origination of new Ground Leases and
additional fundings on existing Ground Leases classified as sales-type leases
and Ground Lease receivables.

Operating lease income increased to $20.9 million during the three months ended
March 31, 2023 from $17.0 million for the same period in 2022. The increase was
due primarily to a $2.9 million increase in percentage rent, which was primarily
attributable to our Park Hotels Portfolio for which we recognized no percentage
rent in 2022.

Other income for both the three months ended March 31, 2023 and 2022 includes
$0.1 million of other income relating to a Ground Lease in which we are the
lessee but our tenant at the property pays this expense directly under the terms
of a master lease. Other income for the three months ended March 31, 2023 and
2022 also includes $0.3 million and $0.3 million, respectively, of interest
income on our cash and other ancillary income from our investments.

During the three months ended March 31, 2023 and 2022, we incurred interest
expense from our debt obligations of $40.9 million and $25.3 million,
respectively. The increase in 2023 was primarily the result of issuances of
unsecured notes to fund our growing portfolio of Ground Leases and additional
borrowings on our 2021 Unsecured Revolver which accrued interest at higher rates
in 2023 due to an increase in base interest rates.

Real estate expense was $1.2 million and $0.7 million during the three months
ended March 31, 2023 and 2022, respectively, which consisted primarily of the
amortization of an operating lease right-of-use asset, legal fees, property
taxes and insurance expense. In addition, during both the three months ended
March 31, 2023 and 2022, we also recorded $0.1 million of real estate expense
relating to a Ground Lease in which we are the lessee but our tenant at the
property pays this expense directly under the terms of a master lease. The
increase in 2023 was primarily the result of an increase in recoverable property
taxes.

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Depreciation and amortization was $2.4 million and $2.4 million during the
three months ended March 31, 2023 and 2022, respectively, and primarily relates
to our ownership of the Park Hotels Portfolio and a multi-family property and
the amortization of in-place lease assets.

General and administrative expenses include management fees, an allocation of
expenses to us from our Former Manager, costs of operating as a public company
and stock-based compensation (primarily to our non-management directors). The
following table presents our general and administrative expenses for the
three months ended March 31, 2023 and 2022 ($ in thousands):

                                                      For the Three Months Ended
                                                              March 31,
                                                        2023               2022
Management fees(1)                                 $        5,199      $      4,457

Expense reimbursements to the Former Manager(1)             3,125

3,125


Public company and other costs                              2,063

1,330


Stock-based compensation(2)                                 4,680

282

Total general and administrative expenses $ 15,067 $

9,194

(1) Refer to Note 13 to the consolidated financial statements.

For the three months ended March 31, 2023, relates primarily to the (2) accelerated vesting of iStar's equity-based compensation plans in connection


    with the Merger.




During the three months ended March 31, 2023, we recorded a provision for credit
losses of $2.2 million. The provision was primarily the result of the adoption
of a new accounting standard (refer to Note 3 to the consolidated financial
statements) in 2023 which resulted in a $2.3 million provision on our loan
receivable.

During the three months ended March 31, 2023, other expense consists primarily
of legal and consulting costs and transfer taxes associated with the Merger
(refer to Note 1 to the consolidated financial statements). During the
three months ended March 31, 2022, other expense consists primarily of fees
related to our derivative transactions. The increase during the three months
ended March 31, 2023 was primarily due to legal and consulting costs and
transfer taxes incurred in connection with the Merger.

During the three months ended March 31, 2023, earnings from equity method
investments resulted from our $0.8 million pro rata share of income from our 425
Park Avenue venture and our $1.4 million pro rata share of income from our 32
Old Slip venture. During the three months ended March 31, 2022, earnings from
equity method investments resulted from our $0.9 million pro rata share of
income from our 425 Park Avenue venture and our $1.4 million pro rata share of
income from our 32 Old Slip venture.

Liquidity and Capital Resources


Liquidity is a measure of our ability to meet potential cash requirements,
including to pay interest and repay borrowings, fund and maintain our assets and
operations, complete acquisitions and originations of investments, make
distributions to our shareholders and meet other general business needs. In
order to qualify as a REIT, we are required under the Internal Revenue Code of
1986 to distribute to our shareholders, on an annual basis, at least 90% of our
REIT taxable income, determined without regard to the deduction for dividends
paid and excluding net capital gains. We expect to make quarterly cash
distributions to our shareholders sufficient to meet REIT qualification
requirements.

In the first quarter 2021, we received investment-grade credit ratings from
Moody's Investors Services of Baa1 and Fitch Ratings of BBB+ and entered into an
unsecured revolver (refer to Note 8 to the consolidated financial statements)
with a total capacity of $1.35 billion (the "2021 Unsecured Revolver"). In the
second quarter 2021, the fourth quarter 2021, the first quarter 2022 and the
second quarter 2022, we issued four tranches of unsecured notes with varying
fixed-rates and maturities ranging from June 2031 to May 2052 (collectively the
"Notes"). Our most recent issuance in May 2022 features a stairstep coupon
structure (refer to Note 8 to the consolidated financial statements) that is
unique in the

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unsecured and investment-grade market and will benefit key cash flow metrics.


 In January 2023, we closed on a new $500 million unsecured revolving credit
facility (the "2023 Unsecured Revolver"). The 2023 Unsecured Revolver has a
current borrowing rate of Adjusted SOFR, as defined in the applicable agreement,
plus 100 basis points, with a maturity of July 31, 2025. We also amended our
2021 Unsecured Revolver (refer to Note 8 to the consolidated financial
statements) primarily to transition from LIBOR to Adjusted SOFR, as defined in
the applicable agreement. As evidenced by our 2023 Unsecured Revolver, our 2021
Unsecured Revolver and the Notes, we believe the strong credit profile we have
established utilizing our modern Ground Leases and our current investment-grade
credit ratings from Moody's Investors Services of Baa1 and Fitch Ratings of BBB+
will further accelerate our ability to bring commercial real estate owners,
developers and sponsors more efficiently priced capital and allows us
significant operational and financial flexibility and supports our ability to
scale our Ground Lease platform.

As of March 31, 2023, we had $20 million of unrestricted cash and an aggregate
$880 million of undrawn capacity on our 2021 Unsecured Revolver and 2023
Unsecured Revolver. We refer to this unrestricted cash and additional borrowing
capacity on our 2021 Unsecured Revolver and 2023 Unsecured Revolver as our
"equity" liquidity which can be used for general corporate purposes or leveraged
to acquire or originate new Ground Lease assets. Our primary sources of cash to
date have been proceeds from equity offerings and private placements, proceeds
from our initial capitalization by iStar and two institutional investors and
borrowings from our debt facilities, unsecured notes and mortgages. Our primary
uses of cash to date have been the acquisition/origination of Ground Leases,
repayments on our debt facilities and distributions to our shareholders.

In April 2023, we entered into an at-the-market equity offering (the "ATM")
pursuant to which we may sell shares of our common stock up to an aggregate
purchase price of $300.0 million. We may sell such shares in amounts and at
times to be determined by us from time to time, but we have no obligation to
sell any of the shares. Actual sales, if any, will depend on a variety of
factors to be determined by us from time to time, including, among other things,
market conditions, the trading price of our common stock, capital needs, and our
determinations of the appropriate sources of funding.

We expect our short-term liquidity requirements to include debt service on our
debt obligations (refer to Note 8 to the consolidated financial statements),
distributions to our shareholders, working capital, new acquisitions and
originations of Ground Lease investments. We expect our long-term liquidity
requirements to include debt service on our debt obligations (refer to Note 8 to
the consolidated financial statements), distributions to our shareholders,
working capital, new acquisitions and originations of Ground Lease investments
(including in respect of unfunded commitments - refer to Note 9 to the
consolidated financial statements) and debt maturities. Our primary sources of
liquidity going forward will generally consist of cash on hand and cash flows
from operations, new financings, unused borrowing capacity under our 2021
Unsecured Revolver (subject to the conditions set forth in the applicable loan
agreement), our 2023 Unsecured Revolver (subject to the conditions set forth in
the applicable loan agreement) and common and/or preferred equity issuances. We
expect that we will be able to meet our liquidity requirements over the next
12 months and beyond.

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, 2023 and 2022 ($ in thousands):

                                                              For the Three Months Ended
                                                                      March 31,
                                                                 2023             2022

Cash flows (used in) provided by operating activities $ (6,813)

    $    24,599
Cash flows used in investing activities                          (269,933)

(435,185)


Cash flows provided by financing activities                        276,645

528,339


The decrease in cash flows provided by operating activities during 2023 was
primarily due to costs incurred in connection with the Merger, increased costs
on our debt obligations due to an increase in borrowings and interest rates and
us receiving cash in connection with the termination of a derivative transaction
in 2022, which were partially offset by an increase in rents collected in 2023
from new originations and acquisitions of Ground Leases throughout 2022. The
decrease in cash flows used in investing activities during 2023 was due
primarily to a decrease in new originations and acquisitions of Ground Leases,
which was partially offset by the origination of the Star Holdings Term Loan
Facility and consideration

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paid in connection with the Merger. The decrease in cash flows provided by financing activities during 2023 was due primarily to the issuance of common stock in 2022 and the issuance of unsecured debt to fund our growing Ground Lease portfolio in 2022.

Supplemental Guarantor Disclosure



In March 2020, the Securities and Exchange Commission ("SEC") adopted amendments
to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure
requirements related to certain registered securities. The amendments became
effective on January 4, 2021. We and Portfolio Holdings have filed a
registration statement on Form S-3 with the SEC registering, among other
securities, debt securities of Portfolio Holdings, which will be fully and
unconditionally guaranteed by us. As of March 31, 2023, Portfolio Holdings had
issued and outstanding the Notes, which were registered on a Form S-3 filed by
Old SAFE and Portfolio Holdings (then known as Safehold Operating Partnership
LP). The obligations of Portfolio Holdings to pay principal, premiums, if any,
and interest on the Notes are guaranteed on a senior basis by us. The guarantee
is full and unconditional, and Portfolio Holdings is a consolidated subsidiary
of ours.

As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers
of obligations guaranteed by the parent are not required to provide separate
financial statements, provided that the subsidiary obligor is consolidated into
the parent company's consolidated financial statements, the parent guarantee is
"full and unconditional" and, subject to certain exceptions as set forth below,
the alternative disclosure required by Rule 13-01 is provided, which includes
narrative disclosure and summarized financial information. Accordingly, separate
consolidated financial statements of Portfolio Holdings have not been presented.
Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have
excluded the summarized financial information for Portfolio Holdings because the
assets, liabilities and results of operations of Portfolio Holdings are not
materially different than the corresponding amounts in our consolidated
financial statements, and management believes such summarized financial
information would be repetitive and would not provide incremental value to
investors.

Critical Accounting Estimates



The preparation of financial statements in accordance with generally accepted
accounting principles in the United States of America ("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.

Allowance for credit losses on net investment in sales-type leases and Ground
Lease receivables-Effective January 1, 2023, upon the adoption of ASU 2016-13,
we estimate our allowance for credit losses on net investment in sales-type
leases and Ground Lease receivables, including unfunded commitments, using a
quantitative analysis to estimate expected loss rates for our portfolio of net
investment in sales-type leases and Ground Lease receivables. ASU 2016-13
replaced the incurred loss impairment methodology in prior GAAP with a
methodology that reflects expected credit losses over the life of the investment
and requires consideration of a broader range of reasonable and supportable
information to inform credit loss estimates. We analyze historical unemployment
rates and historical data provided by Trepp ("Trepp") for single asset borrower
loans including loan to value ratios, loss rates, timing of losses, vintage,
property type and other statistics. We utilize historical loss rates, timing of
losses and unemployment rates and update our analysis for current market
conditions and reasonable and supportable forecasts of unemployment rates to
develop an estimate of credit losses. We analyze our portfolio of Ground Leases
based on whether the property is a stabilized property or a development project.
Our development properties are assigned a higher loss rate due to the more
inherent risk of deals under construction.

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We perform a quarterly analysis of our loan receivable that incorporates
management's current judgments about credit quality based on all known and
relevant internal and external factors that may affect collectability. We
consider, among other things, payment status, lien position, borrower financial
resources and investment collateral, collateral type, project economics and
geographical location as well as national and regional economic factors. We
estimate our Expected Loss on our loans receivable based on relevant information
including current market conditions and reasonable and supportable forecasts
that affect the collectability of its investments. The estimate of our Expected
Loss requires significant judgment. We calculated our Expected Loss through the
use of third-party market data that provided current and future economic
conditions that may impact the performance of the commercial real estate assets
securing our investments.

Acquisitions-We evaluate each acquisition transaction to determine whether the
acquired asset meets the definition of a business. Under ASC 805, an acquisition
does not qualify as a business when (i) substantially all of the fair value is
concentrated in a single identifiable asset or group of similar identifiable
assets; (ii) the acquisition does not include a substantive process in the form
of an acquired workforce; or (iii) an acquired contract that cannot be replaced
without significant cost, effort or delay. Acquisitions of a business are
accounted for as business combinations and other acquisition transactions are
accounted for as asset acquisitions. Transaction costs related to asset
acquisitions are capitalized as part of the cost basis of the acquired assets,
while transaction costs related to business combinations are expensed as
incurred.

Our acquisition of iStar was accounted for as a business combination. For
business combinations, we recognize and measure identifiable assets acquired,
liabilities assumed and any noncontrolling interest in the acquiree at their
fair values on our consolidated balance sheets. In a business combination, the
difference, if any, between the purchase consideration and the fair value of
identifiable net assets acquired is either recorded as goodwill or as a bargain
purchase gain.

Fair values are based on available information including discounted cash flow
analysis or similar fair value models. Fair value estimates are also made using
significant assumptions such as capitalization rates, discount rates, fair
market lease rates and other market data. The fair value of our interests in
equity investments acquired is calculated using the fair value of the
investments held by the venture, which are valued using methods as described
above, and considers our economics in the venture.

The fair value of financial instruments, which could include loans receivable or
net investment in sales-type leases, is based on current market conditions and
loan or lease agreements in place. The fair value of tangible assets, which
could include land, buildings, building improvements and tenant improvements is
determined as if these assets are vacant. Intangible assets may include the
value of right of use lease assets, above-market leases and in-place leases.
Right of use lease assets and lease liabilities are measured at the present
value of lease payments not yet paid, discounted at the implied rate charged by
the lessor  if that rate is readily determinable, or if that rate is not readily
determinable, our incremental borrowing rate, as of the date of the acquisition.
Right of use assets are included in "Deferred expenses and other assets, net"
and lease liabilities are recorded in "Accounts payable, accrued expenses and
other liabilities" on our consolidated balance sheets. Above-market leases and
in-place leases are each recorded at their fair values and included in "Deferred
expenses and other assets, net" on our consolidated balance sheets. Intangible
liabilities may also include below-market leases, which are recorded at their
fair values and included in "Accounts payable, accrued expenses and other
liabilities" on our consolidated balance sheets.

Goodwill-Goodwill is calculated as the excess of purchase consideration over the
fair value of the net identifiable assets acquired and primarily relates to the
acquisition of iStar's workforce and future synergies expected to be realized
from the Merger. Goodwill is not subject to amortization but is tested annually
for impairment or more frequently should potential triggering events be
identified that may indicate potential impairment. We do not expect goodwill to
have any tax impact on our financial statements.

For a discussion of other critical accounting policies, refer to Note 3 to the
consolidated financial statements and our 2022 Annual Report and our Current
Report on Form 8-K filed with the SEC on April 4, 2023.

New Accounting Pronouncements-For a discussion of the impact of new accounting
pronouncements on our financial condition or results of operations, refer to
Note 3 to the consolidated financial statements.

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