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iStar and Safety, Income & Growth Announce Expanded Relationship

NEW YORK, Jan. 3, 2019 /PRNewswire/ -- iStar Inc. (STAR) and Safety, Income & Growth Inc. (SAFE) jointly announced today that iStar has made an additional $250 million equity investment in SAFE as part of an expanded effort to accelerate SAFE's growth. The investment provides SAFE with new capital to pursue approximately $750 million of new ground leases assuming SAFE's targeted two-to-one debt-to-equity ratio. Since going public 18 months ago, SAFE has nearly tripled the size of its aggregate ground lease portfolio to approximately $1 billion.

iStar's investment is structured as a purchase of 12.5 million limited partnership units in SAFE's operating partnership at a price of $20.00 per unit. The limited partnership units are economically equivalent to one share of SAFE's common stock. The limited partnership units may be exchanged for shares of common stock subject to stockholder approval, which SAFE intends to seek at an upcoming meeting. After giving effect to the issuance of the new partnership units, iStar's total investment in SAFE will be approximately $400 million or 65% of SAFE's total equity.

In conjunction with the $250 million equity investment, the companies have entered into an amended and restated management agreement. The revised agreement reflects iStar's increased commitment to SAFE and aligns with SAFE's ambitious future growth targets. The material revised terms of the amended management agreement are summarized in the following table.

Terms

Prior Agreement

Amended Agreement

Management Fee

  • 1.0% of total equity (up to $2.5B of equity)
  • 0.75% of total equity (for incremental equity over $2.5B)
  • 1.0% of total equity (up to $1.5B of equity);
  • 1.25% of total equity (for incremental equity of $1.5B - $3.0B);
  • 1.375% of total equity (for incremental equity of $3.0B - $5.0B); and
  • 1.5% of total equity (for incremental equity over $5.0B)

Term

1 year

Initial term from January 1, 2019 - June 30, 2022; non-terminable except for cause.

 

Automatic annual renewals thereafter, subject to non-renewal upon certain findings by SAFE's independent directors and payment of termination fee.   

 

Termination Fee

None

3x prior year's management fee, subject to SAFE having raised $820 million of total equity since inception.



In addition, iStar and SAFE entered into a Stockholder's Agreement that provides, among other things, the following: (i) iStar's discretionary voting power in SAFE will be capped at 41.9%.  iStar will cast all voting power in excess of 41.9% with respect to any matter in the same proportions as SAFE's non-iStar stockholders; (ii) iStar will be subject to certain restrictions on transfer of its SAFE securities; (iii) iStar will be subject to a two year standstill; and (iv) iStar will be granted certain rights to maintain its ownership interest in SAFE upon future issuances of SAFE shares.

Additional information regarding the transaction agreements may be found in the companies' respective Current Reports on Form 8-K filed with the Securities and Exchange Commission.

The transactions were negotiated and approved by committees of independent directors of iStar and of SAFE. iStar's committee was advised by Lazard and Clifford Chance US LLP. SAFE's committee was advised by Houlihan Lokey and Fried, Frank, Harris, Shriver and Jacobson LLP and Hogan Lovells US LLP (as to Maryland law). 

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About iStar
iStar (STAR) finances, invests in and develops real estate and real estate related projects as part of its fully-integrated investment platform. Building on over two decades of experience and more than $40 billion of transactions, iStar brings uncommon capabilities and new ways of thinking to commercial real estate and adapts its investment strategy to changing market conditions. The Company is structured as a real estate investment trust ("REIT"), with a diversified portfolio focused on larger assets located in major metropolitan markets. Additional information on iStar is available on its website at www.istar.com.

iStar logo. (PRNewsFoto/iStar Financial Inc.) (PRNewsfoto/iStar)

About Safety, Income & Growth
Safety, Income & Growth Inc. (SAFE) is the first publicly traded company that focuses on acquiring, owning, managing and capitalizing ground leases. The Company seeks to provide safe, growing income and capital appreciation to shareholders by building a diversified portfolio of high quality ground leases. The Company, which is taxed as a real estate investment trust (REIT), is managed by its largest shareholder, iStar Inc. Additional information on SAFE is available on its website at www.safetyincomegrowth.com.

 

Cision

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