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Other Investments | 9 Months Ended
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Sep. 30, 2017
Investments, All Other Investments [Abstract] |
Other Investments | Other Investments The Company's other investments and its proportionate share of earnings from equity method investments were as follows ($ in thousands):
|  |  | 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 |
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(1) | Equity in earnings is for the period from April 14, 2017 to September 30, 2017.
(2) | In June 2016, a majority-owned consolidated subsidiary of the Company sold its interest in a real estate equity method investment for net proceeds of $39.8 million and recognized a gain of $31.5 million, of which $10.1 million 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.
(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—In February 2014, the Company partnered with a sovereign wealth fund to form the Net Lease Venture to acquire and develop net lease assets and gave a right of first refusal 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. Several 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. 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 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 December 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, the Company purchased 1.3 million shares of SAFE's common stock for $24.5 million, at an average cost of $19.20 per share, pursuant to a 10b5-1 plan in accordance with Rules 10b5-1 and 10b-18 under the Securities and Exchange Act of 1934, as amended. As of September 30, 2017, the Company had utilized all of the availability authorized in the 10b5-1 Plan and owned approximately 34.6% of SAFE's common stock outstanding. In addition, subsequent to SAFE's initial public offering, 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, purchased 26 thousand shares in the aggregate of SAFE's common stock for an aggregate $0.5 million, at an average cost of $19.20 per share, pursuant to a 10b5-1 plan in accordance 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 all of the availability authorized in the 10b5-1 Plan. 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 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 to receive any performance or incentive compensation. The Company is also entitled to receive expense reimbursements, payable solely in shares 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. The Company has agreed to waive both the management fee and certain of the expense reimbursements through June 30, 2018. In August 2017, the Company committed to provide a $24.0 million loan to the ground lessee of a ground lease originated at SAFE. The loan has an initial term of one year and will be used for the renovation of a medical office building in Atlanta, GA. $5.1 million of the loan was funded as of September 30, 2017. Marina Palms—As of September 30, 2017, the Company owned a 47.5% equity interest in Marina Palms, a 468 unit, two tower residential condominium development in North Miami Beach, Florida. The 234 unit north tower has one unit remaining for sale as of September 30, 2017. The 234 unit south tower is 85% sold or pre-sold (based on unit count) as of September 30, 2017. This entity is not a VIE and the Company does not have controlling interest due to shared control of the entity with its partner. As of September 30, 2017 and December 31, 2016, the venture's carrying value of total assets was $43.5 million and $201.8 million, respectively. Other real estate equity investments—As of September 30, 2017, the Company's other real estate equity investments included equity interests in real estate ventures ranging from 20% to 95%, comprised of investments of $21.8 million in operating properties and $57.9 million in land assets. As of December 31, 2016, the Company's other real estate equity investments included $3.6 million in operating properties and $49.6 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 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, 2017 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, the Company also had investments in real estate related funds and other strategic investments in several other entities that were accounted for under the equity method or cost method. As of September 30, 2017 and December 31, 2016, the carrying value of the Company's cost method investments was $0.8 million and $1.4 million, respectively. Summarized investee financial information—The following table presents the investee level summarized financial information of the Company's equity method investments, which were significant subsidiaries for the nine months ended September 30, 2017 and 2016 ($ 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 |

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