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Equity Investments

12 Months Ended

Dec. 31, 2024

Investments, All Other Investments [Abstract]

Equity Investments

Note 7—Equity Investments

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


								Earnings (losses) from
		Carrying Value						Equity Method Investments⁽¹⁾
		as of						For the Year Ended
		December 31,			December 31,			December 31,
		2024			2023			2024			2023			2022
Equity investment
425 Park Avenue		$	137,348		$	135,288		$	3,245		$	3,536		$	3,403
32 Old Slip			57,574			52,425			5,662			5,670			5,652
Ground Lease Plus Fund⁽¹⁾			30,103			73,428			2,271			5,415			—
Leasehold Loan Fund⁽²⁾			25,009			49,179			11,799			9,608			—
Total		$	250,034		$	310,320		$	22,977		$	24,229		$	9,055

(1)

As of December 31, 2024, the Company has a basis difference of $19.4 million in the Ground Lease Plus Fund that will be amortized over a weighted average remaining term of 105.6 years using the effective interest method. During the years ended December 31, 2024 and 2023, ($0.1) million and $2.4 million, respectively, of the basis difference was amortized as a (decrease) increase to earnings from equity method investments.

(2)

As of December 31, 2024, the Company has a basis difference of $6.5 million in the Leasehold Loan Fund that will be amortized over a weighted average remaining term of 2.3 years using the effective interest method. During the years ended December 31, 2024 and 2023, $4.8 million and $3.0 million, respectively, of the basis difference was amortized as an increase to earnings from equity method investments.

425 Park Avenue—In August 2019, the Company formed a venture with a sovereign wealth fund that is an existing shareholder of the Company to acquire the existing Ground Lease at 425 Park Avenue in New York City. The venture acquired the Ground Lease in November 2019. The Company has a 54.8% noncontrolling equity interest in the venture and is the manager of the venture. iStar was the manager prior to the Merger.

32 Old Slip—In June 2021, the Company acquired a 29.2% noncontrolling equity interest in a Ground Lease at an office property in New York City.

Ground Lease Plus Fund—In connection with Merger, the Company acquired from iStar an investment fund that iStar managed 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”). The Company owns a 53.2% 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 the substantive participating rights of its partner and accounts for this investment as an equity method investment. The Company receives a fee from its partner in exchange for managing the entity and is also entitled to a promote payment on investments in the Ground Lease Plus Fund.

In November 2021, iStar acquired land for $33.3 million and simultaneously structured and entered into a Ground Lease on which a multi-family project will be constructed (refer also to Note 14). In December 2021, iStar sold the Ground Lease to the Ground Lease Plus Fund and recognized no gain or loss on the sale. At the time of iStar’s acquisition in November 2021, the Company and iStar entered into an agreement pursuant to which the Company 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. In January 2024, the Company acquired the Ground Lease from the Ground Lease Plus Fund for $38.3 million, excluding amounts funded by the Company pursuant to a leasehold improvement allowance (refer to Note 14).

In June 2021, the Company entered into two agreements (refer to Note 14) pursuant to each of which it agreed to acquire land and a related Ground Lease originated by iStar when certain construction related conditions are met by a specified time period. In January 2022, iStar sold the two Ground Leases to the Ground Lease Plus Fund, which remain subject to the June 2021 agreement with the Company, and recognized an aggregate $0.5 million of gains on the sale.

Leasehold Loan Fund—In connection with the Merger, the Company acquired from iStar an investment fund that iStar managed that targets customers that may require a mortgage leasehold loan as well as a Ground Lease (the “Leasehold

Loan Fund”). The Company owns a 53.2% noncontrolling equity interest in the Leasehold Loan Fund. The Company does not have a controlling interest in the Leasehold Loan Fund due to the substantive participating rights of its partner. The Company accounts for this investment as an equity method investment and receives a fixed annual administrative fee and an asset management fee from its partner in exchange for managing the entity. The Company is also entitled to a promote payment on certain investments in the Leasehold Loan Fund.

In March 2021, iStar acquired land and simultaneously structured and entered into with the seller a Ground Lease on which a multi-family project was to be constructed. iStar also committed to provide a $75.0 million construction loan to the Ground Lease tenant. In September 2021, the construction loan commitment was transferred to the Leasehold Loan Fund. The construction loan was repaid in full in April 2024. The Leasehold Loan Fund funded $69.4 million of the commitment prior to its repayment.

In February 2022, the Leasehold Loan Fund committed to provide a $130.0 million loan to the ground lessee of a Ground Lease originated by the Company. The loan was for the Ground Lease tenant’s recapitalization of a life science property. As of December 31, 2024, the Leasehold Loan Fund funded $0.8 million of the commitment.

In June 2022, the Leasehold Loan Fund committed to provide a $105.0 million loan to the ground lessee of a Ground Lease originated by the Company. The loan was for the Ground Lease tenant’s recapitalization of a mixed-use property. As of December 31, 2024, the Leasehold Loan Fund funded $40.8 million of the commitment.

In July 2024, the Leasehold Loan Fund committed to provide a $31.5 million loan to the ground lessee of a Ground Lease originated by the Company. The loan was for the Ground Lease tenant’s construction of a student housing property. As of December 31, 2024, the Leasehold Loan Fund has not funded any of the commitment.

Summarized investee financial information—The following table presents the investee level summarized financial information of the Company’s equity method investments as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 ($ in thousands):


		As of December 31,
		2024			2023
Total assets		$	1,026,071		$	1,179,050
Total liabilities			602,428			599,538
Noncontrolling interests			552			24,313
Total equity attributable to parent entities			423,091			555,199

		Year Ended December 31,
		2024			2023			2022
Total revenues		$	65,094		$	64,728		$	45,975
Total expenses			24,860			23,451			22,636
Net income			40,234			41,277			23,339
Net income attributable to parent entities			40,095			40,856			23,339