S-4 1 tm2230881-1_s4.htm S-4 tm2230881-1_s4 - none - 123.969324s
As filed with the U.S. Securities and Exchange Commission on December 16, 2022
Registration No. [•]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
iStar Inc.
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization)
6798
(Primary Standard Industrial
Classification Code Number)
95-6881527
(I.R.S. Employer
Identification Number)
1114 Avenue of the Americas, 39th Floor
New York, New York 10036
(212) 930-9400
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Douglas B. Heitner, Esq.
iStar Inc.
1114 Avenue of the Americas, 39th Floor
New York, New York 10036
(212) 930-9400
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of all communications, including communications sent to agent for service, should be sent to:
Kathleen L. Werner, Esq.
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
(212) 878-8000
Douglas B. Heitner, Esq.
iStar Inc.
1114 Avenue of the Americas, 39th Floor
New York, New York 10036
(212) 930-9400
Eric L. Schiele, P.C.
Michael P. Brueck, P.C.
David L. Perechocky
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
(212) 446-4800
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.   ☐
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐
Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer)   ☐
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities may not be issued until the registration statement filed with the Securities and Exchange Commission is effective. The preliminary proxy statement/prospectus is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer and sale is not permitted.
PRELIMINARY — SUBJECT TO COMPLETION, DATED DECEMBER 16, 2022
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MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT
[•], 2023
The boards of directors of iStar Inc., a Maryland corporation (which we refer to as “STAR”), and Safehold Inc., a Maryland corporation (which we refer to as “SAFE”), have each approved a merger agreement, dated as of August 10, 2022 (which we refer to, as amended from time to time, as the “merger agreement”), by and between STAR and SAFE. Pursuant to the merger agreement, STAR and SAFE will combine through a stock-for-stock merger, in which SAFE will merge with and into STAR (which we refer to as the “merger”), with STAR continuing as the surviving corporation and operating under the name “Safehold Inc.” ​(which we refer to as “New SAFE”).
Prior to the merger, STAR will consummate a series of reorganization and separation transactions (which we refer to, collectively, as the “SpinCo reorganization”) pursuant to which, among other things, STAR will separate its remaining legacy non-ground lease assets and businesses into a separate public company, Star Holdings, a Maryland statutory trust (which we refer to as “SpinCo”). Following the SpinCo reorganization, but prior to the effective time of the merger (which we refer to as the “effective time”), STAR will distribute to the stockholders of STAR, on a pro rata basis, all of the issued and outstanding common shares of beneficial interest, par value $0.01 per share, of SpinCo (which we refer to as the “SpinCo distribution” and, together with the SpinCo reorganization, the “spin-off”).
In the merger and related transactions, the charter of STAR will be amended to effect a consolidation of each issued and outstanding share of common stock, par value $0.001 per share, of STAR (which we refer to as “STAR common stock”), by means of a reverse stock split (which we refer to as the “reverse split”), whereby each such share of STAR common stock will be combined into a fraction of a share of STAR common stock (which we refer to as the “STAR share consolidation ratio”) based on the number of shares of common stock, par value $0.01 per share, of SAFE (which we refer to as the “SAFE common stock”) owned by STAR, after giving effect to certain adjustments, and the number of shares of STAR common stock outstanding, in each case as of immediately prior to the reverse split, and further amended to change the par value per share of STAR common stock following the reverse split to $0.01 per share of STAR common stock (which we refer to as the “par value change”).
In the merger, SAFE stockholders will have the right to receive, after the reverse split, one (1) newly issued share of common stock, par value $0.01 per share, of New SAFE (which we refer to as “New SAFE common stock”) for each share of SAFE common stock that they own immediately prior to the effective time of the merger (which we refer to as the “merger exchange ratio”), as described in more detail in the accompanying joint proxy statement/prospectus under the heading “The Merger Agreement — Merger Consideration.” The merger exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing of the merger. Shares of New SAFE common stock will be traded on the New York Stock Exchange under the ticker symbol “SAFE.”
STAR and SAFE will each hold special meetings of their respective stockholders on [•] in connection with the merger and related transactions. STAR stockholders are cordially invited to attend a special meeting of the stockholders of STAR (which we refer to as the “STAR special meeting”) to be held on [•] at [•] a.m., Eastern Time in a virtual format, and SAFE stockholders are cordially invited to attend a special meeting of the stockholders of SAFE (which we refer to as the “SAFE special meeting”) to be held on [•] at [•] a.m., Eastern Time in a virtual format.
Your vote is very important, regardless of the number of shares you own.   We cannot complete the merger unless (i) STAR stockholders approve each of the merger and the issuance of shares of New SAFE common stock in connection with the merger and (ii) SAFE stockholders approve the merger. Approval of the merger by STAR stockholders requires the affirmative vote of holders of at least a majority of the outstanding shares of STAR common stock and STAR 8% Series D Cumulative Redeemable preferred stock (which we refer to as the “STAR Series D preferred stock”) entitled to vote thereon, voting together as a single class, assuming a quorum is present. Approval of the issuance of shares of New SAFE common stock by STAR stockholders requires the affirmative vote of at least a majority of the votes cast by holders of outstanding shares of STAR common stock and STAR Series D preferred stock, voting together as a single class, assuming a quorum is present. Approval of the merger by SAFE stockholders requires the affirmative vote of holders of at least a majority of the outstanding shares of SAFE common stock entitled to vote thereon, assuming a quorum is present.
At the STAR special meeting, STAR stockholders will be asked to vote on (i) a proposal to approve the merger (which we refer to as the “STAR merger proposal”), (ii) a proposal to approve the issuance of shares of New SAFE common stock in connection with the merger (which we refer to as the “STAR stock issuance proposal”), (iii) a proposal

to approve, on a non-binding advisory basis, the compensation that STAR’s named executive officers may receive in connection with the merger (which we refer to as the “STAR non-binding advisory compensation proposal”) and (iv) a proposal to approve the adjournment from time to time of the STAR special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the STAR special meeting, or any adjournment or postponement thereof, to approve each of the STAR merger proposal and the STAR stock issuance proposal (which we refer to as the “STAR adjournment proposal” and, collectively, with the STAR merger proposal, the STAR stock issuance proposal and the STAR non-binding advisory compensation proposal, the “STAR proposals”).
Based on the unanimous recommendation of a special committee of independent directors of STAR, the disinterested members of STAR’s board of directors have unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger and the issuance of shares of New SAFE common stock in connection with the merger, are advisable, fair to and in the best interests of STAR, and the STAR board of directors recommends that STAR stockholders vote (i) “FOR” the approval of the STAR merger proposal, (ii) “FOR” the approval of the STAR stock issuance proposal, (iii) “FOR” the approval of the STAR non-binding advisory compensation proposal and (iv) “FOR” the approval of the STAR adjournment proposal.
At the SAFE special meeting, SAFE stockholders will be asked to vote on (i) a proposal to approve the merger (which we refer to as the “SAFE merger proposal”), (ii) a proposal to approve certain changes to SAFE’s Caret program (which we refer to as the “SAFE Caret amendment proposal”) and (iii) a proposal to approve the adjournment from time to time of the SAFE special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the SAFE merger proposal at the time of the SAFE special meeting or any adjournment or postponement thereof (which we refer to as the “SAFE adjournment proposal” and, collectively with the SAFE merger proposal and the SAFE Caret amendment proposal, the “SAFE proposals”).
Based on the unanimous recommendation of a special committee of independent directors of SAFE with respect to the merger proposal, the disinterested members of SAFE’s board of directors have unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of SAFE and its stockholders and the SAFE board of directors recommends that SAFE stockholders vote (i) “FOR” the approval of the SAFE merger proposal, (ii) “FOR” the approval of the SAFE Caret amendment proposal and (iii) “FOR” the approval of the SAFE adjournment proposal.
More information about STAR, SAFE, the special meetings, the merger agreement and the transactions contemplated thereby, including the merger, is included in this joint proxy statement/prospectus. You should also consider carefully the risks that are described in the “Risk Factors” section, beginning on page 34.
Whether or not you expect to attend your company’s special meeting, the details of which are described in the accompanying joint proxy statement/prospectus, please immediately submit your proxy by telephone, by the Internet or by completing, signing, dating and returning your signed proxy card(s) in the enclosed prepaid return envelope so that your shares may be represented at the applicable special meeting.
If STAR stockholders have any questions or require assistance in voting their shares of STAR common stock, they should call Innisfree M&A Incorporated, STAR’s proxy solicitor for its special meeting, at (877) 825-8777.
If SAFE stockholders have any questions or require assistance in voting their shares of SAFE common stock, they should call D.F. King & Co., Inc., SAFE’s proxy solicitor for its special meeting, at (888) 887-0082.
We hope to see you at the applicable special meeting and look forward to the successful completion of the merger.
On behalf of the boards of directors of STAR and SAFE, thank you for your consideration and continued support.
Sincerely,
Jay Sugarman
Chairman of the Board of Directors and Chief Executive Officer of STAR and SAFE
Barry Ridings
Chairman of the STAR Special Committee
Stefan Selig
Member of the SAFE Special Committee
Neither the U.S. Securities and Exchange Commission (which we refer to as the “SEC”) nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying joint proxy statement/prospectus or determined that the accompanying joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
The accompanying joint proxy statement/prospectus is dated [•], 2023 and is first being mailed to STAR stockholders and SAFE stockholders on or about [•], 2023.

 
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iStar Inc.
1114 Avenue of the Americas, 39th Floor
New York, New York 10036
(212) 930-9400
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On []
Dear Stockholders of iStar Inc.:
We are pleased to invite you to attend a special meeting of stockholders of iStar Inc., a Maryland corporation (which we refer to as “STAR”). The meeting will be held on [•] at [•] a.m., Eastern Time in a virtual meeting format (which we refer to as the “STAR special meeting”), to consider and vote upon the following matters:

a proposal to approve the merger of Safehold Inc., a Maryland corporation (which we refer to as “SAFE”), with and into STAR, with STAR continuing as the surviving corporation and operating under the name “Safehold Inc.” ​(which we refer to as “New SAFE”), as contemplated by the merger agreement (which we refer to, as amended from time to time, as the “merger agreement”) entered into by and between STAR and SAFE on August 10, 2022 (which we refer to as the “STAR merger proposal”);

a proposal to approve the issuance of shares of common stock, par value $0.01 per share, of New SAFE (which we refer to as “New SAFE common stock”) in connection with the merger (which we refer to as the “STAR stock issuance proposal”);

a proposal to approve, on a non-binding advisory basis, certain compensation that STAR’s named executive officers may receive in connection with the merger (which we refer to as the “STAR non-binding advisory compensation proposal”); and

a proposal to approve the adjournment of the STAR special meeting from time to time, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the STAR special meeting, or any adjournment or postponement thereof, to approve each of the STAR merger proposal and the STAR stock issuance proposal (which we refer to as the “STAR adjournment proposal”).
The approval by STAR stockholders of each of the STAR merger proposal and the STAR stock issuance proposal is a condition to the completion of the merger. If each of the STAR merger proposal and the STAR stock issuance proposal is not approved, the merger and related transactions will not be completed.
Since the vote on the STAR non-binding advisory compensation proposal is advisory only, it will not be binding on STAR. Accordingly, if the STAR merger proposal is approved and the merger is completed, the merger-related compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the vote on the STAR non-binding advisory compensation proposal.
Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the STAR special meeting.
The special meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. No physical meeting will be held. You will be able to attend the special meeting online by visiting [•]. You also will be able to vote your shares online by attending the special meeting by webcast.
 

 
To participate in the special meeting, you will need to review the information included on your proxy card or on the instructions that accompanied your proxy materials. The password for the meeting is [•].
Holders of record of shares of common stock, par value $0.001 per share, of STAR (which we refer to as “STAR common stock”) and shares of 8% Series D Cumulative Redeemable Preferred Stock, par value $0.001 per share, of STAR (which we refer to as “STAR Series D preferred stock”) at the close of business on [•] are entitled to notice of, and to vote at, the STAR special meeting and any adjournments or postponements of the STAR special meeting.
To be approved, the STAR merger proposal requires the affirmative vote of holders of at least a majority of the outstanding shares of STAR common stock and STAR 8% Series D Cumulative Redeemable preferred stock (which we refer to as the “STAR Series D preferred stock”) entitled to vote thereon, voting together as a single class, assuming a quorum is present.
To be approved, each of the STAR stock issuance proposal, the STAR non-binding advisory compensation proposal and the STAR adjournment proposal requires the affirmative vote of at least a majority of the votes cast by holders of outstanding shares of STAR common stock and STAR Series D preferred stock, voting together as a single class, assuming a quorum is present. If a quorum is not present, the chairman of the STAR special meeting may adjourn the meeting.
Your vote is important. Whether or not you expect to attend the STAR special meeting, we urge you to vote your shares as promptly as possible by: (1) accessing the Internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the STAR special meeting. If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder.
By Order of the Board of Directors,
Geoffrey M. Dugan
General Counsel, Corporate and Secretary
[•], 2023
New York, New York
 

 
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Safehold Inc.
1114 Avenue of the Americas, 39th Floor
New York, New York 10036
(212) 930-9400
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On []
Dear Stockholders of Safehold Inc.:
We are pleased to invite you to attend a special meeting of stockholders of Safehold Inc., a Maryland corporation (which we refer to as “SAFE”). The meeting will be held on [•] at [•] a.m., Eastern Time in a virtual meeting format (which we refer to as the “SAFE special meeting”), to consider and vote upon the following matters:

a proposal to approve the merger of SAFE with and into iStar Inc., a Maryland corporation (which we refer to as “STAR”), with STAR continuing as the surviving corporation and operating under the name “Safehold Inc.” ​(which we refer to as “New SAFE”), as contemplated by the merger agreement (which we refer to, as amended from time to time, as the “merger agreement”) entered into by and between STAR and SAFE on August 10, 2022 (which we refer to, collectively, as the “SAFE merger proposal”);

a proposal to approve certain changes to SAFE’s Caret program (which we refer to as the “SAFE Caret amendment proposal”); and

a proposal to approve the adjournment of the SAFE special meeting from time to time, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the SAFE special meeting, or any adjournment or postponement thereof, to approve each of the SAFE merger proposal and the SAFE Caret amendment proposal (which we refer to as the “SAFE adjournment proposal”).
The approval by SAFE stockholders of the SAFE merger proposal is a condition to the completion of the merger. If the SAFE merger proposal is not approved, the merger and related transactions will not be completed.
The approval by SAFE stockholders of the SAFE Caret amendment proposal is not a condition to the completion of the merger; however, the approval of the SAFE Caret amendment proposal is a condition to the closing of the sale by STAR of $200 million of shares of SAFE common stock to a third-party investor, the proceeds of which are intended to be used by STAR to reduce the outstanding principal amount of STAR’s senior unsecured notes. The merger agreement includes a covenant of STAR to repay its outstanding senior unsecured notes substantially concurrently with completion of the merger.
Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the SAFE special meeting.
The special meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. No physical meeting will be held. You will be able to attend the special meeting online by visiting [•]. You also will be able to vote your shares online by attending the special meeting by webcast.
To participate in the special meeting, you will need to review the information included on your proxy card or on the instructions that accompanied your proxy materials. The password for the meeting is [•].
Holders of record of shares of common stock, par value $0.01 per share, of SAFE (which we refer to as the “SAFE common stock”), at the close of business on [•] are entitled to notice of, and to vote on, all proposals at the SAFE special meeting and any adjournments or postponements of the SAFE special meeting.
 

 
To be approved, the SAFE merger proposal requires the affirmative vote of holders of at least a majority of the outstanding shares of SAFE common stock entitled to vote thereon, assuming a quorum is present.
To be approved, each of the SAFE Caret amendment proposal and the SAFE adjournment proposal requires the affirmative vote of at least a majority of the votes cast by holders of outstanding shares of SAFE common stock, assuming a quorum is present. If a quorum is not present, the chairman of the SAFE special meeting may adjourn the meeting.
Your vote is important. Whether or not you expect to attend the SAFE special meeting, we urge you to vote your shares as promptly as possible by: (1) accessing the Internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the SAFE special meeting. If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder.
By Order of the Board of Directors,
Geoffrey M. Dugan
General Counsel, Corporate and
Secretary
[•], 2023
New York, New York
 

 
ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates by reference important business and financial information about STAR and SAFE from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:
iStar Inc.
1114 Avenue of the Americas, 39th Floor
New York, New York 10036
(212) 930-9400
Attention: Investor Relations
or
Safehold Inc.
1114 Avenue of the Americas, 39th Floor
New York, New York 10036
(212) 930-9400
Attention: Investor Relations
or
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Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders may call toll free:
(877) 825-8777
Banks and Brokers may call collect:
(212) 750-5833
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, New York 10005
Stockholders may call toll free:
(888) 887-0082
Banks and Brokers may call collect:
(212) 269-5550
Email: SAFE@dfking.com
Investors may also consult the websites of STAR or SAFE for more information concerning the merger and the other transactions described in this joint proxy statement/prospectus. The website of STAR is www.istar.com and the website of SAFE is www.safeholdinc.com. Information included on these websites is not incorporated by reference into this joint proxy statement/prospectus.
If you would like to request any documents, please do so by [], in order to receive them before the special meetings.
For a more detailed description of the information incorporated by reference in this joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information.”
 

 
ABOUT THIS DOCUMENT
This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by STAR, constitutes a prospectus of STAR under Section 5 of the Securities Act of 1933, as amended (which we refer to as the “Securities Act”), with respect to the New SAFE common stock to be issued to SAFE stockholders in connection with the merger. This document also constitutes a joint proxy statement of STAR and SAFE under Section 14(a) of the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”). It also constitutes a notice of meeting with respect to the STAR special meeting and the SAFE special meeting, at which STAR stockholders and SAFE stockholders, respectively, will be asked to vote upon certain proposals to approve the merger and other related matters.
You should not rely on any information that is not contained or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [•]. You should not assume that the information contained in, or incorporated by reference into, this joint proxy statement/prospectus is accurate as of any date other than the date on the front cover of those documents. Neither our mailing of this joint proxy statement/prospectus to STAR stockholders or SAFE stockholders nor the issuance of New SAFE common stock in connection with the merger will create any implication to the contrary.
Neither STAR stockholders nor SAFE stockholders should construe the contents of this joint proxy statement/prospectus as legal, tax or financial advice. STAR stockholders and SAFE stockholders should consult with their own legal, tax, financial or other professional advisors. All summaries of, and references to, the agreements governing the terms of the transactions described in this joint proxy statement/prospectus are qualified by the full copies of and complete text of such agreements in the forms attached hereto as annexes, which are also available on the Electronic Data Gathering Analysis and Retrieval System (EDGAR) of the SEC website at www.sec.gov.
This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding STAR has been provided by STAR and information contained in this joint proxy statement/prospectus regarding SAFE has been provided by SAFE.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE MERGER OR DETERMINED IF THIS JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 

 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which STAR and SAFE operate and beliefs of and assumptions made by STAR’s management and SAFE’s management, involve uncertainties that could significantly affect the financial or operating results of STAR or SAFE. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed transactions involving STAR and SAFE, including future financial and operating results, plans, objectives, expectations and intentions. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to creating value for stockholders, benefits of the proposed transactions to tenants, employees, stockholders and other constituents of the combined company, integrating our companies, cost savings and the expected timetable for completing the proposed transactions — are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and, therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to, those set forth under “Risk Factors” as well as the following:

risks associated with the ability to consummate the merger;

risks associated with the merger exchange ratio and the STAR share consolidation ratio;

risks associated with the dilution of STAR stockholders in the merger;

risks associated with the failure to consummate the merger;

risks associated with provisions in the merger agreement that could discourage a potential competing acquirer of either STAR or SAFE;

risks associated with the pendency of the merger adversely affecting the businesses of STAR and SAFE;

risks associated with the different interests in the merger of certain directors and executive officers of STAR and SAFE;

risks associated with the different interests in the merger of STAR, a significant stockholder of SAFE;

risks associated with the failure of the spin-off to deliver its intended results;

risks associated with the spin-off distracting management time and attention and giving rise to disputes or other unfavorable effects;

risks associated with the spin-off exposing STAR and New SAFE to liabilities arising out of fraudulent conveyance laws;

risks associated with the agreements entered into in connection with the spin-off not reflecting arm’s-length terms;

risks associated with the expenses incurred by New SAFE in connection with the transactions;

risks associated with the inability of New SAFE to retain key employees following the merger;

risks associated with New SAFE’s failure to effectively manage its operations following the merger;

risks associated with the trading price of shares of New SAFE common stock following the merger;
 

 

risks associated with the historical and unaudited pro forma condensed combined financial information presented herein not being representative of New SAFE’s results post-transactions;

risks associated with New SAFE’s indebtedness post-merger;

risks relating to reductions in distributions and potential dilution to SAFE and New SAFE common stockholders arising from distributions to holders of Caret units (as defined below);

risks that the proposed changes to the Caret program (as defined below) may fail to improve market recognition of SAFE’s and New SAFE’s two distinct components of value;

risks relating to potential conflicts of interest between holders of SAFE and New SAFE common stock and holders of Caret units;

risks that the proposed changes to the Caret program will place certain limitations on SAFE and New SAFE;

risks associated with STAR or SAFE failing to qualify as a REIT for U.S. federal income tax purposes;

risks associated with the complex organizational and operational requirements of REITs;

risks associated with New SAFE’s limited ability to engage in certain prohibited transactions for U.S. federal income tax purposes;

risks associated with a decline in the market price for New SAFE common stock as a result of the transactions;

risks associated with rights of holders of the New SAFE common stock being different from those of holders of the STAR common stock;

risks associated with anti-takeover effects of certain provisions of New SAFE’s organizational documents, the MGCL and the documents governing the Caret program;

risks associated with certain provisions of New SAFE’s organizational documents limiting shareholder recourse and access to judicial forum;

risks associated with New SAFE not paying dividends at or above the rate currently paid by STAR or SAFE post-transactions; and

those additional risks and factors discussed in reports filed with the SEC by STAR and SAFE from time to time, including those discussed under the heading “Risk Factors” in their respective most recently filed reports on Forms 10-K and 10-Q.
Neither STAR nor SAFE undertakes any duty to update any forward-looking statements appearing in this document, except as may be required by applicable securities laws.
 

 
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QUESTIONS AND ANSWERS
The following are answers to some questions that you, as a stockholder of iStar Inc., a Maryland corporation (which we refer to as “STAR”), or a stockholder of Safehold Inc., a Maryland corporation (which we refer to as “SAFE”), may have regarding the proposed transactions between STAR and SAFE and the other matters being considered at the special meeting of STAR (which we refer to as the “STAR special meeting”) and at the special meeting of SAFE (which we refer to as the “SAFE special meeting”). STAR and SAFE urge you to carefully read this joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the special meetings. Additional important information is also contained in the annexes to and the documents incorporated by reference into this joint proxy statement/prospectus.
Q:
What is the merger?
A:
STAR and SAFE have agreed to combine pursuant to the terms of an Agreement and Plan of Merger, dated as of August 10, 2022 (which we refer to, as amended from time to time, as the “merger agreement”), by and between STAR and SAFE. A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus.
The merger agreement provides that, subject to the terms and conditions thereof, SAFE will merge with and into STAR (which we refer to as the “merger”). The surviving company of the merger will be named Safehold Inc. (which we refer to as “New SAFE”) and its shares of common stock will trade on the New York Stock Exchange under the symbol “SAFE.”
In the merger and related transactions, each issued and outstanding share of common stock, par value $0.001 per share, of STAR (which we refer to as the “STAR common stock”) will, by means of a reverse stock split (which we refer to as the “reverse split”), be combined into a fraction of a share of STAR common stock (which we refer to as the “STAR share consolidation ratio”) equal to (i)(a) the number of shares of common stock, par value $0.01 per share, of SAFE (which we refer to as “SAFE common stock”) held by STAR and its wholly-owned subsidiaries as of immediately prior to the reverse split (after giving effect to (w) the spin-off (as defined below), (x) the distribution by STAR of approximately 6.63 million of its shares of SAFE common stock to holders of STAR common stock in a pro rata distribution paid on December 7, 2022 (which we refer to as the “STAR special distribution”); (y) any sales or other distributions by STAR of SAFE common stock that occur prior to the reverse split, including distributions in respect of STAR’s performance incentive program known as “iPIP” and (z) the MSD transactions (as defined below)), plus (b) 1,195,034 (representing $50 million of shares of SAFE common stock based on the volume-weighted average price of the SAFE common stock during the 10-day period ended August 9, 2022), plus (c) the number of shares of SAFE common stock payable in respect of accrued but unpaid management fees owing to STAR, divided by (ii) the aggregate number of issued and outstanding shares of STAR common stock as of immediately prior to the reverse split.
Based on (i) the number of shares of STAR common stock outstanding as of September 30, 2022; (ii) our current estimate of the number of shares of SAFE common stock that will be owned by STAR as of the closing date of the merger (which we define as the “closing date”), after giving effect to the adjustments described in the immediately preceding paragraph; and (iii) the approximate respective trading prices of $26.46 per share of SAFE common stock, as of September 30, 2022, and $7.07 per share of STAR common stock adjusted for the STAR special distribution, as of September 30, 2022, we currently estimate that the STAR share consolidation ratio will be approximately 0.138, meaning that, in the reverse split each STAR stockholder is expected to receive approximately 0.138 of a share of STAR common stock for each share of STAR common stock that such stockholder owns prior to the reverse split. These shares will remain outstanding as shares of common stock, par value $0.01 per share, of New SAFE (which we refer to as “New SAFE common stock”) from and after the effective time of the merger (which we refer to as the “effective time”). By virtue of the merger, each share of SAFE common stock issued and outstanding immediately prior to the effective time will be converted into the right to receive a fixed number of one share of New SAFE common stock (which we refer to as the “merger exchange ratio”).
 
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The merger exchange ratio of one share of New SAFE common stock for each outstanding share of SAFE common stock (other than certain excluded shares) is fixed. The STAR share consolidation ratio, which determines the number of shares of New SAFE common stock to be received by holders of STAR common stock in connection with the merger, is not fixed and will be finally determined based on the number of shares of SAFE common stock held by STAR and the number of shares of STAR common stock outstanding at the time of the reverse split, which will occur just prior to the merger. The final STAR share consolidation ratio is subject to change based on a number of factors and may be higher or lower than 0.138. Items that could cause a change in the final STAR share consolidation ratio include, without limitation, any of the following that may occur prior to the closing of the merger: sales or other distributions by STAR of shares of SAFE common stock owned by STAR; increases or decreases in the price of SAFE common stock which, among other things, will affect the number of shares of SAFE common stock that STAR will be required to distribute to participants in its iPIP programs and that will serve as collateral for a margin loan financing related to the spin-off, as discussed further below; the receipt of lower prices than anticipated for legacy asset sales, delays in the anticipated timing of legacy asset sales and/or insufficient sales of legacy assets, which could necessitate STAR having to sell SAFE shares in order to raise additional cash proceeds to satisfy its liabilities; and delays in the timing of closing of the merger, which could also necessitate STAR having to raise additional cash from sales of SAFE shares to compensate for cash used to fund operating activities.
Based on September 30, 2022 stock prices and assuming a STAR share consolidation ratio of 0.138, we currently estimate that New SAFE will have approximately 63.6 million shares of New SAFE common stock outstanding upon completion of the merger, of which (x) approximately 36.4 million shares (or approximately 57.3%) will have been issued to holders of SAFE common stock (other than STAR) in the merger (including former stockholders of STAR who received an aggregate of approximately 6.63 million (or approximately 10.4% of the outstanding shares of New SAFE) shares of SAFE common stock in the STAR special distribution and continue to hold their SAFE shares at the effective time of the merger); (y) approximately 12.0 million shares (or approximately 18.9%) will have been issued to holders of STAR common stock in the reverse split; and (z) approximately 15.1 million shares (or approximately 23.8%) will have been contributed by STAR to SpinCo.
Holders of outstanding preferred stock, par value $0.001 per share, of STAR (which we refer to as “STAR preferred stock”) will receive cash in the merger in an amount per share equal to the liquidation preference of such share of preferred stock plus accrued and unpaid dividends to the closing date.
Q:
What happens if the market price of shares of STAR common stock or SAFE common stock changes before the closing of the merger?
A:
As discussed in the answer to the preceding question, changes in the market price of SAFE common stock will impact the number of shares of SAFE common stock that STAR will own at the time of the reverse split, which in turn will affect the final STAR share consolidation ratio. The final STAR share consolidation ratio is relevant to the relative ownership percentages of former holders of STAR common stock, as a group, and former holders of SAFE common stock, as a group, of the New SAFE common stock immediately after giving effect to the merger.
Q:
What is the SAFE Caret amendment?
A:
The SAFE Caret amendment is a proposed amendment to the terms of SAFE’s existing Caret program to effect a restructuring of the Caret program and significant changes to the terms of the Caret units, including, among other matters:

eliminating Caret unit holders’ rights to refinancing proceeds in excess of an asset’s investment basis;

limiting distributions to Caret units in certain circumstances, such as restricting future Caret unit distributions until SAFE (as holder of the GL units (as defined below)) is made whole in the event the operating partnership of SAFE (and of New SAFE after the merger) (which we refer to as “Portfolio Holdings”) fails to recover its investment basis in certain ground lease assets from the sale thereof following a default under the corresponding ground lease;
 
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expanding the circumstances pursuant to which Portfolio Holdings is required to sell a ground lease asset and requiring sales of a ground lease asset to an unaffiliated third party or through an arm’s length marketed process; and

providing that any material amendment to the limited liability company agreement of Portfolio Holdings, after giving effect to the SAFE Caret amendment (which we refer to as the “Portfolio Holdings LLCA”), that adversely impacts the interest of Caret unit holders, subject to certain agreed exceptions, will require the consent of (i) a majority of Caret unit holders that are not SAFE (or, after the merger, New SAFE) or members of its management, prior to certain specified liquidity transactions, and (ii) a majority of the members of a committee of independent directors and, for certain amendments, a majority of Caret unit holders that are not SAFE (or, after the merger, New SAFE) or members of its management, following certain specified liquidity transactions.
For more information, see “SAFE Proposal 2: The SAFE Caret Amendment Proposal.”
Q:
Why am I receiving this joint proxy statement/prospectus?
A:
The merger cannot be completed unless the following conditions are satisfied or waived (if waivable):

STAR stockholders vote to approve the merger (which we refer to as the “STAR merger proposal”);

STAR stockholders vote to approve the issuance of shares of New SAFE common stock in connection with the merger (which we refer to as the “STAR stock issuance proposal”); and

SAFE stockholders vote to approve the merger (which we refer to as the “SAFE merger proposal”).
The approval by SAFE stockholders of the SAFE Caret amendment proposal is not a condition to the completion of the merger; however, the approval of the SAFE Caret amendment proposal is a condition to the closing of the MSD transactions (as defined below), the proceeds of which are intended to be used by STAR to reduce the outstanding principal amount of STAR’s senior unsecured notes. The merger agreement includes a covenant of STAR to repay its outstanding senior unsecured notes substantially concurrently with completion of the merger.
Each of STAR and SAFE will hold separate special meetings of their stockholders to obtain approvals for these and other related proposals as described herein.
This joint proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the special meetings, and you should read it carefully. It is a joint proxy statement because the STAR board of directors is soliciting proxies from its stockholders and the SAFE board of directors is soliciting proxies from its stockholders. It is a prospectus because New SAFE will issue shares of its common stock in connection with the merger. The enclosed voting materials allow you to vote your shares without attending your respective meeting.
Your vote is important. We encourage you to vote as soon as possible.
Q:
Why is STAR proposing the merger?
A:
Among other reasons, the STAR board of directors, acting on the recommendation of a committee comprised solely of independent directors (which we refer to as the “STAR special committee”), approved the merger agreement and recommended that STAR stockholders approve the STAR merger proposal and the STAR stock issuance proposal because the merger represents the culmination of STAR’s stated corporate strategy since 2019 and they believe that the merger and related transactions will provide a number of strategic benefits and opportunities for STAR stockholders. For more information, see “The Merger — STAR’s Reasons for the Merger; Recommendations of the STAR Board of Directors.”
Q:
Why is SAFE proposing the merger?
A:
Among other reasons, the SAFE board of directors, acting on the recommendation of a committee comprised solely of independent directors (which we refer to as the “SAFE special committee”), approved the merger agreement and recommended that SAFE stockholders approve the SAFE merger proposal based on a number of strategic and financial benefits, including the potential for New SAFE to create
 
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additional long-term value for SAFE stockholders due to its improved credit profile and stronger balance sheet and enhanced ability to raise capital in the future, and the expected cost savings and value that SAFE stockholders will benefit from through the internalization of STAR’s management team and intellectual property. For more information, see “The Merger — SAFE’s Reasons for the Merger; Recommendations of the SAFE Board of Directors.”
Q:
Why is SAFE proposing the Caret amendment?
A:
Approval of the Caret amendment proposal by SAFE stockholders is required to consummate the MSD transactions, as defined below. Additionally, among other reasons, the SAFE board of directors believes that the proposed modifications to the Caret program reflect various enhancements that should help to achieve the stated purpose of improving the recognition of the value of unrealized capital appreciation (as defined below) in SAFE’s ground lease portfolio, simplify the overall structure of SAFE’s Caret program and better position SAFE to make potential future sales of Caret units to investors in either private or public offerings. For more information, see “SAFE Proposal 2: The SAFE Caret Amendment Proposal — Principal Reasons for Changes to the Caret Program” and “The MSD Transactions.”
Q:
What are the MSD Transactions and why are they important?
A:
STAR and MSD Partners, L.P. (which we refer to as “MSD Partners”) entered into a stock purchase agreement, dated as of August 10, 2022, to which SAFE is also a party, pursuant to which MSD Partners has agreed to purchase 5,405,406 shares of SAFE common stock from STAR for an aggregate purchase price of $200,000,022.00, or $37.00 per share, payable in cash. We refer to this transaction as the “MSD stock purchase.” SAFE and Caret Ventures LLC (which we refer to as “Caret Ventures”) entered into a subscription agreement, dated as of August 10, 2022, with MSD Partners pursuant to which MSD Partners has subscribed to purchase 100,000 Caret units for an aggregate purchase price of $20,000,000.00, payable in cash. We refer to this transaction as the “MSD Caret unit purchase,” and together with the MSD stock purchase as the “MSD transactions.” The closings of the MSD stock purchase and the MSD Caret unit purchase are conditioned on each other and will take place immediately prior to, and on the same date as, the closing of the merger, subject to the satisfaction of certain other closing conditions. The closing of the MSD Caret unit purchase is subject to the approval of the SAFE Caret amendment proposal at the special meeting. If the SAFE Caret amendment proposal is not approved at the special meeting, MSD Partners will have the right to terminate both the MSD Caret unit purchase and the MSD stock purchase. In addition, if the merger agreement is terminated for any reason, the MSD stock purchase agreement and the MSD Caret unit subscription agreement (as defined below) will also terminate.
STAR intends to use the proceeds of the MSD stock purchase to reduce the outstanding principal amount of its senior unsecured notes. The merger agreement includes a covenant of STAR to repay its outstanding senior unsecured notes substantially concurrently with completion of the merger. If the MSD stock purchase does not occur for any reason, STAR will have to obtain $200 million from other sources in order to satisfy that covenant.
Q:
What is the spin-off and why is it important?
A:
Prior to the merger, STAR will consummate (1) a series of internal reorganization and separation transactions (which we refer to, collectively, as the “SpinCo reorganization”) in order to separate its remaining legacy non-ground lease assets and businesses into a separate public company, STAR Holdings, a Maryland statutory trust (which we refer to as “SpinCo”) and (2) a pro-rata distribution of the common shares of SpinCo to STAR’s common stockholders (which we refer to as the “SpinCo distribution” and, together with the SpinCo reorganization, the “spin-off”). The spin-off is important because it will separate STAR’s assets and liabilities related to its non-ground lease business from STAR before STAR and SAFE complete the merger. Completing the spin-off prior to the merger will improve New SAFE’s credit profile and enable New SAFE to be dedicated to the ground lease business. SpinCo will be dedicated to the business of managing and monetizing STAR’s remaining non-ground lease legacy assets, which are comprised primarily of interests in real properties that present uncertain future cash flows, and shares of New SAFE.
 
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Q:
What are the reasons for the reverse split?
A:
The reverse split will function to combine the outstanding shares of STAR common stock into fractions of a share equal to the STAR share consolidation ratio, after which new shares will be issued pursuant to the merger to holders of SAFE common stock. The reverse split and the STAR share consolidation ratio are designed to achieve a result similar to STAR making a distribution of its shares of SAFE common stock to the holders of STAR common stock immediately prior to the merger, after the adjustments contemplated by the STAR share consolidation ratio. For more information, see “The Merger Agreement — Reverse Split.”
Q:
When and where will the special meetings be held?
A:
The STAR special meeting will be held on [•] at [•] a.m., Eastern Time. The special meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. No physical meeting will be held. You will be able to attend the special meeting online and submit your questions during the meeting by visiting [•]. You also will be able to vote your shares online by attending the special meeting by webcast.
To participate in the special meeting, you will need to review the information included on your proxy card or on the instructions that accompanied your proxy materials. The password for the meeting is [•].
If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions below.
The online meeting will begin promptly at [•]:00 a.m., Eastern Time. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement.
The SAFE special meeting will be held on [•] at [•] a.m., Eastern Time. The special meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. No physical meeting will be held. You will be able to attend the special meeting online and submit your questions during the meeting by visiting [•]. You also will be able to vote your shares online by attending the special meeting by webcast.
To participate in the special meeting, you will need to review the information included on your proxy card or on the instructions that accompanied your proxy materials. The password for the meeting is [•].
If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions below.
The online meeting will begin promptly at [•]:00 a.m., Eastern Time. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement.
Q:
How do I vote?
A:
STAR.   If you are a holder of record of STAR common stock or shares of 8% Series D Cumulative Redeemable Preferred Stock, par value $0.001 per share, of STAR (which we refer to as “STAR Series D preferred stock”) as of the record date for the STAR special meeting, you may vote on the applicable proposals by:

accessing the Internet website specified on your proxy card;

calling the toll-free number specified on your proxy card; or

signing and returning the enclosed proxy card in the postage-paid envelope provided.
If you hold STAR common stock or STAR Series D preferred stock in the name of a broker, bank or nominee, please follow the voting instructions provided by your broker, bank or nominee to ensure that your shares are represented at the STAR special meeting.
SAFE.   If you are a holder of record of SAFE common stock as of the record date for the SAFE special meeting, you may vote on the applicable proposal by:
 
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accessing the Internet website specified on your proxy card;

calling the toll-free number specified on your proxy card; or

signing and returning the enclosed proxy card in the postage-paid envelope provided.
If you hold shares of SAFE common stock in the name of a broker, bank or nominee, please follow the voting instructions provided by your broker, bank or nominee to ensure that your shares are represented at the SAFE special meeting.
Q:
What am I being asked to vote on?
A:
STAR.   STAR stockholders are being asked to vote on (i) the STAR merger proposal, (ii) the STAR stock issuance proposal, (iii) a proposal to approve, on a non-binding advisory basis, certain compensation that STAR’s named executive officers may receive in connection with the merger (which we refer to as the “STAR non-binding advisory compensation proposal”) and (iv) a proposal to approve the adjournment from time to time of the STAR special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the STAR special meeting, or any adjournment or postponement thereof, to approve each of the STAR merger proposal and the STAR stock issuance proposal (which we refer to as the “STAR adjournment proposal”). STAR stockholders are not being asked to vote on the spin-off.
SAFE.   SAFE stockholders are being asked to vote on (i) the SAFE merger proposal, (ii) a proposal to approve certain changes to SAFE’s Caret program (which we refer to as the “SAFE Caret amendment proposal”) and (iii) a proposal to approve the adjournment from time to time of the SAFE special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the SAFE merger proposal at the time of the SAFE special meeting or any adjournment or postponement thereof (which we refer to as the “SAFE adjournment proposal”).
The merger cannot be completed without the approval by STAR stockholders of the STAR merger proposal and the STAR stock issuance proposal and the approval by SAFE stockholders of the SAFE merger proposal. Approval of the SAFE Caret amendment proposal is not a condition to completion of the merger, but is a condition to completion of the MSD transactions.
Q:
What vote is required to approve each proposal?
A:
STAR.

The STAR merger proposal requires the affirmative vote of holders of at least a majority of the votes entitled to be cast by holders of the outstanding shares of STAR common stock and STAR Series D preferred stock, voting together as a single class, assuming a quorum is present.

The STAR stock issuance proposal, the STAR non-binding advisory compensation proposal and the STAR adjournment proposal each require the affirmative vote of at least a majority of the votes cast by holders of outstanding shares of STAR common stock and STAR Series D preferred stock, voting together as a single class, assuming a quorum is present. If a quorum is not present, the chair of the STAR special meeting may adjourn the meeting.
SAFE.

The SAFE merger proposal requires the affirmative vote of holders of at least a majority of the votes entitled to be cast by holders of the outstanding shares of SAFE common stock, assuming a quorum is present.

The SAFE Caret amendment proposal and the SAFE adjournment proposal each require the affirmative vote of at least a majority of the votes cast by holders of outstanding shares of SAFE common stock, assuming a quorum is present. If a quorum is not present, the chair of the SAFE special meeting may adjourn the meeting.
 
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Q:
How do the boards of directors of STAR and SAFE recommend that I vote?
A:
STAR.   The STAR board of directors unanimously recommends that holders of STAR common stock and holders of STAR Series D preferred stock vote “FOR” the STAR merger proposal, “FOR” the STAR stock issuance proposal, “FOR” the STAR non-binding advisory compensation proposal and “FOR” the STAR adjournment proposal.
SAFE.   The SAFE board of directors unanimously recommends that holders of SAFE common stock vote “FOR” the SAFE merger proposal, “FOR” the SAFE Caret amendment proposal and “FOR” the SAFE adjournment proposal.
Q:
How many votes do I have?
A:
STAR.   Holders of STAR common stock are entitled to one vote for each share of common stock owned as of the close of business on [•], 2023, the record date for the STAR special meeting. Holders of STAR Series D preferred stock are entitled to 0.25 votes for each share of STAR Series D preferred stock owned as of the record date for the STAR special meeting. As of the close of business on the record date for the STAR special meeting, there were [•] outstanding shares of STAR common stock and [•] outstanding shares of STAR Series D preferred stock, approximately [•]% and [•]% of which, respectively, were beneficially owned by the directors and executive officers of STAR.
SAFE.   Holders of SAFE common stock are entitled to one vote for each share of common stock owned as of the close of business on [•], 2023, the record date for the SAFE special meeting. For more information, see “Questions and Answers — Have any stockholders already agreed to approve the merger and other proposals?” As of the close of business on the record date for the SAFE special meeting, there were [•] outstanding shares of SAFE common stock, approximately [•]% of which were beneficially owned by the directors and executive officers of SAFE.
Q:
What constitutes a quorum?
A:
STAR.   Holders of enough outstanding STAR common stock and STAR Series D preferred stock on the record date, in the aggregate, to cast a majority of the votes entitled to be cast must be present or represented by proxy to constitute a quorum at the STAR special meeting.
SAFE.   Holders of the outstanding SAFE common stock on the record date entitled to cast a majority of all the votes entitled to be cast must be present in person or represented by proxy to constitute a quorum at the SAFE special meeting.
Q:
Have any stockholders already agreed to approve the merger and other proposals?
A:
Yes. Pursuant to a voting agreement, dated as of August 10, 2022, by and between STAR and SAFE (which we refer to as the “STAR voting agreement”), STAR will vote its shares representing 41.9% of the outstanding SAFE common stock to (i) approve the merger and take certain other actions, including voting against any alternative acquisition proposal or other proposal which could reasonably be expected to materially delay, postpone or materially adversely affect the consummation of the transactions contemplated by the merger agreement; and (ii) approve the SAFE Caret amendment proposal and the SAFE adjournment proposal. In accordance with the terms of the existing stockholders’ agreement between SAFE and STAR, the remainder of the SAFE common stock owned by STAR will be voted in the same manner and proportion as the votes cast by the remaining shareholders of SAFE. The STAR voting agreement and the obligations thereunder terminate upon the termination of the merger agreement in accordance with its terms. For more information, see “Certain Agreements Related to the Transactions — Voting Agreement.”
Q:
If my shares of common stock or preferred stock are held in “street name” by my broker, will my broker vote my shares for me?
A:
If you hold your shares of common stock or preferred stock in a stock brokerage account or if your shares of common stock or preferred stock are held by a bank or nominee (that is, in “street name”), you must provide the record holder of your shares with instructions on how to vote your shares of common stock or preferred stock, as applicable. Please follow the voting instructions provided by your broker,
 
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bank or nominee. Please note that you may not vote shares of common stock or preferred stock held in street name by returning a proxy card directly to STAR or SAFE or by voting in person at either special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or nominee. Further, brokers who hold shares of STAR common stock, STAR Series D preferred stock or SAFE common stock on behalf of their customers may not give a proxy to STAR or SAFE to vote those shares without specific instructions from their customers.
Q:
What will happen if I fail to instruct my broker, bank or nominee how to vote?
A:
STAR.   If you are a STAR stockholder and you do not instruct your broker, bank or nominee on how to vote your shares of STAR common stock or STAR Series D preferred stock, your broker may not vote your shares on any of the STAR proposals. Failure to instruct your broker, bank or nominee how to vote will have the same effect as a vote against the STAR merger proposal, but will have no effect on the STAR stock issuance proposal, the STAR non-binding advisory compensation proposal or the STAR adjournment proposal.
SAFE.   If you are a SAFE stockholder and you fail to instruct your broker, bank or nominee to vote your shares of SAFE common stock, your broker may not vote your shares on any of the SAFE proposals. Failure to instruct your broker, bank or nominee how to vote will have the same effect as a vote against the SAFE merger proposal, but will have no effect on the SAFE Caret amendment proposal or the SAFE adjournment proposal.
A broker non-vote occurs when a broker, bank or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the broker, bank or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one proposal is presented with respect to which the broker, bank or other nominee has discretionary authority. It is expected that all proposals to be voted on at the STAR special meeting and the SAFE special meeting will be “non-routine” matters and, as such, broker non-votes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at either the STAR special meeting or the SAFE special meeting. If your broker, bank or nominee holds your shares of STAR common stock, STAR Series D preferred stock or SAFE common stock in “street name,” such entity will vote your shares only if you provide instructions on how to vote by complying with the voter instruction form sent to you by your broker, bank or other nominee with this joint proxy statement/prospectus.
Q:
What will happen if I fail to vote or I abstain from voting?
A:
STAR.   If you are a STAR stockholder and fail to vote or abstain from voting, it will have the same effect as a vote against the STAR merger proposal, but it will have no effect on the STAR stock issuance proposal, the STAR non-binding advisory compensation proposal or the STAR adjournment proposal. Abstentions will be considered present for the purpose of determining the presence of a quorum.
SAFE.   If you are a SAFE stockholder and fail to vote or abstain from voting, it will have the same effect as a vote against the SAFE merger proposal, but it will have no effect on the SAFE Caret amendment proposal or the SAFE adjournment proposal. Abstentions will be considered present for the purpose of determining the presence of a quorum.
Q:
What if I return my proxy card without indicating how to vote?
A:
If you sign and return your proxy card without indicating how to vote on any particular proposal, your shares of STAR common stock, STAR Series D preferred stock or SAFE common stock will be voted in accordance with the recommendation described in this joint proxy statement/prospectus of the STAR board of directors or SAFE board of directors, as applicable, with respect to such proposal.
Q:
Can I change my vote after I have returned a proxy or voting instruction card?
A:
Yes. You can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:

you can send a signed notice of revocation;
 
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you can grant a new, valid proxy bearing a later date; or

if you are a holder of record, you can attend your special meeting and personally vote at the meeting, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.
Attending the STAR special meeting or the SAFE special meeting without voting will not, by itself, revoke your proxy. If your shares of STAR common stock, STAR Series D preferred stock or SAFE common stock are held by a bank, broker or nominee, you should follow the instructions provided by the bank, broker or nominee.
If you choose either of the first two methods, you must submit your notice of revocation or your new proxy to the secretary of STAR or secretary of SAFE, as appropriate, no later than the beginning of the applicable special meeting. If your shares of STAR common stock, STAR Series D preferred stock or SAFE common stock are held in street name by your broker, bank or nominee, you should contact your broker, bank or nominee to change your vote.
Q:
What are the material U.S. federal income tax consequences of the merger to U.S. holders of SAFE common stock?
A:
STAR and SAFE intend for the merger to be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”). The obligation of STAR to effect the merger is conditioned on STAR’s receipt of an opinion from Clifford Chance US LLP (or, if Clifford Chance US LLP is unable or unwilling to render such opinion, Kirkland & Ellis LLP or another nationally recognized counsel as may be reasonably acceptable to STAR), to the effect that, for U.S. federal income tax purposes, the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Code. The obligation of SAFE to effect the merger is conditioned on SAFE’s receipt of an opinion from Kirkland & Ellis LLP (or, if Kirkland & Ellis LLP is unable or unwilling to render such opinion, Clifford Chance US LLP or another nationally recognized counsel as may be reasonably acceptable to SAFE), to the effect that, for U.S. federal income tax purposes, the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Code. Subject to the qualifications and limitations set forth herein, a U.S. holder of SAFE common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the receipt of shares of New SAFE common stock in exchange for SAFE common stock in the merger.
The particular consequences of the merger to each SAFE stockholder depend on such holder’s particular facts and circumstances. SAFE stockholders are urged to consult their tax advisors to understand fully the consequences to them of the merger in their specific circumstances. For more information, see “Certain Material U.S. Federal Income Tax Consequences of the Merger.”
Q:
What are the material U.S. federal income tax consequences of the reverse split and the merger to holders of STAR common stock?
A:
Subject to the assumptions, qualifications and limitations set forth herein, a U.S. holder of STAR common stock will not recognize gain or loss upon the reverse split, except with respect to cash received in lieu of a fractional STAR share. A U.S. holder’s aggregate tax basis in the STAR common stock received pursuant to the reverse split will equal the aggregate tax basis of the STAR common stock surrendered (excluding any portion of such basis that is allocated to a fractional share of STAR common stock), and such U.S. holder’s holding period in the STAR common stock received will include the holding period in the STAR common stock surrendered. A U.S. holder of STAR common stock that receives cash in lieu of a fractional STAR share pursuant to the reverse split will recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. holder’s tax basis in the STAR common stock surrendered that is allocated to such fractional STAR share. The Merger, which will occur immediately following the reverse split, will have no U.S. federal income tax consequences to a U.S. holder of STAR common stock (other than a U.S. holder that receives New SAFE common stock pursuant to the merger agreement, as described in the section entitled “Certain Material U.S. Federal Income Tax Consequences”). Non-U.S. holders of STAR common stock generally are not expected to recognize gain or loss for U.S. federal income tax purposes in connection with either the reverse split or the merger.
 
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Please review the information set forth in the section entitled “Certain Material U.S. Federal Income Tax Consequences” for a more complete description of the material U.S. federal income tax consequences of the reverse split and the merger to holders of STAR common stock. The tax consequences to you of the reverse split and the merger will depend on your particular facts and circumstances. Please consult your own tax advisors as to the specific tax consequences to you of the reverse split and the merger.
Q:
Are there any conditions to closing of the merger that must be satisfied for the merger to be completed?
A:
Yes. In addition to the approvals of the merger by the stockholders of each of STAR and SAFE as described herein, there are a number of conditions that must be satisfied or waived for the merger to be consummated. For more information, see “The Merger Agreement — Conditions to Completion of the Merger.”
Q:
When do you expect the merger to be completed?
A:
STAR and SAFE are working to complete the merger as promptly as reasonably practicable, and currently anticipate that closing will occur in the first half of 2023. However, the merger is subject to various conditions, and it is possible that factors outside the control of STAR and SAFE could result in the merger being completed at a later time, or not at all.
Q:
Are STAR and SAFE stockholders entitled to appraisal rights in connection with the merger?
A:
No. Holders of STAR common stock, STAR Series D preferred stock and SAFE common stock will not be entitled to appraisal rights or dissenters’ rights in the merger under Section 3-202 of the Maryland General Corporation Law (which we refer to as the “MGCL”). For more information, see “The Merger — No Appraisal or Dissenters’ Rights.”
Q:
What will happen if the SAFE stockholders vote to approve the SAFE Caret amendment proposal but the merger is not approved by stockholders of each of STAR and SAFE, or if the stockholders of each of STAR and SAFE vote to approve the merger, but the SAFE Caret amendment proposal is not approved by stockholders of SAFE?
A:
If the merger is not approved by stockholders of each of STAR and SAFE, the SAFE board of directors will nevertheless have discretion as to whether or not to implement the changes to the Caret program contemplated by the SAFE Caret amendment proposal. While the completion of the merger and spin-off and approval by SAFE stockholders of the SAFE Caret amendment proposal are conditions to the consummation of the MSD transactions, the SAFE board of directors will also have discretion to implement such changes if the SAFE Caret amendment proposal is not approved.
If the merger is approved by the stockholders of each of STAR and SAFE but the SAFE Caret amendment proposal is not approved by the stockholders of SAFE, MSD Partners will not be obligated to consummate the MSD transactions. If the MSD stock purchase does not occur for any reason, STAR will have to obtain $200 million from other sources in order to satisfy its obligations under the merger agreement to repay all of its outstanding senior unsecured notes substantially concurrently with completion of the merger.
Q:
Are there any conditions that must be satisfied for the SAFE Caret changes to be completed?
A:
No. However, because approval of the SAFE Caret amendment proposal by the stockholders of SAFE is a condition to the consummation of the MSD transactions, the MSD transactions may not be consummated if the SAFE Caret amendment is not approved.
Q:
What do I need to do now?
A:
Carefully read and consider the information contained in and incorporated by reference into this joint proxy statement/prospectus, including its annexes.
In order for your shares to be voted at the STAR special meeting or the SAFE special meeting:

you can attend the applicable special meeting and vote in person;
 
10

 

you can vote through the Internet or by telephone by following the instructions included on your proxy card; or

you can indicate on the enclosed proxy or voting instruction card how you would like to vote and return the card in the accompanying postage-paid envelope.
Q:
Do I need to do anything with my stock certificates now?
A:
STAR.   If you are a holder of STAR common stock, you should not submit your STAR stock certificates at this time. After the reverse split is completed, if you held certificates representing STAR common stock issued and outstanding immediately prior to the reverse split, Computershare, the exchange agent for STAR (which we refer to as the “exchange agent”), will send you a letter of transmittal and instructions for exchanging your certificates representing STAR common stock. STAR will not issue stock certificates in respect of shares of STAR common stock, except as required by law. STAR stockholders who are entitled to receive new shares as a result of the reverse stock split will receive shares of STAR common stock in book-entry form.
If you are a holder of STAR Series D preferred stock, you should not submit your stock certificates at this time. After the merger is completed, if you held certificates representing STAR Series D preferred stock issued and outstanding immediately prior to the effective time, the exchange agent will send you a letter of transmittal and instructions for exchanging your certificates representing shares of STAR Series D preferred stock for the merger consideration of an amount in immediately available funds (or, if no wire instructions are provided, a check) equal to $25.00 per share of STAR Series D preferred stock plus the aggregate amount of all accrued and unpaid dividends on such shares of STAR Series D preferred stock as of the effective time.
SAFE.   You should not submit your SAFE stock certificates at this time. After the merger is completed, if you held certificates representing SAFE common stock issued and outstanding immediately prior to the effective time, the exchange agent will send you a letter of transmittal and instructions for exchanging your certificates representing SAFE common stock for the merger consideration of one (1) share of New SAFE common stock per share of SAFE common stock (which we refer to as the “common stock merger consideration”). Upon surrender of the certificates for cancellation along with the executed letter of transmittal and other required documents described in the instructions, SAFE stockholders will receive the common stock merger consideration.
Q:
Do I need to register in advance to attend the STAR or SAFE special meetings?
A:
If you are a registered stockholder (i.e., you hold your shares through the transfer agent of each of STAR and SAFE, Computershare), you do not need to register to attend the special meeting virtually on the Internet. Please follow the instructions on the notice or proxy card that you received. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the special annual meeting virtually on the Internet.
To register to attend the special meeting online by webcast you must submit proof of your proxy power (legal proxy) reflecting your STAR or SAFE holdings along with your name and email address to Computershare. Requests for registration should be directed to:
Computershare
iStar Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Computershare
Safehold Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time on [•].
You will receive a confirmation of your registration by email after we receive your registration materials.
Q:
Who can help answer my questions?
A:
STAR stockholders or SAFE stockholders who have questions about the merger or the other matters
 
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to be voted on at the special meetings or who desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact:
If you are a STAR stockholder:
If you are a SAFE stockholder:
[MISSING IMAGE: lg_innisfree-4c.jpg]
[MISSING IMAGE: lg_eqdfking-pn.jpg]
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders may call toll free:
(877) 825-8777
Banks and Brokers may call collect:
(212) 750-5833
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, New York 10005
Stockholders may call toll free:
(888) 887-0082
Banks and Brokers may call collect:
(212) 269-5550
Email: SAFE@dfking.com
 
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SUMMARY
This summary highlights information contained elsewhere in this joint proxy statement/prospectus and may not contain all of the information that is important to you. STAR and SAFE urge you to read carefully this joint proxy statement/prospectus, including the attached annexes, and the other documents to which we have referred you because this section does not provide all of the information that might be important to you with respect to the merger and the related matters being considered at the applicable special meeting. See also “Where You Can Find More Information.” We have included page references to direct you to a more complete description of the topics presented in this summary.
Information about the Companies
iStar Inc. (See page 50)
STAR finances, invests in and develops real estate and real estate related projects as part of its fully-integrated investment platform. STAR also manages entities focused on ground lease investments, including SAFE. STAR has invested over $40 billion over the past two decades and is structured as a real estate investment trust (which we refer to as a “REIT”), with a diversified portfolio focused on larger assets located in major metropolitan markets. In 2019, STAR announced that it intended to simplify its balance sheet, reduce its legacy assets and transition its business focus and resources primarily to its ground lease strategy.
The principal executive offices of STAR are located at 1114 Avenue of the Americas, 39th Floor, New York, New York 10036, and its telephone number is (212) 930-9400. STAR common stock is listed on the New York Stock Exchange (which we refer to as the “NYSE”), trading under the symbol “STAR.” Additional information about STAR and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus and “Where You Can Find More Information.”
Safehold Inc. (See page 50)
SAFE is a publicly-traded company that operates its business through one reportable segment by acquiring, managing and capitalizing ground leases. SAFE believes that its business has characteristics comparable to a high-grade, fixed income investment business, but with certain unique advantages. Relative to alternative fixed income investments generally, SAFE’s ground leases typically benefit from built-in growth derived from contractual base rent increases (either at a specified percentage or consumer price index based, or both), and the opportunity to realize value from residual rights to take ownership of the buildings and other improvements on SAFE’s land at no additional cost to SAFE. SAFE believes that these features offer SAFE the opportunity to realize superior risk-adjusted total returns when compared to certain alternative highly-rated investments.
Ground leases generally represent the ownership of land underlying commercial real estate projects that is net leased on a long-term basis (base terms are typically 30 to 99 years, often with tenant renewal options) by the fee owner of the land (landlord) to the owners/operators of the real estate projects built thereon (“Ground Lease”), or what we refer to as a Safehold® ground lease. The property is generally leased on a triple net basis with the tenant generally responsible for taxes, maintenance and insurance as well as all operating costs and capital expenditures. Ground Leases typically provide that at the end of the lease term or upon tenant default and the termination of the Ground Lease upon such default, the land, building and all improvements revert to the landlord. SAFE has become the industry leader in Ground Leases by demonstrating the value of the product to real estate investors, owners, operators and developers and expanding their use throughout major metropolitan areas.
SAFE is managed by SFTY Manager, LLC, a wholly-owned subsidiary of STAR, SAFE’s largest shareholder.
The principal executive offices of SAFE are located at 1114 Avenue of the Americas, 39th Floor, New York, New York 10036, and its telephone number is (212) 930-9400. SAFE common stock is listed on the NYSE, trading under the symbol “SAFE.” Additional information about SAFE and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus and “Where You Can Find More Information.”
 
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STAR Holdings (See page 50)
SpinCo was formed as a Maryland statutory trust and wholly owned subsidiary of STAR on October 7, 2022 for the purpose of effecting the spin-off. SpinCo will be externally managed by New SAFE following the merger. SpinCo is expected to be publicly traded following the spin-off. The principal executive offices of SpinCo will be located at 1114 Avenue of the Americas, 39th Floor, New York, New York 10036, (212) 930-9400. (See page 50).
Risk Factors (See page 34)
Before voting at the STAR special meeting or the SAFE special meeting, you should carefully consider all of the information contained in or incorporated by reference into this joint proxy statement/prospectus, as well as the specific factors under the heading “Risk Factors” beginning on page 34. If any of these risks actually occur, New SAFE’s, STAR’s or SAFE’s business, financial condition or results of operations may be materially adversely affected. These risks include, but are not limited to, the following:

the merger is subject to a number of conditions and may not be completed on the terms or timeline currently contemplated, or at all;

the merger exchange ratio is fixed and will not be adjusted in the event of any change in the stock prices of either STAR or SAFE;

STAR and SAFE may be unable to successfully integrate their businesses in order to realize the anticipated benefits of the merger;

STAR stockholders will be diluted by the merger;

STAR and SAFE expect to incur substantial costs in connection with the merger;

the spin-off may not deliver its intended results and could give rise to disputes or other unfavorable effects;

there are risks relating to the effects of the proposed SAFE Caret changes; and

New SAFE may incur adverse tax consequences if STAR or SAFE has failed or fails to qualify as a REIT for U.S. federal income tax purposes.
The Merger
The Merger Agreement (See page 109)
STAR and SAFE have entered into the merger agreement attached as Annex A to this joint proxy statement/prospectus. The STAR board of directors, based on the unanimous recommendation of the STAR special committee, and the SAFE board of directors, based on the unanimous recommendation of the SAFE special committee, have both approved the merger of STAR and SAFE. STAR and SAFE encourage you to read the entire merger agreement carefully because it is the principal legal document governing the merger.
Form of the Merger (See page 109)
Pursuant to the merger agreement, upon the terms and subject to the conditions of the merger agreement and in accordance with the MGCL, at the effective time of the merger, SAFE will be merged with and into STAR, with STAR continuing as the surviving corporation of the merger as New SAFE.
Based on September 30, 2022 stock prices and an assumed STAR share consolidation ratio of 0.138, we currently estimate that New SAFE will have approximately 63.6 million shares of New SAFE common stock outstanding upon completion of the merger, of which (x) approximately 36.4 million shares (or approximately 57.3%) will have been issued to holders of SAFE common stock (other than STAR) in the merger (including former stockholders of STAR who received an aggregate of approximately 6.63 million (or approximately 10.4% of the outstanding shares of New SAFE) shares of SAFE common stock in the STAR special distribution and continue to hold their SAFE shares at the effective time of the merger); (y) approximately 12.0 million shares (or approximately 18.9%) will have been issued to holders of STAR
 
14

 
common stock in the reverse split; and (z) approximately 15.1 million shares (or 23.8%) will have been contributed by STAR to SpinCo.
Consideration to SAFE Stockholders in the Merger (See page 109)
Pursuant to the terms of the merger agreement, (i) each share of SAFE common stock (other than any shares owned directly by STAR or any of the wholly-owned subsidiaries of STAR or SAFE and in each case not held on behalf of third parties) outstanding immediately prior to the effective time of the merger will be converted into the right to receive one (1) newly issued share of New SAFE common stock, after taking into account the reverse split (which we refer to as the “merger exchange ratio”); and (ii) by way of the reverse split, each share of STAR common stock will be converted into a number of shares of New SAFE common stock based on the STAR share consolidation ratio, which we currently estimate will be approximately 0.138. The merger exchange ratio is fixed and will not be adjusted for changes in the market value of STAR common stock or SAFE common stock. The STAR share consolidation ratio is not fixed and will be calculated primarily based on the number of shares of SAFE common stock held by STAR and the number of shares of STAR common stock outstanding as of the time of the reverse split, as discussed further in the next paragraph. Because of this, the implied value of the consideration to SAFE stockholders in the merger will fluctuate between now and the completion of the merger. For more information, see “Comparative Stock Prices and Dividends.”
The following table presents trading information for STAR common stock and SAFE common stock on August 10, 2022, the last trading day before public announcement of the merger following the closing of trading on that day, and November 30, 2022, the latest practicable date before the date of this joint proxy statement/prospectus. The table also shows the equivalent implied value of a share of STAR common stock on each of the dates, which has been determined by multiplying the market price of a share of SAFE common stock on each of the dates by an estimated STAR share consolidation ratio of 0.138, which has been calculated based on: (i) the number of shares of STAR common stock outstanding and the number of shares of SAFE common stock owned by STAR as of September 30, 2022; (ii) the estimated number of shares of SAFE common stock required to be contributed by STAR to SpinCo and paid to settle iPIP liabilities; (iii) the sale of 5,405,406 shares of SAFE common stock in the MSD transactions; (iv) an upward adjustment of 1,195,034; (v) an estimated number of shares of SAFE common stock to be payable to STAR in respect of accrued but unpaid management fees as of the closing date; and (vi) the special distribution by STAR of approximately 6.63 million shares of SAFE common stock to holders of STAR common stock in a pro rata distribution paid on December 7, 2022. If the closing of the transaction occurs after March 31, 2023 and STAR has not raised certain additional cash proceeds from asset sales and other transactions, the upward adjustment amount of 1,195,034 will be reduced by 358,511, and if the closing of the transaction occurs after June 30, 2023, and STAR has not raised certain additional cash proceeds, the upward adjustment amount of 1,195,034 will be reduced to zero.
The implied per share value of STAR common stock presented below does not reflect: (i) the STAR special distribution of 0.07655 shares of SAFE common stock per share of STAR common stock paid on December 7, 2022 or (ii) the value of SpinCo common shares to be distributed to holders of STAR common stock in the spin-off.
STAR Common
Stock (Close)(1)
SAFE Common
Stock (Close)
Implied Per Share
Value of STAR
Common Stock
in the Merger
(Close)
August 10, 2022
$ 17.08 $ 43.45 $ 5.99
November 30, 2022
$ 8.03 $ 29.52 $ 4.07
(1)
The ex-dividend date for the STAR special distribution was November 30, 2022; accordingly, the closing price of STAR common stock on November 30, 2022 reflects the STAR special distribution, but the closing price on August 10, 2022 does not reflect the STAR special distribution.
The market prices of STAR common stock and SAFE common stock fluctuate. As a result, we urge you to obtain current market quotations of STAR common stock and SAFE common stock.
 
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Treatment of STAR Equity Awards in the Charter Amendment and SAFE Restricted Stock in the Merger (See page 110)

At the effective time of the filing of the amendment to STAR’s charter (which we refer to as the “charter amendment”) effecting the reverse stock split (which we refer to as the “charter amendment effective time”), upon the terms and subject to the conditions of the merger agreement, each STAR restricted stock unit that is issued and outstanding immediately prior to the effective time of the merger will be adjusted to correspond to a number of shares of STAR common stock (rounded to the nearest whole share) equal to the product obtained by multiplying (i) the number of shares of STAR common stock subject to such STAR restricted stock unit as of immediately prior to the charter amendment effective time by (ii) the STAR share consolidation ratio. Each unvested STAR restricted stock unit issued and outstanding immediately prior to the effective time of the merger shall become fully vested immediately prior to the effective time of the merger and shall be converted at the closing into the right to receive the number of shares of STAR common stock then subject to such STAR restricted stock unit.

At the effective time of the merger, upon the terms and subject to the conditions of the merger agreement, each SAFE restricted stock award that is outstanding as of immediately prior to the effective time of the merger will be assumed by STAR and will be converted into a STAR restricted stock award with respect to a number of shares of STAR common stock (rounded to the nearest whole share) equal to the number of shares of SAFE common stock subject to such SAFE restricted stock unit as of immediately prior to the effective time of the merger and shall continue to have and remain subject to the same terms and conditions as applied to such SAFE restricted stock unit as of immediately prior to the effective time of the merger.
The Spin-Off (See page 100)
Prior to the merger, STAR will consummate (1) the SpinCo reorganization and (2) the SpinCo distribution.
The completion of the spin-off is a condition to STAR’s and SAFE’s obligations to close the merger. Each of STAR and SAFE has agreed to cooperate in good faith and use their respective reasonable best efforts to effect the spin-off in accordance with the merger agreement and the separation and distribution agreement to be entered into between STAR and SpinCo at the time of the spin-off, substantially in the form of Annex B to this joint proxy statement/prospectus. STAR will contribute the assets and liabilities of STAR, other than those related to its ground lease business, to SpinCo in order to separate them from the ground lease business assets and liabilities being retained by New SAFE. STAR will also contribute at least $400.0 million of shares of SAFE common stock owned by STAR and at least $50.0 million of cash to SpinCo. STAR expects that the spin-off will occur shortly before or the same day as the closing date.
SpinCo intends to enter into a margin loan in a principal amount of up to $140.0 million with a commercial lender in connection with the spin-off. SpinCo will distribute or pay the proceeds of the margin loan to STAR, and STAR will use the proceeds to repay indebtedness.
In connection with the spin-off, STAR and SpinCo will enter into a management agreement (which we refer to as the “SpinCo management agreement”) under which STAR (or New SAFE after the merger) will manage SpinCo. At the time of the merger, New SAFE will enter into a term loan (which we refer to as the “SpinCo term loan facility”), a governance agreement and a registration rights agreement with SpinCo. For additional information on these agreements and the other terms of the spin-off, see “The Spin-Off” and “Certain Agreements Related to the Transactions.”
The MSD Transactions (See page 105)
STAR entered into a stock purchase agreement, dated as of August 10, 2022, with MSD Partners, L.P. (which we refer to as “MSD Partners”), to which SAFE is also a party, pursuant to which MSD Partners has agreed to purchase 5,405,406 shares of SAFE common stock from STAR for an aggregate purchase price of $200.0 million, or $37.00 per share, payable in cash. We refer to this transaction as the “MSD stock purchase.” SAFE and Caret Ventures entered into a subscription agreement, dated as of August 10, 2022, with MSD Partners pursuant to which MSD Partners has subscribed to purchase 100,000 Caret units for an
 
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aggregate purchase price of $20.0 million, payable in cash. We refer to this transaction as the “MSD Caret unit purchase,” and together with the MSD stock purchase as the “MSD transactions.” The closings of the MSD stock purchase and the MSD Caret unit purchase are conditioned on each other and will take place immediately prior to, and on the same date as the closing of the merger, subject to the satisfaction of certain other closing conditions. The closing of the MSD Caret unit purchase is subject to the approval of the SAFE Caret amendment proposal at the SAFE special meeting. If the SAFE Caret amendment proposal is not approved at the SAFE special meeting, MSD Partners will have the right to terminate both the MSD Caret unit purchase and the MSD stock purchase. In addition, if the merger agreement is terminated for any reason, the MSD stock purchase agreement and the MSD Caret unit subscription agreement will also terminate. If the MSD stock purchase does not occur for any reason, STAR will have to obtain $200 million from other sources in order to satisfy its obligations under the merger agreement to repay all of its outstanding senior unsecured notes substantially concurrently with completion of the merger. The stock purchase agreement governing the MSD stock purchase (which we refer to as the “MSD stock purchase agreement”) and the subscription agreement for the Caret unit purchase (which we refer to as the “MSD Caret unit subscription agreement”) are included as Annex C and Annex D, respectively to this joint proxy statement/prospectus.
The SAFE Caret Amendment Proposal (See page 148)
In order to improve the recognition of the value of unrealized capital appreciation in SAFE’s ground lease portfolio, simplify the overall structure of SAFE’s Caret program and better position SAFE to make potential future sales of Caret units to investors in either private or public offerings, the SAFE board of directors, together with financial and legal advisors, has been evaluating potential modifications to the terms of the Caret program.
In connection with the MSD Caret unit purchase, which is conditioned on the completion of the merger, MSD Partners negotiated for certain revisions to the Caret program related to its rights as a minority investor in Caret units, including many revisions consistent with those independently considered by the SAFE board of directors in order to improve the marketability of the program. The adoption of these revisions, and their approval by SAFE’s stockholders, are a condition to the closing of the MSD Caret unit purchase. Therefore, SAFE stockholders are asked to approve the changes described under the heading “SAFE Proposal 2: The SAFE Caret Amendment Proposal” to the Portfolio Holdings LLCA, which reflect the result of the negotiation with MSD Partners and which have been recommended by the SAFE board of directors. Although the MSD Caret unit purchase is also conditioned on the completion of the merger, the SAFE board of directors will nevertheless have discretion to implement the changes described herein even if the merger is not completed.
As of September 30, 2022, 9,531,627 of the 10,000,000 currently authorized Caret units are issued and outstanding. As of September 30, 2022, SAFE held 8,000,000 Caret units, representing 83.93% of the then-outstanding Caret units and 80.00% of the then-authorized Caret units.
The STAR Special Meeting (See page 135)
The STAR special meeting will be held at [•] a.m., Eastern Time, on [•] in a virtual format. You may vote at the STAR special meeting if you owned shares of STAR common stock or STAR Series D preferred stock at the close of business on [•], the record date for the STAR special meeting. On the record date for the STAR special meeting, there were [•] shares of STAR common stock and [•] shares of STAR Series D preferred stock outstanding and entitled to vote at the STAR special meeting. You may cast one vote for each share of STAR common stock and 0.25 votes for each share of STAR Series D preferred stock that you owned on that date. The STAR common stock and the STAR Series D preferred stock will vote together as one class on all matters presented at the STAR special meeting.
At the STAR special meeting, STAR stockholders will be asked to consider and vote upon:

the STAR merger proposal;

the STAR stock issuance proposal;

the STAR non-binding advisory compensation proposal; and
 
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the STAR adjournment proposal, if necessary or appropriate.
The approval of each of the STAR merger proposal and the STAR stock issuance proposal is a condition to the completion of the merger. If the STAR merger proposal or the STAR stock issuance proposal is not approved and the condition in the merger agreement is not waived, the merger and related transactions will not be completed.
The STAR merger proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of STAR common stock and STAR Series D preferred stock entitled to cast votes on the proposal, voting together as a single class, assuming a quorum is present. Each of the STAR stock issuance proposal, the STAR non-binding advisory compensation proposal and the STAR adjournment proposal requires the affirmative vote of holders of a majority of the votes cast by holders of STAR common stock and STAR Series D preferred stock, voting together as a single class, assuming a quorum is present. If a quorum is not present, the chair of the STAR special meeting may adjourn the meeting.
As of the record date for the STAR special meeting, approximately [•]% of the outstanding shares of STAR common stock and [•]% of the outstanding shares of STAR Series D preferred stock were held by STAR directors and executive officers and their affiliates. STAR currently expects that the STAR directors and executive officers will vote their shares in favor of all of the proposals set forth above, although none has entered into any agreements obligating them to do so.
The STAR board of directors, based on the unanimous recommendation of the STAR special committee, recommends that STAR stockholders vote “FOR” all of the proposals set forth above. For more information, see “The STAR Special Meeting.”
The SAFE Special Meeting (See page 143)
The SAFE special meeting will be held at [•] a.m. Eastern Time, on [•] in a virtual format. You may vote at the SAFE special meeting if you owned SAFE common stock at the close of business on [•], 2023, the record date for the SAFE special meeting. On the record date for the SAFE special meeting, there were [•] shares of SAFE common stock outstanding and entitled to vote at the SAFE special meeting. Each share of SAFE common stock is entitled to cast one vote on all matters that come before the SAFE special meeting.
At the SAFE special meeting, stockholders of SAFE will be asked to consider and vote upon:

the SAFE merger proposal;

the SAFE Caret amendment proposal; and

the SAFE adjournment proposal, if necessary or appropriate.
The approval of the SAFE merger proposal is a condition to the completion of the merger. If the SAFE merger proposal is not approved, the merger and related transactions will not be completed.
The approval of the SAFE merger proposal requires the affirmative vote of holders of at least a majority of the outstanding shares of SAFE common stock entitled to vote thereon, assuming a quorum is present.
The approval of each of the SAFE Caret amendment proposal and the SAFE adjournment proposal requires the affirmative vote of at least a majority of the votes cast by the holders of outstanding shares of SAFE common stock, assuming a quorum is present. If a quorum is not present, the chair of the SAFE special meeting may adjourn the meeting.
As of the record date for the SAFE special meeting, approximately [•]% of the outstanding shares of SAFE common stock was held by SAFE directors and executive officers and their affiliates. SAFE currently expects that the directors and executive officers of SAFE will vote their shares in favor of the SAFE merger proposal, the SAFE Caret amendment proposal and the SAFE adjournment proposal, although, other than STAR, none has entered into any agreements obligating them to do so. STAR, which has the power to vote approximately 41.9% of the outstanding shares of SAFE common stock as of the date of the merger agreement, has agreed to vote in favor of the transactions contemplated by the merger agreement, including the SAFE merger proposal, the SAFE Caret amendment proposal and the SAFE adjournment
 
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proposal, pursuant to the terms and conditions of the voting agreement. For more information, see “Certain Agreements Related to the Transactions — Voting Agreement.”
The SAFE board of directors unanimously recommends that SAFE stockholders vote “FOR” all of the proposals set forth above. For more information, see “The SAFE Special Meeting.”
Recommendations of the STAR Board of Directors (See page 135)
After careful consideration, the STAR board of directors, on August 10, 2022, upon the unanimous recommendation of the STAR special committee, approved the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interests of STAR.
The STAR board of directors recommends that the STAR stockholders vote “FOR” the STAR merger proposal, “FOR” the STAR stock issuance proposal, “FOR” the STAR non-binding advisory compensation proposal and “FOR” the STAR adjournment proposal.
For the factors considered by the STAR board of directors and the STAR special committee in reaching their respective decisions to approve the merger agreement and make the foregoing recommendations, see “The Merger — STAR’s Reasons for the Merger; Recommendations of the STAR Board of Directors.”
Recommendations of the SAFE Board of Directors (See page 143)
After careful consideration, the SAFE board of directors, on August 10, 2022, upon the unanimous recommendation of the SAFE special committee, approved the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interests of SAFE and its stockholders. In addition, after careful consideration, the SAFE board of directors, on August 10, 2022, approved the MSD Caret unit subscription agreement and declared the MSD Caret unit subscription agreement and the transactions contemplated thereby, including the MSD Caret unit purchase and the changes to SAFE’s Caret program (which we refer to as the “SAFE Caret changes”), to be advisable and in the best interests of SAFE.
The SAFE board of directors recommends that the SAFE stockholders vote “FOR” the SAFE merger proposal, “FOR” the SAFE Caret amendment proposal and “FOR” the SAFE adjournment proposal.
For the factors considered by the SAFE board of directors and the SAFE special committee in reaching their respective decisions to approve the merger agreement and make the foregoing recommendations, see “The Merger — SAFE’s Reasons for the Merger; Recommendations of the SAFE Board of Directors.”
Opinion of the STAR Special Committee’s Financial Advisor, Lazard Frères & Co. LLC (See page 70)
The STAR special committee retained Lazard Frères & Co. LLC, which we refer to as “Lazard,” to act as its financial advisor in connection with the merger, the spin-off and certain related transactions. In connection with this engagement, the STAR special committee requested that Lazard evaluate the fairness, from a financial point of view, to holders of STAR common stock (other than holders of excluded shares) of the shares of STAR common stock to be received by such holders by way of the reverse split and the common shares of SpinCo to be received by such holders in the spin-off (such shares of STAR common stock and common shares of SpinCo, together, the “transaction consideration”).
On August 10, 2022, at a meeting of the STAR special committee, Lazard rendered to the STAR special committee an oral opinion, which was confirmed by delivery of a written opinion dated August 10, 2022, to the effect that, as of that date and based on and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken described in such opinion, the transaction consideration to be received by holders of STAR common stock (other than holders of excluded shares) was fair, from a financial point of view, to such holders.
The full text of Lazard’s written opinion, dated August 10, 2022, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken, is attached as Annex E and is incorporated by reference in this document. The summary of the written
 
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opinion of Lazard, dated August 10, 2022, set forth in this proxy statement is qualified in its entirety by reference to the full text of Lazard’s opinion. Lazard’s opinion was for the benefit of the STAR special committee (in its capacity as such) and Lazard’s opinion was rendered to the STAR special committee in connection with its evaluation of the merger, the spin-off and related transactions identified in Lazard’s opinion and did not address any terms or other aspects (other than the transaction consideration to the extent expressly specified in Lazard’s opinion) of such transactions. Lazard’s opinion did not address the relative merits of such related transactions compared to any other transaction or business strategy in which STAR might engage or the merits of the underlying decision by STAR to engage in such transactions. Lazard’s opinion is not intended to and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the merger or other transactions or any matter relating thereto. For a description of the opinion that the STAR special committee received from Lazard, see the section entitled “Opinion of STAR’s Financial Advisor, Lazard” beginning on page 70.
Opinion of the SAFE Special Committee’s Financial Advisor, J.P. Morgan Securities LLC (See page 82)
Pursuant to an engagement letter, SAFE retained J.P. Morgan Securities LLC (which we refer to as “J.P. Morgan”) as financial advisor to the SAFE special committee in connection with the spin-off, the issuance of the SpinCo term loan facility, the reverse split, the par value change and the merger (which we refer to as the “SAFE transactions”).
At the meeting of the SAFE special committee on August 10, 2022, J.P. Morgan rendered its oral opinion to the SAFE special committee that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, the consideration to be paid to the holders of SAFE common stock in the SAFE transactions was fair, from a financial point of view, to such holders. J.P. Morgan confirmed its August 10, 2022 oral opinion by delivering its written opinion, dated as of August 10, 2022, to the SAFE special committee that, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, the consideration to be paid to the holders of SAFE common stock in the SAFE transactions was fair, from a financial point of view, to such holders.
The full text of the written opinion of J.P. Morgan, dated as of August 10, 2022, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, is attached as Annex F to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Holders of SAFE common stock are urged to read the opinion in its entirety. J.P. Morgan’s opinion was addressed to the SAFE special committee (in its capacity as such) in connection with and for the purposes of its evaluation of the SAFE transactions, was directed only to the consideration to be paid to the holders of SAFE common stock in the SAFE transactions and did not address any other aspect of the SAFE transactions. J.P. Morgan expressed no opinion as to the fairness of any consideration to be paid in connection with the SAFE transactions to the holders of any other class of securities, creditors or other constituencies of SAFE, or as to the underlying decision by SAFE to engage in the SAFE transactions. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any shareholder of SAFE as to how such shareholder should vote with respect to the SAFE transactions or any other matter. For a description of the opinion that the SAFE special committee received from J.P. Morgan, see the section entitled “Opinion of SAFE’s Financial Advisor, J.P. Morgan” beginning on page 82.
Interests of STAR’s Directors and Executive Officers in the Merger (See page 91)
In considering the recommendation of the STAR special committee and the STAR board of directors, STAR stockholders should be aware that certain of STAR’s directors and executive officers have interests in the merger that may be different from, or in addition to, those of STAR’s stockholders generally. These interests may present such executive officers and directors with actual or potential conflicts of interest. These interests include, but are not limited to, the fact that certain directors of STAR serve as directors of SAFE, the continued service of certain directors of STAR as directors of New SAFE and SpinCo, the
 
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continued employment of the executive officers of STAR by New SAFE following the merger and new equity incentive awards to be granted to them in connection with their post-merger employment, the treatment in the merger of STAR’s iPIP plans and other equity awards, and provisions in the merger agreement regarding continued indemnification of and advancement of expenses to STAR directors and officers. The members of the STAR special committee and the STAR board of directors were aware of and considered these interests relating to STAR, among other matters, in evaluating the merger agreement and the merger, and in recommending that STAR stockholders approve the STAR merger proposal and the STAR stock issuance proposal. For more information, see the section entitled “The Merger — Interests of STAR’s Directors and Officers in the Merger beginning on page 91.
Interests of SAFE’s Directors and Executive Officers in the Merger (See page 96)
In considering the recommendation of the SAFE special committee and board of directors, SAFE stockholders should be aware that certain of SAFE’s directors and executive officers have interests in the merger that may be different from, or in addition to, those of SAFE’s stockholders generally. These interests may present such executive officers and directors with actual or potential conflicts of interest. These interests include, but are not limited to, the fact that certain directors of SAFE serve as directors of STAR, the continued service of certain directors of SAFE as directors of New SAFE, the continued employment of the executive officers of STAR by New SAFE following the merger and new equity incentive awards to be granted to them in connection with their post-merger employment and provisions in the merger agreement regarding continued indemnification of and advancement of expenses to SAFE directors and officers. The members of the SAFE special committee and the SAFE board of directors were aware of these interests and considered them, among others, in their authorization, approval and adoption of the merger agreement, the merger and the other transactions contemplated thereby and their recommendation that SAFE’s stockholders approve the SAFE merger proposal agreement and the transactions contemplated thereby. For more information, see the section entitled “The Merger — Interests of SAFE’s Directors and Officers in the Merger beginning on page 96.
Ownership of New SAFE After the Transactions (See page 168)
See “Share Ownership of Certain Beneficial Owners and Management/Directors of STAR” beginning on page 168 and “Share Ownership of Certain Beneficial Owners and Management/Directors of SAFE” beginning on page 170 for information about the beneficial ownership of STAR and SAFE before the effective time of the merger and New SAFE following the effective time of the merger.
Directors and Officers of New SAFE After the Transactions (See page 98)
The merger agreement provides that, from and after the effective time of the merger, and until such time their successors have been duly elected and qualify or until their earlier death, resignation or removal in accordance with New SAFE’s organizational documents, the directors of New SAFE shall consist of a total of seven directors, three of whom will be designated by STAR and four of whom will be designated by SAFE.
In addition, the merger agreement provides that, from and after the effective time of the merger, and until such time their successors have been duly appointed and qualified or until their earlier death, resignation or removal in accordance with New SAFE’s organizational documents, the officers of STAR as immediately prior to the effective time will be the officers of New SAFE.
Accounting Treatment (See page 98)
STAR and SAFE prepare their financial statements, respectively, in accordance with accounting principles generally accepted in the United States (which we refer to as “GAAP”). The merger will be accounted for by applying the acquisition method of accounting, with SAFE treated as the acquirer. For more information, see “The Merger — Accounting Treatment.”
Regulatory Approvals (See page 98)
In connection with the issuance of STAR common stock in the merger, pursuant to the merger agreement, as a condition to the closing of the merger, STAR must file a registration statement with the
 
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U.S. Securities and Exchange Commission (which we refer to as the “SEC”) under the Securities Act, of which this joint proxy statement/prospectus forms a part, and the Form 10, in each case, that is declared effective by the SEC and not be the subject of any stop order or proceedings seeking a stop order.
Expected Timing of the Merger (See page 110)
STAR and SAFE are working to complete the merger as promptly as reasonably practicable, and currently anticipate that the closing will occur in the first half of 2023. However, the merger is subject to various conditions, and it is possible that factors outside the control of both companies could result in the merger being completed at a later time, or not at all. For more information, see “Risk Factors — Risks Relating to the Merger.”
Conditions to Completion of the Merger (See page 118)
As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

receipt of the requisite approvals of STAR stockholders and SAFE stockholders;

the SpinCo reorganization and the SpinCo distribution shall have been consummated;

the approval of listing of STAR common stock to be issued in the merger shall have been approved on the NYSE, and the SpinCo common shares being distributed in connection with the SpinCo distribution shall have been approved for listing on SpinCo’s designated exchange;

the SEC having declared effective the Form 10 and the registration statement of which this joint proxy statement/prospectus forms a part, and the Form 10 and the registration statement not being the subject of any stop order or proceedings seeking a stop order;

the absence of any temporary restraining order, preliminary or permanent injunction or other legal restraint, prohibition or binding order of any court or other governmental entity of competent jurisdiction that prevents the consummation of the charter amendment, the par value charter amendment or the merger;

the accuracy of all representations and warranties made by the parties in the merger agreement and performance by the parties of their obligations in the merger agreement (subject in most cases to materiality or material adverse effect qualifications), and receipt of an officer’s certificate from each party attesting thereto;

STAR having generated a certain amount of minimum proceeds in cash, which it intends to do using cash on hand, proceeds from asset sales and proceeds from the MSD stock purchase;

the receipt by each of STAR and SAFE of an opinion of counsel to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code; and

the receipt by each of STAR and SAFE of an opinion of counsel regarding such party’s qualification as a REIT.
We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
No Solicitation (See page 121)
STAR and SAFE are each subject to a customary “no-shop” provision that requires them to refrain from, and to cease discussions or solicitations with respect to, alternative transactions and subjects them to certain restrictions in considering and negotiating alternative transactions. If either of the parties receives a superior proposal (as defined in “The Merger Agreement — No Solicitation”) or an acquisition proposal (as defined in “The Merger Agreement — No Solicitation”) that is reasonably likely to result in a superior proposal, the receiving party may, subject to specified conditions and requirements, provide nonpublic information to the proposing party and engage in discussions or negotiations with the party making such a
 
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proposal. Each party shall promptly notify the other party of any proposal for an alternative transaction within 48 hours and provide the other party with a copy of such proposal.
In response to a superior proposal, the board of directors of the party receiving such a superior proposal may, subject to specified conditions and requirements, acting on the recommendation of the special committee of that board of directors, change its recommendation with respect to such party’s stockholder vote, and such party may terminate the merger agreement in order to accept such proposal. Prior to effecting such change or terminating the merger agreement, the board of directors of the party receiving the superior proposal must provide the other party with notice, reasons for such action and five business days of good-faith negotiations to counter such proposal.
Termination of the Merger Agreement (See page 123)
The merger agreement may be terminated prior to the effective time of the merger, whether before or after the required approvals of the STAR stockholders and SAFE stockholders are obtained:

by mutual written consent of STAR and SAFE;

by either STAR or SAFE, if the merger is not consummated by September 30, 2023;

by either STAR or SAFE, if a court or other governmental entity issues a final and nonappealable order prohibiting the merger;

by either STAR or SAFE, if the required approvals of either the STAR stockholders or the SAFE stockholders are not obtained;

by either STAR or SAFE, if there is a breach of the representations or covenants of the other party that would result in the failure of the related closing condition to be satisfied, subject to a cure period; provided that SAFE shall not be deemed to have breached any representation or warranty set forth in the merger agreement to the extent STAR or any subsidiary of STAR (including SFTY Manager, LLC, a Delaware limited liability company (which we refer to as the “SpinCo manager”)) has knowledge of such breach as of August 10, 2022 and SAFE shall not be deemed to have breached any representation, warranty, covenant or agreement set forth in the agreement to the extent the principle course of such breach resulted from any action or failure to take any action of STAR or any subsidiary of STAR other than at the express direction of the STAR special committee;

by STAR, if the SAFE board of directors changes its recommendation in favor of the approval of the SAFE merger proposal;

by SAFE, if the STAR board of directors changes its recommendation regarding the approval of the STAR merger proposal;

by STAR, to enter into a superior proposal, subject to compliance with specified terms of the merger agreement, including payment of a termination fee described below; and

by SAFE, to enter into a superior proposal, subject to compliance with specified terms of the merger agreement, including payment of a termination fee described below.
Fees and Expenses (See pages 123 and 124)
Other than as provided below, whether or not the merger, charter amendment, the par value charter amendment, the SpinCo reorganization, the SpinCo distribution and/or the STAR stock issuance are consummated, all costs and expenses incurred in connection with the merger agreement, the separation and distribution agreement and the transactions contemplated hereby and thereby will be paid by the party incurring such expense. Any expenses incurred by STAR in connection with the merger agreement, the separation and distribution agreement and the transactions contemplated thereby shall not constitute “Expenses” ​(as such term is defined under the management agreement) reimbursable to the SpinCo manager by SAFE pursuant to the management agreement.
No Appraisal or Dissenters’ Rights (See page 99)
Under Section 3-202 of the MGCL, holders of STAR common stock and STAR Series D preferred stock do not have the right to receive the appraised value of their shares in connection with the merger.
 
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Under Section 3-202 of the MGCL, holders of SAFE common stock do not have the right to receive the appraised value of their shares in connection with the merger.
Specific Performance; Remedies (See page 126)
STAR and SAFE agreed that irreparable damage would occur in the event that any of the provisions of the merger agreement or the transactions contemplated thereby were not performed in accordance with their specific terms on a timely basis or were otherwise breached and that, in addition to any other remedy to which each party would be entitled at law or in equity, each party will be entitled to an injunction or other equitable relief to prevent breaches of the merger agreement or the transactions contemplated thereby and to enforce specifically the terms and provisions the merger agreement in the Circuit Court for Baltimore City, Maryland (or if such court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division). In addition, each of the parties has further consented to the assignment of any action or proceeding in the Circuit Court for Baltimore City, Maryland to the Business and Technology Case Management Program pursuant to Maryland Rule 16-308 (or any successor thereto).
Certain Agreements Related to the Transactions
Voting Agreement with STAR (See page 127)
Concurrently with the execution of the merger agreement, SAFE entered into a voting agreement with STAR, which, after giving effect to the STAR special distribution paid on December 7, 2022, beneficially owns approximately 33.9 million shares of SAFE common stock, representing approximately 54.3% of the outstanding shares of SAFE common stock. The voting agreement generally requires STAR (i) not to transfer the shares of SAFE common stock beneficially owned by STAR, subject to certain exceptions and (ii) to vote the shares of SAFE common stock representing 41.9% of the issued and outstanding SAFE common stock at such time (which we refer to as the “covered securities”) in favor of (a) approval of the merger and any other matters set forth in this Joint Proxy Statement to be voted upon by holders of SAFE common stock (including the SAFE Caret amendment proposal) and (b) any proposal to adjourn or postpone the SAFE special meeting to a later date if there are not sufficient votes to approve the merger and against any acquisition proposals, alternative acquisition agreements (as such terms are respectively defined in “The Merger Agreement — No Solicitation”) or any of the transactions contemplated thereby. The voting agreement also requires that STAR vote the covered securities against (i) any action or agreement that could reasonably be expected to result in any condition to the consummation of the merger not being fulfilled or (ii) any action that could reasonably be expected to materially delay, materially postpone or materially adversely affect the consummation of the transactions contemplated by the merger agreement, including the merger, and any action which could reasonably be expected to result in a material breach of any representation, warranty, covenant or agreement of STAR in the merger agreement. In accordance with the terms of the existing stockholders’ agreement between SAFE and STAR, the remainder of the SAFE common stock owned by STAR will be voted in the same manner and proportion as the votes cast by the remaining shareholders of SAFE.
SpinCo Management Agreement (See page 128)
In connection with the spin-off, SpinCo will enter into the SpinCo management agreement with the SpinCo manager, which will act as SpinCo’s external manager. Pursuant to the SpinCo management agreement, the SpinCo manager will provide SpinCo with management services and support. The SpinCo management agreement requires the SpinCo manager to manage SpinCo’s assets and SpinCo’s and its subsidiaries’ day-to-day operations in accordance with the management agreement and subject to the supervision of SpinCo’s board of trustees.
SpinCo will pay the SpinCo manager fixed cash management fees of $25.0 million, $15.0 million, $10.0 million and $5.0 million, respectively, in each of the initial four annual terms of the management agreement and 2.0% of the gross book value of SpinCo’s assets excluding shares of SAFE common stock for each annual term thereafter, and will reimburse the SpinCo manager for third party expenses incurred in connection with its services. The management agreement has an initial one year term and may be terminated
 
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without cause, subject to notice and the payment of a termination fee. See “The Spin-Off — The SpinCo Management Agreement” on page 128 for more information.
Governance Agreement (See page 130)
Following the SpinCo Distribution and effective upon the effective time, New SAFE will enter into the governance agreement with SpinCo, in order to establish various arrangements and restrictions with respect to the governance of SpinCo, and certain rights and restrictions with respect to shares of New SAFE common stock owned by SpinCo, after the effective time of the merger.
Pursuant to the terms of the governance agreement, SpinCo and its subsidiaries are subject to restrictions on the transfer of any New SAFE common stock held by SpinCo for nine months following the closing date. Furthermore, SpinCo and its subsidiaries are prohibited from transferring at any time any shares of New SAFE common stock held by SpinCo or its subsidiaries to any person who is known by SpinCo or its subsidiaries to be an “Activist” or “Company Competitor” ​(as such terms are defined in the governance agreement), or to any group that, to the knowledge of SpinCo or its subsidiaries, includes as “Activist” or “Company Competitor,” without first obtaining New SAFE’s prior written consent.
In addition, pursuant to the governance agreement, SpinCo and its affiliates will be subject to certain standstill restrictions until the earliest to occur of (a) the termination of the management agreement; (b) the date on which both (i) SpinCo ceases to beneficially own at least 7.5% of the New SAFE common stock outstanding and (ii) SpinCo is no longer managed by New SAFE or affiliates of New SAFE; or (c) a “change of control” ​(as such term is defined in the governance agreement) (together, the “restrictive period”).
The standstill restrictions will limit SpinCo’s and its affiliates’ purchases of additional New SAFE common stock in excess of the ownership threshold then applicable to SpinCo. The standstill restrictions will also restrict SpinCo’s and its affiliates’ ability to, among other things, propose a merger or other acquisition transaction relating to all or part of New SAFE, call a special meeting of the stockholders, submit any stockholder proposal, participate in a group for such actions, enter into any voting trust or other agreement with respect to the voting of New SAFE common stock, or seek a change in the composition of New SAFE’s board of directors (including seeking representation on the board).
In addition, during the restrictive period, SpinCo and its subsidiaries will vote all shares of New SAFE common stock owned by them (a) in favor all persons nominated to serve as directors of New SAFE by the board of directors of New SAFE or its nominating and corporate governance committee, (b) against any stockholder proposal that is not recommended by New SAFE and (c) in accordance with the recommendations of the board of directors of New SAFE on all other proposals brought before the stockholders of New SAFE.
Registration Rights Agreement (See page 131)
In connection with the consummation of the merger, New SAFE will enter into a registration rights agreement (the “registration rights agreement”) with SpinCo, pursuant to which New SAFE will be required to file within seven months following the consummation of the merger a shelf registration statement covering the Registrable Shares (as defined in the registration rights agreement) owned by SpinCo (and its permitted assigns) and keep such shelf registration statement effective so long as SpinCo (and its permitted assigns) own Registrable Shares. In addition, SpinCo (and its permitted assigns) will be able to cause New SAFE to undertake one demand registration (including pursuant to an underwritten take down). The registration rights agreement will also grant SpinCo certain customary piggyback registration rights.
Material U.S. Federal Income Tax Consequences of the Merger (See page 132)
STAR and SAFE intend for the merger to be treated as a “reorganization” for U.S. federal income tax purposes within the meaning of Section 368(a) of the Code. The obligation of STAR to effect the merger is conditioned on STAR’s receipt of an opinion from Clifford Chance US LLP (or, if Clifford Chance US LLP is unable or unwilling to render such opinion, Kirkland & Ellis LLP or another nationally recognized counsel as may be reasonably acceptable to STAR), to the effect that, for U.S. federal income tax purposes, the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Code. The obligation
 
25

 
of SAFE to effect the merger is conditioned on SAFE’s receipt of an opinion from Kirkland & Ellis LLP (or, if Kirkland & Ellis LLP is unable or unwilling to render such opinion, Clifford Chance US LLP or another nationally recognized counsel as may be reasonably acceptable to SAFE), to the effect that, for U.S. federal income tax purposes, the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Code. Subject to the qualifications and limitations set forth herein, a U.S. holder of SAFE common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the receipt of shares of New SAFE common stock in exchange for SAFE common stock in the merger.
You should read “Certain Material U.S. Federal Income Tax Consequences of the Merger” for a more complete discussion of the U.S. federal income tax considerations relevant to the merger. The tax consequences of the merger to you will depend on your particular facts and circumstances. You are urged to consult your tax advisor to determine the particular tax consequences of the merger to you.
Comparison of Rights of STAR Stockholders and SAFE Stockholders (See page 172)
The rights of SAFE stockholders will be substantially similar to the rights of STAR stockholders, as New SAFE will be governed by a charter and bylaws which are substantially similar to SAFE’s pre-merger charter and bylaws. However, there will be certain differences. See “Comparison of Rights of STAR Stockholders and New SAFE Stockholders.”
 
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SUMMARY HISTORICAL FINANCIAL DATA OF STAR
The following tables set forth summary consolidated financial information for STAR as of and for each of the years ended December 31, 2021, 2020 and 2019, and as of and for each of the nine-month periods ended September 30, 2022 and 2021.
The summary consolidated financial information for STAR as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019 was derived from STAR’s consolidated financial statements contained in STAR’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 25, 2022, as amended on August 22, 2022, which is incorporated by reference into this joint proxy statement/prospectus.
The summary consolidated financial information for STAR as of September 30, 2022 and for each of the nine-month periods ended September 30, 2022 and 2021 was derived from STAR’s unaudited consolidated financial statements contained in STAR’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 filed with the SEC on November 4, 2022, which is incorporated by reference into this joint proxy statement/prospectus.
The following information should be read together with the consolidated financial statements of STAR, the notes related thereto, and the related reports of management on the financial condition and performance of STAR, all of which are contained in the reports of STAR filed with the SEC and incorporated herein by reference. For more information, see “Where You Can Find More Information.”
Nine Months Ended September 30,
For the Years Ended December 31,
(In thousands, except per share data)
2022
2021
2021
2020
2019
Summary Consolidated Statements of Operations:
Revenues:
Operating lease income
$ 9,715 $ 13,456 $ 16,824 $ 24,276 $ 32,294
Interest income
11,262 24,846 31,229 56,676 75,636
Interest income from sales-type leases
861 683 1,215
Other income
51,545 60,950 70,259 78,445 46,180
Land development revenue
54,390 157,936 189,103 164,702 119,595
Total revenues
127,773 257,871 308,630 324,099 273,705
Costs and expenses:
Interest expense
76,056 86,145 115,400 126,828 141,699
Real estate expense
39,337 33,404 45,994 46,083 67,837
Land development cost of sales
55,369 147,507 171,961 177,727 109,663
Depreciation and amortization
3,985 5,715 7,072 7,327 7,176
General and administrative
10,406 68,954 131,703 100,879 98,609
Provision for (recovery of) loan losses
22,556 (7,411) (8,085) 8,866 6,482
Provision for losses on net investment in leases
465
Impairment of assets
1,768 679 678 5,791 10,948
Other expense
6,624 1,358 8,114 569 13,120
Total costs and expenses
216,101 336,816 472,837 474,070 455,534
Income from sales of real estate
1,443 26,319 26,319 6,318 11,969
Loss from operations before other items
(86,885) (52,626) (137,888) (143,653) (169,860)
Loss on early extinguishment of debt
(131,200) (12,038) (27,724)
Earnings from equity method investments
102,222 110,661 154,344 39,472 42,378
Net income (loss) before income taxes
(115,863) 58,035 16,456 (116,219) (155,206)
Income tax benefit (expense)
(567) 117 118 (89) (369)
Net income (loss) from continuing operations
(116,430) 58,152 16,574 (116,308) (155,575)
 
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Nine Months Ended September 30,
For the Years Ended December 31,
(In thousands, except per share data)
2022
2021
2021
2020
2019
Net income from discontinued operations
797,688 69,415 121,452 85,455 489,900
Net income (loss)
681,258 127,567 138,026 (30,853) 334,325
Net (income) loss from continuing operations attributable to noncontrolling interests
(46) 55 75 (337) 447
Net (income) from discontinued operations attributable to noncontrolling interests
(179,089) (8,092) (5,620) (11,251) (10,730)
Net income (loss) attributable to iStar Inc.
502,123 119,530 132,481 (42,441) 324,042
Preferred dividends
(17,622) (17,622) (23,496) (23,496) (32,495)
Net income (loss) allocable to common shareholders
$ 484,501 $ 101,908 $ 108,985 $ (65,937) $ 291,547
Per common share data:
Net income (loss) allocable to common Shareholders:
Basic
$ 6.16 $ 1.40 $ 1.51 $ (0.87) $ 4.51
Diluted
$ 6.16 $ 1.30 $ 1.51 $ (0.87) $ 4.51
Net income (loss) from continuing operations and allocable to common shareholders:
Basic
$ (1.70) $ 0.56 $ (0.10) $ (1.85) $ (2.90)
Diluted
$ (1.70) $ 0.52 $ (0.10) $ (1.85) $ (2.90)
Net income from discontinued operations and allocable to common shareholders:
Basic
$ 7.86 $ 0.84 $ 1.61 $ 0.98 $ 7.41
Diluted
$ 7.86 $ 0.78 $ 1.61 $ 0.98 $ 7.41
Weighted average number of common shares:
Basic
78,706 72,675 71,831 75,684 64,696
Diluted
78,706 78,402 71,831 75,684 64,696
As of
September 30,
2022
As of December 31,
(In thousands)
2021
2020
Summary Consolidated Balance Sheets:
Total real estate
$ 90,427 $ 92,451 $ 197,590
Real estate and other assets available and held for sale and classified as discontinued operations(1)
11,925 2,299,711 2,228,570
Cash and cash equivalents
1,335,722 339,601 98,633
Total assets
3,522,132 4,840,534 4,861,808
Total liabilities
1,824,502 3,777,328 3,797,425
Total iStar Inc. shareholders’ equity
1,680,319 851,296 870,969
Noncontrolling interests
17,311 211,910 193,414
(1)
Refer to Note 3 — Net Lease Sale and Discontinued Operations in the notes to the financial statements included in STAR’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 and STAR’s Annual Report on Form 10-K for the year ended December 31, 2021.
 
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Nine Months Ended September 30,
For the Years Ended December 31,
(In thousands)
2022
2021
2021
2020
2019
Summary Consolidated Statements of Cash Flow:
Cash flows provided by (used in) operating activities
$ 15,373 (4,741) $ (20,327) $ 21,886 $ (45,625)
Cash flows provided by (used in) investing activities
2,706,633 373,722 514,016 31,179 (398,096)
Cash flows provided by (used in) financing activities
(1,774,805) (164,620) (250,135) (254,978) (178,629)
Effect of exchange rate changes on cash
(100) (126) (124) 273 12
 
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SUMMARY HISTORICAL FINANCIAL DATA OF SAFE
The following tables set forth summary consolidated financial information for SAFE as of and for each of the years ended December 31, 2021, 2020 and 2019, and as of and for each of the nine-month periods ended September 30, 2022 and 2021.
The summary consolidated financial information for SAFE as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019 was derived from SAFE’s consolidated financial statements contained in SAFE’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 15, 2022, which is incorporated by reference into this joint proxy statement/prospectus.
The summary consolidated financial information for SAFE as of September 30, 2022 and for each of the nine-month periods ended September 30, 2022 and 2021 was derived from SAFE’s unaudited consolidated financial statements contained in SAFE’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 filed with the SEC on November 2, 2022, which is incorporated by reference into this joint proxy statement/prospectus.
The following information should be read together with the consolidated financial statements of SAFE, the notes related thereto, and the related reports of management on the financial condition and performance of SAFE, all of which are contained in the reports of SAFE filed with the SEC and incorporated herein by reference. For more information, see “Where You Can Find More Information.”
Nine Months Ended September 30,
For the Years Ended December 31,
(In thousands, except per share data)
2022
2021
2021
2020
2019
Summary Consolidated Statements of Operations:
Revenues:
Interest income from sales-type leases(1)
$ 146,014 $ 83,244 $ 118,824 $ 81,844 $ 18,531
Operating lease income
49,925 51,367 67,667 72,340 72,071
Other income
1,004 390 523 1,243 2,794
Total revenues
196,943 135,001 187,014 155,427 93,396
Costs and expenses:
Interest expense
91,050 57,259 79,707 64,354 29,868
Real estate expense
2,272 2,038 2,663 2,480 2,673
Depreciation and amortization
7,215 7,160 9,562 9,433 9,379
General and administrative
29,203 21,388 28,753 22,733 14,435
Other expense
6,777 740 868 243 899
Total costs and expenses
136,517 88,585 121,553 99,243 57,254
Gain on sales of Net Investment in Leases
55,811
Income from operations before other items
116,237 46,416 65,461 56,184 36,142
Loss on early extinguishment of debt
(216) (216) (2,011)
Earnings (losses) from equity method investments
6,772 4,012 6,279 3,304 (403)
Selling profit from sales-type leases
1,833 1,833
Net income
123,009 52,045 73,357 59,488 33,728
Net (income) attributable to noncontrolling
interests
(8,723) (201) (234) (194) (6,035)
Net (income) attributable to redeemable noncontrolling interests
(658)
Net income attributable to Safehold Inc. common shareholders
$ 113,628 $ 51,844 $ 73,123 $ 59,294 $ 27,693
 
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Nine Months Ended September 30,
For the Years Ended December 31,
(In thousands, except per share data)
2022
2021
2021
2020
2019
Per common share data:
Net income
Basic and diluted
$ 1.87 $ 0.97 $ 1.35 $ 1.17 $ 0.89
Weighted average number of common shares:
Basic
60,776 53,347 54,167 50,688 31,008
Diluted
60,776 53,359 54,180 50,697 31,008
(1)
For the nine months ended September 30, 2022 and 2021 and the years ended December 31, 2021, 2020 and 2019, SAFE recorded $2.1 million, $6.2 million, $8.4 million, $8.2 million and $5.0 million, respectively, of “Interest income from sales-type leases” in its consolidated statements of operations from its ground leases with STAR.
As of
September 30,
2022
As of December 31,
(In thousands)
2021
2020
Summary Consolidated Balance Sheets:
Total real estate, net and real estate-related intangible assets, net
$ 927,576 $ 936,810 $ 972,272
Net investment in sales-type leases
3,066,113 2,412,716 1,305,519
Ground Lease receivables
1,326,632 796,252 577,457
Cash and cash equivalents
35,574 29,619 56,948
Total assets
5,791,874 4,515,726 3,208,970
Total liabilities
3,646,367 2,830,524 1,827,667
Total Safehold Inc. shareholders’ equity
2,113,832 1,682,278 1,379,123
Noncontrolling interests
12,017 2,924 2,180
Nine Months Ended September 30,
For the Years Ended December 31,
(In thousands)
2022
2021
2021
2020
2019
Summary Consolidated Statements of Cash Flows:
Cash flows provided by (used in)
operating activities
$ 52,147 $ 12,947 $ 26,917 $ 35,711 $ (1,963)
Cash flows used in investing activities
(1,047,610) (607,298) (1,287,991) (530,641) (1,520,775)
Cash flow provided by financing activities
1,050,522 545,585 1,203,123 544,615 1,545,095
 
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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The summary unaudited pro forma condensed combined balance sheet presented below assumes the merger and related transactions occurred on September 30, 2022. The summary unaudited pro forma condensed combined statement of operations presented below assumes the merger and related transactions occurred on January 1, 2021.
The following summary unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of Regulation S-X, using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial statements contained elsewhere in this joint proxy statement/prospectus under the heading “Unaudited Pro Forma Condensed Combined Financial Statements”. The summary unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not purport to reflect the results we may achieve in future periods or the historical results that would have been obtained had the merger and related transactions been completed on the dates indicated above. The summary unaudited pro forma condensed combined financial statements also do not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the transactions described above. In addition, future results may vary significantly from those reflected in the unaudited pro forma condensed combined financial statements due to factors discussed in the “Risk Factors” section, beginning on page 34.
The unaudited pro forma condensed combined financial statements are derived from and should be read in conjunction with:

the more detailed unaudited pro forma condensed combined financial statements, including the notes thereto, contained elsewhere in this joint proxy statement/prospectus;

the consolidated financial statements of STAR and accompanying notes thereto included in STAR’s annual report on Form 10-K for the year ended December 31, 2021, as amended by Form 10-K/A, and quarterly report on Form 10-Q for the period ended September 30, 2022, incorporated herein by reference;

the consolidated financial statements of SAFE and accompanying notes thereto included in SAFE’s annual report on Form 10-K for the year ended December 31, 2021 and quarterly report on Form 10-Q for the period ended September 30, 2022, incorporated herein by reference; and

other information relating to STAR and SAFE contained in or incorporated by reference into this joint proxy statement/prospectus. For more information, see “Summary Historical Financial Data of STAR, “Summary Historical Financial Data of SAFE” and “Where You Can Find More Information.” In management’s opinion, all adjustments necessary to reflect the merger, the issuance of shares of New SAFE’s common stock in the merger and the cash out of STAR preferred stock in the merger have been made to present the unaudited pro forma condensed combined financial statements fairly, in accordance with Article 11 of Regulation S-X.
The unaudited pro forma condensed combined financial information is presented to illustrate (i) adjustments to STAR’s historical financial position and results of operations for the planned spin-off of the non-ground lease businesses into a separate public company and other pre-merger transactions; and (ii) acquisition accounting adjustments for the merger and other ancillary adjustments in connection with the merger, including an adjustment to reflect SAFE as the accounting acquirer in the business combination with STAR.
 
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New SAFE Summary Unaudited Pro Forma
Condensed Combined Balance Sheet
as of September 30, 2022
As of September 30, 2022
ASSETS
Net investment in leases
$ 3,066,408
Ground Lease receivables
1,326,632
Total real estate, net and real estate-related intangible assets, net
928,558
Other investments
264,790
Total assets
6,208,397
LIABILITIES AND EQUITY
Debt obligations, net
3,754,193
Total liabilities
3,966,354
Total shareholders’ equity
2,186,625
Noncontrolling interests
35,760
Total equity
2,222,385
Total liabilities and equity
6,208,397
New SAFE Summary Unaudited Pro Forma
Condensed Combined Statements of Operations for the
Nine Months Ended September 30, 2022 and the Year Ended December 31, 2021
For the Nine Months Ended September 30, 2022
Interest income from sales-type leases
$ 146,950
Operating lease income
49,925
Total revenues
220,990
Interest expense
111,016
Total costs and expenses
155,695
Net loss allocable to common shareholders
(5,790)
Loss per share
(0.09)
Weighted average shares outstanding – basic and diluted
61,971
For the Year Ended December 31, 2021
Interest income from sales-type leases
$ 121,746
Operating lease income
67,667
Total revenues
223,961
Interest expense
123,563
Total costs and expenses
289,097
Net loss allocable to common shareholders(1)
(85,219)
Loss per share
(1.54)
Weighted average shares outstanding – basic and diluted
55,362
(1)
Net loss allocable to common shareholders includes a $51.2 million loss on the distribution of SAFE common stock in the form of a dividend to STAR shareholders, $7.3 million of costs in connection with the acceleration of awards under iStar’s long-term incentive program and iPIP programs, a loss on early extinguishment of debt of $131.2 million and $32.2 million of transaction fees, all of which are nonrecurring in nature.
 
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RISK FACTORS
In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risks before deciding how to vote. In addition, you should read and consider the risks associated with the business of SAFE because these risks will also affect New SAFE, as the combined company, following completion of the transactions. These risks can be found in SAFE’s Annual Report on Form 10-K for the year ended December 31, 2021, which is filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. For more information, see “Where You Can Find More Information.”
Risks Relating to the Merger
The merger may not be completed on the terms or timeline currently contemplated, or at all.
The completion of the merger is subject to certain conditions, including: (i) the approval of SAFE’s stockholders, (ii) the approval of STAR’s stockholders, (iii) completion of the spin-off, (iv) the approval of the shares of New SAFE common stock to be issued in the merger for listing on the NYSE, (v) the effectiveness of the registration statement on Form S-4 registering the New SAFE common stock to be issued in the merger, (vi) the absence of any temporary restraining order, injunction or other order of any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the reverse stock split or the merger, (vii) generation of certain cash proceeds, (viii) the receipt of certain tax opinions by STAR and SAFE that the merger will qualify as a reorganization under the Internal Revenue Code and that STAR and SAFE each qualifies as a REIT for federal income tax purposes, (ix) the accuracy of certain representations and warranties of STAR and SAFE contained in the merger agreement and the compliance by the parties with the covenants contained in the merger agreement (subject to customary materiality qualifiers), and (x) certain other conditions specified in the merger agreement. Neither STAR nor SAFE can provide assurances that the merger will be consummated on the terms or timeline currently contemplated, or at all.
Neither the final STAR share consolidation ratio nor the exact percentage or value of the shares of New SAFE common stock that the SAFE stockholders and the STAR stockholders will hold after the merger will be known at the times of the special meetings.
In the merger and related transactions, each issued and outstanding share of STAR common stock will, by means of a reverse stock split, be combined into a fraction of a share of STAR common stock represented by the STAR share consolidation ratio, which is equal to (i)(a) the number of shares of SAFE common stock held by STAR and its wholly-owned subsidiaries as of immediately prior to the reverse split (after giving effect to (w) the spin-off, (x) the STAR special distribution, (y) any sales or other distributions by STAR of shares of SAFE common stock that occur prior to the reverse split, including distributions in respect of STAR’s performance incentive program known as “iPIP” and (z) the MSD transaction), plus (b) 1,195,034 (representing $50 million of shares based on the volume-weighted average price of the SAFE common stock during the 10-day period ended August 9, 2022), plus (c) the number of shares of SAFE common stock payable in respect of accrued but unpaid management fees owing to STAR, divided by (ii) the aggregate number of issued and outstanding shares of STAR common stock as of immediately prior to the reverse split.
Based on (i) the number of shares of STAR common stock outstanding as of September 30, 2022, (ii) our current estimate of the number of shares of SAFE common stock that will be owned by STAR as of the closing date, after giving effect to the adjustments described in the immediately preceding paragraph, and (iii) the approximate respective trading prices of $26.46 per share of SAFE common stock, as of September 30, 2022, and $7.07 per share of STAR common stock adjusted for the STAR special distribution, as of September 30, 2022, we currently estimate the STAR share consolidation ratio will be approximately 0.138. By virtue of the merger, each share of SAFE common stock issued and outstanding immediately prior to the effective time will be converted into the right to receive a fixed number of one share of New SAFE common stock.
 
34

 
The final STAR share consolidation ratio is subject to change based on a number of factors and may be higher or lower than 0.138. Items that could cause a change in the final STAR share consolidation ratio include, without limitation, any of the following that may occur prior to the closing of the merger: sales or other distributions by STAR of shares of SAFE common stock owned by STAR; increases or decreases in the price of SAFE common stock which, among other things, will affect the number of shares of SAFE common stock that STAR will be required to distribute to participants in its iPIP programs and that will serve as collateral for a margin loan financing related to the spin-off, as discussed further below; the receipt of lower prices than anticipated for legacy asset sales, delays in the anticipated timing of legacy asset sales and/or insufficient sales of legacy assets, which could necessitate STAR having to sell SAFE shares in order to raise additional cash proceeds to satisfy its liabilities; and delays in the timing of closing of the merger, which could also necessitate STAR having to raise additional cash from sales of SAFE shares to compensate for cash used to fund operating activities.
As discussed in the preceding paragraph, changes in the market price of SAFE common stock will impact the number of shares of SAFE common stock that STAR will own at the time of the reverse split, which in turn will affect the final STAR share consolidation ratio. The final STAR share consolidation ratio is relevant to the relative ownership percentages of former holders of STAR common stock, as a group, and former holders of SAFE common stock, as a group, of the New SAFE common stock immediately after giving effect to the merger. The exact value of the shares of New SAFE common stock that the SAFE stockholders and STAR stockholders will hold after the merger will not be known at the time of the SAFE special meeting and the STAR special meeting and may be greater than, the same as or less than the prices at the time of the special meetings. Stock price changes may result from a variety of factors (many of which are beyond the control of STAR and SAFE), including the following factors:

changes in the businesses, operations, assets, liabilities and prospects of either company or both companies;

changes in market assessments of the business, operations, financial position and prospects of either company or both companies;

market assessments of the benefits of the merger and the likelihood that the merger will be completed;

interest rates, general market and economic conditions and other factors generally affecting the price of STAR common stock and SAFE common stock;

federal, state and local legislation, governmental regulation and legal developments in the businesses in which STAR and/or SAFE operate; and

other factors beyond the control of STAR or SAFE, including those described under this “Risk Factors” heading.
STAR stockholders may be diluted by the merger.
Based on an assumed STAR share consolidation ratio of 0.138, we currently estimate that New SAFE will have approximately 63.6 million shares of New SAFE common stock outstanding upon completion of the merger, of which (x) approximately 36.4 million shares (or approximately 57.3%) will have been issued to holders of SAFE common stock (other than STAR) in the merger (including former stockholders of STAR who received an aggregate of approximately 6.63 million (or approximately 10.4% of the outstanding shares of New SAFE) shares of SAFE common stock in the STAR special distribution and continue to hold their SAFE shares at the effective time of the merger); (y) approximately 12.0 million shares (or approximately 18.9%) will have been issued to holders of STAR common stock in the reverse split; and (z) approximately 15.1 million shares (or approximately 23.8%) will have been contributed by STAR to SpinCo.
Failure to complete the merger could adversely affect the stock prices and the future business and financial results of STAR and SAFE.
If the merger is not completed, the ongoing businesses of STAR or SAFE may be adversely affected and STAR and SAFE will be subject to numerous risks, including the following:

upon termination of the merger agreement under specified circumstances, a termination fee of $63 million may be payable by either STAR or SAFE;
 
35

 

each of STAR and SAFE having to pay substantial costs relating to the merger, such as legal, accounting, financial advisor, filing, printing and mailing fees and integration preparation costs that have already been incurred or will continue to be incurred until the closing of the merger;

the management of each of STAR and SAFE focusing on the merger instead of on pursuing other opportunities that could be beneficial to the companies, in each case, without realizing any of the benefits of having the merger completed; and

reputational harm due to the adverse perception of any failure to successfully complete the merger.
If the merger is not completed, neither STAR nor SAFE can assure their respective stockholders that these risks will not materialize or will not materially affect the business, financial results and stock prices of either STAR or SAFE.
The merger agreement contains provisions that could discourage a potential competing acquirer of either STAR or SAFE or could result in any competing proposal being at a lower price than it might otherwise be.
The merger agreement contains provisions that, subject to limited exceptions, restrict the ability of each of STAR and SAFE to, directly or indirectly, initiate, solicit, propose, knowingly encourage or facilitate competing third-party proposals to effect, among other things, a merger, reorganization, share exchange, consolidation or the sale of 15% or more of the stock or consolidated net revenues, net income or total assets of STAR or SAFE. In addition, either STAR or SAFE generally has an opportunity to offer to modify the terms of the merger agreement in response to any competing “superior proposal” ​(as defined in “The Merger Agreement — No Solicitation”) that may be made to the other party before the board of directors of STAR or SAFE (acting upon the recommendation of the applicable special committee), as the case may be, may withdraw or modify its recommendation in response to such superior proposal or terminate the merger agreement to enter into such superior proposal. In some circumstances, one of the parties will be required to pay a termination fee of $63 million to the other party. For more information, see “The Merger Agreement — Termination of the Merger Agreement.”
These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of STAR or SAFE from considering or proposing such an acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than that market value proposed to be received or realized in the merger, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances under the merger agreement. In addition, STAR’s significant ownership interest and voting power in SAFE could discourage a potential competing acquirer for SAFE.
The pendency of the merger could adversely affect the business and operations of STAR and SAFE.
In connection with the pending merger, some tenants, vendors or other counterparties of each of STAR and SAFE may delay or defer decisions, which could adversely affect the revenues, earnings, funds from operations, cash flows and expenses of STAR and SAFE, regardless of whether the merger is completed. Similarly, current and prospective employees of STAR and SAFE may experience uncertainty about their future roles with New SAFE following the merger, which may materially adversely affect the ability of STAR and SAFE to attract and retain key personnel during the pendency of the merger. In addition, due to interim operating covenants in the merger agreement, each of STAR and SAFE may be unable (without the other party’s prior written consent), during the pendency of the merger, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions, even if such actions would prove beneficial.
SAFE and STAR directors and officers have interests in the merger that may be different from, or in addition to, the interests of SAFE stockholders and STAR stockholders.
In considering the recommendation of the SAFE special committee and board of directors, SAFE stockholders should be aware that certain of SAFE’s directors and executive officers have interests in the merger that may be different from, or in addition to, those of SAFE’s stockholders generally. These interests
 
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may present such executive officers and directors with actual or potential conflicts of interest. These interests include, but are not limited to, the continued service of certain directors of SAFE as directors of New SAFE, the compensation to be paid to the executive officers and employees of New SAFE following the merger and provisions in the merger agreement regarding continued indemnification of and advancement of expenses to SAFE directors and officers. The members of the SAFE special committee and the SAFE board of directors were aware of these interests and considered them, among others, in their authorization, approval and adoption of the merger agreement, the merger and the other transactions contemplated thereby and their recommendation that SAFE’s stockholders approve the SAFE merger proposal and the transactions contemplated thereby. See “The Merger — Background of the Merger,” “The Merger — SAFE’s Reasons for the Merger; Recommendations of the SAFE Board of Directors” and “The Merger — Interests of SAFE’s Directors and Officers in the Merger” for further discussion of these matters.
In considering the recommendation of the STAR special committee and board of directors, STAR stockholders should be aware that certain of STAR’s directors and executive officers have interests in the merger that may be different from, or in addition to, those of STAR’s stockholders generally. These interests may present such executive officers and directors with actual or potential conflicts of interest. These interests include, but are not limited to, the continued service of certain directors of STAR as directors of New SAFE and SpinCo, the continued employment of the executive officers of STAR by New SAFE following the merger, the treatment in the merger of STAR’s iPIP plans and other equity awards, the New SAFE restricted stock units and Caret units to be issued to the executive officers and employees of New SAFE following the merger and provisions in the merger agreement regarding continued indemnification of and advancement of expenses to STAR directors and officers. The members of the STAR special committee and the STAR board of directors were aware of and considered these interests relating to STAR, among other matters, in evaluating the merger agreement and the merger, and in recommending that STAR stockholders approve the STAR merger proposal and the STAR stock issuance proposal. See “The Merger — Background of the Merger,” “The Merger — STAR’s Reasons for the Merger; Recommendations of the STAR Board of Directors” and “The Merger — Interests of STAR’s Directors and Officers in the Merger” for further discussion of these matters.
STAR is a significant stockholder in SAFE and is also SAFE’s manager and has interests that may be different from, or in addition to, SAFE’s other stockholders.
STAR is a significant stockholder in SAFE and is also SAFE’s manager. STAR has interests that may be different from, or in addition to, the interests of SAFE’s other stockholders. Given STAR’s significant ownership in SAFE, STAR’s role as manager of SAFE and STAR’s obligations under the voting agreement, STAR has significant influence on the SAFE merger proposal.
The STAR share consolidation ratio will be reduced if the merger has not occurred, and STAR has not raised certain additional cash proceeds, by March 31, 2023.
The merger agreement provides that the upward adjustment amount of 1,195,034 will be reduced if the merger has not occurred and STAR has not raised certain Additional Cash Proceeds, as defined under the merger agreement, by March 31, 2023, and may be eliminated entirely thereafter. If STAR has not raised at least $198.0 million of such additional cash proceeds by March 31, 2023, the upward adjustment amount will be reduced by 358,511, and if STAR has not raised at least $223.0 million of such additional cash proceeds by June 30, 2023, the upward adjustment will be reduced to zero. There can be no assurance that STAR will be able to achieve these milestones, and therefore, the STAR share consolidation ratio may be lower than currently anticipated.
SAFE will have the option to internalize STAR’s management if the merger has not occurred by the outside date under the merger agreement.
If the merger agreement is terminated because the merger has not occurred by September 30, 2023, SAFE will have the option under certain circumstances to internalize STAR’s management, which may adversely affect STAR. If SAFE exercises its option under the merger agreement to internalize management, it must pay STAR $100.0 million in shares of SAFE common stock, which is less than the $150.0 million of consideration that was allocated to the termination of the existing management agreement in the
 
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negotiations of the merger. If SAFE exercises this option, STAR would become externally-managed by SAFE pursuant to a management agreement that SAFE and STAR have agreed to negotiate in good faith. These changes in STAR’s management structure may adversely affect STAR and the market value of its securities.
Risks Relating to the Spin-Off
The spin-off may not deliver its intended results.
There are several risks and uncertainties related to the spin-off, including but not limited to:

whether STAR will be able to effect the separation and distribution agreement;

whether SpinCo may be able to meet its obligations to New SAFE and others following the spin-off;

whether there could be legal or other challenges to the spin-off, including changes in legal, regulatory, market and other circumstances that could lead to the spin-off not being pursued;

the fact that SpinCo will be a significant stockholder of New SAFE common stock and sales of New SAFE common stock by SpinCo could adversely affect the market price of New SAFE common stock; and

the fact that certain cash flows payable by SpinCo to New SAFE may be affected by SpinCo’s performance, including amounts payable under the senior secured term loan and management fees payable under the management agreement with SpinCo, and any adverse impact on SpinCo’s performance may adversely affect SpinCo’s ability to pay amounts due to New SAFE.
Any one or more of these risks and uncertainties, or any other complexity or aspect of the spin-off or its implementation, may cause the spin-off to fail or prevent the spin-off from being able to be completed. If the spin-off is not completed, the merger may fail to close.
The spin-off could distract management time and attention and give rise to disputes or other unfavorable effects, which could materially and adversely affect our business, financial position or results of operations.
New SAFE will be SpinCo’s external manager and its duties under the management agreement could distract the time and attention of New SAFE’s management away from New SAFE. In addition, the spin-off may lead to increased operating and other expenses, of both a nonrecurring and a recurring nature, and to changes to certain operations. Disputes with third parties could also arise out of these transactions. These potential management distractions increased expenses, changes to operations, disputes with third parties, or other effects could materially and adversely affect our business, financial position or results of operations.
The spin-off may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws.
If New SAFE files for insolvency or bankruptcy within certain timeframes following the spin-off, a court could deem the spin-off or certain internal restructuring transactions undertaken by STAR in connection therewith to be a fraudulent conveyance or transfer. Fraudulent conveyances or transfers are defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as they become due. In such circumstances, a court could void the transactions or impose substantial liabilities upon us, which could adversely affect our financial condition and our results of operations. Whether a transaction is a fraudulent conveyance or transfer will vary depending upon the jurisdiction whose law is being applied.
The agreements between STAR and SpinCo to be entered into in connection with the spin-off may not reflect terms that would have resulted from arm’s-length negotiations with unaffiliated third parties.
The agreements related to the spin-off, including the separation and distribution agreement, the management agreement, the governance agreement and the registration rights agreement were negotiated
 
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prior to the consummation of the spin-off. As a result, although those agreements are intended to reflect arm’s-length terms, they may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties.
Risks Relating to New SAFE after Completion of the Transactions
New SAFE expects to incur substantial expenses related to the transactions.
New SAFE expects to incur substantial expenses in completing the transactions. While STAR and SAFE have assumed that a certain level of transaction and internalization expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their expenses. Following the merger, New SAFE may be unable to realize the anticipated synergies and related benefits of the merger or do so within the anticipated time frame.
New SAFE will be required to devote significant management attention and resources to managing the combined company as a single, internalized enterprise and ensuring that New SAFE is fulfilling its obligations under the SpinCo management agreement. Potential difficulties New SAFE may encounter include the following:

the inability to successfully combine the businesses of STAR and SAFE in a manner that permits New SAFE to achieve the future cost savings anticipated to result from the merger, which would result in some anticipated benefits of the merger not being realized in the time frame currently anticipated, or at all;

the failure by New SAFE to retain key employees for its business and the management of SpinCo’s assets;

potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the merger and spin-off; and

performance shortfalls as a result of the diversion of management’s attention caused by completing the merger and spin-off and managing SpinCo after the effective time of the merger.
For all these reasons, you should be aware that it is possible that New SAFE may be adversely affected by the business and financial results of distractions of New SAFE’s management, the disruption of New SAFE’s ongoing business and/or unanticipated costs and expenses or the failure to realize anticipated future cost savings.
Following the merger, New SAFE may be unable to retain key employees.
The success of New SAFE after the merger will depend in part upon its ability to retain key STAR employees.
Key employees may depart either before or after the merger because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with New SAFE following the merger. Accordingly, no assurance can be given that STAR, SAFE or, following the merger, New SAFE will be able to retain key employees to the same extent as in the past.
The future operating results of New SAFE will suffer if New SAFE does not effectively manage its operations following the merger.
Following the merger, New SAFE may continue to expand its operations through additional acquisitions, development opportunities and other strategic transactions, some of which involve complex challenges. The future success of New SAFE will depend, in part, upon the ability of New SAFE to manage its expansion opportunities, which may pose substantial challenges for New SAFE to integrate new operations into its existing business in an efficient and timely manner, and to successfully monitor its operations, costs, regulatory compliance and service quality, and to maintain other necessary internal controls. New SAFE cannot assure you that its expansion or acquisition opportunities will be successful, or that it will realize its expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.
 
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The trading price of shares of New SAFE common stock following the merger may be affected by factors different from those affecting the price of shares of STAR common stock or SAFE common stock before the merger.
The results of operations of New SAFE and the trading price of New SAFE common stock after the merger may be affected by factors different from those currently affecting STAR’s or SAFE’s results of operations and the trading prices of STAR common stock and SAFE common stock. For example, some institutional investors which currently own both STAR and SAFE common stock may elect to decrease their ownership in the merged company by selling New SAFE common stock.
Accordingly, the historical trading prices and financial results of STAR and SAFE may not be indicative of these matters for New SAFE after the merger.
The historical and unaudited pro forma condensed combined financial information included elsewhere in this joint proxy statement/prospectus may not be representative of New SAFE’s results after the consummation of the transactions.
The unaudited pro forma condensed combined financial information included elsewhere in this joint proxy statement/prospectus has been presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that actually would have occurred had the merger and related transactions been completed as of the dates indicated, nor is it indicative of the future operating results or financial position of New SAFE after the consummation of the transactions. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon preliminary estimates, to allocate the purchase price to STAR’s assets and liabilities. The purchase price allocation reflected in the unaudited pro forma condensed combined financial information included elsewhere in this joint proxy statement/prospectus is preliminary, and the final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of STAR as of the date of the completion of the merger. The unaudited pro forma condensed combined financial information does not reflect future events that may occur after the merger, including the costs related to the planned integration of the two companies and any future nonrecurring charges resulting from the merger, and does not consider potential impacts of current market conditions on revenues or expense efficiencies. The unaudited pro forma condensed combined financial information presented elsewhere in this joint proxy statement/prospectus is based in part on certain assumptions regarding the transactions that STAR and SAFE believe are reasonable under the circumstances. Neither STAR nor SAFE can assure you that the assumptions will prove to be accurate over time.
Following the merger, New SAFE will have a substantial amount of indebtedness and may need to incur more in the future.
SAFE has substantial indebtedness and, in connection with the merger, New SAFE will assume all of SAFE’s indebtedness in addition to retaining $100.0 million of STAR’s trust preferred securities. New SAFE’s substantial indebtedness could have adverse consequences on New SAFE’s business following the merger, such as:

requiring New SAFE to use a substantial portion of its cash flow from operations to service its indebtedness, which would reduce the available cash flow to fund working capital, capital expenditures, acquisitions, development projects, and other general corporate purposes and reduce cash for distributions;

limiting New SAFE’s ability to obtain additional financing to fund New SAFE’s working capital needs, acquisitions, capital expenditures, or other debt service requirements or for other purposes;

increasing the costs to New SAFE of incurring additional debt;

increasing New SAFE’s exposure to floating interest rates;

limiting New SAFE’s ability to compete with other companies that are not as highly leveraged, as New SAFE may be less capable of responding to adverse economic and industry conditions;