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DATE

Thursday, Feb. 12, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

  • Chairman and Chief Executive Officer — Jay Sugarman
  • President — Michael Trachtenberg
  • Chief Financial Officer — Brett Asnas
  • Executive Vice President, Head of Investments — Steve Wilder
  • Senior Vice President, Capital Markets and Investor Relations — Pearse Hoffmann

TAKEAWAYS

  • Transactions Closed -- Ten transactions executed in the quarter, consisting of nine ground leases and one leasehold loan, totaling $167 million in commitments.
  • Credit Ratings -- Received an S&P upgrade to A- with a stable outlook, now rated single A by all three major agencies.
  • Debt Refinancing -- Secured a $400 million unsecured term loan, refinancing the nearest-term 2027 maturity and increasing liquidity by replacing secured with unsecured, freely prepayable debt.
  • Annual Investment Volume -- Closed 17 ground leases for $277 million and four leasehold loans for $152 million during the year, for an aggregate commitment of $429 million.
  • Ground Lease Portfolio Metrics -- Year-end portfolio was $7.1 billion in value; UCA stood at $9.3 billion, an increase of approximately $200 million from the prior quarter, driven mainly by new investments.
  • Coverage and Leverage Metrics -- Portfolio GLTV measured 52% and rent coverage was 3.4x.
  • Liquidity -- Ended the year with about $1.2 billion in liquidity, augmented by available joint venture capacity.
  • Quarterly Investment Funding -- Funded $60 million in the quarter ($44 million new originations at 7.3% yield, $11 million on preexisting commitments at 7.4% yield, and $6 million leasehold loans at SOFR plus 5.01%).
  • Portfolio Size -- At year-end, 164 ground lease assets, including 101 multifamily properties, representing an approximately 21x increase in book value and estimated unrealized capital appreciation since IPO.
  • Quarterly GAAP Revenue -- Recorded $97.9 million in quarterly GAAP revenue.
  • Quarterly Net Income -- Net income was $27.9 million for the quarter.
  • Quarterly Earnings per Share -- Diluted EPS of $0.39; EPS excluding a $2.2 million nonrecurring loss on debt extinguishment was $0.42, up 15%.
  • Annual GAAP Revenue -- For the year, GAAP revenue was $385.6 million.
  • Annual Net Income -- Reported $114.5 million in net income for the year.
  • Annual Earnings per Share -- Annual diluted EPS of $1.59; excluding nonrecurring items, EPS was $1.65, up 5%.
  • Portfolio Yield -- Portfolio generated a 3.8% cash yield and a 5.4% annualized yield (GAAP); economic yield was 5.9%, rising to 6.1% inflation-adjusted and to 7.3% including unrealized capital appreciation from Carat at recent management valuation.
  • Debt Structure -- $4.9 billion in outstanding debt: $2.6 billion unsecured, $1.3 billion nonrecourse secured, $780 million on revolver, and $270 million of pro rata JV debt.
  • Interest Rate Risk Management -- $500 million SOFR swap locked at 3% until April 2028; $250 million of long-term treasury locks at 4% with a $30 million gain position recognized on the balance sheet.
  • Leverage -- Total debt-to-equity ratio was 2.0x.
  • Effective Interest Rate -- Portfolio’s effective interest rate on permanent debt was 4.3%; cash interest rate was 3.9%.
  • G&A Guidance -- Net general and administrative expenses projected to rise about $5 million, reaching the high $40 million range for 2026, net of management fee declines.
  • Unfunded Commitments -- $140 million of ground lease and $125 million of loan unfunded commitments, with economic yields in the low 7% range on ground leases and SOFR plus 3% on loans.
  • Share Repurchase Program -- Plan to begin utilizing the authorized share repurchase program when conditions allow, aiming for leverage-neutral execution, as stated by management as an upcoming priority.
  • Carat Monetization -- CEO Sugarman said, "We think we can recognize that value much, much earlier. It is tangible. It is measurable. In some respects, it is Safehold Inc.'s trust fund. And so we are going to, you know, continue to point a spotlight at it. We are going to continue to look for things that can enable people to understand that value, whether that is liquidity or sales or monetization of some sort."
  • Office Market Outlook -- CEO Sugarman said, "We have certainly seen a strengthening in some core markets like New York. That feels pretty good...CBRE, you know, take a pretty good whack at those. So do not know whether we are absolutely at the bottom, but...they have taken a pretty good whack at the markets that are slower to recover."
  • Affordable Housing Expansion -- EVP Wilder noted progress on expanding affordable housing platform outside California and stated, "At this point, we have several other transactions in other states under LOI, and we think that will start to translate into closings over the coming quarters."
  • Park Hotels Litigation -- CEO Sugarman said regarding Park Hotels, "We do have a court date, 2027. Unfortunately, it cannot go quicker. But, you know, that is the time frame we have been given. And it is going to cost us, you know, $7 million to get there."

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RISKS

  • Litigation related to the Park Hotels asset will extend until at least 2027 with a projected $7 million cost, limiting management’s flexibility for those assets during the process.
  • Net general and administrative expenses are expected to rise by approximately $5 million in 2026 due to step-down in legacy management fee income, impacting operating leverage.

SUMMARY

Safehold Inc. (SAFE 0.88%) demonstrated increased investment activity and improved capital markets execution, including a $400 million unsecured debt refinancing and a portfolio credit ratings upgrade to single A across all major agencies. Management confirmed that unfunded commitments now carry higher yields, with new ground lease originations concentrated in affordable housing and select multifamily segments. CFO Brett Asnas disclosed that, "every $240 million that we fund takes leverage up one-tenth of a turn," emphasizing active leverage management as the company evaluates buybacks and funding strategy. CEO Sugarman provided clarity that monetizing Carat value remains a priority, with options for enhanced liquidity or asset sales under consideration. Liquidity stood at $1.2 billion year-end, with active risk management on interest rate exposure and sustained expansion efforts in new geographic markets for ground lease originations.

  • President Trachtenberg expressed confidence in the business model’s long-term value creation through a diversified portfolio of institutional-quality ground leases.
  • Management indicated leasehold loans, usually three years in term with extensions, offer competitive blended costs through integrated financing solutions.
  • Company sees margin improvement on new commitments versus its existing book, due to higher economic yields and tightened credit spreads.
  • Discussion revealed an openness to joint venture or insurance capital to optimize cost of equity and support portfolio growth objectives.

INDUSTRY GLOSSARY

  • GLTV (Ground Lease-To-Value): The ratio of the ground lease amount relative to the appraised property value, critical for risk and underwriting in ground lease structures.
  • UCA (Unrealized Capital Appreciation): The estimated increase in asset value not yet recognized through sales or other monetization, tracked as an internal metric.
  • Carat: Safehold Inc.’s internal reference to its portfolio of unrealized capital appreciation, representing the company’s share of potential long-term value embedded in ground lease assets.
  • SOFR (Secured Overnight Financing Rate): A broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, commonly used as a debt pricing benchmark in financial markets.
  • LOI (Letter of Intent): A preliminary agreement outlining the main terms for a proposed transaction, often prior to formal contract execution in real estate origination.

Full Conference Call Transcript

Operator: Good morning, and welcome to Safehold Inc.'s Fourth Quarter and Fiscal 2025 Earnings Conference Call. If you need assistance during today's call, please press 0. If you would like to ask a question, please press 1. That is 1 to ask a question. As a reminder, today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to Pearse Hoffmann, Senior Vice President of Capital Markets and Investor Relations. Please go ahead.

Pearse Hoffmann: Good morning, everyone. Thank you for joining us today for Safehold Inc.'s earnings call. On the call, we have Jay Sugarman, Chairman and Chief Executive Officer; Michael Trachtenberg, President; Brett Asnas, Chief Financial Officer; and Steve Wilder, Executive Vice President, Head of Investments. This morning, we plan to walk through a presentation that details our fourth quarter and fiscal year 2025 results. The presentation can be found on our website at safeholdinc.com, by clicking on the Investors link. There will be a replay of this conference call beginning at 2:00 p.m. Eastern Time today. The dial-in for the replay is (877) 481-4010 with a confirmation code of 53587.

In order to accommodate all those who want to ask questions, we ask that participants limit themselves to two questions during Q&A. If you would like to ask additional questions, you may reenter the queue. Before I turn the call over to Jay, I would like to remind everyone that statements in this earnings call, which are not historical facts, may be forward-looking. Our actual results may differ materially from these forward-looking statements, and the risk factors that could cause these differences are detailed in our SEC reports. Safehold Inc. disclaims any intent or obligation to update these forward-looking statements except as expressly required by law.

Now with that, I would like to turn it over to Chairman and CEO, Jay Sugarman. Jay? Thanks, Pearse, and thank you to all of you joining us today. While headwinds remain, Safehold Inc. made good progress on a number of fronts in the fourth quarter that we believe should have a positive impact on 2026. We were pleased to welcome Michael Trachtenberg as President, giving us new reach and firepower; to see Steve, Josefa, and the rest of our affordable housing team begin expanding our platform to new states and new sponsors; and to have Brett and our capital markets team continue to solidify the balance sheet and drive down our cost of capital.

These are all important parts of our goal to get our share price back to where it belongs. More consistent origination growth, more Carat visibility, and implementing share buybacks are some of the important themes this coming year that we believe have the potential to unlock value for shareholders. And we want to continue the work begun in 2025 to deliver tangible results in 2026. Our goals will be to add more ground lease volume in 2026 versus 2025, to find ways to get Carat's value more readily recognized, and to begin utilizing our previously authorized share repurchase program when trading windows are open and market conditions make sense.

Obviously, there are a lot of factors in the mix, but these are the three areas of focus that we have been working towards and we believe will support success in the coming year if we can deliver on them. With that, I would like to turn things over to Michael and Brett to recap the quarter and the year in more detail. Michael? Thank you, Jay, and good morning, everyone. In the short time that I have been with the company, I have seen firsthand the benefits gained for real estate owners utilizing modern ground lease capital, and the competitive advantages of Safehold Inc.'s platform that have been carefully built out over the past nine years.

It has been a privilege to meet with employees, customers, and investors to better understand the perspectives of our key stakeholders, and I look forward to engaging further with the investment community in the coming weeks and months. I am confident in our business model and the long-term value creation embedded in a diversified portfolio of institutional-quality ground leases, and I am excited to work closely with Jay, Brett, and the entire team to help guide Safehold Inc.'s next stage of growth. With that, let me pass it on to Brett to detail our fourth quarter and full year results.

Brett Asnas: Thank you, Michael, and good morning, everyone. Let's begin on slide two. The fourth quarter was productive for both new investments and capital markets activity. We closed on 10 transactions, including nine ground leases and one leasehold loan, for an aggregate commitment of $167 million. Eight of the ground leases were within the affordable housing sector in Southern California, and one ground lease was a market rate multifamily development in Cambridge, Massachusetts. That market rate transaction also included a leasehold loan, which was valuable and efficient one-stop capital for our customer. Moving to ratings and capital. During the quarter, the company received a credit ratings upgrade from S&P to A- with a stable outlook.

Safehold Inc. now has single A ratings from all three major rating agencies, underscoring the high credit quality of our portfolio and balance sheet. This recognition was a strong result for the company and we are already seeing positive flow through into our cost of capital. Also during the quarter, the company closed on a $400 million unsecured term loan. This transaction effectively refinanced our nearest-term maturity due in 2027, increasing liquidity and replacing secured debt with new unsecured debt that is both low cost and freely prepayable over its term. The right side of the page details the quarter and full year investment metrics.

For the year, we closed 17 ground leases for $277 million and four leasehold loans for $152 million, for an aggregate capital commitment of $429 million. The 17 ground leases included 12 affordable housing, four market rate multifamily, and one hotel, all in major markets with underwritten coverage of 3.2x, GLTV of 34%, and an economic yield of 7.3%. At year end, the total portfolio was $7.1 billion and UCA was estimated at $9.3 billion, an approximately $200 million increase from last quarter, which was primarily driven by external growth from new investments. GLTV was 52% and rent coverage was 3.4x.

We ended the year with approximately $1.2 billion of liquidity, which is further supported by the potential available capacity in our joint venture. Slide three provides a snapshot of our portfolio growth. In the fourth quarter, we funded a total of $60 million, including $44 million of ground lease fundings on new originations that have a 7.3% economic yield, $11 million of ground lease fundings on preexisting commitments that have a 7.4% economic yield, and $6 million of leasehold loan fundings which earned interest at a rate of SOFR plus 5.01%.

For the full year, we funded a total of $252 million, including $141 million of ground lease fundings on new originations that have a 7.2% economic yield, $43 million of ground lease fundings on preexisting commitments that have a 7% economic yield, and $68 million of leasehold loan fundings which earned interest at a rate of SOFR plus 3.47%. At year end, our ground lease portfolio had 164 assets, including 101 multifamily properties, and has grown 21x by both book value and estimated unrealized capital appreciation since our IPO.

In total, the unrealized capital appreciation portfolio is comprised of approximately 38 million square feet of institutional-quality commercial real estate consisting of nearly 23,000 multifamily units, 12.6 million square feet of office, over 5,000 hotel keys, and 2 million square feet of life science and other property types. Continuing on slide four, let me detail our quarterly and annual earnings results. For the fourth quarter, GAAP revenue was $97.9 million, net income was $27.9 million, and earnings per share was $0.39. The increase in quarterly GAAP earnings year over year was primarily driven by $3.5 million net accretion on investment fundings offset by a nonrecurring $2.2 million loss on the early extinguishment of debt.

Excluding the nonrecurring loss, earnings per share for the quarter was $0.42, up 15% year over year. For the full year, GAAP revenue was $385.6 million, net income was $114.5 million, and earnings per share was $1.59. The increase in annual GAAP earnings year over year was primarily driven by $17.2 million net accretion from investment fundings, offset by a $5.1 million decrease in management fee revenue from Star Holdings, and the same $2.2 million loss on early extinguishment of debt. Excluding nonrecurring items, earnings per share for the year was $1.65, up 5% year over year. On slide five, we detail our portfolio's yields.

For GAAP earnings, the portfolio currently earns a 3.8% cash yield and a 5.4% annualized yield. Annualized yield includes noncash adjustments within rent, depreciation, and amortization, which is primarily from accounting methodology on our IPO assets, but excludes all future contractual variable rent such as fair market value resets, percentage rent, or CPI-based escalators, which are all significant economic drivers. On an economic basis, the portfolio generates a 5.9% economic yield, which is an IRR-based calculation that conforms with how we have underwritten these investments. This economic yield has additional upside, including periodic CPI lookbacks, which we have in 81% of our ground leases.

Using the Federal Reserve's current long-term breakeven inflation rate of 2.25%, the 5.9% economic yield increases to a 6.1% inflation-adjusted yield. That 6.1% inflation-adjusted yield then increases to 7.3% after layering in an estimate for unrealized capital appreciation using Safehold Inc.'s 84% ownership interest in Carat at management's most recent estimated valuation. We believe unrealized capital appreciation in our assets to be a significant source of value for the company that remains largely unrecognized by the market today. Turning to slide six, we highlight the diversification of our portfolio by location and underlying property type. Our top 10 markets by gross book value are called out on the right, representing approximately 65% of the portfolio.

We include key metrics such as rent coverage and GLTV for each of these markets, and we have additional detail at the bottom of the page by region and property type. Portfolio GLTV, which is based on annual asset appraisals from CBRE, remained flat quarter over quarter at 52%, and rent coverage on the portfolio was unchanged at 3.4x. We continue to believe that investing in well-located institutional-quality ground leases in the top 30 markets that have attractive risk-adjusted returns will benefit the company and its stakeholders over long periods of time. Lastly, on slide seven, we provide an overview of our capital structure.

At year end, we had approximately $4.9 billion of debt, comprised of $2.6 billion of unsecured debt, $1.3 billion of nonrecourse secured debt, $780 million drawn on our unsecured revolver, and $270 million of our pro rata share of debt on ground leases which we own in joint ventures. Our weighted average debt maturity is approximately 18 years, with no significant maturities due until 2029. At year end, we had approximately $1.2 billion of cash and credit facility availability. We are rated A3 by Moody's, A- by S&P, and A- by Fitch, all with stable outlook. We have benefited from an active hedging strategy and remain well hedged for the short and long term.

Our limited floating rate borrowings are protected by a $500 million SOFR swap locked at 3% through April 2028. We receive SOFR swap payments on a current cash basis each month. We have an additional $250 million of long-term treasury locks at a weighted average rate of 4% and current gain position of approximately $30 million. We recognize the value of our treasury locks on the balance sheet but not yet on the P&L. We are levered 2.0x on a total debt-to-equity basis. The effective interest rate on permanent debt is 4.3%, and the portfolio's cash interest rate on permanent debt is 3.9%.

So to conclude, we saw strong production in the fourth quarter and are pleased with how the pipeline is developing for 2026, and we are well positioned to capitalize on opportunities with ample liquidity and improved debt cost of capital. And with that, let me turn it back to Jay.

Jay Sugarman: Thanks, Brett.

Pearse Hoffmann: Go ahead and open it up for questions.

Operator: Certainly. The floor is now open for questions. If you have any questions or comments, please press 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold just a moment while we poll for any questions. Your first question is coming from Mitch Germain with Citizens Bank. Please pose your question. Your line is live.

Mitch Germain: Good morning, and congrats on the quarter and the year.

Mitch Germain: Jay, it sounds like you are a bit more constructive about putting capital to work here. Obviously, a lot of your origination volume has been in the multifamily sector. Any potential willingness to invest back into office at this point?

Jay Sugarman: Hey, Mitch. Good morning. I am going to throw that to Michael because we have been talking a lot about the opportunity set in 2026. Michael, do you want to jump in here? Hey, Mitch. How are you? Okay. I think that we are certainly going to look to expand the asset classes that we are investing in. I would say more broadly that we will be very, very particular if we look at office deals, and we are more inclined to look at other food groups.

Mitch Germain: Got you. Q1 is a big quarter for office valuations. Any sense—you know, do you think that the worst is behind you with regards to some of the office downside with regards to the appraisals?

Jay Sugarman: Yes, you are right. The first quarter is a big one. We have certainly seen a strengthening in some core markets like New York. That feels pretty good. Other places are a little bit behind, but we have seen the CBRE, you know, take a pretty good whack at those. So do not know whether we are absolutely at the bottom, but, you know, they have taken a pretty good whack at the markets that are slower to recover.

Mitch Germain: Great. Last one for me. Jay, you talked about getting the Carats—I think you used the word recognized. Is it just outright sale of units? Is there anything else that you potentially have up your sleeve there?

Jay Sugarman: Yeah, it is a great question, obviously one we have talked a lot about. Still believe fundamentally this is a massive asset that shareholders own that is not being recognized. I think one of the biggest issues is people still perceive it as a 100-year asset. We think we can recognize that value much, much earlier. It is tangible. It is measurable. In some respects, it is Safehold Inc.'s trust fund. And so we are going to, you know, continue to point a spotlight at it. We are going to continue to look for things that can enable people to understand that value, whether that is liquidity or sales or monetization of some sort.

But yeah, we think as we start to grow the underlying portfolio again, this has to be part of the equation that shareholders factor in. We think the value is so significant that it deserves an enormous amount of our attention, and it will get it.

Mitch Germain: Thank you.

Operator: Your next question is coming from Kenneth Lee with RBC Capital Markets. Please pose your question. Your line is live.

Kenneth Lee: Hey, good morning. Thanks for taking my question. Just one follow-up on the remarks around Carat. Just want to clarify. In the past, you have mentioned that to see any progress around liquidity or any other monetizations you would be dependent upon either a pickup in market activity or investor sentiment. But I just want to check that—would you still be dependent upon any kind of pickup in activity before you could do anything with the Carats? Thanks.

Jay Sugarman: Yeah. I do not think it is a, you know, a specific thing, but it is obviously common sense. If Carat is growing, the underlying portfolio is growing. It is easier for people to understand the potential. And, you know, the marks have been, you know, candidly, with particularly on the office side, you know, a pain point for a couple years now. We feel like that is starting to stabilize. You saw UCA actually pop up this quarter. You know, that to us was a little bit of a precondition to get a wider group of investors interested or at least to take the time to understand Carat. So feel like that is a, you know, a tailwind.

If we can put that into the mix, it just makes everything easier.

Kenneth Lee: Gotcha. Very helpful there. And just one follow-up if I may. Around buybacks, mentioned for the coming year, it sounds like there could be a little bit more emphasis around buybacks. Any way you could frame out either potential levels or a payout ratio and perhaps just talk about how leverage considerations would come into play here? Thanks.

Brett Asnas: Hey, Ken. It is Brett. Yeah, when we think about buybacks, we obviously feel like the stock is at a discounted level. And as you pointed out just now, we are cognizant of our leverage and our targets. In terms of our policy, you know, it has not really changed. In terms of leverage, we are at around two times, and we want to be around that level or lower. So we are, you know, looking at our funding profile, again to the pipeline that Jay and Michael have brought up. You know, we are looking at what those obligations are going forward.

And, you know, just again for context for folks about leverage, every $240 million that we fund takes leverage up one-tenth of a turn. So feel like there is runway there. But, again, to effectuate buybacks, we want to be able to do that in somewhat of a leverage neutral way. So a lot of the capital recycling exercises that we have talked about in the past, you know, we are constantly evaluating and exploring those and want to make sure that any transactions that we not only endeavor on, but actually, you know, move forward with—we want to make sure that it has got, you know, multiple valves that help us from a strategic standpoint as well.

So again, more to update going forward, but that is certainly, as Jay pointed out in his opening remarks, one of our core objectives for the coming quarters.

Kenneth Lee: Gotcha.

Kenneth Lee: Very helpful there. Thanks again.

Operator: Your next question is coming from Harsh Hemnani with Green Street. Please pose your question. Your line is live.

Harsh Hemnani: Thank you. So maybe you highlighted that the origination volume is getting better—2025 was already an acceleration over 2024. And what is interesting is, at least over the last year, your unfunded commitments have burned off, at least the ones that were, you know, written in a lower-rate environment. And what is unfunded today is in that, you know, 5% initial yield-type range. Given that sort of backdrop and that there is no longer a significant mismatch between what you are going to fund, the yields on those, and the cost of capital, as you think through funding your 2026 origination pipeline and also the unfunded commitments that are in place today, how do you think through funding those?

Brett Asnas: Yeah. When we look at our unfunded commitments, you hit the nail on the head, which is a lot of the lower-yielding existing commitments have rolled off. So today, we have about $140 million of ground lease unfunded commitments. On the loan side, it is about $125 million. And as you noted, the economic yield of those ground lease commitments are in the low sevens. So making 5% plus cash yields. On the loan side, they are around SOFR 300. So certainly accretive to what we are achieving on the debt side, especially with credit spreads coming in.

So we are constantly evaluating both the existing hedges that we have in place as well as, you know, thinking about any rate moves moving forward. But, again, the T-locks that we have in place—there is that $30 million of gain that is hung up when we entered into new debt—those could be unwound and then amortized over the life. So that will help our earnings profile and, obviously, some of the cash metrics that you have mentioned. But any new funding activity on the new deal front—you have seen the yields that we have been able to achieve. So there is more spread or more margin than we have had in our existing book over the past couple years.

So certainly feel like we are well positioned from a funding profile of those $265 million of unfunded. Again, that will be over the course of, say, the next six, seven quarters. So that will certainly take some time to deploy. But in looking at those yields versus our cost of debt capital, it feels like that margin math is in the best place it has been for a while, net of the hedges that we have in place. Our credit spreads are at all-time tights, so we are feeling pretty good about continuing to be the ability to drive down our debt cost of capital.

Harsh Hemnani: Got it. That is helpful. And then maybe does that change your math at all in between—it feels like at least last year, the majority of what was funded came from incremental leverage. Does it change your calculus at all between raising more equity capital versus, you know, continuing to tap the unsecured bond market?

Brett Asnas: Not here in the near term, Harsh. I mean, again, the question that came from Ken and Mitch earlier—you know, we were talking about how, you know, our leverage level at the moment and what it really means in terms of funding and deployment for an uptick. We have some room here. We have runway. So, yes, we do have equity capital solutions that are not, you know, issuing shares. Right? There is hybrid solutions. There is recycling capital. There is areas in which to keep leverage neutral. But, you know, in terms of tapping the unsecured bond markets, you have seen us issue both in the public and private market.

That is something we are certainly going to look to here over the coming quarters to make sure we have ample liquidity to continue to do what we are doing. Feel good about our liquidity position right now. But while credit spreads are at tights and, you know, our bond complex has more liquidity than it ever has, we want to make sure that we are being thoughtful about what that pipeline and deployment looks like versus our funding needs.

Harsh Hemnani: Sounds great. Thank you.

Operator: Your next question is coming from Rich Anderson with Cantor Fitzgerald. Please pose your question. Your line is live.

Rich Anderson: Thanks. Good morning, everyone. Just to put a finer point on the whole buyback theme. Is it fair to say that you could be kind of killing two birds with one stone in the sense that you sell assets, get a price discovery event for the Carat, use those proceeds to buy back stock, and do it in a leverage neutral way? Is that one sort of collection of events that, you know, we could potentially expect for 2026?

Jay Sugarman: Yeah. Certainly. Think that components of what you mentioned there are in the cards. We certainly would like to make a lot of that happen. Those are our goals. So again, you know, we think the stock is quite discounted. And we want to bridge that gap and create, you know, shareholder and stakeholder value. And some of those ways of recycling capital, you know, eating our own cooking, and making sure that we are also growing the book accretively—we think we could accomplish all those goals.

Rich Anderson: Eating our own cooking. I like that.

Jay Sugarman: I am going to write that down. So, could you maybe, you know, other forms of equity capital, you know, perhaps more JV capital in the mix—is that something that you are entertaining? You know, you certainly have one in place, but wondering if that is, you know, something you are entertaining to again, you know, create another equity option for the company.

Brett Asnas: Yeah. Certainly, again, having the right partners and the right cost of capital is really important. There is a lot of insurance capital out there that wants duration, that likes, you know, predictable compounding cash flow that is inflation protected. Think we are one of the few places in the universe that can offer that.

And if there is something that we can do with any partner that is helpful to the overall franchise and is helpful to our cost of capital, that is always in the cards, and, you know, that could be in the form of things that we have done historically, like our venture with our sovereign wealth fund partner, or it could come in the form of other sorts of partners. But we are, again, to your point, looking for the best cost of capital that helps us kind of, you know, leap to the next place we want to be.

And right now, with where our cost of equity capital is, solutions like that are front and center in our mind.

Rich Anderson: Yep. Okay. I just want to sort of get that on record. I think it is, you know, important to the longer-term story. Maybe just a couple of quick ones. Can you provide, like, a net G&A guidance number for 2026 with the step down in the fee income and, you know, sort of where our models should, you know, ultimately land when you kind of have that event in April?

Brett Asnas: Yeah. It is a good question, Rich. Obviously, since we did the internalization back in early 2023, that management fee from Star Holdings has continued to decline. When we look at, you know, year over year from this past year to 2026, feels like about a $5 million net increase. So we are going from, you know, low $40 million net G&A, net of the management fees, in 2025 to high forties for 2026. And then, obviously, just, you know, regular-way costs and expenses that we have within that line item—you know, typical inflation, etc. So we are, you know, we are targeting high $40 million.

Rich Anderson: Okay. And does that fee income—is that the last year? Is 2026 the last year, or is there another year still remaining? A stub year of fee income? Do not remember.

Brett Asnas: There is still more fee income to go. So there is a contractual schedule of a fixed amount, and then it will eventually turn to a percentage of assets.

Rich Anderson: Okay. And then finally for me, on leasehold loans, you know, is there—are you sensing more demand? Seems like at least there is more demand for a kind of a one-stop-shop solution that you described in Cambridge. And, you know, how would you describe your leasehold loan terms of its competitiveness to the market? What is the typical term on those loans? We got the pricing, but I am just curious how you know, you fold that in with the obviously long duration of the ground leases. Thanks.

Jay Sugarman: So they are typically three years in term, occasionally have a little extension option period afterwards. We really look at it as a blended ground lease plus leasehold loan. It can be an attractive cost of capital as the entire envelope to the customer. Providing that one-stop shop has been a benefit to some, and we will selectively continue to deploy it where it makes sense, where we like the asset enough to want to go to that place on as an attachment point. Do you think your pricing is market—do you think your pricing is below market again as you consider, like, the one-stop shop solution?

Brett Asnas: As a one-stop solution, we think that our pricing is—this below market is a blended cost of capital. Think we beat the overall market from kind of zero to wherever the last dollar one attachment point.

Rich Anderson: Perfect. Very much.

Operator: Your next question is coming from Ronald Kamdem with Morgan Stanley. Please pose your question. Your line is live.

Ronald Kamdem: Hey. I just wanted to double click back on, you know, the origination activity and sort of the opportunities to expand outside of sort of California. Right? Maybe just a little bit more color on, like, what are the sticking points? Is it finding the right sort of partner? Is it sort of regulatory? Is it the different jurisdictions? Just what are the frictions you think as you sort of try to replicate the success in some of the other states on the origination side? Thanks.

Steve Wilder: Yeah. Hi, Ronald. So you are right. On the affordable side specifically, the volume has been concentrated in California to date. That is the largest and most active of the affordable markets in the U.S. So we are making good progress there and penetrating that market. It is going to continue to be a big part of what we do, but we are also making really good progress on other states. So we are spending some time to study the state-specific mechanics, the regulatory regimes. It does take some time to build up pipeline and to get those deals across the finish line.

But at this point, we have several other transactions in other states under LOI, and we think that will start to translate into closings over the coming quarters.

Ronald Kamdem: Helpful. And then I am sure you are limited on what you could say on Park Hotels, but any sort of update on timing and for resolution when this could all be behind us?

Jay Sugarman: Yeah. You are right. I cannot speak to it directly, but we do have a court date, 2027. Unfortunately, it cannot go quicker. But, you know, that is the time frame we have been given. And it is going to cost us, you know, $7 million to get there, which is unfortunate, but, you know, at least we have something to shoot for here to get our contractual rights recognized.

Ronald Kamdem: Helpful. Thanks so much.

Operator: Once again, if you do have any remaining questions or comments, please press 1 on your phone at this time. Your next question is coming from Kyle Bonsi with Truist Securities. Please pose your question. Your line is live.

Kyle Bonsi: Thanks. Good morning. Just following up on the Park Hotels portfolio. For the two assets that did not renew, do you expect to continue to operate, release, or sell these? And what might that timeline look like?

Jay Sugarman: We have got Hilton staying in place. So that was important. Again, the litigation is really going to dictate a little bit of what we can and cannot do. So timeline still feels like final decisions are going to be dependent on this court process. It is not our long-term goal to run these assets. But I think we need to let the litigation play out before we can make the right decision on timing.

Kyle Bonsi: Great. Thank you.

Operator: Mr. Hoffmann, there are no additional questions in queue at this time.

Pearse Hoffmann: Thanks, everyone, for joining us today. If there are additional questions, please feel free to reach out to me directly. Thank you.

Operator: Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.