Business Context and Reporting Period
This Form 8-K Current Report was filed by Safehold Inc. on February 11, 2026, regarding events occurring as of December 31, 2025. Safehold Inc. (formerly iStar Inc. following a 2023 merger) operates as a ground lease investment company. The filing primarily discloses the company's updated estimate of Unrealized Capital Appreciation (UCA) in its owned residual portfolio, a non-GAAP measure reflecting the potential value of properties reversionary to the company upon lease expiration or tenant default.
Key Financial Metrics
The filing provides specific valuation metrics for the owned residual portfolio as of December 31, 2025. It does not report standard GAAP financial results such as revenue, net income, or cash flow for the period.
| Metric | Value (in millions) |
|---|---|
| Combined Property Value | $15,947 |
| Ground Lease Cost Basis | $6,675 |
| Unrealized Capital Appreciation (UCA) | $9,272 |
Valuation Methodology: The Combined Property Value represents the hypothetical fee simple value of the land and improvements as if the ground leases did not exist. Valuations were prepared by CBRE, Inc., utilizing sales comparison and income capitalization approaches. Key assumptions included stabilized occupancy rates ranging from 66% to 100% and capitalization rates ranging from 4.25% to 11.00%, depending on property type (Hotel, Office, Multi-Family, Life Science, Mixed Use).
Material Changes
The filing does not provide comparative UCA figures for the prior period (e.g., December 31, 2024) to calculate a specific year-over-year change. However, it notes that the company conducts rolling property valuations, meaning the reported figures may not reflect current market conditions at the exact date of the report and could decline materially in the future. The filing also highlights that the UCA calculation excludes certain assets, such as the term loan to Star Holdings and assets in leasehold loan funds.
Outlook, Risks, and Contingencies
Management Commentary: Management views the UCA as an indicator of the safety of their position in a tenant's capital structure and the quality of long-term cash flows. They believe there is a strong correlation between inflation and commercial real estate values, supporting the expectation that reversionary interest value will increase over time.
Risks and Limitations:
- Non-GAAP Measure: The UCA is not subject to U.S. GAAP, is not independently audited, and there is no assurance the company will realize this value.
- Tenant Rights: Realization of UCA may be limited by tenant rights, including options to purchase properties, rights to level buildings prior to lease expiration, and buy-out options.
- Market Volatility: The filing explicitly references risks regarding declines in office values and the possibility that estimated values may not reflect current market conditions.
- Long-Term Horizon: Ground leases have base terms ranging from 30 to 99 years; value realization is a long-term event dependent on lease expiration or default.
Equity Structure: As of December 31, 2025, the Company owned 83.8% of outstanding Caret units. Certain Caret units granted to executives are subject to cliff vesting on March 31, 2027, contingent on the stock price averaging $60.00 or more for 30 consecutive trading days.
Investor Verification Checklist
- Verify the upcoming Form 10-K for the year ended December 31, 2025, expected to be filed around February 12, 2026, for audited GAAP financials and detailed risk factors.
- Review the "Risk Factors" section of the 2025 Annual Report for specific details on tenant rights that may limit UCA realization.
- Confirm the specific property types and locations contributing to the $9,272 million UCA to assess exposure to sectors like office real estate.
- Monitor the vesting conditions for executive Caret units, specifically the $60.00 stock price target required for March 2027 vesting.
- Understand that the $15,947 million Combined Property Value is a hypothetical fee simple value and does not represent the current market value of the company's securities.