NEW YORK, Jan. 3, 2019 /PRNewswire/ -- iStar Inc. (NYSE: STAR)
and Safety, Income & Growth Inc. (NYSE: SAFE) jointly announced
today that iStar has made an additional $250
million equity investment in SAFE as part of an expanded
effort to accelerate SAFE's growth. The investment provides SAFE
with new capital to pursue approximately $750 million of new ground leases assuming SAFE's
targeted two-to-one debt-to-equity ratio. Since going public 18
months ago, SAFE has nearly tripled the size of its aggregate
ground lease portfolio to approximately $1
billion.
iStar's investment is structured as a purchase of 12.5 million
limited partnership units in SAFE's operating partnership at a
price of $20.00 per unit. The limited
partnership units are economically equivalent to one share of
SAFE's common stock. The limited partnership units may be exchanged
for shares of common stock subject to stockholder approval, which
SAFE intends to seek at an upcoming meeting. After giving effect to
the issuance of the new partnership units, iStar's total investment
in SAFE will be approximately $400
million or 65% of SAFE's total equity.
In conjunction with the $250
million equity investment, the companies have entered into
an amended and restated management agreement. The revised agreement
reflects iStar's increased commitment to SAFE and aligns with
SAFE's ambitious future growth targets. The material revised terms
of the amended management agreement are summarized in the following
table.
Terms
|
Prior
Agreement
|
Amended
Agreement
|
Management
Fee
|
- 1.0% of total
equity (up to $2.5B of equity)
- 0.75% of total
equity (for incremental equity over $2.5B)
|
- 1.0% of total
equity (up to $1.5B of equity);
- 1.25% of total
equity (for incremental equity of $1.5B -
$3.0B);
- 1.375% of total
equity (for incremental equity of $3.0B - $5.0B);
and
- 1.5% of total
equity (for incremental equity over $5.0B)
|
Term
|
1 year
|
Initial term from
January 1, 2019 - June 30, 2022; non-terminable except for
cause.
Automatic annual
renewals thereafter, subject to non-renewal upon certain findings
by SAFE's independent directors and payment of termination
fee.
|
Termination
Fee
|
None
|
3x prior year's
management fee, subject to SAFE having raised $820 million of total
equity since inception.
|
In addition, iStar and SAFE entered into a Stockholder's
Agreement that provides, among other things, the following: (i)
iStar's discretionary voting power in SAFE will be capped at
41.9%. iStar will cast all voting power in excess of 41.9%
with respect to any matter in the same proportions as SAFE's
non-iStar stockholders; (ii) iStar will be subject to certain
restrictions on transfer of its SAFE securities; (iii) iStar will
be subject to a two year standstill; and (iv) iStar will be granted
certain rights to maintain its ownership interest in SAFE upon
future issuances of SAFE shares.
Additional information regarding the transaction agreements may
be found in the companies' respective Current Reports on Form 8-K
filed with the Securities and Exchange Commission.
The transactions were negotiated and approved by committees of
independent directors of iStar and of SAFE. iStar's committee was
advised by Lazard and Clifford Chance US LLP. SAFE's committee was
advised by Houlihan Lokey and Fried,
Frank, Harris, Shriver and Jacobson LLP and Hogan Lovells US LLP
(as to Maryland law).
* *
*
About iStar
iStar (NYSE: STAR) finances, invests in and develops real estate
and real estate related projects as part of its fully-integrated
investment platform. Building on over two decades of experience and
more than $40 billion of
transactions, iStar brings uncommon capabilities and new ways of
thinking to commercial real estate and adapts its investment
strategy to changing market conditions. The Company is structured
as a real estate investment trust ("REIT"), with a diversified
portfolio focused on larger assets located in major metropolitan
markets. Additional information on iStar is available on its
website at www.istar.com.
About Safety, Income & Growth
Safety, Income & Growth Inc. (NYSE: SAFE) is the first publicly
traded company that focuses on acquiring, owning, managing and
capitalizing ground leases. The Company seeks to provide safe,
growing income and capital appreciation to shareholders by building
a diversified portfolio of high quality ground leases. The Company,
which is taxed as a real estate investment trust (REIT), is managed
by its largest shareholder, iStar Inc. Additional information on
SAFE is available on its website at www.safetyincomegrowth.com.
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SOURCE iStar Inc.