PROPOSAL 2—ISSUANCE OF SHARES OF COMMON STOCK AND THE GRANT OF PREEMPTIVE RIGHTS TO iSTAR IN THE iSTAR INVESTMENT TRANSACTION

Overview

        On January 2, 2019, the Company entered into an Investor Unit Purchase Agreement (the "Investor Unit Purchase Agreement") with iStar Inc. ("iStar") and Safety Income and Growth Operating Partnership LP (now known as Safehold Operating Partnership LP, the "Operating Partnership" or "SAFE OP", and together with the Company and its other subsidiaries, "SAFE"), pursuant to which iStar purchased from the Operating Partnership 12,500,000 newly designated limited partnership units (the "Investor Units") at a purchase price of $20.00 per unit, for a total purchase price of $250.0 million. The Company intends to use substantially all of the net proceeds from the sale of the Investor Units to purchase ground leases or interests therein. We refer to the $250 million investment and related transactions described below as the "iStar Investment Transaction."

        iStar is the Company's largest stockholder and the parent company of the Company's external manager. The iStar Investment Transaction was approved by a special committee (the "special committee") of the Company's board of directors, which evaluated the iStar Investment Transaction in consultation with its own outside legal and financial advisors, as described in more detail in the sections entitled "Background of the iStar Investment Transaction" and "Reasons for the Recommendation of the Special Committee with respect to the iStar Investment Transaction" below.

        The Investor Units are a newly-designated series of limited partnership interests in the Operating Partnership. Each Investor Unit receives distributions equivalent to distributions declared and paid on one share of common stock, $0.01 par value per share, of the Company (the "Common Stock"). The Investor Units have no voting rights. The Investor Units have limited protective consent rights over certain matters such as amendments to the terms of the Investor Units that would adversely affect the Investor Units.

        The Investor Units may not be converted or exchanged for cash or other property; provided, however, that the Company agreed to seek stockholder approval to exchange the Investor Units for shares of Common Stock (the "Exchange Shares"), on a one-for-one basis, which approval we are seeking pursuant to this proxy statement.

        The Investor Units represent an approximately 40.6% fully diluted economic interest in SAFE. iStar's aggregate fully diluted economic interest in SAFE (including shares of Common Stock and Investor Units owned by iStar as of April 10, 2019) is approximately 65.8%; however, iStar's voting power in SAFE is limited to 41.9% both before and after giving effect to the exchange of Investor Units for shares of Common Stock, as a result of limitations on iStar's voting power contained in the Stockholder's Agreement described below. The Investor Units were issued in a transaction exempt from registration under the Securities Act of 1933, as amended.

        In connection with the transaction, we agreed that with respect to each issuance by us of Common Stock with a value of at least $1.0 million, iStar will have the right, but not the obligation, to purchase from the Company additional shares of Common Stock, at the same price per share as is paid by other

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purchasers in the issuance, to maintain its percentage ownership of Common Stock, after giving effect to the issuance. iStar will have this contractual right so long as it owns at least 20% of our outstanding Common Stock. We refer to this contractual right as the "iStar Preemptive Right." See the description of the Stockholder's Agreement below for more information.

        A summary of the definitive transaction agreements is set forth below in the section entitled "Description of iStar Investment Transaction Documents". We also encourage you to read the definitive agreements, which have been filed as exhibits to our Current Report on Form 8-K, filed with the SEC on January 3, 2019, and are incorporated herein by reference.

        We are seeking stockholder approval for (1) the issuance of 12,500,000 shares of Common Stock to iStar in exchange for the surrender of the Investor Units; and (2) the grant of the iStar Preemptive Right to iStar and the issuance of Common Stock to iStar in the future pursuant to any exercise of the iStar Preemptive Right. This Proposal is being submitted to our stockholders pursuant to Section 312.03 of the NYSE Listed Company Manual. Section 312.03(c) of the Listed Company Manual requires stockholder approval prior to the issuance of common stock, or of securities convertible into common stock, in certain transactions or series of related transactions, to a "Related Party." Because iStar is a Related Party within the meaning of Section 312.03 and the issuances of Common Stock to iStar would implicate Section 312.03(c), and, since the NYSE does not define "change of control," possibly Section 312.03(d), we are seeking stockholder approval prior to issuing Common Stock to iStar. Further, we are obligated to seek stockholder approval pursuant to the Investor Unit Purchase Agreement.

Background of the iStar Investment Transaction

        During the summer of 2016, iStar began to explore the possibility of forming a new company to acquire, own, manage, finance and capitalize ground leases, a real estate asset class with which iStar has significant experience. On October 24, 2016, SAFE was formed as a Maryland corporation.

        SAFE was launched with the intention of becoming the first publicly traded real estate investment trust to focus primarily on ground leases. The company's founders saw a significant market opportunity in becoming the only player to focus on this sector of the commercial property market, an area which the founders believed to be historically fragmented. Since launching, SAFE's business objective has been to build a diversified ground lease portfolio in order to generate attractive returns and support stable and growing distributions to its stockholders. In order to do so, SAFE has employed a strategy of acquiring existing ground leases and originating new ground leases.

        On or before April 14, 2017, (i) SAFE completed a series of transactions through which it acquired its initial portfolio of ground lease assets from iStar, (ii) SAFE entered into a $227 million "initial portfolio financing," a loan secured by SAFE's initial portfolio of 12 properties, and (iii) two institutional investors, GICRE and LA, acquired 2,875,000 shares of SAFE Common Stock, representing a 51% ownership interest in SAFE at that time.

        On June 27, 2017, SAFE completed its initial public offering at a price of $20 per share (before underwriting discounts and commissions of $1.40 per share). Concurrently with the completion of the offering, iStar purchased 2,250,000 shares of SAFE Common Stock in a private placement at the initial public offering price per share for an aggregate purchase price of $45 million. Immediately after giving effect to the initial public offering, the formation transactions and the concurrent iStar private placement, iStar owned approximately 27.6% of SAFE's outstanding Common Stock and GICRE and LA collectively owned approximately 15.8% of SAFE's outstanding Common Stock. From the time of the initial public offering until December 2018, through purchases of SAFE Common Stock in the public market and receipt of shares of SAFE Common Stock as payment of management fees pursuant to the management agreement described below, iStar's ownership interest in SAFE increased from

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approximately 27.6% of the outstanding SAFE Common Stock to approximately 41.9% of the outstanding SAFE Common Stock.

        In connection with its IPO, among other things, SAFE entered into a management agreement with SAFE OP, iStar and SFTY Manager LLC, a wholly owned subsidiary of iStar (the "manager"). SAFE has no employees and relies on the manager to provide all personnel required to oversee SAFE's business and operations. Pursuant to the management agreement, the manager would provide investment advisory and management services in return for management fees, which would be calculated as a percentage of SAFE's total equity. No fees were payable during the first year of the management agreement. Thereafter, SAFE was obligated to pay the manager a fee equal to 1.0% of total equity up to $2.5 billion and 0.75% of total equity in excess of $2.5 billion. The management agreement provided for a rolling one-year term, terminable annually upon a majority vote of SAFE's independent directors.

        During the remainder of 2017 and into 2018, SAFE continued to acquire ground lease assets for its investment portfolio. Its ground lease portfolio increased from approximately $340 million immediately prior to the IPO to approximately $770 million at September 30, 2018. During this period, SAFE recognized that, in order to continue to grow its ground lease portfolio and to take advantage of its "first mover" status, SAFE would need additional equity capital. Accordingly, commencing in the second quarter of 2018, SAFE began exploring potential alternatives to obtain additional equity capital. These alternatives included both a potential follow-on public offering of SAFE Common Stock as well as a potential private placement of SAFE Common Stock. Over the course of several months, SAFE engaged in discussions with investment bankers and third party investors to explore their potential interest in providing equity capital to SAFE. Although these efforts included preliminary discussions with several parties, none of these discussions led to a transaction and SAFE concluded that it was unlikely that at that time any third party would contribute equity capital to the Company on terms favorable to existing holders of SAFE Common Stock.

        In October, 2018, iStar communicated to SAFE's board of directors its potential interest in investing additional equity capital in SAFE as part of an expanded effort to accelerate SAFE's growth. iStar indicated that any potential proposal to provide additional equity capital would be conditioned upon, among other things, amendments to the existing management agreement. iStar and the manager communicated to SAFE's board of directors that it was dedicating more of its investment professionals (whose compensation is not reimbursable to iStar under the management agreement) to ground lease acquisition and origination activities than was anticipated by SAFE, iStar, and the manager at the time of the original management agreement, that iStar believed, based on SAFE's growing investment pipeline and the repeat customer business it had received to date, that SAFE's growth could be accelerated, and that amendments to the management agreement proposed by iStar and the manager would be intended to provide appropriate compensation to iStar and the manager for an expanded commitment to SAFE's growth. SAFE's board of directors determined that, in light of iStar's relationship with SAFE, the board would form a special committee of the board of directors in connection with any potential proposal by iStar. The board concluded that Messrs. Adler, Nydick and Selig were possible members of a special committee.

        On October 26, 2018, Nina Matis, who at that time was SAFE's Vice Chairman and Chief Legal Officer as well as Vice Chairman and Chief Legal Officer of iStar, contacted Fried, Frank, Harris, Shriver & Jacobson LLP ("Fried Frank") at the direction of SAFE's board of directors regarding the possibility of Fried Frank serving as legal counsel to a special committee of the board of directors of SAFE. SAFE's board of directors was familiar with Fried Frank as a leading legal adviser to real estate companies and to boards of directors and special committees in connection with complex financial transactions. In addition, Fried Frank had in the past provided and was providing certain legal services to iStar, primarily on litigation matters.

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        On October 29, 2018, Ms. Matis spoke to representatives of Fried Frank regarding Fried Frank's potential representation of a special committee of SAFE's board of directors.

        On October 31, 2018, Messrs. Adler, Nydick and Selig spoke by telephone with attorneys from Fried Frank concerning the special committee and a potential transaction. Fried Frank discussed with the independent directors the fact that Fried Frank had previously received fees from iStar in connection with certain litigation matters, including ongoing litigation matters, and expected to continue to perform legal services for iStar in the future.

        Following a discussion among the potential members of the special committee, on the same day the potential members of the special committee communicated to Fried Frank that the potential members had discussed Fried Frank's relationship with iStar and had determined to move forward to engage Fried Frank as special counsel.

        Between November 1 and 6, 2018, the representatives of Fried Frank discussed with each of the independent directors any relationships with iStar or its affiliates, including Mr. Sugarman, that potentially could impact (or be perceived to impact) that member's ability to serve on a special committee in an independent and disinterested manner. Following these discussions, Messrs. Adler, Nydick, and Selig concluded that, given the absence of any material relationships with Mr. Sugarman or iStar, Mr. Adler should serve as the sole member of the special committee.

        On November 7, 2018, representatives from Fried Frank followed up with Mr. Adler to outline potential next steps, including drafting a committee charter, engaging Maryland counsel to the special committee and discussing the retention of a financial advisor for the special committee.

        On November 7, 2018, iStar submitted to Mr. Nydick a written proposal for an additional equity contribution to SAFE, which Mr. Nydick forwarded to Mr. Adler. The proposal contemplated, among other things, the following:

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iStar would contribute $250 million in cash to SAFE OP in exchange for Investor Units, a new class of limited partnership units in SAFE OP. The Investor Units would be valued at a price per unit equal to the volume-weighted average price of SAFE Common Stock for a pre-closing period to be determined. The Investor Units would not have voting rights, but would be economically equivalent to shares of SAFE Common Stock, and would be exchangeable on a one-for-one basis for shares of SAFE Common Stock.



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No vote of stockholders of SAFE would be required in connection with the issuance of Investor Units, but the exchange of Investor Units for SAFE Common Stock would be subject to approval by holders of SAFE Common Stock. It would be a condition to the transaction that GICRE and LA enter into voting agreements to vote their shares of SAFE Common Stock in favor of the issuance of shares of SAFE Common Stock in exchange for the Investor Units.



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iStar and SAFE would enter into a voting agreement pursuant to which iStar would agree that with respect to any matter presented for a vote or written consent of the holders of SAFE Common Stock after the exchange of the Investor Units for SAFE Common Stock, iStar would vote all shares received in the exchange that, when added together to other shares of SAFE Common Stock owned by iStar, exceeded 47.5% of the outstanding shares of SAFE Common Stock in the same proportions as the votes cast or consents delivered by SAFE stockholders other than iStar on such matter. In addition, the ownership waiver in effect between SAFE and iStar that limited iStar's ability to acquire additional shares of SAFE Common Stock would be amended to permit iStar to acquire additional shares in the market, up to an increased aggregate ownership limit of 47.5%, as compared to the existing limit of 41.9%.



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Prior to the stockholder vote, SAFE would not be permitted to issue shares of SAFE Common Stock or units of SAFE OP at prices less than the price per Investor Unit being paid by iStar.

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•

SAFE would grant iStar the right to purchase its proportionate share of future issuances of shares of SAFE Common Stock, subject to customary exceptions for issuances under incentive compensation plans.



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iStar would agree not to sell any shares of SAFE Common Stock received in the exchange for six months after the exchange date.



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SAFE would grant iStar the right to purchase interests in distributions from SAFE's residual portfolio (known as "CARET units") in each sale of such interests to a third party, in an equivalent amount and at the same price paid by the third party.



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SAFE and iStar would amend the existing management agreement between them to provide for the following:



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The management fee would increase from 1.0% to 1.5% of equity, with no step down above $2.5 billion of equity, payable in cash or stock at SAFE's option;



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The agreement would have a rolling 4 year term and would be terminable during its initial 4 year term only for cause; and



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After the initial 4 year term, the agreement would be terminable only for cause or failure to meet a performance standard. A failure of the performance standard would occur if SAFE's compounded total stockholder return from the commencement of the initial 4 year term failed to exceed both (i) 6.0% and (ii) the average total stockholder return of the FTSE NAREIT total return index for mortgage REITs, in each case for four consecutive quarters.



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If a failure of the performance standard were to occur, SAFE could terminate the agreement, subject to payment of a termination fee in cash equal to 3x the average annual base fees paid over the two full fiscal years prior to the termination.

        On November 15, 2018, representatives of Fried Frank had a telephone conversation with the special committee regarding next steps. The Special Committee discussed the engagement of Maryland counsel and directed Fried Frank to follow up with Hogan Lovells US LLP ("Hogan Lovells"), which has a leading practice in advising real estate companies on transactions involving Maryland law, on behalf of the committee. The special committee also discussed that it was in discussions with Houlihan Lokey Capital Inc. ("Houlihan Lokey") to act as financial advisor to the special committee.

        On November 14, 2018, Mr. Adler spoke with Barry Ridings, the chairman of a special committee established by iStar in connection with its proposal. The principal issues raised by Mr. Adler were the proposed purchase price per Investor Unit, the management fee structure, the term of the management agreement and the proposed performance standard that would trigger the right of SAFE to terminate the management agreement.

        On November 19, 2018, at the direction of the special committee, Fried Frank forwarded to Clifford Chance US LLP, legal counsel to SAFE and iStar, proposed resolutions to establish the special committee and setting forth the charter of the special committee. On the same day, SAFE's board of directors approved the charter of the special committee in the form proposed by the special committee by unanimous written consent and the special committee was formed.

        Among other things, the resolutions and the charter of the special committee:

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Designated Dean Adler as the sole member of the special committee;



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Delegated to the special committee, to the fullest extent permitted by Maryland law, the full power and authority of the board of directors to:



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work with management and advisers to explore and evaluate the iStar proposal and any potential alternatives;

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•

initiate and participate in discussions with, or otherwise assist or facilitate proposals from, iStar or any third parties regarding any potential alternative proposals;



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work with management and advisers to review and evaluate and, after consultation with the board of directors, negotiate or reject the proposal or any potential alternatives, including, after consultation with the board of directors, negotiating the terms and conditions of a definitive agreement or agreements for a final decision by the board;



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obtain such information, documents, plans and analyses the special committee considered necessary, advisable or appropriate to conduct a review, investigation and evaluation of the proposal and any potential alternatives;



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obtain opinions from legal, financial or other advisers and authorize the retention of such advisers as the committee may find appropriate;



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determine whether a potential transaction with iStar or another party, if any, is advisable, fair to and/or in the best interests of SAFE and its stockholders (other than any stockholders who are interested in any potential transaction);



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recommend to the entire board of directors, what action, if any, should be taken by SAFE with respect to the proposal or any potential alternatives and report to the board its recommendation with respect thereto; and



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Provided that SAFE would not enter into a transaction with iStar without the prior affirmative recommendation of the special committee.

        On November 20, 2018, Clifford Chance forwarded to Fried Frank a revised term sheet, reflecting the discussions that had taken place between Mr. Adler and Mr. Ridings on November 14. The principal changes from the initial term sheet were:

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An increase in the proposed purchase price to $20 per Investor Unit;



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A revised management fee of 1.375% of equity with a step down to 1.25% above $5 billion of equity;



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A rolling 3.5 year term for the management agreement; and



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A revised performance standard giving SAFE the right to terminate the management agreement if SAFE's compounded total stockholder return from the commencement of the initial 3.5 year term failed to exceed both (i) 7.0% and (ii) the average total stockholder return of the FTSE NAREIT total return index for mortgage REITs, in each case for four consecutive quarters.

        Between November 20, 2018 and November 29, 2018, the special committee engaged in certain discussions with Houlihan Lokey regarding the potential transaction with iStar and the terms of the engagement of Houlihan Lokey as financial advisor to the special committee and Houlihan Lokey provided to the special committee certain disclosures concerning its relationships (if any) with the various transaction parties. This disclosure indicated that during the preceding five years Houlihan Lokey's records database showed that Houlihan Lokey had performed no work for iStar and had received less than $50,000 in fees from SAFE.

        On November 25, 2018, Mr. Adler sent an email to Mr. Ridings proposing changes to the management fee structure to provide for a one-time $7 million payment to the manager upon the price of SAFE Common Stock reaching $25 per share, a base management fee of 1% of equity with an increase in the management fee from 1% to 1.25% above $5 billion of equity, and elimination of restrictions on SAFE issuing equity at a price below $20 per share. Messrs. Adler and Ridings discussed this proposal by telephone the following day.

        On November 28, 2018, Clifford Chance forwarded to Fried Frank a further revised term sheet, reflecting the response of iStar to the communications that had taken place between Mr. Adler and

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Mr. Ridings on November 25 and 26, 2018. The principal changes from the November 20, 2018 term sheet were:

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The management fee would be revised to be 1% of total equity until the earlier of (x) the date the SAFE Common Stock price reached $25.00 per share, or (y) total equity reached $1.0 billion, at which time the fee on incremental total equity would be 1.25% of incremental total equity;



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Once total equity reached $2.5 billion, the fee on the incremental total equity above $2.5 billion would be 1.5% of the incremental total equity; and



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The termination fee under the management agreement would be 3x the annual base fee paid in respect of the last completed full fiscal year prior to the termination.

        On November 29, 2018, the special committee met via telephone conference with Fried Frank and Hogan Lovells. The legal advisers provided a presentation to the special committee with respect to the duties of the special committee under Maryland law and possible next steps in response to the revised term sheet presented by iStar. Mr. Adler briefed the legal advisers regarding the special committee's discussions with iStar to date and the special committee's intention to retain Houlihan Lokey as financial advisor to the special committee.

        On November 30, 2018, Mr. Adler sent an email to Mr. Ridings proposing further changes to the management fee. Mr. Adler proposed the following changes:

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Deleting the performance test of $25 per share;



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Increasing the management fee to 1.25% on incremental total equity above $1.5 billion; and



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Increasing the management fee to 1.375% on incremental total equity above $3 billion.

        On December 1, 2018, Clifford Chance forwarded to Fried Frank a further revised term sheet, reflecting iStar's response to Mr. Adler's proposal of November 30, 2018. The revised term sheet contained the following proposed changes to the management fee:

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The management fee would be 1.0% of total equity until total equity reached $1.5 billion, at which time the fee on incremental total equity above $1.5 billion would be 1.25% of incremental total equity;



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Once total equity reached $3.0 billion, the fee on the incremental total equity above $3.0 billion would be 1.375% of incremental total equity; and



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Once total equity reached $5.0 billion, the fee on the incremental total equity above $5.0 billion would be 1.5% of incremental total equity.

        On December 3, 2018, the special committee met via telephone conference with its legal advisers and representatives of Houlihan Lokey. The special committee discussed that, since its initial public offering, SAFE had been engaged in efforts to obtain additional third-party equity financing, and that those efforts had not been successful. In addition, the special committee reviewed that the manager had spent and continued to spend significant time and resources to originate new ground lease assets. The special committee discussed that part of the rationale for iStar seeking changes to the existing management agreement was the additional and significant financial burden being incurred by the manager to originate new ground lease assets. The special committee also discussed its understanding that SAFE had a pipeline of potential ground lease assets and would require additional equity in the very near future. The special committee expressed its view that the ability to acquire assets and to grow its equity capital were critical for SAFE to be a public company with a liquid trading market for its stock that could, over time, attract more institutional investor interest. The special committee also noted that, while the purchase price of $20 per unit contemplated by iStar's current proposal

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represented a premium to the market price of SAFE Common Stock, the premium had eroded due to an increase in the trading price of the Common Stock.

        The special committee and its advisors also discussed the status of various items on an issues list arising from iStar's proposal, which list had previously been prepared by the committee's counsel, including: (a) structure and timing, including whether a stockholder vote would be required to close the transaction, even if not required by Maryland law; (b) the issuance price of the new equity proposed to be subscribed for by iStar; (c) the proposed changes to the management agreement; and (d) other corporate governance aspects of the proposal, given that iStar's proposal contemplated permitting iStar to increase its voting power to 47.5% and its equity ownership to approximately 65%. During this discussion, Mr. Selig, an independent director, joined the meeting at the invitation of the special committee. A discussion ensued regarding the time required to obtain any stockholder approval that might be imposed as a condition to closing the transaction and the implications that requirement could have on the pipeline assets that had been identified by the manager. Mr. Selig then left the meeting.

        After this discussion, the special committee determined that the next steps should be to finalize the engagement of Houlihan Lokey, and to engage with iStar and its advisers to further understand the manager's efforts to originate new ground leases, the status of the pipeline of potential investments by SAFE, and SAFE's previous fundraising efforts. On the same day, the parties finalized the terms of the engagement of Houlihan Lokey as financial advisor to the special committee.

        On December 4, 2018, representatives of Fried Frank and Houlihan Lokey met with representatives of the manager and Lazard LLC ("Lazard"), financial advisor to the iStar transaction committee of independent directors, to discuss SAFE's pipeline of upcoming ground lease acquisitions, its efforts to raise additional equity capital and the amount and timing of additional capital required by SAFE.

        On December 6, 2018, the special committee met by telephone conference with its advisers to discuss a proposed response to the iStar proposal. At this meeting, the special committee requested that Houlihan Lokey review the potential costs SAFE might incur to obtain equity financing from an unaffiliated third party as compared to the proposed iStar transaction, which currently would not involve any placement fee. Mr. Adler also requested that Houlihan Lokey review the revised management fees proposed by iStar, noting that a comparison with mortgage REIT management fees may not be fully probative in light of the scope of management services required to manage a mortgage REIT portfolio as compared to those required to manage a company with a ground lease portfolio. Representatives of Fried Frank summarized information provided to Fried Frank and Houlihan Lokey by iStar on December 4, 2018, including SAFE's efforts to raise additional equity over the prior 3 - 4 months, which efforts had not been successful; that SAFE expected to invest a significant portion of its current cash balance in pending ground lease investments in the coming weeks; that SAFE had approximately $440 million of investments in its pipeline under contract or letter of intent; that iStar's investment professionals had been spending substantially more time on origination activities than expected at the time the existing management agreement was executed; that the costs associated with iStar's investment professionals, which are not reimbursable under the management agreement, substantially exceeded the current management fee; and that both customers and potential equity investors had expressed concerns that the structure of the current management agreement did not provide adequate assurance that iStar or an affiliate would continue as the manager. After discussion, the special committee provided feedback on a mark-up of the iStar investment term sheet and directed Fried Frank to share the revised term sheet with iStar's advisers.

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        On December 6, 2018, Fried Frank provided to Clifford Chance a mark-up containing proposed changes to the term sheet furnished by Clifford Chance on December 1, 2018. The principal changes from the latest iStar proposal were:

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iStar's voting power would be capped at its existing ownership percentage (41.9%), and the voting cap would not be increased to 47.5%;



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iStar would not be permitted to increase the voting cap to 47.5% through acquisition of additional shares of Common Stock in the market;



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Although the Special Committee would no longer seek to condition the issuance of the Investor Units or the effectiveness of the proposed amendments to the management agreement on a stockholder vote, the holders of SAFE Common Stock that did not have an interest in these transactions would be given the opportunity to vote with respect to the ratification of the management agreement amendments for purposes of the Maryland statutory safe harbor for interested director transactions;



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For not less than three years, the board of directors of SAFE must include not less than three individuals independent of each of SAFE and iStar within the meaning of the listing rules of the New York Stock Exchange;



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iStar would enter into a customary "standstill" agreement with SAFE having a term of two years;



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iStar would not be granted pre-emptive rights to participate in future equity issuances;



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For a period of three years, iStar would not be permitted to transfer SAFE Common Stock (including Investor Units and shares issued in exchange for the units) representing more than 10% of the outstanding SAFE Common Stock, in one transaction or a series of related transactions to any person or group, other than pursuant to a widely distributed public offering, unless other holders of SAFE Common Stock would have the opportunity to participate in the transaction at the same price per share and in the same proportion (which we refer to as the "equal treatment" provision);



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iStar would agree not to sell any shares of Common Stock received in exchange for Investor Units for two years after the exchange;



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iStar would not be granted the right to participate as a purchaser in the event of a future sale by SAFE of CARET units;



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With respect to the proposed changes to the management agreement:



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After the initial 3.5-year term, the agreement would be subject to annual renewal (upon the vote of a majority of the independent directors);



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SAFE would have the right to terminate the agreement in the event two-thirds of the independent directors agreed that (i) the manager's long-term performance was materially detrimental to SAFE or (ii) the compensation payable to the manager was unfair, unless the manager agreed to a reduced fee that at least two-thirds of the independent directors determined to be fair);



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SAFE would also have the right to terminate the agreement in the event of (i) the manager's material breach; (ii) bankruptcy or insolvency of the manager or iStar; (iii) change of control of the manager, iStar or SAFE; (iv) dissolution of the manager; or (v) fraud, bad faith, willful misconduct, or gross negligence of the manager.



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The termination fee would be payable in cash or Common Stock, in respect of a termination for performance or unfair compensation of the manager, but only if SAFE had raised total equity from third parties of not less than $1 billion.

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        On December 7, 2018, representatives of iStar engaged in discussions with the special committee and its advisers regarding the revisions to the term sheet proposed by the special committee. On the same date, representatives of Lazard spoke with representatives of Houlihan Lokey regarding the special committee's revisions to the term sheet. The representatives of Lazard communicated that iStar objected to certain of the revisions to SAFE's termination rights under the proposed amended management agreement proposed by the special committee, including the committee's request to eliminate the objective performance standard proposed by iStar.

        On December 10, 2018, the special committee met by conference telephone with its advisers. The purpose of the meeting was to discuss iStar's reported objections to the committee's proposed changes to certain of the termination provisions of the management agreement, including elimination of the objective performance standard proposed by iStar, and potential alternatives that the special committee might propose. Representatives of Houlihan Lokey noted that the performance standard proposed by iStar would be satisfied so long as SAFE's performance exceeded the lower of a 7% internal rate of return or the performance of the FTSE Mortgage REIT Index. Houlihan Lokey furnished to the special committee materials illustrating the potential effect of the performance standard proposed by iStar and the historical performance of certain REIT indices that might be alternatives to the FTSE Mortgage REIT Index. After discussion, the special committee requested that Houlihan Lokey convey to iStar's representatives a proposal to change the performance standard to a flat 7% return test. The special committee and its advisers also discussed the proposed amended management fee structure, under which the management fee would increase at various thresholds of equity capital raised by SAFE. The discussion focused on the possibility that, over time, the level of management services required by SAFE for a static portfolio of ground leases could diminish. After this discussion, the special committee requested that Houlihan Lokey convey to iStar's representatives a proposal that, in addition to the right to terminate for failure to meet the 7% annual performance threshold, after 10 years SAFE would have the right to terminate the management agreement if the independent directors of the Company determine that the fee is unfair.

        On December 11, 2018, a telephone conference took place between representatives of iStar and its advisers and representatives of the special committee and its advisers. The discussion focused upon the following issues raised by the special committee's counterproposal and by the discussions between the parties' respective advisers:

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The ownership level at which iStar would be entitled to exercise its voting rights in full—the current ownership level as proposed by the committee versus 47.5% as proposed by iStar;



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The special committee's request for a ratification vote under the Maryland interested transaction statutory safe harbor;



•

Whether there would be a carve out from the restrictions on issuances by SAFE at prices below $20 per share of new equity prior to stockholder approval of the issuance of SAFE Common Stock in exchange for the Investor Units, in order to permit SAFE to issue an agreed amount of new equity at below $20 per share;



•

The request by the special committee for a "standstill" agreement by iStar;



•

Whether iStar would be entitled to preemptive rights;



•

The deletion of the right of iStar to participate as a purchaser in the event of a sale of CARET units;



•

The special committee's request for "equal treatment" of public stockholders in the event of certain sales of equity by iStar;



•

The duration of the restriction on sale of SAFE Common Stock received upon exchange of the Investor Units;

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•

The special committee's request for a right to terminate the management agreement upon a change of control of iStar or SAFE;



•

The special committee's request that after the 3.5 year initial term the revised management agreement be terminable annually for unsatisfactory performance or if the independent directors determined that the manager's compensation was unfair; and



•

The proposed requirement that SAFE must raise $1 billion in equity from parties other than iStar before any termination fee would become payable to the manager and the right of SAFE to pay any termination fee in cash or SAFE Common Stock.

        During a follow up call with Lazard that same day, at the special committee's direction, Houlihan Lokey conveyed to Lazard that the special committee would be prepared to modify the threshold above which the manager would be entitled to a termination fee to $1 billion of total equity inclusive of an additional $380 million from third party investors.

        On December 12, 2018, the special committee met by conference telephone with its advisers. The advisers provided a summary of various open issues regarding the proposed transaction based on the conference call among the parties on the previous day and the subsequent call between Lazard and Houlihan Lokey. Regarding the management agreement, Houlihan Lokey relayed that Lazard had communicated that iStar would agree that the management agreement would be subject to termination after ten years if the independent directors determined that the management fee were unfair, subject to a right of iStar to renegotiate the management fee. Houlihan Lokey also relayed that iStar had not accepted the special committee's proposal requiring SAFE to raise an additional $380 million from outside investors (for a total of $1 billion) before iStar would be entitled to a termination fee under the proposed revised management agreement. After a discussion, the special committee instructed Houlihan Lokey to continue to negotiate for a threshold of $1 billion including $380 million of new third party equity, while noting that the committee might consider a compromise under which the $1 billion threshold would include all new capital raised. The special committee and its advisers discussed various other issues, including the proposed cap on iStar's voting rights, the level of the stockholder approval for the transaction that the committee would seek, the ability of SAFE to issue equity at a price below $20 per share prior to stockholder approval of the issuance of Common Stock in exchange for the Investor Units, and other open items. After discussions the special committee directed its advisers to continue negotiating these issues.

        Later on December 12, 2018, Clifford Chance delivered a revised term sheet to Fried Frank. The revised term sheet reflected the following principal changes from the term sheet proposed by the special committee:

•

The voting cap applicable to iStar would be iStar's current ownership percentage; provided that if iStar were granted an increased ownership limit waiver by SAFE's independent directors or pursuant to the exercise of preemptive rights, the voting cap would be increased to reflect the shares of Common Stock purchased, but in no event to more than 47.5%;



•

The voting agreement would terminate when iStar's aggregate ownership fell below 47.5%;



•

There would be no ratification vote under the Maryland interested transaction statutory safe harbor;



•

iStar would be entitled to preemptive rights in respect of future equity issuances;



•

The "equal treatment" provision would apply for two years and to a sale by iStar of more than 25% of the outstanding shares of Common Stock;



•

There would be a one year "lock up" on sale by iStar of the shares of Common Stock received in exchange for Investor Units;

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•

With respect to the proposed revisions to the management agreements:



•

The agreement would have an initial 3.5-year term and would not be terminable during its initial term except for cause;



•

After the initial 3.5-year term, the agreement would automatically renew each year for an additional year; provided, however that upon the expiration of the initial term or any renewal term, SAFE may decline to renew the agreement upon written notice and payment of the termination fee in the event two-thirds of the independent directors agree that the manager's long-term performance is unsatisfactory to the point of material detriment to SAFE;



•

In addition, beginning with the seventh annual term after the initial term, and each year thereafter, SAFE may decline to renew the agreement upon written notice and payment of the termination fee in the event two-thirds of the independent directors agree that the compensation payable to the manager is unfair unless the manager agrees to a reduced fee that at least two-thirds of the independent directors determines to be fair.



•

The management agreement would not be terminable for a change in control of iStar or SAFE.



•

There would be no threshold level of additional equity before the termination fee would become payable;



•

The management fee would be payable solely in cash.

        Later on December 12, 2018, representatives of iStar and its advisers spoke by telephone with the advisers to the special committee regarding the revised term sheet submitted by Clifford Chance. The key open points following this call were: the request by the special committee for a voting cap of 41.9%, with no exception for future purchases, and that the cap should remain in effect until iStar's ownership fell below 41.9%, not 47.5%; the committee's request for a ratification vote under the Maryland interested transaction statutory safe harbor; whether SAFE would have the right to issue up to $150 million of equity at below $20 per share, if SAFE required additional equity capital prior to stockholder approval of the exchange of Investor Units for shares of Common Stock; the committee's request to have the right to terminate the management agreement, without a termination fee, in the event of a change in control of iStar, if SAFE reasonably withheld consent to the change of control; the $1 billion equity threshold proposed by the special committee before any termination fee would be triggered; and the right of SAFE to pay any termination fee in SAFE Common Stock.

        A follow up call took place between representatives of Lazard and representatives of Houlihan Lokey on December 13, 2018. Following that call, Clifford Chance submitted to Fried Frank a further revised term sheet. This term sheet reflected the following principal changes from the term sheet submitted by Clifford Chance on December 12, 2018:

•

iStar accepted the special committee's position regarding the voting cap of 41.9% and that the voting cap would remain in effect until iStar's ownership fell below 41.9%;



•

SAFE would have the right to issue up to $100 million of additional equity at a price below $20 per share, if SAFE required additional equity capital prior to stockholder approval of the exchange of Investor Units for shares of Common Stock;



•

The "equal treatment" provision would apply to transfers by iStar of more than 20% of the outstanding shares of SAFE Common Stock; and



•

iStar's right to a termination fee under the management agreement would become effective only if SAFE raised an additional $200 million of total equity (including from iStar) in addition to the $250 million investment by iStar in the Investor Units.

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        Later on December 13, 2018, the special committee met by telephone conference with its advisers to discuss the status of negotiations between the parties. The discussion focused on the potential ratification vote under the Maryland interested transaction statutory safe harbor; iStar's position regarding the effect of a change in control of iStar (as opposed to the manager) under the management agreement, given that the potential income stream under the management agreement could represent a material asset of iStar; the amount of additional equity to be raised by SAFE before the right to a termination fee would become effective; and the right of SAFE to pay the termination fee in cash or stock. After a discussion, the special committee instructed its advisers that, if other terms of the transaction could be resolved satisfactorily, the special committee would be inclined not to insist upon a ratification vote or the right to terminate for an iStar change of control.

        Later that day, at the special committee's direction, representatives of Houlihan Lokey had a further discussion with representatives of Lazard, and conveyed to Lazard that the special committee wished to keep the termination fee threshold at $1 billion of total equity raised and for SAFE to have the option to pay any termination fee one third in cash and the balance in cash or SAFE Common Stock at SAFE's election. This proposal was rejected. After further discussion that same day, Lazard communicated to Houlihan Lokey a proposal from iStar that any termination fee be payable half in cash at the time of termination and the balance within 6 months of termination, with interest of 8%. The special committee instructed Houlihan Lokey to communicate to Lazard that the special committee would accept this proposal, and would move forward to finalize its recommendation with respect to the potential transaction, subject to review with its legal and financial advisers.

        On December 14, 2018, representatives of Lazard informed representatives of Houlihan Lokey that, at a meeting earlier that day, the special committee of iStar had determined to proceed with the proposed transaction on the terms negotiated by the parties.

        On December 15, 2018, Clifford Chance submitted drafts of the definitive transaction documents to Fried Frank. Over the next several days, the parties worked to finalize the definitive transaction documents, subject to receipt of required approvals.

        On December 20, 2018, the special committee met by telephone conference with its advisers. At this meeting, Houlihan Lokey made a financial presentation to the special committee with respect to the proposed transaction, and informed the special committee that, subject to its policies and procedures, and assuming no material changes or developments, Houlihan Lokey anticipated being able to render to the special committee an opinion with respect to the fairness to SAFE OP, from a financial point of view, of the aggregate cash consideration of $250,000,000 to be received by SAFE OP for the Investor Units in the iStar Investment Transaction pursuant to the Unit Purchase Agreement.

        On December 27, 2018, the special committee met by telephone conference with its advisers. Prior to this meeting, Fried Frank distributed to the special committee the most recent drafts of the proposed transaction documents, and Houlihan Lokey distributed to the special committee presentation materials and a draft of its proposed opinion. At this meeting, Fried Frank provided an overview of the duties of the special committee under Maryland law and reviewed with the special committee the material terms of the proposed transaction. Houlihan Lokey made a financial presentation to the special committee and rendered to the special committee an opinion, which was initially rendered verbally and confirmed by delivery of a written opinion to the special committee, dated December 27, 2018, to the effect that, as of such date, and based on and subject to various procedures followed, assumptions made, qualifications and limitations on the review undertaken and the other matters considered by Houlihan Lokey in connection with the preparation of the opinion, the aggregate cash consideration of $250,000,000 to be received by SAFE OP for the Investor Units in the iStar Investment Transaction pursuant to the Unit Purchase Agreement was fair to SAFE OP from a financial point of view. At the conclusion of the meeting, the special committee adopted resolutions determining the proposed transaction to be advisable, fair and reasonable to, and in the best interests

38

of, the Company and its stockholders, and resolved to recommend that the Company's board authorize and approve the transaction.

        Immediately following the meeting of the special committee, a special meeting of the SAFE board of directors was held via telephone conference, with Ms. Josephs, Mr. Nydick and Mr. Selig joining the meeting and with Mr. Sugarman recusing himself from the initial portion of the meeting. During this portion of the meeting, at the request of the special committee, representatives of Fried Frank reviewed the terms of the transaction and a comparison of the final terms of the transaction with the initial term sheet proposed by iStar, a copy of which had been furnished to the directors in advance of the meeting, and representatives of Houlihan Lokey reviewed for the information of the directors Houlihan Lokey's presentation materials to the special committee, a copy of which had been furnished to the directors prior to the meeting. Mr. Adler advised the directors that the special committee had resolved to recommend the transaction to the independent directors and to the board of directors as a whole. At this point Mr. Sugarman joined the meeting. Following discussion, Messrs. Adler, Nydick and Selig resolved, in their capacity as disinterested members of the board of directors, that the transaction was advisable, fair and reasonable to, and in the best interests of SAFE and its stockholders, and the board of directors as whole, with Ms. Josephs and Mr. Sugarman abstaining, resolved that the transaction was advisable, fair and reasonable to, and in the best interests of SAFE and its stockholders, and resolved to recommend to the stockholders of SAFE that they approve the issuance of shares of Common Stock in exchange for the Investor Units and pursuant to the iStar Preemptive Right as required under the listing standards of the New York Stock Exchange.

        On January 2, 2019, the parties executed the definitive transaction documents and closed the purchase and sale of the Investor Units.

Reasons for the Recommendation of the Special Committee with Respect to the iStar Investment Transaction

        At the meeting of the special committee on December 27, 2018, the special committee adopted resolutions determining the iStar Investment Transaction to be advisable, fair and reasonable to, and in the best interests of, SAFE and its stockholders, and resolved to recommend that SAFE's board of directors authorize and approve the transaction.

        In reaching its recommendation, the special committee considered the following factors, among others:

•

The price of $20 per Investor Unit to be paid by iStar in the iStar Investment Transaction, which is equivalent to the price per share at which SAFE issued shares of Common Stock in our IPO, and is higher than the IPO price after taking into account underwriting discounts and commissions of $1.40 per share. The issue price of $20 per Investor Unit represents a premium to the all-time high closing price of the Common Stock on the NYSE for periods prior to the consummation of the iStar Investment Transaction.



•

The special committee's belief, in light of SAFE's efforts prior to the iStar Investment Transaction to raise additional equity capital from third parties, which efforts had not been successful, that the price per Investor Unit being paid by iStar in the transaction likely represented a significant premium to the price obtainable in a third party equity financing, and that there was no assurance that SAFE could complete any alternative equity financing within an acceptable timeframe given SAFE's need for equity capital in the near term to fund its existing pipeline of commitments and expenses.



•

The special committee's belief that it was in the best interests of SAFE and the holders of its Common Stock, consistent with SAFE's business strategy, to continue to grow SAFE's asset base and cash flow through the acquisition of additional ground leases and that increased scale could

39

enable SAFE to establish a more liquid trading market for its stock that could, over time, attract more institutional investor interest.

•

The proposed amendments to the management fee, term and termination provisions of the management agreement. Although the special committee appreciated that these amendments could be viewed as a negative from the perspective of the holders of SAFE Common Stock other than iStar and its affiliates, on balance, the special committee believed that it was in the best interests of SAFE and the holders of its Common Stock to grow SAFE's asset base and equity capital and to expand its efforts with iStar to seek to accelerate SAFE's growth. Although the amendments to the annual management fee afford iStar the opportunity, over time, to earn significantly higher annual management fees than under SAFE's original management agreement, the amendments provide additional management fees to the manager only if it is able to grow SAFE's equity capital from $620 million to $1.5 billion or more, and the manager would receive these additional fees only if investors are willing in the future to provide equity capital to SAFE taking into account the terms of SAFE's amended management agreement. Moreover, the special committee understood that the fees under the original management agreement were insufficient to compensate the manager for the level of management services required to originate ground lease assets to grow SAFE's investment portfolio.



•

The special committee considered that the amended management agreement would have an initial term through June 30, 2022 during which the agreement is non-terminable, except for certain cause events, as compared to the original management agreement, which was subject to annual renewal, as well as the automatic renewal feature of the amended management agreement, pursuant to which the agreement will automatically renew for additional one-year terms, unless ² / 3 of SAFE's independent directors decline to renew the agreement because they have determined that the manager's long-term performance is unsatisfactory to the point of material detriment to SAFE. The special committee believed that it was in the best interests of SAFE and its stockholders that the manager continue as manager of SAFE, taking into account the benefits of long-term stability with regard to the management of SAFE's business, and the fact that SAFE is the first publicly traded company focused on ground lease assets and that the special committee believed that iStar and the manager have special expertise in this asset class. The special committee also believed there was uncertainty whether, in the near term, there are viable, alternative managers for SAFE's business and assets.



•

The special committee considered that, over time, the level of management services required by SAFE to manage SAFE's ground lease portfolio could diminish. Accordingly, the amended management agreement provides that, beginning with the seventh annual renewal term after the initial term and in connection with each annual renewal thereafter, SAFE may decline to renew the management agreement if ² / 3 of SAFE's independent directors determine that the management fee is unfair and the manager does not accept a different fee, or the parties are unable, after good faith negotiations, to agree on a new fee.



•

The special committee considered the termination fee provisions of the amended management agreement, pursuant to SAFE will be obligated to pay to the manager a termination fee equal to three times the annual management fee paid in respect of the last completed fiscal year prior to the termination, if the management agreement is terminated by reason of unsatisfactory long-term performance of the manager or because SAFE's independent directors determine that the management fee is unfair and the parties are unable to agree upon a revised fee. Although this feature of the amended management agreement could result in a substantial additional payment to the manager, the manager will not be entitled to any termination payment unless SAFE has raised total equity of at least $820 million since inception, including from iStar, and the size of the termination payment is directly related to growth in SAFE's total equity capital, which the special committee believed is in the best interests of SAFE and its stockholders.

40

•

The special committee considered publicly available information reviewed with the special committee by Houlihan Lokey with respect to management fee and termination fee provisions of management agreements for externally managed REITs that may be considered similar in certain respects to SAFE. The special committee believed that these provisions of the amended management agreement were consistent with the range of fees under other management agreements that may be considered similar in certain respects to SAFE.



•

The special committee understood, based upon information provided by iStar, that the manager was devoting substantially greater investment personnel resources, including senior level resources, whose compensation is not reimbursable under the management agreement, to originate ground lease investments on behalf of SAFE than anticipated at the time of execution of the original management agreement, and that the original management fee was insufficient to cover the expenses of such resources being incurred by the manager, which could disincentivize the manager and iStar from investing additional capital in SAFE and dedicating more investment personnel to accelerate SAFE's growth.



•

The special committee considered the fact that it was a condition to the willingness of iStar to enter into the iStar Investment Transaction that SAFE agree to amend the terms of the original management agreement (in the manner described above), that the special committee believed that iStar would not have been willing to enter into the transaction without these amendments, and that the special committee believed it was in the best interests of SAFE and the holders of its Common Stock that iStar invest an additional $250 million in equity in SAFE in the near term to fund its existing pipeline of commitments and expenses.



•

The special committee considered the fact that the iStar Investment Transaction was being structured in a manner that closing of the transaction was not conditioned upon a stockholder vote, and that iStar rejected the special committee's request for a stockholder "ratification vote" relating to the transaction for purposes of the Maryland statutory safe harbor for interested director transactions. The special committee recognized that the time required to obtain a stockholder vote could be significant and that a delay could have adverse implications on, among other things, the ability to purchase pipeline assets that had been identified by the manager. The special committee understood that a "ratification vote" under the Maryland interested director transaction statutory safe harbor was not required by Maryland law and would be advisory ( i.e. , non-binding); however, iStar was unwilling to seek such a stockholder vote. In addition, iStar required, as a condition to the iStar Investment Transaction, that GICRE and LA execute voting agreements with respect to the stockholder vote required for the issuance of shares of SAFE Common Stock in exchange for the Investor Units, so that stockholder approval of that equity issuance was assured.



•

The special committee considered the fact that iStar's voting power would remain capped at its current level prior to the transaction of 41.9%, notwithstanding that its ownership would increase to approximately 65.5% of SAFE's Common Stock.



•

The special committee also considered certain other aspects of the iStar Investment Transaction, including:



•

the requirement that, for not less than three years, the SAFE board of directors must have at least three directors independent of both iStar and SAFE;



•

the fact that, as a result of the transaction, iStar's fully diluted equity ownership of SAFE would increase from approximately 41.9% of the outstanding Common Stock to approximately 65.5% of the outstanding Common Stock; in this regard, the special committee noted that, as SAFE's largest stockholder and manager prior to the transaction, iStar and its affiliates exerted substantial influence over SAFE;

41

•

iStar's agreement not to sell any of the shares of Common Stock received in exchange for Investor Units for one year from the date of the exchange;



•

iStar's agreement to a customary two year "standstill"; and



•

iStar's agreement that, for a period of two years, iStar will not transfer shares of SAFE Common Stock representing more than 20% of the outstanding SAFE Common Stock in one transaction or a series of related transactions to any person or group, other than transfers pursuant to a widely distributed public offering, unless the non-iStar holders of SAFE Common Stock are afforded the opportunity to participate in the transaction at the same price per security and in the same proportion as their SAFE Common Stock represents of the outstanding fully diluted equity of SAFE.



•

The special committee considered the course of negotiations leading to the iStar Investment Transaction, during which the special committee, with the assistance of its advisers, were able to negotiate significant improvements with respect to, among other things, the purchase price per Investor Unit, the management agreement amendments and the corporate governance aspects of the transaction, which the special committee viewed as significant improvements from iStar's initial proposal;



•

The special committee considered the fact that the special committee was assisted by its own outside legal counsel and financial advisor; and



•

The special committee considered the opinion, dated December 27, 2018, of Houlihan Lokey to the special committee to the effect that, as of the date of its opinion, the aggregate cash purchase price of $250,000,000 received by SAFE OP for the Investor Units in the iStar Investment Transaction pursuant to the Investor Unit Purchase Agreement was fair to SAFE OP from a financial point of view, which opinion was based on and subject to various procedures followed, assumptions made, qualifications and limitations on the review undertaken and the other matters considered by Houlihan Lokey in connection with the preparation of the opinion as more fully described in the section below entitled "Opinion of Houlihan Lokey Capital, Inc."

        The foregoing discussion of the information and factors considered by the special committee is not exhaustive. In view of the wide variety of factors, both positive and negative, considered by the special committee, the special committee generally did not consider it practical to, nor did it attempt to, quantify, rank or otherwise seek to assign relative weights to the specific factors that it considered in reaching its determination that the proposed transaction is advisable and in the best interests of SAFE and the holders of its Common Stocks. Rather, the special committee viewed its determination as being based upon the committee's judgment in light of the totality of the information presented and considered. The special committee's recommendation was a recommendation to the SAFE board of directors in connection with the board of directors' decision whether to approve the iStar Investment Transaction and was not, and is not, intended as a recommendation to stockholders of SAFE in connection with their consideration of the proposal to issue shares of SAFE Common Stock in exchange for the Investor Units and to grant preemptive rights to iStar in connection with the iStar Investment Transaction.

Opinion of Houlihan Lokey Capital, Inc.

        On December 27, 2018, Houlihan Lokey Capital, Inc. ("Houlihan Lokey") rendered its opinion to the special committee to the effect that, as of such date, the aggregate cash consideration of $250,000,000 received by our Operating Partnership for the Investor Units in the iStar Investment Transaction pursuant to the Investor Unit Purchase Agreement was fair to our Operating Partnership from a financial point of view. The full text of Houlihan Lokey's written opinion, dated December 27, 2018, which describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion, is

42

attached to this Proxy Statement as Annex A and is incorporated herein by reference. In connection with the opinion, Houlihan Lokey reviewed and relied upon (without independent verification), among other things, financial projections prepared by the management of our Manager relating to the Company for the fiscal years ending 2018 through 2022.

         The summary of Houlihan Lokey's opinion in this Proxy Statement is qualified in its entirety by reference to the full text of its written opinion. Houlihan Lokey's opinion was furnished solely for the use of the special committee (solely in its capacity as such) in connection with its evaluation of the aggregate cash consideration of $250,000,000 received by our Operating Partnership for the Investor Units in the iStar Investment Transaction from a financial point of view and did not address any other aspect or implication of the iStar Investment Transaction and does not address any aspect or implication of Proposal 2. Houlihan Lokey was not requested to opine as to, and its opinion did not express an opinion as to or otherwise address, among other things, (a) the underlying business decision of the special committee, the Company's Board of Directors, the Company, its security holders or any other party to proceed with or effect the iStar Investment Transaction, or (b) the relative merits of the iStar Investment Transaction as compared to any alternative business strategies or transactions that might be available for the Company or any other party. Houlihan Lokey's opinion is included in this Proxy Statement solely because it was considered by the special committee in its evaluation of the iStar Investment Transaction and may not be relied upon by any other person or entity (including, without limitation, security holders, creditors or other constituencies of the Company) or used for any other purpose without Houlihan Lokey's prior written consent. Houlihan Lokey's opinion should not be construed as creating any fiduciary duty on Houlihan Lokey's part to any party. Neither Houlihan Lokey's opinion nor the summary description of the related analyses set forth in this Proxy Statement is intended to be, and they do not constitute, advice or a recommendation to the special committee, the Company's Board of Directors, the Company, any security holder or any other person or entity as to how to act or vote relating to the iStar Investment Transaction, Proposal 2 or otherwise.

        Houlihan Lokey's opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date of the opinion. Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to Houlihan Lokey's attention after the date of the opinion.

        Houlihan Lokey did not express any opinion as to what the value of Investor Units or our common stock actually would be when issued pursuant to the iStar Investment Transaction or any subsequent exchange of Investor Units into our common stock or the price or range of prices at which Investor Units or our common stock might be purchased or sold, or otherwise be transferable, at any time. Houlihan Lokey was not requested to opine as to, and Houlihan Lokey's opinion did not express an opinion as to or otherwise address, among other things, the appropriate capital structure of the Company or our Operating Partnership or whether the Company or our Operating Partnership should be issuing Investor Units or any other type of security in the iStar Investment Transaction, or the potential dilutive effects of the iStar Investment Transaction on the existing security holders of the Company, or the other financial or other implications and effects of the iStar Investment Transaction on the Company, our Operating Partnership, any security holders, creditors or other constituencies of the Company or our Operating Partnership, or any other party.

        Houlihan Lokey's opinion was only one of many factors considered by the special committee in evaluating the iStar Investment Transaction. Houlihan Lokey's opinion was not determinative of the aggregate cash consideration of $250,000,000 received by our Operating Partnership for the Investor Units in the iStar Investment Transaction or of the views of the special committee or the Company's Board of Directors with respect to the iStar Investment Transaction or the consideration payable therein. The type and amount of consideration payable in the iStar Investment Transaction were determined through negotiation between the Company and iStar, and the decision of the Company to enter into the iStar Investment Transaction was solely that of the special committee and the Company's Board of Directors. Houlihan Lokey was not requested to, and did not, initiate any discussions with, or solicit any indications of interest from, third parties with respect to the iStar Investment Transaction, the securities, assets, businesses or operations of the Company or any other party, or any alternatives to the iStar Investment Transaction.

43

        In preparing its opinion to the special committee, Houlihan Lokey performed certain analyses described below. The summary description of Houlihan Lokey's analyses is not a complete description of the analyses underlying Houlihan Lokey's opinion. The preparation of a fairness opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither a fairness opinion nor its underlying analyses is readily susceptible to summary description.

        In performing its analyses, Houlihan Lokey considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of the opinion. Houlihan Lokey's analyses involved judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the Company. An evaluation of the results of those analyses is not entirely mathematical. The estimates contained in the financial projections for the Company provided by the management of the manager and the implied reference range values indicated by Houlihan Lokey's financial analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, such analyses do not purport to be appraisals or to reflect the prices at which assets, businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of the Company. Much of the information used in, and accordingly the results of, Houlihan Lokey's analyses are inherently subject to substantial uncertainty.

        The following is a summary description of the material financial analyses reviewed by Houlihan Lokey with the special committee in connection with the rendering of Houlihan Lokey's opinion to the special committee on December 27, 2018. Houlihan Lokey's opinion was based primarily on a comparison of the purchase price per Investor Unit of $20.00 provided for in the iStar Investment Transaction to the implied pre-iStar Investment Transaction per share reference ranges of our common stock, taken as a whole, that Houlihan Lokey believed were indicated by its analyses. With the special committee's approval, Houlihan Lokey relied upon and assumed, without independent verification, that Investor Units and shares of our common stock would be economically equivalent.

        The implied pre-iStar Investment Transaction per share reference ranges of our common stock referred to above were derived from the following financial analyses of the Company before giving effect to the iStar Investment Transaction:

•

A net asset value analysis in which implied capitalization rates, based on information provided by the Company and publicly available information, of the Company's existing 28 income producing properties, 17 selected ground lease transactions and 17 selected triple net lease REITs were reviewed and, taking into account the results of such review, Houlihan Lokey calculated the estimated aggregate value of the Company's existing income producing properties by applying a range of selected capitalization rates of 4.50% to 4.00% to the calendar year 2019 estimated cash net operating income of the Company based on financial projections prepared by the management of our manager. This analysis indicated an implied pre-iStar Investment Transaction per share reference range of our common stock of approximately $15.09 to $20.48, as compared to the purchase price per Investor Unit of $20.00 provided for in the iStar Investment Transaction.



•

A selected companies analysis in which trading multiples, based on closing stock prices on December 24, 2018 and publicly available financial data, of 17 selected triple net lease REITs, 11 selected commercial mortgage REITs and 7 selected agency mortgage REITs were reviewed and, taking into account the results of such review, a range of selected dividend yields of 4.00% to 3.00% derived from all of the selected companies and a range of selected price-to-calendar year

44

2019 estimated funds from operations per share multiples of 8.0x to 10.0x derived from the 17 selected triple net lease REITs were applied to the calendar year 2019 estimated dividends per share and estimated funds from operations per share of the Company based on financial projections prepared by the management of our Manager. This analysis indicated implied pre-iStar Investment Transaction per share reference ranges of our common stock of approximately $14.90 to $19.90 based on the Company's calendar year 2019 estimated dividends per share and approximately $16.67 to $20.86 based on the Company's calendar year 2019 estimated funds from operations per share, as compared to the purchase price per Investor Unit of $20.00 provided for in the iStar Investment Transaction.

•

A discounted cash flow analysis in which an estimated net present value range of cash flows that the Company was forecasted to generate from December 5, 2018 through the fiscal year ending 2022 was calculated based on financial projections prepared by the management of our manager. The discounted cash flow analysis also included an estimated net present value range of terminal values which terminal values were derived by applying a selected range of perpetual growth rates of 2.0% to 3.0% to the Company's estimated adjusted funds from operations for the fiscal year ending 2022 based on financial projections prepared by the management of our Manager. The net present values of the Company's projected future cash flows and terminal values were then calculated using discount rates ranging from 7.0% to 8.0%. This analysis indicated an implied pre-iStar Investment Transaction per share reference range of our common stock of approximately $11.43 to $16.58, as compared to the purchase price per Investor Unit of $20.00 provided for in the iStar Investment Transaction.

        Although Houlihan Lokey's opinion was primarily based on the comparison of the purchase price per Investor Unit of $20.00 provided for in the iStar Investment Transaction to the implied pre-iStar Investment Transaction per share reference ranges of our common stock, taken as a whole, as described above, Houlihan Lokey's opinion also took into account certain financial terms of the amended management agreement by observing publicly available management fee, termination fee and other information contained in the management agreements of 26 selected externally managed REITS, consisting of five equity REITs, 15 non-agency mortgage REITs and six agency mortgage REITs. In addition, Houlihan Lokey performed a comparison of illustrative management fees based on financial projections for the Company's projected book equity through the fiscal year ending 2023 prepared by the management of our manager under our manager's then proposed amended management fee structure, our manager's then current management fee structure and observed base management fee percentages for the selected externally managed REITS, which comparison indicated that, among other things, the illustrative management fees under our manager's amended management fee structure would be below illustrative management fees using the average base management fee percentage of the selected equity REITs, below illustrative management fees using the average base management fee percentage of the selected non-agency mortgage REITs and below illustrative management fees using the average base management fee percentage of the selected non-agency mortgage REITs.

        Other Matters.     Houlihan Lokey was engaged by the special committee to provide certain financial advisory services to the special committee. The special committee engaged Houlihan Lokey based on Houlihan Lokey's experience and reputation. Houlihan Lokey is regularly engaged to provide advisory services in connection with mergers and acquisitions, financings, and financial restructurings.

        The Company has agreed to pay Houlihan Lokey an aggregate fee of $800,000 for its services, of which $400,000 became payable upon the delivery of Houlihan Lokey's opinion, dated December 21, 2018, to the special committee. Houlihan Lokey's fee was not contingent upon the successful completion of the iStar Investment Transaction or the conclusion reached in Houlihan Lokey's opinion. The Company has also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey, its affiliates and certain related parties against certain liabilities and expenses arising out of or relating to Houlihan Lokey's engagement.

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        Houlihan Lokey and/or certain of its affiliates have in the past provided financial advisory and/or other financial or consulting services to the Company, for which Houlihan Lokey and/or its affiliates have received compensation. Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or other financial or consulting services to the Company, our Operating Partnership, iStar, our manager, other participants in the iStar Investment Transaction or certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive compensation. Furthermore, in connection with bankruptcies, restructurings, distressed situations and similar matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees, agents and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, the Company, our Operating Partnership, iStar, our manager, other participants in the iStar Investment Transaction or certain of their respective affiliates or security holders, for which advice and services Houlihan Lokey and its affiliates have received and may receive compensation.

Regulatory Approvals Not Required or Obtained; NYSE Listing

        The Company is required to submit Proposal 2 for stockholder approval pursuant to Section 312.03 of the NYSE Listed Company Manual. No other filings or regulatory approvals are required with respect to the iStar Investment Transaction. We intend to submit supplemental listing applications to the NYSE to list the Exchange Shares and any shares of Common Stock issued to iStar in respect of the iStar Preemptive Right.

Description of iStar Investment Transaction Documents

         While we believe that the summary below of the agreements entered into in connection with the iStar Investment Transaction describes the material terms of such agreements, it may not contain all of the information that is important to you, and is qualified in its entirety by the relevant instruments and agreements themselves, which were included as exhibits to our Current Report on Form 8-K filed with the SEC on January 3, 2019, and are incorporated by reference herein. We encourage you to read the relevant instruments and agreements themselves in their entirety. Further, representations, warranties and covenants in the Investor Unit Purchase Agreement are not intended to function or to be relied on as public disclosures.

Investor Unit Purchase Agreement

        Pursuant to the Investor Unit Purchase Agreement, the Operating Partnership issued and sold to iStar, and iStar purchased from the Operating Partnership, 12,500,000 Investor Units at a purchase price of $20.00 per unit, for a total purchase price of $250.0 million. The terms of the Investor Units are set forth in the Certificate of Designations, which is described in more detail below.

Representations and Warranties

        The Investor Unit Purchase Agreement contains customary representations and warranties jointly and severally made by the Company and the Operating Partnership to iStar and customary representations and warranties made by iStar to the Company.

        The Company's and the Operating Partnership's representations and warranties under the Investor Unit Purchase Agreement relate to, among other things:

•

the due organization, valid existence, good standing and corporate power of the Company and the Operating Partnership;

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•

the authority of the Company and the Operating Partnership to enter into the Investor Unit Purchase Agreement and related agreements and complete the issuance and sale of the Investor Units and the other transactions contemplated by the Investor Unit Purchase Agreement and related agreements and the enforceability of the Investor Unit Purchase Agreement and related agreements against the Company and the Operating Partnership;



•

the valid issuance and due authorization of the Investor Units and, upon receipt of stockholder approval, of the Exchange Shares;



•

the absence of any statutory or contractual pre-emptive rights of third parties with respect to the Investor Units or the Exchange Shares, other than the rights of SFTY Venture LLC and SFTY Venture VIIB, LLC set forth in the Post IPO Stockholder's Agreements, dated as of April 14, 2017, between each of them and the Company;



•

the absence of any liens, claims or encumbrances in connection with the issuance, purchase and sale of the Investor Units and, when applicable, the Exchange Shares, other than transfer restrictions under the Investor Unit Purchase Agreement and under other agreements contemplated thereby; and



•

the absence of any voting requirement in connection with the issuance, purchase and sale of the Investor Units and the Exchange Shares, other than the vote of the stockholders of the Company to be taken at the meeting on Proposal 2.

        The foregoing restrictions will immediately terminate if the Company enters into a definitive agreement with respect to a transaction involving all or a controlling person of its Common Stock or all or substantially all of its assets.

        iStar's representations and warranties under the Investor Unit Purchase Agreement relate to, among others:

•

its status as an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act;



•

the absence of intent to resell the Investor Units and, when applicable, the Exchange Shares in connection with any public distribution or public offering thereof within the meaning of the Securities Act;



•

the due organization, valid existence, good standing and corporate power of the Company and the Operating Partnership.



•

the authority of iStar to enter into the Investor Unit Purchase Agreement and related agreements and complete the issuance and sale of the Investor Units and the other transactions contemplated by the Investor Unit Purchase Agreement and related agreements and the enforceability of the Investor Unit Purchase Agreement and related agreements against iStar;



•

its acknowledgment that the Investor Units and Exchange Shares are "restricted securities" under the Securities Act subject to transfer restrictions;



•

its substantive, pre-existing relationship with the Company and the Operating Partnership; and



•

its financial and business knowledge and experiences and ability to bear risk in connection with its investment in the Investor Units.

Covenants Regarding Stockholder Approval and Exchange of Investor Units for Common Stock

        The Company agreed to solicit stockholder approval for the issuance of the Exchange Shares and the grant of the iStar Preemptive Right and future issuances of Common Stock pursuant to any exercise of such right, which approvals are being sought at the annual meeting.

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        If the Company has not received proxies representing a sufficient number of shares of Common Stock to approve Proposal 2, the Company will adjourn the meeting until such date as is mutually agreed upon by the Company and iStar, which date shall not be less than five days nor more than ten days after the adjournment, and subject to the terms and conditions of the Investor Unit Purchase Agreement, will continue to use its reasonable best efforts, together with its proxy solicitor, to assist in the solicitation of proxies from stockholders.

        Within 10 business days after receipt of stockholder approval, the Company will exchange the Investor Units for Common Stock on a one-on-one basis in accordance with the terms of the Investor Units. Upon completion, the Investor Units will be retired and extinguished by the Operating Partnership. The Investor Units may not be transferred prior to exchange. The Investor Units will be transferable, subject to compliance with securities laws, if stockholder approval for the exchange has not been obtained by June 30, 2019.

        Prior to the annual meeting, neither the Company nor the Operating Partnership will issue shares of Common Stock or securities convertible or exchangeable into or exercisable for shares of Common Stock at a price less than $20.0 per unit, other than grants of shares of Common Stock or securities convertible or exchangeable into or exercisable for share of Common Stock under the Company's incentive plan; provided, however, that the Company may issue up to $100 million of shares of Common Stock at a price less than $20.00 in an offering in which iStar is afforded the opportunity to exercise the iStar Preemptive Right.

Stockholder's Agreement

        In connection with iStar's purchase of the Investor Units, the Company and iStar entered into a Stockholder's Agreement, dated January 2, 2019 (the "Stockholder's Agreement"), which sets forth certain rights and obligations of iStar and the Company, respectively, relating to iStar's ownership of the Investor Units and our Common Stock.

        The Stockholder's Agreement provides that with respect to any matter presented for a vote or written consent of the holders of our Common Stock after the date on which the Investor Units are exchanged for our Common Stock (the "Exchange Date"), iStar will vote all "Excess Shares" in the same proportions as the votes cast or consents delivered by holders of SAFE Common Stock other than iStar. "Excess Shares" means the number of shares of SAFE Common Stock, including, without limitation, Exchange Shares owned by iStar from time to time that exceed 41.9% of the outstanding Common Stock at such time, including the Exchange Shares. These voting limitations will remain in effect until the first date on which iStar's aggregate ownership of Common Stock is less than 41.9% of the outstanding Common Stock.

        The Stockholder's Agreement also provides that, notwithstanding the voting limitations described above, for three years, iStar will cast all of its voting power in favor of three individuals who are independent of each of iStar and SAFE within the meaning of the listing rules of the NYSE to serve as directors of the Company.

        For a term of two years without the prior consent of the Company's independent directors, iStar and its affiliates shall not:

•

purchase or otherwise acquire legal or beneficial ownership of Common Stock in excess of the ownership threshold then applicable to iStar and its subsidiaries;



•

solicit proxies or written consents of stockholders with respect to, a or in any way participate in any proxy solicitation with respect to, the election or removal of directors that have not been approved and recommended by the independent directors of the Company or any other matter that has not been approved and recommended by the Company, otherwise conduct any non-binding referendum with respect to or participate in, advise or encourage any person in, any

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proxy contest or solicitation with respect to the Company not approved or recommended by the independent directors;

•

make any public disclosure, statement, comment or announcement, including with the filing or furnishing of any document with the SEC or any other governmental agency or to any journalist or analyst or the press or media (including social media), in support of the foregoing;



•

form, join or in any other way participate in a "partnership, limited partnership, syndicate or other group" within the meaning of Section 13(d)(3) of the Exchange Act, with respect to any securities of the Company, or otherwise advise, encourage or participate in any effort by a third party with respect to the foregoing;



•

call a meeting of stockholders or initiate any stockholder proposal, or seek the removal of any director from the Board (other than any director that is affiliated with iStar);



•

make any public statement or offer, propose to effect, or in any way assist or facilitate any other person to do so, with respect to any merger, consolidation, business combination, tender or exchange offer, sale or purchase of assets (other than in the ordinary course of operating the Company's business in iStar's capacity as the Company's external manager), sale or purchase of securities (other than in connection with the Company's capital raising activities), dissolution, liquidation, restructuring, recapitalization or similar transactions of or involving the Company or any of its subsidiaries;



•

take any action which could reasonably be expected to cause or require the Company to make a public announcement regarding any of the foregoing, or publicly request to amend, waive or terminate any of the foregoing; and



•

advise, assist, encourage or seek to persuade others to take any action with respect to any of the foregoing.

        The Stockholder's Agreement restricts iStar's ability to transfer Exchange Shares for one year after the Exchange Date. In addition, for a period of two years, iStar will not transfer shares of Common Stock representing more than 20% of the outstanding Common Stock in one transaction or a series of related transactions to any person or group, other than transfers of Common Stock pursuant to a widely distributed public offering, unless the non-iStar holders of Common Stock are afforded the opportunity to participate in the transaction at the same price per security and in the same proportion as their Common Stock represents of the outstanding fully diluted equity of SAFE.

        In connection with the transaction, we agreed that with respect to each issuance by us of Common Stock with a value of at least $1.0 million, iStar will have the right, but not the obligation, to purchase from the Company additional shares of Common Stock to maintain its percentage ownership of Common Stock after giving effect to the issuance. iStar will pay the same purchase price as is paid by other purchasers in the issuance, disregarding any underwriting, placement agent or other fees and commissions borne by the Company. iStar will have this right so long as it owns at least 20% of our outstanding Common Stock. We refer to this right as the "iStar Preemptive Right." The iStar Preemptive Right will not apply to issuances by the Company pursuant to equity incentive plans.

Amended and Restated Management Agreement

        In connection with the iStar Investment Transaction, the Company, the Operating Partnership and SFTY Manager LLC (a wholly-owned subsidiary of iStar) amended and restated on January 2, 2019 the Management Agreement dated as of June 27, 2017 (as amended and restated, the "Amended and Restated Management Agreement"). The Amended and Restated Management Agreement provides for

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a base management fee that will increase incrementally as SAFE's Total Equity (as defined in the agreement) increases, as follows:

        The management fee will be payable in cash or Common Stock, at the Company's election (as determined by the Company's independent directors). Common Stock issued to pay the management fee will be valued at the greater of $20.00 or a recent volume weighted average market price.

        The Amended and Restated Management Agreement will have an initial term through June 30, 2022 during which the agreement is non-terminable, except for certain cause events. After the initial term, the agreement will be automatically renewed for additional one-year terms, unless 2/3 of the Company's independent directors decline to renew the agreement because they have determined that the manager's long-term performance is unsatisfactory to the point of material detriment to SAFE. SAFE will be obligated to pay the manager a termination fee equal to three times the annual management fee paid in respect of the last completed fiscal year prior to the termination if, by the time of such termination, SAFE has raised total equity of at least $820.0 million since inception, including from iStar.

        In addition, beginning with the seventh annual renewal term after the initial term and in connection with each annual renewal thereafter, SAFE may decline to renew the management agreement if 2/3 of the Company's independent directors determine that the management fee is unfair and the manager does not accept a different fee, or the parties are unable, after good faith negotiations, to agree on a new fee. The termination fee will be payable upon such termination provided that the total equity condition described above has been satisfied.

Amended and Restated Registration Rights Agreement

        In connection with iStar's purchase of the Investor Units, iStar and the Company have entered into an Amended and Restated Registration Rights Agreement, dated January 2, 2019, which requires SAFE to, among other things, use commercially reasonable efforts to file with the Securities and Exchange Commission within six months after the purchase of the Investor Units a shelf registration statement providing for resale of all shares of SAFE Common Stock held by iStar. The agreement also provides iStar with certain demand registration rights. The agreement amends and restates the Registration Rights Agreement, dated as of June 27, 2017, between iStar and the Company.

Voting Agreements

        The Company entered into voting agreements with each of SFTY Venture LLC and SFTY VII-B, LLC pursuant to which they agreed to vote their shares of Common Stock to approve the matters being submitted for approval in Proposal 2. The voting agreements expire on June 30, 2019. SFTY VII-B, LLC is an affiliate of Lubert-Adler, L.P. Dean Adler, a principal of Lubert-Adler, L.P., is a director of the Company. SFTY Venture LLC owns 2,125,000 shares of Common Stock and SFTY VII-B, LLC owns 750,000 shares of Common Stock at the date of this proxy statement. iStar has advised us that it intends to vote all of its shares of Common Stock in favor of the Proposal. Therefore, assuming that the parties to the voting agreements comply with their obligations, passage of Proposal 2 is assured even if no other stockholder votes in favor of it.

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Partnership Unit Designation of Investor Units

        The Partnership Unit Designation of Investor Units, dated as of January 2, 2019, established the Investor Units as a newly-designated series of limited partnership interests in the Operating Partnership. Each Investor Unit receives distributions equivalent to distributions declared and paid on one share of Common Stock. The Investor Units have no voting rights. The Investor Units have limited protective consent rights over certain matters such as amendments to the terms of the Investor Units that would adversely affect the Investor Units.

        The Investor Units may not be converted or exchanged for cash or other property; provided, however, that SAFE agreed to seek stockholder approval to issue the Exchange Shares, which we are seeking pursuant to this Proposal 2. The Investor Units may not be transferred prior to such exchange. The Investor Units will be transferable, subject to compliance with securities laws, if stockholder approval for the exchange has not been obtained by June 30, 2019. Prior to the annual meeting held to obtain approval for the exchange, SAFE is restricted from issuing Common Stock or partnership units of the Operating Partnership, in each case at less than $20.00 per share or unit, other than in the form of grants pursuant to SAFE's incentive plan; provided, however, that SAFE may issue up to $100.0 million of shares of Common Stock at a price less than $20.00 in an offering in which iStar is offered the opportunity to purchase Common Stock pursuant to the iStar Preemptive Right.

Amended and Restated Agreement Regarding Ownership Waiver Agreement

        In connection with the iStar Investment Transaction, the Company and iStar entered into an amended and restated agreement regarding ownership waiver agreement to increase the Group Excepted Holder Limit (as defined in the agreement) from 41.9% to 65.5%, solely to permit the acquisition and ownership by iStar and its wholly owned subsidiaries of 12,500,000 shares of Common Stock issued to iStar upon completion of the Exchange of Investor Units to Common Stock subject to the terms and conditions therein. This agreement was further amended on February 14, 2019 to permit iStar to purchase up to an additional 2.0% of the outstanding Common Stock. All shares of Common Stock held by iStar are subject to the Stockholder's Agreement.

Risks Relating to the Approval of Proposal 2

         Stockholders will experience a decrease in their ownership percentages of our Common Stock as a result of the issuance of the Exchange Shares and potential future issuances of Common Stock pursuant to the iStar Preemptive Right.

        If Proposal 2 is approved, we will issue 12,500,000 shares of Common Stock to iStar, thereby increasing our outstanding shares of Common Stock from 18,321,961 shares to 30,821,961 shares. Although iStar has agreed to limit its voting power to 41.9% pursuant to the Stockholder's Agreement, which means that iStar will gain no additional voting power as a result of the issuance of the Exchange Shares to iStar, the issuance of the Exchange Shares and possible issuances of Common Stock to iStar in the future pursuant to the iStar Preemptive Right, will decrease the ownership percentages of our other common stockholders and could negatively impact the price of our Common Stock.

The ownership of our Common Stock will be further concentrated.

        Upon issuance of the Exchange Shares to iStar, iStar's percentage ownership of our Common Stock will increase from approximately 42.4% to approximately 65.8%, based on the number of shares of Common Stock owned by iStar as of the date of this proxy statement. In addition, a wholly-owned subsidiary of iStar is our external manager and two representatives of iStar serve on our Board, including our chairman and chief executive officer who is also the chairman and chief executive officer of iStar. Although iStar has agreed to limit its voting power, the increased ownership interest of iStar may directly or indirectly deter new investors from investing in us out of concerns for a lack of liquidity

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in our Common Stock and an inability to influence corporate matters. Additionally, the increased concentration may deter third parties from seeking change of control transactions with us.

Interests of Certain Persons in Proposal 2

        Certain of our directors and executive officers and iStar have interests in Proposal 2 that may be different from, in addition to or in conflict with yours. Those interests include:

•

Jay Sugarman, our chairman and a director, and Robin Josephs, one of our directors, are also directors of iStar and Mr. Sugarman is also the chairman of iStar's board of directors.



•

Each of our executive officers is also an executive officer of iStar. We pay management fees to iStar under our management agreement, but iStar solely determines and pays each person's compensation.



•

As of the date of this proxy statement, the following directors and executive officers of the Company are beneficial owners of the number of shares of common stock of iStar set forth below:

        To the extent that iStar receives benefits from the transactions described in Proposal 2, the individuals named above may receive direct or indirect benefits, including as a result of any increase in iStar's common stock price attributable to the transactions.

        iStar receives a number of benefits from the transactions, including without limitation the following:

•

An increase in its percentage ownership interest in us, which may give it greater ability to influence corporate matters, notwithstanding the limitations on iStar's voting power contained in the Stockholder's Agreement.



•

The opportunity to receive dividends on the Investor Units and the Exchange Shares.



•

Changes in the Amended and Restated Management Agreement, including the inclusion of a termination fee and provisions adding an initial term during which the agreement may only be terminated for cause and limiting the Company's termination rights thereafter.



•

The iStar Preemptive Right.

Vote Required

        Pursuant to the rules of the NYSE, the approval of Proposal 2 requires the affirmative vote of a majority of the votes cast at the meeting. This means that there must be more votes " FOR " the proposal than the aggregate of votes " AGAINST " the proposal plus abstentions at the meeting.

        Abstentions will be counted as votes " AGAINST " the proposal. Broker "non-votes" will have no effect on the outcome of this vote.

        iStar intends to vote all of its shares of Common Stock in favor of the Proposal. Therefore, assuming that the parties to the voting agreements described above comply with their obligations, passage of Proposal 2 is assured even if no other stockholder votes in favor of it.

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        Pursuant to the Investor Unit Purchase Agreement, we are obligated to adjourn the meeting to solicit additional proxies if there are insufficient votes at the meeting to approve the Exchange of Investor Units to Common Stock and reconvene the meeting at a date mutually agreed upon by the Company and iStar, which date shall not be less than five days nor more than ten days after the date of adjournment.

Recommendation Regarding Approval of the iStar Investment Transaction

        The Board of Directors, with Mr. Sugarman and Ms. Josephs abstaining, unanimously recommends that you vote FOR Proposal 2.