$1.86
$16.96
bear $1.86
base $10.45
bull $16.96
margin of safety $5.50
market price* $7.70
Star Holdings was spun off from iStar in March 2023 to hold and wind down a legacy real estate portfolio, and it is managed under contract by Safehold (Safe). It is not a going business that grows; it is a collection of assets being sold over several years while paying interest, management fees and running costs. That matters for how it is valued. Its operating cash flow is negative every year (about $(12) million in 2025, $(31) million in 2024, $(19) million in 2023) because land-sale proceeds are booked as investing cash flow, not operating cash flow. Earnings-based valuation therefore says little, and we value the assets directly, then subtract what the company owes. Owner earnings were about $(1.29) per share in 2025, $(1.94) in 2024 and $(2.23) in 2023. That is a smaller loss, not a profit, and it is not the basis for our value. What it owns (June 30, 2026 balance sheet): 13.5 million Safehold shares, worth about $212 million at market; Magnolia Green (about 1,900 acres, 2,239 lots already sold, remaining lots expected to sell over roughly two years); Asbury Park Waterfront in New Jersey (the Asbury hotel, Asbury Lanes and Surfside hotel, plus development sites); loans and securities of about $46 million; about $35 million of cash; and land and real estate carried at roughly $168 million. It owes about $209 million, mainly an 8% credit facility from Safe (about $115 million) and a $91 million margin loan secured by the Safehold shares, both due March 2028. Shareholders own what is left after those lenders and a small outside partner. Base case: about $10.45 per share. The Safehold stake is valued at what its dividend (about $9.7 million a year, roughly 9% of 2025 revenue) is worth at a 6% yield, about $162 million, below its market price. Real estate and land are assumed to convert to cash at their carrying value over about four years, with no premium and no credit for growth. The reason for confidence in carrying values is that no write-downs were recorded in 2024 or 2025 and land sold for about 116%, 123% and 161% of its cost in 2023, 2024 and 2025. Against that we subtract wind-down costs: the Safe management fee (contractually $7.5 million for the year to March 2027, then 2% of non-Safe asset book value), other overhead of about $3 million, and roughly $5 million a year of net carrying cost on hotels and land. Business value is about $341 million; it owes about $214 million (including about $5 million for the 8% Safe loan and margin loan costing more than 6%) and about $1 million to a minority partner, leaving about $126 million, or $10.45 per share on 12.1 million shares. Bull case: about $16.96 per share. The Safehold shares are sold at their recent market price (about $15.70), land sells at 115% of carrying value (the lowest premium achieved in the last three years) and the wind-down finishes in three years. Business value is about $420 million against about $215 million owed, leaving about $205 million. Bear case: about $1.86 per share. Safehold shares fall another quarter (they fell from about $18.48 to $13.69 during 2025), to about $10, which also risks margin-loan collateral calls. Real estate and land recover only 75% of carrying value over five years because Asbury Park and Magnolia Green are 54% of the portfolio, need local approvals and are exposed to residential downturns, and cash spent on land development slightly exceeded land-sale proceeds in 2025. The March 2028 maturities are refinanced or extended at costlier terms (about $20 million extra). Business value is about $253 million against about $230 million owed, leaving about $22 million. Leverage leaves little cushion here. What was left out: no growth in Safehold's dividend, no gains on hotels or operating properties above carrying value, no benefit from the roughly $18 million of restricted cash, and no allowance for taxes (the company is a taxable corporation; we assume its loss carryforwards cover asset sale gains, which we could not confirm). What would make this wrong: a large loss in Safehold's share price, a slower sell-down of Asbury Park and Magnolia Green, or a refinancing failure in 2028. Company documents also note that management could choose to delist and sell down the portfolio. Could not be fully reconciled: between year-end 2025 and June 2026 real estate fell by about $82 million and debt by about $60 million, consistent with a development venture leaving the balance sheet, but the detailed June 2026 filing text was not available, so we relied on reported totals. The 2024 and 2025 filings show this business as one that has been shrinking, with land sales falling from $60 million to $46 million.