Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are included with respect to, among other things, Star Holdings' (the "Company's") current business plan, business strategy, portfolio management, prospects and liquidity. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results or outcomes to differ materially from those contained in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in this Form 10-Q and the uncertainties and risks described in Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report"), all of which could affect our future results of operations, financial condition and liquidity. For purposes of Management's Discussion and Analysis of Financial Condition and Results of Operations, the terms "we," "our" and "us" refer to Star Holdings and its consolidated subsidiaries, unless the context indicates otherwise.

The discussion below should be read in conjunction with our consolidated financial statements and related notes in this quarterly report on Form 10-Q and our 2025 Annual Report. These historical financial statements may not be indicative of our future performance.

Our Development Portfolio

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Asbury Park Waterfront

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We are the managing member in Asbury Partners, LLC, which is the joint venture that owns the Asbury Park Waterfront investment. The aggregate carrying value of the Asbury Park Waterfront investment was approximately $122.8 million as of March 31, 2026.

The Asbury Park Waterfront investment includes the following:

In addition to the operating assets, we also own remaining development sites. Our current strategy for the Asbury Park Waterfront investment is to actively asset manage our operating assets, and strategically monetize the remaining development sites and our operating assets through sales to third party developers and operators while meeting our obligations under the redevelopment agreement with the city of Asbury Park.

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Magnolia Green

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Magnolia Green is an approximately 1,900 acre multi-generational master planned residential community that is entitled for 3,550 single and multifamily dwelling units and approximately 193 acres of land for commercial development. The community is located 19 miles southwest of Richmond, Virginia and offers distinct phases designed for people in different life stages, from first home buyers to empty nesters in single family and townhomes built by the area's top homebuilders. The project is anchored by the Magnolia Green Golf Club, a semi-private 18-hole Nicklaus Design championship golf course with full-service clubhouse and driving range. There are also numerous community amenities, including the Aquatic Center, featuring multiple pools and a snack bar, Arbor Walk, featuring a junior Olympic competition pool, water slide and sports courts, the Tennis Center, featuring tennis and pickleball courts and a pro shop, and miles of paved trails. The aggregate carrying value of our Magnolia Green assets as of March 31, 2026 was $30.8 million.

As of March 31, 2026, 2,240 residential lots have been sold to homebuilders. We anticipate selling our remaining residential lots to homebuilders either upon completion of horizontal lot development or in bulk as unimproved lots. We currently expect such sales to occur over the next two years; however, it could take substantially longer. We anticipate selling the golf course operations to a third party upon completion of residential lot sellout. There can be no assurance, however, that these sales will be completed.

Our Monetizing Portfolio

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As of March 31, 2026, we owned assets that we expect to monetize primarily through asset sales, loan repayments or active asset management. These assets had an aggregate carrying value of approximately $71.5 million and were comprised primarily of loans and other lending investments, operating properties, land and other assets. Summarized information regarding these assets is set forth below.

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Loans and other lending investments. The loans and other lending investments included in our monetizing portfolio as of March 31, 2026 includes one loan with a carrying value of $16.1 million and ten available-for-sale debt securities with an aggregate carrying value of $38.2 million.

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Land. The land asset included in our portfolio as of March 31, 2026 has a carrying value of approximately $14.4 million. Our general strategy is to seek to sell the land to third party developers.

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Other. The remainder of the monetizing assets primarily consist of two properties which had an aggregate carrying value of $2.7 million as of March 31, 2026 a group of loans and equity interests that are recorded as having no carrying value in our financial statements. Both properties are leased to us under short term leases and one is subleased by us to a third party. Our general strategy is to monetize the leased assets, although we may hold them until lease expiration. For the assets with no carrying value, we may seek to sell these assets but can give no assurance that we will recover any value from them

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Investment in Safe. In addition to the assets described above, we also own the Safe Shares which had a fair value of $183.0 million based on the closing price of $13.53 as of March 31, 2026. Our Margin Loan Facility is collateralized by the Safe Shares as of the date of this filing. The net proceeds from the sale of any Safe Shares must be applied in accordance with the terms of the Margin Loan Facility.

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Declines in the market value of the Safe Shares could require us to make prepayments of some or all of the outstanding borrowings under the Margin Loan Facility or post additional cash collateral. Accessing incremental

borrowings under the Safe Credit Facility will increase our interest expense because the interest rate on all borrowings increases to 10.0% per annum while incremental borrowings remain outstanding.

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Results of Operations for the Three Months Ended March 31, 2026 compared to the Three Months Ended March 31. 2025

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Revenue-Operating lease income, which primarily includes income from commercial operating properties, was $2.0 million and $1.9 million, respectively, during the three months ended March 31, 2026 and 2025. The increase in 2026 was due primarily to one property beginning operations in September 2025, which was partially offset by a lease expiration in December 2025.

Interest income decreased to $0.5 million for the three months ended March 31, 2026 from $1.1 million for the same period in 2025. The decrease in interest income was due primarily to a decrease in the average balance of our performing loans and other lending investments due to loan repayments.

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Other income increased to $7.4 million during the three months ended March 31, 2026 from $6.5 million for the same period in 2025. Other income consists primarily of dividend income from our investment in Safe and income from our hotel properties and other operating properties, including Asbury Lanes and the Magnolia Green Golf Club, and other ancillary income. The increase in other income in 2026 was due primarily to $1.0 million related to a legal settlement with respect to one of iStar's (refer to Note 1 to the consolidated financial statements) legacy assets. This amount was recorded upon settlement due to uncertainty regarding collectability of the funds and represents the gross amount of the settlement.

Land development revenue and cost of sales-During the three months ended March 31, 2026, we sold residential lots and units and recognized land development revenue of $11.0 million which had associated cost of sales of $9.3 million. During the three months ended March 31, 2025, we sold residential lots and recognized land development revenue of $5.2 million which had associated cost of sales of $6.8 million. The increase in 2026 was primarily due to a bulk sale at our Asbury Park property in 2026 (refer to Note 5 to the consolidated financial statements). As we execute future sales and have fewer remaining residential and development assets, we expect our land development revenue will decline. The timing and amount of such sales cannot be predicted with certainty.

Costs and expenses-For the three months ended March 31, 2026, we incurred $2.3 million of interest expense on the Safe Credit Facility, $1.7 million of interest expense on our Margin Loan Facility, net of amounts capitalized and $2.1 million on the Loan (refer to Note 9 to the consolidated financial statements). We may elect to pay interest

in kind ("PIK") on the Margin Loan Facility in respect of certain quarterly interest payments and such PIK has been added to the principal balance on the Margin Loan Facility. The applicable margin on the Margin Loan Facility increases by 25 basis points for the entirety of the interest period immediately succeeding any interest period with respect to which we make a PIK election. For the three months ended March 31, 2025, we incurred $2.2 million of interest expense on the Safe Credit Facility and $1.6 million of interest expense on our Margin Loan Facility, net of amounts capitalized.

Real estate expense was $11.5 million during the three months ended March 31, 2026 and $9.7 million for the same period in 2025. Real estate expense typically includes expenses at our hotel and retail operating properties and land properties. The increase in 2026 was due primarily to one property beginning operations in September 2025 and $0.5 million of expense related to a legal settlement with respect to one of iStar's (refer to Note 1) legacy assets. This amount was recorded upon settlement due to uncertainty regarding payment, which was contingent on the settlement.

Depreciation and amortization was $2.2 million during the three months ended March 31, 2026 and $1.0 million for the same period in 2025. The increase in 2026 was due primarily to one property beginning operations in September 2025.

During the three months ended March 31, 2026, we incurred $3.3 million of general and administrative expense, primarily resulting from management fees to Safe and director costs. The annual management fee payable to our Manager under the Management Agreement declined from $15.0 million to $10.0 million for the third annual term of the Management Agreement which ended on March 31, 2026, and further declined to $7.5 million for the annual term ending March 31, 2027. During the three months ended March 31, 2025, we incurred $4.7 million of general and administrative expense, primarily resulting from management fees to Safe and director fees. The decrease in 2026 was due primarily to a decrease in management fees.

The provision for loan losses was $0.4 million for the three months ended March 31, 2026 as compared to a recovery of loan losses of $0.1 million for the same period in 2025. The provision for loan losses for the three months ended March 31, 2026 resulted primarily from a $0.5 million charge-off on a loan that was repaid. The recovery of loan losses for the three months ended March 31, 2025 resulted primarily from a partial repayment on a loan during the period and an improving economic forecast.

Other expense was $0.4 million during the three months ended March 31, 2026 and $3 thousand for the same period in 2025. Other expense for the three months ended March 31, 2026 resulted primarily from a loss on deconsolidation of a venture (refer to Note 5 to the consolidated financial statements).

Unrealized gain (loss) on equity investment represents the unrealized gain or loss on our Safe Shares. We account for our Safe Shares as an equity investment under ASC 321, which requires that we adjust our investment in the Safe Shares to fair value through income at each reporting period. The unrealized loss for the three months ended March 31, 2026 represents the difference between the fair value of our investment in the Safe Shares as of March 31, 2026 and December 31, 2025. The unrealized gain for the three months ended March 31, 2025 represents the difference between the fair value of our investment in the Safe Shares as of March 31, 2025 and December 31, 2024.

Loss on early extinguishment of debt during the three months ended March 31, 2025 resulted from the partial repayment of the Margin Loan Facility.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including to pay interest and repay borrowings, develop our assets and maintain our operations, make distributions to our shareholders and meet other general business needs. We were formed in 2023 and we have not paid any dividends. We do not expect to pay regular dividends. We intend to make distributions of available cash from time to time, primarily dependent upon our ability to sell assets and the prices at which we sell our assets.

Our sources of cash will be largely dependent on asset sales, which are difficult to predict in terms of timing and amount. While we may be able to anticipate and plan for certain liquidity needs, there may be unexpected increases in uses of cash that are beyond our control and which would affect our financial position, liquidity and results of operations, such

as prepayments on the Margin Loan Facility resulting from declines in the market value of the Safe Shares. Even if there are no material changes to our anticipated liquidity requirements, our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or needed. Our primary sources of liquidity will generally consist of our cash on hand and proceeds from asset sales. We expect our short-term and long-term liquidity requirements to include:

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We expect to meet our short-term liquidity requirements through any cash flows from operations, proceeds from asset sales, borrowings on available debt facilities and our unrestricted cash. We expect to meet our long-term liquidity requirements through any cash flows from operations and proceeds from asset sales and through refinancing maturing debt.

Our future cash sources will be largely dependent on proceeds from asset sales. The amount and timing of asset sales, including the sale of Safe Shares, could be adversely affected by a number of factors, some of which are outside of our control, including the macroeconomic factors discussed below. We cannot predict with certainty the specific transactions we will undertake to generate sufficient liquidity to meet our obligations as they come due. We will adjust our plans as appropriate in response to changes in our expectations and changes in market conditions. The uncertainty related to macroeconomic factors such as inflation, changes in interest rates, market volatility, disruptions in the banking sector, tariff policy, geopolitical uncertainty and the availability of financing, and the effects of these factors on the economy generally and on the commercial real estate markets in which we operate, make it impossible for us to predict or to quantify the impact of these or other trends on our financial results or liquidity.

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The following table outlines our cash flows from operating activities, cash flows from investing activities and cash flows from financing activities for the three months ended March 31, 2026 and 2025 ($ in thousands):

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The increase in cash flows used in operating activities during 2026 was due primarily to a real estate property beginning operations in the second half of 2025. The increase in cash flows from investing activities during 2026 was due primarily to a decrease in capital expenditures on land and development assets, an increase in proceeds received from sales of land and development assets, which was partially offset by the purchase of other lending investments and the deconsolidation of a venture in 2026. The decrease in cash flows provided by financing activities during 2026 was due primarily to a net decrease in borrowings on debt obligations and the repurchase of common stock in 2026.

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Debt Covenants-The Margin Loan Facility requires that we comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, indebtedness, liens, investments and the payment of dividends. Additionally, the Margin Loan Facility includes customary representations and warranties, events of default and other creditor protections for this type of facility. Upon the occurrence of certain events which are customary for this type of facility, we may be required to prepay all amounts due under the Margin Loan Facility or post additional collateral in accordance with the Margin Loan Facility and related agreements. As part of the amendment to the Margin Loan Facility

that we entered into on March 28, 2025, the loan-to-value ratios that would require us to post additional collateral with the lender or permit us to request a release of collateral were eased from then existing levels.

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The Safe Credit Facility requires that we comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, indebtedness, liens, investments, mergers, asset sales and the payment of certain dividends. Additionally, the Safe Credit Facility includes customary representations and warranties as well as customary events of default, the occurrence of which, following any applicable grace period, would permit Safe to, among other things, declare the principal, accrued interest and other obligations of ours under the Safe Credit Facility to be immediately due and payable and foreclose on the collateral securing the Safe Credit Facility.

As of March 31, 2026, we were in compliance with all of our financial covenants.

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments in certain circumstances that affect amounts reported as assets, liabilities, revenues and expenses. We have established detailed policies and control procedures intended to ensure that valuation methods, including any judgments made as part of such methods, are well controlled, reviewed and applied consistently from period to period. We base our estimates on historical corporate and industry experience and various other assumptions that we believe to be appropriate under the circumstances. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and, therefore, routinely require adjustment.

For a discussion of our critical accounting policies, refer to the combined and consolidated financial statements of our 2025 Annual Report.

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