Star Holdings Announces Successful Debt Extensions and Authorizes $10 Million Share Repurchase Program

Rhea-AI Summary

Star Holdings (NASDAQ: STHO) has announced two major developments: a $10 million share repurchase program and successful debt extensions. The Board authorized share buybacks through open market or private transactions, subject to market conditions. The company secured several amendments to its financing arrangements, including:

- Extension of Term Loan Credit Agreement maturity to March 31, 2028, with current balance of $115.0 million
- Management fee increase from $5.0M to $7.5M for 2026-2027 period
- Margin Loan Facility extension to March 31, 2028 with $15.8M additional funding availability
- Increase in Termination Fee to $55.0M

Star Holdings' portfolio includes interests in Asbury Park Waterfront, Magnolia Green residential developments, and Safehold Inc. (NYSE: SAFE) shares.

Positive

• $10M share repurchase program authorized, potentially enhancing shareholder value
• Term loan maturity extended by 1 year to 2028
• Margin loan facility extended by 2 years with $15.8M additional funding availability
• Improved loan-to-value ratios and collateral release thresholds

Negative

• Management fee increasing by 50% to $7.5M for 2026-2027
• Termination Fee increased to $55.0M from $50.0M
• Higher applicable margins on margin loan facility

Insights

Financial Analyst

Star Holdings' announcement reveals several significant financial maneuvers that merit investor attention. The $10 million share repurchase program represents approximately 8.9% of STHO's current $112.4 million market capitalization - a meaningful percentage that could provide substantial support for the share price and signals management's confidence in the company's underlying value.

The debt extensions are strategically important given STHO's capital structure. With $115 million in term loan principal (slightly exceeding its market cap), extending maturity dates by 1-2 years provides critical breathing room and reduces near-term refinancing risk. The additional $15.8 million funding commitment through the amended margin loan facility enhances liquidity options.

However, several amendments warrant caution. The 50% increase in the management fee (from $5 million to $7.5 million) starting in 2026 represents a substantial increase relative to STHO's size. Similarly, the $5 million increase in termination fees favors the manager rather than shareholders.

The company's focus on "realizing value for shareholders" through "active asset management and asset sales" suggests STHO is primarily a liquidation vehicle for its commercial real estate assets and Safehold shares rather than a growth-oriented entity. In this context, the share repurchase program makes strategic sense as a capital return mechanism while the debt extensions provide adequate runway for orderly asset monetization.

Related amendments made to financing arrangements and management agreement

NEW YORK, March 31, 2025 /PRNewswire/ -- Star Holdings (NASDAQ: STHO) (the "Company") announced the following:

Share Repurchase Program

The Company's Board of Trustees has authorized the repurchase of up to $10 million of the Company's common shares. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan, subject to market and pricing conditions, applicable law and other factors deemed relevant in the Company's sole discretion. The share repurchase authorization does not obligate the Company to repurchase any dollar amount or number of shares, and may be suspended or discontinued at any time.

Term Loan Credit Agreement with Safehold

The Term Loan Credit Agreement has been amended to, among other things:

• Extend the maturity date of the underlying term loan facilities by one year, to March 31, 2028
• Provide that Star Holdings may re-borrow amounts that have been paid on the $25 million incremental facility available under the agreement for permitted purposes
• Provide a restricted payments basket that will permit the Company to repurchase up to $10 million of its common shares for cash

As of March 28, 2025, the outstanding term loan had a principal balance of $115.0 million and no outstanding borrowings on the incremental facility.

Management Agreement with Safehold

The Management Agreement has been amended to, among other things:

• Increase the management fee payable in respect of the annual term running from April 1, 2026 through March 31, 2027 from $5.0 million to $7.5 million
• Increase the "Termination Fee" payable to the manager in certain circumstances from $50.0 million to $55.0 million, in each case less the aggregate amount of management fees paid prior to the termination date

Amendment to Margin Loan Facility

The Margin Loan Facility has been amended to, among other things:

• Extend the maturity date of the underlying margin loan facility by two years, to March 31, 2028
• Provide a commitment for up to $15.8 million of additional funding on a delayed-draw basis, subject to satisfaction of the conditions for drawing
• Provide for increases in the applicable margin
• Improve certain loan-to-value ratios and collateral release thresholds

For more information on the transactions, please refer to SEC Form 8-K filed March 31, 2025.

Forward-Looking Statements:

This press release contains forward-looking statements that are based on Star Holdings' current expectations. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including prevailing market conditions and other factors.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected.  More information about potential risk factors that could affect Star Holdings results is included in our filings with the Securities and Exchange Commission.  The term "including," and any variation thereof, means "including, without limitation."

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Star Holdings' (NASDAQ: STHO) portfolio is comprised primarily of interests in the Asbury Park Waterfront, the Magnolia Green residential development projects and other commercial real estate properties and loans that are for sale or otherwise plan to be monetized. Star Holdings also owns shares of Safehold Inc. (NYSE: SAFE). Star Holdings expects to focus on realizing value for shareholders from its portfolio primarily by maximizing cash flows through active asset management and asset sales.  Additional information on Star Holdings is available on its website at www.starholdingsco.com.

Company Contact:
Pearse Hoffmann
Senior Vice President
Head of Corporate Finance
T 212.930.9400
E investors@starholdingsco.com 

 

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SOURCE Star Holdings

FAQ

What is the size of Star Holdings' (STHO) share repurchase program announced in March 2025?

Star Holdings authorized a $10 million share repurchase program for its common shares, which can be executed through open market or private transactions.

When does Star Holdings' (STHO) extended Term Loan Credit Agreement mature?

The Term Loan Credit Agreement has been extended by one year to mature on March 31, 2028.

How much will Star Holdings' (STHO) management fee increase in 2026-2027?

The management fee will increase from $5.0 million to $7.5 million for the period April 1, 2026 through March 31, 2027.

What is the current principal balance of STHO's outstanding term loan as of March 2025?

As of March 28, 2025, the outstanding term loan had a principal balance of $115.0 million.

How much additional funding is available under STHO's amended Margin Loan Facility?

The amended Margin Loan Facility provides up to $15.8 million of additional funding on a delayed-draw basis, subject to conditions.