Shares of iStar Inc. rallied 8.3% in premarket trading Thursday, after the real estate investment trust and fellow REIT Safehold Inc. /zigman2/quotes/201350626/composite SAFE -0.46% announced an agreement to combine, which Safehold says will make it the only publicly traded, pure-play ground lease company. Safehold's stock was still inactive in the premarket. Under terms of the deal, each iStar share will have an implied value of $18.39, or 7.7% above Wednesday's closing price of $17.08. That would value iStar at about $1.57 billion, which compares with Safehold's market capitalization of $2.69 billion. As part of the deal, which is expected to close late in the fourth quarter of 2022 or in the first quarter of 2023, Safehold will internalize iStar's management team and intellectual property, Safehold will assume iStar's $100 million in L+150 trust preferred securities due 2035 and issue 1.2 million new Safehold shares to iStar. Prior to the closing of the deal, iStar will enact a reverse stock split to reduce the shares outstanding to match that of Safehold shares owned by iStar. And at closing, MSD Partners will make strategic investments in Safehold and Caret, which includes iStar selling 5.4 million shares of its Safehold shares to MSD for $200 million, and Safehold selling 100,000 units of Caret to MSD for $20 million, which values Caret at $2 billion. Safehold shares have tumbled 45.6% year to date through Wednesday and iStar's stock has dropped 33.9%, while the SPDR Real Estate Select Sector ETF /zigman2/quotes/207325179/composite XLRE +0.81% has lost 13.2% and the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.38% has declined 11.7%.