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07/30/2007

iStar Financial Announces Second Quarter 2007 Results

  • Adjusted earnings per diluted common share up 12% year-over-year to $1.02.
  • New financing commitments totaled $1.8 billion in 36 separate transactions.
  • Total revenues reached a record $317.3 million, up 33% year-over-year.
  • Subsequent to quarter end, the Company closed on its previously announced acquisition of the commercial real estate lending business from Fremont Investment & Loan.
  • Company increases fiscal year 2007 guidance for adjusted earnings per diluted common share to $4.00 - $4.20 and diluted GAAP earnings per common share to $2.90 - $3.10.

NEW YORK, July 30 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), a leading publicly traded finance company focused on the commercial real estate industry, today reported results for the second quarter ended June 30, 2007. Second quarter results do not reflect the impact of the Fremont transaction, which closed subsequent to the end of the quarter.

iStar reported adjusted earnings for the quarter of $1.02 per diluted common share. This compares with $0.91 per diluted common share for the second quarter 2006. Adjusted earnings allocable to common shareholders for the second quarter 2007 were $130.1 million on a diluted basis, compared to $103.9 million for the second quarter 2006. Adjusted earnings represent net income computed in accordance with GAAP, adjusted for preferred dividends, depreciation, depletion, amortization and gain (loss) from discontinued operations.

Net income allocable to common shareholders for the second quarter was $96.3 million, or $0.75 per diluted common share, compared to $78.0 million, or $0.68 per diluted common share for the second quarter 2006. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income.

Net investment income for the quarter was $131.8 million, compared to $105.2 million for the second quarter 2006. The year-over-year increase in net investment income was primarily due to continued growth of the Company's loan portfolio. Net investment income represents interest income, operating lease income and equity in earnings (loss) from joint ventures, less interest expense, operating costs for corporate tenant lease assets and loss on early extinguishment of debt.

The Company announced that during the second quarter, it closed 36 new financing commitments, for a total of $1.8 billion. Of that amount, $904.6 million was funded during the second quarter. In addition, the Company funded $381.4 million under pre-existing commitments and received $1.05 billion in principal repayments. Cumulative repeat customer business totaled $14.1 billion at June 30, 2007.

Additionally, the Company completed the sale of four non-strategic corporate tenant lease facilities for total proceeds of $29.8 million, net of costs, resulting in a total net book gain of approximately $5.4 million.

For the quarter ended June 30, 2007, the Company generated adjusted return on average common book equity of 20.7%. The Company's debt to book equity plus accumulated depreciation/depletion and loan loss reserves, all as determined in accordance with GAAP, was 2.5x at quarter end.

The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 3.22% for the quarter, essentially in-line with the previous quarter.

On July 2, 2007, the Company announced that it had completed its transaction with Fremont Investment & Loan, a subsidiary of Fremont General Corporation, in which the Company acquired Fremont's commercial real estate lending business and retained a 30 percent participation interest in its commercial real estate loan assets for an aggregate purchase price of approximately $1.9 billion.

Capital Markets Summary

During the second quarter, the Company entered into a new five-year, $1.2 billion unsecured revolving credit agreement that carries an interest rate of LIBOR + 0.525%. This facility will serve as additional capacity to iStar's existing $2.2 billion unsecured revolving credit facility, which also carries an interest rate of LIBOR + 0.525%.

As of June 30, 2007, the Company had $1.3 billion outstanding under $3.9 billion in revolving credit facilities. Consistent with its match funding policy under which a one percentage point change in interest rates cannot impact adjusted earnings by more than 2.5%, as of June 30, 2007, a one percentage point increase in rates would have increased the Company's adjusted earnings by 2.16%.

During the second quarter, iStar also closed on a 364-day $2 billion interim financing facility to fund the acquisition of the commercial real estate lending business and existing portfolio from Fremont Investment & Loan. The Company said that it expects to repay the interim facility through debt and equity issuances. The timing of any debt or equity issuance will be predicated on market conditions.

Risk Management

At June 30, 2007, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 83.6% of the Company's asset base, versus 81.4% in the prior quarter. The Company's loan portfolio consisted of 72% floating rate and 28% fixed rate loans, with a weighted average maturity of 3.8 years. The weighted average last dollar loan-to-value ratio for all structured finance assets was 65.0%. At quarter end, the Company's corporate tenant lease assets were 95.0% leased with a weighted average remaining lease term of 11.0 years. At June 30, 2007, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 2.78 and 2.50, respectively.

At June 30, 2007, watch list assets represented 1.45% of total assets versus 1.27% in the prior quarter. During the second quarter, four assets were moved from the watch list to non-performing loan (NPL) status and four assets were added to the watch list.

At June 30, 2007, the Company had seven loans on NPL status, representing 1.73% of total assets. The Company's policy is to stop the accrual of interest on loans placed on NPL status. The Company believes it has adequate collateral to support the book value for each of the watch list and NPL assets. The Company had $62.2 million in loan loss reserves at June 30, 2007 versus $52.2 million at December 31, 2006.

Earnings Guidance

Consistent with the Securities and Exchange Commission's Regulation FD and Regulation G, iStar Financial comments on earnings expectations within the context of its regular earnings press releases. The Company is increasing its expectations for diluted adjusted earnings per common share for the fiscal year 2007 to $4.00 - $4.20, and diluted GAAP earnings per common share for the fiscal year 2007 to $2.90 - $3.10. The Company forecasts annual net asset growth of approximately $6.0 billion, including the Company's retained interest in the Fremont portfolio which has an approximate book value of $1.9 billion as of June 30, 2007. Excluding the Fremont interest, net asset growth for the fiscal year 2007 is expected to be approximately $4.0 billion. The Company continues to expect to fund its long-term net asset growth with a combination of unsecured debt and equity.

Dividend

On July 2, 2007, iStar Financial declared a regular quarterly dividend of $0.825. The second quarter dividend will be payable on July 30, 2007 to shareholders of record on July 16, 2007.

[Financial Tables to Follow]

* * *

iStar Financial Inc. is a leading publicly traded finance company focused on the commercial real estate industry. The Company primarily provides custom-tailored investment capital to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, as well as corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust ("REIT"), seeks to deliver strong dividends and superior risk-adjusted returns on equity to shareholders by providing innovative and value added financing solutions to its customers.

iStar Financial will hold a quarterly earnings conference call at 10:00 a.m. EDT today, July 30, 2007. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through iStar Financial's website, www.istarfinancial.com, under the "Investor Relations" section. To listen to the live call, please go to the website's "Investor Relations" section at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the iStar Financial website.

(Note: Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although iStar Financial Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from iStar Financial Inc.'s expectations include completion of pending investments, continued ability to originate new investments, the mix of originations between structured finance and corporate tenant lease assets, repayment levels, the timing of receipt of prepayment penalties, the availability and cost of capital for future investments, competition within the finance and real estate industries, economic conditions, loss experience and other risks detailed from time to time in iStar Financial Inc.'s SEC reports.)



    Selected Income Statement Data
    (In thousands)
    (unaudited)
                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2007      2006      2007      2006

    Net investment income (1)          $131,838  $105,154  $257,321  $214,262
    Other income                         38,801    21,676    67,276    35,145
    Other expenses (2)                  (67,250)  (41,301) (129,841)  (80,058)
    Minority interest in consolidated
     entities                                15      (821)      579    (1,069)
    Income from continuing operations  $103,404   $84,708  $195,335  $168,280

    Income from discontinued
     operations                             296     3,438     1,048     5,670
    Gain from discontinued operations     5,362     2,353     6,778     4,536
    Preferred dividends                 (10,580)  (10,580)  (21,160)  (21,160)
    Net income allocable to common
     shareholders and HPU holders (3)   $98,482   $79,919  $182,001  $157,326

    (1) Includes interest income, operating lease income and equity in
        earnings (loss) from joint ventures, less interest expense, operating
        costs for corporate tenant lease assets and loss on early
        extinguishment of debt.

    (2) Includes depreciation and amortization, general and administrative
        expenses and provision for loan losses.

    (3) HPU holders are Company employees who purchased high performance
        common stock units under the Company's High Performance Unit Program.



    Selected Balance Sheet Data
    (In thousands)
                                                As of              As of
                                            June 30, 2007    December 31, 2006
                                             (unaudited)

    Loans and other lending investments, net    $7,694,183        $6,799,850
    Corporate tenant lease assets, net           3,324,186         3,084,794
    Other investments                              490,741           407,617
    Total assets                                12,322,330        11,059,995
    Debt obligations                             8,987,059         7,833,437
    Total liabilities                            9,219,894         8,034,394
    Total shareholders' equity                   3,071,834         2,986,863



                             iStar Financial Inc.
                    Consolidated Statements of Operations
                   (In thousands, except per share amounts)
                                 (unaudited)

                                      Three Months Ended    Six Months Ended
                                          June 30,             June 30,
                                       2007       2006      2007       2006
      REVENUES

         Interest income             $192,165   $135,075  $373,025   $261,124
         Operating lease income        86,382     81,336   167,694    162,991
         Other income                  38,801     21,676    67,276     35,145
           Total revenues             317,348    238,087   607,995    459,260

      COSTS AND EXPENSES

         Interest expense             139,174    101,302   267,701    194,785
         Operating costs - corporate
          tenant lease assets           7,433     10,722    14,244     16,121
         Depreciation and
          amortization                 22,827     18,877    42,869     37,502
         General and administrative(1) 39,423     20,424    76,972     39,556
         Provision for loan losses      5,000      2,000    10,000      3,000
           Total costs and expenses   213,857    153,325   411,786    290,964

      Income from continuing
       operations before other items  103,491     84,762   196,209    168,296
           Equity in earnings (loss)
            from joint ventures          (102)       767    (1,453)     1,053
           Minority interest in
            consolidated entities          15       (821)      579     (1,069)
       Income from continuing
       operations                     103,404     84,708   195,335    168,280

           Income from discontinued
            operations                    296      3,438     1,048      5,670
           Gain from discontinued
            operations                  5,362      2,353     6,778      4,536
      Net income                      109,062     90,499   203,161    178,486

      Preferred dividends             (10,580)   (10,580)  (21,160)   (21,160)

      Net income allocable to common
       shareholders and HPU holders   $98,482    $79,919  $182,001   $157,326

      Net income per common share
           Basic                        $0.76      $0.69     $1.40      $1.36
           Diluted (2)                  $0.75      $0.68     $1.39      $1.34

      Net income per HPU share
           Basic (3)                  $143.80    $130.20   $265.80    $256.40
           Diluted (2) (4)            $142.53    $129.00   $263.47    $254.07

    (1) For the three months ended June 30, 2007 and 2006, includes $3,856 and
        $1,747 of stock-based compensation expense, respectively.  For the six
        months ended June 30, 2007 and 2006, includes $8,265 and $2,950 of
        stock-based compensation expense, respectively.

    (2) For the three months ended June 30, 2007 and 2006, includes the
        allocable share of $28 of joint venture income.  For the six months
        ended June 30, 2007 and 2006, includes the allocable share of $56 of
        joint venture income.

    (3) For the three months ended June 30, 2007 and 2006, $2,157 and $1,953
        of net income is allocable to HPU holders, respectively. For the six
        months ended June 30, 2007 and 2006, $3,987 and $3,846 of net income
        is allocable to HPU holders, respectively.

    (4) For the three months ended June 30, 2007 and 2006, $2,138 and $1,935
        of net income is allocable to HPU holders, respectively. For the six
        months ended June 30, 2007 and 2006, $3,952 and $3,811 of net income
        is allocable to HPU holders, respectively.



                             iStar Financial Inc.
                        Earnings Per Share Information
                   (In thousands, except per share amounts)
                                 (unaudited)

                                         Three Months Ended  Six Months Ended
                                             June 30,           June 30,
                                          2007      2006     2007      2006
      EPS INFORMATION FOR COMMON SHARES

      Income from continuing operations
       per common share (1)
          Basic                            $0.72     $0.64    $1.34     $1.27
          Diluted (2)                      $0.71     $0.63    $1.33     $1.26

      Net income per common share
          Basic                            $0.76     $0.69    $1.40     $1.36
          Diluted (2)                      $0.75     $0.68    $1.39     $1.34

      Weighted average common shares
       outstanding
          Basic                          126,753   113,282  126,723   113,263
          Diluted                        127,963   114,404  127,915   114,381

      EPS INFORMATION FOR HPU SHARES

      Income from  continuing operations
       per HPU share (1)
          Basic                          $135.60   $120.73  $254.40   $239.73
          Diluted (2)                    $134.40   $119.67  $252.13   $237.60

      Net income per HPU share (3)
          Basic                          $143.80   $130.20  $265.80   $256.40
          Diluted (2)                    $142.53   $129.00  $263.47   $254.07

      Weighted average HPU shares
       outstanding
          Basic                               15        15       15        15
          Diluted                             15        15       15        15

     (1) For the three months ended June 30, 2007 and 2006, excludes
         preferred dividends of $10,580. For the six months ended June 30,
         2007 and 2006, excludes preferred dividends of $21,160.

     (2) For the three months ended June 30, 2007 and 2006, includes the
         allocable share of $28 of joint venture income. For the six months
         ended June 30, 2007 and 2006, includes the allocable share of $56 of
         joint venture income.

     (3) As more fully explained in the Company's quarterly SEC filings, three
         plans of the Company's HPU program vested in December 2002, December
         2003 and December 2004. Each of the respective plans contain 5 HPU
         shares. Cumulatively, these 15 shares were entitled to $2,157 and
         $1,953 of net income for the three months ended June 30, 2007 and
         2006, respectively, and $3,987 and $3,846 of net income for the six
         months ended June 30, 2007 and 2006, respectively. On a diluted
         basis, these cumulative 15 shares were entitled to $2,138 and $1,935
         of net income for the three months ended June 30, 2007 and 2006,
         respectively, and $3,952 and 3,811 of net income for the six months
         ended June 30, 2007 and 2006, respectively.



                             iStar Financial Inc.
            Reconciliation of Adjusted Earnings to GAAP Net Income
                   (In thousands, except per share amounts)
                                 (unaudited)

                                   Three Months Ended      Six Months Ended
                                        June 30,               June 30,
                                   2007         2006      2007          2006
    ADJUSTED EARNINGS (1)


    Net income                    $109,062     $90,499  $203,161     $178,486
    Add: Depreciation, depletion
     and amortization               23,366      20,021    45,244       41,033
    Add: Joint venture income           31          30        61           60
    Add: Joint venture depreciation,
     depletion and amortization      9,748       2,724    20,585        5,448
    Add: Amortization of
     deferred financing costs        6,713       6,155    13,157       12,268
    Less: Preferred dividends      (10,580)    (10,580)  (21,160)     (21,160)
    Less: Gain from discontinued
     operations                     (5,362)     (2,353)   (6,778)      (4,536)

    Adjusted earnings allocable
     to common shareholders
     and HPU holders:

       Basic                      $132,947    $106,466  $254,209     $211,539
       Diluted                    $132,978    $106,496  $254,270     $211,599

    Adjusted earnings per
     common share:
       Basic (2)                     $1.03       $0.92     $1.96        $1.82
       Diluted (3)                   $1.02       $0.91     $1.94        $1.81

    Weighted average
     common shares
     outstanding:
       Basic                       126,753     113,282   126,723      113,263
       Diluted                     127,963     114,404   127,915      114,381

    Common shares
     outstanding at
     end of period:
       Basic                       126,786     113,303   126,786      113,303
       Diluted                     127,991     114,438   127,991      114,438


    (1) Adjusted earnings should be examined in conjunction with net income as
        shown in the Consolidated Statements of Operations. Adjusted earnings
        should not be considered as an alternative to net income (determined
        in accordance with GAAP) as an indicator of the Company's performance,
        or to cash flows from operating activities (determined in accordance
        with GAAP) as a measure of the Company's liquidity, nor is this
        measure indicative of funds available to fund the Company's cash needs
        or available for distribution to shareholders. Rather, adjusted
        earnings is an additional measure the Company uses to analyze how its
        business is performing. It should be noted that the Company's manner
        of calculating adjusted earnings may differ from the calculations of
        similarly-titled measures by other companies.

    (2) For the three months ended June 30, 2007 and 2006, excludes $2,912 and
        $2,602 of net income allocable to HPU holders, respectively. For the
        six months ended June 30, 2007 and 2006, excludes $5,569 and $5,171 of
        net income allocable to HPU holders, respectively.

    (3) For the three months ended June 30, 2007 and 2006, excludes $2,886 and
        $2,578 of net income allocable to HPU holders, respectively. For the
        six months ended June 30, 2007 and 2006, excludes $5,519 and $5,124 of
        net income allocable to HPU holders, respectively.



                               iStar Financial Inc.
                           Consolidated Balance Sheets
                                  (In thousands)

                                                 As of             As of
                                             June 30, 2007   December 31, 2006
                                              (unaudited)
     ASSETS

     Loans and other lending investments, net   $7,694,183        $6,799,850
     Corporate tenant lease assets, net          3,324,186         3,084,794
     Other investments                             490,741           407,617
     Investments in joint ventures                 391,798           382,030
     Assets held for sale                           15,985             9,398
     Cash and cash equivalents                      88,019           105,951
     Restricted cash                                33,901            28,986
     Accrued interest and operating lease
      income receivable                             97,696            72,954
     Deferred operating lease income receivable     89,634            79,498
     Deferred expenses and other assets             78,063            71,181
     Goodwill                                       18,124            17,736
        Total assets                           $12,322,330       $11,059,995



     LIABILITIES AND SHAREHOLDERS' EQUITY

     Accounts payable, accrued expenses
      and other liabilities                       $232,835          $200,957

     Debt obligations:
       Unsecured senior notes                    7,084,961         6,250,249
       Unsecured revolving credit facilities     1,305,718           923,068
       Secured term loans                          498,360           562,116
       Other debt obligations                       98,020            98,004
         Total liabilities                       9,219,894         8,034,394
     Minority interest in consolidated
      entities                                      30,602            38,738
     Shareholders' equity                        3,071,834         2,986,863
         Total liabilities and shareholders'
          equity                               $12,322,330       $11,059,995




                               iStar Financial Inc.
                             Supplemental Information
                                  (In thousands)
                                   (unaudited)

    PERFORMANCE STATISTICS
                                                 Three Months Ended
    Net Finance Margin                              June 30, 2007

    Weighted average GAAP yield of loan
     and CTL investments                                 9.72%
    Less: Cost of debt                                  (6.50%)
    Net Finance Margin (1)                               3.22%

    Return on Average Common Book Equity

    Average total book equity                       $3,070,208
    Less: Average book value of preferred equity      (506,176)
    Average common book equity (A)                  $2,564,032

    Net income allocable to common
     shareholders and HPU holders                      $98,482
    Net income allocable to common
     shareholders and HPU holders -
     Annualized (B)                                   $393,928

    Return on Average Common Book Equity (B) / (A)       15.4%

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (2)          $132,947
    Adjusted basic earnings allocable to
     common shareholders and HPU holders
     - Annualized (C)                                 $531,788

    Adjusted Return on Average Common
     Book Equity (C) / (A)                               20.7%

    Efficiency Ratio

    General and administrative expenses (D)            $39,423
    Total revenue (E)                                 $317,348
    Efficiency Ratio (D) / (E)                           12.4%


    (1) Weighted average GAAP yield is the annualized sum of interest income
        and operating lease income (excluding other income), divided by the
        sum of average gross corporate tenant lease assets, average loans and
        other lending investments, average SFAS No. 141 purchase intangibles
        and average assets held for sale over the period. Cost of debt is
        the annualized sum of interest expense and operating costs --
        corporate tenant lease assets, divided by the average gross debt
        obligations over the period. Operating lease income and operating
        costs -- corporate tenant lease assets exclude SFAS No. 144
        adjustments from discontinued operations of $342 and $24,
        respectively. The Company does not consider net finance margin to be a
        measure of the Company's liquidity or cash flows. It is one of several
        measures that management considers to be an indicator of the
        profitability of its operations.

    (2) Adjusted earnings should be examined in conjunction with net income
        as shown in the Consolidated Statements of Operations. Adjusted
        earnings should not be considered as an alternative to net income
        (determined in accordance with GAAP) as an indicator of the Company's
        performance, or to cash flows from operating activities (determined
        in accordance with GAAP) as a measure of the Company's liquidity, nor
        is this measure indicative of funds available to fund the Company's
        cash needs or available for distribution to shareholders. Rather,
        adjusted earnings is an additional measure the Company uses to
        analyze how its business is performing. It should be noted that the
        Company's manner of calculating adjusted earnings may differ from the
        calculations of similarly-titled measures by other companies.




                             iStar Financial Inc.
                           Supplemental Information
                                (In thousands)
                                 (unaudited)


    CREDIT STATISTICS
                                                   Three Months Ended
                                                     June 30, 2007
    Book debt (A)                                      $8,987,059

    Book equity                                        $3,071,834
    Add: Accumulated depreciation/depletion and loan
     loss reserves                                        487,301
    Sum of book equity, accumulated
     depreciation/depletion and loan loss reserves (B) $3,559,136

    Book Debt / Sum of Book Equity, Accumulated
     Depreciation/Depletion and Loan Loss
     Reserves (A) / (B)                                      2.5x

    Ratio of Earnings to Fixed Charges                       1.9x

    Ratio of Earnings to Fixed Charges and
     Preferred Stock Dividends                               1.7x

    Interest Coverage

    EBITDA (1) (C)                                        $281,350
    GAAP interest expense (D)                            $139,174

    EBITDA / GAAP Interest Expense  (C) / (D)                2.0x

    Fixed Charge Coverage

    EBITDA (1) (C)                                        $281,350

    GAAP interest expense                                $139,174
    Add: Preferred dividends                               10,580
    Total GAAP interest expense and
     preferred dividends (E)                             $149,754

    EBITDA / GAAP Interest Expense and
     Preferred Dividends (C) / (E)                           1.9x

    RECONCILIATION OF NET INCOME TO EBITDA

    Net income                                           $109,062
    Add: GAAP interest expense                            139,174
    Add: Depreciation, depletion and amortization          23,366
    Add: Joint venture depreciation, depletion and
     amortization                                           9,748

    EBITDA (1)                                           $281,350


    (1) EBITDA should be examined in conjunction with net income as shown in
        the Consolidated Statements of Operations. EBITDA should not be
        considered as an alternative to net income (determined in accordance
        with GAAP) as an indicator of the Company's performance, or to cash
        flows from operating activities (determined in accordance with GAAP)
        as a measure of the Company's liquidity, nor is this measure
        indicative of funds available to fund the Company's cash needs or
        available for distribution to shareholders. It should be noted that
        the Company's manner of calculating EBITDA may differ from the
        calculations of similarly-titled measures by other companies.



                             iStar Financial Inc.
                           Supplemental Information
                                (In thousands)
                                 (unaudited)

      Three Months Ended June 30, 2007

                                   LOAN ORIGINATIONS
                                                  Total/
                               Fixed  Floating  Weighted  CORPORATE   OTHER
                               Rate     Rate     Average   LEASING INVESTMENTS
      Amount funded          $34,519  $646,549  $681,068  $147,821     $75,703
      Weighted average GAAP
       yield                   9.30%     9.11%     9.12%    10.24%         N/A
      Weighted average all-in
       spread/margin (basis
       points) (1)               435       379         -       527         N/A
      Weighted average first
       $ loan-to-value ratio   1.45%     2.22%     2.18%       N/A         N/A
      Weighted average last
       $ loan-to-value ratio  87.60%    65.06%    66.21%       N/A         N/A



      UNFUNDED COMMITMENTS

      Number of assets with unfunded commitments                          127

      Discretionary commitments                                       $13,170
      Non-discretionary commitments                                 3,509,285
      Total unfunded commitments                                   $3,522,455
      Estimated weighted average funding period       Approximately 2.8 years

      UNENCUMBERED ASSETS                                         $11,701,621



    RISK MANAGEMENT STATISTICS
    (weighted average risk rating)      2007                2006
                                     June   March   December  September June
                                      30,    31,       31,       30,     30,
    Structured Finance Assets
     (principal risk)                2.78   2.64      2.74      2.75    2.67
    Corporate Tenant Lease Assets    2.50   2.45      2.37      2.39    2.38

                                            (1=lowest risk; 5=highest risk)

    (1)  Represents spread over base rate LIBOR (floating-rate loans) and
         interpolated U.S. Treasury rates (fixed-rate loans and corporate
         leasing transactions) during the quarter.




                             iStar Financial Inc.
                           Supplemental Information
                   (In thousands, except per share amounts)

    LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

                                                         As of
                                             June 30, 2007   December 31, 2006

    Carrying value of non-performing loans /
     As a percentage of total assets          $213,085  1.73%   $61,480  0.56%

    Reserve for loan losses /
     As a percentage of total assets           $62,201  0.50%   $52,201  0.47%
     As a percentage of non-performing loans              29%              85%



    RECONCILIATION OF DILUTED ADJUSTED EPS
    GUIDANCE TO DILUTED GAAP EPS GUIDANCE (1)
                                                             Year Ending
                                                          December 31, 2007

    Earnings per diluted common share guidance              $2.90 - $3.10
    Add: Depreciation, depletion and amortization
     per diluted common share                               $0.90 - $1.30
    Adjusted earnings per diluted common share guidance     $4.00 - $4.20

    (1) Adjusted earnings should be examined in conjunction with net income as
        shown in the Consolidated Statements of Operations. Adjusted earnings
        should not be considered as an alternative to net income (determined
        in accordance with GAAP) as an indicator of the Company's performance,
        or to cash flows from operating activities (determined in accordance
        with GAAP) as a measure of the Company's liquidity, nor is this
        measure indicative of funds available to fund the Company's cash needs
        or available for distribution to shareholders. Rather, adjusted
        earnings is an additional measure the Company uses to analyze how its
        business is performing. It should be noted that the Company's manner
        of calculating adjusted earnings may differ from the calculations of
        similarly-titled measures by other companies.



                             iStar Financial Inc.
                           Supplemental Information
                                (In millions)
                                 (unaudited)

    PORTFOLIO STATISTICS AS OF JUNE 30, 2007 (1)

    Security Type
    First Mortgages / Senior Loans                   $6,376             52.3 %
    Corporate Tenant Leases                           3,811             31.3
    Mezzanine / Subordinated Debt                     1,380             11.3
    Other Investments                                   616              5.1
              Total                                 $12,183            100.0 %

    Collateral Type
    Apartment / Residential                          $2,643             21.7 %
    Office (CTL)                                      1,771             14.5
    Retail                                            1,582             13.0
    Other                                             1,548             12.7
    Industrial / R&D                                  1,355             11.1
    Entertainment / Leisure                           1,201              9.9
    Mixed Use / Mixed Collateral                      1,104              9.1
    Hotel                                               745              6.1
    Office (Lending)                                    234              1.9
              Total                                 $12,183            100.0 %

    Collateral Location
    West                                             $2,406             19.8 %
    Northeast                                         2,072             17.0
    Southeast                                         1,901             15.6
    Mid-Atlantic                                      1,696             13.9
    Various                                           1,178              9.7
    Central                                             831              6.8
    South                                               716              5.9
    International                                       524              4.3
    Southwest                                           369              3.0
    Northcentral                                        354              2.9
    Northwest                                           136              1.1
              Total                                 $12,183            100.0 %


    (1) Figures presented prior to loan loss reserves, accumulated
        depreciation and impact of Statement of Financial Accounting Standards
        No. 141, "Business Combinations."

SOURCE iStar Financial Inc.

CONTACT:
Catherine D. Rice, Chief Financial Officer
or
Andrew G. Backman, Vice President - Investor Relations
both of iStar Financial Inc.
1-212-930-9400
Web site: http://www.istarfinancial.com

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