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11/06/2007

iStar Financial Announces Third Quarter 2007 Results

Board of Directors Approves 5% Increase in Quarterly Dividend on Common Stock

- Adjusted earnings reach record of $1.07 per diluted common share, up 19% year-over-year.

- Total revenues reach a record $419.4 million, up 68% year-over-year.

- Company expects fiscal year 2007 adjusted earnings per diluted common share of $4.00 - $4.10 and diluted GAAP earnings per diluted common share of $2.80 - $2.90.

- Company announces fiscal year 2008 adjusted earnings guidance of $4.00 - $4.20 per diluted common share and GAAP earnings per diluted common share guidance of $2.70 - $2.90.

- Company increases regular quarterly dividend by 5% to $0.87 per common share, or $3.48 per common share on an annualized basis; increase effective for fourth quarter 2007 dividend payment.

NEW YORK, Nov. 6 /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 third quarter ended September 30, 2007. Third quarter results reflect the completion of the Fremont transaction on July 2, 2007.

iStar reported adjusted earnings for the quarter of $1.07 per diluted common share. This compares with $0.90 per diluted common share for the third quarter 2006. Adjusted earnings allocable to common shareholders for the third quarter 2007 were $135.8 million on a diluted basis, compared to $103.1 million for the third quarter 2006. Adjusted earnings represent net income computed in accordance with GAAP, adjusted for preferred dividends, depreciation, depletion, amortization, gain (loss) from discontinued operations and ineffectiveness on interest rate hedges.

Net income allocable to common shareholders for the third quarter was $93.0 million, or $0.73 per diluted common share, compared to $91.8 million, or $0.80 per diluted common share for the third 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 $220.8 million, compared to $109.0 million for the third quarter 2006. The year-over-year increase was primarily due to higher interest income associated with the inclusion of the acquired Fremont portfolio of assets, including $60.7 million primarily associated with the amortization of the $281.4 million loan purchase discount from the acquisition. 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.

Excluding the effect of the Fremont acquisition, the Company announced that during the third quarter, it closed 42 new financing commitments, for a total of $1.8 billion. Of that amount, $988.4 million was funded during the quarter. In addition, the Company funded $396.6 million under pre-existing commitments and received $401.4 million in principal repayments.

Additionally, the Company completed the sale of two non-strategic corporate tenant lease assets for total proceeds of $5.6 million, net of costs, resulting in a total net book gain of approximately $1.0 million.

For the quarter ended September 30, 2007, the Company generated adjusted return on average common book equity of 21.8%. The Company's debt to book equity plus accumulated depreciation/depletion and loan loss reserves, all as determined in accordance with GAAP, was 3.3x at quarter end.

The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 5.25% for the quarter, versus 3.22% in the previous quarter. The increase in quarter-over-quarter net finance margin was primarily due to the amortization of the Fremont loan purchase discount. Excluding the impact of the amortization of the Fremont loan purchase discount, the Company's net finance margin was 3.53%.

Risk Management

At September 30, 2007, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 86.0% of the Company's asset base, versus 83.6% in the prior quarter. The Company's loan portfolio consisted of 78% floating rate and 22% fixed rate loans, with a weighted average maturity of 3.2 years.

The weighted average last dollar loan-to-value ratio for all structured finance assets was 66.6%. At quarter end, the Company's corporate tenant lease assets were 95.6% leased with a weighted average remaining lease term of 11.2 years. At September 30, 2007, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 2.92 and 2.48, respectively, versus 2.78 and 2.50, respectively, in the previous quarter.

Inclusive of the assets acquired in the Fremont acquisition, at September 30, 2007, the Company had 29 loans on non-performing loan (NPL) status representing $848.7 million of gross book value. At the end of the third quarter, the Company had 28 loans on its watch list representing $1.1 billion of gross book value. Gross book values represent iStar's book value plus Fremont's A-participation interest. Excluding Fremont's A-participation interest on the associated assets, NPL and watch list assets were $428.7 million and $610.5 million, respectively. The Company's policy is to stop the accrual of interest on loans placed on NPL status. The Company believes it has adequate collateral and loan loss reserves to support the book value for each of the NPL and watch list assets.

The Company had $124.2 million in loan loss reserves at September 30, 2007 versus $52.2 million at December 31, 2006. The third quarter increase of $62.0 million in loan loss reserves was the result of the Company's regular quarterly risk ratings review process as well as the addition of the Fremont portfolio. This quarter's risk ratings process included a comprehensive review of the Fremont portfolio.

The Company's total loss coverage, defined as the combination of loan loss reserves and remaining purchase discount from the Fremont acquisition, was $344.9 million or 3.2% of total loan assets at the end of the third quarter.

Summary of Fremont Contributions to Quarterly Results

On July 2, 2007, the Company completed its transaction with Fremont Investment & Loan in which the Company acquired Fremont's commercial real estate lending business and retained a $2.1 billion B-participation interest in its commercial real estate loan assets for an aggregate purchase price of approximately $1.9 billion.

The Company accounted for the acquisition as a business combination under the purchase method of accounting. Under the purchase method, the assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date, with any excess of the purchase price over the fair value recorded as goodwill. On the acquisition date, the Company recorded a $281.4 million aggregate discount related to the acquired loans as follows. The Company recognized 18 loans with an aggregate principal balance of $577.2 million, as impaired. These loans were recorded at a discount of $56.9 million, or approximately $520.2 million. The majority of these loans will be accounted for on the cost recovery basis. The remaining $5.7 billion of acquired loans were recorded at a fair value of $5.5 billion, a discount of $224.5 million to principal value. This discount was determined on a loan by loan basis and will be amortized through interest income over the life of each individual loan. During the third quarter, we recognized approximately $57.4 million of interest income related to the amortization of purchase discount, leaving a balance of $167.1 million. In addition, we recognized $3.2 million of interest income from two of the impaired loans, one of which repaid in full during the quarter, and one of which is expected to repay by year end. The balances discussed above represent iStar's B-participation interest plus Fremont's A-participation interest.

At the end of the third quarter, the acquired portfolio and additional fundings made during the quarter, had a principal balance of $5.7 billion, consisting of 243 loans with a weighted average margin of 325 bps. This compared to 281 loans on July 2, 2007, with a principal balance of $6.3 billion and a weighted average margin of 327 bps.

At the end of the third quarter, the principal balance of Fremont's A- participation interest in the portfolio was $3.4 billion versus $4.2 billion on July 2, 2007. The principal balance of iStar's B-participation interest at the end of the third quarter was $2.3 billion versus $2.1 billion on July 2, 2007. During the quarter, iStar received $1.1 billion in principal repayments of which the Company retained 30%. The balance of the principal repayments was paid to Fremont as part of the terms of its participation. The weighted average maturity of the portfolio is approximately 12 months.

During the third quarter, iStar funded $567.4 million of commitments related to the portfolio. Unfunded commitments at the end of the third quarter were $3.0 billion, of which the Company only expects to fund approximately $2.6 billion based upon its comprehensive review of the portfolio. This compares to unfunded commitments of $3.7 billion on July 2, 2007.

At September 30, 2007, there were 22 loans from the acquired portfolio on NPL status with a gross book value of $640.1 million versus 16 loans from the date of the acquisition, which represented $406.1 million of gross book value. In addition, there were 22 loans on the Company's watch list with a gross book value of $781.3 million versus 22 loans from the date of the acquisition which represented $843.6 million of gross book value. Excluding Fremont's A- participation interest on the associated assets, NPL and watch list assets for the acquired portfolio were $220.1 million and $296.0 million, respectively.

Capital Markets Summary

As of September 30, 2007, the Company had $1.7 billion available 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 September 30, 2007, a one percentage point increase in rates would have increased the Company's adjusted earnings by 2.3%.

During the third quarter, the Company repurchased approximately 613,000 shares of its common stock for $20.2 million pursuant to its existing 5.0 million share repurchase program. The Company currently has remaining authority to repurchase up to 2.1 million shares under the program.

On October 15, 2007, the Company issued $800 million of convertible senior floating rate notes due 2012. The Notes priced at par, mature on October 1, 2012, and will bear interest at a rate of 3-month LIBOR plus 0.50%. The Notes will be convertible into cash, shares of common stock, or any combination thereof at the Company's option at an initial conversion price of $45.05, which represented a 30% premium over the closing price on October 10, 2007. The Company used half of the net proceeds to pay down the interim facility used to fund the Fremont acquisition and the other half to pay down other indebtedness.

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.

For fiscal year 2007, the Company expects diluted adjusted earnings per common share of $4.00 - $4.10, and diluted GAAP earnings per common share of $2.80 - $2.90, based on expected net asset growth of approximately $5.0 billion, including the Company's retained interest in the Fremont portfolio. Excluding the Fremont interest, net asset growth for fiscal year 2007 is expected to be approximately $3.0 billion.

For fiscal year 2008, the Company expects diluted adjusted earnings per common share of $4.00 - $4.20, and diluted GAAP earnings per common share of $2.70 - $2.90. The lower end of these ranges assumes minimal net asset growth in 2008. The higher end of these ranges assumes $3.0 - $3.5 billion of net asset growth in 2008.

Dividend

On October 1, 2007, iStar Financial declared a regular quarterly dividend of $0.825 per share. The third quarter dividend was paid on October 29, 2007 to shareholders of record on October 15, 2007.

iStar Financial announced today, that effective December 3, 2007, its Board of Directors approved an increase in the regular quarterly cash dividend on its common stock to $0.87 per share for the quarter ending December 31, 2007, payable on December 31, 2007 to holders of record on December 17, 2007. The $0.87 per share quarterly dividend, or $3.48 per share on an annualized basis, represents an approximate 5% increase over iStar Financial's previous quarterly dividend rate of $0.825 per share.

To ensure the Company pays out 100% of its taxable income for fiscal 2007, the Company stated today that it expects to declare a special dividend later this year on its common stock of approximately $0.15 - $0.30 per share. Record and payment dates for a special dividend will be set by the Board of Directors.

[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. EST today, November 6, 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  Nine Months Ended
                                         September 30,       September 30,
                                         2007      2006      2007      2006

    Net investment income (1)          $220,790  $109,042  $468,233  $312,697
    Other income                         19,890    20,369    87,165    57,746
    Other expenses (2)                 (141,017)  (48,472) (270,852) (128,594)
    Minority interest in consolidated
     entities                              (277)     (291)      302    (1,360)
                                       --------- --------- --------- ---------
    Income from continuing operations   $99,386   $80,648  $284,848  $240,489
                                       ========= ========= ========= =========
    Income from discontinued
     operations                           5,213     6,738    16,132    20,848
    Gain from discontinued operations     1,045    17,264     7,823    21,800
    Preferred dividends                 (10,580)  (10,580)  (31,740)  (31,740)
                                       --------- --------- --------- ---------
    Net income allocable to common
     shareholders and HPU holders (3)   $95,064   $94,070  $277,063  $251,397
                                       ========= ========= ========= =========
    ----------------------------
    (1) Includes interest income, operating lease income and equity in
        earnings 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, provision for loan losses and other expenses.

    (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
                                          September 30, 2007 December 31, 2006
                                          ------------------ -----------------
                                               (unaudited)

    Loans and other lending investments,
     net                                        $10,569,207        $6,799,850
    Corporate tenant lease assets, net            3,282,976         3,084,794
    Other investments                               472,221           407,617
    Total assets                                 15,304,705        11,059,995
    Debt obligations                             11,748,508         7,833,437
    Total liabilities                            12,215,295         8,034,394
    Total shareholders' equity                    3,034,600         2,986,863



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

                                     Three Months Ended    Nine Months Ended
                                       September 30,          September 30,
                                      2007       2006       2007        2006
                                      ----       ----       ----        ----
    REVENUES

      Interest income               $316,855   $153,053   $689,880   $414,177
      Operating lease income          82,650     76,097    240,118    228,951
      Other income                    19,890     20,369     87,165     57,746
                                    ---------  ---------  ---------  ---------
          Total revenues             419,395    249,519  1,017,163    700,874
                                    ---------  ---------  ---------  ---------

    COSTS AND EXPENSES

      Interest expense               173,376    115,214    441,077    309,999
      Operating costs -
       corporate tenant
       lease assets                    7,937      6,337     21,833     22,928
      Depreciation and
       amortization                   24,802     18,980     67,665     56,546
      General and
       administrative(1)              51,266     27,492    128,238     67,048
      Provision for loan losses       62,000      2,000     72,000      5,000
      Other expense                    2,949          -      2,949          -
                                    ---------  ---------  ---------  ---------
          Total costs and expenses   322,330    170,023    733,762    461,521
                                    ---------  ---------  ---------  ---------
    Income from continuing
     operations before other items    97,065     79,496    283,401    239,353
      Equity in earnings from
       joint ventures                  2,598      1,443      1,145      2,496
      Minority interest in
       consolidated entities            (277)      (291)       302     (1,360)
                                    ---------  ---------  ---------  ---------
    Income from continuing
     operations                       99,386     80,648    284,848    240,489

      Income from discontinued
       operations                      5,213      6,738     16,132     20,848
      Gain from discontinued
       operations                      1,045     17,264      7,823     21,800
                                    ---------  ---------  ---------  ---------
    Net income                       105,644    104,650    308,803    283,137

    Preferred dividends              (10,580)   (10,580)   (31,740)   (31,740)
                                    ---------  ---------  ---------  ---------
    Net income allocable to
     common shareholders and HPU
     holders                         $95,064    $94,070   $277,063   $251,397
                                    =========  =========  =========  =========
    Net income per common share
        Basic                          $0.74      $0.81      $2.14      $2.16
        Diluted (2)                    $0.73      $0.80      $2.12      $2.14

    Net income per HPU share
        Basic (3)                    $139.07    $153.27    $404.87    $409.67
        Diluted (2) (4)              $138.07    $151.67    $401.47    $405.73
    ------------------------------
    (1) For the three months ended September 30, 2007 and 2006, includes
        $3,786 and $6,407 of stock-based compensation expense, respectively.
        For the nine months ended September 30, 2007 and 2006, includes
        $12,051 and $9,357 of stock-based compensation expense, respectively.

    (2) For the three months ended September 30, 2007 and 2006, includes the
        allocable share of $29 and $30 of joint venture income, respectively.
        For the nine months ended September 30, 2007 and 2006, includes the
        allocable share of $85 and $86 of joint venture income, respectively.

    (3) For the three months ended September 30, 2007 and 2006, $2,086 and
        $2,299 of net income is allocable to HPU holders, respectively. For
        the nine months ended September 30, 2007 and 2006, $6,073 and $6,145
        of net income is allocable to HPU holders, respectively.

    (4) For the three months ended September 30, 2007 and 2006, $2,071 and
        $2,275 of net income is allocable to HPU holders, respectively. For
        the nine months ended September 30, 2007 and 2006, $6,022 and $6,086
        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 Nine Months Ended
                                            September 30,      September 30,
                                           2007      2006     2007      2006
                                           ----      ----     ----      ----
    EPS INFORMATION FOR COMMON SHARES

    Income from continuing operations
     per common share (1)
        Basic                              $0.69     $0.60    $1.96     $1.79
        Diluted (2)                        $0.68     $0.60    $1.94     $1.78

    Net income per common share
        Basic                              $0.74     $0.81    $2.14     $2.16
        Diluted (2)                        $0.73     $0.80    $2.12     $2.14

    Weighted average common shares
     outstanding
        Basic                            126,488   113,318  126,644   113,281
        Diluted                          127,508   114,545  127,782   114,439

    EPS INFORMATION FOR HPU SHARES

    Income from continuing operations
     per HPU share (1)
        Basic                            $129.94   $114.14  $369.87   $340.14
        Diluted (2)                      $128.94   $113.00  $366.74   $336.86

    Net income per HPU share (3)
        Basic                            $139.07   $153.27  $404.87   $409.67
        Diluted (2)                      $138.07   $151.67  $401.47   $405.73

    Weighted average HPU shares
     outstanding
        Basic                                 15        15       15        15
        Diluted                               15        15       15        15
    -----------------------------
    (1) For the three months ended September 30, 2007 and 2006, excludes
        preferred dividends of $10,580. For the nine months ended September
        30, 2007 and 2006, excludes preferred dividends of $31,740.

    (2) For the three months ended September 30, 2007 and 2006, includes the
        allocable share of $29 and $30 of joint venture income, respectively.
        For the nine months ended September 30, 2007 and 2006, includes the
        allocable share of $85 and $86 of joint venture income, respectively.

    (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 $2,086 and
        $2,299 of net income for the three months ended September 30, 2007 and
        2006, respectively, and $6,073 and $6,145 of net income for the nine
        months ended September 30, 2007 and 2006, respectively. On a diluted
        basis, these cumulative 15 shares were entitled to $2,071 and $2,275
        of net income for the three months ended September 30, 2007 and 2006,
        respectively, and $6,022 and $6,086 of net income for the nine months
        ended September 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   Nine Months Ended
                                        September 30,       September 30,
                                       2007      2006      2007      2006
                                       ----      ----      ----      ----
    ADJUSTED EARNINGS (1)

    Net income                       $105,644  $104,650  $308,803  $283,137
    Add: Depreciation, depletion and
     amortization                      25,928    20,758    71,172    61,791
    Add: Joint venture income              31        32        92        92
    Add: Joint venture depreciation,
     depletion and amortization        10,407     2,645    30,992     8,093
    Add: Amortization of deferred
     financing costs                    7,065     5,403    20,222    17,671
    Add: Hedge ineffectiveness, net     2,944         -     2,944         -
    Less: Preferred dividends         (10,580)  (10,580)  (31,740)  (31,740)
    Less: Gain from discontinued
     operations                        (1,045)  (17,264)   (7,823)  (21,800)
    Less: Joint venture gain from
     discontinued operations           (1,572)        -    (1,572)        -
                                     --------- --------- --------- ---------

    Adjusted earnings allocable to common shareholders
     and HPU holders:
      Basic                          $138,791  $105,612  $392,998  $317,152
      Diluted                        $138,822  $105,644  $393,090  $317,244

    Adjusted earnings per common share:
      Basic (2)                         $1.07     $0.91     $3.04     $2.73
      Diluted (3)                       $1.07     $0.90     $3.01     $2.71

    Weighted average common shares outstanding:
      Basic                           126,488   113,318   126,644   113,281
      Diluted                         127,508   114,545   127,782   114,439

    Common shares outstanding at end of period:
      Basic                           126,272   113,820   126,272   113,820
      Diluted                         127,282   115,053   127,282   115,053
    ------------------------------
    (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 September 30, 2007 and 2006, excludes
        $3,046 and $2,581 of net income allocable to HPU holders,
        respectively. For the nine months ended September 30, 2007 and 2006,
        excludes $8,615 and $7,752 of net income allocable to HPU holders,
        respectively.

    (3) For the three months ended September 30, 2007 and 2006, excludes
        $3,023 and $2,554 of net income allocable to HPU holders,
        respectively. For the nine months ended September 30, 2007 and 2006,
        excludes $8,542 and $7,678 of net income allocable to HPU holders,
        respectively.



                             iStar Financial Inc.
                         Consolidated Balance Sheets
                                (In thousands)

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

    Loans and other lending investments, net  $10,569,207        $6,799,850
    Corporate tenant lease assets, net          3,282,976         3,084,794
    Other investments                             472,221           407,617
    Investments in joint ventures                 390,863           382,030
    Assets held for sale                           76,590             9,398
    Cash and cash equivalents                     102,044           105,951
    Restricted cash                                33,340            28,986
    Accrued interest and operating lease
     income receivable                            141,373            72,954
    Deferred operating lease income receivable     95,339            79,498
    Deferred expenses and other assets             97,697            71,181
    Goodwill                                       43,055            17,736
                                          ------------------ -----------------
        Total assets                          $15,304,705       $11,059,995
                                          ================== =================

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Accounts payable, accrued expenses
     and other liabilities                       $466,787          $200,957

    Debt obligations:
      Unsecured senior notes                    7,119,466         6,250,249
      Unsecured revolving credit facilities     2,178,049           923,068
      Interim credit facility                   1,900,000                 -
      Secured term loans                          452,964           562,116
      Other debt obligations                       98,029            98,004
                                          ------------------ -----------------
        Total liabilities                      12,215,295         8,034,394
    Minority interest in consolidated
     entities                                      54,810            38,738
    Shareholders' equity                        3,034,600         2,986,863
                                          ------------------ -----------------
         Total liabilities and
          shareholders' equity                $15,304,705       $11,059,995
                                          ================== =================



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

    PERFORMANCE  STATISTICS
                                                            Three Months Ended
    Net Finance Margin                                      September 30, 2007
    ------------------                                      ------------------
    Weighted average GAAP yield of loan
     and CTL investments                                           11.61%
    Less: Cost of debt                                             (6.36%)
                                                             --------------
    Net Finance Margin (1)                                          5.25%
                                                             ===============
    Net Finance Margin Excluding
     Amortization of Discount on Fremont Loans                      3.53%
                                                             ===============
    Return on Average Common Book Equity
    ------------------------------------
    Average total book equity                                 $3,053,217
    Less: Average book value of preferred equity                (506,176)
                                                             --------------
    Average common book equity (A)                            $2,547,041

    Net income allocable to common
     shareholders and HPU holders                                $95,064
    Net income allocable to common
     shareholders and HPU holders -
     Annualized (B)                                             $380,256

    Return on Average Common Book Equity (B) / (A)                  14.9%
                                                             ===============
    Adjusted basic earnings allocable to
     common shareholders and HPU holders (2)                    $138,791
    Adjusted basic earnings allocable to
     common shareholders and HPU holders
     - Annualized ( C )                                         $555,164

    Adjusted Return on Average Common
     Book Equity ( C ) / (A)                                        21.8%
                                                             ===============
    Efficiency Ratio
    ----------------
    General and administrative expenses (D)                      $51,266
    Total revenue (E)                                           $419,395
    Efficiency Ratio (D) / (E)                                      12.2%
    --------------------------                               ===============

    (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 $5,359 and $227, 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
                                                           September 30, 2007
                                                           ------------------
    Book debt (A)                                            $11,748,508

    Book equity                                               $3,034,600
    Add: Accumulated depreciation/depletion and loan
     loss reserves                                               579,066
                                                             --------------
    Sum of book equity, accumulated
     depreciation/depletion and loan
     loss reserves (B)                                        $3,613,666

    Book Debt / Sum of Book Equity,
     Accumulated Depreciation/Depletion
     and Loan Loss Reserves (A) / (B)                                3.3x
                                                             ===============
    Ratio of Earnings to Fixed Charges                               1.6x

    Ratio of Earnings to Fixed Charges
     and Preferred Stock Dividends                                   1.6x

    Interest Coverage
    -----------------
    EBITDA (1) (C)                                              $315,355
    GAAP interest expense (D)                                   $173,376

    EBITDA / GAAP Interest Expense  (C) / (D)                        1.8x
                                                             ===============
    Fixed Charge Coverage
    ---------------------
    EBITDA (1) (C)                                              $315,355

    GAAP interest expense                                       $173,376
    Add: Preferred dividends                                      10,580
                                                             --------------
    Total GAAP interest expense and
     preferred dividends (E)                                    $183,956

    EBITDA / GAAP Interest Expense and
     Preferred Dividends (C) / (E)                                   1.7x
                                                             ===============
    RECONCILIATION OF NET INCOME TO EBITDA

    Net income                                                  $105,644
    Add: GAAP interest expense                                   173,376
    Add: Depreciation, depletion and amortization                 25,928
    Add: Joint venture depreciation,
     depletion and amortization                                   10,407
                                                             --------------
    EBITDA (1)                                                  $315,355
    ---------------------------------                        ===============
    (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
     September 30, 2007          LOAN ORIGINATIONS (1)
                                 ---------------------
                                                    Total/              OTHER
                                         Floating Weighted  CORPORATE  INVEST-
                              Fixed Rate   Rate    Average   LEASING    MENTS
                              ---------- --------- --------- --------- -------
    Amount funded              $184,973  $660,326  $845,299  $141,163  $1,918
    Weighted average GAAP
     yield                         8.96%     8.99%     8.98%     9.96%    N/A
    Weighted average all-in
     spread/margin (basis
     points) (2)                    448       384         -       517     N/A
    Weighted average first $
     loan-to-value ratio          15.93%    10.91%    12.03%      N/A     N/A
    Weighted average last $
     loan-to-value ratio          59.69%    56.40%    57.12%      N/A     N/A


    UNFUNDED COMMITMENTS

    Number of assets with
     unfunded commitments                                                 336

    Discretionary commitments                                      $1,082,730
    Non-discretionary commitments                                   6,009,115
                                                                   ----------
    Total unfunded commitments                                     $7,091,845
                                                                   ==========
    Estimated weighted average
     funding period                                   Approximately 2.0 years


    UNENCUMBERED ASSETS                                           $15,011,609


    RISK MANAGEMENT STATISTICS
    (weighted average risk rating)             2007               2006
                                       -------------------- ------------------
                                       September June March December September
                                           30,    30,   31,     31,    30,
                                       -------------------- ------------------
    Structured Finance Assets
     (principal risk)                    2.92    2.78  2.64    2.74   2.75
    Corporate Tenant Lease Assets        2.48    2.50  2.45    2.37   2.39

                                            (1=lowest risk; 5=highest risk)
    ------------------------------
    (1) Excludes loans purchased through the Fremont acquisition

    (2) 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)
                                 (unaudited)

    LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

                                                 As of
                            --------------------------------------------------
                            September 30, 2007           December 31, 2006
                            -----------------------   ------------------------
    Book value of non-
     performing loans (1) /
     As a percentage of
     total assets             $848,714       5.55%      $61,480        0.56%

    Reserve for loan losses /
      As a percentage of
       total assets           $124,201       0.81%      $52,201        0.47%
      As a percentage of
       non-performing
       loans (1)                            14.63%                    84.91%


    RECONCILIATION OF DILUTED ADJUSTED EPS
    GUIDANCE TO DILUTED GAAP EPS GUIDANCE (2)

                                              Year Ending       Year Ending
                                           December 31, 2007 December 31, 2008
                                           ----------------- -----------------
    Earnings per diluted common
     share guidance                           $2.80 - $2.90    $2.70 - $2.90
    Add: Depreciation, depletion
     and amortization per diluted
     common share                             $1.10 - $1.30    $1.10 - $1.50
                                           ----------------- -----------------
    Adjusted earnings per diluted
     common share guidance                    $4.00 - $4.10    $4.00 - $4.20
                                           ================= =================
    ----------------------------------
    (1) Non-performing loans include iStar's book value and Fremont's A-
        participation interest on the associated assets.

    (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 millions)
                                 (unaudited)

    PORTFOLIO STATISTICS AS OF SEPTEMBER 30, 2007 (1)

    Security Type
    -------------
    First Mortgages / Senior Loans                    $9,162           60.5%
    Corporate Tenant Leases                            3,860           25.5
    Mezzanine / Subordinated Debt                      1,531           10.1
    Other Investments                                    592            3.9
                                                    ---------      ---------
          Total                                      $15,145          100.0%
                                                    =========      =========
    Collateral Type
    ---------------
    Apartment / Residential                           $2,815           18.6%
    Land                                               2,190           14.5
    Office (CTL)                                       1,767           11.7
    Corporate - Real Estate                            1,682           11.1
    Retail                                             1,591           10.5
    Industrial / R&D                                   1,436            9.5
    Entertainment / Leisure                              868            5.7
    Hotel                                                707            4.7
    Other                                                700            4.6
    Mixed Use / Mixed Collateral                         651            4.3
    Corporate - Non-Real Estate                          372            2.4
    Office (Lending)                                     366            2.4
                                                    ---------      ---------
          Total                                      $15,145          100.0%
                                                    =========      =========
    Collateral Location
    -------------------
    West                                              $3,135           20.7%
    Northeast                                          2,606           17.2
    Southeast                                          2,297           15.2
    Mid-Atlantic                                       1,605           10.6
    Various                                            1,360            9.0
    International                                      1,105            7.3
    Central                                              939            6.2
    South                                                799            5.3
    Southwest                                            745            4.9
    Northcentral                                         364            2.4
    Northwest                                            190            1.2
                                                    ---------      ---------
          Total                                      $15,145          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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