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07/31/2008

iStar Financial Announces Second Quarter 2008 Results

- Total revenues were $324 million, up 5.7% year-over-year.

- Company recognizes $308 million of net gains on asset sales; records $217 million non-cash asset specific loan provisions and $45 million non-cash mark-to-market impairments.

- Net income allocable to common shareholders was $20 million or $0.15 per diluted common share for the quarter.

- Adjusted earnings plus net realized gains were $106 million or $0.79 per diluted common share.

- Board of Directors approves $50 million common stock repurchase program.

- Company estimates third quarter common stock dividend in the range of $0.30 - $0.40 per share.

- Company revises full year 2008 adjusted earnings per diluted common share guidance to ($1.75) - ($1.00) and diluted GAAP earnings per share of ($1.00) - ($0.25).

NEW YORK, July 31 /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, 2008.

iStar reported adjusted earnings (loss) for the quarter of ($1.46) per diluted common share, compared with $1.02 for the second quarter 2007. Including net realized gains of $308.4 million, adjusted earnings allocable to common shareholders for the quarter were $0.79 per diluted common share. Adjusted earnings (loss) allocable to common shareholders for the second quarter 2008 were ($196.2) million, compared with $130.0 million for the second quarter 2007. Including net realized gains of $308.4 million, adjusted earnings allocable to common shareholders for the quarter were $105.9 million. Adjusted earnings (loss) represent net income computed in accordance with GAAP, adjusted primarily for preferred dividends, depreciation, depletion, amortization, impairments of goodwill and intangible assets, gain (loss) from discontinued operations and ineffectiveness on interest rate hedges.

Net income allocable to common shareholders for the second quarter was $20.1 million, or $0.15 per diluted common share, compared to $96.3 million, or $0.75 per diluted common share for the second quarter 2007. 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 $156.1 million, compared to $122.3 million for the second quarter 2007. The year-over-year increase was due to growth in the overall loan portfolio, primarily due to the addition of the Fremont assets as well as the amortization of $16.9 million of Fremont loan portfolio purchase discount recognized in the quarter. Net investment income represents interest income, operating lease income and earnings (loss) from equity method investments, less interest expense, operating costs for corporate tenant lease assets and gain (loss) on early extinguishment of debt.

During the quarter the Company funded a total of $981.1 million under new and pre-existing commitments and received $1.2 billion in gross principal repayments. Of the $1.2 billion, $0.5 billion was utilized to pay down the A-participation interest from the Fremont acquisition. During the quarter, the Company closed two new financing commitments for a total of $13.0 million.

During the quarter, the Company realized a total of $308.4 million of gains on asset sales, generating net proceeds of $815.0 million. As previously announced, the Company, along with its partners, closed on the sale of the TimberStar Southwest joint venture and the venture's 900,000-acre timber property for $1.7 billion, including the assumption of debt. iStar received net proceeds of $417.0 million, representing a gain of $261.7 million, net of minority interest. Additionally, the Company sold its 300,000-acre Maine timber property for $152.9 million, representing a gain of $23.4 million, net of minority interest. The Company also completed the sale of 32 assets in its AutoStar portfolio for total net proceeds of $199.8 million and a gain of $18.4 million. In addition, the Company sold four non-strategic corporate tenant lease assets for total net proceeds of $45.3 million resulting in a total net book gain of $5.0 million.

During the quarter, the Company's adjusted return on average common book equity was negative. Including realized gains, adjusted return on average common book equity was 18.3%. On a GAAP basis, the Company generated return on average common book equity of 3.5%.

The Company's equity represented 23.8% of total capitalization at quarter end versus 22.4% at the end of the prior quarter. The Company's debt to book equity plus accumulated depreciation/depletion and loan loss reserves, each as determined in accordance with GAAP, was 3.2x at June 30, 2008 versus 3.5x at March 31, 2008.

The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 3.13% for the quarter. Excluding the impact of the amortization of the Fremont loan portfolio purchase discount, the Company's net finance margin was 2.75% for the quarter, versus 3.42% in the prior quarter.

As of June 30, 2008, a one percentage point increase in short-term rates, excluding the impact of interest floors in certain loan assets, would have increased the Company's adjusted earnings by 1.3%, which is consistent with its match funding policy.

Summary of Capital Markets and Other Initiatives

During the second quarter, the Company issued $750 million of 8.625% senior unsecured notes due 2013. The Company used the proceeds to repay outstanding U.S. dollar indebtedness under its unsecured revolving credit facilities.

As previously announced, during the second quarter the Company closed on a $948 million first mortgage financing transaction secured by 34 properties in the Company's corporate tenant lease portfolio, representing $1.1 billion of net book value and an appraised value of $1.7 billion. Additionally, the Company repaid the interim facility used to fund the acquisition of Fremont General's commercial real estate lending business.

Since December 31, 2007, the Company has generated $2.9 billion of liquidity through its various capital markets initiatives, strategic asset sales and repayments on its diverse portfolio of assets.

As of June 30, 2008, the Company had $1.4 billion of cash and available capacity under $3.9 billion in revolving credit facilities versus $890.6 million at the end of the prior quarter. The Company is currently in compliance with all of its bank and bond covenants.

Risk Management

At June 30, 2008, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 89.2% of the Company's asset base, versus 86.4% in the prior quarter. The Company's loan portfolio consisted of 78.9% floating rate and 21.1% fixed rate loans, with a weighted average maturity of 2.7 years.

The weighted average last dollar loan-to-value ratio for all structured finance assets was 74.5%. At quarter end, the Company's corporate tenant lease assets were 94.7% leased with a weighted average remaining lease term of 12.1 years. At June 30, 2008, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 3.28 and 2.55, respectively, versus 3.12 and 2.51, respectively, in the prior quarter.

As of June 30, 2008, 39 of the Company's 408 total loans were on non-performing loan (NPL) status, representing $1.3 billion or 10.5% of total gross loan value, compared to 30 loans representing $1.1 billion or 8.0% of total gross loan value in the prior quarter. Gross loan values represent iStar's book value plus the Fremont A-participation interest. The Company's total gross loan value at quarter end was $12.8 billion. The Company's policy is to stop the accrual of interest on loans placed on NPL status.

At the end of the second quarter, the Company had 30 loans on its watch list representing $1.5 billion or 11.4% of total gross loan value, compared to 30 loans representing $1.2 billion or 9.4% of total gross loan value in the prior quarter.

Excluding the Fremont A-participation interest on the associated assets, NPL and watch list assets were $1.1 billion and $1.3 billion, respectively, compared to NPL and watch list assets in the prior quarter of $796.9 million and $1.0 billion, respectively.

At the end of the second quarter, the Company had eight assets classified as other real estate owned (OREO) with a book value of $269.1 million. During the quarter, the Company took title to three properties that served as collateral on its loans, resulting in $10.1 million of charge-offs against the Company's reserve for loan losses. All of the loans were previously on NPL status and had a gross loan value of $75.2 million prior to the Company receiving title to the properties. Additionally, the Company sold two OREO assets during the quarter for total net proceeds of $81.3 million, which approximated book value at the time of the sale.

At June 30, 2008, the Company had $460.1 million in loan loss reserves versus $252.9 million at March 31, 2008. During the second quarter, the Company recorded $276.7 million in loan loss provisions, including $60.0 million of general provisions and $216.7 million of asset specific provisions. The provisions reflect the continued deterioration in the overall credit markets and its impact on the portfolio as determined in the Company's regular quarterly risk ratings review process.

The Company's total loss coverage, defined as the combination of loan loss reserves of $460.1 million and remaining purchase discount from the Fremont acquisition of $94.1 million, was $554.3 million or 4.3% of total gross loan value at the end of the second quarter. This compares to total loss coverage of $367.1 million or 2.8% of total gross loan value in the prior quarter.

During the quarter, the Company recorded $45.2 million of non-cash

mark-to-market impairments on four credits in its portfolio. Also included in the second quarter were $51.5 million of non-cash impairments of goodwill and certain intangibles.

Summary of Fremont Contributions to Quarterly Results

At the end of the second quarter, the Fremont portfolio, including additional fundings made during the quarter, had a gross loan value of $4.5 billion consisting of 178 loans versus $4.9 billion consisting of 193 loans at the end of the first quarter 2008.

At the end of the second quarter, the value of the Fremont A-participation interest in the portfolio was $1.9 billion versus $2.4 billion on March 31, 2008. The book value of iStar's B-participation interest at the end of the second quarter was $2.6 billion versus $2.5 billion on March 31, 2008. During the quarter, iStar received $684.8 million in principal repayments of which the Company retained 30%. The balance of principal repayments was paid to the Fremont A-participation. The weighted average maturity of the portfolio is 10 months.

During the second quarter, iStar funded $313.3 million of commitments related to the portfolio. Unfunded commitments at the end of the second quarter were $1.2 billion, of which the Company expects to fund approximately $1.0 billion based upon its comprehensive review of the portfolio. This compares to unfunded commitments of $1.5 billion at the end of the prior quarter.

At June 30, 2008, there were 26 Fremont loans on NPL status with a gross loan value of $683.0 million versus 20 loans at the prior quarter end, with $494.1 million of gross loan value. In addition, there were 14 loans on the Company's watch list with a gross loan value of $411.8 million versus 14 loans at the prior quarter end, with $405.4 million of gross loan value. Excluding the Fremont A-participation interest on the associated assets, NPL and watch list assets for the Fremont portfolio were $414.6 million and $241.4 million, respectively, versus $238.1 million and $233.3 million in the prior quarter.

Earnings Guidance and Dividend Estimate

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 2008, the Company expects diluted adjusted earnings per common share of ($1.75) - ($1.00), and diluted GAAP earnings per common share of ($1.00) - ($0.25).

The Company currently estimates that its third quarter common stock dividend will be in the range of $0.30 - $0.40 per share. The Company's Board of Directors will meet at the end of the third quarter to consider the declaration of the actual dividend for the third quarter. The determination of the actual dividend will be based upon the Company's then-current estimates of its taxable income for the full-year 2008. It is possible that the actual third quarter dividend will be different from the currently expected range. It is the Company's policy to pay annual dividends in an amount equal to 100% of its annual taxable income. The fourth quarter dividend will be based upon the remaining amount necessary to distribute 100% of taxable income for the year as estimated by the Company at that time.

Share Repurchase Program

The Company's Board of Directors has approved a $50 million dollar common stock repurchase program. This program is in addition to the Company's previously disclosed 5 million share repurchase program, which currently has remaining authorization for 700,000 shares. Shares may be purchased under the new program from time to time in the open market and in privately negotiated transactions. There can be no assurance as to the timing or amounts of any purchases under our share repurchase programs.

[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. ET today, July 31, 2008. 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,
                                        2008      2007      2008      2007
                                        ----      ----      ----      ----

    Net investment income (1)         $156,058  $122,277  $337,819  $238,215
    Other income                         7,760    37,953    65,785    65,568
    Non-interest expense (2)          (445,633)  (65,884) (606,389) (127,164)
    Minority interest in consolidated
     entities                              771        15       567       579
    Gain on sale of joint venture
     interest, net of minority
     interest                          261,659         -   261,659         -
                                      --------- --------- --------- ---------
    Income from continuing operations  (19,385)   94,361    59,441   177,198

    Income from discontinued
     operations                          3,689     9,339     9,197    19,185
    Gain from discontinued
     operations, net of minority
     interest                           46,787     5,362    48,843     6,778
    Preferred dividends                (10,580)  (10,580)  (21,160)  (21,160)
                                      --------- --------- --------- ---------
    Net income allocable to common
     shareholders and HPU holders (3)  $20,511   $98,482   $96,321  $182,001
                                      ========= ========= ========= =========

    (1) Includes interest income, operating lease income and earnings (loss)
        from equity method investments, less interest expense, operating costs
        for corporate tenant lease assets and gain (loss) on early
        extinguishment of debt.
    (2) Includes depreciation and amortization, general and administrative
        expenses, provision for loan losses, impairments 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
                                              June 30, 2008  December 31, 2007
                                              -------------  -----------------
                                               (unaudited)

    Loans and other lending investments, net    $10,823,099       $10,949,354
    Corporate tenant lease assets, net           $3,120,804        $3,309,866
    Other investments                              $688,065          $856,609
    Total assets                                $15,619,140       $15,848,298
    Debt obligations                            $12,240,439       $12,399,558
    Total liabilities                           $12,649,933       $12,894,869
    Total shareholders' equity                   $2,897,373        $2,899,481



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

                                      Three Months Ended    Six Months Ended
                                           June 30,             June 30,
                                        2008      2007      2008       2007
                                        ----      ----      ----       ----
    REVENUES

      Interest income                 $235,354  $192,165  $511,453  $373,025
      Operating lease income            80,955    76,449   162,782   147,860
      Other income                       7,760    37,953    65,785    65,568
                                      --------- --------- --------- ---------
        Total revenues                 324,069   306,567   740,020   586,453
                                      --------- --------- --------- ---------

    COSTS AND EXPENSES

      Interest expense                 162,876   139,174   331,091   267,701
      Operating costs - corporate
       tenant lease assets               5,040     7,061    10,393    13,516
      Depreciation and amortization     24,886    21,481    49,566    40,233
      General and administrative (1)    44,004    39,403    86,780    76,931
      Provision for loan losses        276,660     5,000   366,160    10,000
      Impairments of goodwill           39,092         -    39,092         -
      Impairments of other assets       57,692         -    57,692         -
      Other expense                      1,704         -     5,504         -
                                      --------- --------- --------- ---------
        Total costs and expenses       611,954   212,119   946,278   408,381
                                      --------- --------- --------- ---------
      Income (loss) from continuing
       operations before other items  (287,885)   94,448  (206,258)  178,072
        Gain on sale of joint venture
         interest, net of minority
         interest                      261,659         -   261,659         -
        Earnings (loss) from equity
         method investments              6,070      (102)    3,473    (1,453)
        Minority interest in
         consolidated entities             771        15       567       579
                                      --------- --------- --------- ---------
      Income (loss) from continuing
       operations                      (19,385)   94,361    59,441   177,198

        Income from discontinued
         operations                      3,689     9,339     9,197    19,185
        Gain from discontinued
         operations, net of minority
         interest                       46,787     5,362    48,843     6,778
                                      --------- --------- --------- ---------
      Net income                        31,091   109,062   117,481   203,161
      Preferred dividends              (10,580)  (10,580)  (21,160)  (21,160)
                                      --------- --------- --------- ---------
      Net income allocable to common
       shareholders and HPU holders    $20,511   $98,482   $96,321  $182,001
                                      ========= ========= ========= =========
      Net income per common share
        Basic                            $0.15     $0.76     $0.70     $1.40
        Diluted (2)                      $0.15     $0.75     $0.70     $1.39

      Net income per HPU share
        Basic (3)                       $28.27   $143.80   $132.93   $265.80
        Diluted (2)(4)                  $28.20   $142.53   $132.33   $263.47

    (1) For the three months ended June 30, 2008 and 2007, includes $7,993 and
        $3,856 of stock-based compensation expense, respectively. For the six
        months ended June 30, 2008 and 2007, includes $12,841 and $8,265 of
        stock-based compensation expense, respectively.
    (2) For the three months ended June 30, 2008 and 2007, includes the
        allocable share of $1 and $28 of joint venture income, respectively.
        For the six months ended June 30, 2008 and 2007, includes the
        allocable share of $2 and $56 of joint venture income, respectively.
    (3) For the three months ended June 30, 2008 and 2007, $424 and $2,157 of
        net income is allocable to HPU holders, respectively. For the six
        months ended June 30, 2008 and 2007, $1,994  and $3,987 of net income
        is allocable to HPU holders, respectively.
    (4) For the three months ended June 30, 2008 and 2007, $423 and $2,138 of
        diluted net income is allocable to HPU holders, respectively. For the
        six months ended June 30, 2008 and 2007, $1,985 and $3,952 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,
                                         2008      2007      2008      2007
                                         ----      ----      ----      ----
    EPS INFORMATION FOR COMMON SHARES

    Income (loss) from continuing
     operations per common share (1)
        Basic                           ($0.22)    $0.65     $0.27     $1.20
        Diluted (2)                     ($0.22)    $0.64     $0.28     $1.19

    Net income per common share
        Basic                            $0.15     $0.76     $0.70     $1.40
        Diluted (2)                      $0.15     $0.75     $0.70     $1.39

    Weighted average common shares
     outstanding
        Basic                          134,399   126,753   134,330   126,723
        Diluted                        134,867   127,963   134,874   127,915

    EPS INFORMATION FOR HPU SHARES

    Income (loss) from continuing
     operations per HPU share (1)
        Basic                          ($41.33)  $122.33    $52.86   $227.93
        Diluted (2)                    ($41.14)  $121.27    $52.53   $225.94

    Net income per HPU share (3)
        Basic                           $28.27   $143.80   $132.93   $265.80
        Diluted (2)                     $28.20   $142.53   $132.33   $263.47

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

    (1) For the three months ended June 30, 2008 and 2007, excludes preferred
        dividends of $10,580. For the six months ended June 30, 2008 and 2007,
        excludes preferred dividends of $21,160.
    (2) For the three months ended June 30, 2008 and 2007, includes the
        allocable share of $1 and $28 of joint venture income, respectively.
        For the six months ended June 30, 2007 and 2006, includes the
        allocable share of $2 and $56 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 $424 and $2,157
        of net income for the three months ended June 30, 2008 and 2007,
        respectively, and $1,994 and $3,987 for the six months ended June 30,
        2008 and 2007, respectively. On a diluted basis, these cumulative 15
        shares were entitled to $423 and $2,138 of net income for the three
        months ended June 30, 2008 and 2007, respectively, and $1,985 and
        $3,952 of net income for the six months ended June 30, 2008 and 2007,
        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,
                                        2008       2007     2008       2007
                                        ----       ----     ----       ----
    ADJUSTED EARNINGS (1)

    Net income                         $31,091  $109,062  $117,481  $203,161
    Add: Depreciation, depletion
     and amortization                   26,064    23,366    53,701    45,244
    Add: Joint venture income                -        31         4        61
    Add: Joint venture
     depreciation, depletion and
     amortization                        1,945     9,748    10,570    20,585
    Add: Amortization of
     deferred financing costs           10,423     6,713    18,773    13,157
    Add: Impairments of goodwill
     and intangible assets              51,549         -    51,549         -
    Less: Hedge ineffectiveness, net    (2,341)        -      (850)        -
    Less: Preferred dividends          (10,580)  (10,580)  (21,160)  (21,160)
    Less: Gain from discontinued
     operations, net of minority
     interest                          (46,787)   (5,362)  (48,843)   (6,778)
    Less: Gain on sale of joint
     venture interest, net of
     minority interest                (261,659)        -  (261,659)        -
                                      --------- --------- --------- ---------

    Adjusted earnings (loss)
     allocable to common
     shareholders and HPU
     holders:
        Basic                        ($200,295) $132,947  ($80,438) $254,209
        Diluted                      ($200,295) $132,978  ($80,435) $254,270

    Adjusted earnings (loss) per
     common share:
        Basic (2)                       ($1.46)    $1.03    ($0.59)    $1.96
        Diluted (3)                     ($1.46)    $1.02    ($0.58)    $1.94

    Weighted average common
     shares outstanding:
        Basic                          134,399   126,753   134,330   126,723
        Diluted                        134,518   127,963   134,699   127,915

    Common shares outstanding at
     end of period:
        Basic                          134,327   126,786   134,327   126,786
        Diluted                        134,462   127,991   134,462   127,991

    (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. The sum of adjusted
        earnings plus net realized gains of $308.4 million for the quarter is
        $105.9. The Company believes it may be useful for investors to
        consider this amount as an additional measure of performance for the
        second quarter because the net realized gains relate to sales of
        assets which were acquired with the expectation that such assets would
        yield lower current returns but would appreciate in value.
    (2) For the three months ended June 30, 2008 and 2007, excludes ($4,142)
        and $2,912 of net income (loss) allocable to HPU holders,
        respectively.  For the six months ended June 30, 2008 and 2007,
        excludes ($1,661) and $5,569 of net income (loss) allocable to HPU
        holders, respectively.
    (3) For the three months ended June 30, 2008 and 2007, excludes ($4,139)
        and $2,886 of net income (loss) allocable to HPU holders,
        respectively.  For the six months ended June 30, 2008 and 2007,
        excludes ($1,668) and $5,519 of net income (loss) allocable to HPU
        holders, respectively.



                               iStar Financial Inc.
                            Consolidated Balance Sheets
                                  (In thousands)

                                                 As of              As of
                                             June 30, 2008   December 31, 2007
                                             -------------   -----------------
                                              (unaudited)
    ASSETS

    Loans and other lending investments, net   $10,823,099        $10,949,354
    Corporate tenant lease assets, net           3,120,804          3,309,866
    Other investments                              688,065            856,609
    Other real estate owned                        269,145            128,558
    Assets held for sale                            74,910             74,335
    Cash and cash equivalents                      234,546            104,507
    Restricted cash                                 49,897             32,977
    Accrued interest and operating
     lease income receivable                        97,647            121,405
    Deferred operating lease income receivable     110,803            102,135
    Deferred expenses and other assets             146,038            125,274
    Goodwill                                         4,186             43,278
                                             --------------     --------------
        Total assets                           $15,619,140        $15,848,298
                                             ==============     ==============

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Accounts payable, accrued expenses
     and other liabilities                        $409,494           $495,311

    Debt obligations:
      Unsecured senior notes                     8,065,284          7,916,852
      Unsecured revolving credit facilities      2,430,610          2,681,174
      Interim financing facility                         -          1,289,811
      Secured term loans                         1,646,490            413,683
      Other debt obligations                        98,055             98,038
                                             --------------     --------------
        Total liabilities                       12,649,933         12,894,869

    Minority interest in consolidated
     entities                                       71,834             53,948
    Shareholders' equity                         2,897,373          2,899,481
                                             --------------     --------------
        Total liabilities and
         shareholders' equity                  $15,619,140        $15,848,298
                                             ==============     ==============



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

    PERFORMANCE  STATISTICS                                 Three Months Ended
                                                               June 30, 2008
                                                            ------------------
    Net Finance Margin
    ------------------
    Weighted average GAAP yield of loan
     and CTL investments                                              8.51%
    Less: Cost of debt                                                5.38%
                                                             --------------
    Net Finance Margin (1)                                            3.13%

    Net Finance Margin Excluding
     Amortization of Discount on Fremont Loans                        2.75%

    Return on Average Common Book Equity
    ------------------------------------
    Average total book equity                                   $2,874,557
    Less: Average book value of preferred equity                  (506,176)
                                                             --------------
    Average common book equity (A)                              $2,368,381

    Net income allocable to common
     shareholders and HPU holders                                  $20,511
    Net income allocable to common
     shareholders and HPU holders -
     Annualized (B)                                                $82,044

    Return on Average Common Book Equity (B)/(A)                       3.5%

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (2)                     ($200,295)
    Adjusted basic earnings allocable to
     common shareholders and HPU holders
     - Annualized (C )                                           ($801,180)

    Adjusted Return on Average Common
     Book Equity (C )/(A)                                            (33.8%)

    Expense Ratio
    -------------
    General and administrative expenses (D)                        $44,004
    Total revenue (E)                                             $324,069

    Expense Ratio (D)/(E)                                             13.6%

    (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 $3,434 and ($169), 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, 2008
                                                            ------------------
    Book debt (A)                                              $12,240,439

    Book equity                                                 $2,897,373
    Add: Accumulated depreciation/depletion
     and loan loss reserves                                        919,209
                                                             --------------
    Sum of book equity, accumulated depreciation/
     depletion and loan loss reserves (B)                       $3,816,582

    Book Debt / Sum of Book Equity,
     Accumulated Depreciation/Depletion
     and Loan Loss Reserves (A)/(B)                                    3.2x

    Ratio of Earnings to Fixed Charges                                 0.9x

    Ratio of Earnings to Fixed Charges
     and Preferred Stock Dividends                                     0.9x

    Interest Coverage
    -----------------
    EBITDA (1)(C )                                                $221,976
    GAAP interest expense (D)                                     $162,876

    EBITDA / GAAP Interest Expense (1)
     (C )/(D)                                                          1.4x

    Covenant Calculation of Fixed Charge
     Coverage Ratio (2)                                                2.4x

    RECONCILIATION OF NET INCOME TO EBITDA  (1)

    Net income                                                     $31,091
    Add: GAAP interest expense                                     162,876
    Add: Depreciation, depletion and amortization                   26,064
    Add: Joint venture depreciation,
     depletion and amortization                                      1,945
                                                             --------------
    EBITDA (1)                                                    $221,976

    (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.
    (2) This measure, which is a trailing twelve-month calculation and
        excludes the effect of impairment charges and other non-cash items, is
        consistent with covenant calculations included in the Company's
        unsecured credit facilities; therefore, we believe it is a useful
        measure for investors to consider.



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


      Three Months Ended June 30, 2008
                                           LOANS
                               ----------------------------
                                                    Total/   CORPORATE OTHER
                                 Fixed    Floating Weighted  TENANT    INVEST-
                                  Rate      Rate   Average   LEASING   MENTS
                               --------- --------- --------- -------- --------
    Amount funded               $68,470  $877,075  $945,544  $22,393  $13,145
    Weighted average yield (1)    13.99%     8.46%     8.87%   10.75%     N/A
    Weighted average all-in
     spread/margin (bps) (2)      1,075       586       621      N/A      N/A
    Weighted average first
     $ loan-to-value ratio        54.59%     0.31%     4.25%     N/A      N/A
    Weighted average last
     $ loan-to-value ratio        82.99%    67.02%    68.18%     N/A      N/A


    UNFUNDED COMMITMENTS

    Number of assets with unfunded
     commitments                                                          238

    Discretionary commitments                                        $522,620
    Non-discretionary commitments                                   3,402,808
                                                                 -------------
    Total unfunded commitments                                     $3,925,428

    Estimated weighted average funding
     period                                           Approximately 2.1 years

      UNENCUMBERED ASSETS / UNSECURED
       DEBT

      Unencumbered assets (A)                                     $13,950,012
      Unsecured debt (B)                                          $10,689,042

      Unencumbered Assets / Unsecured
       Debt (A)/(B)                                                       1.3x


    RISK MANAGEMENT STATISTICS
    (weighted average risk rating)

                               2008                         2007
                       ------------------- -----------------------------------
                        June 30, March 31, December 31, September 30, June 30,
                       ------------------- -----------------------------------
    Structured finance
     assets (principal
     risk)                3.28      3.12       3.07          2.92       2.78
    Corporate tenant
     lease assets         2.55      2.51       2.50          2.48       2.50

                                            (1=lowest risk; 5=highest risk)

    (1) Yield on Fremont loans does not take into account income associated
        with the amortization of fees and discounts.
    (2) Represents spread over base rate LIBOR (floating-rate loans) and
        interpolated U.S. Treasury rates (fixed-rate loans) during the
        quarter.



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

    LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

                                                     As of
                                   -------------------------------------------
                                       June 30, 2008       December 31, 2007
                                   -------------------------------------------
    Value of non-performing
     loans (1) /
      As a percentage of total
       gross loan value            $1,340,437   10.50%   $1,193,669     8.71%

    Reserve for loan losses /
      As a percentage of
       total gross loan value        $460,134    3.61%     $217,911     1.59%
      As a percentage of
       non-performing loans (1)                 34.33%                 18.26%


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

                                                                Year Ending
                                                             December 31, 2008
                                                            ------------------

    Earnings per diluted common share guidance               ($1.00) - ($0.25)
    Less: Gains, depreciation and other adjustments, net      $0.00  -  $1.50
                                                            ------------------
    Adjusted earnings per diluted common share guidance      ($1.75) - ($1.00)

    (1) Non-performing loans include iStar's book value and the Fremont
        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 June 30, 2008 (1)

    Security Type
    -------------
    First Mortgages / Senior Loans                  $10,275             65.4%
    Corporate Tenant Leases                           3,738             23.8
    Mezzanine / Subordinated Debt                     1,008              6.4
    Other Investments                                   697              4.4
                                                 -----------      -----------
              Total                                 $15,718            100.0%
                                                 ===========      ===========

    Collateral Type
    ---------------
    Apartment / Residential                          $3,595             22.9%
    Land                                              2,204             14.0
    Office (CTL)                                      1,754             11.2
    Industrial / R&D                                  1,507              9.6
    Retail                                            1,407              9.0
    Corporate - Real Estate                           1,118              7.1
    Entertainment / Leisure                             979              6.2
    Other                                               920              5.8
    Hotel                                               914              5.8
    Mixed Use / Mixed Collateral                        692              4.4
    Corporate - Non-Real Estate                         374              2.4
    Office (Lending)                                    254              1.6
                                                 -----------      -----------
              Total                                 $15,718            100.0%
                                                 ===========      ===========

    Collateral Location
    -------------------
    West                                             $3,503             22.3%
    Northeast                                         2,708             17.2
    Southeast                                         2,606             16.6
    Mid-Atlantic                                      1,668             10.6
    Various                                           1,137              7.2
    Central                                             977              6.2
    International                                       944              6.0
    Southwest                                           893              5.7
    South                                               563              3.6
    Northcentral                                        434              2.8
    Northwest                                           285              1.8
                                                 -----------      -----------
              Total                                 $15,718            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, Senior Vice President - Investor Relations
iStar Financial Inc.
1-212-930-9400
Web site: http://www.istarfinancial.com

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