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07/31/2009

iStar Financial Announces Second Quarter 2009 Results

- Adjusted earnings (loss) allocable to common shareholders for the second quarter was ($250.1) million, or ($2.51) per diluted common share
- Net income (loss) allocable to common shareholders for the second quarter was ($284.2) million, or ($2.85) per diluted common share.
- Company records $435.0 million of loan loss provisions during the quarter versus $258.1 million during the prior quarter.
- Company exchanged $1.0 billion of existing unsecured notes for $634.8 million of new secured notes.

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, 2009.

iStar reported adjusted earnings (loss) allocable to common shareholders for the second quarter of ($250.1) million or ($2.51) per diluted common share, compared with ($196.2) million or ($1.46) per diluted common share for the second quarter 2008. Adjusted earnings (loss) represents net income (loss) 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 gain on sale of joint venture interest.

Net income (loss) allocable to common shareholders for the second quarter was ($284.2) million, or ($2.85) per diluted common share, compared to $18.5 million or $0.14 per diluted common share for the second quarter 2008. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income (loss).

Revenues for the second quarter 2009 were $224.6 million versus $320.4 million for the second quarter 2008. The year-over-year decrease is primarily due to a reduction of interest income resulting from an increase in non-performing loans (NPLs), lower interest rates and an overall lower asset base.

Net investment income for the quarter was $289.0 million compared to $149.7 million for the second quarter 2008. The year-over-year increase is primarily due to gains associated with the bond exchange and early extinguishment of debt, offset by lower interest income resulting from an increase in the Company's NPLs. Net investment income represents interest income, operating lease income, earnings (loss) from equity method investments and gain on early extinguishment of debt, less interest expense and operating costs for corporate tenant lease assets. During the quarter, the Company recorded a $42.4 million charge associated with the termination of a long-term lease with its landlord for headquarters space.

During the quarter, the Company received $414.9 million in gross principal repayments. Additionally, the Company generated proceeds of $141.5 million from loan sales; $4.1 million of net proceeds from the sale of one corporate tenant lease (CTL) asset; and $72.2 million of net proceeds from other real estate owned (OREO) asset sales. Of the gross principal repayments and asset sales, $148.8 million was utilized to pay down the A-participation interest associated with the Fremont portfolio. Additionally during the quarter, the Company funded a total of $377.7 million under pre-existing commitments.

The Company's leverage, calculated as book debt net of unrestricted cash and cash equivalents, divided by the sum of book equity, accumulated depreciation and loan loss reserves, each as determined in accordance with GAAP, was 2.8x at June 30, 2009, versus 2.9x at March 31, 2009. The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 1.48% for the quarter, versus 2.37% in the prior quarter.

Capital Markets

As of June 30, 2009, the Company had $417.4 million of unrestricted cash and available capacity on its credit facilities versus $1.0 billion at the end of the prior quarter. The Company is currently in compliance with all of its bank and bond covenants.

As previously announced, during the quarter the Company issued $155.3 million of its new 8.0% secured notes due 2011 and $479.5 million of its new 10.0% secured notes due 2014 in exchange for $1.0 billion of its unsecured senior notes. The new notes are secured by a second priority lien on the same pool of assets that serve as collateral for its current secured bank lines. In connection with this transaction, the Company recognized a gain of $108.0 million during the second quarter and $262.7 million will be amortized against interest expense over the life of the new notes.

In addition, the Company repurchased $371.9 million par value of its senior unsecured notes, including $155.6 million of its senior unsecured notes due September 2009, resulting in a net gain on early extinguishment of debt of $92.9 million. The Company also repurchased approximately 2.8 million shares of its common stock during the quarter. The Company currently has remaining authority to repurchase up to $34.5 million of shares under its share repurchase programs.

Risk Management

At June 30, 2009, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 91.0% of the Company's asset base, versus 91.7% in the prior quarter. The Company's loan portfolio consisted of 78.9% floating rate loans and 21.1% fixed rate loans, with a weighted average maturity of 2.1 years.

At the end of the quarter, the weighted average last dollar loan-to-value ratio for all structured finance assets was 82.1%. The Company's corporate tenant lease assets were 94.0% leased with a weighted average remaining lease term of 11.4 years. At June 30, 2009, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 3.90 and 2.59, respectively, versus 3.71 and 2.59, respectively, in the prior quarter.

As of June 30, 2009, 90 of the Company's 299 total loans were on NPL status. These loans represent $4.6 billion or 39.6% of total managed loans, compared to 76 loans representing $3.9 billion or 32.6% of total managed loans in the prior quarter. Managed asset and loan values represent iStar's book value plus the A-participation interest associated with the Fremont portfolio. The Company's total managed loan value at quarter end was $11.6 billion.

At the end of the second quarter, the Company had 28 loans on its watch list representing $1.2 billion or 10.4% of total managed loans, compared to 30 loans representing $1.3 billion or 10.7% of total managed loans in the prior quarter. Assets on the Company's watch list are all performing loans.

At the end of the second quarter, the Company had 16 assets classified as OREO with a book value of $382.6 million. During the quarter, the Company took title to six properties that served as collateral on its loans with managed loan values totaling $258.2 million, resulting in $48.7 million of charge-offs against the Company's reserve for loan losses. In addition, the Company recorded $22.2 million of non-cash impairment charges on its OREO portfolio.

During the quarter, the Company charged off $53.9 million against its reserve for losses associated with loan sales and repayments during the quarter. During the quarter, the Company recorded $2.6 million of non-cash impairment charges associated with the sale of one CTL asset.

During the second quarter, the Company recorded $435.0 million in loan loss provisions, comprised of $412.5 million of asset specific provisions and $22.5 million of general provisions. Provisions in the quarter 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. At June 30, 2009, the Company had loan loss reserves of $1.5 billion or 12.6% of total managed loans. This compares to loan loss reserves of $1.1 billion or 9.4% of total managed loans at March 31, 2009.

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 managed loan value of $3.6 billion consisting of 122 loans versus $3.7 billion consisting of 128 loans at the end of the prior quarter. In addition, there were seven OREO assets associated with the Fremont portfolio with a managed asset value of $113.6 million versus seven assets at the prior quarter end, with $136.1 million of managed asset value.

At the end of the second quarter, the value of the A-participation interest in the portfolio was $0.9 billion versus $1.0 billion at the end of the prior quarter. The book value of iStar's B-participation interest was $2.8 billion versus $2.7 billion at the end of the prior quarter. During the quarter, iStar received $199.6 million in principal repayments and proceeds from loan sales, of which the Company retained $75.0 million. The balance of principal repayments was paid to the A-participation interest. The weighted average maturity of the Fremont portfolio is seven months.

During the second quarter, iStar funded $110.0 million of commitments related to the portfolio. Unfunded commitments at the end of the second quarter were $371.6 million, of which the Company expects to fund approximately $180 million based upon its comprehensive review of the portfolio. This compares to unfunded commitments of $499.6 million at the end of the prior quarter.

At June 30, 2009, there were 51 Fremont loans on NPL status with a managed loan value of $2.0 billion versus 43 loans at the prior quarter end, with $1.6 billion of managed loan value. In addition, there were 12 Fremont loans on the Company's watch list with a managed loan value of $347.2 million versus 13 loans at the prior quarter end, with $483.8 million of managed loan value.

                           [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"), provides 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, 2009. 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,
                                       2009      2008       2009      2008
                                     --------  --------   --------  --------
    Net investment income(1)         $288,958  $149,703   $541,001  $326,558
    Other income                        5,560     7,760      8,073    65,785
    Non-interest expense(2)          (576,389) (443,177)  (929,855) (603,115)
    Gain on sale of joint
     venture interest                       -   280,219          -   280,219
                                     --------  --------   --------  --------
    Income (loss) from
     continuing operations           (281,871)   (5,495)  (380,781)   69,447

    Income (loss) from
     discontinued operations             (102)    5,994        119    14,025
    Gain from discontinued
     operations                             -    50,476     11,617    52,532
    Net loss attributable to
     noncontrolling interests             271       771      1,514       567
    Gain on sale of joint venture
     interest attributable to
     noncontrolling interests               -   (18,560)         -   (18,560)
    Gain from discontinued
     operations attributable to
     noncontrolling interests               -    (3,689)         -    (3,689)
    Preferred dividends               (10,580)  (10,580)   (21,160)  (21,160)
                                     --------  --------   --------  --------
    Net income (loss) allocable to
     common shareholders,
     HPU holders and
     Participating
     Security holders(3)            ($292,282)  $18,917  ($388,691)  $93,162
                                    =========   =======  =========   =======

     (1) Includes interest income, operating lease income, earnings (loss)
         from equity method investments and gain (loss) on early
         extinguishment of debt, less interest expense and operating costs
         for corporate tenant lease assets.
     (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. Participating Security holders are Company employees and
         directors who hold unvested restricted stock units and common stock
         equivalents under the Company's Long Term Incentive Plan.



    Selected Balance Sheet Data
    (In thousands)
    (unaudited)                              As of              As of
                                         June 30, 2009    December 31, 2008
                                         -------------    -----------------

    Loans and other lending
     investments, net                       $9,578,241          $10,586,644
    Corporate tenant lease assets, net      $2,992,286           $3,044,811
    Other investments                         $391,292             $447,318
    Total assets                           $14,118,594          $15,296,748
    Debt obligations                       $11,826,503          $12,486,404
    Total liabilities                      $12,056,994          $12,840,896
    Total iStar Financial Inc.
     shareholders' equity                   $2,029,184           $2,418,999



                              iStar Financial Inc.
                     Consolidated Statements of Operations
                                 (In thousands)
                                  (unaudited)

                                    Three Months Ended    Six Months Ended
                                         June 30,             June 30,
                                      2009      2008       2009      2008
                                    -------   -------    -------   -------
    REVENUES

      Interest income              $142,181  $235,354   $319,408  $511,453
      Operating lease income         76,835    77,295    155,485   155,495
      Other income                    5,560     7,760      8,073    65,785
                                    -------   -------    -------   -------
        Total revenues              224,576   320,409    482,966   732,733
                                    -------   -------    -------   -------
    COSTS AND EXPENSES

      Interest expense              127,186   164,470    258,351   334,250
      Operating costs - corporate
       tenant lease assets            5,615     4,546     12,161     9,613
      Depreciation and
       amortization                  24,825    24,025     48,477    47,887
      General and administrative(1)  38,421    44,004     77,810    86,780
      Provision for loan losses     435,016   276,660    693,112   366,160
      Impairment of other assets     24,817    57,692     45,962    57,692
      Impairment of goodwill              -    39,092      4,186    39,092
      Other expense                  53,310     1,704     60,308     5,504
                                    -------   -------    -------   -------
        Total costs and expenses    709,190   612,193  1,200,367   946,978
                                    -------   -------    -------   -------
      Income (loss) from
       continuing operations
       before other items          (484,614) (291,784)  (717,401) (214,245)
        Gain on early
         extinguishment of debt     200,879         -    355,256         -
        Gain on sale of joint
         venture interest                 -   280,219          -   280,219
        Earnings (loss) from
         equity method
         investments                  1,864     6,070    (18,636)    3,473
                                    -------   -------    -------   -------
      Income (loss) from
       continuing operations       (281,871)   (5,495)  (380,781)   69,447

        Income (loss) from
         discontinued operations
                                       (102)    5,994        119    14,025
        Gain from discontinued
         operations                       -    50,476     11,617    52,532
                                    -------   -------    -------   -------
      Net income (loss)            (281,973)   50,975   (369,045)  136,004

      Net loss attributable to
       noncontrolling interests         271       771      1,514       567
      Gain on sale of joint
       venture interest
       attributable to
       noncontrolling interests           -   (18,560)         -   (18,560)
      Gain from discontinued
       operations attributable to
       noncontrolling interests           -    (3,689)         -    (3,689)
                                    -------   -------    -------   -------
      Net income (loss)
       attributable to iStar
       Financial Inc.              (281,702)   29,497   (367,531)  114,322

      Preferred dividend
       requirements                 (10,580)  (10,580)   (21,160)  (21,160)
                                    -------   -------    -------   -------
      Net income (loss) allocable to
       common shareholders, HPU holders
       and Participating Security
       holders (2)                ($292,282)  $18,917  ($388,691)  $93,162
                                  =========   =======  =========   =======

     (1) For the three months ended June 30, 2009 and 2008, includes $7,500
         and $7,993 of stock-based compensation expense, respectively.  For
         the six months ended June 30, 2009 and 2008, includes $13,051 and
         $12,841 of stock-based compensation expense, respectively.
     (2) HPU holders are Company employees who purchased high performance
         common stock units under the Company's High Performance Unit
         Program. Participating Security holders are Company employees and
         directors who hold unvested restricted stock units and common stock
         equivalents under the Company's Long Term Incentive Plan.




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

                                      Three Months Ended    Six Months Ended
                                           June 30,             June 30,
                                        2009      2008       2009     2008
                                      --------  --------   --------  --------
    EPS INFORMATION FOR COMMON SHARES
    Income (loss) attributable
     to iStar Financial Inc. from
     continuing operations(1)(2)
      Basic                             ($2.85)   ($0.24)    ($3.79)    $0.21
      Diluted(3)                        ($2.85)   ($0.24)    ($3.79)    $0.22

    Net income (loss) attributable
     to iStar Financial Inc.(1)(4)
      Basic                             ($2.85)    $0.14     ($3.68)    $0.67
      Diluted(3)                        ($2.85)    $0.14     ($3.68)    $0.67

    Weighted average shares outstanding
      Basic                             99,769   134,399    102,671   134,330
      Diluted                           99,769   134,399    102,671   134,782

    EPS INFORMATION FOR HPU SHARES
    Income (loss) attributable
     to iStar Financial Inc.
     from continuing operations(1)(2)
      Basic                           ($538.80)  ($46.73)  ($718.14)   $40.20
      Diluted(3)                      ($538.80)  ($46.73)  ($718.14)   $40.13

    Net income (loss) attributable
     to iStar Financial Inc.(1)(4)(5)
      Basic                           ($539.00)   $26.07   ($697.07)  $126.93
      Diluted(3)                      ($539.00)   $26.07   ($697.07)  $126.53

    Weighted average shares outstanding
      Basic and diluted                     15        15         15        15


     (1) For the three months ended June 30, 2009 and 2008, excludes
         preferred dividends of $10,580. For the six months ended
         June 30, 2009 and 2008, excludes preferred dividends of $21,160.
     (2) Income (loss) attributable to iStar Financial Inc. from continuing
         operations excludes net (income) loss from noncontrolling interests.
     (3) For the six months ended June 30, 2008, includes the allocable share
         of $2 of joint venture income.
     (4) For the six months ended June 30, 2008, net income (loss)
         attributable to iStar Financial Inc. and allocable to common
         shareholders and HPU holders is reduced by $1,122 of dividends paid
         to Participating Security holders.
     (5) For the three months ended June 30, 2009 and 2008, net income (loss)
         allocable to HPU holders was ($8,085) and $391, respectively, on both
         a basic and dilutive basis. For the six months ended June 30, 2009,
         net (loss) allocable to HPU holders was ($10,456) on both a basic and
         diluted basis. For the six months ended June 30, 2008, basic net
         income allocable to HPU holders was $1,904 and diluted net income
         allocable to HPU holders was $1,898.




                                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,
                                       2009       2008       2009      2008
                                     --------   --------   --------  --------
      ADJUSTED EARNINGS (1)

      Net income (loss)             ($281,973)   $50,975  ($369,045) $136,004
      Add: Depreciation, depletion
       and amortization                24,579     26,064     48,078    53,701
      Add: Joint venture
       depreciation, depletion and
       amortization                     3,506      1,945     14,194    10,570
      Add: Amortization of
       deferred financing costs         6,966     12,017     12,126    21,932
      Add: Impairment of goodwill
       and intangible assets                -     51,549      4,186    51,549
      Less: Hedge ineffectiveness,
       net                                  -     (2,341)         -      (850)
      Less: Gain from discontinued
       operations                           -    (50,476)   (11,617)  (52,532)
      Less: Gain on sale of joint
       venture interest                     -   (280,219)         -  (280,219)
      Less: Net loss attributable
       to noncontrolling interests        271        771      1,514       567
      Less: Preferred dividends       (10,580)   (10,580)   (21,160)  (21,160)
                                      -------    -------    -------   -------

      Adjusted earnings (loss)
       allocable to common
       shareholders, HPU holders
       and Participating
       Security holders:
         Basic and Diluted          ($257,231) ($200,295) ($321,724) ($80,438)

      Adjusted earnings (loss)
       per common share:(2)
         Basic and Diluted(3)          ($2.51)    ($1.46)    ($3.05)   ($0.59)

      Weighted average common
       shares outstanding:
         Basic and Diluted             99,769    134,399    102,671   134,330

      Common shares outstanding
       at end of period:
         Basic and Diluted             99,618    134,327     99,618   134,327


     (1) Adjusted earnings should be examined in conjunction with net income
         (loss) as shown in the Consolidated Statements of Operations.
         Adjusted earnings should not be considered as an alternative to net
         income (loss) (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 six months ended June 30, 2008, excludes $1,122 of
         dividends paid to Participating Security holders.
     (3) For the three months ended June 30, 2009 and 2008, excludes ($7,115)
         and ($4,142) of basic and diluted net (loss) allocable to HPU
         holders, respectively. For the six months ended June 30, 2009
         and 2008, excludes ($8,655) and ($1,688) of basic and diluted net
         (loss) allocable to HPU holders, respectively.



                               iStar Financial Inc.
                            Consolidated Balance Sheets
                                  (In thousands)
                                    (unaudited)

                                                 As of           As of
                                             June 30, 2009 December 31, 2008
                                             ------------- -----------------
      ASSETS

      Loans and other lending investments, net  $9,578,241       $10,586,644
      Corporate tenant lease assets, net         2,992,286         3,044,811
      Other investments                            391,292           447,318
      Other real estate owned                      382,570           242,505
      Cash and cash equivalents                    417,352           496,537
      Restricted cash                               34,406           155,965
      Accrued interest and operating lease
       income receivable, net                       66,611            87,151
      Deferred operating lease income
       receivable                                  118,062           116,793
      Deferred expenses and other assets, net      137,774           119,024
                                               -----------       -----------
            Total assets                       $14,118,594       $15,296,748
                                               ===========       ===========

      LIABILITIES AND EQUITY

      Accounts payable, accrued expenses
       and other liabilities                      $230,491          $354,492

      Debt obligations:
        Unsecured senior notes                   5,126,738         7,188,541
        Secured senior notes                       882,460                 -
        Unsecured revolving credit facilities      745,722         3,281,273
        Secured revolving credit facilities        960,651           306,867
        Secured term loans                       4,012,840         1,611,650
        Other debt obligations                      98,092            98,073
                                               -----------       -----------
          Total liabilities                     12,056,994        12,840,896

      Redeemable noncontrolling interests            7,447             9,190

      Total iStar Financial Inc.
       shareholders' equity                      2,029,184         2,418,999
      Noncontrolling interests                      24,969            27,663
                                               -----------       -----------
          Total equity                           2,054,153         2,446,662
                                               -----------       -----------
            Total liabilities and equity       $14,118,594       $15,296,748
                                               ===========       ===========




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

    PERFORMANCE STATISTICS                                Three Months Ended
                                                              June 30, 2009
                                                              -------------
    Net Finance Margin
    ------------------
    Weighted average GAAP yield on loan and CTL investments           5.94%
    Less: Cost of debt                                                4.46%
                                                                   --------
    Net Finance Margin (1)                                            1.48%

    Return on Average Common Book Equity
    ------------------------------------
    Average total book equity                                   $2,174,110
    Less: Average book value of preferred equity                  (506,176)
                                                                   --------
    Average common book equity (A)                              $1,667,934

    Net income (loss) allocable to common shareholders,
     HPU holders and Participating Security holders              ($292,282)
    Net income (loss) allocable to common shareholders,
     HPU holders and Participating Security holders
     - Annualized (B)                                          ($1,169,128)
    Return on Average Common Book Equity (B) / (A)                     Neg

    Adjusted basic earnings (loss) allocable to common
     shareholders, HPU holders and
     Participating Security holders (2)                          ($257,231)
    Adjusted basic earnings (loss) allocable
     to common shareholders, HPU holders and
     Participating Security holders  - Annualized (C )         ($1,028,924)
    Adjusted Return on Average Common Book Equity (C ) / (A)           Neg

    Expense Ratio
    -------------
    General and administrative expenses (D)                        $38,421
    Total revenue (E)                                             $224,576
    Expense Ratio (D) / (E)                                           17.1%

    (1) Weighted average GAAP yield is the annualized sum of interest income
        and operating lease 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 costs-corporate tenant lease assets exclude SFAS No. 144
        adjustments from discontinued operations of $89. 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
        (loss) as shown in the Consolidated Statements of Operations. Adjusted
        earnings should not be considered as an alternative to net income
        (loss) (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, 2009
                                                             -------------
    Book debt, net of unrestricted cash
     and cash equivalents (A)                                 $11,409,151

    Book equity                                                 2,054,153
    Add: Accumulated depreciation and loan loss reserves        1,998,888
                                                                ---------
    Sum of book equity, accumulated depreciation
     and loan loss reserves (B)                                $4,053,041

    Leverage (1) (A) / (B)                                            2.8x

    Ratio of Earnings to Fixed Charges                               (1.1x)

    Ratio of Earnings to Fixed Charges
     and Preferred Stock Dividends                                   (1.1x)

    Covenant Calculation of Fixed Charge Coverage Ratio(2)            2.6x

    Interest Coverage
    -----------------

    EBITDA (3) (C )                                             ($137,282)
    GAAP interest expense and preferred dividends (D)             137,766

    EBITDA / GAAP Interest Expense (3) (C ) / (D)                     Neg

    RECONCILIATION OF NET INCOME TO EBITDA (3)

    Net income (loss) less preferred dividends                  ($292,553)
    Add: GAAP interest expense                                    127,186
    Add: Depreciation, depletion and amortization                  24,579
    Add: Joint venture depreciation, depletion and amortization     3,506
                                                                ---------
    EBITDA (3)                                                  ($137,282)

    (1) Leverage is calculated by dividing book debt net of unrestricted
        cash and cash equivalents by the sum of book equity, accumulated
        depreciation and loan loss reserves.
    (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
        secured credit facilities; therefore, we believe it is a useful
        measure for investors to consider.
    (3) EBITDA should be examined in conjunction with net income (loss) as
        shown in the Consolidated Statements of Operations. EBITDA should not
        be considered as an alternative to net income (loss) (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)

    FINANCING VOLUME SUMMARY STATISTICS

    Three Months Ended June 30, 2009

                                     LOANS
                          ----------------------------
                                              Total/     CORPORATE
                          Fixed     Floating  Weighted   TENANT    OTHER
                          Rate      Rate      Average    LEASING   INVESTMENTS
                          --------  --------  --------   --------- -----------
    Amount funded          $23,108  $335,140  $358,248        $860     $18,552
    Weighted average
     GAAP yield              11.00%     6.32%     6.61%        N/A         N/A
    Weighted average
     all-in spread/margin
     (basis points)(1)       1,013       580       611         N/A         N/A
    Weighted average
     first $ loan-to-value
     ratio                   21.19%     1.01%     2.25%        N/A         N/A
    Weighted average
     last $ loan-to-value
     ratio                   81.50%    79.37%    79.50%        N/A         N/A

    UNFUNDED COMMITMENTS

    Number of assets with
     unfunded commitments                                                  140

    Discretionary commitments                                         $161,846
    Non-discretionary commitments                                    1,274,047
                                                                     ---------
    Total unfunded commitments                                      $1,435,893

    Estimated weighted average funding period          Approximately 2.5 years

    UNENCUMBERED ASSETS / UNSECURED DEBT

    Unencumbered assets (A)                                         $8,428,042
    Unsecured debt (B)                                              $6,003,376

    Unencumbered Assets / Unsecured Debt (A) / (B)                        1.4x

    RISK MANAGEMENT STATISTICS
    (weighted average risk rating)

                              2009                         2008
                       ------------------ -----------------------------------
                       June 30, March 31, December 31, September 30, June 30,
                       -------- --------- ------------ ------------- --------
    Structured
     Finance Assets
     (principal risk)     3.90      3.71         3.53          3.41     3.28
    Corporate Tenant
     Lease Assets         2.59      2.59         2.58          2.55     2.55

                                              (1=lowest risk; 5=highest risk)

    (1) Represents spread over base rate LIBOR (floating-rate loans) and
        interpolated U.S. Treasury rates (fixed-rate loans) 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, 2009     December 31, 2008
                                      ------------------   ------------------
    Value of non-performing loans(1) /
      As a percentage of
       total managed loans            $4,610,330   39.6%   $3,458,158   27.5%

    Reserve for loan losses /
      As a percentage of
       total managed loans            $1,469,415   12.6%     $976,788    7.8%
      As a percentage of
       non-performing loans(1)                     31.9%                28.3%

    (1) Non-performing loans include iStar's book value and Fremont's
        A-participation interest on the associated assets.



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

    NPL STATISTICS AS OF JUNE 30, 2009(1)              Managed    % of
                                                        Value     NPLs
                                                       ------    ------
    Origination
    -----------
    iStar Legacy                                       $2,643     57.3%
    Fremont                                             1,967     42.7
                                                       ------    ------
          Total                                        $4,610    100.0%
                                                       ======    ======

    Property / Collateral Type
    --------------------------
    Land                                               $1,610     34.9%
    Condo Construction - Completed                        829     18.0
    Multifamily                                           356      7.7
    Retail                                                338      7.3
    Condo Construction - In Progress                      290      6.3
    Entertainment / Leisure                               273      5.9
    Mixed Use / Mixed Collateral                          245      5.3
    Hotel                                                 198      4.3
    Conversion - Completed                                162      3.5
    Conversion - In Progress                              156      3.4
    Industrial / R&D                                       88      1.9
    Office                                                 53      1.2
    Corporate - Real Estate                                12      0.3
                                                       ------    ------
          Total                                        $4,610    100.0%
                                                       ======    ======

    (1) Based on carrying value of the loans, plus the Fremont A-participation
        interest on the associated loans.



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

    PORTFOLIO STATISTICS AS OF JUNE 30, 2009(1)      Carrying     % of
                                                       Value      Total
                                                      -------    -------
    Asset Type
    ----------
    First Mortgages / Senior Loans                    $10,210      67.4%
    Corporate Tenant Leases                             3,580      23.6
    Mezzanine / Subordinated Debt                         837       5.5
    Other Investments                                     534       3.5
                                                      -------    -------
      Total                                           $15,161     100.0%
                                                      =======    =======

    Property / Collateral Type
    --------------------------
    Apartment / Residential                            $4,411      29.1%
    Land                                                2,300      15.2
    Office                                              1,841      12.1
    Industrial / R&D                                    1,417       9.3
    Retail                                              1,176       7.8
    Entertainment / Leisure                               925       6.1
    Hotel                                                 871       5.7
    Corporate - Real Estate                               802       5.3
    Mixed Use / Mixed Collateral                          751       5.0
    Other                                                 526       3.5
    Corporate - Non-Real Estate                           141       0.9
                                                      -------    -------
      Total                                           $15,161     100.0%
                                                      =======    =======

    Geography
    ---------
    West                                               $3,543      23.4%
    Northeast                                           2,928      19.3
    Southeast                                           2,433      16.0
    Mid-Atlantic                                        1,618      10.7
    Central                                               930       6.1
    Southwest                                             890       5.9
    International                                         798       5.3
    Various                                               661       4.3
    South                                                 499       3.3
    Northcentral                                          441       2.9
    Northwest                                             420       2.8
                                                      -------    -------
      Total                                           $15,161     100.0%
                                                      =======    =======

    (1) Based on carrying value of the Company's total investment portfolio,
        gross of loan loss reserves and accumulated depreciation.

SOURCE iStar Financial Inc.

CONTACT:
James D. Burns, 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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