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02/17/2010

iStar Financial Announces Fourth Quarter and Fiscal Year 2009 Results

- Adjusted earnings (loss) allocable to common shareholders for the fourth quarter and fiscal year 2009 were ($141.7) million and ($688.8) million, respectively, or ($1.47) and ($6.88) per diluted common share, respectively.

- Net income (loss) allocable to common shareholders for the fourth quarter and fiscal year 2009 was ($159.2) million and ($788.6) million, respectively, or ($1.65) and ($7.88) per diluted common share, respectively.

- Company recorded $216.4 million of loan loss provisions during the quarter versus $345.9 million during the prior quarter.

NEW YORK, Feb 17, 2010 /PRNewswire via COMTEX/ -- iStar Financial Inc. (NYSE: SFI), a publicly traded finance company focused on the commercial real estate industry, today reported results for the fourth quarter and fiscal year ended December 31, 2009.

Fourth Quarter 2009 Results

iStar reported adjusted earnings (loss) allocable to common shareholders for the fourth quarter of ($141.7) million or ($1.47) per diluted common share, compared with $12.9 million or $0.10 per diluted common share for the fourth 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 fourth quarter was ($159.2) million, or ($1.65) per diluted common share, compared to ($24.0) million or ($0.20) per diluted common share for the fourth quarter 2008. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings (loss) to GAAP net income (loss).

Revenues for the fourth quarter 2009 were $199.8 million versus $287.4 million for the fourth 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) and an overall smaller asset base.

Net investment income for the fourth quarter was $192.1 million compared to $431.6 million for the fourth quarter 2008. The year-over-year decrease is primarily due to decreased gains on early extinguishment of debt in the quarter, as well as lower interest income as discussed above, offset by lower interest expense. 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 fourth quarter, the Company received $543.7 million in gross principal repayments. Additionally, the Company generated proceeds of $129.3 million from loan sales; $98.1 million of net proceeds from other real estate owned (OREO) asset sales; and $6.1 million of net proceeds from the sale of one corporate tenant lease (CTL) asset. Of the gross principal repayments and asset sales, $199.6 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 $252.7 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 2.9x at December 31, 2009, unchanged from the prior quarter. The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 1.60% for the quarter, versus 1.51% in the prior quarter.

Fiscal Year 2009 Results

Adjusted earnings (loss) allocable to common shareholders for the year ended December 31, 2009, were ($688.8) million or ($6.88) per diluted common share. This compares to ($354.0) million or ($2.70) per diluted share for the year ended December 31, 2008.

Net income (loss) allocable to common shareholders for the year ended December 31, 2009, was ($788.6) million or ($7.88) per diluted common share, compared to ($242.5) million or ($1.85) per diluted common share for the year ended December 31, 2008.

Results for the year included $1.3 billion of loan loss provisions, $141.0 million of impairments and $547.3 million of gains associated with the early extinguishment of debt, including $107.9 million of gains associated with the bond exchange executed during the second quarter of 2009. As of December 31, 2009, there was $227.6 million of remaining premium related to this bond exchange which will be amortized against interest expense over the terms of the new Senior Secured Notes due 2011 and 2014.

Net investment income was $910.9 million for the year versus $966.3 million for the prior year. Revenue was $893.3 million for the year versus $1.4 billion for the prior year.

Capital Markets

As of December 31, 2009, the Company had $224.6 million of unrestricted cash versus $187.1 million at the end of the prior quarter. At December 31, 2009, the Company was in compliance with all of its bank and bond covenants.

During the quarter, the Company repurchased $395.5 million par value of its senior unsecured notes, resulting in a net gain on early extinguishment of debt of $100.4 million. The Company also repurchased 3.2 million shares of its common stock during the quarter. The Company currently has remaining authority to repurchase up to $21.5 million of shares under its share repurchase program.

Risk Management

At December 31, 2009, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 84.0% of the Company's asset base, versus 87.0% in the prior quarter. The Company's loan portfolio consisted of 74.3% floating rate loans and 25.7% fixed rate loans, with a weighted average maturity of 2.0 years.

At the end of the quarter, the weighted average last dollar loan-to-value ratio for all structured finance assets was 84.8%. The Company's corporate tenant lease assets were 94.5% leased with a weighted average remaining lease term of 10.9 years. At December 31, 2009, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 3.92 and 2.59, versus 3.91 and 2.60, respectively, in the prior quarter.

As of December 31, 2009, the Company had 14 loans on its watch list representing $717.7 million or 7.7% of total managed loans, compared to 26 loans representing $1.2 billion or 11.3% of total managed loans in the prior quarter. Assets on the Company's watch list were all performing loans at December 31, 2009. Managed loan value represents iStar's carrying value of loans, gross of specific reserves and the A-participation interest outstanding on Fremont portfolio assets. The Company's total managed loan value at quarter end was $9.3 billion.

At the end of the fourth quarter, 81 of the Company's 221 total loans were on NPL status. These loans represent $4.2 billion or 45.3% of total managed loans, compared to 85 loans representing $4.4 billion or 42.0% of total managed loans in the prior quarter.

Additionally, during the quarter the Company took title to 12 properties that had an aggregate managed loan value of $675.2 million prior to foreclosure, resulting in $211.0 million of charge-offs against the Company's reserve for loan losses. In addition, during the quarter the Company recorded $41.7 million of additional impairments on its OREO portfolio.

At the end of the fourth quarter, the Company held 39 assets, representing a book value of $1.3 billion, which had previously served as collateral for certain of its loan assets. Of these assets, $839.1 million were classified as OREO and considered held for sale based on management's current intention to market and sell the assets in the near term. The remaining $422.7 million were classified as real estate held for investment (REHI) based on management's current strategy to hold, operate or develop these assets over a longer term.

During the quarter, the Company also charged-off $78.8 million against its reserve for loan losses in association with restructurings, loan sales and repayments made during the quarter. Additionally, the Company recorded $22.0 million of impairments associated with CTL assets.

During the fourth quarter, the Company recorded $216.4 million in loan loss provisions. Provisions and impairments in the quarter reflect the continued deterioration in underlying fundamentals and their impact on the portfolio as determined in the Company's regular quarterly risk ratings review process. At December 31, 2009, the Company had loan loss reserves of $1.4 billion or 15.3% of total managed loans. This compares to loan loss reserves of $1.5 billion or 14.2% of total managed loans at September 30, 2009.

Summary of Fremont Contributions to Quarterly Results

At the end of the fourth quarter, the Fremont portfolio, including additional fundings made during the quarter, had a managed loan value of $2.6 billion consisting of 87 loans, versus $3.1 billion consisting of 103 loans at the end of the prior quarter. In addition, there were 13 OREO assets with a carrying value of $329.2 million and 10 REHI assets with a net carrying value of $204.9 million associated with the Fremont portfolio at the end of the quarter.

At the end of the fourth quarter, the value of the A-participation interest in the portfolio was $473.3 million versus $672.9 million at the end of the prior quarter. The book value of iStar's B-participation interest was $2.1 billion versus $2.4 billion at the end of the prior quarter. During the quarter, iStar received $292.4 million in principal repayments and proceeds from asset sales in respect of Fremont assets, of which the Company retained $92.8 million. The balance of principal repayments was paid to the A-participation interest. The weighted average maturity of the Fremont portfolio is six months.

During the fourth quarter, iStar funded $48.1 million of commitments related to the portfolio. Unfunded commitments at the end of the fourth quarter were $198.1 million, of which the Company expects to fund approximately $71.2 million based upon its comprehensive review of the portfolio.

At December 31, 2009, there were 41 Fremont loans on NPL status with a managed loan value of $1.6 billion versus 45 loans at the prior quarter end with $1.8 billion of managed loan value. In addition, there were four Fremont loans on the Company's watch list with a managed loan value of $115.3 million versus nine loans with $213.5 million of managed loan value at the prior quarter end.

                         [Financial Tables to Follow]

                            *         *         *

iStar Financial Inc. is a 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, February 17, 2010. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through iStar Financial's website, http://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 the amount and timing of additional loan loss provisions, the amount and timing of asset sales (including OREO assets), continued increases in NPLs, repayment levels, the Company's ability to reduce its indebtedness at a discount, the Company's ability to generate liquidity, the Company's ability to maintain compliance with its debt covenants, economic conditions, the availability of liquidity for commercial real estate transactions 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    Twelve Months Ended
                                        December 31,          December 31,
                                      2009      2008        2009       2008
                                      ----      ----        ----       ----

    Net investment income (1)      $192,077  $431,619    $910,880    $966,304
    Other income                     10,061     9,144      30,468      97,851
    Non-interest expense (2)       (352,774) (476,591) (1,711,950) (1,640,014)
    Gain on sale of joint
     venture interest                     -         -           -     280,219
                                    -------   -------     -------     -------
    Income (loss) from
     continuing operations         (150,636)  (35,828)   (770,602)   (295,640)

    Income (loss) from
     discontinued operations         (2,723)    2,967     (11,671)     22,415
    Gain from discontinued
     operations                           -    18,971      12,426      91,458
    Net (income) loss
     attributable to
     noncontrolling interests            73       (78)      1,071         991
    Gain attributable to
     noncontrolling interests             -         -           -     (22,249)
    Preferred dividends             (10,580)  (10,580)    (42,320)    (42,320)
                                    -------   -------     -------     -------
    Net income (loss) allocable
     to common shareholders,
     HPU holders and
     Participating Security
     holders (3)                  ($163,866) ($24,548)  ($811,096)  ($245,345)
                                  =========  ========   =========   =========

    -----------------------------

    (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 current and former 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
                                         December 31, 2009 December 31, 2008
                                         ----------------- -----------------

    Loans and other lending
     investments, net                           $7,661,562       $10,586,644
    Corporate tenant lease assets, net          $2,885,896        $3,044,811
    Other investments                             $433,130          $447,318
    Total assets                               $12,810,575       $15,296,748
    Debt obligations, net                      $10,894,903       $12,486,404
    Total liabilities                          $11,147,013       $12,840,896
    Total equity                                $1,656,118        $2,446,662



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


                                    Three Months Ended     Twelve Months Ended
                                       December 31,            December 31,
                                     2009      2008          2009       2008
                                     ----      ----          ----       ----
    REVENUES

      Interest income             $113,700  $199,201      $557,809   $947,661
      Operating lease income        76,073    79,096       305,007    308,742
      Other income                  10,061     9,144        30,468     97,851
                                    ------     -----        ------     ------
        Total revenues             199,834   287,441       893,284  1,354,254
                                   -------   -------       -------  ---------

    COSTS AND EXPENSES

      Interest expense             108,828   162,792       481,116    666,706
      Operating costs -
       corporate tenant lease
       assets                        5,824     8,258        23,467     23,059
      Depreciation and
       amortization                 25,080    24,065        97,869     94,726
      General and
       administrative (1)           27,085    29,307       127,044    143,902
      Provision for loan losses    216,354   252,020     1,255,357  1,029,322
      Impairment of other assets    61,756   149,972       122,699    295,738
      Impairment of goodwill             -         -         4,186     39,092
      Other expense                 22,499    21,227       104,795     37,234
                                    ------    ------       -------     ------
        Total costs and expenses   467,426   647,641     2,216,533  2,329,779
                                   -------   -------     ---------  ---------

      Income (loss) from
       continuing operations
       before other items         (267,592) (360,200)   (1,323,249)  (975,525)
        Gain on early
         extinguishment of debt    100,392   323,215       547,349    393,131
        Gain on sale of joint
         venture interest                -         -             -    280,219
        Earnings from equity
         method investments         16,564     1,157         5,298      6,535
                                    ------     -----         -----      -----
      Income (loss) from
       continuing operations      (150,636)  (35,828)     (770,602)  (295,640)

        Income (loss) from
         discontinued operations    (2,723)    2,967       (11,671)    22,415
        Gain from discontinued
         operations                      -    18,971        12,426     91,458
                                    ------    ------        ------     ------
      Net income (loss)           (153,359)  (13,890)     (769,847)  (181,767)

      Net (income) loss
       attributable to
       noncontrolling
       interests                        73       (78)        1,071        991
      Gain on sale of joint
       venture interest
       attributable to
       noncontrolling
       interests                         -         -             -    (18,560)
      Gain from discontinued
       operations attributable
       to noncontrolling
       interests                         -         -             -     (3,689)
                                    ------    ------        ------     ------
      Net income (loss)
       attributable to
       iStar Financial Inc.       (153,286)  (13,968)     (768,776)  (203,025)

      Preferred dividend
       requirements                (10,580)  (10,580)      (42,320)   (42,320)
                                   -------   -------       -------    -------
      Net income (loss)
       allocable to
       common shareholders,
       HPU holders and
       Participating
       Security holders (2)      ($163,866) ($24,548)    ($811,096) ($245,345)
                                 =========  ========     =========  =========
    ---------------------------

    (1) For the three months ended December 31, 2009 and 2008, includes
        $6,020 and $5,817 of stock-based compensation expense, respectively.
        For the twelve months ended December 31, 2009 and 2008, includes
        $23,593 and $23,542 of stock-based compensation expense,
        respectively.

    (2) HPU holders are current and former 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    Twelve Months Ended
                                         December 31,           December 31,
                                        2009     2008          2009      2008
                                        ----     ----          ----      ----
    EPS INFORMATION FOR COMMON SHARES
    Income (loss) attributable
     to iStar Financial Inc.
     from continuing
     operations (1) (2)
      Basic and diluted               ($1.62)  ($0.37)       ($7.89)   ($2.68)
    Net income (loss) attributable
     to iStar Financial Inc. (1) (3)
      Basic and diluted               ($1.65)  ($0.20)       ($7.88)   ($1.85)
    Weighted average shares
     outstanding
      Basic and diluted               96,354  122,809       100,071   131,153

    EPS INFORMATION FOR HPU SHARES
    Income (loss) attributable
     to iStar Financial Inc.
     from continuing
     operations (1) (2)
      Basic and diluted             ($307.40) ($70.07)   ($1,503.13) ($505.47)
    Net income (loss) attributable
     to iStar Financial
     Inc. (1) (3) (4)
      Basic and diluted             ($312.60) ($37.00)   ($1,501.73) ($349.87)
    Weighted average shares
     outstanding
      Basic and diluted                   15       15            15        15
    --------------------------------

    (1) For the three months ended December 31, 2009 and 2008, excludes
        preferred dividends of $10,580. For the twelve months ended December
        31, 2009 and 2008, excludes preferred dividends of $42,320.

    (2) Income (loss) attributable to iStar Financial Inc. from continuing
        operations excludes net (income) loss from noncontrolling interests.

    (3) For the twelve months ended December 31, 2008, net income (loss)
        attributable to iStar Financial Inc. and allocable to common
        shareholders and HPU holders is reduced by $2,393 for dividends paid
        to Participating Security holders.

    (4) For the three months ended December 31, 2009 and 2008, net loss
        allocable to HPU holders was ($4,689) and ($555), respectively, on
        both a basic and dilutive basis. For the twelve months ended
        December 31, 2009 and 2008, net loss allocable to HPU holders was
        ($22,526) and ($5,248), respectively, on both a basic and diluted
        basis.



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

                                      Three Months Ended   Twelve Months Ended
                                          December 31,         December 31,
                                        2009      2008       2009       2008
                                        ----      ----       ----       ----
      ADJUSTED EARNINGS (1)

      Net income (loss)             ($153,359) ($13,890) ($769,847) ($181,767)
      Add: Depreciation,
       depletion and amortization      24,896    24,596     98,238    102,745
      Add: Joint venture income             -         2          -          -
      Add: Joint venture
       depreciation, depletion and
       amortization                     1,899     1,953     17,990     14,466
      Add: Deferred financing
       amortization                    (8,833)   11,546     (5,487)    50,222
      Add: Impairment of goodwill
       and intangible assets                -     9,069      4,186     60,618
      Less: Hedge ineffectiveness,
       net                                  -     9,533          -      7,427
      Less: Gain from discontinued
       operations                           -   (18,971)   (12,426)   (91,458)
      Less: Gain on sale of joint
       venture interest                     -         -          -   (280,219)
      Less: Net (income) loss
       attributable to
       noncontrolling interests            73       (78)     1,071        991
      Less: Preferred dividends       (10,580)  (10,580)   (42,320)   (42,320)
                                      -------   -------    -------    -------

      Adjusted earnings (loss)
       allocable to common
       shareholders, HPU holders
       and Participating Security
       holders:
        Basic                       ($145,904)  $13,178  ($708,595) ($359,295)
        Diluted                     ($145,904)  $13,180  ($708,595) ($359,295)

      Adjusted earnings (loss)
       per common share: (2)
        Basic and Diluted (3)          ($1.47)    $0.10     ($6.88)    ($2.70)

      Weighted average common
       shares outstanding:
        Basic                          96,354   122,809    100,071    131,153
        Diluted                        96,354   123,107    100,071    131,153

      Common shares outstanding
       at end of period:
        Basic                          94,216   105,457     94,216    105,457
        Diluted                        94,216   108,846     94,216    108,846
    ----------------------------------

    (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 twelve months ended December 31, 2008, excludes $2,393 of
        dividends paid to Participating Security holders.

    (3) For the three months ended December 31, 2009, excludes ($4,175) of
        basic and diluted net loss allocable to HPU holders. For the three
        months ended December 31, 2008, excludes $298 of basic and $297 of
        diluted net income to HPU holders. For the twelve months ended
        December 31, 2009 and 2008, excludes ($19,748) and ($7,661) of basic
        and diluted net loss allocable to HPU holders, respectively.



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

                                            As of             As of
                                       December 31, 2009 December 31, 2008
                                       ----------------- -----------------

      ASSETS

      Loans and other lending
       investments, net                     $7,661,562       $10,586,644
      Corporate tenant lease assets, net     2,885,896         3,044,811
      Other investments                        433,130           447,318
      Real estate held for
       investment, net                         422,664                 -
      Other real estate owned                  839,141           242,505
      Assets held for sale                      17,282                 -
      Cash and cash equivalents                224,632           496,537
      Restricted cash                           39,654           155,965
      Accrued interest and operating
       lease income receivable, net             54,780            87,151
      Deferred operating
       lease income receivable                 122,628           116,793
      Deferred expenses and
       other assets, net                       109,206           119,024
                                               -------           -------
            Total assets                   $12,810,575       $15,296,748
                                           ===========       ===========


      LIABILITIES AND EQUITY

      Accounts payable, accrued
       expenses and other liabilities         $252,110          $354,492

      Debt obligations, net:
        Unsecured senior notes               4,228,908         7,188,541
        Secured senior notes                   856,071                 -
        Unsecured revolving
         credit facilities                     748,601         3,281,273
        Secured revolving credit
         facilities                            959,426           306,867
        Secured term loans                   4,003,786         1,611,650
        Other debt obligations                  98,111            98,073
                                                ------            ------
          Total liabilities                 11,147,013        12,840,896

      Redeemable noncontrolling
       interests                                 7,444             9,190

      Total iStar Financial Inc.
       shareholders' equity                  1,605,685         2,418,999
      Noncontrolling interests                  50,433            27,663
                                                ------            ------
          Total equity                       1,656,118         2,446,662
                                           -----------       -----------
            Total liabilities
             and equity                    $12,810,575       $15,296,748
                                           ===========       ===========



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

    PERFORMANCE STATISTICS                     Three Months Ended
                                                December 31, 2009
                                                -----------------
    Net Finance Margin
    ------------------
    Weighted average GAAP yield
     on loan and CTL investments                       5.81%
    Less: Cost of debt                                 4.21%
                                                       ----
    Net Finance Margin (1)                             1.60%

    Return on Average Common Book Equity
    ------------------------------------
    Average total book equity                    $1,690,149
    Less: Average book value of
     preferred equity                              (506,176)
                                                   --------
    Average common book equity (A)               $1,183,973

    Net income (loss) allocable to
     common shareholders, HPU holders
     and Participating Security
     holders                                      ($163,866)
    Net income (loss) allocable to
     common shareholders, HPU holders
     and Participating Security
     holders - Annualized (B)                     ($655,464)
    Return on Average Common Book
     Equity (B) / (A)                                   Neg

    Adjusted basic earnings (loss)
     allocable to common shareholders,
     HPU holders and Participating
     Security holders (2)                         ($145,904)
    Adjusted basic earnings (loss)
     allocable to common shareholders,
     HPU holders and Participating
     Security holders -
     Annualized (C)                               ($583,616)
    Adjusted Return on Average Common
     Book Equity (C) / (A)                              Neg

    Expense Ratio
    -------------
    General and administrative expenses (D)         $27,085
    Total revenue (E)                              $199,834
    Expense Ratio (D) / (E)                            13.6%
    ----------------------------------------

    (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 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 adjustments from discontinued operations of $477 and
        $293, 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
        (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
                                                      December 31, 2009
                                                      -----------------
    Book debt, net of unrestricted cash
     and cash equivalents (A)                            $10,670,271

    Book equity                                            1,656,118
    Add: Accumulated depreciation and loan
     loss reserves                                         1,990,023
                                                           ---------
    Sum of book equity, accumulated
     depreciation and loan loss reserves (B)              $3,646,141

    Leverage (1) (A) / (B)                                       2.9x

    Ratio of Earnings to Fixed Charges                          (0.5x)

    Ratio of Earnings to Fixed Charges and
     Preferred Stock Dividends                                  (0.4x)

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

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

    EBITDA (3) (C)                                          ($22,795)
    Interest expense and preferred dividends (D)             119,408

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

    RECONCILIATION OF NET INCOME TO EBITDA  (3)

    Net income (loss) less preferred dividends             ($163,939)
    Add: Interest expense                                    108,828
    Add: Depreciation, depletion and amortization             24,896
    Add: Income taxes                                          5,521
    Add: Joint venture depreciation, depletion and
     amortization                                              1,899
                                                               -----
    EBITDA (3)                                              ($22,795)
    -------------------------------------------------

    (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
     December 31, 2009             LOANS
                         --------------------------
                                             Total/    CORPORATE
                                  Floating  Weighted    TENANT      OTHER
                     Fixed Rate     Rate     Average    LEASING  INVESTMENTS
                     ----------   --------  --------   --------- -----------
    Amount funded       $42,730  $170,592  $213,323     $5,637     $33,726
    Weighted average
     first $ loan-to-
     value ratio           7.18%     0.66%     1.96%       N/A         N/A
    Weighted average
     last $ loan-to-
     value ratio          93.54%    82.74%     84.90%      N/A         N/A


    UNFUNDED COMMITMENTS

    Number of assets with
     unfunded commitments                                               96
    Discretionary
     commitments                                                  $137,685
    Non-discretionary
     commitments                                                   702,613
                                                                   -------
    Total unfunded
     commitments                                                  $840,298

    Estimated weighted
     average funding
     period                                        Approximately 2.8 years


    UNENCUMBERED ASSETS / UNSECURED DEBT

    Unencumbered assets (A)                                     $6,959,058
    Unsecured debt (B)                                          $5,115,236

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


    RISK MANAGEMENT STATISTICS
    (weighted average risk rating)

                                         2009                         2008
                    --------------------------------------------- ------------
                    December 31, September 30, June 30, March 31, December 31,
                    --------------------------------------------- ------------
    Structured
     Finance Assets
     (principal risk)    3.92         3.91       3.90      3.71       3.53
    Corporate Tenant
     Lease Assets        2.59         2.60       2.59      2.59       2.58

                                              (1=lowest risk; 5=highest risk)


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


      LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

                                                         As of
                                        --------------------------------------
                                        December 31, 2009    December 31, 2008
                                        -----------------    -----------------
    Value of non-performing loans (1) /
       As a percentage of total
        managed loans                   $4,209,255  45.3%    $3,458,157  27.5%

    Reserve for loan losses /
       As a percentage of total
        managed loans                   $1,417,949  15.3%      $976,788   7.8%
       As a percentage of
        non-performing loans (1)                    33.7%                28.2%
    ----------------------------------

    (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 DECEMBER 31, 2009 (1)     Managed Value   % of NPLs
                                                   -------------   ---------
    Origination
    -----------
    iStar Legacy                                          $2,571     61.1%
    Fremont                                                1,638     38.9%
                                                          ------     -----
       Total                                              $4,209      100%
                                                          ======     =====

    Property / Collateral Type
    --------------------------
    Land                                                  $1,272     30.2%
    Condo Construction - Completed                           925     22.0%
    Mixed Use / Mixed Collateral                             372      8.8%
    Retail                                                   299      7.0%
    Entertainment / Leisure                                  267      6.4%
    Multifamily                                              263      6.2%
    Hotel                                                    245      5.8%
    Condo Construction - In Progress                         240      5.7%
    Office                                                   111      2.6%
    Industrial / R&D                                          65      1.6%
    Corporate - Real Estate                                   62      1.5%
    Conversion - Completed                                    44      1.1%
    Conversion - In Progress                                  37      0.9%
    Other                                                      7      0.2%
                                                          ------      ----
       Total                                              $4,209      100%
                                                          ======      ====
    ----------------------------------------------------
    (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 DECEMBER 31, 2009 (1)    Carrying
                                                         Value     % of Total
                                                        --------   ----------

    Asset Type
    ----------
    First Mortgages / Senior Loans                       $8,310       59.1%
    Corporate Tenant Leases                               3,515       25.0
    Other Real Estate Owned                                 839        6.0
    Mezzanine / Subordinated Debt                           770        5.5
    Real Estate Held for Investment                         426        3.0
    Other Investments                                       192        1.4
                                                            ---        ---
      Total                                             $14,052      100.0%
                                                        =======      =====

    Property / Collateral Type
    --------------------------
    Apartment / Residential                              $3,816       27.1%
    Land                                                  2,162       15.4
    Office                                                1,865       13.3
    Industrial / R&D                                      1,322        9.4
    Retail                                                1,157        8.2
    Entertainment / Leisure                                 907        6.5
    Hotel                                                   885        6.3
    Mixed Use / Mixed Collateral                            774        5.5
    Corporate - Real Estate                                 736        5.2
    Other                                                   418        3.0
    Corporate - Non-Real Estate                              10        0.1
                                                             --        ---
      Total                                             $14,052      100.0%
                                                        =======      =====

    Geography
    ---------
    West                                                 $3,288       23.4%
    Northeast                                             2,634       18.7
    Southeast                                             2,189       15.6
    Mid-Atlantic                                          1,393        9.9
    Southwest                                               966        6.9
    Central                                                 923        6.6
    Various                                                 877        6.2
    International                                           549        3.9
    Northwest                                               430        3.1
    South                                                   413        2.9
    Northcentral                                            390        2.8
                                                            ---        ---
      Total                                             $14,052      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.

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