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04/29/2010

iStar Financial Announces First Quarter 2010 Results


Earnings Report

  • Adjusted earnings (loss) allocable to common shareholders for the first quarter 2010 were ($24.2) million, or ($0.26) per diluted common share, compared with ($141.7) million, or ($1.47) per diluted common share for the fourth quarter 2009.
  • Net income (loss) allocable to common shareholders for the first quarter 2010 was ($25.4) million, or ($0.27) per diluted common share, compared with ($159.2) million, or ($1.65) per diluted common share for the fourth quarter 2009.
  • Company recorded $89.5 million of loan loss provisions during the quarter versus $216.4 million during the fourth quarter 2009.

NEW YORK, April 29, 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 first quarter ended March 31, 2010.

First Quarter 2010 Results

iStar reported adjusted earnings (loss) allocable to common shareholders for the first quarter of ($24.2) million or ($0.26) per diluted common share, compared with ($62.8) million or ($0.59) per diluted common share for the first quarter 2009. Adjusted earnings (loss) represents net income (loss) computed in accordance with GAAP, adjusted primarily for preferred dividends, depreciation and amortization, impairments of goodwill and intangible assets, and gain (loss) from discontinued operations.

Net income (loss) allocable to common shareholders for the first quarter was ($25.4) million, or ($0.27) per diluted common share, compared to ($93.9) million or ($0.89) per diluted common share for the first quarter 2009. 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 first quarter 2010 were $173.5 million versus $225.7 million for the first quarter 2009. 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 first quarter was $119.2 million compared to $237.9 million for the first quarter 2009. 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 increased earnings from equity method investments and 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 first quarter, the Company received $790.1 million in gross principal repayments. Additionally, the Company generated proceeds of $126.3 million from loan sales; $165.8 million of net proceeds from sales of other real estate owned (OREO) assets; and $17.2 million of net proceeds from the sale of two corporate tenant lease (CTL) assets. Of the gross principal repayments and asset sales, $221.8 million was utilized to pay the A-participation interest associated with the Fremont portfolio down to $251.5 million. Additionally during the quarter, the Company funded a total of $142.2 million under pre-existing commitments.

During the quarter, the Company announced that it is pursuing a sale or other transaction involving a portfolio of corporate tenant lease assets representing an aggregate $1.1 billion of book value. The portfolio is encumbered by secured, non-recourse term debt with an aggregate principal balance of $947.9 million that matures in April 2011. These assets are presented as assets held for sale as of March 31, 2010, and the related net income has been reclassified as income from discontinued operations for all periods presented.

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 March 31, 2010, down from 2.9x at the end of the prior quarter. The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 2.23% for the quarter, versus 1.60% in the prior quarter.

Capital Markets

As of March 31, 2010, the Company had $640.9 million of unrestricted cash versus $224.6 million at the end of the prior quarter. The Company is currently in compliance with all of its bank and bond covenants.

During the quarter, the Company repurchased $222.6 million par value of its senior unsecured and secured notes, resulting in a net gain on early extinguishment of debt of $38.7 million.

Risk Management

At March 31, 2010, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 82.3% of the Company's asset base, versus 84.0% in the prior quarter. The Company's loan portfolio consisted of 73.1% floating rate loans and 26.9% 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 85.1%. The Company's corporate tenant lease assets were 93.7% leased with a weighted average remaining lease term of 11.0 years. At March 31, 2010, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 3.93 and 2.57, versus 3.92 and 2.59, respectively, in the prior quarter.

As of March 31, 2010, the Company had 12 loans on its watch list representing $673.9 million or 8.1% of total managed loans, compared to 14 loans representing $717.7 million or 7.7% of total managed loans in the prior quarter. Assets on the Company's watch list are all performing loans. 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 $8.3 billion.

At the end of the first quarter, 72 of the Company's 212 total loans were on NPL status. These loans represent $3.5 billion or 42.3% of total managed loans, compared to 81 loans representing $4.2 billion or 45.3% of total managed loans in the prior quarter.

Additionally, during the quarter the Company took title to six properties that had an aggregate managed loan value of $397.9 million prior to foreclosure, resulting in $122.1 million of charge-offs against the Company's reserve for loan losses. During the quarter the Company recorded $4.9 million of additional impairments on its OREO portfolio.

At the end of the first quarter, the Company held 42 assets, representing a gross book value of $1.4 billion, which had previously served as collateral for certain of its loan assets. Of these assets, $829.9 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 $542.7 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 first quarter, the Company recorded $89.5 million in loan loss provisions. At March 31, 2010, the Company had loan loss reserves of $1.3 billion or 15.8% of total managed loans. This compares to loan loss reserves of $1.4 billion or 15.3% of total managed loans at December 31, 2009.

                          [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, April 29, 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
                                                    March 31,
                                                 2010           2009
                                             --------       --------

    Net investment income (1)                $119,223       $237,927
    Other income                               13,198          2,506
    Non-interest expense (2)                 (156,115)      (343,766)
    Income (loss) from continuing operations  (23,694)      (103,333)

    Income from discontinued operations         7,552          4,644
    Gain from discontinued operations               -         11,617
                                             --------       --------
    Net income (loss)                        ($16,142)      ($87,072)
                                             ========       ========


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



    Selected Balance Sheet Data
    (In thousands)
    (unaudited)                                 As of         As of
                                              March 31,    December 31,
                                                 2010          2009
                                             ----------   -------------

    Loans and other lending investments, net  $6,731,546     $7,661,562
    Corporate tenant lease assets, net        $1,823,854     $2,885,896
    Assets held for sale                      $1,158,595        $17,282
    Other investments                           $411,003       $433,130
    Total assets                             $12,355,555    $12,810,575
    Debt obligations, net                    $10,469,573    $10,894,903
    Total liabilities                        $10,724,320    $11,147,013
    Total equity                              $1,623,793     $1,656,118



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



                                                        Three Months Ended
                                                             March 31,
                                                          2010       2009
                                                          ----       ----
    REVENUES

      Interest income                                   $116,616   $177,227
      Operating lease income                              43,735     45,943
      Other income                                        13,198      2,506
                                                        --------   --------
        Total revenues                                   173,549    225,676
                                                        --------   --------

    COSTS AND EXPENSES

      Interest expense                                    87,216    114,630
      Operating costs -corporate tenant lease assets       4,070      4,490
      Depreciation and amortization                       15,826     14,392
      General and administrative (1)                      27,216     35,590
      Provision for loan losses                           89,469    258,096
      Impairment of other assets                           5,921     25,331
      Other expense                                       17,683     10,357
                                                        --------   --------
        Total costs and expenses                         247,401    462,886
                                                        --------   --------

      Income (loss) from continuing operations
       before other items                                (73,852) (237,210)
        Gain on early extinguishment of debt              38,728    154,377
        Earnings (loss) from equity method investments    11,430    (20,500)
                                                        --------   --------
      Income (loss) from continuing operations           (23,694) (103,333)

        Income from discontinued operations                7,552      4,644
        Gain from discontinued operations                      -     11,617
                                                        --------   --------
      Net income (loss)                                  (16,142)   (87,072)

      Net loss attributable to noncontrolling
       interests                                             546      1,243
                                                        --------   --------
    Net income (loss) attributable to iStar
       Financial Inc.                                    (15,596)   (85,829)

      Preferred dividends                                (10,580)   (10,580)
                                                        --------   --------
      Net income (loss) allocable to common
       shareholders, HPU holders
       and Participating Security holders (2)           ($26,176)  ($96,409)

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


    (1)   For the three months ended March 31, 2010 and 2009, includes $4,730
          and $5,551 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
                                                            March 31,
                                                        2010        2009
                                                        ----        ----
    EPS INFORMATION FOR COMMON SHARES
    Income (loss) attributable to iStar Financial Inc.
     from continuing operations (1) (2)
        Basic and diluted                             ($0.35)     ($1.04)
    Net income (loss) attributable to iStar
     Financial Inc. (1)
        Basic and diluted                             ($0.27)     ($0.89)
    Weighted average shares outstanding
        Basic and diluted                             93,923     105,606

    EPS INFORMATION FOR HPU SHARES
    Income (loss) attributable to iStar FinancialInc.
     from continuing operations (1) (2)
        Basic and diluted                            ($66.00)   ($196.60)
    Net income (loss) attributable to iStar
     Financial Inc. (1) (3)
        Basic and diluted                            ($51.20)   ($168.20)
    Weighted average shares outstanding
        Basic and diluted                                 15          15

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



    (1)   For the three months ended March 31, 2010 and 2009, excludes
          preferred dividends of $10,580.
    (2)   Income (loss) attributable to iStar Financial Inc. from continuing
          operations excludes net (income) loss from noncontrolling interests.
    (3)   For the three months ended March 31, 2010 and 2009, net loss
          allocable to HPU holders was ($768) and ($2,523), respectively, on
          both a basic and dilutive basis.


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


                                                      Three Months Ended
                                                           March 31,
                                                         2010        2009
                                                         ----        ----
     ADJUSTED EARNINGS (1)

     Net income (loss)                                 ($16,142)   ($87,072)
     Add: Depreciation and amortization                  21,753      23,499
     Add: Joint venture depreciation and amortization     1,883      10,688
     Add: Deferred financing amortization               (22,387)      5,160
     Add: Impairment of goodwill and intangible assets        -       4,186
     Add: Net loss attributable to noncontrolling
      interests                                             546       1,243
     Less: Gain from discontinued operations                  -     (11,617)
     Less: Preferred dividends                          (10,580)    (10,580)
                                                        -------     -------

     Adjusted earnings (loss) allocable to common
      shareholders, HPU holders and Participating
      Security holders:
       Basic and Diluted (2)                           ($24,927)   ($64,493)

     Adjusted earnings (loss) per common share:
       Basic and Diluted                                 ($0.26)     ($0.59)

     Weighted average common shares outstanding:
       Basic and Diluted                                 93,923     105,606

     Common shares outstanding at end of period:         93,382     102,462

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



    (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 three months ended March 31, 2010 and 2009, excludes ($731)
          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
                                                  March 31,    December 31,
                                                     2010          2009
                                                 ----------   -------------

    ASSETS

    Loans and other lending investments, net      $6,731,546     $7,661,562
    Corporate tenant lease assets, net             1,823,854      2,885,896
    Other investments                                411,003        433,130
    Real estate held for investment, net             538,786        422,664
    Other real estate owned                          829,851        839,141
    Assets held for sale                           1,158,595         17,282
    Cash and cash equivalents                        640,858        224,632
    Restricted cash                                   20,518         39,654
    Accrued interest and operating lease income
     receivable, net                                  51,571         54,780
    Deferred operating lease income receivable        60,808        122,628
    Deferred expenses and other assets, net           88,165        109,206
                                                 -----------    -----------
         Total assets                            $12,355,555    $12,810,575
                                                 ===========    ===========


    LIABILITIES AND EQUITY

    Accounts payable, accrued expenses and other
     liabilities                                    $254,747       $252,110

    Debt obligations, net:
      Unsecured senior notes                       3,911,469      4,228,908
      Secured senior notes                           788,743        856,071
      Unsecured revolving credit facilities          743,929        748,601
      Secured revolving credit facilities            952,388        959,426
      Secured term loans                           3,974,924      4,003,786
      Other debt obligations                          98,120         98,111
                                                 -----------    -----------
        Total liabilities                         10,724,320     11,147,013

    Redeemable noncontrolling interests                7,442          7,444

    Total iStar Financial Inc. shareholders'
     equity                                        1,574,403      1,605,685
    Noncontrolling interests                          49,390         50,433
                                                 -----------    -----------
        Total equity                               1,623,793      1,656,118

         Total liabilities and equity            $12,355,555    $12,810,575
                                                 ===========    ===========



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


    PERFORMANCE  STATISTICS                               Three Months Ended
                                                            March 31, 2010
                                                            --------------
    Net Finance Margin
    ------------------
    Weighted average GAAP yield on loan and CTL
     investments                                                         6.38%
    Less: Cost of debt                                                   4.15%
                                                                   ----------
    Net Finance Margin (1)                                               2.23%

    Return on Average Common Book Equity
    ------------------------------------
    Average total book equity                                      $1,590,044
    Less: Average book value of preferred equity                     (506,176)
                                                                   ----------
    Average common book equity (A)                                 $1,083,868

    Net income (loss) allocable to common shareholders,
     HPU holders and Participating Security holders                  ($26,176)
    Net income (loss) allocable to common shareholders, HPU
     holders and Participating Security holders  - Annualized (B)   ($104,704)
    Return on Average Common Book Equity (B) / (A)                        Neg

    Adjusted basic earnings (loss) allocable to common shareholders,
     HPU holders and Participating Security holders (2)              ($24,927)
    Adjusted basic earnings (loss) allocable to common shareholders,
     HPU holders and Participating Security holders  -
     Annualized (C)                                                  ($99,708)
    Adjusted Return on Average Common Book Equity (C) / (A)               Neg

    Expense Ratio (3)
    -----------------
    General and administrative expenses (D)                           $27,219
    Total revenue (E)                                                $205,277
    Expense Ratio (D) / (E)                                              13.3%

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



    (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 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, operating
          costs-corporate tenant lease assets and interest expense exclude
          adjustments from discontinued operations of $31,723, $1,596 and
          $16,049, 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.
    (3)   General and administrative expenses and total revenue exclude
          adjustments from discontinued operations of $3 and $31,728,
          respectively.



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


    CREDIT STATISTICS                                Three Months Ended
                                                       March 31, 2010
                                                       --------------
    Book debt, net of unrestricted cash and cash
     equivalents (A)                                           $9,828,715

    Book equity                                                 1,623,793
    Add: Accumulated depreciation and loan loss
     reserves                                                   1,868,177
                                                               ----------
    Sum of book equity, accumulated depreciation and
     loan loss reserves (B)                                    $3,491,970

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

    Ratio of Earnings to Fixed Charges                               0.8x

    Ratio of Earnings to Fixed Charges and Preferred
     Stock Dividends                                                 0.7x

    Covenant Calculation of Fixed Charge Coverage
     Ratio (2)                                                       2.2x

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

    EBITDA (3) (C)                                               $111,802
    Interest expense and preferred dividends (D)                  113,846

    EBITDA / Interest Expense and
     Preferred Dividends  (3)  (C) / (D)                           1.0x

    RECONCILIATION OF NET INCOME TO EBITDA  (3)

    Net income (loss)                                            ($16,142)
    Add: Interest expense (4)                                     103,266
    Add: Depreciation and amortization (4)                         21,753
    Add: Income taxes                                               1,042
    Add: Joint venture depreciation and amortization                1,883
                                                               ----------
    EBITDA (3)                                                   $111,802

    ----------



    (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.
    (4) Interest expense and depreciation and amortization exclude
        adjustments from discontinued operations of $16,049 and $6,166,
        respectively.



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


     UNFUNDED COMMITMENTS

     Number of assets with unfunded commitments                           78


     Performance-based commitments                                  $471,949
     Discretionary fundings                                          125,692
     Strategic investments                                            70,060
                                                                    --------
     Total Unfunded Commitments                                     $667,701

     UNENCUMBERED ASSETS / UNSECURED DEBT

     Unencumbered assets (A)                                      $6,406,531
     Unsecured debt (B)                                           $4,793,239

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




     RISK MANAGEMENT
      STATISTICS
     (weighted average risk
      rating)                    2010                    2009
                                ------   -----------------------------------
                                 March   December   September   June   March
                                  31,       31,         30,      30,    31,
                                ------   --------   ---------  -----  ------
     Structured Finance
      Assets (principal risk)     3.93       3.92        3.91   3.90    3.71
     Corporate Tenant Lease
      Assets                      2.57       2.59        2.60   2.59    2.59


     (1=lowest risk; 5=highest risk)



      LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS



                                                     As of
                                                     -----
                                    March 31, 2010        December 31, 2009
                                    --------------        -----------------
     Value of non-performing
      loans (1) /
        As a percentage
         of total managed loans   $3,498,150   42.3 %   $4,209,255    45.3 %

     Reserve for loan losses /
        As a percentage of total
         Managed loans            $1,306,250   15.8 %   $1,417,949    15.3 %
        As a percentage of
         non-performing loans (1)              37.3 %                 33.7 %

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



    (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)

    PORTFOLIO STATISTICS AS OF MARCH 31, 2010 (1)


                                                                        % of
    Asset Type                                                  Total   Total
    ----------                                                  -----   -----
    First Mortgages / Senior Loans                              $7,288  55.6%
    Corporate Tenant Leases (2)                                  3,491  26.7
    Other Real Estate Owned                                        830   6.3
    Mezzanine / Subordinated Debt                                  750   5.7
    Real Estate Held for Investment                                543   4.2
    Other Investments                                              197   1.5
                                                               ------- -----
      Total                                                    $13,099 100.0%
                                                               ======= =====

                                                                        % of
    Geography                                                   Total   Total
    ---------                                                   -----   -----
    West                                                        $3,055  23.3%
    Northeast                                                    2,433  18.6
    Southeast                                                    2,090  16.0
    Mid-Atlantic                                                 1,348  10.3
    Southwest                                                      947   7.2
    Central                                                        801   6.1
    Various                                                        675   5.1
    International                                                  520   4.0
    Northwest                                                      425   3.2
    South                                                          418   3.2
    Northcentral                                                   387   3.0
                                                               ------- -----
      Total                                                    $13,099 100.0%
                                                               ======= =====




                          Performing
                           Loans &     CTLs                             % of
    Property Type           Other       (2)  NPLs  OREO  REHI   Total   Total
    -------------         ----------   ----  ----  ----  ----   -----   -----
    Condo:
        Construction -
         Completed             $799     $-    $724  $371    $-  $1,894  14.5%
        Construction -In
         Progress               631      -     248    20     -     899   6.9
        Conversion              109      -      44   115     -     268   2.1
                             ------ ------  ------  ----  ---- ------- -----
        Subtotal Condo        1,539      -   1,016   506     -   3,061  23.5
    Land                        491     59     905   112   376   1,943  14.8
    Office                      204  1,548     109     -     7   1,868  14.3
    Industrial / R&D            207    939      25     -     -   1,171   8.9
    Retail                      667    184     278    39     -   1,168   8.9
    Entertainment /
     Leisure                    157    483     268     -     -     908   6.9
    Hotel                       395    184     149    64    69     861   6.6
    Mixed Use /Mixed
     Collateral                 207     73     353    69    22     724   5.4
    Corporate -Real
     Estate                     470      -      62     -     -     532   4.1
    Other (3)                   394     21       6     -    50     471   3.6
    Multifamily                 150      -     183    40    19     392   3.0
                             ------ ------  ------  ----  ---- ------- -----
      Total                  $4,881 $3,491  $3,354  $830  $543 $13,099 100.0%

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


    (1) Based on carrying value of the Company's total investment portfolio,
        gross of loan loss reserves and accumulated depreciation.
    (2) Includes assets held for sale.
    (3) Performing loans and other includes $197 million of other investments.



SOURCE iStar Financial Inc.

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