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07/25/2002

iStar Financial Announces Record Results and Raises Guidance

* Financing volume up 73% over prior quarter to new record level of $678.3 million. * First mortgages and investment grade corporate tenant lease transactions comprise 93% of second quarter financing commitments. * Adjusted earnings per diluted share increases to record $0.76, exceeding Company's previously-published guidance of $0.74, excluding non-cash charge. * Net investment income hits record high of $76.1 million, up 11.1% from second quarter 2001. * iStar Financial raises adjusted earnings guidance. * iStar Financial completes another highly successful offering under its proprietary iStar Asset Receivables ("STARs") match funding program.

NEW YORK, Jul 25, 2002 /PRNewswire-FirstCall via COMTEX/ -- iStar Financial Inc. (NYSE: SFI) reported that adjusted earnings for the quarter ended June 30, 2002 were $0.76 per diluted share, exceeding the Company's previously- published guidance of $0.74, in each case excluding a $6.1 million non-cash charge related to performance-based vesting of restricted shares granted under its long-term incentive plan. The Company previously announced the charge in its April 2002 press release for first quarter 2002 earnings. For the quarter ended June 30, 2001, adjusted earnings were $0.72 per diluted share.

Adjusted earnings for the second quarter 2002 were $69.8 million on a diluted basis excluding the non-cash charge, up from $63.5 million for second quarter 2001. Adjusted earnings after the non-cash charge were $63.7 million, or $0.69 per diluted share, exceeding the Company's previously-published guidance of $0.67. Adjusted earnings represents net income computed in accordance with GAAP, before gain on sale of corporate tenant lease assets, extraordinary items and cumulative effect of change in accounting principle, plus depreciation and amortization, less preferred stock dividends.

Net income allocable to common shareholders for the quarter was $33.3 million, or $0.36 per diluted share, compared with $49.7 million, or $0.56 per diluted share, in the second quarter 2001. Please see the financial tables which follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income.

In the second quarter of 2002, iStar Financial achieved a return on average book assets of 6.4% and a return on average common book equity of 18.6% prior to the non-cash charge, while leverage increased to 1.7x book equity. Returns on average book assets and equity were 5.9% and 17.0%, respectively, after the charge.

Net investment income for the quarter ended June 30, 2002 increased to a record $76.1 million, from $68.4 million for the second quarter of 2001. Net investment income represents interest and operating lease revenue less interest expense and operating costs for corporate tenant lease assets.

iStar Financial announced that during the second quarter, it closed eight new financing commitments for a record total of $576.0 million, of which $545.9 million was funded during the quarter. In addition, the Company funded $102.3 million under six pre-existing commitments and received $64.5 million in principal repayments. The Company's recent transactions continue to reflect its core business strategy of originating structured financing transactions for owners of high-quality commercial real estate assets and leading corporations across the United States.

Jay Sugarman, iStar Financial's chairman and chief executive officer, stated, "This quarter, we continued to capitalize on our leadership position in value-added financing for high-end real estate borrowers and corporate customers. During unsettled market conditions, we provide our customers with a reliable, responsive and intelligent source of capital, and charge a premium for that reliability and responsiveness."

Mr. Sugarman continued, "In this volatile capital markets environment, we are pleased to have a straightforward business model that relies on adding value for its customers in generating strong total returns for its shareholders, and not on accounting gimmicks or excessive leverage. This visibility has allowed us to generate consistent earnings growth while paying a substantial quarterly dividend to our shareholders."

     Selected Income Statement Data
     (In thousands, except per share amounts)
     (unaudited)

                            Three Months Ended           Six Months Ended
                                  June 30,                   June 30,
                             2002          2001          2002         2001

    Net investment income  $76,050       $68,433     $145,289      $135,201
    Other income             6,713         7,678       14,448        13,861
    Non-interest expense   (28,707)      (18,196)     (48,616)      (35,704)
    Net income before
      minority interest    $54,056       $57,915     $111,121      $113,358

    Minority interest         (41)          (41)         (81)         (136)
    Income from discontinued
      operations (1)           69            42          154           102
    Gain (loss) on sale of
      corporate tenant
      lease assets            595         1,044          595         1,599
    One-time effect of a
      change in accounting
      principle                --            --           --           (282)
    Extraordinary loss --
      early extinguishments
      of debt (2)         (12,166)           --      (12,166)        (1,037)
    Preferred dividends    (9,227)       (9,227)     (18,454)       (18,454)
    Net income allocable
      to common
      shareholders        $33,286       $49,733      $81,169         $95,150

     (1)  Reflects the adoption, as of January 1, 2002, of Statement of
          Financial Accounting Standards No. 144 ("SFAS No. 144"), "Accounting
          For the Impairment or Disposal of Long-Lived Assets." SFAS No. 144
          requires income from corporate tenant lease assets held for sale or
          sold subsequent to December 31, 2001 to be shown as "discontinued
          operations" as of the beginning of the earliest period presented,
          even though such income was actually received by the Company prior
          to the asset's sale.
     (2)  Represents unamortized deferred financing costs and prepayment
          penalties related to the early repayment of iStar Asset Receivables,
          Series 2000-1 in May 2002.


     Selected Balance Sheet Data
     (In thousands)
                                             As of                 As of
                                         June 30, 2002       December 31, 2001
                                           (unaudited)

    Loans and other lending investments,
      net                                  $2,900,597            $2,377,763
    Corporate tenant lease assets, net      2,148,723             1,841,800
    Total assets                            5,270,750             4,378,560
    Debt obligations                        3,272,820             2,495,369
    Total liabilities                       3,378,855             2,588,132
    Total shareholders' equity              1,889,315             1,787,778
Transaction Volume

In the second quarter of 2002, iStar Financial generated a record $576.0 million in new financing commitments in eight separate transactions. The Company also funded an additional $102.3 million under six pre-existing financing commitments and received $64.5 million in loan repayments.

Mr. Sugarman commented, "By compensating our people with equity and thinking like owners, we have always emphasized a disciplined approach to committing capital. In the more heated market conditions between January 2000 and September 2001, we restricted net asset growth to less than $400 million, despite lower short-term earnings growth. We went into year-end 2001 with significant excess liquidity, and are now using a portion of that capacity to capitalize on significantly more favorable risk/return dynamics in our markets. Since October 2001, we have generated $1.1 billion in net asset growth, and are raising our earnings guidance for the rest of the year accordingly." Of the Company's new financing commitments in the second quarter, 93% were either first mortgages or investment grade corporate tenant lease transactions.

During the quarter, the weighted average first dollar and last dollar loan-to-value ratio on new loan commitments and follow-on fundings was 6.8% and 67.4%, respectively. This ratio represents the average beginning and ending points for the Company's lending exposure in the aggregate capitalization of the underlying properties or companies it finances. In its corporate leasing business, the Company's new investments this quarter include two transactions with a weighted average lease term of 15.2 years.

Capital Markets

On May 28, 2002, the Company completed a private offering of asset-backed bonds under its proprietary match-funding program, iStar Asset Receivables ("STARs"). The STARs Series 2002-1 offered bonds consist of 11 classes of investment-grade securities, and the Company received approximately $885 million of gross proceeds from the offering. The STARs Series 2002-1 bonds create match funded term financing for approximately $1.1 billion of the Company's structured finance and corporate tenant lease assets. STARs transactions are accounted for as on-balance sheet financings, with the underlying assets remaining on the Company's books, the issued bonds recorded as debt, and no "gain on sale" recorded as revenue.

The weighted average interest rate on the offered bonds, expressed on an all-floating rate basis, is approximately LIBOR + 56 basis points. The Company used the offering proceeds to redeem the STARs Series 2000-1 bonds and to repay amounts outstanding under its secured credit facilities. Spencer B. Haber, iStar Financial's president and chief financial officer stated, "With the highly successfully completion of another financing under the STARs program, we have again strengthened our financial position by creating significant excess liquidity and capacity under our credit facilities, while maintaining our match funding discipline. In addition, with 109 bondholders participating in our latest STARs offering, we continue to broaden and diversify our capital resources without relying on the commercial paper market."

At June 30, 2002, the Company had $1.2 billion outstanding under $2.2 billion of total credit facilities. In connection with redemption of the STARs Series 2000-1 bonds, the Company recognized an extraordinary loss on early extinguishment of debt of $12.2 million, representing unamortized deferred financing costs and prepayment penalties on the Series 2000-1 transaction.

Consistent with the Securities and Exchange Commission's Regulation FD, iStar Financial comments on earnings expectations within the context of its regular earnings press releases. The Company is raising earnings guidance for both the third quarter and fiscal year 2002. iStar Financial currently expects diluted adjusted EPS for the third quarter of $0.77-$0.78, up from prior guidance of $0.76. The Company also expects diluted adjusted EPS for fiscal year 2002 of $3.02-$3.04, up from $3.00-$3.02. These figures exclude the $0.16 per share non-cash charge previously announced in April 2002 applicable to the second quarter ($0.065 per share) and third quarter ($0.097 per share) of this year. The charge relates to the performance-based vesting of restricted shares granted under the Company's long-term incentive plan and tied to overall shareholder performance (as measured by the Company's total rate of return).

In conjunction with its increased earnings guidance, the Company has raised its expectations for 2002 net asset growth from $700 million to $950 million. The revised $950 million figure assumes $1.4 billion of gross originations and $450 million of loan repayments. Mr. Haber commented, "With interest rates again declining over the past three months, we expect loan repayments to increase somewhat in the latter half of the year. However, any such increase should be more than offset by the strong origination pace we have already generated, and by transactions in our pipeline." Of the upwardly-revised $950 million in net asset growth the Company is forecasting for the entire year, it has already funded $838 million in the first six months.

Mr. Haber continued, "This quarter's record origination levels continue to reflect the more favorable financing climate we have described in our conference calls since early this year. Those of you who have followed our Company for some time know that we added very little net asset growth between mid-2000 and late 2001, reflecting our often-expressed concern that the markets were getting somewhat overheated. We have seen those trends reverse over the past three quarters, and have used some of the significant excess liquidity we raised last year to take advantage of the more favorable environment. We continue to sit on over $1 billion of liquidity available to fund net asset growth, but remain conscious of our longstanding policy of limiting leverage to approximately 2x book debt to equity."

Risk Management

At June 30, 2002, first mortgages, corporate tenant leases and corporate financing transactions collectively comprised 85.0% of the Company's asset base. The weighted average first and last dollar loan-to-value ratio for all structured finance assets (senior and junior loans) was 27.3% and 68.3%, respectively. The weighted average debt service coverage, based on 2002 budgeted cash flow and current interest rates, was 2.1x at June 30, 2002.

At quarter end, the Company's corporate tenant lease assets were 97.0% leased with a weighted average remaining lease term of 9.6 years. Corporate tenant lease expirations for the remainder of 2002 and 2003 represent just 0.9% and 2.3% of annualized total revenue for second quarter 2002. At quarter end, 82.3% of the Company's corporate lease customers were public companies (or subsidiaries of public companies).

In addition, across all of the office properties collateralizing the Company's lending assets, only 3% and 5% of the underlying leases expire in 2002 and 2003, respectively. Timothy J. O'Connor, iStar Financial's chief operating officer, stated, "We have always managed the business to be insulated from short-term changes in underlying commercial real estate market conditions. As a finance business, we want our performance for shareholders and creditors to be independent of which way real estate rents or values are going in any given period. We are very pleased with our current risk management profile, and particularly our minimal exposure to short-term office market conditions in both the lending and leasing businesses."

The Company establishes loss reserves based on a quarterly bottom-up review of each of its assets, as well as using top-down guidance from industry-wide loss data and market trends. On a quarterly basis, the Company conducts a comprehensive credit review, resulting in an individual risk rating assigned to each asset. Attendance at the quarterly review sessions is mandatory for each of the Company's professional employees. These quarterly meetings are designed to enable management to evaluate and proactively manage asset-specific credit issues and identify credit trends on a portfolio-wide basis as an "early warning system."

During the risk ratings review, each asset is assigned a risk rating from "one" to "five," with a "one" indicating superior credit quality, a "two" signifying better than average credit quality, "three" as an average rating, a "four" indicating that management time and attention is required, and a "five" denoting a problem asset. In addition to the ratings system, the Company maintains a "watch list" of assets which require highly proactive asset management to preserve their current ratings.

Based upon the Company's second quarter 2002 review, the weighted average risk rating of the Company's structured finance assets improved to 2.74 from last quarter's rating of 2.77. The weighted average risk rating for corporate tenant lease assets at the end of the second quarter remained essentially unchanged at 2.76 from the prior quarter's rating of 2.78.

For the second quarter, the Company removed two loans from its credit watch list and added no loans or corporate tenant lease assets to the list. The Company now has one loan and two corporate tenant lease assets on the list, with a combined book value of $134.2 million as of June 30, 2002, down from $140.8 million at March 31, 2002. The Company is currently comfortable that it has adequate collateral to support the book value for each of the watch list assets.

At quarter end, accumulated loan loss reserves, cash deposits on corporate tenant leases, and corporate tenant lease depreciation represented approximately 2.92% of the gross book value of the Company's investments (loans and operating leases). As of June 30, 2002, the Company continued to have just two assets on non-accrual status with an aggregate gross book value of $5.6 million, or 0.11% of the gross book value of the Company's investments, down from $5.9 million at March 31, 2002. Each of the Company's two non-accrual assets, as well as the three assets on its watch list, continues to pay as agreed.

In addition to these reserves, the Company has asset-specific cash reserves, deposits and letters of credit totaling $165.2 million (5.65% of gross book value) for its loans and $83.8 million (3.72% of gross book value) for its corporate tenant leases. The Company typically requires these reserves and letters of credit to be funded and/or posted at the closing of a transaction in accounts in which the Company has a security interest. These reserve figures do not include additional reserves posted by borrowers for tax and insurance payments on properties collateralizing the Company's loans.

Mr. O'Connor added, "Eighteen months into a slowing economy and softening commercial real estate environment, we remain very comfortable with overall asset quality and visibility going forward. None of our watch list assets, including our two non-accrual assets, has missed a payment and we expect a full recovery of principal in each case. However, despite our track record of no missed loan payments, our sizable reserves help to protect our position in the event an unforeseen credit issue should develop."

Other Developments

On July 1, 2002, iStar Financial declared a regular quarterly cash dividend of $0.63 per common share for the quarter ended June 30, 2002. The second quarter 2002 dividend, which is payable on July 29, 2002 to holders of record as of July 15, 2002, represents approximately 79.7% of basic adjusted earnings per share for the second quarter, excluding the non-cash incentive compensation charge.

iStar Financial is the largest publicly-traded finance company focused exclusively on the commercial real estate industry. The Company provides structured financing to private and corporate owners of real estate nationwide, including senior and junior mortgage debt, corporate mezzanine and subordinated capital, and corporate net lease financing. The Company, which is taxed as a real estate investment trust, seeks to deliver superior risk-adjusted returns on equity to shareholders by providing innovative and value-added financing solutions to its customers.

iStar Financial will hold a quarterly earnings conference call at 11:00 a.m. EDT today, July 25, 2002. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through iStar Financial's Web site, http://www.istarfinancial.com, under the "investor relations" section. To listen to the live call, please go to the Web site'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 Web site.

(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 availability and cost of capital for future investments, competition within the finance and real estate industries, economic conditions, and other risks detailed from time to time in iStar Financial Inc.'s SEC reports.) Financial Tables to Follow

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

                             Three Months Ended          Six Months Ended
                                   June 30,                  June 30,
                             2002          2001        2002           2001

    Revenue:
      Interest income      $64,395       $63,903     $120,271      $130,816
      Operating lease
        income              61,413        49,134      119,488        98,546
      Other income           6,713         7,678       14,448        13,861
        Total revenue      132,521       120,715      254,207       243,223

    Costs and expenses:
      Interest expense      46,775        41,331       88,464        87,655
      Operating costs --
        corporate tenant
        lease assets         2,983         3,273        6,006         6,506
      Depreciation and
        amortization        11,655         8,748       22,285        17,544
      General and
        administrative       8,144         6,498       14,761        12,600
      General and
        administrative --
        Stock-based
        compensation
        expense              6,908         1,200        7,820         2,060
      Provision for
        loan losses          2,000         1,750        3,750         3,500
        Total costs and
          expenses          78,465        62,800      143,086       129,865

    Net income before
      minority interest     54,056        57,915      111,121       113,358
      Minority interest        (41)          (41)         (81)         (136)
      Income from discontinued
        operations (1)          69            42          154           102
      Gain (loss) on sale of
        corporate tenant
        lease assets           595         1,044          595         1,599
      One-time effect of a
        change in accounting
        principle               --            --           --          (282)
      Extraordinary loss --
        early extinguishments
        of debt (2)        (12,166)           --      (12,166)       (1,037)
    Net income              42,513        58,960       99,623       113,604

    Preferred dividends     (9,227)       (9,227)     (18,454)      (18,454)
    Net income allocable to
      common shareholders  $33,286       $49,733      $81,169       $95,150

    Net income per common share:
      Basic                  $0.38         $0.58        $0.92         $1.11
      Diluted                $0.36         $0.56        $0.89         $1.09

    Weighted average common shares outstanding:
      Basic                 88,656        86,081       88,193        85,958
      Diluted               92,039        88,142       90,893        87,584

     (1)  Reflects the adoption, as of January 1, 2002, of Statement of
          Financial Accounting Standards No. 144 ("SFAS No. 144"), "Accounting
          For the Impairment or Disposal of Long-Lived Assets." SFAS No. 144
          requires income from corporate tenant lease assets held for sale or
          sold subsequent to December 31, 2001 to be shown as "discontinued
          operations" as of the beginning of the earliest period presented,
          even though such income was actually received by the Company prior
          to the asset's sale.
     (2)  Represents unamortized deferred financing costs and prepayment
          penalties related to the early repayment of iStar Asset Receivables,
          Series 2000-1 in May 2002.


                             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,
                                      2002       2001      2002        2001

     ADJUSTED EARNINGS: (1)
     Net income                     $42,513    $58,960    $99,623    $113,604
     Add: Joint venture income           --        234        521         474
     Add: Depreciation               11,655      8,748     22,285      17,544
     Add: Joint venture depreciation  1,221        954      2,438       1,905
     Add: One-time effect of a change
       in accounting principle           --         --         --         282
     Add: Amortization                6,016      4,890     11,751      10,432
     Less: Preferred dividends       (9,227)    (9,227)   (18,454)    (18,454)
     Less: (Gain) loss on sale of
       corporate tenant lease assets   (595)    (1,044)      (595)     (1,599)
     Add: Extraordinary loss --
       early extinguishment of debt  12,166         --     12,166       1,037
     Adjusted diluted earnings
       allocable to common
       shareholders:
       Before non-cash incentive
         compensation charge        $69,825    $63,515   $135,811    $125,225
        After non-cash incentive
          compensation charge       $63,749    $63,515   $129,735    $125,225

     Adjusted earnings per diluted common share:
        Before non-cash incentive
          compensation charge         $0.76      $0.72      $1.49       $1.42
        After non-cash incentive
          compensation charge         $0.69      $0.72      $1.42       $1.42

     Weighted average common
       diluted shares outstanding    92,039     88,440     91,263      87,957

     (1)  Adjusted earnings should be examined in conjunction with net income
          as shown in the Consolidated Statements of Operations. Adjusted
          earnings should not be considered as an alternative to net income
          (determined in accordance with GAAP) as an indicator of the
          Company's performance, or to cash flows from operating activities
          (determined in accordance with GAAP) as a measure of the Company's
          liquidity, nor is this measure indicative of funds available to fund
          the Company's cash needs or available for distribution to
          shareholders. The Company's management believes that adjusted
          earnings more closely approximates operating cash flow and is a
          useful measure for investors to consider, in conjunction with net
          income and other GAAP measures, in evaluating the Company's
          financial performance. This is primarily because the Company is a
          commercial finance company that focuses on real estate lending and
          corporate tenant leasing; therefore, the Company's net income
          (determined in accordance with  GAAP) reflects significant non-cash
          depreciation expense on corporate tenant lease assets. 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.
                         Consolidated Balance Sheets
                                (In thousands)

                                                  As of             As of
                                             June 30, 2002   December 31, 2001
                                               (unaudited)

     ASSETS

     Loans and other lending investments,
       net                                     $2,900,597         $2,377,763
     Corporate tenant lease assets, net         2,148,723          1,841,800
     Cash and cash equivalents                     18,338             15,670
     Restricted cash                               31,244             17,852
     Accrued interest and operating lease
       income receivable                           29,291             26,688
     Deferred operating lease income
       receivable                                  29,281             21,195
     Deferred expenses and other assets           113,276             77,592
                   Total assets                $5,270,750         $4,378,560

     LIABILITIES AND SHAREHOLDERS' EQUITY
     Accounts payable and other liabilities      $100,810             $87,538
     Dividends payable                              5,225               5,225

     Debt obligations:
            Unsecured senior notes                611,302             609,302
            Unsecured revolving credit facilities      --                  --
            Secured revolving credit facilities 1,217,813             900,546
            Secured term loans                    545,186             506,613
            iStar Asset Receivables
              secured notes                       883,236             462,373
            Other debt obligations                 15,283              16,535
                   Total liabilities           $3,378,855          $2,588,132
     Minority interest                              2,580               2,650
     Shareholders' equity                       1,889,315           1,787,778
                   Total liabilities and
                     shareholders' equity      $5,270,750          $4,378,560


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

    SECOND QUARTER 2002 PERFORMANCE STATISTICS

    Return on Average Book Assets
                                         Three Months Ended   Six Months Ended
                                             June 30, 2002      June 30, 2002

    Adjusted Basic Earnings to Common
      Shareholders (1) (2)                      $69,825            $135,290
    Plus: Preferred Dividends                     9,227              18,454
    Adjusted Basic Earnings before
      Preferred Dividends                       $79,052            $153,744
    Adjusted Basic Earnings before
      Preferred Dividends -- Annualized (A)    $316,208            $307,488

    Average Total Book Assets (B)            $4,957,580          $4,824,655

    Return on Average Book Assets (A)/(B)           6.4%                6.4%

    Return on Average Common Book Equity

    Adjusted Basic Earnings to Common
      Shareholders (1) (2)                      $69,825            $135,290
    Adjusted Basic Earnings to Common --
      Annualized (C)                           $279,300            $270,580

    Average Total Book Equity                $1,879,861          $1,838,547
    Less: Book Value of Preferred Equity       (382,000)           (382,000)
    Average Common Book Equity (D)           $1,497,861          $1,456,547

    Return on Average Common Book Equity
      (C)/(D)                                      18.6%               18.6%

    Efficiency Ratio

    General & Administrative Expenses            $8,144             $14,761
    Plus: General and Administrative --
      Stock-Based Compensation                    6,908               7,820
    Total Corporate Overhead (E)                $15,052             $22,581

    Total Revenue (F)                          $132,521            $254,207

    Efficiency Ratio (E)/(F)                       11.4%                8.9%

    SECOND QUARTER 2002 CREDIT STATISTICS

    Book Debt/Equity

    Book Debt (A)                            $3,272,820

    Total Book Equity (B)                    $1,889,315

    Book Debt/Book Equity (A)/(B)                   1.7x

     (1)  Adjusted earnings should be examined in conjunction with net income
          as shown in the Consolidated Statements of Operations. Adjusted
          earnings should not be considered as an alternative to net income
          (determined in accordance with GAAP) as an indicator of the
          Company's performance, or to cash flows from operating activities
          (determined in accordance with GAAP) as a measure of the Company's
          liquidity, nor is this measure indicative of funds available to fund
          the Company's cash needs or available for distribution to
          shareholders. The Company's management believes that adjusted
          earnings more closely approximates operating cash flow and is a
          useful measure for investors to consider, in conjunction with net
          income and other GAAP measures, in evaluating the Company's
          financial performance. This is primarily because the Company is a
          commercial finance company that focuses on real estate lending and
          corporate tenant leasing; therefore, the Company's net income
          (determined in accordance with GAAP) reflects significant non-cash
          depreciation expense on corporate tenant lease assets. 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)  Excludes a $6.1 million non-cash charge related to performance-based
          vesting of restricted shares granted under the Company's long-term
          incentive plan.


                             iStar Financial Inc.
                           Supplemental Information
                                (In thousands)

     SECOND QUARTER CREDIT STATISTICS  (cont.)
                                             Three Months          Six Months
                                                 Ended                Ended
     Interest Coverage                       June 30, 2002       June 30, 2002

     EBITDA (1) (A)                             $118,562            $227,947

     GAAP Interest Expense (B)                   $46,775             $88,464

     EBITDA / GAAP Interest Expense (A)/(B)          2.5x                2.6x

     Fixed Charge Coverage

     EBITDA (1) (C)                             $118,562            $227,947

     GAAP Interest Expense                       $46,775             $88,464
     Plus: Preferred Dividends                     9,227              18,454
     Total Fixed Charges (D)                     $56,002            $106,918

     EBITDA / Fixed Charges (C) / (D)                2.1x               2.1x

     FINANCING  VOLUME  SUMMARY  STATISTICS

    Three Months Ended June 30, 2002         LOAN ORIGINATIONS
                                                      Total/
                                        Floating    Weighted       CORPORATE
                          Fixed Rate      Rate       Average        LEASING

    Amount Committed      $162,732      $248,581     $411,313      $165,488
    Weighted Average
      GAAP Yield              9.10%         7.64%        8.22%         9.46%
    Weighted Average All-In
      Spread/Margin
      (basis points) (2)     + 440         + 579           --         + 424
    Weighted Average First
      $ Loan-to-Value Ratio     --          11.3%         6.8%           --
    Weighted Average Last
      $ Loan-to-Value Ratio   65.5%         68.6%        67.4%           --

    UNFUNDED COMMITMENTS

    Number of Loans with
      Unfunded Commitments                    11

    Discretionary Commitments            $41,785
    Non-Discretionary Commitments         44,124
    Total Unfunded Commitments           $85,909

    Estimated Weighted Average
      Funding Period              Approximately 2.4 years

     (1)  EBITDA is calculated as total revenue minus the sum of general and
          administrative expenses, general and administrative - stock-based
          compensation (excluding a $6.1 million non-cash charge related to
          performance-based vesting of restricted shares granted under the
          Company's long-term incentive plan), provision for loan losses and
          operating costs on corporate tenant lease assets. EBITDA should be
          examined in conjunction with net income as shown in the Consolidated
          Statements of Operations.  EBITDA should not be considered as an
          alternative to net income (determined in accordance with GAAP) as an
          indicator of the Company's performance, or to cash flows from
          operating activities (determined in accordance with GAAP) as a
          measure of the Company's liquidity, nor is this measure indicative
          of funds available to fund the Company's cash needs or available for
          distribution to shareholders.  The Company's management believes
          that EBITDA more closely approximates operating cash flow and is a
          useful measure for investors to consider, in conjunction with net
          income and other GAAP measures, in evaluating the Company's
          financial performance. This is primarily because the Company is a
          commercial finance company that focuses on real estate lending and
          corporate tenant leasing; therefore, the Company's net income
          (determined in accordance with GAAP) reflects significant non-cash
          depreciation expense on corporate tenant lease assets. It should be
          noted that the Company's manner of calculating EBITDA may differ
          from the calculations of similarly-titled measures by other
          companies.
     (2)  Based on average quarterly one-month LIBOR (floating-rate loans) and
          U.S. Treasury rates (fixed-rate loans and corporate leasing
          transactions) during the quarter.


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

    PORTFOLIO STATISTICS AS OF JUNE 30, 2002 (1)

    Security Type                                      $                 %
    First Mortgages                                 $1,772             34.2%
    Second Mortgages                                   391              7.6%
    Corporate/Partnership Loans/Other                  763             14.7%
    Corporate Tenant Leases                          2,250             43.5%
                 Total                              $5,176            100.0%

    Collateral Type                                    $                 %
    Office                                          $2,453             47.4%
    Industrial/R&D                                     609             11.8%
    Retail                                             215              4.1%
    Hotel (Lending)                                    633             12.2%
    Hotel (Investment-Grade CTL)                       272              5.3%
    Mixed Use/Mixed Collateral                         439              8.5%
    Apartment/Residential                              182              3.5%
    Conference/Entertainment                           357              6.9%
    Homebuilder/Land                                    16              0.3%
                 Total                              $5,176            100.0%

    Product Line                                       $                 %
    Structured Finance                              $1,191             23.0%
    Corporate Finance                                  736             14.2%
    Portfolio Finance                                  470              9.1%
    Loan Acquisition                                   529             10.2%
    Corporate Tenant Leasing                         2,250             43.5%
                 Total                              $5,176            100.0%

    Collateral Location                                $                 %
    West                                            $1,414             27.3%
    Southwest                                           82              1.6%
    South                                              765             14.8%
    Central                                            422              8.2%
    North Central                                      248              4.8%
    Northeast                                          898             17.3%
    Mid-Atlantic                                       576             11.1%
    Southeast                                          482              9.3%
    Northwest                                          255              4.9%
    Various                                             34              0.7%
                 Total                              $5,176            100.0%

     (1)  Figures presented prior to loan loss reserves and accumulated
          depreciation.

SOURCE iStar Financial Inc.

CONTACT: Spencer B. Haber, President & Chief Financial Officer, Andrew C. Richardson, Senior Vice President, Capital Markets, or Erin C. Hart, Associate, Investor Relations, +1-212-930-9400, all of iStar Financial Inc.

URL: http://www.istarfinancial.com http://www.prnewswire.com

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