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10/24/2002

iStar Financial Announces Third Quarter Results

* Net investment income hits record high of $79.3 million, up 20% from third quarter 2001. * 2002 year-to-date net asset growth reaches $1.0 billion. * First mortgages comprise 77% of third quarter financing commitments. * Adjusted earnings per diluted share increases to $0.77, excluding non-cash charge. * Company receives investment-grade senior unsecured credit rating from Fitch Ratings. * Standard & Poor's and Moody's Investor Service raise iStar Financial's ratings outlook to "positive" for a move to investment grade. * iStar Financial closes new $500 million revolving credit facility.

NEW YORK, Oct 24, 2002 /PRNewswire-FirstCall via COMTEX/ -- iStar Financial Inc. (NYSE: SFI) reported that adjusted earnings for the quarter ended September 30, 2002 were $0.77 per diluted share, excluding an $8.9 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 April 2002. After the non-cash charge, adjusted earnings were $0.67 per diluted share. For the quarter ended September 30, 2001, adjusted earnings were $0.73 per diluted share.

Adjusted earnings for third quarter 2002 were $71.3 million on a diluted basis excluding the non-cash charge and $62.5 million after the charge, compared to $64.9 million for third quarter 2001. Adjusted earnings represents net income computed in accordance with GAAP, before gain (loss) from discontinued operations, 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 $43.4 million, or $0.47 per diluted share, compared with $48.3 million, or $0.54 per diluted share, in third 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.

Net investment income for the quarter ended September 30, 2002 increased to a record $79.3 million, up 20.2% from $66.0 million for the third quarter of 2001. Net investment income represents interest income, operating lease revenue and equity in earnings from joint ventures and unconsolidated subsidiaries less interest expense and operating costs for corporate tenant lease assets.

In the third quarter of 2002, iStar Financial achieved a return on average book assets of 6.1% and a return on average common book equity of 19.0% prior to the non-cash charge, while leverage increased slightly to 1.8x book equity. Returns on average book assets and equity were 5.4% and 16.6%, respectively, after the non-cash charge.

iStar Financial announced that during the third quarter, it closed eight new financing commitments for a total of $334.5 million, of which $329.5 million was funded during the quarter. In addition, the Company funded $2.5 million under five pre-existing commitments and received $233.7 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, "Given the unprecedented weakness in the macro environment, iStar Financial's investment and funding strategies continue to emphasize risk mitigation and capital preservation. Those who have followed our Company know that we have been bearish on the economy and commercial real estate fundamentals since mid-2000. Consistent with our outlook, between December 1999 and September 2001, we grew net assets by just $400 million. This conservative posture has served us well in the current environment as our asset quality and balance sheet remain strong."

Mr. Sugarman continued, "Following the market dislocations in late 2001, we have utilized our substantial liquidity to capitalize on opportunities in the senior mortgage financing and investment-grade sale/leaseback markets. In the 12 months since September 30, 2001, we have grown net assets by $1.1 billion. Of our new financing commitments during this period, 83% represented first mortgages and investment-grade sale/leasebacks."

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

                             Three Months Ended         Nine Months Ended
                                 September 30,              September 30,
                             2002          2001        2002          2001

    Net investment income  $79,305       $65,987     $220,244      $197,946
    Other income             4,822         9,187       21,263        23,893
    Non-interest expense   (32,363)      (17,047)     (80,977)      (52,752)
    Net income before
     minority interest     $51,764       $58,127     $160,530      $169,087

    Minority interest in
     consolidated entities     (40)          (41)        (122)         (177)
    Income from
     discontinued
     operations(1)             823         1,246        3,333         3,744
    Gain (loss) from
     discontinued operations   123        (1,196)         717           403
    Extraordinary loss on
     early extinguishment
     of debt                     -          (583)     (12,166)       (1,620)
    One-time effect of a
     change in accounting
     principle                   -             -            -          (282)
    Preferred dividends     (9,227)       (9,227)     (27,681)      (27,681)
    Net income allocable to
     common shareholders   $43,443       $48,326     $124,611      $143,474

    (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.


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

    Loans and other lending investments, net      $2,939,769     $2,377,763
    Corporate tenant lease assets, net             2,174,555      1,781,565
    Total assets                                   5,367,483      4,378,560
    Debt obligations                               3,387,560      2,495,369
    Total liabilities                              3,487,357      2,588,132
    Total shareholders' equity                     1,877,545      1,787,778

Transaction Volume

In the third quarter of 2002, iStar Financial generated $334.5 million in new financing commitments in eight separate transactions. The Company also funded an additional $2.5 million under five pre-existing financing commitments and received $233.7 million in loan repayments. Of the Company's third quarter financing commitments, 77% represented first mortgages. The third quarter originations bring iStar Financial's net asset growth to $981.5 million for the nine months ended September 30, 2002.

Mr. Sugarman commented, "Relative to alternative asset classes, we continue to see very attractive risk-adjusted returns in our core real estate finance business, and our investment pipeline remains robust. However, as U.S. Treasury rates and LIBOR base rates have fallen to record lows, absolute rates of return have declined. Looking ahead for 2003, we will continue to alter our investment mix in favor of safer assets until such time as we see demonstrable signs of improvement in economic, geopolitical and commercial real estate market conditions. While this may produce more moderate earnings growth in 2003, the safety of our earnings stream and our substantial free cash flow will continue to provide a rock solid foundation for our dividend."

During the quarter, the weighted average first dollar and last dollar loan-to-value ratio on new loan commitments was 0.9% and 74.6%, 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.

Capital Markets

During the third quarter of 2002, Fitch Ratings upgraded iStar Financial's senior unsecured credit rating to BBB- from BB+. In addition, Standard & Poor's and Moody's Investors Service raised their ratings outlooks for the Company's senior unsecured credit rating to BB+ "positive" and Ba1 "positive," respectively.

On September 30, 2002, the Company closed a new $500 million secured revolving credit facility with a leading financial institution, bringing the Company's total committed credit facilities to $2.7 billion. The facility accepts a broad range of structured finance and corporate tenant lease assets, and has a final maturity date of September 2005. At September 30, 2002, the Company had $1.3 billion outstanding under its five primary credit facilities.

Spencer B. Haber, iStar Financial's president, stated, "This quarter, we are pleased to report another series of positive credit ratings moves and additional balance sheet firepower. The rating agencies' acknowledgement of our continued strong performance stands out in a difficult economic and credit environment. Achieving investment-grade status at Fitch is an important milestone for iStar Financial, and our goal is to convert Moody's and S&P's positive outlooks into similar ratings within the next nine to 15 months."

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 currently expects diluted adjusted EPS for fiscal year 2002 of $3.02 per share, excluding the $0.16 per share previously-announced non-cash charge. For fiscal year 2003, the Company currently expects diluted adjusted EPS of $3.22-$3.28 per share. The Company's 2003 earnings guidance assumes approximately $950 million of net asset growth.

For the first quarter of fiscal year 2003, the Company currently expects to increase its dividend by 5.2%, from $0.63 per share to $0.6625 per share. This expectation is based upon the Company's current forecast for its results of operations for that period. Actual results may differ due to the factors discussed elsewhere in this press release, and dividends are only payable upon declaration by the Company's Board of Directors. For fiscal 2003, the Company's dividend payout ratio should range from approximately 78%-80%, based on expected basic adjusted EPS of $3.32-$3.38 per share and assuming the increased dividend is paid for each quarter.

Mr. Haber commented, "Despite low base rates and an even more conservative posture regarding investment mix going into next year, we still expect steady growth in both the dividend and earnings. At the same time, our dividend payout ratio should further improve as earnings growth continues to exceed dividend growth. The safety margin created by substantial earnings and free cash flow coverage of our dividend should provide investors with a reliable current yield as a foundation for our stock's total rate of return potential."

Mr. Haber added, "Our 2003 guidance assumes net asset growth of approximately $950 million for the full year, which is less than what we have already generated in the first nine months of 2002. We have also been appropriately conservative with respect to net investment margins and releasing assumptions for the relatively small number of CTL leases which rollover in 2003."

Risk Management

At September 30, 2002, first mortgages, corporate tenant leases and corporate financing transactions collectively comprised 87.7% 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 24.9% and 68.1%, respectively. The weighted average debt service coverage for all structured finance assets, based on 2002 budgeted cash flow and current interest rates, was 2.1x at September 30, 2002.

At quarter end, the Company's corporate tenant lease assets were 97.3% leased with a weighted average remaining lease term of 9.1 years. Corporate tenant lease expirations for the remainder of 2002 and 2003 represent 0.9% and 2.5% of annualized total revenue for third quarter 2002. At quarter end, 85.5% of the Company's corporate lease customers were public companies (or subsidiaries of public companies).

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 third quarter 2002 review, the weighted average risk rating of the Company's structured finance assets increased slightly, to 2.81 from last quarter's rating of 2.74. The weighted average risk rating for corporate tenant lease assets at the end of the third quarter also rose slightly, to 2.80 from the prior quarter's rating of 2.76.

For the third quarter, the Company added one loan and one corporate tenant lease asset to its credit watch list. The Company now has two loans and three corporate tenant lease assets on the list, with a combined book value of $137.3 million as of September 30, 2002, as compared to $134.2 million at June 30, 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 and other asset-specific credit protection represented an aggregate of approximately 5.67% of the gross book value of the Company's loans. In addition, cash deposits, letters of credit and accumulated depreciation relating to corporate tenant lease assets represented 9.36% of the gross book value of the Company's corporate tenant lease assets at quarter end. As of September 30, 2002, the Company continued to have just two assets on non-accrual status with an aggregate gross book value of $5.5 million, or 0.1% of the gross book value of the Company's investments, down from $5.6 million at June 30, 2002. Each of the Company's two non-accrual assets continues to pay as agreed.

Timothy J. O'Connor, iStar Financial's chief operating officer, stated, "Asset quality remains strong, even in the face of weaker economic and commercial real estate fundamentals. This is evidenced by continued healthy debt service coverage on our loans and minimal changes to overall risk ratings and watch list assets during the quarter. As in the past, we have successfully identified potential credit issues early in the cycle, and proactively worked to reduce our exposure before weaker asset or customer performance resulted in credit trouble."

Other Developments

On October 1, 2002, iStar Financial declared a regular quarterly cash dividend of $0.63 per common share for the quarter ended September 30, 2002. The third quarter 2002 dividend, which is payable on October 29, 2002 to holders of record as of October 15, 2002, represents approximately 78.8% of basic adjusted earnings per share for the third 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 10:00 a.m. ET today, October 24, 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.)

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

                             Three Months Ended        Nine Months Ended
                                September 30,              September 30,
                             2002          2001        2002          2001
    Revenue:
     Interest income       $66,786       $62,389     $187,057      $193,205
     Operating lease income 63,561        45,984      177,483       137,605
     Other income            4,822         9,187       21,263        23,893
    Total revenue          135,169       117,560      385,803       354,703

    Costs and expenses:
     Interest expense       47,471        41,141      135,935       128,796
     Operating costs -
    corporate tenant lease
    assets                   3,656         3,206        9,662         9,713
     Depreciation and
    amortization            12,729         8,646       35,013        26,191
     General and
    administrative           8,088         6,131       22,849        18,731
     General and
    administrative -
    stock-based
    compensation             9,546           520       17,365         2,580
     Provision for loan
    losses                   2,000         1,750        5,750         5,250
    Total costs and
    expenses                83,490        61,394      226,574       191,261

    Net income before
     minority interest      51,679        56,166      159,229       163,442
     Equity in earnings
    from joint ventures
    and unconsolidated
    subsidiaries                85         1,961        1,301         5,645
     Minority interest in
    consolidated entities     (40)          (41)        (122)         (177)
     Income from
    discontinued
    operations (1)             823         1,246        3,333         3,744
     Gain (loss) from
    discontinued operations    123       (1,196)          717           403
     Extraordinary loss on
    early extinguishment
    of debt                      -         (583)     (12,166)       (1,620)
     One-time effect of a
    change in accounting
    principle                    -             -            -         (282)
    Net income              52,670        57,553      152,292       171,155

    Preferred dividends    (9,227)       (9,227)     (27,681)      (27,681)
    Net income allocable to
     common shareholders   $43,443       $48,326     $124,611      $143,474

    Net income per common
     share:
     Basic                   $0.49         $0.56        $1.41         $1.67
     Diluted                 $0.47         $0.54        $1.36         $1.63

    Weighted average common
     shares outstanding:
     Basic                  89,431        86,470       88,610        86,130
     Diluted                92,566        88,824       91,449        87,999

    (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.


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

                            Three Months Ended    Nine Months Ended
                              September 30,         September 30,
                             2002       2001      2002        2001

     ADJUSTED EARNINGS:(1)
     Net income             $52,670    $57,553   $152,292    $171,155
     Add: Joint venture
      income                      -        235        621         709
     Add: Depreciation       12,730      8,669     35,053      26,255
     Add: Joint venture
      depreciation and
      amortization              960        960      3,391       2,828
     Add: Amortization        5,451      4,959     17,202      15,391
     Add: Extraordinary
      loss - early
      extinguishment of
      debt                        -        583     12,166       1,620
     Add: One-time effect
      of a change in
      accounting principle        -          -          -         282
     Less: Preferred
      dividends              (9,227)    (9,227)   (27,681)    (27,681)
     Less: (Gain) loss
      from discontinued
      operations               (123)     1,196       (717)       (403)
     Adjusted diluted
      earnings allocable
      to common
      shareholders:
        Before non-cash
         incentive
         compensation
         charge             $71,335    $64,928   $207,277    $190,156
        After non-cash
         incentive
         compensation
         charge             $62,461    $64,928   $192,327    $190,156

     Adjusted earnings per
      diluted common
      share:
        Before non-cash
         incentive
         compensation
         charge               $0.77      $0.73      $2.26       $2.15
        After non-cash
         incentive
         compensation
         charge               $0.67      $0.73      $2.10       $2.15

     Weighted average
      common shares
      outstanding:
        Basic                89,431     86,470     88,610      86,130
        Diluted              92,566     89,197     91,746      88,372

     Common shares
      outstanding at end
      of period:
        Basic                89,937     86,569
        Diluted              92,560     88,901

     (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
                                              September 30,    December 31,
                                                   2002            2001
                                               (unaudited)
     ASSETS

     Loans and other lending
      investments, net                          $2,939,769      $2,377,763
     Corporate tenant lease assets, net          2,174,555       1,781,565
     Investments in joint ventures and
      unconsolidated subsidiaries                   24,362          58,226
     Assets held for sale                           24,800               -
     Cash and cash equivalents                      20,144          15,670
     Restricted cash                                36,949          17,852
     Accrued interest and operating
      lease income receivable                       18,055          26,688
     Deferred operating lease income
      receivable                                    33,311          21,195
     Deferred expenses and other assets             95,538          79,601
                 Total assets                   $5,367,483      $4,378,560

     LIABILITIES AND SHAREHOLDERS' EQUITY

     Accounts payable and other
      liabilities                                  $94,572         $87,538
     Dividends payable                               5,225           5,225

     Debt obligations:
           Unsecured senior notes                  612,337         609,302
           Unsecured revolving credit
            facilities                                   -               -
           Secured revolving credit
            facilities                           1,258,427         900,546
           Secured term loans                      622,743         506,613
           iStar Asset Receivables
            secured notes                          877,770         462,373
           Other debt obligations                   16,283          16,535
                 Total liabilities              $3,487,357      $2,588,132
     Minority interest                               2,581           2,650
     Shareholders' equity                        1,877,545       1,787,778
                 Total liabilities and
                  shareholders' equity          $5,367,483      $4,378,560


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

    THIRD QUARTER 2002 PERFORMANCE STATISTICS

                                                Three Months    Nine Months
    Return on Average Book Assets                  Ended           Ended
                                              September 30,     September 30,
                                                   2002            2002

    Adjusted Basic Earnings to Common
     Shareholders (1) (2)                           $71,335      $206,656
    Plus: Preferred Dividends                         9,227        27,681
    Adjusted Basic Earnings before
     Preferred Dividends                            $80,562      $234,337
    Adjusted Basic Earnings before
     Preferred Dividends - Annualized (A)          $322,248      $312,449

    Average Total Book Assets (B)                $5,319,117    $4,873,022

    Return on Average Book Assets (A) / (B)            6.1%          6.4%

    Return on Average Common Book Equity

    Adjusted Basic Earnings to Common
     Shareholders (1) (2)                           $71,335      $206,656
    Adjusted Basic Earnings to Common -
     Annualized (C)                                $285,340      $275,541

    Average Total Book Equity                    $1,883,430    $1,832,662
    Less: Book Value of Preferred Equity           (382,000)     (382,000)
    Average Common Book Equity (D)               $1,501,430    $1,450,662

    Return on Average Common Book Equity
     (C) / (D)                                        19.0%         19.0%

    Efficiency Ratio

    General & Administrative Expenses                $8,088       $22,849
    Plus: General and Administrative -
     Stock-Based Compensation                         9,546        17,365
    Total Corporate Overhead (E)                    $17,634       $40,214

    Total Revenue (F)                              $135,169      $385,803

    Efficiency Ratio (E) / (F)                        13.0%         10.4%

    THIRD QUARTER 2002 CREDIT STATISTICS

    Book Debt / Equity

    Book Debt (A)                                $3,387,560

    Total Book Equity (B)                        $1,877,545

    Book Debt / Book Equity (A) / (B)                  1.8x

    (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 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 non-cash charge related to performance-based vesting of
        restricted shares granted under the Company's long-term incentive plan
        of $8.9 million and $15.0 million for the three- and nine-month
        periods, respectively.


                               iStar Financial Inc.
                             Supplemental Information
                                  (In thousands)

     THIRD QUARTER 2002 CREDIT STATISTICS  (cont.)

                                       Three Months Ended    Nine Months Ended
     Interest Coverage                 September 30, 2002   September 30, 2002

     EBITDA (1) (A)                          $120,838             $346,428
     GAAP Interest Expense (B)                $47,471             $135,935
     EBITDA/GAAP Interest Expense (A)/(B)        2.5x                 2.5x

     Fixed Charge Coverage

     EBITDA (1) (C)                          $120,838             $346,428
     GAAP Interest Expense                    $47,471             $135,935
     Plus: Preferred Dividends                  9,227               27,681
     Total Fixed Charges (D)                  $56,698             $163,616

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

     FINANCING VOLUME SUMMARY STATISTICS
     Three Months Ended September 30, 2002        LOAN ORIGINATIONS
                                                          Total/
                                        Fixed  Floating   Weighted   CORPORATE
                                         Rate    Rate     Average     LEASING

     Amount Committed                  $5,062  $259,008   $264,070     $70,396
     Weighted Average GAAP Yield        9.43%     6.39%      6.44%       9.05%
     Weighted Average All-In
      Spread/Margin (basis points) (2)  + 601     + 457         --       + 642
     Weighted Average First $
      Loan-to-Value Ratio               47.3%      0.0%       0.9%          --
     Weighted Average Last $
      Loan-to-Value Ratio               61.7%     74.9%      74.6%          --

     UNFUNDED COMMITMENTS

     Number of Loans with
      Unfunded Commitments                           9

     Discretionary Commitments                 $32,920
     Non-Discretionary
      Commitments                               30,839
     Total Unfunded Commitments                $63,759

     Estimated Weighted Average
     Funding Period                   Approximately 2.1 years


(1) EBITDA is calculated as total revenue plus equity in earnings from

joint ventures and unconsolidated subsidiaries minus the sum of

general and administrative expenses, general and administrative -- -

stock-based compensation (excluding the 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 SEPTEMBER 30, 2002 (1)

    Security Type                                       $                 %
    First Mortgages                                  $1,975             37.3%
    Second Mortgages                                    301              5.7%
    Corporate/Partnership Loans/Other                   691             13.1%
    Corporate Tenant Leases                           2,320             43.9%
                 Total                               $5,287            100.0%

    Collateral Type                                     $                 %
    Office (CTL)                                     $1,408             26.6%
    Office (Lending)                                  1,053             20.0%
    Industrial/R&D                                      756             14.3%
    Retail                                              214              4.0%
    Hotel (Lending)                                     612             11.6%
    Hotel (Investment-Grade CTL)                        271              5.1%
    Mixed Use/Mixed Collateral                          325              6.2%
    Apartment/Residential                               254              4.8%
    Conference/Entertainment                            356              6.7%
    Other                                                38              0.7%
                 Total                               $5,287            100.0%

    Product Line                                        $                 %
    Structured Finance                               $1,382             26.1%
    Corporate Finance                                   706             13.4%
    Portfolio Finance                                   349              6.6%
    Loan Acquisition                                    530             10.0%
    Corporate Tenant Leasing                          2,320             43.9%
                 Total                               $5,287            100.0%

    Collateral Location                                 $                 %
    West                                             $1,520             28.8%
    Southwest                                            82              1.5%
    South                                               664             12.6%
    Central                                             417              7.9%
    North Central                                       246              4.7%
    Northeast                                         1,007             19.1%
    Mid-Atlantic                                        589             11.1%
    Southeast                                           497              9.4%
    Northwest                                           227              4.3%
    Various                                              38              0.6%
                 Total                               $5,287            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, or Andrew C. Richardson, Senior Vice President, Capital Markets, or Erin C. Gatewood, 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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