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04/24/2003

iStar Financial Announces Record Quarterly Earnings

- Adjusted earnings per diluted common share increases to a record $0.78 for first quarter 2003 from $0.73 for first quarter 2002.
- Quarterly dividend increases 5.2% to $0.6625 per share.
- New financing activity totals $383 million.
- Number of transactions completed during the quarter reaches new record.
- First mortgages and investment grade corporate tenant lease transactions comprise 72% of first quarter financing commitments.
- iStar Financial issues $150 million of unsecured Senior Notes due March 2008.

NEW YORK, April 24 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI) reported that adjusted earnings for the quarter ended March 31, 2003 were $0.78 per diluted common share, up from $0.73 per diluted common share for the quarter ended March 31, 2002. Adjusted earnings allocable to common shareholders for first quarter 2003 were $78.8 million on a diluted basis, compared to $65.7 million for first quarter 2002. Adjusted earnings represents net income to common shareholders, computed in accordance with GAAP, before depreciation, amortization, gain (loss) from discontinued operations, extraordinary items and cumulative effect of change in accounting principle.

Net income allocable to common shareholders for the first quarter was $58.2 million, or $0.58 per diluted common share, compared with $47.9 million, or $0.53 per diluted common share, in the first quarter of 2002. 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 first quarter of 2003, iStar Financial achieved a return on average book assets of 6.2% and a return on average common book equity of 18.8%, while leverage remained unchanged at 1.7x book equity. Net investment income for the quarter ended March 31, 2003 increased to a record $87.1 million, up 30.0% from $66.9 million for the first quarter of 2002. 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 each case as computed in accordance with GAAP.

iStar Financial announced that during the first quarter, it closed 16 new financing commitments for a total of $383.2 million, of which $347.2 million was funded during the quarter. In addition, the Company funded $7.2 million under three pre-existing commitments and received $114.0 million in principal repayments. The Company's recent transactions continue to reflect its core business strategy of originating structured financing transactions for leading corporations and private owners of high-quality commercial real estate assets across the United States.

Jay Sugarman, iStar Financial's chairman and chief executive officer, stated, "This quarter we continued to build our portfolio diversification with a strong mix of custom-tailored transactions for high quality borrowers and corporate customers. We are very pleased with our ability to deliver excellent results in these times of economic and geopolitical turmoil. In terms of volume, diversity and number of transactions, we are well on our way to achieving our goals for 2003."

     Selected Income Statement Data
     (In thousands)
     (unaudited)
                                                        Three Months Ended
                                                            March 31,
                                                      2003              2002

    Net investment income                          $87,050           $66,938
    Other income                                     4,329             8,725
    Non-interest expense                           (23,526)          (19,862)
    Net income before minority interest            $67,853           $55,801

    Minority interest in consolidated entities         (39)              (40)
    (Loss) income from discontinued operations        (125)            1,350
    Gain from discontinued operations                  264                --
    Preferred dividends                             (9,227)           (9,227)
    Net income allocable to common shareholders
      and HPU holders (1)                          $58,726           $47,884

     (1) HPU holders are Company employees who purchased high performance
         common stock units under the Company's High Performance Unit Program.


     Selected Balance Sheet Data
     (In thousands)
                                                     As of             As of
                                                  March 31,      December 31,
                                                      2003              2002
                                                (unaudited)

    Loans and other lending investments, net    $3,247,631        $3,050,342
    Corporate tenant lease assets, net           2,338,456         2,291,805
    Total assets                                 5,874,359         5,611,697
    Debt obligations                             3,655,003         3,461,590
    Total liabilities                            3,759,092         3,583,816
    Total shareholders' equity                   2,112,687         2,025,300


Transaction Volume

In the first quarter of 2003, iStar Financial generated $383.2 million in new financing commitments in 16 separate transactions. The Company also funded an additional $7.2 million under three pre-existing financing commitments and received $114.0 million in loan repayments. Of the Company's first quarter financing commitments, 72% represented first mortgages and investment-grade corporate tenant leasing transactions.

During the quarter, the weighted average first dollar and last dollar loan-to-value ratio on new loan commitments was 21.5% and 66.9%, 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.

Mr. Sugarman commented, "With a record 16 transactions completed during the first quarter we continued to find attractive places to put our capital to work to meet our customer's financing needs and build diversification into our asset base. Increasingly, more of our customers are recognizing the unique level of service and flexibility that we provide to them, with over 50% of the dollar volume of this quarter's commitments made to repeat customers."

Mr. Sugarman continued, "Our pipeline remains strong, and we are seeing increasing opportunities in our corporate and junior lending product lines. As we near the bottom of the real estate cycle we will seek to take advantage of the attractive risk/return characteristics of these businesses."

Capital Markets

In March of 2003, iStar Financial issued at par $150 million of 7.00% unsecured Senior Notes due March 2008, and in April issued an additional $35 million of Senior Notes, bringing the aggregate principal amount of the Senior Notes to $185 million. The add-on Notes have identical terms to the Senior Notes issued in March, but were issued at 102.75% of their principal amount to yield 6.34% per annum. The Company used the net proceeds to repay existing unsecured indebtedness maturing in March and to repay secured revolving credit facilities.

Catherine D. Rice, iStar Financial's chief financial officer, stated, "We are pleased with the number of new fixed income investors that participated in the offering and the market's recognition of our positive credit momentum. We are now, more than ever, committed to our goal of achieving investment grade status from Moody's and S&P."

As previously announced during the first quarter of 2003, the Company extended the maturity of a $700 million secured credit facility to January 2007 from January 2005.

Ms. Rice commented, "Our Company has always been proactive in managing debt maturities well in advance of actual maturity dates, and we now have no significant debt maturities until August 2005. Our capital position remains strong and we have significant excess liquidity and capacity under our credit facilities." At March 31, 2003, the Company had $1.5 billion outstanding under its five primary credit facilities, which total $2.7 billion in committed capacity.

Consistent with the Securities and Exchange Commission's Regulation FD and the newly adopted Regulation G, iStar Financial comments on earnings expectations within the context of its regular earnings press releases. For fiscal year 2003, the Company currently continues to expect adjusted earnings per diluted common share of $3.22-$3.28. iStar Financial also expects adjusted earnings per diluted common share for the second quarter of $0.79-$0.80. iStar Financial expects GAAP earnings per diluted common share of $2.34-$2.44 for 2003. The Company also expects GAAP earnings per diluted common share for the second quarter of $0.57-$0.59. Ms. Rice added, "Our 2003 earnings guidance assumes net asset growth of $800 million to $1 billion, consistent with our prior expectations."

Ms. Rice continued, "Beginning this quarter, in accordance with Reg. G, we are communicating GAAP EPS guidance in addition to adjusted earnings. As a commercial finance company that focuses on real estate lending and credit tenant leasing, we believe that adjusted earnings more closely approximates operating cash flow as a performance measure. The principal difference between GAAP EPS and adjusted EPS is non-cash depreciation and amortization. Because we are required to depreciate our owned corporate tenant lease assets, changes in the mix of our origination volume between structured finance assets and corporate tenant leases, which otherwise does not have a significant impact on adjusted earnings, results in more GAAP EPS volatility. For this reason, our GAAP EPS guidance has a wider range than our adjusted EPS guidance."

Risk Management

At March 31, 2003, first mortgages, participations in first mortgages, corporate tenant leases and corporate financing transactions collectively comprised 88.2% 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 27.2% and 69.2%, respectively. The weighted average debt service coverage for all structured finance assets, based on actual 2002 collateral cash flow and interest rates, was 2.1x at March 31, 2003.

At quarter end, the Company's corporate tenant lease assets were 95.8% leased with a weighted average remaining lease term of 9.4 years. Corporate tenant lease expirations for the remainder of 2003 represent 2.2% of annualized total revenue for first quarter 2003. At quarter end, 89.7% 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.

In prior periods, the Company had assigned a single risk rating to each of its structured finance assets that implicitly represented the Company's evaluation of the risk of loss of principal and the performance of the asset compared to the Company's original underwriting. For first quarter 2003, the Company assigned two separate quarterly risk ratings to its structured finance assets using a "one" to "five" scale. The Company assigned a rating representing the Company's evaluation of the risk of principal loss, and a rating representing performance compared to original underwriting. For risk of principal loss, a "one" indicates no expected principal loss in any foreseeable scenario, a "two" indicates no expected principal loss in all but extreme scenarios, a "three" indicates no expected principal loss in all reasonably foreseeable scenarios, a "four" indicates a possible risk of principal loss in at least one reasonably foreseeable scenario, and a "five" indicates a possible risk of principal loss in more than one reasonably foreseeable scenario. For performance compared to original underwriting, a "one" indicates performance well above our underwriting, a "two" signifies performance above our underwriting, a "three" represents performance in line with our underwriting, a "four" indicates performance below our underwriting, and a "five" means performance is well below our underwriting.

Corporate tenant lease risk ratings reflect our assessment of the quality and longevity of the cash flow yield from the asset. A "one" indicates superior credit quality and longevity, a "two" signifies better than average credit quality and longevity, a "three" represents an average rating, a "four" indicates below average credit quality or longevity, and a "five" denotes poor credit quality or longevity.

Assets with risk ratings of "four" and "five" indicate management time and attention is required, and a "five" rating denotes a potential problem asset. In addition to the ratings system, the Company maintains a "watch list" of assets that require highly proactive asset management.

Based upon the Company's first quarter 2003 review, the weighted average risk ratings of the Company's structured finance assets was 2.54 and 2.95 for risk of principal loss and performance compared to original underwriting, respectively. The average of these ratings at March 31, 2003 was 2.75, compared to last quarter's rating of 2.75. The weighted average risk rating for corporate tenant lease assets at the end of the first quarter remained unchanged from the prior quarter's rating of 2.76.

For the first quarter, the Company added one loan to its credit watch list. The Company now has five loans and two corporate tenant lease assets on the list, with a combined book value of $115.2 million as of March 31, 2003, up from $107.6 million at December 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 and other asset-specific credit protection represented an aggregate of approximately 5.97% of the gross book value of the Company's loans. In addition, cash deposits, letters of credit, allowances for doubtful accounts and accumulated depreciation relating to corporate tenant lease assets represented 9.35% of the gross book value of the Company's corporate tenant lease assets at quarter end. As of March 31, 2003, the Company had three assets on non-accrual status with an aggregate gross book value of $11.1 million, or 0.2% of the gross book value of the Company's investments. Each of the Company's three non-accrual assets continues to pay as agreed.

Timothy J. O'Connor, iStar Financial's chief operating officer, stated, "Our asset quality continues to remain strong through the weak economic and commercial real estate environment, and our proactive risk management, diverse asset base and asset-specific reserves have served us well during this period. By providing two risk ratings for our structured finance assets for this quarter and going forward, we are seeking to provide more visibility into the two separate factors that were historically implicitly incorporated into a single risk rating. Together, the two structured finance risk ratings show the security and stability of our position in our borrowers' capital structures, which protects us from principal loss even when the macroeconomic environment and real estate fundamentals are weak."

Other Developments

On April 1, 2003, iStar Financial increased its regular quarterly cash dividend 5.2% to $0.6625 per common share for the quarter ended March 31, 2003. The first quarter 2003 dividend is payable on April 29, 2003 to holders of record on April 15, 2003.

The Company will host its annual meeting of shareholders at the Sofitel Hotel, located at 45 West 44th Street, New York, New York, 10036 on Tuesday, June 3, 2003 at 8:30 a.m. local time. All shareholders are cordially invited to attend.

iStar Financial is the leading publicly traded finance company focused on the commercial real estate industry. The Company provides custom-tailored financing to high-end private and corporate owners of real estate nationwide, including senior and junior mortgage debt, senior, mezzanine and subordinated corporate capital, and corporate net lease financing. The Company, which is taxed as a real estate investment trust, seeks to deliver a strong dividend and 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. ET today, April 24, 2003. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through iStar Financial's website, www.istarfinancial.com, under the "investor relations" section. To listen to the live call, please go to the website's "investor relations" section at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the iStar Financial website.

  • (Note: Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although iStar Financial Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from iStar Financial Inc.'s expectations include completion of pending investments, continued ability to originate new investments, the mix of originations between structured finance and corporate tenant lease assets, repayment levels, the availability and cost of capital for future investments, competition within the finance and real estate industries, economic conditions, loss experience and other risks detailed from time to time in iStar Financial Inc.'s SEC reports.)
                                 iStar Financial Inc.
                        Consolidated Statements of Operations
                       (In thousands, except per share amounts)
                                     (unaudited)
    
                                                           Three Months Ended
                                                                March 31,
                                                         2003               2002
         Revenue:
            Interest income                            $73,427            $55,876
            Operating lease income                      65,524             54,975
            Other income                                 4,329              8,725
              Total revenue                            143,280            119,576
    
         Costs and expenses:
            Interest expense                            47,980             41,689
            Operating costs - corporate tenant lease
              assets                                     3,863              3,021
            Depreciation and amortization               13,272             10,584
            General and administrative                   7,681              6,617
            General and administrative - stock-based
              compensation expense                         823                911
            Provision for loan losses                    1,750              1,750
              Total costs and expenses                  75,369             64,572
    
         Net income before other items                  67,911             55,004
              Equity in (loss) earnings from
                joint ventures and unconsolidated
                subsidiaries                               (58)               797
              Minority interest in consolidated entities   (39)               (40)
              (Loss) income from discontinued operations  (125)             1,350
              Gain from discontinued operations            264                 --
         Net income                                     67,953             57,111
    
         Preferred dividends                            (9,227)            (9,227)
    
         Net income allocable to common shareholders
          and HPU holders                              $58,726            $47,884
    
         Net income per common share: (1)
              Basic                                      $0.59              $0.55
              Diluted                                    $0.58              $0.53
    
         Weighted average common shares outstanding:
              Basic                                     98,472             87,724
              Diluted                                  101,285             89,691
    
         (1)  For the three months ended March 31, 2003, net income per basic and
              diluted common share excludes $485 and $472 of net income allocable
              to HPU holders, respectively.
    
    
                                 iStar Financial Inc.
                Reconciliation of Adjusted Earnings to GAAP Net Income
                       (In thousands, except per share amounts)
                                     (unaudited)
    
                                                           Three Months Ended
                                                                March 31,
                                                         2003               2002
    
         ADJUSTED EARNINGS: (1)
         Net income                                    $67,953            $57,111
         Add: Joint venture income                         249                249
         Add: Depreciation                              13,272             10,653
         Add: Joint venture depreciation and
           amortization                                  1,012              1,217
         Add: Amortization                               6,451              5,735
         Less: Preferred dividends                      (9,227)            (9,227)
         Less: (Gain) from discontinued operations        (264)                --
    
         Adjusted earnings allocable to common
           shareholders and HPU holders:
            Basic                                      $79,197            $65,489
            Diluted                                    $79,446            $65,738
    
         Adjusted earnings per common share: (2)
            Basic                                        $0.80              $0.75
            Diluted                                      $0.78              $0.73
    
         Weighted average common shares outstanding:
            Basic                                       98,472             87,724
            Diluted                                    101,582             90,063
    
         Common shares outstanding at end of period:
            Basic                                       99,074             88,417
            Diluted                                    102,185             90,690
    
         (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.  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, 2003, adjusted earnings per
              basic and diluted common share excludes $654 and $636 of adjusted
              earnings allocable to HPU holders, respectively.
    
    
                                 iStar Financial Inc.
                             Consolidated Balance Sheets
                                    (In thousands)
    
                                                        As of             As of
                                                      March 31,       December 31,
                                                        2003              2002
                                                    (unaudited)
    
         ASSETS
    
         Loans and other lending investments, net    $3,247,631        $3,050,342
         Corporate tenant lease assets, net           2,338,456         2,291,805
         Investments in and advances to
           joint ventures and unconsolidated
           subsidiaries                                  30,343            30,611
         Assets held for sale                            24,800            28,501
         Cash and cash equivalents                       13,275            15,934
         Restricted cash                                 45,442            40,211
         Accrued interest and operating lease income
           receivable                                    26,112            26,804
         Deferred operating lease income receivable      40,328            36,739
         Deferred expenses and other assets             107,972            90,750
                         Total assets                $5,874,359        $5,611,697
    
         LIABILITIES AND SHAREHOLDERS' EQUITY
    
         Accounts payable and other liabilities         $98,864          $117,001
         Dividends payable                                5,225             5,225
    
         Debt obligations:
                 Unsecured senior notes                 615,777           617,317
                 Unsecured revolving credit facilities       --                --
                 Secured revolving credit facilities  1,501,827         1,273,754
                 Secured term loans                     680,704           682,615
                 iStar Asset Receivables secured notes  816,338           871,943
                 Other debt obligations                  40,357            15,961
                         Total liabilities           $3,759,092        $3,583,816
         Minority interest                                2,580             2,581
         Shareholders' equity                         2,112,687         2,025,300
                         Total liabilities and
                          shareholders' equity       $5,874,359        $5,611,697
    
    
                                 iStar Financial Inc.
                               Supplemental Information
                                    (In thousands)
                                     (unaudited)
    
        PERFORMANCE STATISTICS
                                                               Three Months Ended
        Return on Average Book Assets                              March 31, 2003
    
        Adjusted basic earnings allocable to common
         shareholders and HPU holders (1)                                 $79,197
        Plus: Preferred dividends                                           9,227
        Adjusted basic earnings before preferred dividends                $88,424
        Adjusted basic earnings before preferred dividends -
          annualized (A)                                                 $353,696
        Average total book assets (B)                                  $5,743,028
        Return on average book assets (A) / (B)                               6.2%
    
        Return on Average Common Book Equity
    
        Adjusted basic earnings allocable to common
          shareholders and HPU holders (1)                                $79,197
        Adjusted basic earnings allocable to
         common shareholders and HPU holders - annualized (C)            $316,788
        Average total book equity                                      $2,068,993
        Less: Book value of preferred equity                             (382,000)
        Average common book equity (D)                                 $1,686,993
        Return on average common book equity (C) / (D)                       18.8%
    
        Efficiency Ratio
    
        General & administrative expenses                                  $7,681
        Plus: General and administrative - stock-based compensation           823
        Total corporate overhead (E)                                       $8,504
    
        Total revenue (F)                                                $143,280
    
        Efficiency ratio (E) / (F)                                            5.9%
    
        CREDIT STATISTICS
    
        Book Debt / Equity
    
        Book Debt (A)                                                  $3,655,003
        Total Book Equity (B)                                          $2,112,687
        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.  It should be noted that the Company's manner of
              calculating adjusted earnings may differ from the calculations of
              similarly-titled  measures by other companies.
    
    
                                 iStar Financial Inc.
                               Supplemental Information
                                    (In thousands)
    
         CREDIT STATISTICS  (cont.)
                                                               Three Months Ended
         Interest Coverage                                         March 31, 2003
    
         EBITDA (1) (A)                                                  $129,105
    
         GAAP interest expense (B)                                        $47,980
    
         EBITDA / GAAP interest expense (A) / (B)                             2.7x
    
         Fixed Charge Coverage
    
         EBITDA (1) (C)                                                  $129,105
    
         GAAP interest expense                                            $47,980
         Plus: preferred dividends                                          9,227
         Total GAAP interest expense and preferred dividends (D)          $57,207
    
         EBITDA / GAAP interest expense and preferred
           dividends (C) / (D)                                                2.3x
    
         Ratio of earnings to fixed charges                                   2.4x
    
         Ratio of earnings to fixed charges and preferred
           stock dividends                                                    2.1x
    
         RECONCILIATION OF EBITDA TO TOTAL REVENUE
    
         Total revenue                                                   $143,280
         Plus:  Equity in earnings from joint ventures and
           unconsolidated subsidiaries                                        (58)
         Less:  General and administrative                                  7,681
         Less:  General and administrative- stock-based compensation          823
         Less:  Provision for loan losses                                   1,750
         Less:  Operating cost-corporate tenant lease assets                3,863
    
         EBITDA                                                          $129,105
    
         (1)  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.  It should be noted that
              the Company's manner of calculating EBITDA may differ from the
              calculations of similarly-titled  measures by other companies.
    
    
                                 iStar Financial Inc.
                               Supplemental Information
                                    (In thousands)
                                     (unaudited)
    
         FINANCING VOLUME SUMMARY STATISTICS
    
         Three Months Ended March 31, 2003      LOAN ORIGINATIONS
                                                                Total/
                                           Fixed   Floating   Weighted  CORPORATE
                                            Rate       Rate    Average    LEASING
    
         Amount funded                   $76,324   $213,400   $289,724    $57,463
         Weighted average GAAP yield       12.15%      7.01%      8.36%      8.91%
         Weighted average all-in spread/
           margin (basis points) (1)        +886       +568         --       +465
         Weighted average first
           $ loan-to-value ratio            49.9%      11.9%      21.9%        --
         Weighted average last
           $ loan-to-value ratio            67.9%      66.5%      66.8%        --
    
    
         UNFUNDED COMMITMENTS
    
         Number of loans with unfounded
          commitments                                                          12
    
         Discretionary commitments                                        $77,225
         Non-discretionary commitments                                    100,617
         Total unfunded commitments                                      $177,842
    
         Estimated weighted average funding period        Approximately 1.5 years
    
    
         RECONCILIATION OF DILUTED ADJUSTED EPS
         GUIDANCE TO GAAP DILUTED EPS GUIDANCE (2)
    
                                              Three Months Ended       Year Ended
                                                   June 30,          December  31,
                                                    2003                  2003
    
         GAAP earnings per diluted common
           share guidance                       $0.57-$0.59            $2.34-$2.44
         Add:  Depreciation and amortization
           per diluted common share             $0.21-$0.22            $0.84-$0.88
    
         Adjusted earnings per diluted common
           share guidance                       $0.79-$0.80            $3.22-$3.28
    
         (1)  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.
         (2)  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.  It should be noted that the Company's manner of
              calculating adjusted earnings may differ from the calculations of
              similarly-titled  measures by other companies.
    
    
                                 iStar Financial Inc.
                               Supplemental Information
                                    (In millions)
                                     (unaudited)
    
        PORTFOLIO STATISTICS AS OF MARCH 31, 2003 (1)
    
        Security Type                                      $                 %
        Corporate Tenant Leases                         $2,534             43.6%
        First Mortgages (2)                              2,174             37.4
        Corporate/Partnership Loans/Other                  802             13.8
        Second Mortgages                                   302              5.2
                     Total                              $5,812            100.0%
    
        Collateral Type                                    $                 %
        Office (CTL)                                    $1,577             27.1%
        Office (Lending)                                 1,136             19.5
        Industrial/R&D                                     865             14.9
        Hotel (Lending)                                    696             12.0
        Other                                              432              7.5
        Apartment/Residential                              287              4.9
        Hotel (Investment-Grade CTL)                       271              4.7
        Retail                                             235              4.0
        Mixed Use/Mixed Collateral                         174              3.0
        Conference Center                                  139              2.4
                     Total                              $5,812            100.0%
    
        Product Line                                       $                 %
        Corporate Tenant Leasing                        $2,534             43.6%
        Structured Finance                               1,642             28.3
        Corporate Finance                                  747             12.8
        Loan Acquisition                                   481              8.3
        Portfolio Finance                                  408              7.0
                     Total                              $5,812            100.0%
    
        Collateral Location                                $                 %
        West                                            $1,597             27.5%
        Northeast                                        1,192             20.5
        South                                              666             11.5
        Southeast                                          654             11.3
        Mid-Atlantic                                       632             10.9
        Central                                            462              7.9
        North Central                                      258              4.4
        Northwest                                          191              3.3
        Southwest                                           84              1.4
        Various                                             76              1.3
                     Total                              $5,812            100.0%
    
         (1)  Figures presented prior to loan loss reserves and accumulated
              depreciation.
         (2)  Includes junior participation interests in first mortgages.
    

    Source: iStar Financial Inc.

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