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iStar Financial Announces Largest Shareholder Successfully Completes Distribution of Shares

NEW YORK, May 13, 2003 /PRNewswire-FirstCall via COMTEX/ -- iStar Financial Inc. (NYSE: SFI) announced today that SOFI-IV SMT Holdings, a private investment fund and iStar Financial's largest shareholder, distributed approximately 15.9 million of the approximately 20.1 million iStar Financial common shares held by SOFI-IV to the limited and general partners of the fund. Some of the partners then elected to sell 6.9 million of the shares distributed to them in an underwritten public offering managed by Merrill Lynch & Co.

Upon completion of the public offering, SOFI-IV will hold 4.2 million shares of iStar Financial common stock, representing less than 5% of iStar Financial's common stock on both a diluted and outstanding basis.

iStar Financial also announced that effective upon the closing of the public offering, Jeffrey Dishner, Madison Grose, Merrick Kleeman and Barry Sternlicht will resign as directors of iStar Financial. Messrs. Dishner, Grose, Kleeman and Sternlicht are representatives of Starwood Capital Group, LLC, an affiliate of the general partner of SOFI-IV.

Jay Sugarman, iStar Financial's Chairman and Chief Executive Officer, made the following comments with regard to the transactions:

"iStar Financial has enjoyed a very successful relationship with SOFI-IV and its partners. SOFI-IV was one of the original investment funds that provided capital and assets to found iStar Financial. We are pleased that some of the investors have completed a successful public offering of shares, thereby increasing the liquidity of iStar Financial's common shares. We are also pleased that many investors in SOFI-IV, including some of the country's largest public and private pension funds, elected to become direct shareholders in our company."

This press release does not constitute an offer of the securities described herein. A registration statement relating to the securities has been previously declared effective by the Securities and Exchange Commission. The offering is being made solely by means of a prospectus supplement and the accompanying prospectus, copies of which may be obtained from the offices of the underwriter named above.

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. Additional information on iStar Financial is available on the Company's website at

SOURCE iStar Financial Inc.

Catherine D. Rice, Chief Financial Officer, or Andrew C.
Richardson, Executive Vice President, Capital Markets, or Erin C. Gatewood,
Associate, Investor Relations, all of iStar Financial Inc., +1-212-930-9400
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