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07/22/2004

iStar Financial Announces Record Second Quarter Results

     - Adjusted earnings per diluted common share increases to $0.87 for
       second quarter 2004.

     - New financing activity during second quarter totals $742.0 million in
       17 separate transactions.

     - First mortgage and first mortgage participation transactions comprise
       74.8% of second quarter financing commitments.

     - Cumulative repeat customer volume now exceeds $6 billion.

NEW YORK, July 22 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI) reported that adjusted earnings for the quarter ended June 30, 2004 were $0.87 per diluted common share, up from $0.80 per diluted common share for the quarter ended June 30, 2003. Adjusted earnings allocable to common shareholders for second quarter 2004 were $97.3 million on a diluted basis, compared to $81.8 million for second quarter 2003. Adjusted earnings represents net income computed in accordance with GAAP, adjusted for joint venture income, preferred dividends, depreciation, amortization and gain (loss) from discontinued operations.

Net income allocable to common shareholders for the second quarter was $71.3 million, or $0.64 per diluted common share, compared with $60.0 million, or $0.59 per diluted common share, in the second quarter of 2003. 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 June 30, 2004 increased to a record $105.4 million, up 23.0% from $85.7 million for the second quarter of 2003. Net investment income represents interest income, operating lease income and equity in earnings from joint ventures and unconsolidated subsidiaries, less interest expense and operating costs for corporate tenant lease assets and loss on early extinguishment of debt, in each case as computed in accordance with GAAP.

For the quarter ended June 30, 2004, iStar Financial generated returns on average book assets and average common book equity of 5.9% and 19.9%, respectively, while leverage was 1.8x debt to book equity plus accumulated depreciation and loan loss reserves, all as determined in accordance with GAAP.

iStar Financial announced that during the second quarter, it closed 17 new financing commitments for a total of $742.0 million, of which $614.3 million was funded during the quarter. In addition, the Company funded $68.6 million under 16 pre-existing commitments and received $394.2 million in principal repayments. The Company's recent transactions continue to reflect its core business strategy of originating custom-tailored 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, "During the first six months of 2004, we closed a record $1.7 billion of financing commitments, continuing to lead the commercial real estate finance markets in providing customized and flexible capital to high-end private and corporate owners of real estate. Our eleven year track record of consistently serving our customers with a higher level of expertise and integrity and providing one-call responsiveness throughout the relationship has earned iStar Financial broad recognition as the leading franchise in this market."

Mr. Sugarman continued, "As we discussed last quarter, the commercial real estate sector is experiencing large capital inflows for several reasons, including anticipated continued improvement in macroeconomic and commercial real estate fundamentals, the very strong credit performance of real estate finance through the recent economic recession, and the lack of attractive alternative investment opportunities in other sectors. In our view, this capital is starting to become overly aggressive in certain markets. Since our investment philosophy has always been to invest our capital where returns are most attractive, we will seek to take capital out of mispriced markets either by negotiating the early repayment of loans, together with significant prepayment penalties, or by selective sales of non-core sale/leaseback facilities. Because of our leading franchise position and large footprint in most major markets in the U.S., we continue to find attractive opportunities to invest our capital; however, as in the year 2000, asset growth may temporarily slow as we take capital out of what we believe to be overheated markets."


    Selected Income Statement Data
    (In thousands)
    (unaudited)
                                        Three Months Ended   Six Months Ended
                                             June 30,            June 30,
                                          2004     2003      2004      2003

    Net investment income (1)           $105,353  $85,679  $198,469  $171,580
    Other income                           9,910    8,440    21,851    12,769
    Non- interest expense (2)            (32,242) (25,112) (172,185)  (48,396)
    Net income before minority interest  $83,021  $69,007   $48,135  $135,953

    Minority interest in consolidated
     entities                               (128)     (40)     (261)      (79)
    Income from discontinued operations      126      779      (107)    1,561
    Gain from discontinued operations         --       --       136       264
    Preferred dividend requirements (3)  (10,580)  (9,227)  (30,180)  (18,454)
    Net income allocable to common
     shareholders and HPU holders (4)    $72,439  $60,519   $17,723  $119,245


     (1)  Net investment income for the six months ended June 30, 2004
          includes an $11.5 million charge relating to redemption of $110
          million of the Company's 8.75% Senior Notes due 2008.
     (2)  Non-interest expense for the six months ended June 30, 2004 includes
          the Q1'04 CEO, CFO and ACRE Partners compensation charges of $106.9
          million.
     (3)  Preferred dividend requirements for the six months ended June 30,
          2004 includes $9.0 million related to the redemption of the
          Company's 9.375% Series B and 9.20% Series C Cumulative Redeemable
          Preferred Stock.
     (4)  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
                                            June 30, 2004    December 31, 2003
                                              (unaudited)

    Loans and other lending investments,
     net                                       $4,255,005        $3,702,674
    Corporate tenant lease assets, net          2,854,967         2,535,885
    Total assets                                7,606,431         6,660,590
    Debt obligations                            4,942,568         4,113,732
    Total liabilities                           5,099,955         4,240,256
    Total shareholders' equity                  2,493,904         2,415,228


    Transaction Volume

In the second quarter of 2004, iStar Financial generated $742.0 million in new financing commitments in 17 separate transactions. The Company also funded an additional $68.6 million under 16 pre-existing financing commitments and received $394.2 million in loan repayments. Of the Company's second quarter financing commitments, 74.8% represented first mortgage and first mortgage participation transactions.

During the quarter, the weighted average first dollar and last dollar loan-to-value ratio on new loan commitments was 18.6% and 66.5%, 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. Cumulative repeat customer transactions total $6.1 billion as of June 30, 2004.

Mr. Sugarman commented, "This quarter we committed over $742.0 million of capital in a record 17 transactions demonstrating the strength of our franchise. Increasingly, high-end real estate owners are seeing the value that a flexible balance sheet lender brings to their investments. For the first six months of 2004, we have grown our net assets by $868.5 million, increasing diversification in our nearly $8 billion asset base and building a secure foundation for future growth."

Capital Markets

On July 20, 2004, iStar Financial completed a one-year extension of its $500 million secured revolving credit facility which had an effective maturity date in August 2004. As part of the extension, total capacity under the facility was reduced to $350 million and pricing for certain collateral types was reduced. Pro forma for the extension, iStar Financial has $2.7 billion of committed credit capacity under its credit facilities, and had $1.1 billion outstanding under its facilities at June 30, 2004.

Catherine D. Rice, iStar Financial's chief financial officer, stated, "This quarter we made significant progress in transitioning our short and intermediate debt capital sources from secured to unsecured. With the previously-announced completion of an $850 million unsecured credit facility in April, we focused on reducing excess capacity in our secured credit lines. We are funding all of our new origination volume with the unsecured facility and excess working capital while maintaining a prudent level of secured capacity as a backup source of debt capital in the event there are disruptions in the corporate credit markets."

Ms. Rice continued, "By funding new originations on an unsecured basis, we are no longer sharing proprietary information about our investments with our secured lenders. This enables us to more effectively protect intellectual capital from those lenders with whom we compete in certain markets. In addition, our unencumbered asset base is now $4.6 billion, nearly three times larger than the unencumbered base at the beginning of fourth quarter 2003 when we began our transition from secured to unsecured debt funding."

Consistent with the Securities and Exchange Commission's Regulation FD and Regulation G, iStar Financial comments on earnings expectations within the context of its regular earnings press releases. Before giving effect to the $127.4 million of first quarter compensation, senior notes and preferred stock redemption charges, the Company reiterates its previously-communicated diluted adjusted earning per share guidance for fiscal year 2004 of $3.40-$3.48 and expects diluted earnings per share of $2.50-$2.60. iStar Financial also expects diluted adjusted and earnings per share for third quarter 2004 of $0.86-$0.88 and $0.63-$0.66, respectively. After giving effect to the first quarter $127.4 million compensation, senior notes and preferred stock redemption charges, iStar Financial expects diluted adjusted and earnings per share of $2.30-$2.38 and $1.40-$1.50 for full year 2004, respectively.

Ms. Rice commented, "There continues to be a large supply of inexpensive capital in the commercial real estate markets, and we consequently expect to generate a higher level of prepayments for the remainder of 2004 if the capital markets environment remains the same. We therefore are forecasting minimal to no net asset growth for the third quarter and are taking advantage of this environment by selectively marketing non-core sale/leaseback assets. Funds for additional prepayments will come from initial public offerings, asset sales and refinancings. In several cases, our borrowers will owe us substantial prepayment penalties resulting in higher other income offsetting reduced interest income from the repayments. Fourth quarter net asset growth outlook will be largely dependent upon what we see during the next few months. We will continue to be selective in the transactions that we do, and will maintain lots of "dry powder" for the period when current market excesses will inevitably be reversed."

Ms. Rice continued, "Our conservative investment discipline and match funding policies are hallmarks of our Company. This has enabled iStar Financial to consistently deliver strong returns to its shareholders and to insulate earnings as much as possible from changes in short- and long-term interest rates. At June 30, 2004, a 100 basis point increase in interest rates would decrease our adjusted earnings by just 1.25% and the weighted average maturity of our assets and liabilities was 6.4 years and 5.3 years, respectively."

As of June 30, 2004, the Company's loan portfolio consisted of 66% floating rate and 34% fixed rate loans. Approximately 60% of the Company's floating rate loans have LIBOR floors with a weighted average LIBOR floor of 1.93%. The weighted average GAAP LIBOR margin, inclusive of LIBOR floors, was 5.57%. The weighted average GAAP margin of the Company's fixed rate loans was 8.26% on a term-adjusted basis.

Risk Management

At June 30, 2004, first mortgages, participations in first mortgages, corporate tenant leases and corporate financing transactions collectively comprised 90.4% 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 23.7% and 67.3%, respectively. As of June 30, 2004 the weighted average debt service coverage for all structured finance assets, based on either actual cash flow or trailing 12- month cash flow through March 31, 2004, was 2.0x.

At quarter end, the Company's corporate tenant lease assets were 95.3% leased with a weighted average remaining lease term of 10.9 years. Corporate tenant lease expirations for the remainder of 2004 represent 1.4% of annualized total revenue for second quarter 2004. At quarter end, 77.2% of the Company's corporate lease customers were public companies (or subsidiaries of public companies).

At June 30, 2004, the weighted average risk ratings of the Company's structured finance assets was 2.59 for risk of principal loss, compared to last quarter's rating of 2.62, and 3.15 for performance compared to original underwriting, compared to last quarter's rating of 3.16. The weighted average risk rating for corporate tenant lease assets was 2.50 at the end of the second quarter, an improvement from the prior quarter's rating of 2.52.

At quarter end, accumulated loan loss reserves and other asset-specific credit protection represented an aggregate of approximately 6.18% 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 9.81% of the gross book value of the Company's corporate tenant lease assets at quarter end. At June 30, 2004, the Company's non-accrual assets represented 0.36% of total assets, compared to 0.55% at March 31, 2004. At June 30 2004, watch list assets represented 1.00% of total assets, compared to 1.59% at March 31, 2004.

Timothy J. O'Connor, iStar Financial's chief operating officer, stated, "The credit quality of our asset base remains strong and we continue to see improving leasing activity in most markets. We are taking advantage of aggressively priced commercial real estate capital to selectively sell some non-strategic assets in our sale/leaseback portfolio and redeploy the proceeds into more attractive investment opportunities."

Other Developments

On July 1, 2004, iStar Financial declared a regular quarterly cash dividend of $0.6975 per common share for the quarter ended June 30, 2004. The second quarter 2004 dividend is payable on July 29, 2004 to holders of record on July 15, 2004.

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 and mezzanine 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 the highest quality financing solutions to its customers.

iStar Financial will hold a quarterly earnings conference call at 10:00 a.m. ET today, July 22, 2004. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through iStar Financial's website, http://www.istarfinancial.com, under the "investor relations" section. To listen to the live call, please go to the website's "investor relations" section at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the iStar Financial website.

(Note: Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although iStar Financial Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from iStar Financial Inc.'s expectations include 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  Six Months Ended
                                            June 30,            June 30,
                                        2004      2003      2004       2003
      Revenue:
         Interest income               $92,195   $74,079  $175,252   $147,506
         Operating lease income         79,985    65,584   154,413    129,748
         Other income                    9,910     8,440    21,851     12,769
           Total revenue               182,090   148,103   351,516    290,023

      Costs and expenses:
         Interest expense               59,121    50,191   111,687     98,171
         Operating costs - corporate
          tenant lease assets            5,845     3,693    11,724      7,345
         Depreciation and amortization  17,163    13,458    33,206     26,488
         General and administrative     12,511     9,038    25,870     16,719
         General and administrative -
          stock-based compensation
          expense                          568       866   108,109      1,689
         Provision for loan losses       2,000     1,750     5,000      3,500
         Loss on early extinguishment
          of debt                        1,006        --    13,178         --
           Total costs and expenses     98,214    78,996   308,774    153,912

      Net income before other items     83,876    69,107    42,742    136,111
           Equity in earnings (loss)
            from joint ventures and
            unconsolidated subsidiaries   (855)     (100)    5,393       (158)
           Minority interest in
            consolidated entities         (128)      (40)     (261)       (79)
           Income (loss) from
            discontinued operations        126       779      (107)     1,561
           Gain from discontinued
            operations                      --        --       136        264
      Net income                        83,019    69,746    47,903    137,699

      Preferred dividends              (10,580)   (9,227)  (30,180)   (18,454)

      Net income allocable to common
       shareholders and HPU holders    $72,439   $60,519   $17,723   $119,245

      Net income per common share:
           Basic (1)                     $0.64     $0.60     $0.16      $1.20
           Diluted (2) (3)               $0.64     $0.59     $0.16      $1.16

      Weighted average common shares
       outstanding:
           Basic                       110,695    99,445   109,081     98,784
           Diluted                     112,246   102,389   109,793    101,647


     (1) For the three months ended June 30, 2004, and June 30, 2003, excludes
         $1,163 and $494 of net income allocable to HPU holders, respectively.
         For the six months ended June 30, 2004 and June 30, 2003, excludes
         $259 and $979 of net income allocable to HPU holders, respectively.
     (2) For the three months ended June 30, 2004 and June 30, 2003, excludes
         $1,148 and $481 of net income allocable to HPU holders, respectively.
         For the six months ended June 30, 2004 and June 30, 2003, excludes
         $243 and $952 of net income allocable to HPU holders, respectively.
     (3) For the three months ended June 30, 2004 and June 30, 2003, includes
         $41 and $40 of joint venture income, respectively. For the six months
         ended June 30, 2004 and June 30, 2003, includes $41 and $79 of joint
         venture income, respectively.


                             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,
                                      2004       2003      2004       2003

      ADJUSTED EARNINGS: (1)
      Net income  (2)                $83,019    $69,746   $47,903    $137,699
      Add: Joint venture income           41        251        41         500
      Add: Depreciation               17,081     13,711    33,019      26,983
      Add: Joint venture
       depreciation and
       amortization                      490        982     2,022       1,994
      Add: Amortization                8,859      6,957    19,171      13,408
      Less: Preferred dividends (3)  (10,580)    (9,227)  (30,180)    (18,454)
      Less: Gain from discontinued
       operations                         --         --      (136)       (264)

      Adjusted earnings allocable
       to common shareholders and
       HPU holders:
         Basic                       $98,869    $82,169   $71,799    $161,366
         Diluted                     $98,910    $82,420   $71,840    $161,866

      Adjusted earnings per common
       share:
      Basic: (4)                       $0.88      $0.82     $0.65       $1.62
      Diluted: (5)                     $0.87      $0.80     $0.64       $1.58

      Weighted average common
       shares outstanding:
         Basic                       110,695     99,445   109,081      98,784
         Diluted                     112,246    102,687   109,793     101,945

      Common shares outstanding at
       end of period:
         Basic                       111,167    100,300   111,167     100,300
         Diluted                     113,019    103,541   113,019     103,541

     (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. Rather,
         adjusted earnings is an additional measure the Company uses to
         analyze how its business is performing. It should be noted that the
         Company's manner of calculating adjusted earnings may differ from
         the calculations of similarly-titled measures by other companies.
     (2) For the six months ended June 30, 2004, includes the Q1'04 CEO, CFO,
         and ACRE Partners compensation charges of $106.9 million and the
         8.75% Senior Notes due 2008 redemption charge of $11.5 million.
     (3) For the six months ended June 30, 2004, includes $9.0 million
         relating to redemption of the 9.375% Series B and 9.20% Series C
         Cumulative Redeemable Preferred Stock in Q1'04.
     (4) For the three months ended June 30, 2004 and June 30, 2003, excludes
         $1,588 and $671 of net income allocable to HPU holders, respectively.
         For the six months ended June 30, 2004 and June 30, 2003, excludes
         $1,140 and $1,324 of net income allocable to HPU holders,
         respectively.
     (5) For the three months ended June 30, 2004 and June 30, 2003, excludes
         $1,567 and $652 of net income allocable to HPU holders, respectively.
         For the six months ended June 30, 2004 and June 30, 2003, excludes
         $1,119 and 1,288 of net income allocable to HPU holders,
         respectively.


                             iStar Financial Inc.
                         Consolidated Balance Sheets
                                (In thousands)

                                                  As of             As of
                                              June 30, 2004  December 31, 2003
                                               (unaudited)

     ASSETS

     Loans and other lending investments,
      net                                        $4,255,005        $3,702,674
     Corporate tenant lease assets, net           2,854,967         2,535,885
     Investments in and advances to joint
      ventures and unconsolidated subsidiaries       18,380            25,019
     Assets held for sale                            51,692            24,800
     Cash and cash equivalents                       96,073            80,090
     Restricted cash                                 82,625            57,665
     Accrued interest and operating lease
      income receivable                              26,689            26,076
     Deferred operating lease income
      receivable                                     63,412            51,447
     Deferred expenses and other assets             157,588           156,934
                     Total assets                $7,606,431        $6,660,590

     LIABILITIES AND SHAREHOLDERS' EQUITY

     Accounts payable, accrued expenses
      and other liabilities                        $157,387          $126,524

     Debt obligations:
             Unsecured senior notes               2,042,011         1,137,769
             Unsecured revolving credit
              facilities                            783,000           130,000
             Secured revolving credit
              facilities                            277,446           696,591
             Secured term loans                     744,750           808,000
             iStar Asset Receivables
              secured notes                       1,095,361         1,307,224
             Other debt obligations                      --            34,148
                     Total liabilities           $5,099,955        $4,240,256
     Minority interest in consolidated
      entities                                       12,572             5,106
     Shareholders' equity                         2,493,904         2,415,228
                     Total liabilities and
                      shareholders' equity       $7,606,431        $6,660,590


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

    PERFORMANCE  STATISTICS
                                                Three Months Ended
    Return on Average Book Assets                  June 30, 2004

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (1)          $98,869
    Plus: Preferred dividends                          10,580
    Adjusted basic earnings before
     preferred dividends                             $109,449

    Adjusted basic earnings before
     preferred dividends - Annualized (A)            $437,796
    Average total book assets (B)                  $7,455,639
    Return on average book assets (A)/(B)                 5.9%

    Return on Average Common Book Equity

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (1)          $98,869
    Adjusted basic earnings allocable to
     common shareholders and HPU holders -
     Annualized (C)                                  $395,476
    Average total book equity                      $2,489,052
    Less: Average book value of preferred
     equity                                          (506,176)
    Average common book equity (D)                 $1,982,876
    Return on average common book equity (C)/(D)         19.9%

    Efficiency Ratio

    General & administrative expenses                 $12,511
    Plus: General and administrative -
     stock-based compensation                             568
    Total corporate overhead (E)                      $13,079

    Total revenue (F)                                $182,090

    Efficiency ratio (E)/(F)                              7.2%

    CREDIT STATISTICS

    Book Debt (A)                                  $4,942,568

    Book Equity (B)                                $2,493,904
    Plus: Accumulated Depreciation and
     Loan Loss Reserves                               253,761
    Sum of Book Equity, Accumulated
     Depreciation and Loan Loss Reserves  (B)      $2,747,665

    Book Debt / Sum of Book Equity,
     Accumulated Depreciation
     and Loan Loss Reserves (A)/(B)                       1.8x

    Ratio of earnings to fixed charges                    2.4x

    Ratio of earnings to fixed charges and
     preferred stock dividends                            2.0x

     (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. Rather,
         adjusted earnings is an additional measure the Company uses to
         analyze how its business is performing. It should be noted that the
         Company's manner of calculating adjusted earnings may differ from the
         calculations of similarly-titled measures by other companies.


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


      CREDIT STATISTICS  (cont.)
                                                  Three Months Ended
      Interest Coverage                            June 30, 2004

      EBITDA (1) (C)                                   $159,303
      GAAP interest expense (D)                         $59,121

      EBITDA / GAAP interest expense (C)/(D)                2.7x

      Fixed Charge Coverage

      EBITDA (1) (C)                                   $159,303
      GAAP interest expense                             $59,121
      Plus: Preferred dividends                          10,580
      Total GAAP interest expense and
       preferred dividends (E)                          $69,701

      EBITDA / GAAP interest expense and
       preferred dividends (C) / (E)                        2.3x

      Unencumbered assets                            $4,553,995

      RECONCILIATION OF NET INCOME TO
       EBITDA

      Net Income                                        $83,019
      Add:  Interest expense                             59,121
      Add:  Depreciation and amortization                17,163

      EBITDA (1)                                       $159,303

     (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 June 30, 2004              LOAN ORIGINATIONS

                                                             Total/
                                                  Floating  Weighted CORPORATE
                                       Fixed Rate   Rate    Average   LEASING

      Amount funded                      $90,043  $524,229  $614,273     --
      Weighted average GAAP yield          10.57%     6.89%     7.43%    --
      Weighted average all-in
       spread/margin (basis points) (1)    + 681     + 574        --     --
      Weighted average first $ loan-to-
       value ratio                          10.3%     20.4%     18.9%    --
      Weighted average last $ loan-to-
       value ratio                          71.8%     67.1%     67.8%    --


      UNFUNDED COMMITMENTS

      Number of loans with unfunded
       commitments                                                       27

      Discretionary commitments                                    $265,069
      Non-discretionary commitments                                 202,505
      Total unfunded commitments                                   $467,574

      Estimated weighted average
       funding period                               Approximately 1.9 years


     (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.


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


    LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

                                             Three Months Ended
                                     June 30, 2004          March 31, 2004
                                      $         %            $          %

    Carrying value of loans
     past due 60 days or more /
     As a percentage of loans and
     other lending investments     $27,526    0.64%       $27,526     0.68%

    Reserve for loan losses /
     As a percentage of loans and
      other lending investments    $38,436    0.90%       $36,436     0.91%
     As a percentage of past due
      60 days or more                          140%                    132%

    RECONCILIATION OF DILUTED
    ADJUSTED EPS GUIDANCE TO
    GAAP DILUTED EPS GUIDANCE (1)

    Three Months Ended
     September 30, 2004

    GAAP earnings per diluted
     common share guidance              $0.63  -  $0.66
    Add:  Depreciation and
     amortization per diluted
     common share                       $0.20  -  $0.25
    Adjusted earnings per diluted
     common share guidance              $0.86  -  $0.88


                                   Before Compensation,    After Compensation
                                     Preferred Stock        Preferred Stock
                                     and Senior Note        and Senior No
    Year Ended December 31, 2004    Redemption Charges    Redemption Charges

    Earnings per diluted common
     share guidance                 $2.50  -  $2.60        $1.40  -  $1.50
    Add:  Depreciation and
     amortization per diluted
     common share                   $0.80  -  $0.98        $0.80  -  $0.98
    Adjusted earnings per diluted
     common share guidance          $3.40  -  $3.48        $2.30  -  $2.38


     (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. Rather,
         adjusted earnings is an additional measure the Company uses to
         analyze how its business is performing. It should be noted that the
         Company's manner of calculating adjusted earnings may differ from the
         calculations of similarly-titled measures by other companies.


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

    PORTFOLIO STATISTICS AS OF JUNE 30, 2004 (1)

    Security Type                                $                 %
    First Mortgages (2)                             $3,183             42.6 %
    Corporate Tenant Leases                          3,173             42.5
    Corporate/Partnership Loans/Other                  987             13.2
    Second Mortgages                                   124              1.7
               Total                                $7,467            100.0 %

    Collateral Type                              $                 %
    Office (CTL)                                    $1,885             25.3 %
    Industrial/R&D                                   1,175             15.7
    Office (Lending)                                 1,107             14.8
    Hotel (Lending)                                    822             11.0
    Entertainment/Leisure                              731              9.8
    Mixed Use/Mixed Collateral                         582              7.8
    Apartment/Residential                              470              6.3
    Hotel (Investment-Grade CTL)                       270              3.6
    Retail                                             228              3.1
    Other                                              122              1.6
    Conference Center                                   75              1.0
               Total                                $7,467            100.0 %

    Product Line                                 $                 %
    Corporate Tenant Leasing                        $3,173             42.5 %
    Structured Finance                               2,080             27.9
    Portfolio Finance                                  924             12.4
    Corporate Finance                                  787             10.5
    Loan Acquisition                                   503              6.7
               Total                                $7,467            100.0 %

    Collateral Location                          $                 %
    Northeast                                       $1,785             23.9 %
    West                                             1,767             23.7
    Southeast                                        1,018             13.6
    Mid Atlantic                                       799             10.7
    South                                              677              9.1
    Central                                            666              8.9
    North Central                                      261              3.5
    Various                                            199              2.7
    Northwest                                          184              2.5
    Southwest                                          111              1.4
               Total                                $7,467            100.0 %

     (1) Figures presented prior to loan loss reserves, accumulated
         depreciation and impact of statement of Financial Accounting
         Standards No. 141 ("SFAS No. 141") "Business Combinations".

     (2) Includes $644 million of junior participation interests in first
         mortgages.
SOURCE  iStar Financial
    -0-                             07/22/2004
    /CONTACT:  Catherine D. Rice, Chief Financial Officer, or Andrew C.
Richardson, Executive Vice President - Capital Markets, or Heather A. Rauch,
Analyst - Investor Relations, all of iStar Financial, +1-212-930-9400/
    /Web site:  http://www.istarfinancial.com /
    (SFI)

CO:  iStar Financial
ST:  New York
IN:  FIN RLT
SU:  ERN CCA

TC 
-- NYTH020 --
3190 07/22/2004 07:31 EDT http://www.prnewswire.com
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