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10/21/2004

iStar Financial Announces Record Third Quarter Results

     - Adjusted earnings per diluted common share reach a record $0.87 for
       third quarter 2004, up 5% from third quarter 2003.

     - Net investment income increases 17% to $101.9 million for third quarter
       2004, compared to $87.0 million for third quarter 2003.

     - New financing activity during third quarter totals $480.9 million in 12
       separate transactions.

     - iStar Financial's senior unsecured credit rating is upgraded to
       investment grade by both Moody's Investors Service and Standard &
       Poor's.

NEW YORK, Oct. 21 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI) reported that adjusted earnings for the quarter ended September 30, 2004 were $0.87 per diluted common share, up from $0.83 per diluted common share for the quarter ended September 30, 2003. Adjusted earnings allocable to common shareholders for third quarter 2004 were $97.5 million on a diluted basis, compared to $87.0 million for third 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 third quarter was $73.3 million, or $0.65 per diluted common share, compared with $66.1 million, or $0.63 per diluted common share, in the third 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 September 30, 2004 increased to $101.9 million, up 17.1% from $87.0 million for the third 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 September 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 1.7x debt to book equity plus accumulated depreciation and loan loss reserves, all as determined in accordance with GAAP.

iStar Financial announced that during the third quarter, it closed 12 new financing commitments for a total of $480.9 million, of which $406.7 million was funded during the quarter. In addition, the Company funded $53.1 million under 16 pre-existing commitments and received $690.9 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, "This quarter, we consciously slowed investment activity in anticipation of a resolution to our rating agency discussions and a clearer view of macroeconomic conditions. With our recent upgrades to investment grade from Moody's and Standard & Poor's, we have now begun a new era in the Company's evolution. With an investment grade cost of capital and an increased availability of funds, we are now better equipped to both serve and expand our core business as well as to capitalize on underserved financing opportunities that emerge in the real estate sector."

Mr. Sugarman continued, "As we have stated over the last six months, we continue to see strong capital inflows into the real estate sector as most markets continue to show improved underlying fundamentals and interest rates remain at historical low levels. This increased capital has resulted in an extremely competitive real estate financing environment with historically low financing spreads. Despite this trend, we will continue to maintain our disciplined investment strategy and deploy our capital to those opportunities that demonstrate the most attractive returns. Our new cost of funds should enable us to increase the velocity of our originations and to enter new arenas that we previously were unable to access due to our higher cost of capital."


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

    Net investment income (1)           $101,890  $87,021  $292,707  $251,536
    Other income                           8,835    9,971    30,685    22,741
    Non-interest expense (2)             (30,267) (26,562) (200,992)  (73,505)
    Net income before minority interest  $80,458  $70,430  $122,400  $200,772

    Minority interest in consolidated
     entities                               (227)     (40)     (487)     (119)
    Income from discontinued operations    2,858    3,787     8,945    10,961
    Gain from discontinued operations      2,013      701     2,149       964
    Preferred dividend requirements (3)  (10,580)  (8,258)  (40,760)  (26,712)
    Net income allocable to common
     shareholders and HPU holders (4)    $74,522  $66,620   $92,247  $185,866

    (1)  Net investment income for the nine months ended September 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 nine months ended September 30, 2004
         includes the Q1'04 CEO, CFO and ACRE Partners compensation charges of
         $106.9 million.
    (3)  Preferred dividend requirements for the nine months ended September
         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
                                          September 30, 2004 December 31, 2003
                                              (unaudited)

    Loans and other lending investments, net    $3,868,027        $3,702,674
    Corporate tenant lease assets, net           2,900,628         2,535,885
    Total assets                                 7,319,520         6,660,590
    Debt obligations                             4,672,659         4,113,732
    Total liabilities                            4,807,622         4,240,256
    Total shareholders' equity                   2,492,469         2,415,228


    Transaction Volume

In the third quarter of 2004, iStar Financial generated $480.9 million in new financing commitments in 12 separate transactions. The Company also funded an additional $53.1 million under 16 pre-existing financing commitments and received $690.9 million in loan repayments. Of the Company's third quarter financing commitments, 71.3% represented first mortgage, first mortgage participation and corporate tenant lease transactions.

During the quarter, the weighted average first dollar and last dollar loan-to-value ratio on new loan commitments was 39.5% and 64.0%, 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 $6.4 billion as of September 30, 2004.

Mr. Sugarman commented, "Repeat customer transactions continue to demonstrate the strength of our reputation for delivering responsive capital solutions to high-end real estate owners, with approximately 50% of third quarter commitments coming from customers who have used our services more than once. With the lower cost of funds now available to us, we look forward to increasing our repeat customer activity with an expanded range of financing solutions."

Capital Markets

On October 5, 2004, Standard & Poor's upgraded iStar Financial's senior unsecured credit rating to BBB- from BB+. In addition, Standard & Poor's raised the ratings on all of iStar Financial's preferred stock issuances to BB from B+. On October 6, 2004, Moody's Investors Service upgraded iStar Financial's senior unsecured credit rating to Baa3 from Ba1 and raised its ratings on the Company's preferred stock issuances to Ba2 from Ba3.

Catherine D. Rice, iStar Financial's chief financial officer, stated, "The upgrade to investment grade by both Moody's and S&P has been one of our highest priorities and is a significant milestone in our history. We are pleased that both agencies recognized the strength of our platform and acknowledged our strong track record, high quality asset base and disciplined investment and asset management culture."

Ms. Rice continued, "Being rated investment grade by all three rating agencies will enable the Company to more effectively and efficiently serve its high-end customer base. Accessing the high-grade unsecured debt markets will afford us greater speed in execution and will allow us to more effectively match fund our asset base. Having a lower cost of capital is essential in today's competitive real estate markets and should allow us to pursue both new customers and new business opportunities."

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, for fiscal year 2004 the Company expects diluted adjusted earning per share of $3.45-$3.48 and diluted earnings per share of $2.78-$2.83. After giving effect to the first quarter charges, iStar Financial expects diluted adjusted and earnings per share of $2.35-$2.38 and $1.68-$1.73 for full year 2004, respectively.

Ms. Rice stated, "As we mentioned last quarter, we are taking advantage of the current environment by selectively selling certain non-core sale/leaseback assets and expect to close several sales in the fourth quarter. We also expect to continue seeing higher levels of prepayments in the fourth quarter as capital inflows into the commercial real estate sector remain strong. Our loans typically have call-protection in the form of prepayment penalties, so as a result, we expect other income for the fourth quarter to be higher than usual. We anticipate that the combination of the fourth quarter prepayment volume and asset sales may outpace our origination volume and are therefore forecasting minimal or slightly negative net asset growth for the fourth quarter. With several new initiatives underway, however, we expect this trend to materially reverse itself in 2005."

Capital Markets (continued)

For fiscal year 2005, the Company expects diluted adjusted earnings per share of $3.50-$3.70 and diluted earnings per share of $2.58-$2.82, based on expected net asset growth of $3.0-$3.5 billion in 2005.

Ms. Rice commented, "A number of factors will drive our earnings and the level of net asset growth that we achieve in 2005. We expect that markets will remain highly competitive; however, we also expect that both our new investment grade cost of funds and the growth of some of our new business initiatives will result in a higher gross origination volume. The $3.0-$3.5 billion of net asset growth guidance reflects a higher velocity in gross originations and a tapering of prepayments in 2005. While it is difficult to determine how quickly we can capitalize on the opportunities that we see for 2005, we will continue to refine our guidance as the year progresses and we have a clearer view of the investment pipeline."

Ms. Rice continued, "Match funding our assets with our liabilities has always been one of the key components of our conservative funding strategy. Our policy states that a 100 basis point change in interest rates cannot impact adjusted earnings by more than 2.5% each quarter. This disciplined approach has allowed iStar Financial to provide stable, strong returns to its shareholders and to protect earnings as much as possible from swings in short and long-term interest rates. At September 30, 2004, a 100 basis point increase in interest rates would decrease our adjusted earnings by just 1.4% and the weighted average maturity of our assets and liabilities was 6.5 years and 5.2 years, respectively."

As of September 30, 2004, the Company's loan portfolio consisted of 67% floating rate and 33% fixed rate loans. Approximately 60% of the Company's floating rate loans have LIBOR floors with a weighted average LIBOR floor of 1.96%. The weighted average GAAP LIBOR margin, inclusive of LIBOR floors, was 5.35%. The weighted average GAAP margin of the Company's fixed rate loans was 7.56% on a term-adjusted basis.

Risk Management

At September 30, 2004, first mortgages, participations in first mortgages, corporate tenant leases and corporate financing transactions collectively comprised 91.8% 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 24.5% and 67.5%, respectively. As of September 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 June 30, 2004, was 2.14x.

At quarter end, the Company's corporate tenant lease assets were 95.7% leased with a weighted average remaining lease term of 10.5 years. Corporate tenant lease expirations for the remainder of 2004 represent 1.7% of annualized total revenue for third quarter 2004. At quarter end, 78.1% of the Company's corporate lease customers were public companies (or subsidiaries of public companies).

At September 30, 2004, the weighted average risk ratings of the Company's structured finance assets was 2.68 for risk of principal loss, compared to last quarter's rating of 2.59, and 3.17 for performance compared to original underwriting, compared to last quarter's rating of 3.15. The weighted average risk rating for corporate tenant lease assets was 2.47 at the end of the third quarter, an improvement from the prior quarter's rating of 2.50.

At quarter end, accumulated loan loss reserves and other asset-specific credit protection represented an aggregate of approximately 7.9% 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 10.1% of the gross book value of the Company's corporate tenant lease assets at quarter end. At September 30, 2004, the Company's non-performing loan assets (NPLs) represented 0.38% of total assets. NPLs represent loans on non-accrual status and repossessed real estate collateral. At September 30, 2004 the Company had two loans on non- accrual and no repossessed assets. In addition, watch list assets represented 0.88% of total assets at September 30, 2004.

Timothy J. O'Connor, iStar Financial's chief operating officer, stated, "The credit quality of our asset base remained strong this quarter. While lease rates remain relatively low in many markets, we continue to see increased leasing activity, indicating that most real estate markets are stabilizing as the economy continues to recover. As we have stated in previous quarters, we expect to sell approximately $129 million of non-core sale/leaseback assets at a significant gain to our book basis in the fourth quarter."

Mr. O'Connor continued, "Beginning with the third quarter, we are reporting non-performing loans, or NPLs, as another indicator of asset quality that more closely conforms to other finance company metrics. NPLs include all loans on non-accrual status and all repossessed real estate collateral. In addition, any asset classified as an NPL will not be included in our watch list. Historically, most watch list asset issues were resolved before the asset's performance required it to be put on non-accrual, yet non-accruals were also included as part of our watch list. We believe that separating NPLs from the watch list will give our investors better transparency regarding the actual ultimate credit performance of the assets on our watch list, which was always intended to be an early warning for potential problem assets."

Other Developments

On October 1, 2004, iStar Financial declared a regular quarterly cash dividend of $0.6975 per common share for the quarter ended September 30, 2004. The third quarter 2004 dividend is payable on October 29, 2004 to holders of record on October 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, October 21, 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.)

                          Financial Tables to Follow

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

                                       Three Months Ended  Nine Months Ended
                                         September 30,       September 30,
                                        2004      2003      2004       2003
      Revenue:
         Interest income               $90,098   $77,166  $265,350   $224,670
         Operating lease income         78,354    60,495   224,140    181,710
         Other income                    8,835     9,971    30,685     22,741
           Total revenue               177,287   147,632   520,175    429,121

      Costs and expenses:
         Interest expense               58,671    46,591   169,179    143,246
         Operating costs - corporate
          tenant lease assets            6,016     4,793    17,945     12,184
         Depreciation and amortization  17,025    12,810    48,772     37,848
         General and administrative     10,512    11,154    36,381     27,870
         General and administrative -
          stock-based compensation
          expense                          730       848   108,839      2,537
         Provision for loan losses       2,000     1,750     7,000      5,250
         Loss on early extinguishment
          of debt                            -         -    13,178          -
           Total costs and expenses     94,954    77,946   401,294    228,935

      Net income before other items     82,333    69,686   118,881    200,186
           Equity in earnings (loss)
            from joint ventures and
           unconsolidated subsidiaries  (1,875)      744     3,519        586
           Minority interest in
            consolidated entities         (227)      (40)     (487)      (119)
           Income (loss) from
            discontinued operations      2,858     3,787     8,945     10,961
           Gain from discontinued
            operations                   2,013       701     2,149        964
      Net income                        85,102    74,878   133,007    212,578

      Preferred dividends              (10,580)   (8,258)  (40,760)   (26,712)

      Net income allocable to common
       shareholders and HPU holders    $74,522   $66,620   $92,247   $185,866

      Net income per common share:
           Basic (1)                     $0.66     $0.66     $0.83      $1.85
           Diluted (2) (3)               $0.65     $0.63     $0.81      $1.79

      Weighted average common shares
       outstanding:
           Basic                       111,230   100,687   109,803     99,543
           Diluted                     112,568   104,746   112,390    102,809

    (1) For the three months ended September 30, 2004, and 2003, excludes
        $1,191 and $538 of net income allocable to HPU holders, respectively.
        For the nine months ended September 30, 2004 and 2003, excludes $1,450
        and $1,517 of net income allocable to HPU holders, respectively.
    (2) For the three months ended September 30, 2004 and 2003, excludes
        $1,178 and $517 of net income allocable to HPU holders, respectively.
        For the nine months ended September 30, 2004 and 2003, excludes $1,421
        and $1,470 of net income allocable to HPU holders, respectively.
    (3) For the three months ended September 30, 2004 and 2003, includes $43
        and $40 of joint venture income, respectively. For the nine months
        ended September 30, 2004 and 2003, includes $5 and $119 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   Nine Months Ended
                                         September 30,       September 30,
                                        2004      2003      2004       2003

      ADJUSTED EARNINGS: (1)
      Net income  (2)                  $85,102   $74,878  $133,007   $212,578
      Add: Joint venture income             43       253         7        754
      Add: Depreciation                 17,644    13,774    50,664     40,756
      Add: Joint venture depreciation
       and amortization                  1,451     1,003     3,473      3,001
      Add: Amortization                  7,427     6,709    26,598     20,117
      Less: Preferred dividends  (3)   (10,580)   (8,258)  (40,760)   (26,712)
      Less: Gain from discontinued
       operations                       (2,013)     (701)   (2,149)      (964)

      Adjusted earnings allocable to
       common shareholders and HPU
       holders:
         Basic                         $99,031   $87,405  $170,833   $248,776
         Diluted                       $99,074   $87,658  $170,840   $249,530

      Adjusted earnings per common
       share:
      Basic: (4)                         $0.88     $0.86     $1.53      $2.48
      Diluted: (5)                       $0.87     $0.83     $1.50      $2.40

      Weighted average common shares
       outstanding:
         Basic                         111,230   100,687   109,803     99,543
         Diluted                       112,568   105,044   112,390    103,107

      Common shares outstanding at end
       of period:
         Basic                         111,381   101,423   111,381    101,423
         Diluted                       112,647   105,780   112,647    105,780

    (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 nine months ended September 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 nine months ended September 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 September 30, 2004 and 2003, excludes
        $1,583 and $705 of net income allocable to HPU holders, respectively.
        For the nine months ended September 30, 2004 and 2003, excludes $2,723
        and $2,030 of net income allocable to HPU holders, respectively.
    (5) For the three months ended September 30, 2004 and 2003, excludes
        $1,565 and $678 of net income allocable to HPU holders, respectively.
        For the nine months ended September 30, 2004 and 2003, excludes $2,684
        and 1,966 of net income allocable to HPU holders, respectively.


                             iStar Financial Inc.
                         Consolidated Balance Sheets
                                (In thousands)

                                                   As of             As of
                                          September 30, 2004 December 31, 2003
                                               (unaudited)
     ASSETS

     Loans and other lending investments, net    $3,868,027        $3,702,674
     Corporate tenant lease assets, net           2,900,628         2,535,885
     Investments in and advances to joint
      ventures and unconsolidated subsidiaries       16,409            25,019
     Assets held for sale                           129,284            24,800
     Cash and cash equivalents                      104,763            80,090
     Restricted cash                                 60,054            57,665
     Accrued interest and operating lease
      income receivable                              25,345            26,076
     Deferred operating lease income receivable      63,377            51,447
     Deferred expenses and other assets             151,633           156,934
                     Total assets                $7,319,520        $6,660,590

     LIABILITIES AND SHAREHOLDERS' EQUITY

     Accounts payable, accrued expenses
      and other liabilities                        $134,963          $126,524

     Debt obligations:
             Unsecured senior notes               2,067,258         1,137,769
             Unsecured revolving credit
              facilities                            642,000           130,000
             Secured revolving credit
              facilities                            195,795           696,591
             Secured term loans                     715,401           808,000
             iStar Asset Receivables
              secured notes                       1,052,205         1,307,224
             Other debt obligations                       -            34,148
                     Total liabilities           $4,807,622        $4,240,256
     Minority interest in consolidated
      entities                                       19,429             5,106
     Shareholders' equity                         2,492,469         2,415,228
                     Total liabilities and
                      shareholders' equity       $7,319,520        $6,660,590


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

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

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (1)  $99,031
    Plus: Preferred dividends                  10,580
    Adjusted basic earnings before
     preferred dividends                     $109,611

    Adjusted basic earnings before
     preferred dividends - Annualized (A)    $438,444
    Average total book assets (B)          $7,462,975
    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)  $99,031
    Adjusted basic earnings allocable to
     common shareholders and HPU holders -
     Annualized (C)                          $396,124
    Average total book equity              $2,493,186
    Less: Average book value of preferred
     equity                                  (506,176)
    Average common book equity (D)         $1,987,010
    Return on average common
     book equity (C)/(D)                         19.9%

    Efficiency Ratio

    General & administrative expenses         $10,512
    Plus: General and administrative -
     stock-based compensation                     730
    Total corporate overhead (E)              $11,242

    Total revenue (F)                        $177,287

    Efficiency ratio (E)/(F)                      6.3%

    CREDIT STATISTICS

    Book Debt (A)                          $4,672,659

    Book Equity                            $2,492,469
    Plus: Accumulated Depreciation and
     Loan Loss Reserves                       270,479
    Sum of Book Equity, Accumulated
     Depreciation and Loan
      Loss Reserves (B)                    $2,762,948

    Book Debt / Sum of Book Equity,
     Accumulated Depreciation
     and Loan Loss Reserves (A)/(B)               1.7x

    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)

      CREDIT STATISTICS  (cont.)
                                                            Three Months Ended
      Interest Coverage                                     September 30, 2004
      EBITDA (1) (C)                                                 $160,798
      GAAP interest expense (D)                                       $58,671

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

      Fixed Charge Coverage

      EBITDA (1) (C)                                                 $160,798
      GAAP interest expense                                           $58,671
      Plus: Preferred dividends                                        10,580
      Total GAAP interest expense and preferred dividends (E)         $69,251

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

      Unencumbered assets                                          $4,506,563

      RECONCILIATION OF NET INCOME TO EBITDA

      Net Income                                                      $85,102
      Add:  Interest expense                                           58,671
      Add:  Depreciation and amortization                              17,025

      EBITDA (1)                                                     $160,798

    (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
       September 30, 2004                    LOAN ORIGINATIONS
                                                            Total/
                                         Fixed   Floating  Weighted  CORPORATE
                                         Rate      Rate    Average   LEASING
      Amount funded                     $40,000  $200,623  $240,623  $166,046
      Weighted average GAAP yield          7.66%     6.63%     6.80%     8.43%
      Weighted average all-in
       spread/margin (basis points) (1)    +417      +503         -      +408
      Weighted average first $
       loan-to-value ratio                  0.0%     48.0%     40.0%        -
      Weighted average last $
       loan-to-value ratio                 31.1%     68.8%     62.5%        -

      UNFUNDED COMMITMENTS

      Number of assets with unfunded
       commitments                                                         27

      Discretionary commitments                                      $258,485
      Non-discretionary commitments                                   239,754
      Total unfunded commitments                                     $498,239

      Estimated weighted average
       funding period                                  Approximately 1.8 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
                                           September 30, 2004    June 30, 2004
                                                $         %        $         %
    Carrying value of non-performing loans/
     As a percentage of total assets        $27,526    0.38%   $27,526   0.36%

    Provision for loan losses/
     As a percentage of total assets        $40,436    0.55%   $38,436   0.51%
     As a percentage of non-performing loans            147%              140%

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

                                   Before Compensation,    After Compensation,
                                   Preferred Stock         Preferred Stock
                                   and Senior Note         and Senior Note
                                   Redemption Charges      Redemption Charges
    Year Ended December 31, 2004
    Earnings per diluted
     common share guidance            $2.78  -  $2.83        $1.68  -  $1.73
    Add: Depreciation and amortization
     per diluted common share         $0.85  -  $0.93        $0.85  -  $0.93
    Less: Gain on disposition of
     sale/leaseback assets           ($0.23  -  $0.23)      ($0.23  -  $0.23)
    Adjusted earnings per diluted
     common share guidance            $3.45  -  $3.48        $2.35  -  $2.38

    Year Ended December 31, 2005
    GAAP earnings per diluted
     common share guidance            $2.58  -  $2.82
    Add: Depreciation and amortization
     per diluted common share         $0.68  -  $1.12
    Adjusted earnings per diluted
     common share guidance            $3.50  -  $3.70

    (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 SEPTEMBER 30, 2004 (1)

    Security Type                                      $                 %
    Corporate Tenant Leases                         $3,302             45.8 %
    First Mortgages (2)                              2,862             39.7
    Corporate/Partnership Loans/Other                  952             13.2
    Second Mortgages                                    95              1.3
               Total                                $7,211            100.0 %

    Collateral Type                                    $                 %
    Office (CTL)                                    $1,843             25.6 %
    Industrial/R&D                                   1,106             15.3
    Office (Lending)                                   929             12.9
    Entertainment/Leisure                              802             11.1
    Hotel (Lending)                                    665              9.2
    Mixed Use/Mixed Collateral                         535              7.4
    Apartment/Residential                              414              5.7
    Retail                                             403              5.6
    Hotel (Investment Grade CTL)                       269              3.7
    Other                                              171              2.4
    Conference Center                                   74              1.1
               Total                                $7,211            100.0 %

    Product Line                                       $                 %
    Corporate Tenant Leasing                        $3,302             45.8 %
    Structured Finance                               1,717             23.8
    Portfolio Finance                                  981             13.6
    Corporate Finance                                  713              9.9
    Loan Acquisition                                   498              6.9
               Total                                $7,211            100.0 %

    Collateral Location                                $                 %
    West                                            $1,781             24.7 %
    Northeast                                        1,522             21.1
    Southeast                                        1,095             15.2
    Mid Atlantic                                       772             10.7
    Central                                            626              8.7
    South                                              593              8.2
    North Central                                      265              3.7
    Various                                            202              2.8
    Northwest                                          195              2.7
    Southwest                                          160              2.2
               Total                                $7,211            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 $643.2 million of junior participation interests in first
        mortgages.
SOURCE  iStar Financial Inc.
    -0-                             10/21/2004
    /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 Inc., +1-212-930-9400/
    /Web site:  http://www.istarfinancial.com /
    (SFI)

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

KC 
-- NYTH038 --
8733 10/21/2004 07:30 EDT http://www.prnewswire.com
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