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07/26/2005

iStar Financial Announces Second Quarter 2005 Results

  • Adjusted earnings per diluted common share were $0.83 for the second quarter 2005, up 12% versus prior quarter.
  • New financing activity exceeded $1.0 billion for second straight quarter in a record 23 separate transactions.
  • First half 2005 commitments hit record $2.4 billion, up 43% year-over-year.
  • Total revenues reach record $198.7 million, up nearly 10% quarter-over-quarter.
  • Total assets under management exceed $8.3 billion.
  • Fitch revises ratings outlook to positive during second quarter; affirms investment grade rating.

NEW YORK, July 26 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), the leading publicly traded finance company focused on the commercial real estate industry, today reported second quarter results for the quarter ended June 30, 2005.

iStar reported adjusted earnings for the second quarter 2005 of $0.83 per diluted common share, compared to $0.87 per diluted common share for the second quarter 2004. Adjusted earnings allocable to common shareholders for the second quarter 2005 were $94.5 million on a diluted basis, compared to $97.3 million for the second quarter 2004. Adjusted earnings represents net income computed in accordance with GAAP, adjusted for preferred dividends, depreciation, depletion, amortization and gain (loss) from discontinued operations.

Net income allocable to common shareholders for the second quarter 2005 was $66.5 million, or $0.58 per diluted common share, compared with $71.3 million, or $0.64 per diluted common share, for the second quarter of 2004. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income.

Second Quarter 2005 Results

Net investment income for the quarter was $97.4 million, compared to $98.4 million for the second quarter of 2004. Net investment income represents interest income, operating lease income and equity in earnings from joint ventures, less interest expense, operating costs for corporate tenant lease assets and loss on early extinguishment of debt, in each case as computed in accordance with GAAP.

iStar Financial announced that during the second quarter, it closed 23 new financing commitments for a total of $1.0 billion, of which $822.3 million was funded during the quarter. In addition, the Company funded $266.7 million under 17 pre-existing commitments and received $654.2 million in principal repayments. Of the Company's second quarter financing commitments, 64% represented first mortgage, first mortgage participation and corporate tenant lease transactions. Cumulative repeat customer business totaled $8.1 billion at June 30, 2005.

For the quarter ended June 30, 2005, iStar Financial generated returns on average book assets and average common book equity of 5.3% and 19.1%, respectively. For the quarter, the Company's debt to book equity plus accumulated depreciation and loan loss reserves, as determined in accordance with GAAP, was 2.0x.

As of June 30, 2005, the Company's loan portfolio consisted of 62% floating rate and 38% fixed rate loans. The weighted average GAAP LIBOR margin of floating rate loans was 4.99%. The weighted average GAAP margin of the Company's fixed rate loans was 5.75% on a term-adjusted basis.

Jay Sugarman, iStar Financial's chairman and chief executive officer, stated, "Closing $1.0 billion of new financing commitments for the second straight quarter demonstrates the strength of our customer focused approach and our ability to execute in a challenging market by leveraging our proven origination and underwriting capabilities."

Mr. Sugarman continued, "We continue to see high levels of liquidity in the commercial real estate market, as evidenced by the level of repayments we experienced during the second quarter and first half of this year. While the exact timing of repayments and the direction of interest rates are difficult to predict, our long-term business platform is designed to perform in a wide variety of market environments."

Mr. Sugarman concluded, "We see additional growth opportunities from natural extensions of our loan and lease portfolio businesses with iStar branded capital solutions for new customers in select new markets. We look for opportunities that share the same fundamental risk dynamics as our existing commercial real estate business. For example, while clearly still in its early stage, our lending and long-term sale/leaseback platforms within our AutoStar business are performing to our expectations. Our AutoStar business currently has approximately $540 million of total assets under management. Our corporate tenant lease portfolio is 100% leased, with a weighted average remaining lease term of approximately 12.4 years and the earliest lease maturity not occurring until 2014. Approximately 75% of our tenants are publicly traded consolidators or top 100 dealers nationwide. Our loan portfolio has a weighted average loan-to-value of 66.8% and a weighted average maturity of approximately 9.5 years."

Capital Markets Summary

During the second quarter iStar Financial issued $250 million of 5.375% senior unsecured notes due 2010, and $250 million of 6.05% senior unsecured notes due 2015. The net proceeds of the issuances were used to repay revolving credit facilities. In June, the Company also upsized its universal shelf registration statement to $5.0 billion.

Catherine D. Rice, iStar Financial's chief financial officer, stated, "As a finance company we always want to maintain strong sources of liquidity and be able to efficiently access capital for our business. For 2005, we continue to expect to issue approximately $2.0-$2.5 billion of unsecured notes, inclusive of the $1.6 billion sold earlier this year. Our increased shelf capacity will enable us to efficiently access long-term debt and equity capital well into 2006."

Ms. Rice continued, "We were pleased that during the second quarter Fitch revised our ratings outlook from stable to positive and affirmed our BBB- investment grade rating on our senior unsecured debt, noting the progress the Company has made in unencumbering assets and maintaining our conservative approach to growing our asset base."

At June 30, 2005, the Company had $571.3 million outstanding under its four credit facilities, which total $2.8 billion in committed capacity. Consistent with its match funding policy under which a one percentage point change in interest rates cannot impact adjusted earnings by more than 2.5%, as of June 30, 2005, a 100 basis point increase in rates would have decreased the Company's earnings by 0.06%.

Ms. Rice said, "We also continue to increase our unsecured funding on the right side of the balance sheet and decrease secured debt. During the third quarter, two secured credit facilities totaling $850 million will reach their initial maturity dates, at which time we do not currently plan on renewing with these lenders. We have been funding new originations with our $1.25 billion unsecured credit facility, and believe we have adequate sources of short-term capital for our business."

Ms. Rice continued, "We are currently evaluating repayment of our iStar Asset Receivables ("STARs") series 2002-1 and 2003-1 asset backed notes. In addition to being able to issue unsecured debt at more attractive terms given our investment grade ratings, the $716 million repayment of these notes would unencumber approximately $1.3 billion of assets and reduce secured debt to just 12.2% of our total debt, based upon June 30, 2005 balances. Should we repay these notes in 2005, we would incur one-time cash costs, including prepayment and other fees of approximately $8 million and a non-cash charge of approximately $38 million to write off deferred financing fees and expenses. Based upon today's U.S. Treasury rates, these one-time costs would reduce our full year 2005 diluted adjusted earnings per share by approximately $0.07 and our diluted earnings per share by approximately $0.40."

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. The Company currently expects diluted adjusted earnings per share for the second half and full year 2005 of $1.73-$1.83 and $3.30-$3.40, respectively, and diluted earnings per share for the second half and full year 2005 of $1.15-$1.35 and $2.25-$2.45, respectively, excluding any effect of a possible prepayment of the Company's STARs discussed above.

Including the effect of the possible prepayment of these notes, the Company's diluted adjusted earnings per share and diluted earnings per share would be reduced by approximately $0.07 and $0.40, respectively, based upon today's U.S. Treasury rates.

Ms. Rice concluded, "As we enter the second half of 2005, we have narrowed our earnings expectations for the full year. Our expectations, however, remain within the range we communicated in the past two quarters. The commercial real estate finance markets continue to experience high levels of liquidity. In our loan portfolio, our borrowers are selling or refinancing their assets at very aggressive levels. In our sale/leaseback portfolio, we are selectively selling assets where we believe we can redeploy the capital at more attractive rates. In fact, since 2004, we have sold $383 million in assets. As a result, we have received and expect to receive large prepayment penalties associated with loan payoffs as well as gains associated with our own asset sales. The timing of all of these factors is difficult to estimate. For this reason, we are providing guidance for the remainder of 2005 rather than separately breaking it out on a quarterly basis. Despite the competitive environment, we continue to find compelling opportunities to invest our capital, committing approximately $2.4 billion for the first half of 2005. We expect to originate approximately $4.0 billion of investment volume and expect between $2.0-$2.5 billion of principal repayments for the full year 2005."

Risk Management

At June 30, 2005, first mortgages, participations in first mortgages, corporate tenant leases and corporate financing transactions collectively comprised 92.2% of the Company's asset base. The weighted average first and last dollar loan-to-value ratio for all structured finance assets was 18.1% and 65.4%, respectively. As of June 30, 2005 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, 2005, was 2.24x.

At quarter end, the Company's corporate tenant lease assets were 95.1% leased with a weighted average remaining lease term of 11.5 years. At quarter end, 79.1% of the Company's corporate lease customers were public companies (or subsidiaries of public companies).

At June 30, 2005, the weighted average risk ratings of the Company's structured finance assets was 2.52 for risk of principal loss, compared to last quarter's rating of 2.71, and 3.10 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 2.36 at the end of the second quarter, the same as the prior quarter's rating of 2.36.

At quarter end, accumulated loan loss reserves and other asset-specific credit protection represented an aggregate of approximately 5.8% 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 10.8% of the gross book value of the Company's corporate tenant lease assets at quarter end.

For the first half of 2005, the company recorded no credit losses. At June 30, 2005, the Company's non-performing loan assets (NPLs) represented 1.2% of total assets. NPLs represent loans on non-accrual status and repossessed real estate collateral. At June 30, 2005, the Company had two loans on non-accrual and no repossessed assets. In addition, watch list assets represented 0.1% of total assets at June 30, 2005.

Tim O'Connor, iStar Financial's chief operating officer, stated, "The second quarter was characterized by improving credit trends in our overall loan portfolio and no changes to the credit statistics in our corporate tenant lease assets. There were no additional assets added to our NPL list this quarter and we continue to believe that the large first mortgage that was added in the first quarter is well covered by the underlying collateral. We do not expect a loss of principal or interest on this loan and we are working with the borrower to resolve the current status of the loan. With continued liquidity in the commercial real estate markets, we continue to evaluate the sale of certain non-core sale/leaseback assets where we believe we can redeploy the capital at more attractive returns."

Mr. O'Connor continued, "We target loan loss reserves equal to 1.50% of the outstanding book balance of our loans. Our target incorporates loan- specific cash reserves that we frequently require our borrowers to fund at closing, excluding reserves for taxes and insurance, that would be available to us in the event there is a problem with the asset. The Company increases its on-balance sheet loan loss reserve to make up the difference between the 1.50% target and the cash credit protection of each loan. This quarter the Company's asset-specific and general loan loss reserves totaled 1.55% of our book balance; therefore no increase to the general reserve was needed."

Dividend and Other Developments

On July 1, 2005 iStar Financial declared a regular quarterly dividend of $0.7325. The second quarter dividend is payable on July 29, 2005 to holders of record on July 15, 2005.

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 26, 2005. 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 timing of receipt of prepayment penalties, 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.)



    Selected Income Statement Data
    (In thousands)
    (unaudited)
                                        Three Months Ended  Six Months Ended
                                              June 30,           June 30,
                                           2005     2004      2005      2004

    Net investment income (1)            $97,436  $98,430  $191,579  $184,064
    Other income                          13,847    9,993    26,072    22,107
    Non-interest expense (2)             (32,987) (31,007)  (69,081) (169,736)
    Minority interest in consolidated
     entities                                (74)    (128)     (280)     (261)
    Income from continuing operations    $78,222  $77,288  $148,290   $36,174

    Income from discontinued operations      110    5,731       361    11,593
    Gain from discontinued operations        407        -       407       136
    Preferred dividend requirements (3)  (10,580) (10,580)  (21,160)  (30,180)
    Net income allocable to common
     shareholders and HPU holders (4)    $68,159  $72,439  $127,898   $17,723

    (1) Net investment income for the six months ended June 30, 2004, includes
        an $11.5 million charge relating to the 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, 2005  December 31, 2004
                                              (unaudited)

    Loans and other lending investments, net  $4,509,309        $3,946,189
    Corporate tenant lease assets, net         2,997,395         2,877,042
    Other investments                            292,715            75,092
    Total assets                               8,360,009         7,220,237
    Debt obligations                           5,637,584         4,605,674
    Total liabilities                          5,791,973         4,745,749
    Total shareholders' equity                 2,540,185         2,455,242



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

                                      Three Months Ended    Six Months Ended
                                           June 30,             June 30,
                                        2005      2004      2005       2004
    Revenue:
     Interest income                $106,287   $92,112  $198,285   $174,996
     Operating lease income           78,523    71,493   155,534    137,367
     Other income                     13,847     9,993    26,072     22,107
      Total revenue                  198,657   173,598   379,891    334,470

    Costs and expenses:
     Interest expense                 81,654    59,043   150,605    111,529
     Operating costs - corporate
      tenant lease assets              5,715     4,271    11,470      8,985
     Depreciation and
      amortization                    18,180    15,928    36,021     30,757
     General and administrative       14,166    12,511    29,527     25,870
     General and administrative -
      stock-based compensation
      expense                            641       568     1,283    108,109
     Provision for loan losses             -     2,000     2,250      5,000
     Loss on early extinguishment
      of debt                              -     1,006         -     13,178
       Total costs and expenses      120,356    95,327   231,156    303,428

    Income from continuing
     operations before other items    78,301    78,271   148,735     31,042
      Equity in earnings from
       joint ventures                     (5)     (855)     (165)     5,393
      Minority interest in
       consolidated entities             (74)     (128)     (280)      (261)
        Income from continuing
                operations            78,222    77,288   148,290     36,174

      Income from discontinued
       operations                        110     5,731       361     11,593
      Gain from discontinued
       operations                        407         -       407        136
      Net income                      78,739    83,019   149,058     47,903

    Preferred dividends              (10,580)  (10,580)  (21,160)   (30,180)

    Net income allocable to common
     shareholders and HPU holders    $68,159   $72,439  $127,898    $17,723

    Net income per common share:
          Basic (1)                    $0.59     $0.64     $1.11      $0.16
          Diluted (2) (3)              $0.58     $0.64     $1.10      $0.16

    Weighted average common shares
      outstanding:
          Basic                      112,624   110,695   112,050    109,081
          Diluted                    113,801   112,246   113,241    112,324

    (1) For the three months ended June 30, 2005 and 2004, excludes $1,675
        and $1,163 of net income allocable to HPU holders, respectively. For
        the six months ended June 30, 2005 and 2004, excludes $3,159 and
        $259 of net income allocable to HPU holders, respectively.
    (2) For the three months ended June 30, 2005 and 2004, excludes $1,659
        and $1,148 of net income allocable to HPU holders, respectively. For
        the six months ended June 30, 2005 and 2004, excludes $3,126 and
        $243 of net income allocable to HPU holders, respectively.
    (3) For the three and six months ended June 30, 2004, includes $41 and
        $3 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
                                        2005       2004     2005       2004

      ADJUSTED EARNINGS: (1)
      Net income  (2)                 $78,739    $83,019 $149,058    $47,903
      Add: Depreciation, depletion
       and amortization                18,381     17,081   36,531     33,019
      Add: Joint venture income            33         41       75          5
      Add: Joint venture depreciation
       and amortization                 2,707        490    2,842      2,022
      Add: Amortization                 7,975      8,859   15,501     19,171
      Less: Preferred dividends  (3)  (10,580)   (10,580) (21,160)   (30,180)
      Less: Gain from discontinued
       operations                        (407)         -     (407)      (136)

      Adjusted earnings allocable to
       common shareholders and HPU
       holders:
         Basic                        $96,815    $98,869 $182,365    $71,799
         Diluted                      $96,848    $98,910 $182,440    $71,804

      Adjusted earnings per common
       share:
         Basic: (4)                     $0.84      $0.88    $1.59      $0.65
         Diluted: (5)                   $0.83      $0.87    $1.57      $0.63

      Weighted average common shares
       outstanding:
         Basic                        112,624    110,695  112,050    109,081
         Diluted                      113,853    112,246  113,292    112,324

      Common shares outstanding at
       end of period:
         Basic                        112,704    111,167  112,704    111,167
         Diluted                      113,926    113,019  113,926    113,019

    (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, 2005 and 2004, excludes $2,380 and
        $1,588 of net income allocable to HPU holders, respectively. For the
        six months ended June 30, 2005 and 2004, excludes $4,504 and $1,140 of
        net income allocable to HPU holders, respectively.
    (5) For the three months ended June 30, 2005 and 2004, excludes $2,356 and
        $1,567 of net income allocable to HPU holders, respectively. For the
        six months ended June 30, 2005 and 2004, excludes $4,457 and $1,119 of
        net income allocable to HPU holders, respectively.



                             iStar Financial Inc.
                         Consolidated Balance Sheets
                                (In thousands)

                                                   As of             As of
                                              June 30, 2005      December 31,
                                                (unaudited)           2004

     ASSETS

     Loans and other lending investments, net   $4,509,309        $3,946,189
     Corporate tenant lease assets, net          2,997,395         2,877,042
     Other investments                             292,715            75,092
     Investments in joint ventures                 205,301             5,663
     Cash and cash equivalents                     116,372            88,422
     Restricted cash                                38,202            39,568
     Accrued interest and operating lease
      income receivable                             30,357            25,633
     Deferred operating lease income
      receivable                                    70,095            62,092
     Deferred expenses and other assets             92,517           100,536
     Goodwill                                        7,746                 -
                     Total assets               $8,360,009        $7,220,237



     LIABILITIES AND SHAREHOLDERS' EQUITY

     Accounts payable, accrued expenses
      and other liabilities                       $154,389          $140,075

     Debt obligations:
             Unsecured senior notes              3,660,533         2,064,435
             Unsecured revolving credit
              facilities                           558,000           840,000
             Secured revolving credit
              facilities                            13,325            78,587
             Secured term loans                    693,517           693,472
             iStar Asset Receivables
              secured notes                        712,209           929,180
                     Total liabilities           5,791,973         4,745,749
     Minority interest in consolidated
      entities                                      27,851            19,246
     Shareholders' equity                        2,540,185         2,455,242
                     Total liabilities and
                      shareholders' equity      $8,360,009        $7,220,237



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

    PERFORMANCE STATISTICS
                                                      Three Months Ended
    Return on Average Book Assets                        June 30, 2005

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (1)                 $96,815
    Plus: Preferred dividends                                 10,580
    Adjusted basic earnings before preferred dividends      $107,395

    Adjusted basic earnings before
     preferred dividends - Annualized (A)                   $429,581
    Average total book assets (B)                         $8,178,798
    Return on average book assets (A) / (B)                      5.3%

    Return on Average Common Book Equity

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (1)                 $96,815
    Adjusted basic earnings allocable to common
     shareholders and HPU holders - Annualized (C)          $387,261

    Average total book equity                             $2,528,450
    Less: Average book value of preferred equity            (506,176)
    Average common book equity (D)                        $2,022,274
    Return on average common book equity (C) / (D)              19.1%

    Efficiency Ratio

    General & administrative expenses                        $14,166
    Plus: General and administrative - stock-based
     compensation                                                641
    Total corporate overhead (E)                             $14,807

    Total revenue (F)                                       $198,657

    Efficiency ratio (E) / (F)                                   7.5%

    CREDIT STATISTICS

    Book Debt (A)                                         $5,637,584

    Book Equity                                           $2,540,185
    Plus: Accumulated Depreciation and
     Loan Loss Reserves                                      310,581
    Sum of Book Equity, Accumulated
     Depreciation and Loan Loss Reserves (B)              $2,850,766

    Book Debt / Sum of Book Equity,
     Accumulated Depreciation
    and Loan Loss Reserves (A)/(B)                              2.0x

    Ratio of earnings to fixed charges                          2.0x

    Ratio of earnings to fixed charges
     and preferred stock dividends                              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.  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, 2005

    EBITDA (1) (C)                                       $178,919
    GAAP interest expense (D)                             $81,654

    EBITDA / GAAP interest expense  (C)/(D)                   2.2x

    Fixed Charge Coverage

    EBITDA (1) (C)                                       $178,919

    GAAP interest expense                                 $81,654
    Plus: Preferred dividends                              10,580
    Total GAAP interest expense and
     preferred dividends (E)                              $92,234

    EBITDA / GAAP interest expense and
     preferred dividends (C) / (E)                            1.9x

    Unencumbered assets                                $6,120,951

    RECONCILIATION OF NET INCOME TO EBITDA

    Net Income                                            $78,739
    Add: GAAP interest expense                             81,654
    Add: Depreciation, depletion and amortization          18,526

    EBITDA (1)                                           $178,919

    (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, 2005         LOAN ORIGINATIONS

                                                            Total/
                                                  Floating Weighted  CORPORATE
                                       Fixed Rate   Rate    Average   LEASING

    Amount funded                      $384,224   $400,930  $785,154  $37,122
    Weighted average GAAP yield            7.23%      8.26%     7.76%    9.80%
    Weighted average all-in
     spread/margin (basis points) (1)      +352       +516         -     +552
    Weighted average first $
     loan-to-value ratio                   27.5%      12.0%     19.6%     N/A
    Weighted average last $
     loan-to-value ratio                   61.5%      66.4%     64.0%     N/A


    UNFUNDED COMMITMENTS

    Number of assets with unfunded commitments                             33
    Discretionary commitments                                         $34,444
    Non-discretionary commitments                                     684,915
    Total unfunded commitments                                       $719,359

    Estimated weighted average funding period         Approximately 2.5 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

                                               As of             As of
                                           June 30, 2005   December 31, 2004
                                             $        %        $        %
    Carrying value of non-performing
     loans / As a percentage of total
     assets                                $99,672   1.19%   $27,526   0.38%

    Provision for loan losses /
     As a percentage of total assets       $46,876   0.56%   $42,436   0.59%
     As a percentage of non-performing
      loans                                            47%              154%

                                           Six Months Ended       Year Ended
                                            June 30, 2005    December 31, 2004
                                               $      %          $      %
    Net charge-offs /
     As a percentage of total assets          $0   0.00%        $0   0.00%


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

                                               Six Months Ending   Year Ending
                                                   December 31,   December 31,
                                                      2005              2005
    Earnings per diluted common share guidance     $1.15-$1.35    $2.25-$2.45
    Add: Depreciation and amortization per
     diluted common share                          $0.38-$0.68    $0.85-$1.15
    Adjusted earnings per diluted common
     share guidance                                $1.73-$1.83    $3.30-$3.40

     (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, 2005 (1)

    Security Type                                      $                 %
    Corporate Tenant Leases                         $3,309             41.3 %
    First Mortgages (2)                              3,326             41.6
    Corporate / Partnership Loans                    1,230             15.4
    Other Investments                                  140              1.7
               Total                                $8,005            100.0 %

    Collateral Type
    Office (CTL)                                    $1,650             20.6 %
    Industrial/R&D                                   1,256             15.7
    Office (Lending)                                   977             12.2
    Entertainment / Leisure                            754              9.4
    Other                                              738              9.2
    Retail                                             711              8.9
    Hotel (Lending)                                    633              7.9
    Mixed Use / Mixed Collateral                       518              6.5
    Apartment / Residential                            499              6.2
    Hotel (Investment Grade CTL)                       269              3.4
               Total                                $8,005            100.0 %

    Collateral Location
    West                                            $1,991             24.9 %
    Northeast                                        1,619             20.2
    Southeast                                        1,207             15.1
    Central                                            696              8.7
    Mid-Atlantic                                       657              8.2
    Various / Corporate                                630              7.9
    South                                              529              6.6
    North Central                                      279              3.5
    Northwest                                          203              2.5
    Southwest                                          194              2.4
               Total                                $8,005            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 $377.0 million of junior participation interests in
        first mortgages.

SOURCE iStar Financial Inc.
07/26/2005
CONTACT: Catherine D. Rice, Chief Financial Officer, or Andrew C.
Richardson, Executive Vice President - Capital Markets, or Andrew G. Backman,
Vice President - Investor Relations, all of iStar Financial Inc.,
+1-212-930-9400
/Web site: http://www.istarfinancial.com
(SFI)
CO: iStar Financial Inc.

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