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10/27/2005

iStar Financial Announces Third Quarter 2005 Results

  • Adjusted earnings per diluted common share reach $0.98 for the third quarter 2005, up 18% from prior quarter.

  • New financing activity totals $819.1 million in 22 separate transactions.

  • Total revenues reach $222.2 million, up nearly 12% quarter-over- quarter.

  • Year-to-date originations exceed $3.0 billion, surpassing full-year 2004 volumes.

  • Company increases full year 2005 diluted AEPS guidance to $3.30 - $3.40.

NEW YORK, Oct. 27 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), the leading publicly traded finance company focused on the commercial real estate industry, today reported third quarter results for the quarter ended September 30, 2005.

iStar reported adjusted earnings for the third quarter 2005 of $0.98 per diluted common share, up from $0.87 per diluted common share for the third quarter 2004. Adjusted earnings allocable to common shareholders for the third quarter 2005 were $112.2 million on a diluted basis, compared to $97.5 million for the third 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 third quarter 2005 was $46.8 million, or $0.41 per diluted common share, compared with $73.3 million, or $0.65 per diluted common share, for the third quarter of 2004. Third quarter 2005 net income includes a $37.5 million non-cash charge for prepayment of its STARs asset-backed notes. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income.

Third Quarter 2005 Results

Net investment income for the quarter was $48.2 million, compared to $97.7 million for the third 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. Accordingly, this measure was also impacted by a $44.3 million total charge for the prepayment of the STARs asset-backed notes.

iStar Financial announced that during the third quarter, it closed 22 new financing commitments for a total of $819.1 million, of which $435.8 million was funded during the quarter. In addition, the Company funded $103.9 million under pre-existing commitments and received $730.0 million in principal repayments. Cumulative repeat customer business totaled $8.4 billion at September 30, 2005.

For the quarter ended September 30, 2005, iStar Financial generated returns on average book assets and average common book equity of 6.2% and 22.6%, respectively. These returns were favorably impacted by the substantial fees associated with the prepayment of several of the Company's loans, resulting in Other Income of $43.7 million for the quarter. For the quarter, the Company's debt to book equity plus accumulated depreciation and loan loss reserves, as determined in accordance with GAAP, was 1.8x.

As of September 30, 2005, the Company's loan portfolio consisted of 63% floating rate and 37% fixed rate loans. The weighted average GAAP LIBOR margin of floating rate loans was 5.1%. The weighted average GAAP margin of the Company's fixed rate loans was 7.1% on a term-adjusted basis.

Jay Sugarman, iStar Financial's chairman and chief executive officer, stated, "iStar's multi-discipline franchise, tested in several competitive economic cycles, continues to produce attractive financing opportunities in our targeted market, despite continuing high levels of liquidity in commercial real estate. In the third quarter, new financing activity was over $800 million from 22 separate transactions, bringing our nine-month originations to just over $3.0 billion, surpassing our full-year 2004 origination total."

Mr. Sugarman continued, "While originations were strong, our repayment activity remained high during the quarter as borrowers continue to receive extremely attractive prices for their assets, more than compensating them for the material prepayment penalties associated with many of our loans."

Mr. Sugarman concluded, "We will remain disciplined in investing our capital and continue to avoid areas where increased liquidity is resulting in commodity-like returns. Our increased origination volumes and number of completed investment transactions for the first three quarters this year demonstrates the depth and strength of our franchise. We continue to gain new customers and complete more transactions with repeat customers who value the expertise and one-call responsiveness on which we have built our reputation."

Capital Markets Summary

During the third quarter, iStar Financial added four new participants to its unsecured credit facility and increased total capacity by $250 million to $1.5 billion. The facility now has 32 participants from leading financial institutions. The Company also allowed $850 million of secured credit facility capacity to expire during the quarter.

In August, the Company repaid a $76 million secured financing, and in September, the Company redeemed $621 million of outstanding asset-backed notes under its STARs on-balance sheet match funding program. Subsequent to quarter end, iStar Financial also repaid a $135 million secured financing in advance of its 2008 maturity date. These secured debt repayments unencumbered over $1.6 billion of assets. Pro forma for the October repayment, secured debt as a percentage of total debt represented just 8.3% of the Company's total debt at September 30, 2005. Unencumbered assets at quarter end represented 94.2% of total assets, also on a pro forma basis.

Catherine D. Rice, iStar Financial's chief financial officer, stated, "During the third quarter, we completed our goals of substantially unencumbering our asset base, decreasing secured debt, and increasing unsecured credit capacity to replace expiring secured credit facilities. This year, we upsized our unsecured credit facility by $250 million and we are comfortable that the Company has ample short-term capital available to fund our business. With these substantial secured debt repayments, we have completed the transition of the right side of the balance sheet to a profile that is consistent with an investment grade finance company."

In September, the Company, through a 100% owned trust, issued $100 million of trust preferred securities having a 30-year term and bearing interest at a rate of LIBOR+1.50%. These securities are callable at par by the Company after five years, and are subordinate unsecured indebtedness of the Company.

As of September 30, 2005, the Company had $941.3 million outstanding under $2.2 billion in credit facilities. 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 September 30, 2005, a 100 basis point increase in rates would have decreased the Company's earnings by 0.03%.

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 fiscal year 2005 of $3.30-$3.40, respectively, and diluted earnings per share for the fiscal year 2005 of $2.05-$2.15, respectively. The Company's fiscal year 2005 GAAP earnings expectations include the effect of the prepayment of the Company's STARs asset-backed notes program.

For fiscal year 2006, the Company expects diluted adjusted earnings per share of $3.35-$3.50 and diluted earnings per share of $2.35-$2.50, based on expected net asset growth of approximately $1.5 billion.

Ms. Rice commented, "Our earnings guidance assumes that velocity within the commercial real estate sector will remain high through 2006. We will continue to maintain our investment discipline, a hallmark of the Company, even when this results in slower overall growth. Prepayment activity is forecasted to remain high, with most prepayments resulting from borrowers selling our collateral at values often far exceeding our valuation at the time of underwriting the investment. When prepayments are high, we tend to generate higher Other Income from prepayment penalties, but net asset growth is slower."

Ms. Rice continued, "Our view continues to be that rising interest rates will benefit the Company by rewarding market share to capital providers with strong balance sheets and sophisticated underwriting skills. Further, because we are match funded, rising interest rates and changes in the shape of the yield curve have minimal impact on our earnings."

Risk Management

At September 30, 2005, first mortgages, participations in first mortgages, corporate tenant leases and corporate financing transactions collectively comprised 92.9% of the Company's asset base. The weighted average first and last dollar loan-to-value ratio for all structured finance assets was 19.2% and 65.7%, respectively. As of September 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 June 30, 2005, was 2.2x.

At quarter end, the Company's corporate tenant lease assets were 95.2% leased with a weighted average remaining lease term of 11.4 years. At quarter end, 79.3% of the Company's corporate lease customers were public companies (or subsidiaries of public companies).

At September 30, 2005, the weighted average risk ratings of the Company's structured finance assets was 2.60 for risk of principal loss, compared to last quarter's rating of 2.52, and 3.02 for performance compared to original underwriting, compared to last quarter's rating of 3.10. The weighted average risk rating for corporate tenant lease assets was 2.36 at the end of the third quarter, unchanged from 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 5.6% 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 11.5% of the gross book value of the Company's corporate tenant lease assets at quarter end.

At September 30, 2005, the Company's non-performing loan assets (NPLs) represented 0.9% of total assets. NPLs represent loans on non-accrual status and repossessed real estate collateral. At September 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 September 30, 2005.

Tim O'Connor, iStar Financial's chief operating officer, stated, "The overall credit quality of our diverse asset base remained strong during the third quarter. We saw no significant changes in our overall loan portfolio or in the credit statistics in our corporate tenant lease assets. Further, we saw a reduction in the carrying value of our NPLs this quarter and no new NPLs were added to the list. We continue to believe that the collateral value underlying the two NPLs fully supports our basis in the loans."

Dividend and Other Developments

On October 3, 2005, iStar Financial declared a regular quarterly dividend of $0.7325. The third quarter dividend is payable on October 31, 2005 to shareholders of record on October 17, 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, October 27, 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         Nine Months
                                              Ended               Ended
                                          September 30,       September 30,
                                          2005     2004      2005      2004

    Net investment income (1)            $48,208  $97,705  $238,651  $279,999
    Other income                          43,789    9,340    69,861    32,078
    Non-interest expense (2)             (34,134) (29,587) (102,860) (199,019)
    Minority interest in consolidated
     entities                               (401)    (227)     (681)     (487)
    Income from continuing operations    $57,462  $77,231  $204,971  $112,571

    Income from discontinued operations      521    5,858     1,665    18,287
    Gain from discontinued operations        552    2,013       958     2,149
    Preferred dividend requirements (3)  (10,580) (10,580)  (31,740)  (40,760)
    Net income allocable to common
     shareholders and HPU holders (4)    $47,955  $74,522  $175,854   $92,247

     (1)  Net investment income for the three months and nine months ended
          September 30, 2005 includes a $44.3 million charge relating to the
          redemption of $620.7 million of STARs asset backed notes. Net
          investment income for the nine months ended September 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 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,    December 31,
                                                  2005              2004
                                               (unaudited)

    Loans and other lending investments, net    $4,190,491       $3,938,427
    Corporate tenant lease assets, net           2,997,792        2,877,042
    Other investments                              236,666           82,854
    Total assets                                 7,960,569        7,220,237
    Debt obligations                             5,238,280        4,605,674
    Total liabilities                            5,386,802        4,745,749
    Total shareholders' equity                   2,544,054        2,455,242


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

                                      Three Months Ended   Nine Months Ended
                                         September 30,       September 30,
                                        2005      2004      2005       2004
      Revenue:
         Interest income              $100,833   $89,593  $299,118   $263,957
         Operating lease income         77,568    73,519   231,760    209,563
         Other income                   43,789     9,340    69,861     32,078
           Total revenue               222,190   172,452   600,739    505,598

      Costs and expenses:
         Interest expense               80,731    59,182   231,336    170,710
         Operating costs - corporate
          tenant lease assets            5,839     4,350    17,103     13,152
         Depreciation and
          amortization                  18,174    16,345    53,841     46,799
         General and administrative     15,242    10,512    44,769     36,381
         General and administrative -
          stock-based compensation
          expense                          718       730     2,000    108,839
         Provision for loan losses           -     2,000     2,250      7,000
         Loss on early extinguishment
          of debt                       44,362         -    44,362     13,178
           Total costs and expenses    165,066    93,119   395,661    396,059

      Income from continuing
       operations before other items    57,124    79,333   205,078    109,539
           Equity in earnings from
            joint ventures                 739    (1,875)      574      3,519
           Minority interest in
            consolidated entities         (401)     (227)     (681)      (487)
       Income from continuing
        operations                      57,462    77,231   204,971    112,571

           Income from discontinued
            operations                     521     5,858     1,665     18,287
           Gain from discontinued
            operations                     552     2,013       958      2,149
      Net income                        58,535    85,102   207,594    133,007

      Preferred dividends              (10,580)  (10,580)  (31,740)   (40,760)

      Net income allocable to common
       shareholders and HPU holders    $47,955   $74,522  $175,854    $92,247

      Net income per common share:
           Basic (1)                     $0.41     $0.66     $1.53      $0.83
           Diluted (2) (3)               $0.41     $0.65     $1.51      $0.81

      Weighted average common shares
       outstanding:
           Basic                       112,835   111,230   112,313    109,803
           Diluted                     114,021   112,568   113,502    112,390


     (1) For the three months ended September 30, 2005 and 2004, excludes
         $1,177 and $1,191 of net income allocable to HPU holders,
         respectively. For the nine months ended September 30, 2005 and 2004,
         excludes $4,335 and $1,450 of net income allocable to HPU holders,
         respectively.

     (2) For the three months ended September 30, 2005 and 2004, excludes
         $1,165 and $1,178 of net income allocable to HPU holders,
         respectively. For the nine months ended September 30, 2005 and 2004,
         excludes $4,291 and $1,421 of net income allocable to HPU holders,
         respectively.

     (3) For the three and nine months ended September 30, 2004, includes $43
         and $5 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,
                                    2005       2004       2005        2004

     ADJUSTED EARNINGS: (1)
     Net income  (2)               $58,535    $85,102  $207,594    $133,007
     Add: Depreciation,
      depletion and amortization    19,485     17,644    56,016      50,664
     Add: Joint venture income          31         43       105           7
     Add: Joint venture
      depreciation and
      amortization                   2,704      1,451     5,546       3,473
     Add: Amortization of
      deferred financing costs (3)  45,336      7,427    60,837      26,598
     Less: Preferred dividends (4) (10,580)   (10,580)  (31,740)    (40,760)
     Less: Gain from
      discontinued operations         (552)    (2,013)     (958)     (2,149)

     Adjusted earnings allocable
      to common shareholders and
      HPU holders:
        Basic                     $114,928    $99,031  $297,295    $170,833
        Diluted                   $114,959    $99,074  $297,400    $170,840

     Adjusted earnings per
      common share:
        Basic: (5)                   $0.99      $0.88     $2.58       $1.53
        Diluted: (6)                 $0.98      $0.87     $2.56       $1.50

     Weighted average common
      shares outstanding:
        Basic                      112,835    111,230   112,313     109,803
        Diluted                    114,073    112,568   113,560     112,390

     Common shares outstanding
      at end of period:
        Basic                      113,096    111,381   113,096     111,381
        Diluted                    114,333    112,647   114,333     112,647

     (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 three and nine months ended for September 30, 2005, includes
         a $44.3 million charge relating to the redemption of $620.7 million
         of STARs asset-backed notes. 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 three and nine months ended September 30, 2005, includes a
         $37.5 million non-cash charge relating to the redemption of STARs
         asset-backed notes.

     (4) 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.

     (5) For the three months ended September 30, 2005 and 2004, excludes
         $2,820 and $1,583 of net income allocable to HPU holders,
         respectively. For the nine months ended September 30, 2005 and 2004,
         excludes $7,324 and $2,723 of net income allocable to HPU holders,
         respectively.

     (6) For the three months ended September 30, 2005 and 2004, excludes
         $2,791 and $1,565 of net income allocable to HPU holders,
         respectively. For the nine months ended September 30, 2005 and 2004,
         excludes $7,248 and $2,684 of net income allocable to HPU holders,
         respectively.

                               iStar Financial Inc.
                           Consolidated Balance Sheets
                                  (In thousands)

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

     ASSETS

     Loans and other lending investments, net     $4,190,491     $3,938,427
     Corporate tenant lease assets, net            2,997,792      2,877,042
     Other investments                               236,666         82,854
     Investments in joint ventures                   202,610          5,663
     Assets held for sale                             19,980              -
     Cash and cash equivalents                       112,207         88,422
     Restricted cash                                  31,254         39,568
     Accrued interest and operating lease
      income receivable                               35,534         25,633
     Deferred operating lease income receivable       73,717         62,092
     Deferred expenses and other assets               51,115        100,536
     Goodwill                                          9,203              -
                     Total assets                 $7,960,569     $7,220,237

     LIABILITIES AND SHAREHOLDERS' EQUITY

     Accounts payable, accrued expenses
      and other liabilities                         $148,522       $140,075

     Debt obligations:
             Unsecured senior notes                3,641,775      2,064,435
             Unsecured revolving credit
              facilities                             930,000        840,000
             Secured revolving credit
              facilities                              11,325         78,587
             Secured term loans                      557,217        693,472
             Other debt obligations                   97,963              -
             iStar Asset Receivables secured notes         -        929,180
                      Total liabilities             5,386,802     4,745,749
     Minority interest in consolidated entities        29,713        19,246
     Shareholders' equity                           2,544,054     2,455,242
                     Total liabilities
                      and shareholders' equity     $7,960,569    $7,220,237


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

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

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (1)                $114,928
    Plus: Preferred dividends                                 10,580
    Adjusted basic earnings before preferred dividends      $125,508

    Adjusted basic earnings before
     preferred dividends - Annualized (A)                   $502,034
    Average total book assets (B)                         $8,160,289
    Return on average book assets (A) / (B)                      6.2%

    Return on Average Common Book Equity

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (1)                $114,928

    Adjusted basic earnings allocable to
     common shareholders and HPU holders
     - Annualized (C)                                       $459,714

    Average total book equity                             $2,542,119
    Less: Average book value of preferred equity            (506,176)
    Average common book equity (D)                        $2,035,943

    Return on average common book equity (C) / (D)              22.6%

    Efficiency Ratio

    General & administrative expenses                        $15,242
    Plus: General and administrative -- stock-based
     compensation                                                718

    Total corporate overhead (E)                             $15,960

    Total revenue (F)                                       $222,190

    Efficiency ratio (E) / (F)                                   7.2%

    CREDIT STATISTICS

    Book Debt (A)                                         $5,238,280

    Book Equity                                           $2,544,054
    Plus: Accumulated Depreciation and Loan Loss Reserves    327,656
    Sum of Book Equity, Accumulated Depreciation and
     Loan Loss Reserves (B)                               $2,871,710

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

    Ratio of earnings to fixed charges                           1.7x

    Ratio of earnings to fixed charges and preferred
     stock dividends                                             1.5x

      (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
      Adjusted EBITDA Interest Coverage                     September 30, 2005

      Adjusted EBITDA (1) (2) (C)                                    $203,320
      GAAP interest expense (D)                                       $80,731

      Adjusted EBITDA / GAAP interest expense  (C) / (D)                  2.5x

      Adjusted EBITDA Fixed Charge Coverage

      Adjusted EBITDA (1) (2) (C)                                    $203,320

      GAAP interest expense                                           $80,731
      Plus: Preferred dividends                                        10,580
      Total GAAP interest expense and preferred dividends (E)         $91,311

      Adjusted EBITDA / GAAP interest expense and preferred
       dividends (C) / (E)                                                2.2x

      Unencumbered assets                                          $7,302,300

      RECONCILIATION OF NET INCOME TO EBITDA

      Net Income                                                      $58,535
      Add: GAAP interest expense                                       80,731
      Add: Depreciation, depletion and amortization                    19,692

      EBITDA (2)                                                     $158,958

      Add: Loss on early extinguishment of debt                       $44,362

      Adjusted EBITDA (1) (2)                                        $203,320

    (1) Adjusted EBITDA is EBITDA plus loss on early extinguishment of debt.

    (2) EBITDA and Adjusted EBITDA should be examined in conjunction with net
        income as shown in the Consolidated Statements of Operations. Neither
        Adjusted EBITDA nor EBITDA should 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 are these measures indicative of funds available to
        fund the Company's cash needs or available for distribution to
        shareholders. It should be noted that the Company's manner of
        calculating Adjusted EBITDA and EBITDA may differ from the
        calculations of similarly-titled measures by other companies.


      FINANCING VOLUME SUMMARY STATISTICS
      Three Months Ended September 30, 2005

                                    LOAN ORIGINATIONS

                                                   Total/               OTHER
                                         Floating  Weighted CORPORATE  INVEST-
                              Fixed Rate   Rate    Average   LEASING    MENTS
      Amount funded            $184,471  $178,985  $363,456  $29,240  $43,111
      Weighted average GAAP
       yield (1)                  11.05%     9.59%    10.33%    8.22%     N/A
      Weighted average all-in
       spread/margin (basis
       points) (2)                  730       599         -      384      N/A
      Weighted average first
       $ loan-to-value ratio       68.0%      7.3%     38.1%     N/A      N/A
      Weighted average last
       $ loan-to-value ratio       80.0%     68.5%     74.3%     N/A      N/A


      UNFUNDED COMMITMENTS

      Number of assets with unfunded commitments                  41
      Discretionary commitments                              $39,721
      Non-discretionary commitments                          966,746
      Total unfunded commitments                          $1,006,467

      Estimated weighted average funding period       Approximately 5.9 years

    (1) Yield excludes up-front fees earned from an acquistion financing
        funded during the quarter.

    (2) 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.


         LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

                                                As of             As of
                                             September 30,      December 31,
                                                 2005               2004
                                               $        %        $        %
    Carrying value of non-performing loans /
      As a percentage of total assets       $72,011   0.90%   $27,526   0.38%

    Provision for loan losses /
       As a percentage of total assets      $46,876   0.59%   $42,436   0.59%
       As a percentage of
        non-performing loans                     65%              154%

                                          Nine Months Ended      Year Ended
                                            September 30,        December 31,
                                                2005                 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)

                                                 Year Ending      Year Ending
                                                 December 31,     December 31,
                                                    2005              2006
    Earnings per diluted common share guidance  $2.05 - $2.15    $2.35 - $2.50
    Add: Depreciation and amortization per
     diluted common share                       $1.15 - $1.35    $0.85 - $1.15
    Adjusted earnings per diluted common share
     guidance                                   $3.30 - $3.40    $3.35 - $3.50


      (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.


    PORTFOLIO STATISTICS AS OF SEPTEMBER 30, 2005 (1)

    Security Type                                     $                 %
    Corporate Tenant Leases                         $3,346             43.0 %
    First Mortgages (2)                              3,038             39.1
    Corporate / Partnership Loans                    1,199             15.4
    Other Investments                                  191              2.5
               Total                                $7,774            100.0 %

    Collateral Type
    Office (CTL)                                    $1,666             21.4 %
    Industrial/R&D                                   1,241             16.0
    Office (Lending)                                   826             10.6
    Entertainment / Leisure                            707              9.1
    Hotel (Lending)                                    557              7.2
    Mixed Use / Mixed Collateral                       528              6.8
    Apartment / Residential                            455              5.8
    Retail                                             796             10.2
    Hotel (Investment Grade CTL)                       268              3.5
    Other                                              730              9.4
               Total                                $7,774            100.0 %

    Collateral Location
    West                                            $1,945             25.0 %
    Northeast                                        1,483             19.1
    Southeast                                        1,132             14.5
    Central                                            755              9.7
    Mid-Atlantic                                       611              7.9
    Various                                            641              8.2
    South                                              482              6.2
    North Central                                      291              3.8
    Northwest                                          206              2.7
    Southwest                                          228              2.9
               Total                                $7,774            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 $342.0 million of junior participation interests in
        first mortgages.
SOURCE  iStar Financial Inc.
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

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