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10/03/2006

Supplemental Indenture Executed With Respect to 8.75% Notes Due 2008

NEW YORK, Oct. 3 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), announced today that pursuant to iStar Financial's previously announced exchange offer and consent solicitation for the exchange of iStar Financial Inc. 5.95% Senior Notes due 2013 ("2013 notes") for its outstanding iStar Financial Inc. 8.75% Notes due 2008 ("2008 notes"), iStar Financial received the requisite consents to adopt the proposed amendments to the indenture governing the 2008 Notes.

Adoption of the proposed amendments required the consent of holders of at least a majority of the aggregate principal amount of the outstanding 2008 notes under the indenture. As of 5:00 p.m. on October 2, 2006, $187,299,000 aggregate principal amount of 2008 notes had been tendered. The proposed amendments will amend two of the restrictive covenants in the indenture governing the 2008 notes. iStar Financial and the trustee under the indenture executed the supplemental indenture adopting the proposed amendments on October 2, 2006. Holders who tendered their 2008 notes are no longer able to withdraw them.

The amendments will not become operative until iStar Financial accepts and consummates the exchange of all notes validly tendered. The exchange offer and consent solicitation are scheduled to expire on October 17, 2006. Once the amendments with regard to the 2008 notes become operative, they will be effective as of October 2, 2006.

iStar Financial's obligation to exchange notes that are tendered is subject to customary conditions. iStar Financial has the right to waive these conditions.

The exchange offer and consent solicitation is only made, and copies of the offering documents will only be made available to, holders of 2008 notes that have certified certain matters to iStar, including their status as "qualified institutional buyers" within the meaning of Rule 144A, or non-U.S. persons as defined under Regulation S, under the Securities Act of 1933 ("Eligible Holders"). An offering memorandum will be distributed to Eligible Holders and is available only to Eligible Holders through the information agent, Global Bondholder Services Corporation, at 866-387-1500 or 212-430-3774.

The 2013 notes have not been registered under the Securities Act or any state securities laws. Therefore, the 2013 notes may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws.

This press release does not constitute an offer to purchase any securities or a solicitation of an offer to sell any securities. The exchange offers are being made only pursuant to an offering memorandum and related consent and letter of transmittal and only to such persons and in such jurisdictions as is permitted under applicable law.

SOURCE iStar Financial Inc.
CONTACT: Catherine D. Rice, Chief Financial Officer, or Andrew G. Backman, Vice President - Investor Relations, both of iStar Financial Inc., +1-212-930-9400/

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