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10/26/2006

iStar Financial Announces Third Quarter 2006 Results

     - Third quarter new financing commitments reach record $1.95 billion in
       37 separate transactions, up 138% year-over-year.

     - Total revenues reach record $256.6 million for the third quarter 2006.

     - Adjusted earnings per diluted common share were $0.90 for the third
       quarter 2006.

     - Company increases full year 2006 adjusted earnings per diluted common
       share guidance to $3.50 - $3.60.

     - Company announces full year 2007 adjusted earnings per diluted common
       share guidance of $3.80 - $4.00.

NEW YORK, Oct. 26 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), the leading publicly traded finance company focused on the commercial real estate industry, today reported results for the third quarter ended September 30, 2006.

iStar reported adjusted earnings for the quarter of $0.90 per diluted common share. This compares with $0.98 per diluted common share for the third quarter 2005, which included significant prepayment fees associated with two loans in the Company's portfolio. Adjusted earnings allocable to common shareholders for the third quarter 2006 were $103.1 million on a diluted basis, compared to $112.2 million for the third quarter 2005. Included in the third quarter 2006 results was a previously disclosed $4.5 million, or $0.04 per diluted common share, non-cash cumulative charge related to adjustments in the historical discount assumptions underlying certain of iStar's stock based compensation plans. 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 was $91.8 million, or $0.80 per diluted common share, compared to $46.8 million, or $0.41 per diluted common share, for the third quarter 2005. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income.

Net investment income for the quarter was $115.7 million, compared to $46.7 million for the third quarter of 2005. The year-over-year increase in net investment income was primarily due to growth of the Company's loan portfolio, as well as $44.3 million of expenses associated with the prepayment of the Company's STARs asset-backed notes in the third quarter of 2005. 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.

The Company announced that during the third quarter, it closed a record 37 new financing commitments, for a total of $1.95 billion, up 138% year-over- year. Of that amount, $1.41 billion was funded during the third quarter. In addition, the Company funded $154.2 million under pre-existing commitments and received $621.9 million in principal repayments. Additionally, the company completed the sale of a non-core, back-office technology facility for $32.5 million net of costs, resulting in a net book gain of approximately $17.3 million. Cumulative repeat customer business totaled $11.1 billion at September 30, 2006.

For the quarter ended September 30, 2006, the Company generated return on average common book equity of 20.7%. The Company's debt to book equity plus accumulated depreciation/depletion and loan loss reserves, all as determined in accordance with GAAP, was 2.6x at quarter end.

The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 3.35% for the quarter.

Capital Markets Summary

During the third quarter, the Company issued $700 million of fixed rate 5.95% senior unsecured notes due 2013 and $500 million of floating rate senior unsecured notes due 2009. The floating rate notes bear interest at a rate per annum equal to 3-month LIBOR plus 0.34%. In addition, the Company recently completed an exchange offer and consent solicitation for the exchange of the Company's outstanding 8.75% Notes due 2008 for its newly issued 5.95% Senior Notes due 2013.

As of September 30, 2006, the Company had $696.4 million outstanding under $2.7 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, 2006, a 100-basis- point increase in rates would have increased the Company's adjusted earnings by 0.75%.

Earnings Guidance

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.

For fiscal year 2006, the Company is increasing earnings guidance, and now expects to report diluted adjusted earnings per share of $3.50 - $3.60, and diluted GAAP earnings per share of $2.70 - $2.80, based on expected net asset growth of approximately $2.0 billion.

For fiscal year 2007, the Company expects diluted adjusted earnings per share of $3.80 - $4.00 and diluted earnings per share of $2.70 - $2.90, based on expected net asset growth of approximately $3.0 billion. The Company continues to expect to fund its net asset growth with a combination of unsecured debt and equity.

Risk Management

At September 30, 2006, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 83.8% of the Company's asset base versus 88.2% in the prior quarter. The Company's loan portfolio consisted of 59.6% floating rate and 40.4% fixed rate loans, with a weighted average maturity of 4.3 years. The weighted average first and last dollar loan-to-value ratio for all structured finance assets was 15.6% and 64.7%, respectively. At quarter end, the Company's corporate tenant lease assets were 94.5% leased with a weighted average remaining lease term of 10.8 years.

At September 30, 2006, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 2.75 and 2.39, respectively.

During the quarter, the Company wrote-off $5.5 million of the book value of a $5.7 million mezzanine loan on a class A office building in the mid-west. The write-off was primarily due to a projected decrease in property cash flow resulting from an unexpected lease termination at the property. The write-off was applied to the Company's loan loss reserves and had no impact to third quarter 2006 earnings.

At September 30, 2006, the Company's non-performing loan assets (NPLs) represented 0.18% of total assets. NPLs represent loans on non-accrual status. At September 30, 2006, the Company had two loans on non-accrual status. In addition, one asset was removed and two assets were added to the watch list this quarter, with watch list assets representing 1.09% of total assets at September 30, 2006. The Company is currently comfortable that it has adequate collateral to support the book value for each of the watch list assets.

Dividend

On October 2, 2006, iStar Financial declared a regular quarterly dividend of $0.77. The third quarter dividend will be payable on October 30, 2006 to shareholders of record on October 16, 2006.


                        [Financial Tables to Follow]

                              *             *

iStar Financial Inc. is the leading publicly traded finance company focused on the commercial real estate industry. The Company primarily provides custom tailored financing to high end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust ("REIT"), seeks to deliver strong dividends and superior risk-adjusted returns on equity to shareholders by providing innovative and value added financing solutions to its customers.

iStar Financial will hold a quarterly earnings conference call at 10:00 a.m. EDT today, October 26, 2006. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through iStar Financial's website, 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  Nine Months Ended
                                          September 30,      September 30,
                                          2006     2005      2006      2005

    Net investment income              $115,678  $46,681  $336,404  $234,068
    Other income                         20,369   43,789    54,547    69,861
    Non-interest expense                (49,054) (33,851) (130,028) (102,012)
    Minority interest in consolidated
     entities                              (291)    (401)   (1,360)     (681)
    Income from continuing operations   $86,702  $56,218  $259,563  $201,236

    Income from discontinued
     operations                             684    1,765     1,774     5,400
    Gain from discontinued operations    17,264      552    21,800       958
    Preferred dividend requirements     (10,580) (10,580)  (31,740)  (31,740)
    Net income allocable to common
     shareholders and HPU holders (1)   $94,070  $47,955  $251,397  $175,854

    (1) 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, 2006  December 31, 2005
                                              (unaudited)

    Loans and other lending investments,
     net                                        $6,123,911        $4,661,915
    Corporate tenant lease assets, net           3,113,402         3,115,361
    Other investments                              395,054           240,470
    Total assets                                10,313,457         8,532,296
    Debt obligations                             7,517,251         5,859,592
    Total liabilities                            7,723,786         6,052,114
    Total shareholders' equity                   2,535,014         2,446,671



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

                                      Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                       2006       2005      2006       2005
      REVENUES

         Interest income             $153,053   $100,833  $414,177   $299,118
         Operating lease income        83,170     75,920   248,810    226,852
         Other income                  20,369     43,789    54,547     69,861
           Total revenue              256,592    220,542   717,534    595,831

      COSTS AND EXPENSES

         Interest expense             115,262     80,731   310,147    231,336
         Operating costs - corporate
          tenant lease assets           6,726      5,718    18,932     16,778
         Depreciation and
          amortization                 19,562     17,891    57,980     52,993
         General and administrative
          (1)                          27,492     15,960    67,048     46,769
         Provision for loan losses      2,000          -     5,000      2,250
         Loss on early
          extinguishment of debt            -     44,362         -     44,362
           Total costs and expenses   171,042    164,662   459,107    394,488

      Income from continuing
       operations before other items   85,550     55,880   258,427    201,343
           Equity in earnings from
            joint ventures              1,443        739     2,496        574
           Minority interest in
            consolidated entities        (291)      (401)   (1,360)      (681)
       Income from continuing
        operations                     86,702     56,218   259,563    201,236

           Income from discontinued
            operations                    684      1,765     1,774      5,400
           Gain from discontinued
            operations                 17,264        552    21,800        958
      Net income                      104,650     58,535   283,137    207,594

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

      Net income allocable to common
       shareholders and HPU holders   $94,070    $47,955  $251,397   $175,854

      Net income per common share
           Basic                        $0.81      $0.41     $2.16      $1.53
           Diluted (2)                  $0.80      $0.41     $2.14      $1.51

      Net income per HPU share
           Basic (3)                  $153.27     $78.47   $409.67    $289.00
           Diluted (2) (4)            $153.67     $77.67   $411.47    $286.07

    (1) For the three months ended September 30, 2006 and 2005, includes
        $6,407 and $718 of stock-based compensation expense.  For the nine
        months ended September 30, 2006 and 2005, includes $9,357 and $2,000
        of stock-based compensation expense.

    (2) For the three months ended September 30, 2006, includes the allocable
        share of $30 of joint venture income.  For the nine months ended
        September 30, 2006, includes the allocable share of $86 of joint
        venture income.

    (3) For the three months ended September 30, 2006 and 2005, $2,299 and
        $1,177 of net income is allocable to HPU holders, respectively. For
        the nine months ended September 30, 2006 and 2005, $6,145 and $4,335
        of net income is allocable to HPU holders, respectively.

    (4) For the three months ended September 30, 2006 and 2005, $2,275 and
        $1,165 of net income is allocable to HPU holders, respectively. For
        the nine months ended September 30, 2006 and 2005, $6,086 and $4,291
        of net income is allocable to HPU holders, respectively.



                                iStar Financial Inc.
                           Earnings Per Share Information
                      (In thousands, except per share amounts)
                                    (unaudited)

                                        Three Months Ended   Nine Months Ended
                                           September 30,       September 30,
                                          2006      2005      2006      2005
      EPS INFORMATION FOR COMMON SHARES

      Income from  continuing operations
       per common share (1)
        Basic                             $0.66     $0.39    $1.96     $1.47
        Diluted (2)                       $0.65     $0.39    $1.94     $1.46

      Net income per common share
        Basic                             $0.81     $0.41    $2.16     $1.53
        Diluted (2)                       $0.80     $0.41    $2.14     $1.51

      Weighted average common shares
       outstanding
        Basic                           113,318   112,835  113,281   112,313
        Diluted (2)                     114,545   114,021  114,439   113,502

      EPS INFORMATION FOR HPU SHARES

      Income from  continuing operations
       per HPU share (1)
        Basic                           $124.00    $74.67  $371.27   $278.53
        Diluted (2)                     $124.73    $73.93  $373.40   $275.73

      Net income per HPU share (3)
        Basic                           $153.27    $78.47  $409.67   $289.00
        Diluted (2)                     $153.67    $77.67  $411.47   $286.07

      Weighted average HPU shares
       outstanding
        Basic                                15        15       15        15
        Diluted (2)                          15        15       15        15

    (1) For the three months ended September 30, 2006 and 2005, excludes
        preferred dividends of $10,580.  For the nine months ended September
        30, 2006 and 2005, excludes preferred dividends of $31,740.

    (2) For the three months ended September 30, 2006, includes the allocable
        share of $30 of joint venture income.  For the nine months ended
        September 30, 2006, includes the allocable share of $86 of joint
        venture income.

    (3) As more fully explained in the Company's quarterly SEC filings, three
        plans of the Company's HPU program vested in December 2002, December
        2003 and December 2004, respectively. Each of the respective plans
        contain 5 HPU shares. Cumulatively, these 15 shares were entitled to
        $2,299 and $1,177 of net income for the three months ended September
        30, 2006 and 2005, respectively, and $6,145 and $4,335 of net income
        for the nine months ended September 30, 2006 and 2005, respectively.
        On a diluted basis, these cumulative 15 shares were entitled to $2,275
        and $1,165 of net income for the three months ended September 30, 2006
        and 2005, respectively, and $6,086 and $4,291 of net income for the
        nine months ended September 30, 2006 and 2005, 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,
                                       2006       2005      2006       2005
      ADJUSTED EARNINGS (1)

      Net income                     $104,650    $58,535  $283,137   $207,594
      Add: Depreciation, depletion
       and amortization                20,758     19,485    61,791     56,016
      Add: Joint venture income            32         31        92        105
      Add: Joint venture
       depreciation and amortization    2,645      2,704     8,093      5,546
      Add: Amortization of deferred
       financing costs                  5,403     45,336    17,671     60,837
      Less: Preferred dividends       (10,580)   (10,580)  (31,740)   (31,740)
      Less: Gain from discontinued
       operations                     (17,264)      (552)  (21,800)      (958)

      Adjusted earnings allocable to
       common shareholders
       and HPU holders:
         Basic                       $105,612   $114,928  $317,152   $297,295
         Diluted                     $105,644   $114,959  $317,244   $297,400

      Adjusted earnings per common
       share:
         Basic (2)                      $0.91      $0.99     $2.73      $2.58
         Diluted (3)                    $0.90      $0.98     $2.71      $2.56

      Weighted average common shares
       outstanding:
         Basic                        113,318    112,835   113,281    112,313
         Diluted                      114,545    114,073   114,439    113,560

      Common shares outstanding at
       end of period:
         Basic                        113,820    113,096   113,820    113,096
         Diluted                      115,053    114,333   115,053    114,333


    (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 months ended September 30, 2006 and 2005, excludes
        $2,581 and $2,820 of net income allocable to HPU holders,
        respectively.  For the nine months ended September 30, 2006 and 2005,
        excludes $7,752 and $7,324 of net income allocable to HPU holders,
        respectively.

    (3) For the three months ended September 30, 2006 and 2005, excludes
        $2,554 and $2,791 of net income allocable to HPU holders,
        respectively. For the nine months ended September 30, 2006 and 2005,
        excludes $7,678 and $7,248 of net income allocable to HPU holders,
        respectively.



                               iStar Financial Inc.
                            Consolidated Balance Sheets
                                  (In thousands)

                                                As of               As of
                                         September 30, 2006  December 31, 2005
                                              (unaudited)
     ASSETS

     Loans and other lending investments,
      net                                        $6,123,911        $4,661,915
     Corporate tenant lease assets, net           3,113,402         3,115,361
     Other investments                              395,054           240,470
     Investments in joint ventures                  194,985           202,128
     Assets held for sale                            12,016                 -
     Cash and cash equivalents                      177,042           115,370
     Restricted cash                                 74,474            28,804
     Accrued interest and operating lease
      income receivable                              67,794            32,166
     Deferred operating lease income
      receivable                                     73,432            76,874
     Deferred expenses and other assets              72,144            50,005
     Goodwill                                         9,203             9,203
                     Total assets               $10,313,457        $8,532,296



     LIABILITIES AND SHAREHOLDERS' EQUITY

     Accounts payable, accrued expenses
      and other liabilities                        $206,535          $192,522

     Debt obligations:
             Unsecured senior notes               6,255,420         4,108,477
             Unsecured revolving credit
              facilities                            696,414         1,242,000
             Secured term loans                     467,422           411,144
             Other debt obligations                  97,995            97,971
                     Total liabilities            7,723,786         6,052,114
     Minority interest in consolidated
      entities                                       54,657            33,511
     Shareholders' equity                         2,535,014         2,446,671
                     Total liabilities
                      and shareholders'
                      equity                    $10,313,457        $8,532,296



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

    PERFORMANCE  STATISTICS
                                                           Three Months Ended
    Net Finance Margin                                     September 30, 2006

    Weighted average GAAP yield of loan
     and CTL investments                                               10.21%
    Less: Cost of debt                                                 (6.86%)
    Net Finance Margin (1)                                              3.35%

    Return on Average Common Book Equity

    Adjusted basic earnings allocable to
     common shareholders and HPU holders (2)                         $105,612
    Adjusted basic earnings allocable to
     common shareholders and HPU holders -
     Annualized (A)                                                  $422,448

    Average total book equity                                      $2,544,275
    Less: Average book value of preferred
     equity                                                          (506,176)
    Average common book equity (B)                                 $2,038,099
    Return on Average Common Book Equity
     (A) / (B)                                                          20.7%

    Efficiency Ratio

    General and administrative expenses (C)                           $27,492
    Total revenue (D)                                                $256,592
    Efficiency Ratio (C) / (D)                                          10.7%

    (1) Weighted average GAAP yield is the annualized sum of interest income
        and operating lease income (excluding other income), divided by the
        sum of average gross corporate tenant lease assets, average loans
        and other lending investments, average SFAS No. 141 purchase
        intangibles and average assets held for sale over the period.  Cost
        of debt is the annualized sum of interest expense and operating
        costs-corporate tenant lease assets, divided by the average gross
        debt obligations over the period. Operating lease income and
        operating costs-corporate tenant lease assets exclude SFAS No. 144
        adjustments from discontinued operations of $777 and $26,
        respectively.  The Company does not consider net finance margin to
        be a measure of the Company's liquidity or cash flows.  It is one of
        several measures that management considers to be an indicator of the
        profitability of its operations.

    (2) 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
                                                            Three Months Ended
                                                            September 30, 2006

    Book debt (A)                                                  $7,517,251

    Book equity                                                    $2,535,014
    Add: Accumulated
     depreciation/depletion and loan loss
     reserves                                                         400,128
    Sum of book equity, accumulated
     depreciation/depletion and loan loss
     reserves (B)                                                  $2,935,142

    Book Debt / Sum of Book Equity,
     Accumulated Depreciation/Depletion
     and Loan Loss Reserves (A) / (B)                                    2.6x

    Ratio of Earnings to Fixed Charges                                   1.8x

    Ratio of Earnings to Fixed Charges and
     Preferred Stock Dividends                                           1.6x

    Interest Coverage

    EBITDA (1) (C)                                                   $243,315
    GAAP interest expense (D)                                        $115,262

    EBITDA / GAAP Interest Expense  (C) / (D)                            2.1x

    Fixed Charge Coverage

    EBITDA (1) (C)                                                   $243,315
    GAAP interest expense                                             115,262
    Add: Preferred dividends                                           10,580
    Total GAAP interest expense and
     preferred dividends (E)                                         $125,842

    EBITDA / GAAP Interest Expense and
     Preferred Dividends (C) / (E)                                       1.9x

    RECONCILIATION OF NET INCOME TO EBITDA

    Net income                                                       $104,650
    Add: GAAP interest expense                                        115,262
    Add: Depreciation, depletion and
     amortization                                                      20,758
    Add: Joint venture depreciation,
     depletion and amortization                                         2,645

    EBITDA (1)                                                       $243,315


    (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)

      Three Months Ended
      September 30, 2006         LOAN ORIGINATIONS
                                                  Total/
                                     Floating   Weighted  CORPORATE    OTHER
                        Fixed Rate     Rate      Average  LEASING  INVESTMENTS

      Amount funded      $229,455  $1,032,208  $1,261,663  $42,668   $106,871
      Weighted average
       GAAP yield           11.23%       8.92%       9.34%   10.56%       N/A
      Weighted average
       all-in
       spread/margin
       (basis points) (1)     638         357           -      561        N/A
      Weighted average
       first $ loan-to-
       value ratio           47.2%       18.8%       24.0%     N/A        N/A
      Weighted average
       last $ loan-to-
       value ratio           72.6%       57.3%       60.1%     N/A        N/A


      UNFUNDED COMMITMENTS

      Number of assets with unfunded
       commitments                                                         95

      Discretionary commitments                                       $24,390
      Non-discretionary commitments                                 2,359,499
      Total unfunded commitments                                   $2,383,889
      Estimated weighted average funding
       period                                         Approximately 3.4 years

      UNENCUMBERED ASSETS                                          $9,734,850

      RISK MANAGEMENT STATISTICS
      (weighted average
        risk rating)             2006                        2005
                  September 30, June 30, March 31,  December 31, September 30,
      Structured
       Finance
       Assets         2.75        2.67     2.71        2.63         2.60
      Corporate
       Tenant
       Lease
       Assets         2.39        2.38     2.42        2.38         2.36

                                            (1=lowest risk; 5=highest risk)

    (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, except per share amounts)
                                    (unaudited)

         LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

                                                          As of
                                         September 30, 2006  December 31, 2005
         Carrying value of non-performing
          loans / As a percentage of
          total assets                      $18,356   0.18%   $35,291   0.41%

         Reserve for loan losses /
            As a percentage of
             total assets                   $46,378   0.45%   $46,876   0.55%
            As a percentage of non-
             performing loans                          253%              133%


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

                                            Year Ended           Year Ended
                                         December 31, 2006   December 31, 2007

         Earnings per diluted common
          share guidance                   $2.70 - $2.80       $2.70 - $2.90
         Add:  Depreciation, depletion
          and amortization per diluted
          common share                     $0.70 - $0.90       $0.90 - $1.30
         Adjusted earnings per diluted
          common share guidance            $3.50 - $3.60       $3.80 - $4.00

    (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, 2006 (1)

    Security Type                                      $                 %
    Corporate Tenant Leases                          $3,517             35.1 %
    First Mortgages / Senior Loans                    4,889             48.7
    Mezzanine / Subordinated Debt                     1,281             12.8
    Other Investments                                   337              3.4
              Total                                 $10,024            100.0 %

    Collateral Type
    Office (CTL)                                     $1,632             16.3 %
    Industrial / R&D                                  1,310             13.1
    Retail                                            1,343             13.4
    Apartment / Residential                           1,206             12.0
    Other (2)                                         1,351             13.5
    Entertainment / Leisure                             980              9.8
    Mixed Use / Mixed Collateral                        836              8.3
    Hotel                                               855              8.5
    Office (Lending)                                    511              5.1
              Total                                 $10,024            100.0 %

    Collateral Location
    West                                             $2,022             20.2 %
    Northeast                                         1,518             15.1
    Southeast                                         1,530             15.3
    Various                                           1,206             12.0
    Mid-Atlantic                                        801              8.0
    Central                                             656              6.5
    South                                               619              6.2
    Southwest                                           588              5.9
    International                                       553              5.5
    Northcentral                                        330              3.3
    Northwest                                           201              2.0
              Total                                 $10,024            100.0 %

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

    (2) Includes Other Investments.

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

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