Skip to content
Open Search Panel
Toggle Menu
<< Back to News
02/22/2007

iStar Financial Announces Fourth Quarter and Fiscal Year 2006 Results

Board of Directors Approves 7.1% Increase in Quarterly Dividend on Common Stock

  • Fourth quarter new financing commitments reached $1.84 billion in 39 separate transactions, up 10% year-over-year.
  • 2006 origination volume increased to $6.1 billion, up 29% year-over- year, in 121 total financing commitments.
  • 2006 net asset growth reached $2.5 billion; total assets reached $11.0 billion at year-end.
  • Adjusted earnings per diluted common share were $0.91 and $3.61 for the fourth quarter and fiscal year 2006, respectively.
  • Total revenues reached a record $265.3 million and $980.2 million for the fourth quarter and fiscal year 2006, respectively.
  • Company affirms full year 2007 adjusted earnings per diluted common share guidance of $3.80 - $4.00 and diluted GAAP earnings per share of $2.70 - $2.90.
  • Company increases regular quarterly dividend by 7.1% to $0.825 per common share, or $3.30 per common share on an annualized basis.

NEW YORK, Feb. 22 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), a leading publicly traded finance company focused on the commercial real estate industry, today reported results for the fourth quarter and fiscal year ended December 31, 2006.

"In 2006, we made significant steps to grow our business by extending iStar's reach and building on our strengths," said Jay Sugarman, iStar Financial's chairman and chief executive officer. "Our team produced record originations and earnings, while maintaining our disciplined approach in a competitive real estate market. We closed a high percentage of the deals we pursued by providing truly flexible, customer-focused, custom-tailored capital to our valued customers."

Fourth Quarter 2006 Results

iStar reported adjusted earnings for the quarter of $0.91 per diluted common share. This compares with $0.81 per diluted common share for the fourth quarter 2005. Adjusted earnings allocable to common shareholders for the fourth quarter 2006 were $110.1 million on a diluted basis, compared to $92.2 million for the fourth quarter 2005. 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 fourth quarter was $79.2 million, or $0.65 per diluted common share, compared to $68.0 million, or $0.60 per diluted common share for the fourth 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 $128.1 million, compared to $97.4 million for the fourth quarter of 2005. The year-over-year increase in net investment income was primarily due to growth of the Company's loan portfolio. 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 fourth quarter, it closed a record 39 new financing commitments, for a total of $1.8 billion, up 10% year-over- year. Of that amount, $1.1 billion was funded during the fourth quarter. In addition, the Company funded $238.1 million under pre-existing commitments and received $371.2 million in principal repayments. Cumulative repeat customer business totaled $12.0 billion at December 31, 2006.

Additionally, the Company completed the sale of two non-strategic office/R&D portfolios consisting of five properties, as well as the sale of an interest in one additional property, for total proceeds of $55.0 million net of costs, resulting in a total net book gain of approximately $2.4 million.

For the quarter ended December 31, 2006, the Company generated adjusted return on average common book equity of 20.0%. The Company's debt to book equity plus accumulated depreciation/depletion and loan loss reserves, all as determined in accordance with GAAP, was 2.3x at quarter end. The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 3.31% for the quarter, essentially in-line with the previous quarter.

Fiscal Year 2006 Results

Adjusted earnings allocable to common shareholders for the year ended December 31, 2006, were $419.7 million on a diluted basis, or $3.61 per diluted share, compared to $382.3 million, or $3.36 per diluted share for the year ended December 31, 2005.

Net income allocable to common shareholders for the year ended December 31, 2006, was $324.5 million, or $2.79 per diluted common share, compared to $239.6 million, or $2.11 per diluted common share for the year ended December 31, 2005.

Net investment income and total revenue were $462.2 million and $980.2 million, respectively, for the year ended December 31, 2006, versus $330.4 million and $789.7 million, respectively, for the year ended December 31, 2005.

The Company said it continued to see increased opportunities and solid growth from its core lending business and new business extensions. The AutoStar business surpassed the $1 billion threshold in commitments and the Company said it expects this natural extension of its core lending and corporate tenant lease business to continue to produce solid returns. In 2006, TimberStar led and closed the $1.13 billion acquisition of 900,000 acres of timberland from International Paper in conjunction with three third-party equity investors. As part of the acquisition, the Company retained a number of seasoned timber executives and operations personnel, increasing the depth of the TimberStar management team. The Company's European subsidiary also expanded in 2006, closing nearly $500 million in commitments in 16 transactions since entering the European markets. Finally, the Company said its relationship with Oak Hill Advisors continued to strengthen iStar's network of knowledge in corporate credit markets and enhance overall deal flow.

"To support our growth, in 2006, we increased the total number of employees by 12% across all levels of the organization and in multiple disciplines including investments, risk management, asset management, finance and accounting," Mr. Sugarman said. "I am proud that we are able to continue to attract high caliber talent who embrace the iStar culture and join an outstanding team of over 200 employees at our firm."

Mr. Sugarman concluded, "In 2007, we will look to continue to grow our business by utilizing our proven competitive advantages including our size, scale, depth, breadth and long-standing customer relationships. We believe all of these elements, combined with our absolute commitment to integrity and fairness, should allow iStar to continue to deliver superior risk-adjusted returns to our shareholders."

Capital Markets Summary

During the fourth quarter, the Company completed a follow-on equity offering in which it issued 12.65 million primary common shares, generating $541.4 million in net proceeds. The Company used the proceeds from the offering to repay borrowings under its unsecured revolving credit facility.

As of December 31, 2006, the Company had $923.1 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 December 31, 2006, a one percentage point increase in rates would have increased the Company's adjusted earnings by 1.47%.

Risk Management

At December 31, 2006, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 81.6% of the Company's asset base, versus 83.8% in the prior quarter. The Company's loan portfolio consisted of 61.0% floating rate and 39.0% fixed rate loans, with a weighted average maturity of 4.3 years. The weighted average last dollar loan-to-value ratio for all structured finance assets was 64.9%. At quarter end, the Company's corporate tenant lease assets were 95.2% leased with a weighted average remaining lease term of 10.9 years. During the fourth quarter, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets improved slightly versus last quarter and were 2.74 and 2.37, respectively, at December 31, 2006.

At December 31, 2006, watch list assets represented 1.34% of total assets. During the fourth quarter, two assets were removed and four assets were added to the watch list.

At December 31, 2006, the Company's non-performing loan (NPL) assets represented 0.56% of total assets. The Company currently has two loans on its NPL list, both of which were on the watch list in the previous quarter. The two assets previously on the NPL list last quarter were removed during the fourth quarter. The Company's policy is to stop the accrual of interest on loans placed on NPL status. The Company believes it has adequate collateral to support the book value for each of the watch list and NPL assets.

During the quarter, the Company wrote off a total of $3.2 million of book value related to its loan portfolio, including $3.0 million relating to an asset in its AutoStar portfolio. The remaining balance of this loan was added to the Company's NPL list pending further discussion and action with the borrower. In addition, the Company received $18.0 million of the $18.2 million of book value of a mezzanine loan that had been on the NPL list since 2003 and wrote off the remaining $0.2 million balance of that loan. These write-offs were applied to the Company's loan loss reserves and had no impact to fourth quarter 2006 earnings.

Catherine D. Rice, iStar Financial's chief financial officer, noted, "Over the past 13-plus years, we've built our franchise and diversified our asset base. We continue to maintain discipline in our underwriting and believe we are prudently reserved given our view of the overall market and our portfolio. As we have consistently said, we expect some level of losses within the portfolio, despite our strong credit track record. We believe the small losses we incurred in 2006 were asset specific and do not reflect a systemic change or trend within the portfolio."

The Company had $52.2 million in loan loss reserves at December 31, 2006 versus $46.9 million at December 31, 2005.

Ms. Rice continued, "Last year, we again recorded some of the strongest credit statistics in the finance industry and the overall credit profile of our portfolio remains solid. In the fourth quarter, we added provisions to our loan loss reserves based on our quarterly risk ratings process and the increase in the size of the Company's overall loan portfolio."

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

Dividend

On December 1, 2006, iStar Financial declared a regular quarterly dividend of $0.77. The fourth quarter dividend was paid on December 29, 2006 to shareholders of record on December 15, 2006.

iStar Financial announced today that, effective April 1, 2007, its Board of Directors approved an increase in the regular quarterly cash dividend on its common stock to $0.825 per share for the quarter ending March 31, 2007, payable on April 29, 2007 to holders of record on April 15, 2007. The $0.825 per share quarterly dividend, or $3.30 per share on an annualized basis, represents a 7.1% increase over iStar Financial's 2006 quarterly dividend rate of $0.77 per share.

iStar Financial Inc. is a 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. EST today, February 22, 2007. 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 Twelve Months Ended
                                         December 31,        December 31,
                                         2006     2005      2006      2005

    Net investment income              $128,139  $97,394  $462,159  $330,441
    Other income                         20,962   11,579    75,727    81,440
    Non-interest expense                (58,400) (35,271) (187,399) (136,679)
    Minority interest in consolidated
     entities                               154     (300)   (1,207)     (980)
    Income from continuing operations   $90,855  $73,402  $349,280  $274,222

    Income (loss) from discontinued
     operations                          (1,590)   1,522     1,320     7,337
    Gain from discontinued operations     2,428    5,396    24,227     6,354
    Preferred dividend requirements     (10,580) (10,580)  (42,320)  (42,320)
    Net income allocable to common
     shareholders and HPU holders(1)    $81,113  $69,740  $332,507  $245,593


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

    Loans and other lending investments, net    $6,799,850        $4,661,915
    Corporate tenant lease assets, net           3,084,794         3,115,361
    Other investments                              407,617           238,294
    Total assets                                11,059,995         8,532,296
    Debt obligations                             7,833,437         5,859,592
    Total liabilities                            8,034,394         6,052,114
    Total shareholders' equity                   2,986,863         2,446,671



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

                                      Three Months Ended  Twelve Months Ended
                                         December 31,         December 31,
                                       2006       2005      2006       2005
    REVENUES

      Interest income                $161,421   $107,550  $575,598   $406,668
      Operating lease income           82,910     76,428   328,868    301,623
      Other income                     20,962     11,579    75,727     81,440
        Total revenue                 265,293    195,557   980,193    789,731

    COSTS AND EXPENSES

      Interest expense                119,660     81,717   429,807    313,053
      Operating costs - corporate
       tenant lease assets              6,427      5,667    24,891     21,809
      Depreciation and amortization    20,017     18,054    76,967     70,442
      General and administrative(1)    29,383     17,217    96,432     63,987
      Provision for loan losses         9,000          -    14,000      2,250
      Loss on early extinguishment
       of debt                              -      1,642         -     46,004
        Total costs and expenses      184,487    124,297   642,097    517,545

      Income from continuing
       operations before other items   80,806     71,260   338,096    272,186
        Equity in earnings from
         joint ventures                 9,895      2,442    12,391      3,016
        Minority interest in
         consolidated entities            154       (300)   (1,207)      (980)
      Income from continuing
       operations                      90,855     73,402   349,280    274,222

        Income (loss) from
         discontinued operations       (1,590)     1,522     1,320      7,337
        Gain from discontinued
         operations                     2,428      5,396    24,227      6,354
      Net income                       91,693     80,320   374,827    287,913

      Preferred dividends             (10,580)   (10,580)  (42,320)   (42,320)

      Net income allocable to common
       shareholders and HPU holders   $81,113    $69,740  $332,507   $245,593

      Net income per common share
        Basic                           $0.66      $0.60     $2.82      $2.13
        Diluted(2)                      $0.65      $0.60     $2.79      $2.11

      Net income per HPU share
        Basic(3)                      $124.73    $113.80   $533.80    $402.87
        Diluted(2)(4)                 $123.47    $112.73   $528.67    $398.87


     (1) For the three months ended December 31, 2006 and 2005, includes
         $2,077 and $757 of stock-based compensation expense.  For the twelve
         months ended December 31, 2006 and 2005, includes $11,435 and $2,758
         of stock-based compensation expense.

     (2) For the three months ended December 31, 2006 and 2005, includes the
         allocable share of $29 and $28 of joint venture income, respectively.
         For the twelve months ended December 31, 2006 and 2005, includes the
         allocable share of $115 and $28 of joint venture income,
         respectively.

     (3) For the three months ended December 31, 2006 and 2005, $1,871 and
         $1,707 of net income is allocable to HPU holders, respectively. For
         the twelve months ended December 31, 2006 and 2005, $8,007 and $6,043
         of net income is allocable to HPU holders, respectively.

     (4) For the three months ended December 31, 2006 and 2005, $1,852 and
         $1,691 of net income is allocable to HPU holders, respectively. For
         the twelve months ended December 31, 2006 and 2005, $7,930 and $5,983
         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 Twelve Months Ended
                                           December 31,       December 31,
                                          2006      2005     2006      2005
    EPS INFORMATION FOR COMMON SHARES

    Income from continuing operations
     per common share(1)
      Basic                               $0.65     $0.54    $2.60     $2.01
      Diluted(2)                          $0.65     $0.54    $2.58     $1.99

    Net income per common share
      Basic                               $0.66     $0.60    $2.82     $2.13
      Diluted(2)                          $0.65     $0.60    $2.79     $2.11

    Weighted average common shares
     outstanding
      Basic                             120,191   113,107  115,023   112,513
      Diluted(2)                        121,498   114,283  116,219   113,703

    EPS INFORMATION FOR HPU SHARES

    Income from continuing operations
     per HPU share(1)
      Basic                             $123.47   $102.53  $492.80   $380.40
      Diluted(2)                        $122.20   $101.53  $488.07   $376.60

    Net income per HPU share(3)
      Basic                             $124.73   $113.80  $533.80   $402.87
      Diluted(2)                        $123.47   $112.73  $528.67   $398.87

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


     (1) For the three months ended December 31, 2006 and 2005, excludes
         preferred dividends of $10,580.  For the twelve months ended December
         31, 2006 and 2005, excludes preferred dividends of $42,320.

     (2) For the three months ended December 31, 2006 and 2005, includes the
         allocable share of $29 and $28 of joint venture income, respectively.
         For the twelve months ended December 31, 2006 and 2005, includes the
         allocable share of $115 and $28 of joint venture income,
         respectively.

     (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
         $1,871 and $1,707 of net income for the three months ended December
         31, 2006 and 2005, respectively, and $8,007 and $6,043 of net income
         for the twelve months ended December 31, 2006 and 2005, respectively.
         On a diluted basis, these cumulative 15 shares were entitled to
         $1,852 and $1,691 of net income for the three months ended December
         31, 2006 and 2005, respectively, and $7,930 and $5,983 of net income
         for the twelve months ended December 31, 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  Twelve Months Ended
                                         December 31,        December 31,
                                        2006      2005      2006       2005
    ADJUSTED EARNINGS(1)

    Net income                        $91,693   $80,320  $374,827   $287,913
    Add: Depreciation, depletion
     and amortization                  21,267    19,558    83,058     75,574
    Add: Joint venture income              31        31       123        136
    Add: Joint venture depreciation,
     depletion and amortization         6,848     2,738    14,941      8,284
    Add: Amortization of deferred
     financing costs                    5,849     7,814    23,520     68,651
    Less: Preferred dividends         (10,580)  (10,580)  (42,320)   (42,320)
    Less: Gain from discontinued
     operations                        (2,428)   (5,396)  (24,227)    (6,354)

    Adjusted earnings allocable to
     common shareholders and HPU
     holders:
      Basic                          $112,649   $94,454  $429,799   $391,748
      Diluted                        $112,680   $94,485  $429,922   $391,884

    Adjusted earnings per common
     share:
      Basic(2)                          $0.92     $0.81     $3.65      $3.40
      Diluted(3)                        $0.91     $0.81     $3.61      $3.36

    Weighted average common shares
     outstanding:
      Basic                           120,191   113,107   115,023    112,513
      Diluted                         121,498   114,283   116,219    113,747

    Common shares outstanding at
     end of period:
      Basic                           126,565   113,209   126,565    113,209
      Diluted                         127,854   114,403   127,854    114,403


     (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 December 31, 2006 and 2005, excludes
         $2,599 and $2,312 of net income allocable to HPU holders,
         respectively.  For the twelve months ended December 31, 2006 and
         2005, excludes $10,351 and $9,636 of net income allocable to HPU
         holders, respectively.

     (3) For the three months ended December 31, 2006 and 2005, excludes
         $2,572 and $2,290 of net income allocable to HPU holders,
         respectively.  For the twelve months ended December 31, 2006 and
         2005, excludes $10,250 and $9,538 of net income allocable to HPU
         holders, respectively.



                             iStar Financial Inc.
                         Consolidated Balance Sheets
                                (In thousands)

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

    Loans and other lending investments, net    $6,799,850        $4,661,915
    Corporate tenant lease assets, net           3,084,794         3,115,361
    Other investments                              407,617           238,294
    Investments in joint ventures                  382,030           202,128
    Assets held for sale                             9,398                 -
    Cash and cash equivalents                      105,951           115,370
    Restricted cash                                 28,986            28,804
    Accrued interest and operating lease
     income receivable                              72,954            32,166
    Deferred operating lease income receivable      79,498            76,874
    Deferred expenses and other assets              71,181            52,181
    Goodwill                                        17,736             9,203
             Total assets                      $11,059,995        $8,532,296


    LIABILITIES AND SHAREHOLDERS' EQUITY

    Accounts payable, accrued expenses
     and other liabilities                        $200,957          $192,522

    Debt obligations:
        Unsecured senior notes                   6,250,249         4,108,477
        Unsecured revolving credit facilities      923,068         1,242,000
        Secured term loans                         562,116           411,144
        Other debt obligations                      98,004            97,971
          Total liabilities                      8,034,394         6,052,114
    Minority interest in consolidated
     entities                                       38,738            33,511
    Shareholders' equity                         2,986,863         2,446,671
             Total liabilities and
              shareholders' equity             $11,059,995        $8,532,296



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

    PERFORMANCE STATISTICS
                                                            Three Months Ended
    Net Finance Margin                                       December 31, 2006

    Weighted average GAAP yield of loan and CTL investments          9.80%
    Less: Cost of debt                                              (6.49%)
    Net Finance Margin(1)                                            3.31%

    Adjusted Return on Average Common Book Equity

    Adjusted basic earnings allocable to common shareholders
      and HPU holders(2)                                          $112,649
    Adjusted basic earnings allocable to common shareholders
      and HPU holders - Annualized(A)                             $450,596

    Average total book equity                                   $2,760,939
    Less: Average book value of preferred equity                  (506,176)
    Average common book equity(B)                               $2,254,763
    Adjusted Return on Average Common Book Equity(A)/(B)             20.0%

    Efficiency Ratio

    General and administrative expenses(C)                         $29,383
    Total revenue(D)                                              $265,293
    Efficiency Ratio(C)/(D)                                          11.1%


     (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 $871 and $214, 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
                                                             December 31, 2006
    Book debt(A)                                                $7,833,437

    Book equity                                                 $2,986,863
    Add: Accumulated depreciation/depletion and loan loss
     reserves                                                      413,118
    Sum of book equity, accumulated depreciation/depletion
     and loan loss reserves(B)                                  $3,399,981

    Book Debt / Sum of Book Equity, Accumulated
     Depreciation/Depletion and Loan Loss Reserves(A)/(B)             2.3x

    Ratio of Earnings to Fixed Charges                                1.7x

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

    Interest Coverage

    EBITDA(1)(C)                                                  $239,468
    GAAP interest expense(D)                                      $119,660

    EBITDA / GAAP Interest Expense(C)/(D)                             2.0x

    Fixed Charge Coverage

    EBITDA(1)(C)                                                  $239,468

    GAAP interest expense                                          119,660
    Add: Preferred dividends                                        10,580
    Total GAAP interest expense and preferred dividends(E)        $130,240

    EBITDA / GAAP Interest Expense and Preferred
     Dividends(C)/(E)                                                 1.8x

    RECONCILIATION OF NET INCOME TO EBITDA

    Net income                                                     $91,693
    Add: GAAP interest expense                                     119,660
    Add: Depreciation, depletion and amortization                   21,267
    Add: Joint venture depreciation, depletion and
     amortization                                                    6,848

    EBITDA(1)                                                     $239,468


     (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
     December 31, 2006            LOAN ORIGINATIONS
                                                  Total/
                               Fixed   Floating  Weighted CORPORATE  OTHER
                               Rate      Rate    Average   LEASING INVESTMENTS
    Amount funded            $213,243  $632,733  $845,975  $14,114  $212,496
    Weighted average GAAP
     yield                     12.35%    10.63%    11.06%   11.60%       N/A
    Weighted average all-in
     spread/margin (basis
     points)(1)                   776       530         -      695       N/A
    Weighted average first
     $ loan-to-value ratio      26.8%     22.2%     23.0%      N/A       N/A
    Weighted average last
     $ loan-to-value ratio      78.0%     71.0%     72.3%      N/A       N/A


    UNFUNDED COMMITMENTS

    Number of assets with unfunded
     commitments                                                         108

    Discretionary commitments                                        $27,529
    Non-discretionary commitments                                  2,913,224
    Total unfunded commitments                                    $2,940,753
    Estimated weighted average funding
     period                                          Approximately 3.2 years


    UNENCUMBERED ASSETS                                          $10,392,861

    RISK MANAGEMENT STATISTICS
    (weighted average risk rating)                       2006          2005
                                        December September June March December
                                            31,    30,    30,    31,    31,
    Structured Finance Assets
     (principal risk)                      2.74   2.75   2.67   2.71   2.63
    Corporate Tenant Lease Assets          2.37   2.39   2.38   2.42   2.38

                                            (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
                                                   December 31,   December 31,
                                                       2006          2005
    Carrying value of non-performing loans /
     As a percentage of total assets              $61,480 0.56%  $35,291 0.41%

    Reserve for loan losses /
     As a percentage of total assets              $52,201 0.47%  $46,876 0.55%
     As a percentage of non-performing loans                85%           133%


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

                                                                Year Ending
                                                             December 31, 2007

    Earnings per diluted common share guidance                  $2.70 - $2.90
    Add: Depreciation, depletion and amortization
     per diluted common share                                   $0.90 - $1.30
    Adjusted earnings per diluted common share guidance         $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 DECEMBER 31, 2006(1)

    Security Type                                        $               %
    First Mortgages / Senior Loans                    $5,406           49.6%
    Corporate Tenant Leases                            3,487           32.0
    Mezzanine / Subordinated Debt                      1,446           13.3
    Other Investments                                    554            5.1
        Total                                        $10,893          100.0%

    Collateral Type
    Other                                             $1,691           15.5%
    Apartment / Residential                            1,655           15.2
    Office (CTL)                                       1,611           14.8
    Retail                                             1,423           13.1
    Industrial / R&D                                   1,340           12.3
    Entertainment / Leisure                            1,014            9.3
    Mixed Use / Mixed Collateral                         958            8.8
    Hotel                                                728            6.7
    Office (Lending)                                     473            4.3
        Total                                        $10,893          100.0%

    Collateral Location
    West                                              $2,282           20.9%
    Northeast                                          1,719           15.8
    Southeast                                          1,700           15.6
    Various                                            1,356           12.5
    Mid-Atlantic                                         769            7.1
    Central                                              754            6.9
    South                                                692            6.3
    International                                        571            5.2
    Southwest                                            519            4.8
    Northcentral                                         347            3.2
    Northwest                                            184            1.7
        Total                                        $10,893          100.0%


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

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

<< Back to News