- Adjusted earnings (loss) allocable to common shareholders for the
third quarter was ($234.2) million, or ($2.37) per diluted common
share. - Net income (loss) allocable to common shareholders for the
third quarter was ($251.3) million, or ($2.55) per diluted common
share. - Company records $345.9 million of loan loss provisions
during the quarter versus $435.0 million during the prior quarter.
NEW YORK, Oct. 30 /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
third quarter ended September 30, 2009. iStar reported adjusted
earnings (loss) allocable to common shareholders for the third
quarter of ($234.2) million or ($2.37) per diluted common share,
compared with ($287.2) million or ($2.16) per diluted common share
for the third quarter 2008. Adjusted earnings (loss) represents net
income (loss) computed in accordance with GAAP, adjusted primarily
for preferred dividends, depreciation, depletion, amortization,
impairments of goodwill and intangible assets, gain (loss) from
discontinued operations, and gain on sale of joint venture
interest. Net income (loss) allocable to common shareholders for
the third quarter was ($251.3) million, or ($2.55) per diluted
common share, compared to ($308.7) million or ($2.32) per diluted
common share for the third quarter 2008. Please see the financial
tables that follow the text of this press release for a detailed
reconciliation of adjusted earnings (loss) to GAAP net income
(loss). Revenues for the third quarter 2009 were $210.2 million
versus $337.3 million for the third quarter 2008. The
year-over-year decrease is primarily due to a reduction of interest
income resulting from an increase in non-performing loans (NPLs),
an overall smaller asset base and lower interest rates. Net
investment income for the quarter was $180.2 million compared to
$209.7 million for the third quarter 2008. The year-over-year
decrease is primarily due to lower interest income as discussed
above, offset by lower interest expense and increased gains on
early extinguishment of debt. Net investment income represents
interest income, operating lease income, earnings (loss) from
equity method investments and gain on early extinguishment of debt,
less interest expense and operating costs for corporate tenant
lease assets. During the quarter, the Company received $403.6
million in gross principal repayments. Additionally, the Company
generated proceeds of $182.4 million from loan sales; $22.0 million
of net proceeds from the sale of three corporate tenant lease (CTL)
assets; and $25.9 million of net proceeds from other real estate
owned (OREO) asset sales. Of the gross principal repayments and
asset sales, $192.0 million was utilized to pay down the
A-participation interest associated with the Fremont portfolio.
Additionally during the quarter, the Company funded a total of
$283.1 million under pre-existing commitments. The Company's
leverage, calculated as book debt net of unrestricted cash and cash
equivalents, divided by the sum of book equity, accumulated
depreciation and loan loss reserves, each as determined in
accordance with GAAP, was 2.9x at September 30, 2009, versus 2.8x
at June 30, 2009. The Company's net finance margin, calculated as
the rate of return on assets less the cost of debt, was 1.51% for
the quarter, versus 1.48% in the prior quarter. Capital Markets As
of September 30, 2009, the Company had $187.1 million of
unrestricted cash and available capacity on its credit facilities
versus $417.4 million at the end of the prior quarter. At September
30, 2009, the Company was in compliance with all of its bank and
bond covenants. During the quarter, the Company repaid its LIBOR +
0.34% senior unsecured notes due September 2009. During the
quarter, the Company repurchased $255.5 million par value of its
senior unsecured notes, resulting in a net gain on early
extinguishment of debt of $91.7 million. The Company also
repurchased 2.2 million shares of its common stock during the
quarter. The Company currently has remaining authority to
repurchase up to $29.5 million of shares under its share repurchase
programs. Risk Management At September 30, 2009, first mortgages,
participations in first mortgages, senior loans and corporate
tenant lease investments collectively comprised 87.0% of the
Company's asset base, versus 91.0% in the prior quarter. The
Company's loan portfolio consisted of 78.3% floating rate loans and
21.7% fixed rate loans, with a weighted average maturity of 2.0
years. At the end of the quarter, the weighted average last dollar
loan-to-value ratio for all structured finance assets was 83.6%.
The Company's corporate tenant lease assets were 94.1% leased with
a weighted average remaining lease term of 11.2 years. At September
30, 2009, the weighted average risk ratings of the Company's
structured finance and corporate tenant lease assets were 3.91 and
2.60, versus 3.90 and 2.59, respectively, in the prior quarter. As
of September 30, 2009, the Company had 26 loans on its watch list
representing $1.2 billion or 11.3% of total managed loans, compared
to 28 loans representing $1.2 billion or 10.4% of total managed
loans in the prior quarter. Assets on the Company's watch list were
all performing loans at September 30, 2009. Managed asset and loan
values represent iStar's book value plus the A-participation
interest associated with the Fremont portfolio. The Company's total
managed loan value at quarter end was $10.5 billion. At the end of
the third quarter, 85 of the Company's 260 total loans were on NPL
status. These loans represent $4.4 billion or 42.0% of total
managed loans, compared to 90 loans representing $4.6 billion or
39.6% of total managed loans in the prior quarter. Additionally,
during the quarter the Company took title to 15 properties that had
an aggregate gross loan value of $826.5 million prior to
foreclosure, resulting in $266.3 million of charge-offs against the
Company's reserve for loan losses and recorded $8.0 million of
additional impairments on its OREO and REHI portfolios. At the end
of the quarter, the Company held 29 assets, representing a book
value of $920.1 million, which had previously served as collateral
on its loans. Of these assets, $584.5 million were classified as
OREO and considered held for sale based on management's current
intention to market and sell the assets in the near term. The
remaining $335.6 million were classified as Real Estate Held for
Investment (REHI) based on management's current strategy to hold,
operate or develop these assets over a longer period. During the
quarter, the Company also charged-off $58.8 million against its
reserve for loan losses associated with restructurings, loan sales
and repayments during the quarter. Additionally, the Company
recorded $8.9 million of non-cash impairment charges associated
with the sales and pending sales of CTL assets, as well as $9.3
million of non-cash impairment charges associated with other
assets. During the third quarter, the Company recorded $345.9
million in loan loss provisions. Provisions in the quarter reflect
the continued deterioration in the overall credit markets and its
impact on the portfolio as determined in the Company's regular
quarterly risk ratings review process. At September 30, 2009, the
Company had loan loss reserves of $1.5 billion or 14.2% of total
managed loans. This compares to loan loss reserves of $1.5 billion
or 12.6% of total managed loans at June 30, 2009. Summary of
Fremont Contributions to Quarterly Results At the end of the third
quarter, the Fremont portfolio, including additional fundings made
during the quarter, had a managed loan value of $3.1 billion
consisting of 103 loans, versus $3.6 billion consisting of 122
loans at the end of the prior quarter. In addition, there were 10
OREO assets with a managed asset value of $182.4 million and six
REHI assets with a managed asset value of $170.7 million associated
with the Fremont portfolio at the end of the quarter. At the end of
the third quarter, the value of the A-participation interest in the
portfolio was $672.9 million versus $865.6 million at the end of
the prior quarter. The book value of iStar's B-participation
interest was $2.4 billion versus $2.7 billion at the end of the
prior quarter. During the quarter, iStar received $274.1 million in
principal repayments and proceeds from asset sales in respect of
Fremont assets, of which the Company retained $82.1 million. The
balance of principal repayments was paid to the A-participation
interest. The weighted average maturity of the Fremont portfolio is
six months. During the third quarter, iStar funded $70.2 million of
commitments related to the portfolio. Unfunded commitments at the
end of the third quarter were $0.3 billion, of which the Company
expects to fund approximately $0.1 billion based upon its
comprehensive review of the portfolio. At September 30, 2009, there
were 45 Fremont loans on NPL status with a managed loan value of
$1.8 billion versus 51 loans at the prior quarter end, with $2.0
billion of managed loan value. In addition, there were nine Fremont
loans on the Company's watch list with a managed loan value of
$213.5 million versus 12 loans at the prior quarter end, with
$347.2 million of managed loan value. [Financial Tables to Follow]
* * * iStar Financial Inc. is a leading publicly traded finance
company focused on the commercial real estate industry. The Company
primarily provides custom-tailored investment capital to high-end
private and corporate owners of real estate, including senior and
mezzanine real estate debt, senior and mezzanine corporate capital,
as well as corporate net lease financing and equity. The Company,
which is taxed as a real estate investment trust ("REIT"), provides
innovative and value added financing solutions to its customers.
iStar Financial will hold a quarterly earnings conference call at
10:00 a.m. ET today, October 30, 2009. 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 the amount and timing of additional loan loss
provisions, the amount and timing of asset sales (including OREO
assets), continued increases in NPLs, repayment levels, the
Company's ability to reduce its indebtedness at a discount, the
Company's ability to generate liquidity, the Company's ability to
maintain compliance with its debt covenants, economic conditions,
the availability of liquidity for commercial real estate
transactions 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, 2009 2008 2009 2008 -------- --------
--------- --------- Net investment income (1) $180,198 $209,745
$719,103 $534,988 Other income 9,454 22,922 20,408 88,707
Non-interest expense (2) (429,797) (559,699) (1,359,176)
(1,163,637) Gain on sale of joint venture interest - - - 280,219
-------- -------- --------- --------- Income (loss) from continuing
operations (240,145) (327,032) (619,665) (259,723) Income (loss)
from discontinued operations (8,106) 3,194 (9,248) 19,358 Gain from
discontinued operations 809 19,955 12,426 72,487 Net (income) loss
attributable to noncontrolling interests (515) 502 998 1,069 Gain
on sale of joint venture interest attributable to noncontrolling
interests - - - (18,560) Gain from discontinued operations
attributable to noncontrolling interests - - - (3,689) Preferred
dividends (10,580) (10,580) (31,740) (31,740) -------- --------
--------- --------- Net income (loss) allocable to common
shareholders, HPU holders and Participating Security holders (3)
($258,537) ($313,961) ($647,229) ($220,798) ========= =========
========= ========= (1) Includes interest income, operating lease
income, earnings (loss) from equity method investments and gain
(loss) on early extinguishment of debt, less interest expense and
operating costs for corporate tenant lease assets. (2) Includes
depreciation and amortization, general and administrative expenses,
provision for loan losses, impairments and other expenses. (3) HPU
holders are Company employees who purchased high performance common
stock units under the Company's High Performance Unit Program.
Participating Security holders are Company employees and directors
who hold unvested restricted stock units and common stock
equivalents under the Company's Long Term Incentive Plan. Selected
Balance Sheet Data (In thousands) (unaudited) As of As of September
30, 2009 December 31, 2008 ------------------ -----------------
Loans and other lending investments, net $8,588,020 $10,586,644
Corporate tenant lease assets, net $2,925,413 $3,044,811 Other
investments $391,053 $447,318 Total assets $13,404,594 $15,296,748
Debt obligations, net $11,311,405 $12,486,404 Total liabilities
$11,586,207 $12,840,896 Total equity $1,810,942 $2,446,662 iStar
Financial Inc. Consolidated Statements of Operations (In thousands)
(unaudited) Three Months Ended Nine Months Ended September 30,
September 30, 2009 2008 2009 2008 -------- -------- --------
-------- REVENUES Interest income $124,701 $237,006 $444,109
$748,460 Operating lease income 76,037 77,378 229,246 229,952 Other
income 9,454 22,922 20,408 88,707 -------- -------- --------
--------- Total revenues 210,192 337,306 693,763 1,067,119 --------
-------- -------- --------- COSTS AND EXPENSES Interest expense
113,938 169,665 372,288 503,915 Operating costs - corporate tenant
lease assets 5,673 5,200 17,655 14,802 Depreciation and
amortization 25,298 23,760 73,004 70,876 General and administrative
(1) 27,808 37,694 105,617 124,474 Provision for loan losses 345,892
411,142 1,039,004 777,302 Impairment of other assets 17,351 88,075
60,729 145,766 Impairment of goodwill - - 4,186 39,092 Other
expense 13,448 (972) 76,636 6,127 -------- -------- ---------
--------- Total costs and expenses 549,408 734,564 1,749,119
1,682,354 -------- -------- --------- --------- Income (loss) from
continuing operations before other items (339,216) (397,258)
(1,055,356) (615,235) Gain on early extinguishment of debt 91,701
68,321 446,957 69,916 Gain on sale of joint venture interest - - -
280,219 Earnings (loss) from equity method investments 7,370 1,905
(11,266) 5,377 -------- -------- -------- --------- Income (loss)
from continuing operations (240,145) (327,032) (619,665) (259,723)
Income (loss) from discontinued operations (8,106) 3,194 (9,248)
19,358 Gain from discontinued operations 809 19,955 12,426 72,487
-------- -------- -------- --------- Net income (loss) (247,442)
(303,883) (616,487) (167,878) Net (income) loss attributable to
noncontrolling interests (515) 502 998 1,069 Gain on sale of joint
venture interest attributable to noncontrolling interests - - -
(18,560) Gain from discontinued operations attributable to
noncontrolling interests - - - (3,689) -------- -------- --------
--------- Net income (loss) attributable to iStar Financial Inc.
(247,957) (303,381) (615,489) (189,058) Preferred dividend
requirements (10,580) (10,580) (31,740) (31,740) -------- --------
-------- --------- Net income (loss) allocable to common
shareholders, HPU holders and Participating Security holders (2)
($258,537) ($313,961) ($647,229) ($220,798) ========= =========
========= ========= (1) For the three months ended September 30,
2009 and 2008, includes $4,521 and $4,884 of stock-based
compensation expense, respectively. For the nine months ended
September 30, 2009 and 2008, includes $17,572 and $17,725 of
stock-based compensation expense, respectively. (2) HPU holders are
Company employees who purchased high performance common stock units
under the Company's High Performance Unit Program. Participating
Security holders are Company employees and directors who hold
unvested restricted stock units and common stock equivalents under
the Company's Long Term Incentive Plan. iStar Financial Inc.
Earnings Per Share Information (In thousands, except per share
amounts) (unaudited) Three Months Ended Nine Months Ended September
30, September 30, 2009 2008 2009 2008 -------- -------- --------
-------- EPS INFORMATION FOR COMMON SHARES Income (loss)
attributable to iStar Financial Inc. from continuing
operations(1)(2) Basic and diluted ($2.48) ($2.49) ($6.24) ($2.27)
Net income (loss) attributable to iStar Financial Inc.(1)(3) Basic
and diluted ($2.55) ($2.32) ($6.21) ($1.63) Weighted average shares
outstanding Basic and diluted 98,674 133,199 101,324 133,955 EPS
INFORMATION FOR HPU SHARES Income (loss) attributable to iStar
Financial Inc. from continuing operations(1)(2) Basic and diluted
($468.33) ($470.67) ($1,181.53) ($430.66) Net income (loss)
attributable to iStar Financial Inc.(1)(3)(4) Basic and diluted
($481.93) ($438.47) ($1,175.73) ($308.73) Weighted average shares
outstanding Basic and diluted 15 15 15 15 (1) For the three months
ended September 30, 2009 and 2008, excludes preferred dividends of
$10,580. For the nine months ended September 30, 2009 and 2008,
excludes preferred dividends of $31,740. (2) Income (loss)
attributable to iStar Financial Inc. from continuing operations
excludes net (income) loss from noncontrolling interests. (3) For
the three and nine months ended September 30, 2008, net income
(loss) attributable to iStar Financial Inc. and allocable to common
shareholders and HPU holders is reduced by $1,271 and $2,393,
respectively, for dividends paid to Participating Security holders.
(4) For the three months ended September 30, 2009 and 2008, net
income (loss) allocable to HPU holders was ($7,229) and ($6,577),
respectively, on both a basic and dilutive basis. For the nine
months ended September 30, 2009 and 2008, net income (loss)
allocable to HPU holders was ($17,636) and ($4,631), respectively,
on both a basic and diluted basis. 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, 2009 2008 2009 2008
-------- -------- -------- -------- ADJUSTED EARNINGS (1) Net
income (loss) ($247,442) ($303,883) ($616,487) ($167,878) Add:
Depreciation, depletion and amortization 25,264 24,448 73,341
78,149 Add: Joint venture depreciation, depletion and amortization
1,897 1,943 16,091 12,513 Add: Deferred financing amortization
(8,780) 16,745 3,346 38,677 Add: Impairment of goodwill and
intangible assets - - 4,186 51,549 Less: Hedge ineffectiveness, net
- (1,256) - (2,106) Less: Gain from discontinued operations (809)
(19,955) (12,426) (72,487) Less: Gain on sale of joint venture
interest - - - (280,219) Less: Net (income) loss attributable to
noncontrolling interests (515) 502 998 1,069 Less: Preferred
dividends (10,580) (10,580) (31,740) (31,740) ------- -------
------- ------- Adjusted earnings (loss) allocable to common
shareholders, HPU holders and Participating Security holders: Basic
and Diluted ($240,965) ($292,036) ($562,691) ($372,473) Adjusted
earnings (loss) per common share: (2) Basic and Diluted (3) ($2.37)
($2.16) ($5.40) ($2.74) Weighted average common shares outstanding:
Basic and Diluted 98,674 133,199 101,324 133,955 Common shares
outstanding at end of period: Basic and Diluted 97,452 132,043
97,452 132,043 (1) Adjusted earnings should be examined in
conjunction with net income (loss) as shown in the Consolidated
Statements of Operations. Adjusted earnings should not be
considered as an alternative to net income (loss) (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 September 30, 2008,
excludes $1,271 and $2,393, respectively, of dividends paid to
Participating Security holders. (3) For the three months ended
September 30, 2009 and 2008, excludes ($6,737) and ($6,120) of
basic and diluted net income (loss) allocable to HPU holders,
respectively. For the nine months ended September 30, 2009 and
2008, excludes ($15,333) and ($7,778) of basic and diluted net
income (loss) allocable to HPU holders, respectively. iStar
Financial Inc. Consolidated Balance Sheets (In thousands)
(unaudited) As of As of September 30, 2009 December 31, 2008
------------------ ----------------- ASSETS Loans and other lending
investments, net $8,588,020 $10,586,644 Corporate tenant lease
assets, net 2,925,413 3,044,811 Other investments 391,053 447,318
Real estate held for investment, net 335,635 - Other real estate
owned 584,519 242,505 Assets held for sale 19,866 - Cash and cash
equivalents 187,090 496,537 Restricted cash 42,509 155,965 Accrued
interest and operating lease income receivable, net 48,233 87,151
Deferred operating lease income receivable 120,124 116,793 Deferred
expenses and other assets, net 162,132 119,024 -----------
----------- Total assets $13,404,594 $15,296,748 ===========
=========== LIABILITIES AND EQUITY Accounts payable, accrued
expenses and other liabilities $274,802 $354,492 Debt obligations,
net: Unsecured senior notes 4,625,363 7,188,541 Secured senior
notes 869,285 - Unsecured revolving credit facilities 748,562
3,281,273 Secured revolving credit facilities 961,128 306,867
Secured term loans 4,008,966 1,611,650 Other debt obligations
98,101 98,073 ----------- ----------- Total liabilities 11,586,207
12,840,896 Redeemable noncontrolling interests 7,445 9,190 Total
iStar Financial Inc. shareholders' equity 1,774,613 2,418,999
Noncontrolling interests 36,329 27,663 ----------- -----------
Total equity 1,810,942 2,446,662 ----------- ----------- Total
liabilities and equity $13,404,594 $15,296,748 ===========
=========== iStar Financial Inc. Supplemental Information (In
thousands) (unaudited) PERFORMANCE STATISTICS Three Months Ended
September 30, 2009 ------------------ Net Finance Margin
------------------ Weighted average GAAP yield on loan and CTL
investments 5.71% Less: Cost of debt 4.20% ----- Net Finance Margin
(1) 1.51% Return on Average Common Book Equity
------------------------------------ Average total book equity
$1,901,899 Less: Average book value of preferred equity (506,176)
----------- Average common book equity (A) $1,395,723 Net income
(loss) allocable to common shareholders, HPU holders and
Participating Security holders ($258,537) Net income (loss)
allocable to common shareholders, HPU holders and Participating
Security holders - Annualized (B) ($1,034,148) Return on Average
Common Book Equity (B) / (A) Neg Adjusted basic earnings (loss)
allocable to common shareholders, HPU holders and Participating
Security holders (2) ($240,965) Adjusted basic earnings (loss)
allocable to common shareholders, HPU holders and Participating
Security holders - Annualized (C) ($963,860) Adjusted Return on
Average Common Book Equity (C) / (A) Neg Expense Ratio
------------- General and administrative expenses (D) $27,808 Total
revenue (E) $210,192 Expense Ratio (D) / (E) 13.2% (1) Weighted
average GAAP yield is the annualized sum of interest income and
operating lease income, divided by the sum of average gross
corporate tenant lease assets, average loans and other lending
investments, average 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 adjustments from discontinued operations of $758 and
($302), 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 (loss)
as shown in the Consolidated Statements of Operations. Adjusted
earnings should not be considered as an alternative to net income
(loss) (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, 2009 ------------------ Book debt, net
of unrestricted cash and cash equivalents (A) $11,124,315 Book
equity 1,810,942 Add: Accumulated depreciation and loan loss
reserves 2,042,688 ----------- Sum of book equity, accumulated
depreciation and loan loss reserves (B) $3,853,630 Leverage (1) (A)
/ (B) 2.9x Ratio of Earnings to Fixed Charges (1.1x) Ratio of
Earnings to Fixed Charges and Preferred Stock Dividends (1.0x)
Covenant Calculation of Fixed Charge Coverage Ratio (2) 2.7x
Interest Coverage ----------------- EBITDA (3) (C) ($116,923)
Interest expense and preferred dividends (D) 124,518 EBITDA /
Interest Expense (3) (C) / (D) Neg RECONCILIATION OF NET INCOME TO
EBITDA (3) Net income (loss) less preferred dividends ($258,022)
Add: Interest expense 113,938 Add: Depreciation, depletion and
amortization 25,264 Add: Joint venture depreciation, depletion and
amortization 1,897 ----------- EBITDA (3) ($116,923) (1) Leverage
is calculated by dividing book debt net of unrestricted cash and
cash equivalents by the sum of book equity, accumulated
depreciation and loan loss reserves. (2) This measure, which is a
trailing twelve-month calculation and excludes the effect of
impairment charges and other non-cash items, is consistent with
covenant calculations included in the Company's secured credit
facilities; therefore, we believe it is a useful measure for
investors to consider. (3) EBITDA should be examined in conjunction
with net income (loss) as shown in the Consolidated Statements of
Operations. EBITDA should not be considered as an alternative to
net income (loss) (determined in accordance with GAAP) as an
indicator of the Company's performance, or to cash flows from
operating activities (determined in accordance with GAAP) as a
measure of the Company's liquidity, nor is this measure indicative
of funds available to fund the Company's cash needs or available
for distribution to shareholders. It should be noted that the
Company's manner of calculating EBITDA may differ from the
calculations of similarly-titled measures by other companies. iStar
Financial Inc. Supplemental Information (In thousands) (unaudited)
FINANCING VOLUME SUMMARY STATISTICS Three Months Ended September
30, 2009 LOANS ----------------------------- Total/ CORPORATE Fixed
Floating Weighted TENANT OTHER Rate Rate Average LEASING
INVESTMENTS ------- -------- -------- --------- ----------- Amount
funded $20,847 $256,447 $277,294 $411 $5,436 Weighted average GAAP
yield 9.86% 6.06% 6.36% N/A N/A Weighted average all-in spread/
margin (basis points) (1) 954 559 588 N/A N/A Weighted average
first $ loan-to-value ratio 19.01% 1.52% 2.90% N/A N/A Weighted
average last $ loan-to-value ratio 87.66% 81.97% 82.42% N/A N/A
UNFUNDED COMMITMENTS Number of assets with unfunded commitments 119
Discretionary commitments $126,576 Non-discretionary commitments
1,005,868 ---------- Total unfunded commitments $1,132,444
Estimated weighted average funding period Approximately 3.1 years
UNENCUMBERED ASSETS / UNSECURED DEBT Unencumbered assets (A)
$7,566,297 Unsecured debt (B) $5,510,740 Unencumbered Assets /
Unsecured Debt (A) / (B) 1.4x RISK MANAGEMENT STATISTICS (weighted
average risk rating) 2009 2008 --------------------------------
-------------------------- September 30, June 30, March 31,
December 31, September 30, --------------------------------
-------------------------- Structured Finance Assets (principal
risk) 3.91 3.90 3.71 3.53 3.41 Corporate Tenant Lease Assets 2.60
2.59 2.59 2.58 2.55 (1=lowest risk; 5=highest risk) (1) Represents
spread over base rate LIBOR (floating-rate loans) and interpolated
U.S. Treasury rates (fixed-rate loans) 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, 2009 December 31, 2008 ------------------
----------------- Value of non-performing loans (1) / As a
percentage of total managed loans $4,399,701 42.0% $3,458,158 27.5%
Reserve for loan losses / As a percentage of total managed loans
$1,491,153 14.2% $976,788 7.8% As a percentage of non-performing
loans (1) 33.9% 28.3% (1) Non-performing loans include iStar's book
value and Fremont's A-participation interest on the associated
assets. iStar Financial Inc. Supplemental Information (In millions)
(unaudited) Managed % of NPL STATISTICS AS OF SEPTEMBER 30, 2009
(1) Value NPLs ------- ----- Origination ----------- iStar Legacy
$2,603 59.2% Fremont 1,797 40.8 ------ ------ Total $4,400 100.0%
====== ====== Property / Collateral Type --------------------------
Land $1,328 30.2% Condo Construction - Completed 721 16.4
Multifamily 370 8.4 Mixed Use / Mixed Collateral 370 8.4 Condo
Construction - In Progress 360 8.2 Retail 298 6.8 Entertainment /
Leisure 274 6.2 Hotel 204 4.6 Conversion - In Progress 181 4.1
Industrial / R&D 92 2.1 Office 77 1.8 Conversion - Completed 63
1.4 Corporate - Real Estate 62 1.4 ------ ------ Total $4,400
100.0% ====== ====== (1) Based on carrying value of the loans, plus
the Fremont A-participation interest on the associated loans. iStar
Financial Inc. Supplemental Information (In millions) (unaudited)
Carrying % of PORTFOLIO STATISTICS AS OF SEPTEMBER 30, 2009 (1)
Value Total ----- ------ Asset Type ---------- First Mortgages /
Senior Loans $9,247 62.9% Corporate Tenant Leases 3,547 24.1
Mezzanine / Subordinated Debt 832 5.7 Other Real Estate Owned 585
4.0 Real Estate Held for Investment 336 2.3 Other Investments 155
1.0 ------- ------ Total $14,702 100.0% ======= ====== Property /
Collateral Type -------------------------- Apartment / Residential
$4,206 28.6% Land 2,307 15.7 Office 1,879 12.8 Industrial / R&D
1,366 9.3 Retail 1,178 8.0 Entertainment / Leisure 926 6.3 Hotel
877 5.9 Mixed Use / Mixed Collateral 762 5.2 Corporate - Real
Estate 752 5.1 Other 439 3.0 Corporate - Non-Real Estate 10 0.1
------- ------ Total $14,702 100.0% ======= ====== Geography
--------- West $3,384 23.0% Northeast 2,700 18.4 Southeast 2,401
16.3 Mid-Atlantic 1,571 10.7 Various 996 6.8 Central 916 6.2
Southwest 869 5.9 South 500 3.4 International 488 3.3 Northcentral
439 3.0 Northwest 438 3.0 ------- ------ Total $14,702 100.0%
======= ====== (1) Based on carrying value of the Company's total
investment portfolio, gross of loan loss reserves and accumulated
depreciation. DATASOURCE: iStar Financial Inc. CONTACT: James D.
Burns, Chief Financial Officer, or Andrew G. Backman, Senior Vice
President - Investor Relations, iStar Financial Inc.,
+1-212-930-9400 Web Site: http://www.istarfinancial.com/
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