Printer Friendly

iStar Financial Announces Second Quarter 2009 Results.

- Adjusted earnings (loss) allocable to common shareholders for the second quarter was ($250.1) million, or ($2.51) per diluted common share. - Net income (loss) allocable to common shareholders for the second quarter was ($284.2) million, or ($2.85) per diluted common share. - Company records $435.0 million of loan loss provisions during the quarter versus $258.1 million during the prior quarter. - Company exchanged $1.0 billion of existing unsecured notes for $634.8 million of new secured notes.

NEW YORK, July 31 /PRNewswire-FirstCall/ -- iStar Financial Inc. , a leading publicly traded finance company focused on the commercial real estate industry, today reported results for the second quarter ended June 30, 2009.

iStar reported adjusted earnings (loss) allocable to common shareholders for the second quarter of ($250.1) million or ($2.51) per diluted common share, compared with ($196.2) million or ($1.46) per diluted common share for the second 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 second quarter was ($284.2) million, or ($2.85) per diluted common share, compared to $18.5 million or $0.14 per diluted common share for the second quarter 2008. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income (loss).

Revenues for the second quarter 2009 were $224.6 million versus $320.4 million for the second 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), lower interest rates and an overall lower asset base.

Net investment income for the quarter was $289.0 million compared to $149.7 million for the second quarter 2008. The year-over-year increase is primarily due to gains associated with the bond exchange and early extinguishment of debt, offset by lower interest income resulting from an increase in the Company's NPLs. 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 recorded a $42.4 million charge associated with the termination of a long-term lease with its landlord for headquarters space.

During the quarter, the Company received $414.9 million in gross principal repayments. Additionally, the Company generated proceeds of $141.5 million from loan sales; $4.1 million of net proceeds from the sale of one corporate tenant lease (CTL) asset; and $72.2 million of net proceeds from other real estate owned (OREO) asset sales. Of the gross principal repayments and asset sales, $148.8 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 $377.7 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 2.8x at June 30, 2009, versus 2.9x at March 31, 2009. The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 1.48% for the quarter, versus 2.37% in the prior quarter.

Capital Markets

As of June 30, 2009, the Company had $417.4 million of unrestricted cash and available capacity on its credit facilities versus $1.0 billion at the end of the prior quarter. The Company is currently in compliance with all of its bank and bond covenants.

As previously announced, during the quarter the Company issued $155.3 million of its new 8.0% secured notes due 2011 and $479.5 million of its new 10.0% secured notes due 2014 in exchange for $1.0 billion of its unsecured senior notes. The new notes are secured by a second priority lien on the same pool of assets that serve as collateral for its current secured bank lines. In connection with this transaction, the Company recognized a gain of $108.0 million during the second quarter and $262.7 million will be amortized against interest expense over the life of the new notes.

In addition, the Company repurchased $371.9 million par value of its senior unsecured notes, including $155.6 million of its senior unsecured notes due September 2009, resulting in a net gain on early extinguishment of debt of $92.9 million. The Company also repurchased approximately 2.8 million shares of its common stock during the quarter. The Company currently has remaining authority to repurchase up to $34.5 million of shares under its share repurchase programs.

Risk Management

At June 30, 2009, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 91.0% of the Company's asset base, versus 91.7% in the prior quarter. The Company's loan portfolio consisted of 78.9% floating rate loans and 21.1% fixed rate loans, with a weighted average maturity of 2.1 years.

At the end of the quarter, the weighted average last dollar loan-to-value ratio for all structured finance assets was 82.1%. The Company's corporate tenant lease assets were 94.0% leased with a weighted average remaining lease term of 11.4 years. At June 30, 2009, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 3.90 and 2.59, respectively, versus 3.71 and 2.59, respectively, in the prior quarter.

As of June 30, 2009, 90 of the Company's 299 total loans were on NPL status. These loans represent $4.6 billion or 39.6% of total managed loans, compared to 76 loans representing $3.9 billion or 32.6% of total managed loans in the prior quarter. 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 $11.6 billion.

At the end of the second quarter, the Company had 28 loans on its watch list representing $1.2 billion or 10.4% of total managed loans, compared to 30 loans representing $1.3 billion or 10.7% of total managed loans in the prior quarter. Assets on the Company's watch list are all performing loans.

At the end of the second quarter, the Company had 16 assets classified as OREO with a book value of $382.6 million. During the quarter, the Company took title to six properties that served as collateral on its loans with managed loan values totaling $258.2 million, resulting in $48.7 million of charge-offs against the Company's reserve for loan losses. In addition, the Company recorded $22.2 million of non-cash impairment charges on its OREO portfolio.

During the quarter, the Company charged off $53.9 million against its reserve for losses associated with loan sales and repayments during the quarter. During the quarter, the Company recorded $2.6 million of non-cash impairment charges associated with the sale of one CTL asset.

During the second quarter, the Company recorded $435.0 million in loan loss provisions, comprised of $412.5 million of asset specific provisions and $22.5 million of general 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 June 30, 2009, the Company had loan loss reserves of $1.5 billion or 12.6% of total managed loans. This compares to loan loss reserves of $1.1 billion or 9.4% of total managed loans at March 31, 2009.

Summary of Fremont Contributions to Quarterly Results

At the end of the second quarter, the Fremont portfolio, including additional fundings made during the quarter, had a managed loan value of $3.6 billion consisting of 122 loans versus $3.7 billion consisting of 128 loans at the end of the prior quarter. In addition, there were seven OREO assets associated with the Fremont portfolio with a managed asset value of $113.6 million versus seven assets at the prior quarter end, with $136.1 million of managed asset value.

At the end of the second quarter, the value of the A-participation interest in the portfolio was $0.9 billion versus $1.0 billion at the end of the prior quarter. The book value of iStar's B-participation interest was $2.8 billion versus $2.7 billion at the end of the prior quarter. During the quarter, iStar received $199.6 million in principal repayments and proceeds from loan sales, of which the Company retained $75.0 million. The balance of principal repayments was paid to the A-participation interest. The weighted average maturity of the Fremont portfolio is seven months.

During the second quarter, iStar funded $110.0 million of commitments related to the portfolio. Unfunded commitments at the end of the second quarter were $371.6 million, of which the Company expects to fund approximately $180 million based upon its comprehensive review of the portfolio. This compares to unfunded commitments of $499.6 million at the end of the prior quarter.

At June 30, 2009, there were 51 Fremont loans on NPL status with a managed loan value of $2.0 billion versus 43 loans at the prior quarter end, with $1.6 billion of managed loan value. In addition, there were 12 Fremont loans on the Company's watch list with a managed loan value of $347.2 million versus 13 loans at the prior quarter end, with $483.8 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, July 31, 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 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 Six Months Ended
 June 30, June 30,
 2009 2008 2009 2008
 -------- -------- -------- --------
 Net investment income(1) $288,958 $149,703 $541,001 $326,558
 Other income 5,560 7,760 8,073 65,785
 Non-interest expense(2) (576,389) (443,177) (929,855) (603,115)
 Gain on sale of joint
 venture interest - 280,219 - 280,219
 -------- -------- -------- --------
 Income (loss) from
 continuing operations (281,871) (5,495) (380,781) 69,447

 Income (loss) from
 discontinued operations (102) 5,994 119 14,025
 Gain from discontinued
 operations - 50,476 11,617 52,532
 Net loss attributable to
 noncontrolling interests 271 771 1,514 567
 Gain on sale of joint venture
 interest attributable to
 noncontrolling interests - (18,560) - (18,560)
 Gain from discontinued
 operations attributable to
 noncontrolling interests - (3,689) - (3,689)
 Preferred dividends (10,580) (10,580) (21,160) (21,160)
 -------- -------- -------- --------
 Net income (loss) allocable to
 common shareholders,
 HPU holders and
 Participating
 Security holders(3) ($292,282) $18,917 ($388,691) $93,162
 ========= ======= ========= =======

 (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
 June 30, 2009 December 31, 2008
 ------------- -----------------

 Loans and other lending
 investments, net $9,578,241 $10,586,644
 Corporate tenant lease assets, net $2,992,286 $3,044,811
 Other investments $391,292 $447,318
 Total assets $14,118,594 $15,296,748
 Debt obligations $11,826,503 $12,486,404
 Total liabilities $12,056,994 $12,840,896
 Total iStar Financial Inc.
 shareholders' equity $2,029,184 $2,418,999



 iStar Financial Inc.
 Consolidated Statements of Operations
 (In thousands)
 (unaudited)

 Three Months Ended Six Months Ended
 June 30, June 30,
 2009 2008 2009 2008
 ------- ------- ------- -------
 REVENUES

 Interest income $142,181 $235,354 $319,408 $511,453
 Operating lease income 76,835 77,295 155,485 155,495
 Other income 5,560 7,760 8,073 65,785
 ------- ------- ------- -------
 Total revenues 224,576 320,409 482,966 732,733
 ------- ------- ------- -------
 COSTS AND EXPENSES

 Interest expense 127,186 164,470 258,351 334,250
 Operating costs - corporate
 tenant lease assets 5,615 4,546 12,161 9,613
 Depreciation and
 amortization 24,825 24,025 48,477 47,887
 General and administrative(1) 38,421 44,004 77,810 86,780
 Provision for loan losses 435,016 276,660 693,112 366,160
 Impairment of other assets 24,817 57,692 45,962 57,692
 Impairment of goodwill - 39,092 4,186 39,092
 Other expense 53,310 1,704 60,308 5,504
 ------- ------- ------- -------
 Total costs and expenses 709,190 612,193 1,200,367 946,978
 ------- ------- ------- -------
 Income (loss) from
 continuing operations
 before other items (484,614) (291,784) (717,401) (214,245)
 Gain on early
 extinguishment of debt 200,879 - 355,256 -
 Gain on sale of joint
 venture interest - 280,219 - 280,219
 Earnings (loss) from
 equity method
 investments 1,864 6,070 (18,636) 3,473
 ------- ------- ------- -------
 Income (loss) from
 continuing operations (281,871) (5,495) (380,781) 69,447

 Income (loss) from
 discontinued operations
 (102) 5,994 119 14,025
 Gain from discontinued
 operations - 50,476 11,617 52,532
 ------- ------- ------- -------
 Net income (loss) (281,973) 50,975 (369,045) 136,004

 Net loss attributable to
 noncontrolling interests 271 771 1,514 567
 Gain on sale of joint
 venture interest
 attributable to
 noncontrolling interests - (18,560) - (18,560)
 Gain from discontinued
 operations attributable to
 noncontrolling interests - (3,689) - (3,689)
 ------- ------- ------- -------
 Net income (loss)
 attributable to iStar
 Financial Inc. (281,702) 29,497 (367,531) 114,322

 Preferred dividend
 requirements (10,580) (10,580) (21,160) (21,160)
 ------- ------- ------- -------
 Net income (loss) allocable to
 common shareholders, HPU holders
 and Participating Security
 holders (2) ($292,282) $18,917 ($388,691) $93,162
 ========= ======= ========= =======

 (1) For the three months ended June 30, 2009 and 2008, includes $7,500
 and $7,993 of stock-based compensation expense, respectively. For
 the six months ended June 30, 2009 and 2008, includes $13,051 and
 $12,841 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 Six Months Ended
 June 30, June 30,
 2009 2008 2009 2008
 -------- -------- -------- --------
 EPS INFORMATION FOR COMMON SHARES
 Income (loss) attributable
 to iStar Financial Inc. from
 continuing operations(1)(2)
 Basic ($2.85) ($0.24) ($3.79) $0.21
 Diluted(3) ($2.85) ($0.24) ($3.79) $0.22

 Net income (loss) attributable
 to iStar Financial Inc.(1)(4)
 Basic ($2.85) $0.14 ($3.68) $0.67
 Diluted(3) ($2.85) $0.14 ($3.68) $0.67

 Weighted average shares outstanding
 Basic 99,769 134,399 102,671 134,330
 Diluted 99,769 134,399 102,671 134,782

 EPS INFORMATION FOR HPU SHARES
 Income (loss) attributable
 to iStar Financial Inc.
 from continuing operations(1)(2)
 Basic ($538.80) ($46.73) ($718.14) $40.20
 Diluted(3) ($538.80) ($46.73) ($718.14) $40.13

 Net income (loss) attributable
 to iStar Financial Inc.(1)(4)(5)
 Basic ($539.00) $26.07 ($697.07) $126.93
 Diluted(3) ($539.00) $26.07 ($697.07) $126.53

 Weighted average shares outstanding
 Basic and diluted 15 15 15 15


 (1) For the three months ended June 30, 2009 and 2008, excludes
 preferred dividends of $10,580. For the six months ended
 June 30, 2009 and 2008, excludes preferred dividends of $21,160.
 (2) Income (loss) attributable to iStar Financial Inc. from continuing
 operations excludes net (income) loss from noncontrolling interests.
 (3) For the six months ended June 30, 2008, includes the allocable share
 of $2 of joint venture income.
 (4) For the six months ended June 30, 2008, net income (loss)
 attributable to iStar Financial Inc. and allocable to common
 shareholders and HPU holders is reduced by $1,122 of dividends paid
 to Participating Security holders.
 (5) For the three months ended June 30, 2009 and 2008, net income (loss)
 allocable to HPU holders was ($8,085) and $391, respectively, on both
 a basic and dilutive basis. For the six months ended June 30, 2009,
 net (loss) allocable to HPU holders was ($10,456) on both a basic and
 diluted basis. For the six months ended June 30, 2008, basic net
 income allocable to HPU holders was $1,904 and diluted net income
 allocable to HPU holders was $1,898.




 iStar Financial Inc.
 Reconciliation of Adjusted Earnings to GAAP Net Income
 (In thousands, except per share amounts)
 (unaudited)

 Three Months Ended Six Months Ended
 June 30, June 30,
 2009 2008 2009 2008
 -------- -------- -------- --------
 ADJUSTED EARNINGS (1)

 Net income (loss) ($281,973) $50,975 ($369,045) $136,004
 Add: Depreciation, depletion
 and amortization 24,579 26,064 48,078 53,701
 Add: Joint venture
 depreciation, depletion and
 amortization 3,506 1,945 14,194 10,570
 Add: Amortization of
 deferred financing costs 6,966 12,017 12,126 21,932
 Add: Impairment of goodwill
 and intangible assets - 51,549 4,186 51,549
 Less: Hedge ineffectiveness,
 net - (2,341) - (850)
 Less: Gain from discontinued
 operations - (50,476) (11,617) (52,532)
 Less: Gain on sale of joint
 venture interest - (280,219) - (280,219)
 Less: Net loss attributable
 to noncontrolling interests 271 771 1,514 567
 Less: Preferred dividends (10,580) (10,580) (21,160) (21,160)
 ------- ------- ------- -------

 Adjusted earnings (loss)
 allocable to common
 shareholders, HPU holders
 and Participating
 Security holders:
 Basic and Diluted ($257,231) ($200,295) ($321,724) ($80,438)

 Adjusted earnings (loss)
 per common share:(2)
 Basic and Diluted(3) ($2.51) ($1.46) ($3.05) ($0.59)

 Weighted average common
 shares outstanding:
 Basic and Diluted 99,769 134,399 102,671 134,330

 Common shares outstanding
 at end of period:
 Basic and Diluted 99,618 134,327 99,618 134,327


 (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 six months ended June 30, 2008, excludes $1,122 of
 dividends paid to Participating Security holders.
 (3) For the three months ended June 30, 2009 and 2008, excludes ($7,115)
 and ($4,142) of basic and diluted net (loss) allocable to HPU
 holders, respectively. For the six months ended June 30, 2009
 and 2008, excludes ($8,655) and ($1,688) of basic and diluted net
 (loss) allocable to HPU holders, respectively.



 iStar Financial Inc.
 Consolidated Balance Sheets
 (In thousands)
 (unaudited)

 As of As of
 June 30, 2009 December 31, 2008
 ------------- -----------------
 ASSETS

 Loans and other lending investments, net $9,578,241 $10,586,644
 Corporate tenant lease assets, net 2,992,286 3,044,811
 Other investments 391,292 447,318
 Other real estate owned 382,570 242,505
 Cash and cash equivalents 417,352 496,537
 Restricted cash 34,406 155,965
 Accrued interest and operating lease
 income receivable, net 66,611 87,151
 Deferred operating lease income
 receivable 118,062 116,793
 Deferred expenses and other assets, net 137,774 119,024
 ----------- -----------
 Total assets $14,118,594 $15,296,748
 =========== ===========

 LIABILITIES AND EQUITY

 Accounts payable, accrued expenses
 and other liabilities $230,491 $354,492

 Debt obligations:
 Unsecured senior notes 5,126,738 7,188,541
 Secured senior notes 882,460 -
 Unsecured revolving credit facilities 745,722 3,281,273
 Secured revolving credit facilities 960,651 306,867
 Secured term loans 4,012,840 1,611,650
 Other debt obligations 98,092 98,073
 ----------- -----------
 Total liabilities 12,056,994 12,840,896

 Redeemable noncontrolling interests 7,447 9,190

 Total iStar Financial Inc.
 shareholders' equity 2,029,184 2,418,999
 Noncontrolling interests 24,969 27,663
 ----------- -----------
 Total equity 2,054,153 2,446,662
 ----------- -----------
 Total liabilities and equity $14,118,594 $15,296,748
 =========== ===========




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

 PERFORMANCE STATISTICS Three Months Ended
 June 30, 2009
 -------------
 Net Finance Margin
 ------------------
 Weighted average GAAP yield on loan and CTL investments 5.94%
 Less: Cost of debt 4.46%
 --------
 Net Finance Margin (1) 1.48%

 Return on Average Common Book Equity
 ------------------------------------
 Average total book equity $2,174,110
 Less: Average book value of preferred equity (506,176)
 --------
 Average common book equity (A) $1,667,934

 Net income (loss) allocable to common shareholders,
 HPU holders and Participating Security holders ($292,282)
 Net income (loss) allocable to common shareholders,
 HPU holders and Participating Security holders
 - Annualized (B) ($1,169,128)
 Return on Average Common Book Equity (B) / (A) Neg

 Adjusted basic earnings (loss) allocable to common
 shareholders, HPU holders and
 Participating Security holders (2) ($257,231)
 Adjusted basic earnings (loss) allocable
 to common shareholders, HPU holders and
 Participating Security holders - Annualized (C ) ($1,028,924)
 Adjusted Return on Average Common Book Equity (C ) / (A) Neg

 Expense Ratio
 -------------
 General and administrative expenses (D) $38,421
 Total revenue (E) $224,576
 Expense Ratio (D) / (E) 17.1%

 (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 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 costs-corporate tenant lease assets exclude SFAS No. 144
 adjustments from discontinued operations of $89. 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
 June 30, 2009
 -------------
 Book debt, net of unrestricted cash
 and cash equivalents (A) $11,409,151

 Book equity 2,054,153
 Add: Accumulated depreciation and loan loss reserves 1,998,888
 ---------
 Sum of book equity, accumulated depreciation
 and loan loss reserves (B) $4,053,041

 Leverage (1) (A) / (B) 2.8x

 Ratio of Earnings to Fixed Charges (1.1x)

 Ratio of Earnings to Fixed Charges
 and Preferred Stock Dividends (1.1x)

 Covenant Calculation of Fixed Charge Coverage Ratio(2) 2.6x

 Interest Coverage
 -----------------

 EBITDA (3) (C ) ($137,282)
 GAAP interest expense and preferred dividends (D) 137,766

 EBITDA / GAAP Interest Expense (3) (C ) / (D) Neg

 RECONCILIATION OF NET INCOME TO EBITDA (3)

 Net income (loss) less preferred dividends ($292,553)
 Add: GAAP interest expense 127,186
 Add: Depreciation, depletion and amortization 24,579
 Add: Joint venture depreciation, depletion and amortization 3,506
 ---------
 EBITDA (3) ($137,282)

 (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 June 30, 2009

 LOANS
 ----------------------------
 Total/ CORPORATE
 Fixed Floating Weighted TENANT OTHER
 Rate Rate Average LEASING INVESTMENTS
 -------- -------- -------- --------- -----------
 Amount funded $23,108 $335,140 $358,248 $860 $18,552
 Weighted average
 GAAP yield 11.00% 6.32% 6.61% N/A N/A
 Weighted average
 all-in spread/margin
 (basis points)(1) 1,013 580 611 N/A N/A
 Weighted average
 first $ loan-to-value
 ratio 21.19% 1.01% 2.25% N/A N/A
 Weighted average
 last $ loan-to-value
 ratio 81.50% 79.37% 79.50% N/A N/A

 UNFUNDED COMMITMENTS

 Number of assets with
 unfunded commitments 140

 Discretionary commitments $161,846
 Non-discretionary commitments 1,274,047
 ---------
 Total unfunded commitments $1,435,893

 Estimated weighted average funding period Approximately 2.5 years

 UNENCUMBERED ASSETS / UNSECURED DEBT

 Unencumbered assets (A) $8,428,042
 Unsecured debt (B) $6,003,376

 Unencumbered Assets / Unsecured Debt (A) / (B) 1.4x

 RISK MANAGEMENT STATISTICS
 (weighted average risk rating)

 2009 2008
 ------------------ -----------------------------------
 June 30, March 31, December 31, September 30, June 30,
 -------- --------- ------------ ------------- --------
 Structured
 Finance Assets
 (principal risk) 3.90 3.71 3.53 3.41 3.28
 Corporate Tenant
 Lease Assets 2.59 2.59 2.58 2.55 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
 ---------------------------------------
 June 30, 2009 December 31, 2008
 ------------------ ------------------
 Value of non-performing loans(1) /
 As a percentage of
 total managed loans $4,610,330 39.6% $3,458,158 27.5%

 Reserve for loan losses /
 As a percentage of
 total managed loans $1,469,415 12.6% $976,788 7.8%
 As a percentage of
 non-performing loans(1) 31.9% 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)

 NPL STATISTICS AS OF JUNE 30, 2009(1) Managed % of
 Value NPLs
 ------ ------
 Origination
 -----------
 iStar Legacy $2,643 57.3%
 Fremont 1,967 42.7
 ------ ------
 Total $4,610 100.0%
 ====== ======

 Property / Collateral Type
 --------------------------
 Land $1,610 34.9%
 Condo Construction - Completed 829 18.0
 Multifamily 356 7.7
 Retail 338 7.3
 Condo Construction - In Progress 290 6.3
 Entertainment / Leisure 273 5.9
 Mixed Use / Mixed Collateral 245 5.3
 Hotel 198 4.3
 Conversion - Completed 162 3.5
 Conversion - In Progress 156 3.4
 Industrial / R&D 88 1.9
 Office 53 1.2
 Corporate - Real Estate 12 0.3
 ------ ------
 Total $4,610 100.0%
 ====== ======

 (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)

 PORTFOLIO STATISTICS AS OF JUNE 30, 2009(1) Carrying % of
 Value Total
 ------- -------
 Asset Type
 ----------
 First Mortgages / Senior Loans $10,210 67.4%
 Corporate Tenant Leases 3,580 23.6
 Mezzanine / Subordinated Debt 837 5.5
 Other Investments 534 3.5
 ------- -------
 Total $15,161 100.0%
 ======= =======

 Property / Collateral Type
 --------------------------
 Apartment / Residential $4,411 29.1%
 Land 2,300 15.2
 Office 1,841 12.1
 Industrial / R&D 1,417 9.3
 Retail 1,176 7.8
 Entertainment / Leisure 925 6.1
 Hotel 871 5.7
 Corporate - Real Estate 802 5.3
 Mixed Use / Mixed Collateral 751 5.0
 Other 526 3.5
 Corporate - Non-Real Estate 141 0.9
 ------- -------
 Total $15,161 100.0%
 ======= =======

 Geography
 ---------
 West $3,543 23.4%
 Northeast 2,928 19.3
 Southeast 2,433 16.0
 Mid-Atlantic 1,618 10.7
 Central 930 6.1
 Southwest 890 5.9
 International 798 5.3
 Various 661 4.3
 South 499 3.3
 Northcentral 441 2.9
 Northwest 420 2.8
 ------- -------
 Total $15,161 100.0%
 ======= =======

 (1) Based on carrying value of the Company's total investment portfolio,
 gross of loan loss reserves and accumulated depreciation.



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/
COPYRIGHT 2009 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2009 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jul 31, 2009
Words:5252
Previous Article:Apartment Investment and Management Company (NYSE: AIV) Announces Second Quarter 2009 Results.
Next Article:Pharmasset Reports Positive Preliminary Antiviral Data With PSI-7851 for the Treatment of Hepatitis C.
Topics:


Related Articles
iStar Financial Sets Second Quarter Earnings Release Date and Webcast.
iStar Financial Sets Second Quarter Earnings Release Date and Webcast.
iStar Financial Sets Second Quarter 2007 Earnings Release Date and Webcast.
iStar Financial Sets Second Quarter 2008 Earnings Release Date and Webcast.
iStar Financial Provides Estimates for Second Quarter Earnings.
iStar Financial Sets Fourth Quarter and Fiscal Year 2008 Earnings Release Date and Webcast.
iStar Financial Sets First Quarter 2009 Earnings Release Date and Webcast.
iStar Financial Provides First Quarter 2009 Earnings Update.
iStar Financial Announces First Quarter 2009 Results.
iStar Financial Sets Second Quarter 2009 Earnings Release Date and Webcast.

Terms of use | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters