- Adjusted earnings (loss) allocable to common shareholders for the
fourth quarter and fiscal year 2009 were ($141.7) million and
($688.8) million, respectively, or ($1.47) and ($6.88) per diluted
common share, respectively. - Net income (loss) allocable to common
shareholders for the fourth quarter and fiscal year 2009 was
($159.2) million and ($788.6) million, respectively, or ($1.65) and
($7.88) per diluted common share, respectively. - Company recorded
$216.4 million of loan loss provisions during the quarter versus
$345.9 million during the prior quarter. NEW YORK, Feb. 17
/PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), a
publicly traded finance company focused on the commercial real
estate industry, today reported results for the fourth quarter and
fiscal year ended December 31, 2009. Fourth Quarter 2009 Results
iStar reported adjusted earnings (loss) allocable to common
shareholders for the fourth quarter of ($141.7) million or ($1.47)
per diluted common share, compared with $12.9 million or $0.10 per
diluted common share for the fourth 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 fourth quarter was ($159.2) million, or
($1.65) per diluted common share, compared to ($24.0) million or
($0.20) per diluted common share for the fourth 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 fourth quarter 2009
were $199.8 million versus $287.4 million for the fourth 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) and an overall smaller asset base. Net investment
income for the fourth quarter was $192.1 million compared to $431.6
million for the fourth quarter 2008. The year-over-year decrease is
primarily due to decreased gains on early extinguishment of debt in
the quarter, as well as lower interest income as discussed above,
offset by lower interest expense. 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 fourth quarter, the Company received
$543.7 million in gross principal repayments. Additionally, the
Company generated proceeds of $129.3 million from loan sales; $98.1
million of net proceeds from other real estate owned (OREO) asset
sales; and $6.1 million of net proceeds from the sale of one
corporate tenant lease (CTL) asset. Of the gross principal
repayments and asset sales, $199.6 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
$252.7 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 2.9x at December 31, 2009, unchanged from
the prior quarter. The Company's net finance margin, calculated as
the rate of return on assets less the cost of debt, was 1.60% for
the quarter, versus 1.51% in the prior quarter. Fiscal Year 2009
Results Adjusted earnings (loss) allocable to common shareholders
for the year ended December 31, 2009, were ($688.8) million or
($6.88) per diluted common share. This compares to ($354.0) million
or ($2.70) per diluted share for the year ended December 31, 2008.
Net income (loss) allocable to common shareholders for the year
ended December 31, 2009, was ($788.6) million or ($7.88) per
diluted common share, compared to ($242.5) million or ($1.85) per
diluted common share for the year ended December 31, 2008. Results
for the year included $1.3 billion of loan loss provisions, $141.0
million of impairments and $547.3 million of gains associated with
the early extinguishment of debt, including $107.9 million of gains
associated with the bond exchange executed during the second
quarter of 2009. As of December 31, 2009, there was $227.6 million
of remaining premium related to this bond exchange which will be
amortized against interest expense over the terms of the new Senior
Secured Notes due 2011 and 2014. Net investment income was $910.9
million for the year versus $966.3 million for the prior year.
Revenue was $893.3 million for the year versus $1.4 billion for the
prior year. Capital Markets As of December 31, 2009, the Company
had $224.6 million of unrestricted cash versus $187.1 million at
the end of the prior quarter. At December 31, 2009, the Company was
in compliance with all of its bank and bond covenants. During the
quarter, the Company repurchased $395.5 million par value of its
senior unsecured notes, resulting in a net gain on early
extinguishment of debt of $100.4 million. The Company also
repurchased 3.2 million shares of its common stock during the
quarter. The Company currently has remaining authority to
repurchase up to $21.5 million of shares under its share repurchase
program. Risk Management At December 31, 2009, first mortgages,
participations in first mortgages, senior loans and corporate
tenant lease investments collectively comprised 84.0% of the
Company's asset base, versus 87.0% in the prior quarter. The
Company's loan portfolio consisted of 74.3% floating rate loans and
25.7% 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 84.8%.
The Company's corporate tenant lease assets were 94.5% leased with
a weighted average remaining lease term of 10.9 years. At December
31, 2009, the weighted average risk ratings of the Company's
structured finance and corporate tenant lease assets were 3.92 and
2.59, versus 3.91 and 2.60, respectively, in the prior quarter. As
of December 31, 2009, the Company had 14 loans on its watch list
representing $717.7 million or 7.7% of total managed loans,
compared to 26 loans representing $1.2 billion or 11.3% of total
managed loans in the prior quarter. Assets on the Company's watch
list were all performing loans at December 31, 2009. Managed loan
value represents iStar's carrying value of loans, gross of specific
reserves and the A-participation interest outstanding on Fremont
portfolio assets. The Company's total managed loan value at quarter
end was $9.3 billion. At the end of the fourth quarter, 81 of the
Company's 221 total loans were on NPL status. These loans represent
$4.2 billion or 45.3% of total managed loans, compared to 85 loans
representing $4.4 billion or 42.0% of total managed loans in the
prior quarter. Additionally, during the quarter the Company took
title to 12 properties that had an aggregate managed loan value of
$675.2 million prior to foreclosure, resulting in $211.0 million of
charge-offs against the Company's reserve for loan losses. In
addition, during the quarter the Company recorded $41.7 million of
additional impairments on its OREO portfolio. At the end of the
fourth quarter, the Company held 39 assets, representing a book
value of $1.3 billion, which had previously served as collateral
for certain of its loan assets. Of these assets, $839.1 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 $422.7 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
term. During the quarter, the Company also charged-off $78.8
million against its reserve for loan losses in association with
restructurings, loan sales and repayments made during the quarter.
Additionally, the Company recorded $22.0 million of impairments
associated with CTL assets. During the fourth quarter, the Company
recorded $216.4 million in loan loss provisions. Provisions and
impairments in the quarter reflect the continued deterioration in
underlying fundamentals and their impact on the portfolio as
determined in the Company's regular quarterly risk ratings review
process. At December 31, 2009, the Company had loan loss reserves
of $1.4 billion or 15.3% of total managed loans. This compares to
loan loss reserves of $1.5 billion or 14.2% of total managed loans
at September 30, 2009. Summary of Fremont Contributions to
Quarterly Results At the end of the fourth quarter, the Fremont
portfolio, including additional fundings made during the quarter,
had a managed loan value of $2.6 billion consisting of 87 loans,
versus $3.1 billion consisting of 103 loans at the end of the prior
quarter. In addition, there were 13 OREO assets with a carrying
value of $329.2 million and 10 REHI assets with a net carrying
value of $204.9 million associated with the Fremont portfolio at
the end of the quarter. At the end of the fourth quarter, the value
of the A-participation interest in the portfolio was $473.3 million
versus $672.9 million at the end of the prior quarter. The book
value of iStar's B-participation interest was $2.1 billion versus
$2.4 billion at the end of the prior quarter. During the quarter,
iStar received $292.4 million in principal repayments and proceeds
from asset sales in respect of Fremont assets, of which the Company
retained $92.8 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 fourth quarter,
iStar funded $48.1 million of commitments related to the portfolio.
Unfunded commitments at the end of the fourth quarter were $198.1
million, of which the Company expects to fund approximately $71.2
million based upon its comprehensive review of the portfolio. At
December 31, 2009, there were 41 Fremont loans on NPL status with a
managed loan value of $1.6 billion versus 45 loans at the prior
quarter end with $1.8 billion of managed loan value. In addition,
there were four Fremont loans on the Company's watch list with a
managed loan value of $115.3 million versus nine loans with $213.5
million of managed loan value at the prior quarter end. [Financial
Tables to Follow] * * * iStar Financial Inc. is a 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, February 17, 2010.
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 Twelve Months Ended
December 31, December 31, 2009 2008 2009 2008 ---- ---- ---- ----
Net investment income (1) $192,077 $431,619 $910,880 $966,304 Other
income 10,061 9,144 30,468 97,851 Non-interest expense (2)
(352,774) (476,591) (1,711,950) (1,640,014) Gain on sale of joint
venture interest - - - 280,219 ------- ------- ------- -------
Income (loss) from continuing operations (150,636) (35,828)
(770,602) (295,640) Income (loss) from discontinued operations
(2,723) 2,967 (11,671) 22,415 Gain from discontinued operations -
18,971 12,426 91,458 Net (income) loss attributable to
noncontrolling interests 73 (78) 1,071 991 Gain attributable to
noncontrolling interests - - - (22,249) Preferred dividends
(10,580) (10,580) (42,320) (42,320) ------- ------- ------- -------
Net income (loss) allocable to common shareholders, HPU holders and
Participating Security holders (3) ($163,866) ($24,548) ($811,096)
($245,345) ========= ======== ========= =========
----------------------------- (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 current and former 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 December 31, 2009 December 31,
2008 ----------------- ----------------- Loans and other lending
investments, net $7,661,562 $10,586,644 Corporate tenant lease
assets, net $2,885,896 $3,044,811 Other investments $433,130
$447,318 Total assets $12,810,575 $15,296,748 Debt obligations, net
$10,894,903 $12,486,404 Total liabilities $11,147,013 $12,840,896
Total equity $1,656,118 $2,446,662 iStar Financial Inc.
Consolidated Statements of Operations (In thousands) (unaudited)
Three Months Ended Twelve Months Ended December 31, December 31,
2009 2008 2009 2008 ---- ---- ---- ---- REVENUES Interest income
$113,700 $199,201 $557,809 $947,661 Operating lease income 76,073
79,096 305,007 308,742 Other income 10,061 9,144 30,468 97,851
------ ----- ------ ------ Total revenues 199,834 287,441 893,284
1,354,254 ------- ------- ------- --------- COSTS AND EXPENSES
Interest expense 108,828 162,792 481,116 666,706 Operating costs -
corporate tenant lease assets 5,824 8,258 23,467 23,059
Depreciation and amortization 25,080 24,065 97,869 94,726 General
and administrative (1) 27,085 29,307 127,044 143,902 Provision for
loan losses 216,354 252,020 1,255,357 1,029,322 Impairment of other
assets 61,756 149,972 122,699 295,738 Impairment of goodwill - -
4,186 39,092 Other expense 22,499 21,227 104,795 37,234 ------
------ ------- ------ Total costs and expenses 467,426 647,641
2,216,533 2,329,779 ------- ------- --------- --------- Income
(loss) from continuing operations before other items (267,592)
(360,200) (1,323,249) (975,525) Gain on early extinguishment of
debt 100,392 323,215 547,349 393,131 Gain on sale of joint venture
interest - - - 280,219 Earnings from equity method investments
16,564 1,157 5,298 6,535 ------ ----- ----- ----- Income (loss)
from continuing operations (150,636) (35,828) (770,602) (295,640)
Income (loss) from discontinued operations (2,723) 2,967 (11,671)
22,415 Gain from discontinued operations - 18,971 12,426 91,458
------ ------ ------ ------ Net income (loss) (153,359) (13,890)
(769,847) (181,767) Net (income) loss attributable to
noncontrolling interests 73 (78) 1,071 991 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. (153,286)
(13,968) (768,776) (203,025) Preferred dividend requirements
(10,580) (10,580) (42,320) (42,320) ------- ------- ------- -------
Net income (loss) allocable to common shareholders, HPU holders and
Participating Security holders (2) ($163,866) ($24,548) ($811,096)
($245,345) ========= ======== ========= =========
--------------------------- (1) For the three months ended December
31, 2009 and 2008, includes $6,020 and $5,817 of stock-based
compensation expense, respectively. For the twelve months ended
December 31, 2009 and 2008, includes $23,593 and $23,542 of
stock-based compensation expense, respectively. (2) HPU holders are
current and former 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 Twelve Months
Ended December 31, December 31, 2009 2008 2009 2008 ---- ---- ----
---- EPS INFORMATION FOR COMMON SHARES Income (loss) attributable
to iStar Financial Inc. from continuing operations (1) (2) Basic
and diluted ($1.62) ($0.37) ($7.89) ($2.68) Net income (loss)
attributable to iStar Financial Inc. (1) (3) Basic and diluted
($1.65) ($0.20) ($7.88) ($1.85) Weighted average shares outstanding
Basic and diluted 96,354 122,809 100,071 131,153 EPS INFORMATION
FOR HPU SHARES Income (loss) attributable to iStar Financial Inc.
from continuing operations (1) (2) Basic and diluted ($307.40)
($70.07) ($1,503.13) ($505.47) Net income (loss) attributable to
iStar Financial Inc. (1) (3) (4) Basic and diluted ($312.60)
($37.00) ($1,501.73) ($349.87) Weighted average shares outstanding
Basic and diluted 15 15 15 15 -------------------------------- (1)
For the three months ended December 31, 2009 and 2008, excludes
preferred dividends of $10,580. For the twelve months ended
December 31, 2009 and 2008, excludes preferred dividends of
$42,320. (2) Income (loss) attributable to iStar Financial Inc.
from continuing operations excludes net (income) loss from
noncontrolling interests. (3) For the twelve months ended December
31, 2008, net income (loss) attributable to iStar Financial Inc.
and allocable to common shareholders and HPU holders is reduced by
$2,393 for dividends paid to Participating Security holders. (4)
For the three months ended December 31, 2009 and 2008, net loss
allocable to HPU holders was ($4,689) and ($555), respectively, on
both a basic and dilutive basis. For the twelve months ended
December 31, 2009 and 2008, net loss allocable to HPU holders was
($22,526) and ($5,248), 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 Twelve Months Ended December 31,
December 31, 2009 2008 2009 2008 ---- ---- ---- ---- ADJUSTED
EARNINGS (1) Net income (loss) ($153,359) ($13,890) ($769,847)
($181,767) Add: Depreciation, depletion and amortization 24,896
24,596 98,238 102,745 Add: Joint venture income - 2 - - Add: Joint
venture depreciation, depletion and amortization 1,899 1,953 17,990
14,466 Add: Deferred financing amortization (8,833) 11,546 (5,487)
50,222 Add: Impairment of goodwill and intangible assets - 9,069
4,186 60,618 Less: Hedge ineffectiveness, net - 9,533 - 7,427 Less:
Gain from discontinued operations - (18,971) (12,426) (91,458)
Less: Gain on sale of joint venture interest - - - (280,219) Less:
Net (income) loss attributable to noncontrolling interests 73 (78)
1,071 991 Less: Preferred dividends (10,580) (10,580) (42,320)
(42,320) ------- ------- ------- ------- Adjusted earnings (loss)
allocable to common shareholders, HPU holders and Participating
Security holders: Basic ($145,904) $13,178 ($708,595) ($359,295)
Diluted ($145,904) $13,180 ($708,595) ($359,295) Adjusted earnings
(loss) per common share: (2) Basic and Diluted (3) ($1.47) $0.10
($6.88) ($2.70) Weighted average common shares outstanding: Basic
96,354 122,809 100,071 131,153 Diluted 96,354 123,107 100,071
131,153 Common shares outstanding at end of period: Basic 94,216
105,457 94,216 105,457 Diluted 94,216 108,846 94,216 108,846
---------------------------------- (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 twelve months ended December 31, 2008, excludes $2,393
of dividends paid to Participating Security holders. (3) For the
three months ended December 31, 2009, excludes ($4,175) of basic
and diluted net loss allocable to HPU holders. For the three months
ended December 31, 2008, excludes $298 of basic and $297 of diluted
net income to HPU holders. For the twelve months ended December 31,
2009 and 2008, excludes ($19,748) and ($7,661) of basic and diluted
net loss allocable to HPU holders, respectively. iStar Financial
Inc. Consolidated Balance Sheets (In thousands) (unaudited) As of
As of December 31, 2009 December 31, 2008 -----------------
----------------- ASSETS Loans and other lending investments, net
$7,661,562 $10,586,644 Corporate tenant lease assets, net 2,885,896
3,044,811 Other investments 433,130 447,318 Real estate held for
investment, net 422,664 - Other real estate owned 839,141 242,505
Assets held for sale 17,282 - Cash and cash equivalents 224,632
496,537 Restricted cash 39,654 155,965 Accrued interest and
operating lease income receivable, net 54,780 87,151 Deferred
operating lease income receivable 122,628 116,793 Deferred expenses
and other assets, net 109,206 119,024 ------- ------- Total assets
$12,810,575 $15,296,748 =========== =========== LIABILITIES AND
EQUITY Accounts payable, accrued expenses and other liabilities
$252,110 $354,492 Debt obligations, net: Unsecured senior notes
4,228,908 7,188,541 Secured senior notes 856,071 - Unsecured
revolving credit facilities 748,601 3,281,273 Secured revolving
credit facilities 959,426 306,867 Secured term loans 4,003,786
1,611,650 Other debt obligations 98,111 98,073 ------ ------ Total
liabilities 11,147,013 12,840,896 Redeemable noncontrolling
interests 7,444 9,190 Total iStar Financial Inc. shareholders'
equity 1,605,685 2,418,999 Noncontrolling interests 50,433 27,663
------ ------ Total equity 1,656,118 2,446,662 -----------
----------- Total liabilities and equity $12,810,575 $15,296,748
=========== =========== iStar Financial Inc. Supplemental
Information (In thousands) (unaudited) PERFORMANCE STATISTICS Three
Months Ended December 31, 2009 ----------------- Net Finance Margin
------------------ Weighted average GAAP yield on loan and CTL
investments 5.81% Less: Cost of debt 4.21% ---- Net Finance Margin
(1) 1.60% Return on Average Common Book Equity
------------------------------------ Average total book equity
$1,690,149 Less: Average book value of preferred equity (506,176)
-------- Average common book equity (A) $1,183,973 Net income
(loss) allocable to common shareholders, HPU holders and
Participating Security holders ($163,866) Net income (loss)
allocable to common shareholders, HPU holders and Participating
Security holders - Annualized (B) ($655,464) Return on Average
Common Book Equity (B) / (A) Neg Adjusted basic earnings (loss)
allocable to common shareholders, HPU holders and Participating
Security holders (2) ($145,904) Adjusted basic earnings (loss)
allocable to common shareholders, HPU holders and Participating
Security holders - Annualized (C) ($583,616) Adjusted Return on
Average Common Book Equity (C) / (A) Neg Expense Ratio
------------- General and administrative expenses (D) $27,085 Total
revenue (E) $199,834 Expense Ratio (D) / (E) 13.6%
---------------------------------------- (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 $477 and $293,
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 December 31, 2009
----------------- Book debt, net of unrestricted cash and cash
equivalents (A) $10,670,271 Book equity 1,656,118 Add: Accumulated
depreciation and loan loss reserves 1,990,023 --------- Sum of book
equity, accumulated depreciation and loan loss reserves (B)
$3,646,141 Leverage (1) (A) / (B) 2.9x Ratio of Earnings to Fixed
Charges (0.5x) Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends (0.4x) Covenant Calculation of Fixed Charge
Coverage Ratio (2) 2.4x Interest Coverage ----------------- EBITDA
(3) (C) ($22,795) Interest expense and preferred dividends (D)
119,408 EBITDA / Interest Expense (3) (C) / (D) Neg RECONCILIATION
OF NET INCOME TO EBITDA (3) Net income (loss) less preferred
dividends ($163,939) Add: Interest expense 108,828 Add:
Depreciation, depletion and amortization 24,896 Add: Income taxes
5,521 Add: Joint venture depreciation, depletion and amortization
1,899 ----- EBITDA (3) ($22,795)
------------------------------------------------- (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 December 31,
2009 LOANS -------------------------- Total/ CORPORATE Floating
Weighted TENANT OTHER Fixed Rate Rate Average LEASING INVESTMENTS
---------- -------- -------- --------- ----------- Amount funded
$42,730 $170,592 $213,323 $5,637 $33,726 Weighted average first $
loan-to- value ratio 7.18% 0.66% 1.96% N/A N/A Weighted average
last $ loan-to- value ratio 93.54% 82.74% 84.90% N/A N/A UNFUNDED
COMMITMENTS Number of assets with unfunded commitments 96
Discretionary commitments $137,685 Non-discretionary commitments
702,613 ------- Total unfunded commitments $840,298 Estimated
weighted average funding period Approximately 2.8 years
UNENCUMBERED ASSETS / UNSECURED DEBT Unencumbered assets (A)
$6,959,058 Unsecured debt (B) $5,115,236 Unencumbered Assets /
Unsecured Debt (A) / (B) 1.4x RISK MANAGEMENT STATISTICS (weighted
average risk rating) 2009 2008
--------------------------------------------- ------------ December
31, September 30, June 30, March 31, December 31,
--------------------------------------------- ------------
Structured Finance Assets (principal risk) 3.92 3.91 3.90 3.71 3.53
Corporate Tenant Lease Assets 2.59 2.60 2.59 2.59 2.58 (1=lowest
risk; 5=highest risk) iStar Financial Inc. Supplemental Information
(In thousands, except per share amounts) (unaudited) LOANS AND
OTHER LENDING INVESTMENTS CREDIT STATISTICS As of
-------------------------------------- December 31, 2009 December
31, 2008 ----------------- ----------------- Value of
non-performing loans (1) / As a percentage of total managed loans
$4,209,255 45.3% $3,458,157 27.5% Reserve for loan losses / As a
percentage of total managed loans $1,417,949 15.3% $976,788 7.8% As
a percentage of non-performing loans (1) 33.7% 28.2%
---------------------------------- (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 DECEMBER 31, 2009
(1) Managed Value % of NPLs ------------- --------- Origination
----------- iStar Legacy $2,571 61.1% Fremont 1,638 38.9% ------
----- Total $4,209 100% ====== ===== Property / Collateral Type
-------------------------- Land $1,272 30.2% Condo Construction -
Completed 925 22.0% Mixed Use / Mixed Collateral 372 8.8% Retail
299 7.0% Entertainment / Leisure 267 6.4% Multifamily 263 6.2%
Hotel 245 5.8% Condo Construction - In Progress 240 5.7% Office 111
2.6% Industrial / R&D 65 1.6% Corporate - Real Estate 62 1.5%
Conversion - Completed 44 1.1% Conversion - In Progress 37 0.9%
Other 7 0.2% ------ ---- Total $4,209 100% ====== ====
---------------------------------------------------- (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
DECEMBER 31, 2009 (1) Carrying Value % of Total -------- ----------
Asset Type ---------- First Mortgages / Senior Loans $8,310 59.1%
Corporate Tenant Leases 3,515 25.0 Other Real Estate Owned 839 6.0
Mezzanine / Subordinated Debt 770 5.5 Real Estate Held for
Investment 426 3.0 Other Investments 192 1.4 --- --- Total $14,052
100.0% ======= ===== Property / Collateral Type
-------------------------- Apartment / Residential $3,816 27.1%
Land 2,162 15.4 Office 1,865 13.3 Industrial / R&D 1,322 9.4
Retail 1,157 8.2 Entertainment / Leisure 907 6.5 Hotel 885 6.3
Mixed Use / Mixed Collateral 774 5.5 Corporate - Real Estate 736
5.2 Other 418 3.0 Corporate - Non-Real Estate 10 0.1 -- --- Total
$14,052 100.0% ======= ===== Geography --------- West $3,288 23.4%
Northeast 2,634 18.7 Southeast 2,189 15.6 Mid-Atlantic 1,393 9.9
Southwest 966 6.9 Central 923 6.6 Various 877 6.2 International 549
3.9 Northwest 430 3.1 South 413 2.9 Northcentral 390 2.8 --- ---
Total $14,052 100.0% ======= =====
------------------------------------------ (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, both
of iStar Financial Inc., +1-212-930-9400 Web Site:
http://www.istarfinancial.com/
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