iStar Financial Announces Second Quarter 2009 Results

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Sagicor Financial Corporation Limited	LSE:SFI	London	Ordinary Share	BMG7777B1046	COM SHS USD0.01 (DI)

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	117.50	105.00	130.00				0.00	00:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
	0	0		N/A	0

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- 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. (NYSE: SFI), 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. 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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SFI Sagicor Financial Corporation Limited