iStar Financial Announces Third Quarter 2006 Results

- Third quarter new financing commitments reach record $1.95 billion in 37 separate transactions, up 138% year-over-year.






NEW YORK, Oct. 26  /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), the leading publicly traded finance company focused on the commercial real estate industry, today reported results for the third quarter ended September 30, 2006.

iStar reported adjusted earnings for the quarter of $0.90 per diluted common share. This compares with $0.98 per diluted common share for the third quarter 2005, which included significant prepayment fees associated with two loans in the Company's portfolio. Adjusted earnings allocable to common shareholders for the third quarter 2006 were $103.1 million on a diluted basis, compared to $112.2 million for the third quarter 2005. Included in the third quarter 2006 results was a previously disclosed $4.5 million, or $0.04 per diluted common share, non-cash cumulative charge related to adjustments in the historical discount assumptions underlying certain of iStar's stock based compensation plans. Adjusted earnings represents net income computed in accordance with GAAP, adjusted for preferred dividends, depreciation, depletion, amortization and gain (loss) from discontinued operations.

Net income allocable to common shareholders for the third quarter was $91.8 million, or $0.80 per diluted common share, compared to $46.8 million, or $0.41 per diluted common share, for the third quarter 2005. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income.

Net investment income for the quarter was $115.7 million, compared to $46.7 million for the third quarter of 2005. The year-over-year increase in net investment income was primarily due to growth of the Company's loan portfolio, as well as $44.3 million of expenses associated with the prepayment of the Company's STARs asset-backed notes in the third quarter of 2005. Net investment income represents interest income, operating lease income and equity in earnings from joint ventures, less interest expense, operating costs for corporate tenant lease assets and loss on early extinguishment of debt.

The Company announced that during the third quarter, it closed a record 37 new financing commitments, for a total of $1.95 billion, up 138% year-over- year. Of that amount, $1.41 billion was funded during the third quarter. In addition, the Company funded $154.2 million under pre-existing commitments and received $621.9 million in principal repayments. Additionally, the company completed the sale of a non-core, back-office technology facility for $32.5 million net of costs, resulting in a net book gain of approximately $17.3 million. Cumulative repeat customer business totaled $11.1 billion at September 30, 2006.

For the quarter ended September 30, 2006, the Company generated return on average common book equity of 20.7%. The Company's debt to book equity plus accumulated depreciation/depletion and loan loss reserves, all as determined in accordance with GAAP, was 2.6x at quarter end.

The Company's net finance margin, calculated as the rate of return on assets less the cost of debt, was 3.35% for the quarter.

Capital Markets Summary

During the third quarter, the Company issued $700 million of fixed rate 5.95% senior unsecured notes due 2013 and $500 million of floating rate senior unsecured notes due 2009. The floating rate notes bear interest at a rate per annum equal to 3-month LIBOR plus 0.34%.  In addition, the Company recently completed an exchange offer and consent solicitation for the exchange of the Company's outstanding 8.75% Notes due 2008 for its newly issued 5.95% Senior Notes due 2013.

As of September 30, 2006, the Company had $696.4 million outstanding under $2.7 billion in credit facilities. Consistent with its match funding policy under which a one percentage point change in interest rates cannot impact adjusted earnings by more than 2.5%, as of September 30, 2006, a 100-basis- point increase in rates would have increased the Company's adjusted earnings by 0.75%.

Earnings Guidance

Consistent with the Securities and Exchange Commission's Regulation FD and Regulation G, iStar Financial comments on earnings expectations within the context of its regular earnings press releases.

For fiscal year 2006, the Company is increasing earnings guidance, and now expects to report diluted adjusted earnings per share of $3.50 - $3.60, and diluted GAAP earnings per share of $2.70 - $2.80, based on expected net asset growth of approximately $2.0 billion.

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

Risk Management

At September 30, 2006, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 83.8% of the Company's asset base versus 88.2% in the prior quarter. The Company's loan portfolio consisted of 59.6% floating rate and 40.4% fixed rate loans, with a weighted average maturity of 4.3 years. The weighted average first and last dollar loan-to-value ratio for all structured finance assets was 15.6% and 64.7%, respectively. At quarter end, the Company's corporate tenant lease assets were 94.5% leased with a weighted average remaining lease term of 10.8 years.

At September 30, 2006, the weighted average risk ratings of the Company's structured finance and corporate tenant lease assets were 2.75 and 2.39, respectively.

During the quarter, the Company wrote-off $5.5 million of the book value of a $5.7 million mezzanine loan on a class A office building in the mid-west. The write-off was primarily due to a projected decrease in property cash flow resulting from an unexpected lease termination at the property. The write-off was applied to the Company's loan loss reserves and had no impact to third quarter 2006 earnings.

At September 30, 2006, the Company's non-performing loan assets (NPLs) represented 0.18% of total assets. NPLs represent loans on non-accrual status. At September 30, 2006, the Company had two loans on non-accrual status. In addition, one asset was removed and two assets were added to the watch list this quarter, with watch list assets representing 1.09% of total assets at September 30, 2006. The Company is currently comfortable that it has adequate collateral to support the book value for each of the watch list assets.

Dividend

On October 2, 2006, iStar Financial declared a regular quarterly dividend of $0.77. The third quarter dividend will be payable on October 30, 2006 to shareholders of record on October 16, 2006.

                      [Financial Tables to Follow]

                            *             *



iStar Financial Inc. is the leading publicly traded finance company focused on the commercial real estate industry. The Company primarily provides custom tailored financing to high end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust ("REIT"), seeks to deliver strong dividends and superior risk-adjusted returns on equity to shareholders by providing innovative and value added financing solutions to its customers.

iStar Financial will hold a quarterly earnings conference call at 10:00 a.m. EDT today, October 26, 2006. 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  Nine Months Ended
                                        September 30,      September 30,
                                        2006     2005      2006      2005

  Net investment income              $115,678  $46,681  $336,404  $234,068
  Other income                         20,369   43,789    54,547    69,861
  Non-interest expense                (49,054) (33,851) (130,028) (102,012)
  Minority interest in consolidated
   entities                              (291)    (401)   (1,360)     (681)
  Income from continuing operations   $86,702  $56,218  $259,563  $201,236

  Income from discontinued
   operations                             684    1,765     1,774     5,400
  Gain from discontinued operations    17,264      552    21,800       958
  Preferred dividend requirements     (10,580) (10,580)  (31,740)  (31,740)
  Net income allocable to common
   shareholders and HPU holders (1)   $94,070  $47,955  $251,397  $175,854

  (1) HPU holders are Company employees who purchased high performance
      common stock units under the Company's High Performance Unit Program.



  Selected Balance Sheet Data
  (In thousands)
                                             As of               As of
                                       September 30, 2006  December 31, 2005
                                            (unaudited)

  Loans and other lending investments,
   net                                        $6,123,911        $4,661,915
  Corporate tenant lease assets, net           3,113,402         3,115,361
  Other investments                              395,054           240,470
  Total assets                                10,313,457         8,532,296
  Debt obligations                             7,517,251         5,859,592
  Total liabilities                            7,723,786         6,052,114
  Total shareholders' equity                   2,535,014         2,446,671



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

                                    Three Months Ended   Nine Months Ended
                                      September 30,        September 30,
                                     2006       2005      2006       2005
    REVENUES

       Interest income             $153,053   $100,833  $414,177   $299,118
       Operating lease income        83,170     75,920   248,810    226,852
       Other income                  20,369     43,789    54,547     69,861
         Total revenue              256,592    220,542   717,534    595,831

    COSTS AND EXPENSES

       Interest expense             115,262     80,731   310,147    231,336
       Operating costs - corporate
        tenant lease assets           6,726      5,718    18,932     16,778
       Depreciation and
        amortization                 19,562     17,891    57,980     52,993
       General and administrative
        (1)                          27,492     15,960    67,048     46,769
       Provision for loan losses      2,000          -     5,000      2,250
       Loss on early
        extinguishment of debt            -     44,362         -     44,362
         Total costs and expenses   171,042    164,662   459,107    394,488

    Income from continuing
     operations before other items   85,550     55,880   258,427    201,343
         Equity in earnings from
          joint ventures              1,443        739     2,496        574
         Minority interest in
          consolidated entities        (291)      (401)   (1,360)      (681)
     Income from continuing
      operations                     86,702     56,218   259,563    201,236

         Income from discontinued
          operations                    684      1,765     1,774      5,400
         Gain from discontinued
          operations                 17,264        552    21,800        958
    Net income                      104,650     58,535   283,137    207,594

    Preferred dividends             (10,580)   (10,580)  (31,740)   (31,740)

    Net income allocable to common
     shareholders and HPU holders   $94,070    $47,955  $251,397   $175,854

    Net income per common share
         Basic                        $0.81      $0.41     $2.16      $1.53
         Diluted (2)                  $0.80      $0.41     $2.14      $1.51

    Net income per HPU share
         Basic (3)                  $153.27     $78.47   $409.67    $289.00
         Diluted (2) (4)            $153.67     $77.67   $411.47    $286.07

  (1) For the three months ended September 30, 2006 and 2005, includes
      $6,407 and $718 of stock-based compensation expense.  For the nine
      months ended September 30, 2006 and 2005, includes $9,357 and $2,000
      of stock-based compensation expense.

  (2) For the three months ended September 30, 2006, includes the allocable
      share of $30 of joint venture income.  For the nine months ended
      September 30, 2006, includes the allocable share of $86 of joint
      venture income.

  (3) For the three months ended September 30, 2006 and 2005, $2,299 and
      $1,177 of net income is allocable to HPU holders, respectively. For
      the nine months ended September 30, 2006 and 2005, $6,145 and $4,335
      of net income is allocable to HPU holders, respectively.

  (4) For the three months ended September 30, 2006 and 2005, $2,275 and
      $1,165 of net income is allocable to HPU holders, respectively. For
      the nine months ended September 30, 2006 and 2005, $6,086 and $4,291
      of net income is allocable to HPU holders, respectively.



                              iStar Financial Inc.
                         Earnings Per Share Information
                    (In thousands, except per share amounts)
                                  (unaudited)

                                      Three Months Ended   Nine Months Ended
                                         September 30,       September 30,
                                        2006      2005      2006      2005
    EPS INFORMATION FOR COMMON SHARES

    Income from  continuing operations
     per common share (1)
      Basic                             $0.66     $0.39    $1.96     $1.47
      Diluted (2)                       $0.65     $0.39    $1.94     $1.46

    Net income per common share
      Basic                             $0.81     $0.41    $2.16     $1.53
      Diluted (2)                       $0.80     $0.41    $2.14     $1.51

    Weighted average common shares
     outstanding
      Basic                           113,318   112,835  113,281   112,313
      Diluted (2)                     114,545   114,021  114,439   113,502

    EPS INFORMATION FOR HPU SHARES

    Income from  continuing operations
     per HPU share (1)
      Basic                           $124.00    $74.67  $371.27   $278.53
      Diluted (2)                     $124.73    $73.93  $373.40   $275.73

    Net income per HPU share (3)
      Basic                           $153.27    $78.47  $409.67   $289.00
      Diluted (2)                     $153.67    $77.67  $411.47   $286.07

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

  (1) For the three months ended September 30, 2006 and 2005, excludes
      preferred dividends of $10,580.  For the nine months ended September
      30, 2006 and 2005, excludes preferred dividends of $31,740.

  (2) For the three months ended September 30, 2006, includes the allocable
      share of $30 of joint venture income.  For the nine months ended
      September 30, 2006, includes the allocable share of $86 of joint
      venture income.

  (3) As more fully explained in the Company's quarterly SEC filings, three
      plans of the Company's HPU program vested in December 2002, December
      2003 and December 2004, respectively. Each of the respective plans
      contain 5 HPU shares. Cumulatively, these 15 shares were entitled to
      $2,299 and $1,177 of net income for the three months ended September
      30, 2006 and 2005, respectively, and $6,145 and $4,335 of net income
      for the nine months ended September 30, 2006 and 2005, respectively.
      On a diluted basis, these cumulative 15 shares were entitled to $2,275
      and $1,165 of net income for the three months ended September 30, 2006
      and 2005, respectively, and $6,086 and $4,291 of net income for the
      nine months ended September 30, 2006 and 2005, respectively.



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

                                   Three Months Ended    Nine Months Ended
                                      September 30,        September 30,
                                     2006       2005      2006       2005
    ADJUSTED EARNINGS (1)

    Net income                     $104,650    $58,535  $283,137   $207,594
    Add: Depreciation, depletion
     and amortization                20,758     19,485    61,791     56,016
    Add: Joint venture income            32         31        92        105
    Add: Joint venture
     depreciation and amortization    2,645      2,704     8,093      5,546
    Add: Amortization of deferred
     financing costs                  5,403     45,336    17,671     60,837
    Less: Preferred dividends       (10,580)   (10,580)  (31,740)   (31,740)
    Less: Gain from discontinued
     operations                     (17,264)      (552)  (21,800)      (958)

    Adjusted earnings allocable to
     common shareholders
     and HPU holders:
       Basic                       $105,612   $114,928  $317,152   $297,295
       Diluted                     $105,644   $114,959  $317,244   $297,400

    Adjusted earnings per common
     share:
       Basic (2)                      $0.91      $0.99     $2.73      $2.58
       Diluted (3)                    $0.90      $0.98     $2.71      $2.56

    Weighted average common shares
     outstanding:
       Basic                        113,318    112,835   113,281    112,313
       Diluted                      114,545    114,073   114,439    113,560

    Common shares outstanding at
     end of period:
       Basic                        113,820    113,096   113,820    113,096
       Diluted                      115,053    114,333   115,053    114,333


  (1) Adjusted earnings should be examined in conjunction with net income as
      shown in the Consolidated Statements of Operations. Adjusted earnings
      should not be considered as an alternative to net income (determined
      in accordance with GAAP) as an indicator of the Company's performance,
      or to cash flows from operating activities (determined in accordance
      with GAAP) as a measure of the Company's liquidity, nor is this
      measure indicative of funds available to fund the Company's cash needs
      or available for distribution to shareholders.  Rather, adjusted
      earnings is an additional measure the Company uses to analyze how its
      business is performing. It should be noted that the Company's manner
      of calculating adjusted earnings may differ from the calculations of
      similarly-titled  measures by other companies.

  (2) For the three months ended September 30, 2006 and 2005, excludes
      $2,581 and $2,820 of net income allocable to HPU holders,
      respectively.  For the nine months ended September 30, 2006 and 2005,
      excludes $7,752 and $7,324 of net income allocable to HPU holders,
      respectively.

  (3) For the three months ended September 30, 2006 and 2005, excludes
      $2,554 and $2,791 of net income allocable to HPU holders,
      respectively. For the nine months ended September 30, 2006 and 2005,
      excludes $7,678 and $7,248 of net income allocable to HPU holders,
      respectively.



                             iStar Financial Inc.
                          Consolidated Balance Sheets
                                (In thousands)

                                              As of               As of
                                       September 30, 2006  December 31, 2005
                                            (unaudited)
   ASSETS

   Loans and other lending investments,
    net                                        $6,123,911        $4,661,915
   Corporate tenant lease assets, net           3,113,402         3,115,361
   Other investments                              395,054           240,470
   Investments in joint ventures                  194,985           202,128
   Assets held for sale                            12,016                 -
   Cash and cash equivalents                      177,042           115,370
   Restricted cash                                 74,474            28,804
   Accrued interest and operating lease
    income receivable                              67,794            32,166
   Deferred operating lease income
    receivable                                     73,432            76,874
   Deferred expenses and other assets              72,144            50,005
   Goodwill                                         9,203             9,203
                   Total assets               $10,313,457        $8,532,296



   LIABILITIES AND SHAREHOLDERS' EQUITY

   Accounts payable, accrued expenses
    and other liabilities                        $206,535          $192,522

   Debt obligations:
           Unsecured senior notes               6,255,420         4,108,477
           Unsecured revolving credit
            facilities                            696,414         1,242,000
           Secured term loans                     467,422           411,144
           Other debt obligations                  97,995            97,971
                   Total liabilities            7,723,786         6,052,114
   Minority interest in consolidated
    entities                                       54,657            33,511
   Shareholders' equity                         2,535,014         2,446,671
                   Total liabilities
                    and shareholders'
                    equity                    $10,313,457        $8,532,296



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

  PERFORMANCE  STATISTICS
                                                         Three Months Ended
  Net Finance Margin                                     September 30, 2006

  Weighted average GAAP yield of loan
   and CTL investments                                               10.21%
  Less: Cost of debt                                                 (6.86%)
  Net Finance Margin (1)                                              3.35%

  Return on Average Common Book Equity

  Adjusted basic earnings allocable to
   common shareholders and HPU holders (2)                         $105,612
  Adjusted basic earnings allocable to
   common shareholders and HPU holders -
   Annualized (A)                                                  $422,448

  Average total book equity                                      $2,544,275
  Less: Average book value of preferred
   equity                                                          (506,176)
  Average common book equity (B)                                 $2,038,099
  Return on Average Common Book Equity
   (A) / (B)                                                          20.7%

  Efficiency Ratio

  General and administrative expenses (C)                           $27,492
  Total revenue (D)                                                $256,592
  Efficiency Ratio (C) / (D)                                          10.7%

  (1) Weighted average GAAP yield is the annualized sum of interest income
      and operating lease income (excluding other income), divided by the
      sum of average gross corporate tenant lease assets, average loans
      and other lending investments, average SFAS No. 141 purchase
      intangibles and average assets held for sale over the period.  Cost
      of debt is the annualized sum of interest expense and operating
      costs-corporate tenant lease assets, divided by the average gross
      debt obligations over the period. Operating lease income and
      operating costs-corporate tenant lease assets exclude SFAS No. 144
      adjustments from discontinued operations of $777 and $26,
      respectively.  The Company does not consider net finance margin to
      be a measure of the Company's liquidity or cash flows.  It is one of
      several measures that management considers to be an indicator of the
      profitability of its operations.

  (2) Adjusted earnings should be examined in conjunction with net income
      as shown in the Consolidated Statements of Operations. Adjusted
      earnings should not be considered as an alternative to net income
      (determined in  accordance with GAAP) as an indicator of the Company's
      performance, or to cash flows from operating activities (determined in
      accordance with GAAP) as a measure of the Company's liquidity, nor is
      this measure indicative of funds available to fund the Company's cash
      needs or available for distribution to shareholders.  Rather, adjusted
      earnings is an additional measure the Company uses to analyze how its
      business is performing.  It should be noted that the Company's manner
      of calculating adjusted earnings may differ from the calculations of
      similarly-titled measures by other companies.



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

  CREDIT STATISTICS
                                                          Three Months Ended
                                                          September 30, 2006

  Book debt (A)                                                  $7,517,251

  Book equity                                                    $2,535,014
  Add: Accumulated
   depreciation/depletion and loan loss
   reserves                                                         400,128
  Sum of book equity, accumulated
   depreciation/depletion and loan loss
   reserves (B)                                                  $2,935,142

  Book Debt / Sum of Book Equity,
   Accumulated Depreciation/Depletion
   and Loan Loss Reserves (A) / (B)                                    2.6x

  Ratio of Earnings to Fixed Charges                                   1.8x

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

  Interest Coverage

  EBITDA (1) (C)                                                   $243,315
  GAAP interest expense (D)                                        $115,262

  EBITDA / GAAP Interest Expense  (C) / (D)                            2.1x

  Fixed Charge Coverage

  EBITDA (1) (C)                                                   $243,315
  GAAP interest expense                                             115,262
  Add: Preferred dividends                                           10,580
  Total GAAP interest expense and
   preferred dividends (E)                                         $125,842

  EBITDA / GAAP Interest Expense and
   Preferred Dividends (C) / (E)                                       1.9x

  RECONCILIATION OF NET INCOME TO EBITDA

  Net income                                                       $104,650
  Add: GAAP interest expense                                        115,262
  Add: Depreciation, depletion and
   amortization                                                      20,758
  Add: Joint venture depreciation,
   depletion and amortization                                         2,645

  EBITDA (1)                                                       $243,315


  (1) EBITDA should be examined in conjunction with net income as shown in
      the Consolidated Statements of Operations. EBITDA should not be
      considered as an alternative to net income (determined in accordance
      with GAAP) as an indicator of the Company's performance, or to cash
      flows from operating activities (determined in accordance with GAAP)
      as a measure of the Company's liquidity, nor is this measure
      indicative of funds available to fund the Company's cash needs or
      available for distribution to shareholders. It should be noted that
      the Company's manner of calculating EBITDA may differ from the
      calculations of similarly-titled measures by other companies.



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

    Three Months Ended
    September 30, 2006         LOAN ORIGINATIONS
                                                Total/
                                   Floating   Weighted  CORPORATE    OTHER
                      Fixed Rate     Rate      Average  LEASING  INVESTMENTS

    Amount funded      $229,455  $1,032,208  $1,261,663  $42,668   $106,871
    Weighted average
     GAAP yield           11.23%       8.92%       9.34%   10.56%       N/A
    Weighted average
     all-in
     spread/margin
     (basis points) (1)     638         357           -      561        N/A
    Weighted average
     first $ loan-to-
     value ratio           47.2%       18.8%       24.0%     N/A        N/A
    Weighted average
     last $ loan-to-
     value ratio           72.6%       57.3%       60.1%     N/A        N/A


    UNFUNDED COMMITMENTS

    Number of assets with unfunded
     commitments                                                         95

    Discretionary commitments                                       $24,390
    Non-discretionary commitments                                 2,359,499
    Total unfunded commitments                                   $2,383,889
    Estimated weighted average funding
     period                                         Approximately 3.4 years

    UNENCUMBERED ASSETS                                          $9,734,850

    RISK MANAGEMENT STATISTICS
    (weighted average
      risk rating)             2006                        2005
                September 30, June 30, March 31,  December 31, September 30,
    Structured
     Finance
     Assets         2.75        2.67     2.71        2.63         2.60
    Corporate
     Tenant
     Lease
     Assets         2.39        2.38     2.42        2.38         2.36

                                          (1=lowest risk; 5=highest risk)

  (1) Based on average quarterly one-month LIBOR (floating-rate loans) and
      U.S. Treasury rates (fixed-rate loans and corporate leasing
      transactions) during the quarter.




                               iStar Financial Inc.
                            Supplemental Information
                   (In thousands, except per share amounts)
                                  (unaudited)

       LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

                                                        As of
                                       September 30, 2006  December 31, 2005
       Carrying value of non-performing
        loans / As a percentage of
        total assets                      $18,356   0.18%   $35,291   0.41%

       Reserve for loan losses /
          As a percentage of
           total assets                   $46,378   0.45%   $46,876   0.55%
          As a percentage of non-
           performing loans                          253%              133%


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

                                          Year Ended           Year Ended
                                       December 31, 2006   December 31, 2007

       Earnings per diluted common
        share guidance                   $2.70 - $2.80       $2.70 - $2.90
       Add:  Depreciation, depletion
        and amortization per diluted
        common share                     $0.70 - $0.90       $0.90 - $1.30
       Adjusted earnings per diluted
        common share guidance            $3.50 - $3.60       $3.80 - $4.00

  (1) Adjusted earnings should be examined in conjunction with net income as
      shown in the Consolidated Statements of Operations. Adjusted earnings
      should not be considered as an alternative to net income (determined
      in accordance with GAAP) as an indicator of the Company's performance,
      or to cash flows from operating activities (determined in accordance
      with GAAP) as a measure of the Company's liquidity, nor is this
      measure indicative of funds available to fund the Company's cash needs
      or available for distribution to shareholders. Rather, adjusted
      earnings is an additional measure the Company uses to analyze how its
      business is performing. It should be noted that the Company's manner
      of calculating adjusted earnings may differ from the calculations of
      similarly-titled  measures by other companies.



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

  PORTFOLIO STATISTICS AS OF SEPTEMBER 30, 2006 (1)

  Security Type                                      $                 %
  Corporate Tenant Leases                          $3,517             35.1 %
  First Mortgages / Senior Loans                    4,889             48.7
  Mezzanine / Subordinated Debt                     1,281             12.8
  Other Investments                                   337              3.4
            Total                                 $10,024            100.0 %

  Collateral Type
  Office (CTL)                                     $1,632             16.3 %
  Industrial / R&D                                  1,310             13.1
  Retail                                            1,343             13.4
  Apartment / Residential                           1,206             12.0
  Other (2)                                         1,351             13.5
  Entertainment / Leisure                             980              9.8
  Mixed Use / Mixed Collateral                        836              8.3
  Hotel                                               855              8.5
  Office (Lending)                                    511              5.1
            Total                                 $10,024            100.0 %

  Collateral Location
  West                                             $2,022             20.2 %
  Northeast                                         1,518             15.1
  Southeast                                         1,530             15.3
  Various                                           1,206             12.0
  Mid-Atlantic                                        801              8.0
  Central                                             656              6.5
  South                                               619              6.2
  Southwest                                           588              5.9
  International                                       553              5.5
  Northcentral                                        330              3.3
  Northwest                                           201              2.0
            Total                                 $10,024            100.0 %

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

  (2) Includes Other Investments.


DATASOURCE: iStar Financial Inc.



CONTACT: Catherine D. Rice, Chief Financial Officer, or Andrew G.

Backman, Vice President - Investor Relations, [phone], both of iStar

Financial Inc.



Web site:  http://www.istarfinancial.com/ 

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