Safehold Inc. - Quarter Report: 2011 March (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File No. 1-15371

iSTAR FINANCIAL INC.
(Exact name of registrant as specified in its charter)


Maryland (State or other jurisdiction of incorporation or organization)		95-6881527 (I.R.S. Employer Identification Number)
1114 Avenue of the Americas, 39^th Floor
New York, NY (Address of principal executive offices)		10036 (Zip code)

Registrant's telephone number, including area code: (212) 930-9400

Indicate by check mark whether the registrant: (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports); and (ii) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ý

As of April 29, 2011, there were 92,472,322 shares of common stock, $0.001 par value per share, of iStar Financial Inc. ("Common Stock") outstanding.

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iStar Financial Inc.

Index to Form 10-Q



Part I.	Consolidated Financial Information	2
Item 1.	Financial Statements:	2
	Consolidated Balance Sheets (unaudited) as of March 31, 2011 and December 31, 2010	2
	Consolidated Statements of Operations (unaudited)—For the three months ended March 31, 2011 and 2010	3
	Consolidated Statement of Changes in Equity (unaudited)—For the three months ended March 31, 2011	4
	Consolidated Statements of Cash Flows (unaudited)—For the three months ended March 31, 2011 and 2010	5
	Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
Part II.	Other Information	50
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	(Removed and Reserved)	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
SIGNATURES		53

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PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Financial Statements

iStar Financial Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

(unaudited)

		As of March 31, 2011			As of December 31, 2010

ASSETS
Loans and other lending investments, net		$	4,314,170		$	4,587,352
Net lease assets, net			1,774,989			1,784,509
Real estate held for investment, net			862,930			833,060
Other real estate owned			790,643			746,081
Other investments			556,966			532,358
Cash and cash equivalents			318,426			504,865
Restricted cash			61,116			13,784
Accrued interest and operating lease income receivable, net			22,619			24,408
Deferred operating lease income receivable			65,173			62,569
Deferred expenses and other assets, net			119,531			85,528

	Total assets	$	8,886,563		$	9,174,514

LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other liabilities		$	172,709		$	134,422
Debt obligations, net			6,939,410			7,345,433

	Total liabilities		7,112,119			7,479,855

Commitments and contingencies			—			—
Equity:
iStar Financial Inc. shareholders' equity:
Preferred Stock Series D, E, F, G and I, liquidation preference $25.00 per share (see Note 12)			22			22
High Performance Units			9,800			9,800
Common Stock, $0.001 par value, 200,000 shares authorized, 138,325 issued and 92,472 outstanding at March 31, 2011 and 138,189 issued and 92,336 outstanding at December 31, 2010			138			138
Additional paid-in capital			3,814,378			3,809,071
Retained earnings (deficit)			(1,941,121	)		(2,014,013	)
Accumulated other comprehensive income (see Note 15)			1,988			1,609
Treasury stock, at cost, $0.001 par value, 45,853 shares at March 31, 2011 and 45,853 shares at December 31, 2010			(158,492	)		(158,492	)

	Total iStar Financial Inc. shareholders' equity		1,726,713			1,648,135
Noncontrolling interests			47,731			46,524

	Total equity		1,774,444			1,694,659

	Total liabilities and equity	$	8,886,563		$	9,174,514

The accompanying notes are an integral part of the consolidated financial statements.

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iStar Financial Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)

			For the Three Months Ended March 31,

			2011			2010
Revenue:
	Interest income		$	60,768		$	116,616
	Operating lease income			42,139			43,505
	Other income			8,675			13,199

		Total revenue		111,582			173,320

Costs and expenses:
	Interest expense			69,634			87,216
	Operating costs—net lease assets			4,560			3,701
	Operating costs—REHI and OREO			17,788			12,778
	Depreciation and amortization			15,933			15,747
	General and administrative			24,400			27,216
	Provision for loan losses			10,881			89,469
	Impairment of assets			1,490			5,921
	Other expense			13,774			4,905

		Total costs and expenses		158,460			246,953

Income (loss) before earnings from equity method investments and other items				(46,878	)		(73,633	)
	Gain on early extinguishment of debt, net			106,604			38,728
	Earnings from equity method investments			24,932			11,430

Income (loss) from continuing operations(1)				84,658			(23,475	)
	Income (loss) from discontinued operations			(756	)		7,333

Net income (loss)				83,902			(16,142	)
	Net (income) loss attributable to noncontrolling interests			(430	)		546

Net income (loss) attributable to iStar Financial Inc.				83,472			(15,596	)
	Preferred dividends			(10,580	)		(10,580	)
	Net (income) loss allocable to HPU holders and Participating Security holders(2)(3)(4)			(5,472	)		768

Net income (loss) allocable to common shareholders(4)			$	67,420		$	(25,408	)

Per common share data(4):
	Income (loss) attributable to iStar Financial Inc. from continuing operations:
		Basic	$	0.74		$	(0.35	)
		Diluted	$	0.72		$	(0.35	)
	Net income (loss) attributable to iStar Financial Inc.:
		Basic	$	0.73		$	(0.27	)
		Diluted	$	0.71		$	(0.27	)
	Weighted average number of common shares—basic			92,458			93,923
	Weighted average number of common shares—diluted			94,609			93,923
Per HPU share data(2)(4):
	Income (loss) attributable to iStar Financial Inc. from continuing operations:
		Basic	$	139.40		$	(65.53	)
		Diluted	$	136.47		$	(65.53	)
	Net income (loss) attributable to iStar Financial Inc.:
		Basic	$	138.00		$	(51.20	)
		Diluted	$	135.07		$	(51.20	)
	Weighted average number of HPU shares—basic and diluted			15			15

Explanatory Notes:

(1): Income (loss) from continuing operations attributable to iStar Financial Inc. for the three months ended March 31, 2011 and 2010 was $84,228 and $(22,929), 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.
(3): Participating Security holders are Company employees and directors who hold unvested restricted stock units and common stock equivalents granted under the Company's Long Term Incentive Plans.
(4): See Note 14 for amounts attributable to iStar Financial Inc. for income (loss) from continuing operations and further details on the calculation of earnings per share.

The accompanying notes are an integral part of the consolidated financial statements.

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iStar Financial Inc.

Consolidated Statement of Changes in Equity

For the Three Months Ended March 31, 2011

(In thousands)

(unaudited)

	iStar Financial Inc. Shareholders' Equity

	Preferred Stock(1)		HPU's		Common Stock at Par		Additional Paid-In Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income		Treasury Stock at cost			Noncontrolling Interests			Total Equity
Balance at December 31, 2010	$	22	$	9,800	$	138	$	3,809,071	$	(2,014,013	)	$	1,609	$	(158,492	)	$	46,524		$	1,694,659
Dividends declared—preferred		—		—		—		—		(10,580	)		—		—			—			(10,580	)
Restricted stock unit amortization, net		—		—		—		5,307		—			—		—			—			5,307
Net income for the period(2)		—		—		—		—		83,472			—		—			434			83,906
Change in accumulated other comprehensive income		—		—		—		—		—			379		—			—			379
Contributions from noncontrolling interests		—		—		—		—		—			—		—			918			918
Distributions to noncontrolling interests		—		—		—		—		—			—		—			(145	)		(145	)

Balance at March 31, 2011	$	22	$	9,800	$	138	$	3,814,378	$	(1,941,121	)	$	1,988	$	(158,492	)	$	47,731		$	1,774,444

Explanatory Notes:

(1): See Note 12 for details on the Company's Cumulative Redeemable Preferred Stock.
(2): For the three months ended March 31, 2011, net income shown above excludes $4 of net loss attributable to redeemable noncontrolling interests.

The accompanying notes are an integral part of the consolidated financial statements.

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iStar Financial Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

			For the Three Months Ended March 31,

			2011			2010
Cash flows from operating activities:
Net income (loss)			$	83,902		$	(16,142	)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
	Provision for loan losses			10,881			89,469
	Non-cash expense for stock-based compensation			4,155			4,730
	Impairment of assets			1,464			5,942
	Depreciation and amortization			15,933			21,987
	Amortization of discounts/premiums and deferred financing costs on debt			4,740			(7,803	)
	Amortization of discounts/premiums, deferred interest and costs on lending investments			(23,338	)		(32,000	)
	Discounts, loan fees and deferred interest received			1,373			2,826
	Earnings from equity method investments			(24,932	)		(11,430	)
	Distributions from operations of equity method investments			14,173			13,523
	Deferred operating lease income			(2,567	)		(3,389	)
	Gain on early extinguishment of debt, net			(106,604	)		(38,728	)
	Other non-cash adjustments			6,635			(1,754	)
	Changes in assets and liabilities:
		Changes in accrued interest and operating lease income receivable, net		1,789			1,365
		Changes in deferred expenses and other assets, net		(83	)		1,547
		Changes in accounts payable, accrued expenses and other liabilities		11,855			(2,382	)

		Cash flows from operating activities		(624	)		27,761

Cash flows from investing activities:
	Add-on fundings under existing loan commitments			(18,057	)		(130,263	)
	Repayments of and principal collections on loans			213,174			376,538
	Net proceeds from sales of loans			20,615			118,793
	Net proceeds from sales of net lease assets			672			17,225
	Net proceeds from sales of other real estate owned			25,740			165,806
	Net proceeds from repayments and sales of securities			—			212,610
	Contributions to unconsolidated entities			(16,591	)		(3,792	)
	Distributions from unconsolidated entities			2,389			1,709
	Capital expenditures on net lease assets			(2,165	)		(5,209	)
	Capital expenditures on REHI and OREO			(6,996	)		(2,833	)
	Changes in restricted cash held in connection with investing activities			(48,046	)		631
	Other investing activities, net			(485	)		(303	)

		Cash flows from investing activities		170,250			750,912

Cash flows from financing activities:
	Borrowings under secured credit facilities			2,913,250			51
	Repayments under secured credit facilities			(956,934	)		—
	Repayments under unsecured credit facilities			(175,000	)		—
	Repayments under secured term loans			(1,678,502	)		(16,077	)
	Repayments under unsecured notes			(107,766	)		(134,970	)
	Repurchases and redemptions of secured and unsecured notes			(312,329	)		(198,651	)
	Payments for deferred financing costs			(29,179	)		—
	Preferred dividends paid			(10,580	)		(10,580	)
	Purchase of treasury stock			—			(3,916	)
	Net contributions from/(distributions to) noncontrolling interests			775			(447	)
	Changes in restricted cash held in connection with debt obligations			200			2,143

		Cash flows from financing activities		(356,065	)		(362,447	)

	Changes in cash and cash equivalents			(186,439	)		416,226
	Cash and cash equivalents at beginning of period			504,865			224,632

	Cash and cash equivalents at end of period		$	318,426		$	640,858

The accompanying notes are an integral part of the consolidated financial statements.

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iStar Financial Inc.

Notes to Consolidated Financial Statements

(unaudited)

Note 1—Business and Organization

Business—iStar Financial Inc., or the "Company," is a fully-integrated finance and investment company focused on the commercial real estate industry. The Company provides custom-tailored investment capital to high-end private and corporate owners of real estate and invests directly across a range of real estate sectors. The Company is taxed as a real estate investment trust, or "REIT." The Company's primary business segments are lending, net leasing and real estate investment. See Note 11 for discussion of the impact of recent economic conditions on the Company and business risks and uncertainties.

Organization—The Company began its business in 1993 through private investment funds and became publicly traded in 1998. Since that time, the Company has grown through the origination of new lending and leasing transactions, as well as through corporate acquisitions, including the acquisition of TriNet Corporate Realty Trust, Inc. in 1999, the acquisitions of Falcon Financial Investment Trust and a significant non-controlling interest in Oak Hill Advisors, L.P. and affiliates in 2005, and the acquisition of the commercial real estate lending business and loan portfolio of Fremont Investment and Loan, a division of Fremont General Corporation, in 2007.

Note 2—Basis of Presentation and Principles of Consolidation

Basis of Presentation—The accompanying unaudited Consolidated Financial Statements have been prepared in conformity with the instructions to Form 10-Q and Article 10-01 of Regulation S-X for interim financial statements. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America ("GAAP") for complete financial statements. These unaudited Consolidated Financial Statements and related Notes should be read in conjunction with the Consolidated Financial Statements and related Notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

In the opinion of management, the accompanying Consolidated Financial Statements contain all adjustments, consisting of normal recurring adjustments necessary for a fair statement of the results for the interim periods presented. Such operating results may not be indicative of the expected results for any other interim periods or the entire year.

Certain prior year amounts have been reclassified in the Consolidated Financial Statements and the related Notes to conform to the 2011 presentation.

Principles of Consolidation—The Consolidated Financial Statements include the financial statements of the Company, its wholly owned subsidiaries, controlled partnerships and variable interest entities ("VIEs") for which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Consolidated VIEs—The Company consolidates OHA Strategic Credit Fund Parallel I, L.P. ("OHA SCF"), which was created to invest in distressed and undervalued loans, bonds, equities and other investments. As of March 31, 2011 and December 31, 2010, OHA SCF had $50.9 million and $45.7 million,

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iStar Financial Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Note 2—Basis of Presentation and Principles of Consolidation (Continued)

respectively, of total assets, no debt, and $0.1 million of noncontrolling interests. The investments held by this entity are presented in "Other investments" on the Company's Consolidated Balance Sheets. As of March 31, 2011, the Company had a total unfunded commitment of $26.8 million to this entity.

The Company also consolidates Madison Deutsche Andau Holdings, LP ("Madison DA"), which was created to invest in mortgage loans collateralized by real estate in Europe. As of March 31, 2011 and December 31, 2010, Madison DA had $60.6 million and $58.0 million, respectively, of total assets, no debt, and $9.0 million and $8.6 million of noncontrolling interests, respectively. The investments held by this entity are presented in "Loans and other lending investments, net" on the Company's Consolidated Balance Sheets.

Unconsolidated VIEs—The Company determined that as of March 31, 2011, 27 of its other investments were VIEs where it is not the primary beneficiary and accordingly the VIEs have not been consolidated in the Company's Consolidated Financial Statements. As of March 31, 2011, the Company's maximum exposure to loss from these investments does not exceed the sum of the $235.8 million carrying value of the investments and $9.7 million of related unfunded commitments.

Note 3—Summary of Significant Accounting Policies

As of March 31, 2011, the Company's significant accounting policies, which are detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, have not changed materially.

New Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-02, "A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring," ("ASU 2010-02"), which provides additional guidance to creditors for determining whether a loan modification is a troubled debt restructuring ("TDR"). The guidance provides additional considerations in determining whether a creditor has granted a concession and adds factors for creditors to consider in determining whether a debtor is experiencing financial difficulties. The new ASU is effective for the first interim or annual period beginning on or after June 15, 2011 with retrospective application for loan modifications that have occurred from the beginning of the annual period of adoption (or January 1, 2011 for the Company). As a result of this adoption the Company may identify loan modifications that qualify as TDRs and therefore are considered impaired. Impairment for newly identified TDRs will be measured and recorded in the period of adoption. The Company will adopt ASU 2011-02 for the reporting period ending September 30, 2011, as required. The Company is currently evaluating the impact of this adoption on its Consolidated Financial Statements.

In January 2011, FASB issued ASU 2011-01, "Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20," which temporarily deferred the effective date in ASU 2010-20, "Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses" in respect of disclosures related to troubled debt restructuring until FASB finalized ASU 2010-20 (see above). ASU 2010-20 requires companies to provide disaggregated levels of disclosure by portfolio segment and class to enable users of the financial statement to understand the nature of loan

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iStar Financial Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Note 3—Summary of Significant Accounting Policies (Continued)

modifications and troubled debt restructurings. The Company will adopt the deferred reporting requirements of ASU 2010-20 for the reporting period ending September 30, 2011, as required.

Note 4—Loans and Other Lending Investments, net

The following is a summary of the Company's loans and other lending investments by class ($ in thousands)(1):

		As of

Type of Investment		March 31, 2011			December 31, 2010
Senior mortgages		$	4,145,565		$	4,390,770
Subordinate mortgages			274,014			305,245
Corporate/Partnership loans			682,328			689,535

	Total gross carrying value of loans(2)		5,101,907			5,385,550
Reserves for loan losses			(804,070	)		(814,625	)

	Total carrying value of loans		4,297,837			4,570,925
Other lending investments—securities			16,333			16,427

	Total loans and other lending investments, net	$	4,314,170		$	4,587,352

Explanatory Notes:

(1): Loans and other lending investments are presented net of unearned income, unamortized discounts and premiums and net unamortized deferred fees and costs. In total, these amounts represented a net discount of $80.7 million and $62.7 million as of March 31, 2011 and December 31, 2010, respectively.
(2): Including accrued interest of $18.2 million and $21.3 million, respectively, the Company's recorded investment in loans as of March 31, 2011 and December 31, 2010 was $5.12 billion and $5.41 billion, respectively.

During the three months ended March 31, 2011, the Company funded $18.1 million under existing loan commitments and received principal repayments of $213.2 million. During the same period, the Company sold loans with a total carrying value of $21.0 million, for which it recognized charge-offs of $0.4 million.

In addition, during the three months ended March 31, 2011, the Company received title to properties in full or partial satisfaction of non-performing mortgage loans with a gross carrying value (gross of asset-specific reserves) of $110.8 million, for which the properties had served as collateral, and recorded charge-offs totaling $14.7 million related to these loans. These properties were recorded as real estate held for investment ("REHI") or other real estate owned ("OREO") on the Company's Consolidated Balance Sheets (see Note 5).

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iStar Financial Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Note 4—Loans and Other Lending Investments, net (Continued)

Reserve for Loan Losses—Changes in the Company's reserve for loan losses were as follows ($ in thousands):

		For the Three Months Ended March 31,

		2011			2010
Reserve for loan losses at beginning of period		$	814,625		$	1,417,949
	Provision for loan losses		10,881			89,469
	Charge-offs		(21,436	)		(201,168	)

Reserve for loan losses at end of period		$	804,070		$	1,306,250

The Company's recorded investment (comprised of a loan's carrying value plus accrued interest) in loans and the associated reserve for loan losses were as follows ($ in thousands):

		Individually Evaluated for Impairment			Collectively Evaluated for Impairment			Loans Acquired with Deteriorated Credit Quality			Total

As of March 31, 2011:
Loans		$	2,319,298		$	2,722,067		$	78,761		$	5,120,126
Less: Reserve for loan losses			(704,704	)		(97,300	)		(2,066	)		(804,070	)

	Total	$	1,614,594		$	2,624,767		$	76,695		$	4,316,056

As of December 31, 2010:
Loans		$	2,296,599		$	3,034,310		$	75,907		$	5,406,816
Less: Reserve for loan losses			(692,610	)		(120,200	)		(1,815	)		(814,625	)

	Total	$	1,603,989		$	2,914,110		$	74,092		$	4,592,191

Credit Characteristics—As part of the Company's process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans.

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iStar Financial Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Note 4—Loans and Other Lending Investments, net (Continued)

The Company's recorded investment in performing loans, presented by class and by credit quality, as indicated by risk rating, was as follows ($ in thousands):

	As of

	March 31, 2011				December 31, 2010
	Performing Loans		Weighted Average Risk Ratings		Performing Loans		Weighted Average Risk Ratings
Senior mortgages	$	2,210,832		3.46	$	2,394,270		3.48
Subordinate mortgages		250,464		2.84		307,509		3.20
Corporate/Partnership loans		677,451		3.25		685,848		3.76

Total	$	3,138,747		3.37	$	3,387,627		3.51

The Company's recorded investment in loans, aged by payment status and presented by class, were as follows ($ in thousands):

		As of March 31, 2011

		Current		Less Than and Equal to 90 Days		Greater Than 90 Days(1)		Total Past Due		Total
Senior mortgages		$	2,357,490	$	5,248	$	1,792,839	$	1,798,087	$	4,155,577
Subordinate mortgages			275,804		—		—		—		275,804
Corporate/Partnership loans			677,451		—		11,294		11,294		688,745

	Total	$	3,310,745	$	5,248	$	1,804,133	$	1,809,381	$	5,120,126

Explanatory Note:

(1): All loans with payments more than 90 days past due are classified as non-performing and are on non-accrual status.

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iStar Financial Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Note 4—Loans and Other Lending Investments, net (Continued)

Impaired Loans—The Company's recorded investment in impaired loans, presented by class, were as follows ($ in thousands)(1):

			As of March 31, 2011							As of December 31, 2010

			Recorded Investment		Unpaid Principal Balance		Related Allowance			Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
	Senior mortgages(2)		$	459,272	$	457,230	$	—		$	404,861	$	404,126	$	—
	Corporate/Partnership loans			10,110		10,161		—			10,110		10,160		—

		Subtotal	$	469,382	$	467,391	$	—		$	414,971	$	414,286	$	—
With an allowance recorded:
	Senior mortgages(2)		$	1,773,248	$	1,764,996	$	(670,611	)	$	1,834,008	$	1,825,150	$	(683,948	)
	Subordinate mortgages			25,340		25,417		(25,339	)		—		—		—
	Corporate/Partnership loans			68,487		68,840		(10,820	)		64,465		64,919		(10,477	)

		Subtotal	$	1,867,075	$	1,859,253	$	(706,770	)	$	1,898,473	$	1,890,069	$	(694,425	)
Total:
	Senior mortgages		$	2,232,520	$	2,222,226	$	(670,611	)	$	2,238,869	$	2,229,276	$	(683,948	)
	Subordinate mortgages			25,340		25,417		(25,339	)		—		—		—
	Corporate/Partnership loans			78,597		79,001		(10,820	)		74,575		75,079		(10,477	)

		Total	$	2,336,457	$	2,326,644	$	(706,770	)	$	2,313,444	$	2,304,355	$	(694,425	)

Explanatory Notes:

(1): All of the Company's non-accrual loans are considered impaired and included in the table above. In addition, as of March 31, 2011 and December 31, 2010, certain loans modified through troubled debt restructurings with a recorded investment of $355.1 million and $294.3 million, respectively, are also included as impaired loans in accordance with GAAP although they are performing and on accrual status.
(2): As of March 31, 2011 and December 31, 2010, amount includes $17.2 million and $16.8 million, respectively, of impaired loans acquired with deteriorated credit quality.

Table of Contents

iStar Financial Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Note 4—Loans and Other Lending Investments, net (Continued)

The Company's average recorded investment in impaired loans and interest income recognized, presented by class, were as follows ($ in thousands):

			For the Three Months Ended March 31,

			2011				2010
			Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
	Senior mortgages		$	432,066	$	966	$	799,792	$	17,977
	Subordinate mortgages			—		—		3,510		73
	Corporate/Partnership loans			10,110		120		42,716		715

		Subtotal	$	442,176	$	1,086	$	846,018	$	18,765
With an allowance recorded:
	Senior mortgages		$	1,803,628	$	2,004	$	2,916,697	$	805
	Subordinate mortgages			12,670		—		98,900		—
	Corporate/Partnership loans			66,476		82		44,623		—

		Subtotal	$	1,882,774	$	2,086	$	3,060,220	$	805
Total:
	Senior mortgages		$	2,235,694	$	2,970	$	3,716,489	$	18,782
	Subordinate mortgages			12,670		—		102,410		73
	Corporate/Partnership loans			76,586		202		87,339		715

		Total	$	2,324,950	$	3,172	$	3,906,238	$	19,570

Encumbered Loans—As of March 31, 2011 and December 31, 2010, loans and other lending investments with a carrying value of $2.67 billion and $2.83 billion, respectively, were pledged as collateral under the Company's secured indebtedness.

Note 5—Real Estate Held for Investment, net and Other Real Estate Owned

During the three months ended March 31, 2011, the Company received title to properties with an aggregate estimated fair value at the time of foreclosure of $96.1 million, in full or partial satisfaction of non-performing mortgage loans for which those properties had served as collateral. Of these, properties with a value of $30.5 million were classified as REHI and $65.6 million were classified as OREO, based on management's current intention to either hold the properties over a longer period or to market them for sale in the near term.

Table of Contents

iStar Financial Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Note 5—Real Estate Held for Investment, net and Other Real Estate Owned (Continued)

Real Estate Held for Investment, net—REHI consisted of the following ($ in thousands):

		As of March 31, 2011			As of December 31, 2010

Land held for investment and development		$	637,547		$	606,083
Operating property
	Land		69,807			69,807
	Buildings and improvements		165,739			165,025
	Less: accumulated depreciation and amortization		(10,163	)		(7,855	)

Real estate held for investment, net		$	862,930		$	833,060

The Company recorded REHI operating income in "Other income" and REHI operating expenses in "Operating costs—REHI and OREO," on the Company's Consolidated Statements of Operations, as follows ($ in thousands):

	For the Three Months Ended March 31,

	2011		2010
REHI operating income	$	7,462	$	4,082
REHI operating expenses	$	10,547	$	6,203

Other Real Estate Owned—During the three months ended March 31, 2011 and 2010, the Company sold OREO assets with a carrying value of $25.6 million and $164.0 million, respectively. For the three months ended March 31, 2011 and 2010, the Company recorded net impairment charges to OREO properties totaling $0.6 million and $4.9 million, respectively, and recorded net expenses related to holding costs for OREO properties of $7.2 million and $6.6 million, respectively.

Encumbered REHI and OREO—As of March 31, 2011 and December 31, 2010, REHI assets with a carrying value of $77.7 million and $28.4 million, respectively, and OREO assets with a carrying value of $171.5 million and $232.1 million, respectively, were pledged as collateral for the Company's secured indebtedness.

Note 6—Net Lease Assets, net

The Company's investments in net lease assets, at cost, were as follows ($ in thousands):

	As of March 31, 2011			As of December 31, 2010

Buildings and improvements	$	1,651,727		$	1,651,998
Land and land improvements		454,925			454,925
Less: accumulated depreciation		(331,663	)		(322,414	)

Net lease assets, net	$	1,774,989		$	1,784,509

Table of Contents

iStar Financial Inc.

Notes to Consolidated Financial Statements (Continued)

(unaudited)

Note 6—Net Lease Assets, net (Continued)

		Carrying value as of				Equity in earnings for the Three Months Ended

		March 31, 2011		December 31, 2010		March 31, 2011		March 31, 2010
Oak Hill		$	165,238	$	176,364	$	1,331	$	4,076
LNR			136,371		122,176		13,985		—
Madison Funds			108,367		92,265		2,202		1,678
Other equity method investments			136,208		131,418		7,414		5,676

	Total equity method investments		546,184		522,223	$	24,932	$	11,430

Other			10,782		10,135

	Total other investments	$	556,966	$	532,358

	For the Three Months Ended December 31, 2010(2)

Income Statement
Total revenue	$	2,593,367
Net income	$	66,703
Net income attributable to LNR	$	58,329

	As of December 31, 2010

Balance Sheet
Total assets	$	143,327,118
Debt	$	142,563,421
Total liabilities	$	142,723,198
Noncontrolling interests	$	33,982
LNR Property Corporation equity	$	569,937

	For the Three Months Ended March 31,

	2011		2010
Income Statements
Revenues	$	114,007	$	122,607
Net income (loss)	$	59,481	$	86,899
Net income attributable to parent entities	$	58,540	$	85,813

	As of

	March 31, 2011		December 31, 2010
Balance Sheets
Total assets	$	4,274,750	$	4,486,974
Debt	$	933,536	$	1,100,561
Total liabilities	$	1,070,398	$	1,236,116
Noncontrolling interests	$	6,298	$	107,422
Total equity	$	3,198,054	$	3,143,436

	As of

	March 31, 2011		December 31, 2010
Deferred financing fees, net(1)	$	34,524	$	5,527
Net lease in-place lease intangibles, net(2)		22,765		24,469
Other receivables		14,091		13,521
Corporate furniture, fixtures and equipment, net(3)		10,478		11,016
Leasing costs, net(4)		8,870		8,267
Prepaid expenses		7,887		5,265
Other assets		20,916		17,463

Deferred expenses and other assets, net	$	119,531	$	85,528

	As of

	March 31, 2011		December 31, 2010
Accrued interest payable	$	48,616	$	38,143
Accrued expenses		32,273		19,800
Deferred tax liabilities		20,537		13,729
Security deposits and other investment deposits		11,520		2,874
Property taxes payable		9,076		5,880
Unearned operating lease income		8,949		10,423
Other liabilities		41,738		43,573

Accounts payable, accrued expenses and other liabilities	$	172,709	$	134,422

			Carrying Value as of

			March 31, 2011			December 31, 2010		Stated Interest Rates			Scheduled Maturity Date
Secured credit facilities:
	Tranche A-1 Facility		$	1,500,000		$	—		LIBOR + 3.75	%(1)	June 2013
	Tranche A-2 Facility			1,450,000			—		LIBOR + 5.75	%(1)	June 2014
	Line of credit			—			618,883		LIBOR + 1.50	%	June 2011
	Line of credit			—			334,180		LIBOR + 1.50	%	June 2012
Unsecured credit facilities:
	Line of credit			329,858			501,405		LIBOR + 0.85	%	June 2011
	Line of credit			244,425			243,819		LIBOR + 0.85	%	June 2012

	Total credit facilities			3,524,283			1,698,287
Secured term loans:
	Collateralized by loans, net lease, REHI and OREO assets			—			1,055,000		LIBOR + 1.50	%	June 2011
	Collateralized by loans, net lease, REHI and OREO assets			—			612,222		LIBOR + 1.50	%	June 2012
	Collateralized by net lease assets			188,468			190,223		6.1% - 8.4	%	Various through 2029

	Total secured term loans			188,468			1,857,445
Secured notes:
	10.0% senior notes			—			312,329		10.0	%	June 2014
Unsecured notes:
	5.80% senior notes			—			107,766		5.80	%	March 2011
	5.125% senior notes			96,916			96,916		5.125	%	April 2011
	5.65% senior notes			196,593			196,593		5.65	%	September 2011
	5.15% senior notes			322,006			322,006		5.15	%	March 2012
	5.50% senior notes			102,345			102,345		5.50	%	June 2012
	LIBOR + 0.50% senior convertible notes(2)			787,750			787,750		LIBOR + 0.50	%	October 2012
	8.625% senior notes			501,701			501,701		8.625	%	June 2013
	5.95% senior notes			448,453			448,453		5.95	%	October 2013
	6.5% senior notes			67,055			67,055		6.5	%	December 2013
	5.70% senior notes			200,601			200,601		5.70	%	March 2014
	6.05% senior notes			105,765			105,765		6.05	%	April 2015
	5.875% senior notes			261,403			261,403		5.875	%	March 2016
	5.85% senior notes			99,722			99,722		5.85	%	March 2017

		Total unsecured notes		3,190,310			3,298,076
Other debt obligations				100,000			100,000		LIBOR + 1.5	%	October 2035

Total debt obligations				7,003,061			7,266,137
Debt premiums/(discounts), net(2)(3)				(63,651	)		79,296

Total debt obligations, net			$	6,939,410		$	7,345,433


2011 (remaining nine months)	$	837,489
2012		2,006,526
2013		1,971,855
2014		1,548,332
2015		105,765
Thereafter		533,094

Total principal maturities		7,003,061
Unamortized debt premiums, net		(63,651	)

Total long-term debt obligations, net	$	6,939,410

	Derivative Assets						Derivative Liabilities

	As of March 31, 2011			As of December 31, 2010			As of March 31, 2011			As of December 31, 2010
Derivative	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Foreign exchange contracts	Other Assets	$	206	Other Assets	$	—	Other Liabilities	$	3,331	Other Liabilities	$	223
Cash flow interest rate swap	Other Assets		—	Other Assets		—	Other Liabilities		236	Other Liabilities		—

Total		$	206		$	—		$	3,567		$	223

	Derivatives Designated in Hedging Relationships		Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)			Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Gain into Earnings (Effective Portion)			Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion)

	Cash flow interest rate swap		Accumulated Other Comprehensive Income		$	(238	)	$	(2	)		N/A

		Amount of Gain or (Loss) Recognized in Income on Derivative

		For the Three Months Ended March 31,
Derivatives not Designated in Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	For the Three Months Ended March 31,
Derivatives not Designated in Hedging Relationships		2011			2010
Foreign Exchange Contracts	Other Expense	$	(4,116	)	$	142

Derivative Type	Notional Amount		Notional (USD Equivalent)		Maturity

Sells SEK/Buy USD Forward	SEK	86,800	$	13,684	April 2011
Sells EUR/Buys USD Forward	€	127,178	$	179,295	June 2011
Sells GBP/Buys USD Forward	£	42,175	$	67,613	June 2011
Sells CAD/Buys USD Forward	CAD	46,895	$	48,222	June 2011

		Loans		Net Lease Assets		Strategic Investments		Total

Performance-Based Commitments		$	121,185	$	7,185	$	—	$	128,370
Discretionary Fundings			157,218		—		—		157,218
Other			—		—		37,102		37,102

	Total	$	278,403	$	7,185	$	37,102	$	322,690

					Cumulative Preferential Cash Dividends(1)(2)

Series	Shares Authorized, Issued and Outstanding ($ in thousands)		Par Value		Rate per Annum of the $25.00 Liquidation Preference			Equivalent to Fixed Annual Rate (per share)
D		4,000	$	0.001		8.00	%	$	2.00
E		5,600	$	0.001		7.875	%	$	1.97
F		4,000	$	0.001		7.8	%	$	1.95
G		3,200	$	0.001		7.65	%	$	1.91
I		5,000	$	0.001		7.50	%	$	1.88

		21,800

		For the Three Months Ended March 31,

		2011			2010
Earnings allocable to common shares:
Numerator for basic earnings per share:
Income (loss) from continuing operations attributable to iStar Financial Inc. and allocable to common shareholders		$	68,119		$	(32,526	)
	Income (loss) from discontinued operations		(699	)		7,118

Net income (loss) attributable to iStar Financial Inc. and allocable to common shareholders		$	67,420		$	(25,408	)

Numerator for diluted earnings per share:
Income (loss) from continuing operations attributable to iStar Financial Inc. and allocable to common shareholders		$	68,235		$	(32,526	)
	Income (loss) from discontinued operations		(700	)		7,118

Net income (loss) attributable to iStar Financial Inc. and allocable to common shareholders		$	67,535		$	(25,408	)

Denominator for basic and diluted earnings per share:
Weighted average common shares outstanding for basic earnings per common share			92,458			93,923
Add: effect of assumed shares issued under treasury stock method for restricted shares			1,853			—
Add: effect of joint venture shares			298			—

Weighted average common shares outstanding for diluted earnings per common share			94,609			93,923

Basic earnings per common share:
Income (loss) from continuing operations attributable to iStar Financial Inc. and allocable to common shareholders		$	0.74		$	(0.35	)
Income (loss) from discontinued operations			(0.01	)		0.08

Net income (loss) attributable to iStar Financial Inc. and allocable to common shareholders		$	0.73		$	(0.27	)

Diluted earnings per common share:
Income (loss) from continuing operations attributable to iStar Financial Inc. and allocable to common shareholders		$	0.72		$	(0.35	)
Income (loss) from discontinued operations			(0.01	)		0.08

Net income (loss) attributable to iStar Financial Inc. and allocable to common shareholders		$	0.71		$	(0.27	)

	For the Three Months Ended March 31,

	2011			2010
Earnings allocable to High Performance Units:
Numerator for basic earnings per HPU share:
Income (loss) from continuing operations attributable to iStar Financial Inc. and allocable to HPU holders	$	2,091		$	(983	)
Income (loss) from discontinued operations		(21	)		215

Net income (loss) attributable to iStar Financial Inc. and allocable to HPU holders	$	2,070		$	(768	)

Numerator for diluted earnings per HPU share:
Income (loss) from continuing operations attributable to iStar Financial Inc. and allocable to HPU holders	$	2,047		$	(983	)
Income (loss) from discontinued operations		(21	)		215

Net income (loss) attributable to iStar Financial Inc. and allocable to HPU holders	$	2,026		$	(768	)

Denominator for basic and diluted earnings per HPU share:
Weighted average High Performance Units outstanding for basic and diluted earnings per share		15			15

Basic earnings per HPU share:
Income (loss) from continuing operations attributable to iStar Financial Inc. and allocable to HPU holders	$	139.40		$	(65.53	)
Income (loss) from discontinued operations		(1.40	)		14.33

Net income (loss) attributable to iStar Financial Inc. and allocable to HPU holders	$	138.00		$	(51.20	)

Diluted earnings per HPU share:
Income (loss) from continuing operations attributable to iStar Financial Inc. and allocable to HPU holders	$	136.47		$	(65.53	)
Income (loss) from discontinued operations		(1.40	)		14.33

Net income (loss) attributable to iStar Financial Inc. and allocable to HPU holders	$	135.07		$	(51.20	)

	For the Three Months Ended March 31,

	2011		2010
Joint venture shares		—		298
Stock options		95		143
Restricted stock units(1)		—		—

	As of

	March 31, 2011			December 31, 2010
Unrealized gains on available-for-sale securities	$	454		$	198
Unrealized gains on cash flow hedges		3,119			3,357
Unrealized losses on cumulative translation adjustment		(1,585	)		(1,946	)

Accumulated other comprehensive income	$	1,988		$	1,609

					Fair Value Using

			Total		Quoted market prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
As of March 31, 2011:
Recurring basis:
	Financial Assets:
		Marketable securities—equity securities	$	636	$	636	$	—	$	—
		Derivative assets	$	206	$	—	$	206	$	—
	Financial Liabilities:
		Derivative liabilities	$	3,567	$	—	$	3,567	$	—
Non-recurring basis:
	Financial Assets:
		Impaired loans	$	302,628	$	—	$	—	$	302,628
		Impaired cost method investment	$	3,345	$	—	$	—	$	3,345
	Non-financial Assets:
		Impaired OREO	$	7,800	$	—	$	—	$	7,800
As of December 31, 2010:
Recurring basis:
	Financial Assets:
		Marketable securities—equity securities	$	699	$	699	$	—	$	—
	Financial Liabilities:
		Derivative liabilities	$	223	$	—	$	223	$	—
Non-recurring basis:
	Financial Assets:
		Impaired loans	$	616,070	$	—	$	—	$	616,070
		Impaired equity method investment	$	1,535	$	—	$	—	$	1,535
	Non-financial Assets:
		Impaired OREO	$	54,141	$	—	$	—	$	54,141

		As of March 31, 2011				As of December 31, 2010

		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
	Loans and other lending investments, net	$	4,314,170	$	4,125,447	$	4,587,352	$	4,256,663
Financial liabilities:
	Debt obligations, net	$	6,939,410	$	6,825,389	$	7,345,433	$	6,767,968



		Real Estate Lending			Net Leasing			Real Estate Investment			Corporate/ Other(1)			Company Total
Three months ended March 31, 2011:
Total revenue(2)		$	61,135		$	42,139		$	7,462		$	846		$	111,582
Earnings from equity method investments			—			639			—			24,293			24,932
Operating costs			(1,249	)		(4,560	)		(17,788	)		(12,525	)		(36,122	)
Interest expense			(36,523	)		(15,539	)		(13,292	)		(4,280	)		(69,634	)
General and administrative(3)			(5,509	)		(2,344	)		(2,005	)		(10,387	)		(20,245	)

	Segment profit (loss)(4)	$	17,854		$	20,335		$	(25,623	)	$	(2,053	)	$	10,513
Other significant non-cash items:
	Provision for loan losses	$	10,881		$	—		$	—		$	—		$	10,881
	Impairment of assets	$	—		$	—		$	617		$	873		$	1,490
	Depreciation and amortization	$	—		$	13,644		$	1,750		$	539		$	15,933
Capitalized expenditures		$	—		$	2,165		$	6,996		$	—		$	9,161
As of March 31, 2011:
Total assets(5)		$	4,344,975		$	1,906,200		$	1,674,013		$	961,375		$	8,886,563
Three months ended March 31, 2010(6):
Total revenue(2)		$	125,310		$	43,502		$	4,082		$	426		$	173,320
Earnings from equity method investments			—			630			—			10,800			11,430
Operating costs			(3,347	)		(3,701	)		(12,778	)		(1,558	)		(21,384	)
Interest expense			(62,015	)		(10,749	)		(11,318	)		(3,134	)		(87,216	)
General and administrative(3)			(7,215	)		(3,117	)		(1,317	)		(10,837	)		(22,486	)

	Segment profit (loss)(4)	$	52,733		$	26,565		$	(21,331	)	$	(4,303	)	$	53,664
Other significant non-cash items:
	Provision for loan losses	$	89,469		$	—		$	—		$	—		$	89,469
	Impairment of assets	$	981		$	—		$	4,940		$	—		$	5,921
	Depreciation and amortization	$	—		$	13,456		$	1,059		$	1,232		$	15,747
Capitalized expenditures		$	—		$	5,209		$	2,833		$	—		$	8,042
As of December 31, 2010:
Total assets(5)		$	4,636,777		$	1,915,164		$	1,594,859		$	1,027,714		$	9,174,514

	For the Three Months Ended March 31,

	2011			2010
Segment profit (loss)	$	10,513		$	53,664
Less: Provision for loan losses		(10,881	)		(89,469	)
Less: Impairment of assets		(1,490	)		(5,921	)
Less: Stock-based compensation expense		(4,155	)		(4,730	)
Less: Depreciation and amortization		(15,933	)		(15,747	)
Add: Gain on early extinguishment of debt, net		106,604			38,728

Income (loss) from continuing operations	$	84,658		$	(23,475	)

		For the Three Months Ended March 31,

		2011			2010			$ Change			% Change
		($ in thousands)
Interest income		$	60,768		$	116,616		$	(55,848	)		(48	)%
Operating lease income			42,139			43,505			(1,366	)		(3	)%
Other income			8,675			13,199			(4,524	)		(34	)%

	Total revenue		111,582			173,320			(61,738	)		(36	)%

Interest expense			69,634			87,216			(17,582	)		(20	)%
Operating costs—net lease assets			4,560			3,701			859			23	%
Operating costs—REHI and OREO			17,788			12,778			5,010			39	%
Depreciation and amortization			15,933			15,747			186			1	%
General and administrative			24,400			27,216			(2,816	)		(10	)%
Provision for loan losses			10,881			89,469			(78,588	)		(88	)%
Impairment of assets			1,490			5,921			(4,431	)		(75	)%
Other expense			13,774			4,905			8,869			>100	%

	Total costs and expenses		158,460			246,953			(88,493	)		(36	)%

Gain on early extinguishment of debt, net			106,604			38,728			67,876			>100	%
Earnings from equity method investments			24,932			11,430			13,502			>100	%
Income (loss) from discontinued operations			(756	)		7,333			(8,089	)		>(100	)%

Net income (loss)		$	83,902		$	(16,142	)	$	100,044			>100	%

		As of

		March 31, 2011			December 31, 2010
Non-performing loans
Carrying value(1)		$	1,304,836		$	1,351,410
	As a percentage of total carrying value of loans		30.4	%		29.6	%
Watch list loans
Carrying value		$	146,198		$	190,553
	As a percentage of total carrying value of loans		3.4	%		4.2	%
Reserve for loan losses
Total reserve for loan losses		$	804,070		$	814,625
	As a percentage of total loans before loan loss reserves		15.8	%		15.1	%
Non-performing loan asset-specific reserves for loan losses		$	676,543		$	667,779
	As a percentage of gross carrying value of non-performing loans		34.1	%		33.1	%

Property/Collateral Types	Performing Loans		Net Lease Assets		Non- performing Loans		REHI		OREO		Total

Apartment / Residential	$	918,871	$	—	$	518,600	$	11,210	$	527,612	$	1,976,293	23.6	%
Land		335,703		56,353		267,941		669,150		107,988		1,437,135	17.1	%
Retail		583,998		161,341		197,991		48,148		43,404		1,034,882	12.3	%
Office		214,672		441,341		52,223		17,140		16,422		741,798	8.8	%
Industrial / R&D		96,991		502,461		21,392		49,387		6,300		676,531	8.1	%
Entertainment / Leisure		159,157		431,144		77,816		—		1,179		669,296	8.0	%
Hotel		352,027		131,042		75,192		42,828		15,389		616,478	7.3	%
Mixed Use / Mixed Collateral		241,126		31,850		93,681		25,067		72,349		464,073	5.5	%
Other		204,089		19,457		—		—		—		223,546	2.7	%
Other Investments		—		—		—		—		—		556,966	6.6	%

Total	$	3,106,634	$	1,774,989	$	1,304,836	$	862,930	$	790,643	$	8,396,998	100.0	%

Geographic Location	Carrying Value(2)

West	$	1,910,453	22.8	%
Northeast		1,708,174	20.3	%
Southeast		1,236,089	14.7	%
Southwest		800,714	9.5	%
Mid-Atlantic		763,418	9.1	%
Central		434,286	5.2	%
International		356,322	4.2	%
Northwest		314,638	3.8	%
Various		872,904	10.4	%

Total	$	8,396,998	100.0	%

		Principal And Interest Payments Due By Period

		Total		Less Than 1 Year(1)		2 - 3 Years(1)		4 - 5 Years(1)		6 - 10 Years		After 10 Years
		($ in thousands)
Long-Term Debt Obligations:
Secured credit facilities		$	2,950,000	$	200,000	$	1,450,000	$	1,300,000	$	—	$	—
Unsecured notes			2,402,560		615,515		1,320,155		367,168		99,722		—
Convertible notes			787,750		—		787,750		—		—		—
Unsecured credit facilities			574,283		329,858		244,425		—		—		—
Secured term loans			188,468		14,122		102,377		—		29,458		42,511
Trust preferred			100,000		—		—		—		—		100,000

	Total principal maturities		7,003,061		1,159,495		3,904,707		1,667,168		129,180		142,511
Interest Payable(2)			984,399		344,236		498,948		86,250		25,431		29,534
Operating Lease Obligations			39,732		4,648		9,745		8,046		17,293		—

	Total	$	8,027,192	$	1,508,379	$	4,413,400	$	1,761,464	$	171,904	$	172,045

		As of

		March 31, 2011		December 31, 2010
Loans and other lending investments		$	2,666,895	$	2,832,184
Net lease assets			971,069		1,021,783
REHI			77,679		28,376
OREO			171,507		232,150

	Total	$	3,887,150	$	4,114,493

Exhibit Number			Document Description

	10.1		Credit Agreement, dated as of March 16, 2011, among iStar Financial Inc., the bank lenders named therein, JPMorgan Chase Bank, N.A., as the administrative agent, The Royal Bank of Scotland plc and Barclays Capital, as syndication agents, and Bank of America, N.A., as documentation agent (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on March 22, 2011).
	10.2		Security Agreement, dated as of March 16, 2011, among iStar Tara Holdings LLC, SFI Belmont LLC, and the other parties thereto, in favor of JPMorgan Chase Bank, N.A., as the administrative agent (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed on March 22, 2011).
	10.3		Guarantee Agreement, dated as of March 16, 2011, among iStar Tara Holdings LLC, SFI Belmont LLC, and the other parties thereto, in favor of JPMorgan Chase Bank, N.A., as the administrative agent (incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed on March 22, 2011).
	31.0		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act.
	32.0		Certifications pursuant to Section 906 of the Sarbanes-Oxley Act.


		iSTAR FINANCIAL INC. Registrant
Date: May 10, 2011		/s/ JAY SUGARMAN Jay Sugarman Chairman of the Board of Directors and Chief Executive Officer (principal executive officer)
		iSTAR FINANCIAL INC. Registrant
Date: May 10, 2011		/s/ DAVID M. DISTASO David M. DiStaso Chief Financial Officer (principal financial and accounting officer)