iStar Financial Announces Fourth Quarter and Fiscal Year 2009 Results
- Adjusted earnings (loss) allocable to common shareholders for the fourth quarter and fiscal year 2009 were ($141.7) million and ($688.8) million, respectively, or ($1.47) and ($6.88) per diluted common share, respectively.
- Net income (loss) allocable to common shareholders for the fourth quarter and fiscal year 2009 was ($159.2) million and ($788.6) million, respectively, or ($1.65) and ($7.88) per diluted common share, respectively.
- Company recorded $216.4 million of loan loss provisions during the quarter versus $345.9 million during the prior quarter.
NEW YORK, Feb. 17 /PRNewswire-FirstCall/ -- iStar Financial Inc. (NYSE: SFI), a publicly traded finance company focused on the commercial real estate industry, today reported results for the fourth quarter and fiscal year ended December 31, 2009.
Fourth Quarter 2009 Results
iStar reported adjusted earnings (loss) allocable to common shareholders for the fourth quarter of ($141.7) million or ($1.47) per diluted common share, compared with $12.9 million or $0.10 per diluted common share for the fourth quarter 2008. Adjusted earnings (loss) represents net income (loss) computed in accordance with GAAP, adjusted primarily for preferred dividends, depreciation, depletion, amortization, impairments of goodwill and intangible assets, gain (loss) from discontinued operations, and gain on sale of joint venture interest.
Net income (loss) allocable to common shareholders for the fourth quarter was ($159.2) million, or ($1.65) per diluted common share, compared to ($24.0) million or ($0.20) per diluted common share for the fourth quarter 2008. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings (loss) to GAAP net income (loss).
Revenues for the fourth quarter 2009 were $199.8 million versus $287.4 million for the fourth quarter 2008. The year-over-year decrease is primarily due to a reduction of interest income resulting from an increase in non-performing loans (NPLs) and an overall smaller asset base.
Net investment income for the fourth quarter was $192.1 million compared to $431.6 million for the fourth quarter 2008. The year-over-year decrease is primarily due to decreased gains on early extinguishment of debt in the quarter, as well as lower interest income as discussed above, offset by lower interest expense. Net investment income represents interest income, operating lease income, earnings (loss) from equity method investments and gain on early extinguishment of debt, less interest expense and operating costs for corporate tenant lease assets.
During the fourth quarter, the Company received $543.7 million in gross principal repayments. Additionally, the Company generated proceeds of $129.3 million from loan sales; $98.1 million of net proceeds from other real estate owned (OREO) asset sales; and $6.1 million of net proceeds from the sale of one corporate tenant lease (CTL) asset. Of the gross principal repayments and asset sales, $199.6 million was utilized to pay down the A-participation interest associated with the Fremont portfolio. Additionally during the quarter, the Company funded a total of $252.7 million under pre-existing commitments.
The Company’s leverage, calculated as book debt net of unrestricted cash and cash equivalents, divided by the sum of book equity, accumulated depreciation and loan loss reserves, each as determined in accordance with GAAP, was 2.9x at December 31, 2009, unchanged from the prior quarter. The Company’s net finance margin, calculated as the rate of return on assets less the cost of debt, was 1.60% for the quarter, versus 1.51% in the prior quarter.
Fiscal Year 2009 Results
Adjusted earnings (loss) allocable to common shareholders for the year ended December 31, 2009, were ($688.8) million or ($6.88) per diluted common share. This compares to ($354.0) million or ($2.70) per diluted share for the year ended December 31, 2008.
Net income (loss) allocable to common shareholders for the year ended December 31, 2009, was ($788.6) million or ($7.88) per diluted common share, compared to ($242.5) million or ($1.85) per diluted common share for the year ended December 31, 2008.
Results for the year included $1.3 billion of loan loss provisions, $141.0 million of impairments and $547.3 million of gains associated with the early extinguishment of debt, including $107.9 million of gains associated with the bond exchange executed during the second quarter of 2009. As of December 31, 2009, there was $227.6 million of remaining premium related to this bond exchange which will be amortized against interest expense over the terms of the new Senior Secured Notes due 2011 and 2014.
Net investment income was $910.9 million for the year versus $966.3 million for the prior year. Revenue was $893.3 million for the year versus $1.4 billion for the prior year.
Capital Markets
As of December 31, 2009, the Company had $224.6 million of unrestricted cash versus $187.1 million at the end of the prior quarter. At December 31, 2009, the Company was in compliance with all of its bank and bond covenants.
During the quarter, the Company repurchased $395.5 million par value of its senior unsecured notes, resulting in a net gain on early extinguishment of debt of $100.4 million. The Company also repurchased 3.2 million shares of its common stock during the quarter. The Company currently has remaining authority to repurchase up to $21.5 million of shares under its share repurchase program.
Risk Management
At December 31, 2009, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 84.0% of the Company’s asset base, versus 87.0% in the prior quarter. The Company’s loan portfolio consisted of 74.3% floating rate loans and 25.7% fixed rate loans, with a weighted average maturity of 2.0 years.
At the end of the quarter, the weighted average last dollar loan-to-value ratio for all structured finance assets was 84.8%. The Company’s corporate tenant lease assets were 94.5% leased with a weighted average remaining lease term of 10.9 years. At December 31, 2009, the weighted average risk ratings of the Company’s structured finance and corporate tenant lease assets were 3.92 and 2.59, versus 3.91 and 2.60, respectively, in the prior quarter.
As of December 31, 2009, the Company had 14 loans on its watch list representing $717.7 million or 7.7% of total managed loans, compared to 26 loans representing $1.2 billion or 11.3% of total managed loans in the prior quarter. Assets on the Company’s watch list were all performing loans at December 31, 2009. Managed loan value represents iStar’s carrying value of loans, gross of specific reserves and the A-participation interest outstanding on Fremont portfolio assets. The Company’s total managed loan value at quarter end was $9.3 billion.
At the end of the fourth quarter, 81 of the Company’s 221 total loans were on NPL status. These loans represent $4.2 billion or 45.3% of total managed loans, compared to 85 loans representing $4.4 billion or 42.0% of total managed loans in the prior quarter.
Additionally, during the quarter the Company took title to 12 properties that had an aggregate managed loan value of $675.2 million prior to foreclosure, resulting in $211.0 million of charge-offs against the Company’s reserve for loan losses. In addition, during the quarter the Company recorded $41.7 million of additional impairments on its OREO portfolio.
At the end of the fourth quarter, the Company held 39 assets, representing a book value of $1.3 billion, which had previously served as collateral for certain of its loan assets. Of these assets, $839.1 million were classified as OREO and considered held for sale based on management’s current intention to market and sell the assets in the near term. The remaining $422.7 million were classified as real estate held for investment (REHI) based on management’s current strategy to hold, operate or develop these assets over a longer term.
During the quarter, the Company also charged-off $78.8 million against its reserve for loan losses in association with restructurings, loan sales and repayments made during the quarter. Additionally, the Company recorded $22.0 million of impairments associated with CTL assets.
During the fourth quarter, the Company recorded $216.4 million in loan loss provisions. Provisions and impairments in the quarter reflect the continued deterioration in underlying fundamentals and their impact on the portfolio as determined in the Company’s regular quarterly risk ratings review process. At December 31, 2009, the Company had loan loss reserves of $1.4 billion or 15.3% of total managed loans. This compares to loan loss reserves of $1.5 billion or 14.2% of total managed loans at September 30, 2009.
Summary of Fremont Contributions to Quarterly Results
At the end of the fourth quarter, the Fremont portfolio, including additional fundings made during the quarter, had a managed loan value of $2.6 billion consisting of 87 loans, versus $3.1 billion consisting of 103 loans at the end of the prior quarter. In addition, there were 13 OREO assets with a carrying value of $329.2 million and 10 REHI assets with a net carrying value of $204.9 million associated with the Fremont portfolio at the end of the quarter.
At the end of the fourth quarter, the value of the A-participation interest in the portfolio was $473.3 million versus $672.9 million at the end of the prior quarter. The book value of iStar’s B-participation interest was $2.1 billion versus $2.4 billion at the end of the prior quarter. During the quarter, iStar received $292.4 million in principal repayments and proceeds from asset sales in respect of Fremont assets, of which the Company retained $92.8 million. The balance of principal repayments was paid to the A-participation interest. The weighted average maturity of the Fremont portfolio is six months.
During the fourth quarter, iStar funded $48.1 million of commitments related to the portfolio. Unfunded commitments at the end of the fourth quarter were $198.1 million, of which the Company expects to fund approximately $71.2 million based upon its comprehensive review of the portfolio.
At December 31, 2009, there were 41 Fremont loans on NPL status with a managed loan value of $1.6 billion versus 45 loans at the prior quarter end with $1.8 billion of managed loan value. In addition, there were four Fremont loans on the Company’s watch list with a managed loan value of $115.3 million versus nine loans with $213.5 million of managed loan value at the prior quarter end.
[Financial Tables to Follow]
* * *
iStar Financial Inc. is a publicly traded finance company focused on the commercial real estate industry. The Company primarily provides custom-tailored investment capital to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, as well as corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust ("REIT"), provides innovative and value added financing solutions to its customers.
iStar Financial will hold a quarterly earnings conference call at 10:00 a.m. ET today, February 17, 2010. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through iStar Financial’s website, www.istarfinancial.com, under the “Investor Relations” section. To listen to the live call, please go to the website’s “Investor Relations” section at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the iStar Financial website.
(Note: Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although iStar Financial Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from iStar Financial Inc.’s expectations include the amount and timing of additional loan loss provisions, the amount and timing of asset sales (including OREO assets), continued increases in NPLs, repayment levels, the Company’s ability to reduce its indebtedness at a discount, the Company’s ability to generate liquidity, the Company’s ability to maintain compliance with its debt covenants, economic conditions, the availability of liquidity for commercial real estate transactions and other risks detailed from time to time in iStar Financial Inc.’s SEC reports.)
Selected Income Statement Data
(In thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net investment income (1) $192,077 $431,619 $910,880 $966,304
Other income 10,061 9,144 30,468 97,851
Non-interest expense (2) (352,774) (476,591) (1,711,950) (1,640,014)
Gain on sale of joint
venture interest - - - 280,219
------- ------- ------- -------
Income (loss) from
continuing operations (150,636) (35,828) (770,602) (295,640)
Income (loss) from
discontinued operations (2,723) 2,967 (11,671) 22,415
Gain from discontinued
operations - 18,971 12,426 91,458
Net (income) loss
attributable to
noncontrolling interests 73 (78) 1,071 991
Gain attributable to
noncontrolling interests - - - (22,249)
Preferred dividends (10,580) (10,580) (42,320) (42,320)
------- ------- ------- -------
Net income (loss) allocable
to common shareholders,
HPU holders and
Participating Security
holders (3) ($163,866) ($24,548) ($811,096) ($245,345)
========= ======== ========= =========
-----------------------------
(1) Includes interest income, operating lease income, earnings (loss) from
equity method investments and gain (loss) on early extinguishment of
debt, less interest expense and operating costs for corporate tenant
lease assets.
(2) Includes depreciation and amortization, general and administrative
expenses, provision for loan losses, impairments and other expenses.
(3) HPU holders are current and former Company employees who purchased
high performance common stock units under the Company's High
Performance Unit Program. Participating Security holders are Company
employees and directors who hold unvested restricted stock units and
common stock equivalents under the Company's Long Term Incentive
Plan.
Selected Balance Sheet Data
(In thousands)
(unaudited) As of As of
December 31, 2009 December 31, 2008
----------------- -----------------
Loans and other lending
investments, net $7,661,562 $10,586,644
Corporate tenant lease assets, net $2,885,896 $3,044,811
Other investments $433,130 $447,318
Total assets $12,810,575 $15,296,748
Debt obligations, net $10,894,903 $12,486,404
Total liabilities $11,147,013 $12,840,896
Total equity $1,656,118 $2,446,662
iStar Financial Inc.
Consolidated Statements of Operations
(In thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
REVENUES
Interest income $113,700 $199,201 $557,809 $947,661
Operating lease income 76,073 79,096 305,007 308,742
Other income 10,061 9,144 30,468 97,851
------ ----- ------ ------
Total revenues 199,834 287,441 893,284 1,354,254
------- ------- ------- ---------
COSTS AND EXPENSES
Interest expense 108,828 162,792 481,116 666,706
Operating costs -
corporate tenant lease
assets 5,824 8,258 23,467 23,059
Depreciation and
amortization 25,080 24,065 97,869 94,726
General and
administrative (1) 27,085 29,307 127,044 143,902
Provision for loan losses 216,354 252,020 1,255,357 1,029,322
Impairment of other assets 61,756 149,972 122,699 295,738
Impairment of goodwill - - 4,186 39,092
Other expense 22,499 21,227 104,795 37,234
------ ------ ------- ------
Total costs and expenses 467,426 647,641 2,216,533 2,329,779
------- ------- --------- ---------
Income (loss) from
continuing operations
before other items (267,592) (360,200) (1,323,249) (975,525)
Gain on early
extinguishment of debt 100,392 323,215 547,349 393,131
Gain on sale of joint
venture interest - - - 280,219
Earnings from equity
method investments 16,564 1,157 5,298 6,535
------ ----- ----- -----
Income (loss) from
continuing operations (150,636) (35,828) (770,602) (295,640)
Income (loss) from
discontinued operations (2,723) 2,967 (11,671) 22,415
Gain from discontinued
operations - 18,971 12,426 91,458
------ ------ ------ ------
Net income (loss) (153,359) (13,890) (769,847) (181,767)
Net (income) loss
attributable to
noncontrolling
interests 73 (78) 1,071 991
Gain on sale of joint
venture interest
attributable to
noncontrolling
interests - - - (18,560)
Gain from discontinued
operations attributable
to noncontrolling
interests - - - (3,689)
------ ------ ------ ------
Net income (loss)
attributable to
iStar Financial Inc. (153,286) (13,968) (768,776) (203,025)
Preferred dividend
requirements (10,580) (10,580) (42,320) (42,320)
------- ------- ------- -------
Net income (loss)
allocable to
common shareholders,
HPU holders and
Participating
Security holders (2) ($163,866) ($24,548) ($811,096) ($245,345)
========= ======== ========= =========
---------------------------
(1) For the three months ended December 31, 2009 and 2008, includes
$6,020 and $5,817 of stock-based compensation expense, respectively.
For the twelve months ended December 31, 2009 and 2008, includes
$23,593 and $23,542 of stock-based compensation expense,
respectively.
(2) HPU holders are current and former Company employees who purchased
high performance common stock units under the Company's High
Performance Unit Program. Participating Security holders are Company
employees and directors who hold unvested restricted stock units and
common stock equivalents under the Company's Long Term Incentive
Plan.
iStar Financial Inc.
Earnings Per Share Information
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
EPS INFORMATION FOR COMMON SHARES
Income (loss) attributable
to iStar Financial Inc.
from continuing
operations (1) (2)
Basic and diluted ($1.62) ($0.37) ($7.89) ($2.68)
Net income (loss) attributable
to iStar Financial Inc. (1) (3)
Basic and diluted ($1.65) ($0.20) ($7.88) ($1.85)
Weighted average shares
outstanding
Basic and diluted 96,354 122,809 100,071 131,153
EPS INFORMATION FOR HPU SHARES
Income (loss) attributable
to iStar Financial Inc.
from continuing
operations (1) (2)
Basic and diluted ($307.40) ($70.07) ($1,503.13) ($505.47)
Net income (loss) attributable
to iStar Financial
Inc. (1) (3) (4)
Basic and diluted ($312.60) ($37.00) ($1,501.73) ($349.87)
Weighted average shares
outstanding
Basic and diluted 15 15 15 15
--------------------------------
(1) For the three months ended December 31, 2009 and 2008, excludes
preferred dividends of $10,580. For the twelve months ended December
31, 2009 and 2008, excludes preferred dividends of $42,320.
(2) Income (loss) attributable to iStar Financial Inc. from continuing
operations excludes net (income) loss from noncontrolling interests.
(3) For the twelve months ended December 31, 2008, net income (loss)
attributable to iStar Financial Inc. and allocable to common
shareholders and HPU holders is reduced by $2,393 for dividends paid
to Participating Security holders.
(4) For the three months ended December 31, 2009 and 2008, net loss
allocable to HPU holders was ($4,689) and ($555), respectively, on
both a basic and dilutive basis. For the twelve months ended
December 31, 2009 and 2008, net loss allocable to HPU holders was
($22,526) and ($5,248), respectively, on both a basic and diluted
basis.
iStar Financial Inc.
Reconciliation of Adjusted Earnings to GAAP Net Income
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
ADJUSTED EARNINGS (1)
Net income (loss) ($153,359) ($13,890) ($769,847) ($181,767)
Add: Depreciation,
depletion and amortization 24,896 24,596 98,238 102,745
Add: Joint venture income - 2 - -
Add: Joint venture
depreciation, depletion and
amortization 1,899 1,953 17,990 14,466
Add: Deferred financing
amortization (8,833) 11,546 (5,487) 50,222
Add: Impairment of goodwill
and intangible assets - 9,069 4,186 60,618
Less: Hedge ineffectiveness,
net - 9,533 - 7,427
Less: Gain from discontinued
operations - (18,971) (12,426) (91,458)
Less: Gain on sale of joint
venture interest - - - (280,219)
Less: Net (income) loss
attributable to
noncontrolling interests 73 (78) 1,071 991
Less: Preferred dividends (10,580) (10,580) (42,320) (42,320)
------- ------- ------- -------
Adjusted earnings (loss)
allocable to common
shareholders, HPU holders
and Participating Security
holders:
Basic ($145,904) $13,178 ($708,595) ($359,295)
Diluted ($145,904) $13,180 ($708,595) ($359,295)
Adjusted earnings (loss)
per common share: (2)
Basic and Diluted (3) ($1.47) $0.10 ($6.88) ($2.70)
Weighted average common
shares outstanding:
Basic 96,354 122,809 100,071 131,153
Diluted 96,354 123,107 100,071 131,153
Common shares outstanding
at end of period:
Basic 94,216 105,457 94,216 105,457
Diluted 94,216 108,846 94,216 108,846
----------------------------------
(1) Adjusted earnings should be examined in conjunction with net income
(loss) as shown in the Consolidated Statements of Operations.
Adjusted earnings should not be considered as an alternative to net
income (loss) (determined in accordance with GAAP) as an indicator
of the Company’s performance, or to cash flows from operating
activities (determined in accordance with GAAP) as a measure of the
Company’s liquidity, nor is this measure indicative of funds
available to fund the Company’s cash needs or available for
distribution to shareholders. Rather, adjusted earnings is an
additional measure the Company uses to analyze how its business is
performing. It should be noted that the Company’s manner of
calculating adjusted earnings may differ from the calculations of
similarly-titled measures by other companies.
(2) For the twelve months ended December 31, 2008, excludes $2,393 of
dividends paid to Participating Security holders.
(3) For the three months ended December 31, 2009, excludes ($4,175) of
basic and diluted net loss allocable to HPU holders. For the three
months ended December 31, 2008, excludes $298 of basic and $297 of
diluted net income to HPU holders. For the twelve months ended
December 31, 2009 and 2008, excludes ($19,748) and ($7,661) of basic
and diluted net loss allocable to HPU holders, respectively.
iStar Financial Inc.
Consolidated Balance Sheets
(In thousands)
(unaudited)
As of As of
December 31, 2009 December 31, 2008
----------------- -----------------
ASSETS
Loans and other lending
investments, net $7,661,562 $10,586,644
Corporate tenant lease assets, net 2,885,896 3,044,811
Other investments 433,130 447,318
Real estate held for
investment, net 422,664 -
Other real estate owned 839,141 242,505
Assets held for sale 17,282 -
Cash and cash equivalents 224,632 496,537
Restricted cash 39,654 155,965
Accrued interest and operating
lease income receivable, net 54,780 87,151
Deferred operating
lease income receivable 122,628 116,793
Deferred expenses and
other assets, net 109,206 119,024
------- -------
Total assets $12,810,575 $15,296,748
=========== ===========
LIABILITIES AND EQUITY
Accounts payable, accrued
expenses and other liabilities $252,110 $354,492
Debt obligations, net:
Unsecured senior notes 4,228,908 7,188,541
Secured senior notes 856,071 -
Unsecured revolving
credit facilities 748,601 3,281,273
Secured revolving credit
facilities 959,426 306,867
Secured term loans 4,003,786 1,611,650
Other debt obligations 98,111 98,073
------ ------
Total liabilities 11,147,013 12,840,896
Redeemable noncontrolling
interests 7,444 9,190
Total iStar Financial Inc.
shareholders' equity 1,605,685 2,418,999
Noncontrolling interests 50,433 27,663
------ ------
Total equity 1,656,118 2,446,662
----------- -----------
Total liabilities
and equity $12,810,575 $15,296,748
=========== ===========
iStar Financial Inc.
Supplemental Information
(In thousands)
(unaudited)
PERFORMANCE STATISTICS Three Months Ended
December 31, 2009
-----------------
Net Finance Margin
------------------
Weighted average GAAP yield
on loan and CTL investments 5.81%
Less: Cost of debt 4.21%
----
Net Finance Margin (1) 1.60%
Return on Average Common Book Equity
------------------------------------
Average total book equity $1,690,149
Less: Average book value of
preferred equity (506,176)
--------
Average common book equity (A) $1,183,973
Net income (loss) allocable to
common shareholders, HPU holders
and Participating Security
holders ($163,866)
Net income (loss) allocable to
common shareholders, HPU holders
and Participating Security
holders - Annualized (B) ($655,464)
Return on Average Common Book
Equity (B) / (A) Neg
Adjusted basic earnings (loss)
allocable to common shareholders,
HPU holders and Participating
Security holders (2) ($145,904)
Adjusted basic earnings (loss)
allocable to common shareholders,
HPU holders and Participating
Security holders -
Annualized (C) ($583,616)
Adjusted Return on Average Common
Book Equity (C) / (A) Neg
Expense Ratio
-------------
General and administrative expenses (D) $27,085
Total revenue (E) $199,834
Expense Ratio (D) / (E) 13.6%
----------------------------------------
(1) Weighted average GAAP yield is the annualized sum of interest income
and operating lease income, divided by the sum of average gross
corporate tenant lease assets, average loans and other lending
investments, average purchase intangibles and average assets held
for sale over the period. Cost of debt is the annualized sum of
interest expense and operating costs–corporate tenant lease assets,
divided by the average gross debt obligations over the period.
Operating lease income and operating costs–corporate tenant lease
assets exclude adjustments from discontinued operations of $477 and
$293, respectively. The Company does not consider net finance margin
to be a measure of the Company's liquidity or cash flows. It is one
of several measures that management considers to be an indicator of
the profitability of its operations.
(2) Adjusted earnings should be examined in conjunction with net income
(loss) as shown in the Consolidated Statements of Operations.
Adjusted earnings should not be considered as an alternative to net
income (loss) (determined in accordance with GAAP) as an indicator
of the Company’s performance, or to cash flows from operating
activities (determined in accordance with GAAP) as a measure of the
Company’s liquidity, nor is this measure indicative of funds
available to fund the Company’s cash needs or available for
distribution to shareholders. Rather, adjusted earnings is an
additional measure the Company uses to analyze how its business is
performing. It should be noted that the Company’s manner of
calculating adjusted earnings may differ from the calculations of
similarly-titled measures by other companies.
iStar Financial Inc.
Supplemental Information
(In thousands)
(unaudited)
CREDIT STATISTICS Three Months Ended
December 31, 2009
-----------------
Book debt, net of unrestricted cash
and cash equivalents (A) $10,670,271
Book equity 1,656,118
Add: Accumulated depreciation and loan
loss reserves 1,990,023
---------
Sum of book equity, accumulated
depreciation and loan loss reserves (B) $3,646,141
Leverage (1) (A) / (B) 2.9x
Ratio of Earnings to Fixed Charges (0.5x)
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends (0.4x)
Covenant Calculation of Fixed Charge
Coverage Ratio (2) 2.4x
Interest Coverage
-----------------
EBITDA (3) (C) ($22,795)
Interest expense and preferred dividends (D) 119,408
EBITDA / Interest Expense (3) (C) / (D) Neg
RECONCILIATION OF NET INCOME TO EBITDA (3)
Net income (loss) less preferred dividends ($163,939)
Add: Interest expense 108,828
Add: Depreciation, depletion and amortization 24,896
Add: Income taxes 5,521
Add: Joint venture depreciation, depletion and
amortization 1,899
-----
EBITDA (3) ($22,795)
-------------------------------------------------
(1) Leverage is calculated by dividing book debt net of unrestricted
cash and cash equivalents by the sum of book equity, accumulated
depreciation and loan loss reserves.
(2) This measure, which is a trailing twelve-month calculation and
excludes the effect of impairment charges and other non-cash items,
is consistent with covenant calculations included in the Company's
secured credit facilities; therefore, we believe it is a useful
measure for investors to consider.
(3) EBITDA should be examined in conjunction with net income (loss) as
shown in the Consolidated Statements of Operations. EBITDA should
not be considered as an alternative to net income (loss) (determined
in accordance with GAAP) as an indicator of the Company’s performance,
or to cash flows from operating activities (determined in accordance
with GAAP) as a measure of the Company’s liquidity, nor is this
measure indicative of funds available to fund the Company’s cash
needs or available for distribution to shareholders. It should be
noted that the Company’s manner of calculating EBITDA may differ
from the calculations of similarly-titled measures by other companies.
iStar Financial Inc.
Supplemental Information
(In thousands)
(unaudited)
FINANCING VOLUME SUMMARY STATISTICS
Three Months Ended
December 31, 2009 LOANS
--------------------------
Total/ CORPORATE
Floating Weighted TENANT OTHER
Fixed Rate Rate Average LEASING INVESTMENTS
---------- -------- -------- --------- -----------
Amount funded $42,730 $170,592 $213,323 $5,637 $33,726
Weighted average
first $ loan-to-
value ratio 7.18% 0.66% 1.96% N/A N/A
Weighted average
last $ loan-to-
value ratio 93.54% 82.74% 84.90% N/A N/A
UNFUNDED COMMITMENTS
Number of assets with
unfunded commitments 96
Discretionary
commitments $137,685
Non-discretionary
commitments 702,613
-------
Total unfunded
commitments $840,298
Estimated weighted
average funding
period Approximately 2.8 years
UNENCUMBERED ASSETS / UNSECURED DEBT
Unencumbered assets (A) $6,959,058
Unsecured debt (B) $5,115,236
Unencumbered Assets /
Unsecured Debt (A) / (B) 1.4x
RISK MANAGEMENT STATISTICS
(weighted average risk rating)
2009 2008
--------------------------------------------- ------------
December 31, September 30, June 30, March 31, December 31,
--------------------------------------------- ------------
Structured
Finance Assets
(principal risk) 3.92 3.91 3.90 3.71 3.53
Corporate Tenant
Lease Assets 2.59 2.60 2.59 2.59 2.58
(1=lowest risk; 5=highest risk)
iStar Financial Inc.
Supplemental Information
(In thousands, except per share amounts)
(unaudited)
LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS
As of
--------------------------------------
December 31, 2009 December 31, 2008
----------------- -----------------
Value of non-performing loans (1) /
As a percentage of total
managed loans $4,209,255 45.3% $3,458,157 27.5%
Reserve for loan losses /
As a percentage of total
managed loans $1,417,949 15.3% $976,788 7.8%
As a percentage of
non-performing loans (1) 33.7% 28.2%
----------------------------------
(1) Non-performing loans include iStar's book value and Fremont's
A-participation interest on the associated assets.
iStar Financial Inc.
Supplemental Information
(In millions)
(unaudited)
NPL STATISTICS AS OF DECEMBER 31, 2009 (1) Managed Value % of NPLs
------------- ---------
Origination
-----------
iStar Legacy $2,571 61.1%
Fremont 1,638 38.9%
------ -----
Total $4,209 100%
====== =====
Property / Collateral Type
--------------------------
Land $1,272 30.2%
Condo Construction - Completed 925 22.0%
Mixed Use / Mixed Collateral 372 8.8%
Retail 299 7.0%
Entertainment / Leisure 267 6.4%
Multifamily 263 6.2%
Hotel 245 5.8%
Condo Construction - In Progress 240 5.7%
Office 111 2.6%
Industrial / R&D 65 1.6%
Corporate - Real Estate 62 1.5%
Conversion - Completed 44 1.1%
Conversion - In Progress 37 0.9%
Other 7 0.2%
------ ----
Total $4,209 100%
====== ====
----------------------------------------------------
(1) Based on carrying value of the loans, plus the Fremont
A-participation interest on the associated loans.
iStar Financial Inc.
Supplemental Information
(In millions)
(unaudited)
PORTFOLIO STATISTICS AS OF DECEMBER 31, 2009 (1) Carrying
Value % of Total
-------- ----------
Asset Type
----------
First Mortgages / Senior Loans $8,310 59.1%
Corporate Tenant Leases 3,515 25.0
Other Real Estate Owned 839 6.0
Mezzanine / Subordinated Debt 770 5.5
Real Estate Held for Investment 426 3.0
Other Investments 192 1.4
--- ---
Total $14,052 100.0%
======= =====
Property / Collateral Type
--------------------------
Apartment / Residential $3,816 27.1%
Land 2,162 15.4
Office 1,865 13.3
Industrial / R&D 1,322 9.4
Retail 1,157 8.2
Entertainment / Leisure 907 6.5
Hotel 885 6.3
Mixed Use / Mixed Collateral 774 5.5
Corporate - Real Estate 736 5.2
Other 418 3.0
Corporate - Non-Real Estate 10 0.1
-- ---
Total $14,052 100.0%
======= =====
Geography
---------
West $3,288 23.4%
Northeast 2,634 18.7
Southeast 2,189 15.6
Mid-Atlantic 1,393 9.9
Southwest 966 6.9
Central 923 6.6
Various 877 6.2
International 549 3.9
Northwest 430 3.1
South 413 2.9
Northcentral 390 2.8
--- ---
Total $14,052 100.0%
======= =====
------------------------------------------
(1) Based on carrying value of the Company's total investment portfolio,
gross of loan loss reserves and accumulated depreciation.
SOURCE iStar Financial Inc.
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