Good morning, and welcome to iStar Financial's Fourth Quarter, and Year End 2007 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to iStar Financial's Senior Vice President of Investor Relations and Marketing, Mr. Andrew Backman. Please go ahead, sir.

Thank you Kent and good morning everyone. Thank you for joining us today to review iStar Financial's fourth quarter and year end 2007 earnings. With me today are Jay Sugarman, Chairman and Chief Executive Officer; Jay Nydick our President, Tim O'Connor, our Chief Operating Officer, and Cathy Rice, our Chief Financial Officer. This morning's call is being webcast on our website at istarfinancial.com in the Investor Relations section. There will be a replay of the call beginning at 12 PM Eastern Time today. The dial in for the replay is 1-800-475-6701 with the confirmation code of 909339. Before I turn the call over to Jay, I'd like to remind everyone that statements in this earnings call, which are not historical facts may be deemed forward-looking statements. Factors that could cause actual results to differ materially from iStar Financial's expectations are detailed in our SEC reports. Now, I would like to turn the call over to iStar's Chairman and CEO, Jay Sugarman. Jay?

Thanks Andy and welcome everybody. We got a lot of information this morning to share with you. So let me quickly recap fourth quarter and full year results right upfront, first on the earnings front. Our fourth quarter included two unusual items $135 million in non-cash impairments in our corporate loan and debt portfolio and an increase loan loss provision approximately $50 million higher than expected. Including those two items adjusted earnings per share were negative $0.29 in the fourth quarter and positive $2.72 per share for the year. Excluding the impairment EPS was $0.74 per diluted share $3.75 per share for the full year and actually excluding both items the EPS was $1.13 per share and $4.14 per share for the full year. Cathie, will talk more about the economics scenario now embedded in our reserve and impairment decisions in just a minute. Second we funded $1.3 billion in new and existing investments and received over $500 million in repayments during the quarter and for the full year funded $7.7 billion in new and existing investments and received $2.7 billion in repayments during the full year. We'll share with you some detailed repayment information from the residential portfolio later in the call. Deferred return on equity on equity was obviously disappointing impacted by those tow items from above the ROEs for the quarter and year were negative 6.1% and positive 14.6% respectively including those items. They were 15% and 19.6% excluding the impartment, and 23.3% and 21.4% for the quarter and year respectively excluding both those items. While the increases in first mortgages as percentage of the portfolio and the Freemont acquisition bumped up overall leverage target slightly. We still believe the portfolio is quite considerably and appropriately leverage relative to other finance industry metrics and run rate return…

Thanks Jay and good morning everyone. As Jay mentioned over the past few months we've been working on a number of initiatives. To build liquidity and to position our firm for the new environment. We believe that the steps we are taking now will allow us to maintain our financial flexibility and begin to take advantage of certain opportunities, we are starting to see in the market. as we discussed at our Investor Day back in December our almost $16 billion unencumbered assets will enable us to tap attractive sources of secured capital at a time when the unsecured debt market remain disrupted. Before I give you an update on some of these initiatives, let me review the results for the quarter and for the year. Our fourth quarter earnings clearly reflect the impact of the current credit environment uncertain of our investments as well as the continued stress in the overall market. Our adjusted earnings resulted in a loss this quarter of $36.6 million or a loss of $0.29 per diluted common share. Included in fourth quarter earnings, were $135 million of non-cash charges associated with the impairment of two credits in our corporate loan and debt portfolio. Excluding the effect of the impairments for these two credits, adjusted earnings for the fourth quarter were $95.4 million or $0.74 per diluted common share. Let me provide you with some background on the impairment. We took a non-cash impairment charge totaling $135 million on two credits which are accounted for as held to maturity debt securities. Both credits are performing and continue to pay interest. The accounting for these securities, does not allow loan loss provision to be taken against them but requires that the value be impaired based on a significant drop in market value for an extended or…

Thanks Cathie. Cathie talked about the more conservative outlook we have utilized in our projection and our reserve analysis. I think there is no question its appropriate and reflects a very real chances of recession throughout 2008. However, it's also important to continue to watch the data in the real estate world very carefully and not the entirely captive to headlines and one-off anecdotes. And one statistics we track quite carefully, obviously as condominium unit closings in our portfolio projects that have units available for sale. I think while the general concerns is that nothing is moving in that market, we think that's too general a statement and too draconian in a view with respect for our own portfolio, we track closings on a weekly basis across all projects we are invested in, that are in a position to close on contracts. And I thought I would share those statistic with you for the past few months. In October of 2007, 292 units closed generating a $147 million of sales proceeds. In November of 2007 a 197 units closed with $89 million of sales proceeds. In December 243 units closed with a $175 million of sales proceeds. In January 304 units closed with $209 million of sales proceeds. And in the first three weeks of February 338 units have closed with $228 million of sales proceeds. Now we aren't telling its all rosy on the condo front, but we would caution extrapolating from some of the headlines out there. We believe borrower will need to work very hard to help buyers access mortgage financing, to be realistic with respect to pricing, and to accept as the profit potential in many projects is gone, and now it is really about them recouping part of their equity. Let's switch to reserve in…

So stay tuned and let's open up for question. Kent? Question And Answer

Thank you. And today's question-and-answer session would be conducted electronically [Operator Instructions]. Thank you. And our first then come from the line of Don Fandetti with Citigroup. Pleas go-ahead.

Hi. Jay question CRE fundamentals and delinquencies remain pretty good. Yes it seems like your portfolio is starting to really show some weakness. What you tribute that to? Is it that you have a residential team, and how do you expect to sort of manage with that as the market gets tougher in CRE?

I guess two things Don, in terms of the parts of the portfolio obviously, Cathie mentioned the condo conversion market. We took a pretty hard view pretty quickly and said, if you are not prepared to put out money an protect you position we are going to foreclose periods. As Cathie also said in each case we have a choice, we can workout lower interest rate, provide more capital, waive some requirements. Our fundamental view over the last six months has become that we don't control the collateral value it destroyed. And so in cases where we not seeing a response from a borrower that indicates a belief in either the return of value to their equity position or protection of mezzanine lenders of their position. We are going straight to guys of unit... if you don't believe hand of the key. If you don't want to hand them politely we are going to take them. I think a lot of these situation we will recover full value In some case we'll recover extra return through either default interest, extension fee. But I guess our view right now is, let's get our hands on the collateral because we feel very comfortable we can maximize the value. It is primarily in the residential related area, I think as we look our loaned values we still feel pretty good about most of the book. But we setup 300 plus million dollars against the bunch of assets we expected to have to work on, and we still feel really good as you heard me say that, if you give us $0.20 on a deal that was 0 to 80% loan to cost and you give us a big basket of those to work with, we are going to get out. And our returns…

Okay. And then Cathie just to clarify, when you closed the secured debt on the CTL portfolio you will be paying off the bridge prior to maturity is that correct?

Yes. The both the AutoStar... excuse me, the AutoStar, the CTL proceeds and obviously the timber sale will be happening sort of in the second quarter. So we'll have plenty of liquidity to pay the bridge down.

Okay. That's all I have. Thanks

Thanks Don. Next question Kent.

Thank you. Yes your next question comes from the line of Jim Shanahan with Wachovia. Please go ahead

Thank you and good morning. First of all with regard to the condo unit closings, Jay thank you very much for providing that incremental disclosure that's that was very helpful. Can you provide however a little of that in contacts in, what I mean is how do you for example these strong loan closing especially giving what I would expect to observe to your seasonal trends in January, February. How does those closing compare to the number of unites in the portfolio that are available for sale? And what kind of actions do you take in terms of pricing or really in the other potential added value to the buyer to incent them to, to act and the close on a condo?

Yes Jim we tries to come over this statistic, I think that's exactly what you are asking, that it is not simple way to do it on a portfolio wide basis. Obviously new projects that reach the state or reach... receiving their certificate of occupancy can begin closing on contracts. So we are in a position where we track those every week, and its hard from week-to-week to give you a statistic that actually make sense. So we are giving you raw data. There are probable somewhere between 7,500 and 10,000 units that we track inside our portfolio available for sale. We only need a fraction of those to close to get us out. But obviously the equity sponsors are trying now when to get their money back pay off their mezzanine, but actually in many cases they still believe they have meaningful profits at stake. And we don't control the pricing, it's really not our per view as a lender to tell people what to do. We can wait minimum release prices, we can work with bars to say, if you sell at this price, we might be willing to do something for you. But at this point we're just trying to encourage everyone that we think still has value in their projects to understand that. On a net present value bases, they will do better in the long run from actually moving units with a customer who says, I want to close and even need a little help in price, I it need a little in terms of getting financing. That's what they should be focused on rather than holding tight and saying we are not going to move prices. And those sponsors who have actually done that are continuing to move units. We've seen that, again throughout…

Thank you. And a quick follow-up. Given the repayments and funding that have occurred in the typically cando loans and investments. Have there been any meaningful changes in the geographic diversification of the cando portfolio?

Not yet, I think you may see a reduction in the New York throughout this year. And even in South Florida we are see still of mind that enough units will close at... both of those exposures will come down fairly materially this year. But as Cathie said, we are been some what conservative, we take and repay it down, probably about 25%... 20% to 25% than last years viewpoints. I'll tell lower... certainly if all mind lower interest rate are helping. Expanded Fannie Mae eligibility will likely help a little bit. But this micro economic overlay is really the variable we are spending the most time trying to figure out, when does it stabilize, does it stabilize, and how do we play that both offensively and defensively.

Thank you very much.

Well thanks Jim. Next question Kent.

Thank you. Yes your next question comes from the line of Susan Berliner with Bear Stearns. Please go ahead.

Hi, good morning. I wanted to catch on two topics, one was if you can talk about the corporate loan and bond portfolio. And I guess just looks like the loan sizes is that we are led lot larger than you typically take in the loan portfolio. So I guess considering how its done and I know it's little unfair because what's going on the market. Are you revaluating, that kind of product type or investment?

Two good questions, on the first one these are two at larger positions. In one case there was meant be a exosmic control position and the other case we wanted to be a larger player. We had actually looked in the capital stock of the transaction with a very high end private intuitional equity investor. They were looking to actually put a mezzanine piece in. We did expensive and underwriting, decided that risk reward wasn't a appropriate for us. Dropped down into a senior bank debt position thinking we were saved. Market is kind of caught that one by the retail, the equity sponsor continue to believe in the story, continues to have a very significant investment junior, continues to pay those notes. But its right in the board tax that some other cost currents that are catching the market place. And while its in our health and maturity bucket... every body should understand when we put some thing and held the maturity bucket, its very, very difficult for us to exit and totaled a credit event. We expected it to be a long term hold, and at this point is still a long term hold. But when it trades that's the kind of levels we've seen recently. We think it was is appropriate as we analyzed it recently to take that one down. The other asset is a controlled position in asset we thought we knew quite a bit about. We still believe there is inherent value there. But again that one is right in the gross cost heads of some of the markets dynamics, some ugly market dynamics. And its still paying and we are still going be in the mix there and certainly hope to recovered our collateral value. But again appropriate move that one down. So those are larger, in fact I think those are two of the largest exposure in that portfolio.

And I guess the other question was, its seem like you are talking about one $200 million mix use asset and on NPL list, you are seen pretty confident in that and you guys also made note to reserving a bunch of NPLs in the quarter. So I guess I'm trying to figure out, what can we expect for provisions... for additional provisions this year?

Yes Sue it's hard for us to predict obviously the provision is based on, again the risk rating process that we undertake after the end of the quarter. And as you can see while we busy resolving a number of our NPL and watch list asset, the watch list is also up a bit. And so I think it is a little difficult for us to give you a good forecast on the potential provision.

Alright, I would say of the just the categorization of the fourth quarter was unusual.

Okay. Thank you.

Thanks. Our next question Kent.

Thanks. Our next question comes from the line of David Fick with Stifel Nicolaus. Please go ahead.

Good morning. Just following-up on that question. Cathie, you in your prepared comments said that the issues are notable and underwrite able, and yet we have this big impairment issue this quarter. And so... and I know it's hard for you to look forward. But clearly things happen that you didn't underwrite, didn't know. And I'm just wondering how you would advice analyst and investors to look at your, book value and the quality of the underwriting going forward?

Yes, now that's a good question and I think it's a little confusing in the corporate and loan and debt health maturity bucket. As we outline that bucket is not reserve-able and it is subject, it's like on the book the book value. And to the extend assets in the that portfolio trade down significantly on a more than temporary basis. We are required to take an impairment based on the market trading. So that group of asset as we outlined, is only about $423 million, we took an impairment on two of the fixed asset in that bucket. And I am sure you are well aware that, the corporate debt market is been subjects to some fairly draconian trading levels at this point.

Yes.

And I think at the end of the quarter we felt although we are so relatively confident in both of these assets, that we need to take this impairment based on the market price.

I guess David just to chip in there a little bit. What's clear to us and I hope really is the punch line for Cathie's comment about underwritable and knowable, we do not structure products. We so not... assumption stuck into a model, if you are right you are right and if you are wrong you are wrong. But that's really... you are not even making a real estate call because you can't go and look at the real estate or you cant go and operating business. Basically have a structured security that has very volatile characteristic that are unknowable and ununderwritable. And we certainly have looked at a lot of opportunity in the current market dislocation that appear on the surface to be very attractive. But when we get inside they are unknowable and ununderwritable, and really don't fit our profile. The things we are investing and the things we hopefully are working on inside our own portfolio we can come to a reasonable value conclusion and can probably defend that across a wide range of investors and say, this is why this value is reasonable. We are having a very high time when we get shown some of the structure products out that. Somewhere in its mix it has a piece of real estate. But it is so layered or so convoluted in its return profile, we can underwrite it and we don't really know how to defend purchase price. There maybe some great opportunities in that sector that's why we continue to look. But right now we think the structure of product quality is not our strength and we are very much focused on the existing portfolio and new opportunities where, we can bring the full resources of the firm to bear and actually come to a conclusion. Everyone around the table and every discipline from asset management to construction to legal to real estate investment can look at each other because that make sense I understand that.

Okay. Can you help us there with why GAAP EPS guidance is higher than adjusted EPS typically it runs the other way.

Yes, as I said and I think we've said this a couple of times in there past, we thinking embedded gains in the portfolio significantly outweigh some of the issues that obviously that have a lot of attention. As you talked about book value, we continue to believe very strongly that we have a number of assets that are very much under booked in terms of value and on the downside we have lots of reserves for those that are on the other side. So we still feel very good about the overall book. When you look at timber in particular as one of the asset that, at least at this point we can actually demonstrate to you that dynamic. It's a $185 million of that, from depletion is down probably to about $150 million on our book. We are going to receive $400 million of proceeds. So it is going to be a very large GAAP gain and a large economic gain there. And so we from a GAAP perspective are going to have a very large gain. But that's not something we will run through a EPS, it only through GAAP.

Yes.

But it clearly is a taxable gain. And so in terms of the dividend as Cathie mentioned, it create a enormous cushion to protect that dividend in 2008, and we don't want that to be lost on folks.

The last question, the, clearly a lot of external factors that were affecting performance. But I am wondering if you can give us any guidance on how management compensation is been impacted by share performance and these loses?

Well as you saw G&A came down very materially in the fourth quarter, that was the reversal of some management bonus accruals. We continue to try to implement paper performance structures that align shareholders interest with managements interest. And we continue to have enormous amount of our network in this company and I'm going to continue to exercise option and buy share at these levels. I believe that at 16 dividend yield or 15 dividend yield I think that dividend certainly for this year is very well protected, is an extraordinary opportunity and we will to make the best with our board and our comp committee that we will generate strong returns for shareholders' over the next several years. And we'll structure a comp position appropriately.

Thank you.

Thanks David. Next question Kent.

Thanks. Our next question comes from the line of Michael Dimler with UBS. Please go ahead.

Good morning. Just kind of curious to why are your last LTV rose during the quarter, when its been pretty steady all along. Can you talk a little about the dynamics of that?

Yes I mean, the heard the not think real estate values are going to be impacted by a lack of liquidity throughout the entire credit markets. Now generally thought even at the end of last year that values were starting to slip by as much as 10% or 15% or even 20%. So we have a pretty cushion in that we don't never marked our assets up internally to some other valuations that we thought were inappropriate. So the LTV has inched up, I don't think this has moved up with materially. But I think we are cognizant as everybody should be that some of the valuation metrics that existed over the last two or three years, are going to get an outstand if liquidity if deals doesn't comeback to this market. And based on our view that we have notched the entire risk complex down based on the macroeconomic over lay its not surprising. But LTV's are inching out

And in that's remark not necessarily to transactions, but to your view of where they should be prices, is that right?

Yes. Exactly I think we have mentioned our historical experiences our marks are significantly below where things actually traded or values up on, on which they were refinanced. I think that statistic which our asset managers track has been in the 20% to 25% range historically. As we said we are probably eating up some of that margin as values in the more frothy sectors come back to earth. But we still think we mark things very appropriately.

Andjust a follow-up, are you seeing any... I mean apart from condos are you seeing any serous acceleration, deterioration in other property classes?

The equity side of the real estate market fairly quite right now. And I think people are trying to find the new level some asset gets out of prices that still shock ups. And we have not seen the big distressed portfolio moves where you have seen real estate equity prices be readjusted materially. I think that will be matter of both the overall market environment and liquidity, and there will come a point where there will be sellers who have to sell there is plenty of equity money in this market there is plenty of mezz money actually in the market. What's lacking and this is unusual because its the 180 degree flip side of history is low risk, low return money has disappeared. So we have got high risk high return money sitting on the sideline waiting. But a lot of that money needs low risk, low return in credit, its actually make there play and right now that's the piece of the market that has not come back and that's the piece of the market we are watching very carefully because there will be driver of value not just in our market but in lots of market.

Great. Kent next question please.

Thank you. Yes we have a question and from the line of Omotayo Okusanya with UBS. Please go ahead.

Yes, good morning. I just wanted to do all my reconciliations of your actual versus my projections. And there is one thing I just need a little help with it. It's the large other expense line that shows up in the number this quarter that hasn't been there historically. Could you just give us more detail on what that is?

Sure other expense scale in this quarter is the $135 million impairment.

Okay.

Primarily. Plus there are also the gain or loss, the mark-to-market on our derivatives.

Okay. So that's the whole thing that goes. Okay. So it actually went through the P&L rather than going to return earning.

Yes.

Okay, great. Thank you.

Thanks. Next question Kent.

Thanks. Our next question comes from the line of Douglas Harter with Credit Suisse. Please go ahead.

Thanks. I just wonder if you could help reconcile that the difference between the $4.4 billion of unfunded commitments you gave at the Investor Day and $3 billion that you are talking about today?

Sure, I mean some of them have been funded in the interim. But as we have mentioned there are a lot of project that are either been delayed, postponed or cancelled, particularly given the current economic environment and what people are viewing as maybe at times to hold on those assets rather than proceed ahead. And try to get a better feel for... if it's a two year construction period when they really want to start that process.

Thanks. And then on the debt maturities and paydown, I think you said that the paydowns in current quarter were like $500 million you are expecting $4 billion for the full year 2008. Is some of that seasonal or you expecting sort of a pick up in activity.

In terms are paydowns for the remainder of 2008 it totals about $4 billion that was versus $5 billion at the end of December sort of investor day. Received a lot of those paydowns we also scrubbed those numbers and as we've mentioned one of the thing that we have little less confidence is the repay schedule given the current liquidity environment. We are having borrowers that are having they have good projects great credit statistics on their projects while they are having trouble right now finding sources of the repayment.

I think is fair to say that second half repayments are slightly higher that the first half repayments so if you are looking for that trend up would be.

Is that contractual or is that, so I am assuming that there are some improved liquidity in the market?

No this is not contraction process this is the list that how we look at it as what we expect to get.

Okay.

Onour knowledge and our discussion with borrowers in that has 2008 maturity.

Okay and you plan is obviously has more of built in cushion are you likely to sore of one run with that bigger cushion for the foreseeable future as opposed sort of deploying the assets. By deploying that excess sources?

You know right now Jay mentioned we are not seeing tremendous amounts of transaction volumes. There seems to be a bit of a stoppage in both the equity and debt side of the real estate capital market. We expect and hope that as the year continues we will see additional opportunities to put capital to work at. What we think will be very attractive risk adjusted returns but right now we're just not seeing that level of activity. So it's real hard to give you a view on that.

Alright. Thank you.

Great. Kent next question?

Thank you. Yes, your next question comes from the line of Stephen Laws with Deutsche Bank. Please go ahead.

Hi, good morning. Couple of questions. Want to follow-up the Fremont I guess unfunded commitment pipeline and I think talk in earlier. You know, you talk about, it looks like a little over $500 million was funded during the quarter yet the unfunded pipeline were down about $800 million, you are looking to fund about $1.8 billion of $2.2 billion left. Can you talk about why you expect the fallout to decline to decrease the pace there. And also talk about any property types or geographical regions where you are seeing high percentage of fallout?

Yes, there is a couple of things that impact the additional funding. One is, they tend to be pushed out from a timing perspective and this is nothing more than construction frankly always take longer than people originally think. So I think while a lot of those will be funded, they tend to lag what we originally think off as schedule. But the second thing as I mentioned, again a lot of, the early stage projects particularly in the Fremont portfolio we have sponsors who were so scratching their head saying. I am not really sure I want to move forward given what I am seeing in my market for this type of projects. So many of them are coming and we are working with them to say, we think that makes sense let's put the project on hold. And we are effectively canceling those commitments to fund.

I think those cancellations are fund loaded we trying to know which ones are not moving forward. We would not expect that same percentage to drop out of the future projection.

Every quarter.

People I missed benchmarks which give us the ability to say your projects is not viable or for them to say that project is not viable. A lot of that has already been floated through the book. By the end of the year the Fremont commitment are actually a quite low number so really 2008 will be the hump year. We pretty much have very good visibility. And we think we already know the vast majority of the deal that just will never fund or which will never hit the benchmarks because the fund. So I wouldn't project that for something it's going keep repeating itself.

And then obviously I guess its lot of condo conversion but any other property types or geographic concentration we are seen that fallout, abnormally high?

I can't give you anything systemic that actually raises the level or appears a big trend. It's one-off projects sympathetic with the overall market conditions in almost every major metro market. People are much more cautious in terms of being able to deliver presales. That is one precondition on the residential side. Pre-leasing on the retail side, pre-leasing on the office side, if you are not hitting numbers the most of these loans are predicated on very stiff milestones and if you don't hit on generally if you have a chance to stop the project, borrowers are stopping. If it can they are in a position we'll require a put lot more money and before we are willing to do something.

Okay great. I guess one quick question if you can just touch on the integration of the Fremont sales force. When the deal was completed you guys were looking or attaining most of the sales people on the various offices. And how thats coming along we are changing the culture there?

We spend a lot of time on that in the last six months, it's unfortunate that we have not really been able to unleash what the combination of the local market knowledge and some of the capital market knowledge. That we sitting in New York have. I think that's frustrating to everybody but I think the systems, process is some of the dynamic that we needed to get in place are there now. And I certainly feel like we have a very strong organization with tremendous capabilities right now. It would be nice to have the capitals to use that one of the reasons for the joint venture. What frankly guys on the ground and investing equity capital out of their new funds. They like see that the debt market is re-pricing much faster they like us see that the some of the more interesting area are semi-distressed and it's takes a real on the ground President to be able to underwriting and gain confidence that you are generating good or great risk adjusted return and we think that's another case where one plus one can actually equal three. So excited by that obviously we liked back in business investing lot of our own capital but first things first. And when we do get out of the mud we want running pretty quickly. So we are going to keep everybody focused on existing assets, new asset opportunities and market trends. And when the door opens we are ready to run through it.

Great, and one final question is, some detail on the guidance, new guidance of $3.50 to $4 I think you said during the prepared remarks, assume zero net asset growth. Is it really the loss provision that's the key there from $3.50 to $4, or kind of what are the other mean variables to the end points of that range?

I think it is a number of things. It's the loss provision, obviously we mentioned as throughput assets on NPL we stop occurring the income so that impacts income. I think we are also taking a harder look at the other income line item which historically has been primarily comprised of prepayment penalties. Obviously in this environment we are expecting lower prepayment penalties on assets. So it's a couple of things.

Okay great. Thanks for taking my questions.

Thanks. Next question Kent?

Next question comes from the line of Dean Solcy [ph] with Lehman Brothers. Please go ahead.

Thanks for taking my question. Can you provide a little bit more color on the investment mandate for the private equity JV and the fee structure?

Sure, we are really targeting at the large transactions, the first mortgage is over $75 million junior positions over $50 million. We will be receiving a management fee and a small promote on capital that's actually deployed. I think that's probably secondary in our minds to really the ability to expand our network of knowledge with a firm that has tremendous relationships throughout the country. And we think is at ground zero in couple of markets where we think that it's going to be really interesting opportunity or by geographic regions and asset type. So I think we had a lot of people actually approach us with capital, I think frankly some of them on more attractive economic terms to us to invest, we like this structure for the one plus one equals three free network of knowledge angle. But it's also a very short term, it's a six month in duration investment period but it meant to be quick hitting. It has a ability to some of the more semi-distressed that we think might be more interesting early in the current year. But it certainly only doesn't preclude us from doing some thing in a different weighing down the road we think this is the way to build our knowledge based very quickly in the market that we think is going to change valuation relatively soon if this market doesn't correct and we think we Lubert-Adler is a great partner here to use their new fund that they have raised to get into the market and some really great risk adjusted return opportunities that we see and you just share the economics of those.

Next question Kent.

Next question comes from the line of Jim Shanahan with Wachovia. Please go ahead.

Thank you for taking my follow up and I appreciate that. Just a quick question there was some volatility on the revenue side associated with joint venture income and I apologize if I missed that explanation but the last time in spite it had something to do with Ivy Hill can you comment on what like to big joint venture income increase. On the year-over-year and the sequential quarter basis?

The bulk of that increase was related to an increase in management fees and our 47.5% interest in Oak Hill.

Thank you.

Thanks Jim, next question.

Next question come from the line of Susan Berliner with Bear Sterns. Please go ahead.

I just want follow up I guess Cathie on the sources and uses one quick question. Do you any of the loans or what percentage of the loans can be extended instead of being repaid?

We don't track that exact statistics but when we look at the forces from maturities and paydowns again this is not necessarily contractual date this is an assumption that we and our asset management team scrub almost on a weekly basis. To indicate when we actually expect so that the borrower may have a maturity coming up, but we know that he is working on refinancing and probably will be a months late. Instead of showing that at the maturity we would show it at when we actually expect to receive the paydown. Or if we don't expect to receive the paydown we would not include that. So we would obviously taken to account any extension any asset any as of right extensions if they have. And frankly assume in this environment that they will extend.

Okay. And I guess looking at the sources and uses the resources include the remaining on your bank line. And I know kind of mentioned asset sales as a possibility, I was wondering if you could elaborate a little bit on that. And also about potential for I guess additional equity issuance?

Yes. As we have already talked about we are in the process finalizing the sale of our TimberStar Southwest venture. We are also working on the sale which will take a little longer and has really just started the process of our Northeastern timber assets. With respect to equity issuance I think we don't have any firm plans there. And based upon the current valuations obviously that's not an attractive proposition. But it's early in the year and I think we'll have to keep you updated based on where we see the business headed.

Okay. Thank you.

Thank you. Kent.

And our final question from the line of Omotayo Okusanya from UBS. Please go ahead.

Yes. Thanks for taking my follow-on question. Just a little bit of focus on the dividend I mean when I think about the dividend, I mean, when I think about the dividend going forward, I really should be thinking about the taxable earnings, right? So although, even if provision levels go up going forward, if you guys are successful or working through any defaults and are you end up not having any charge offs. Then on a net basis, that's you are not seeing any impacts, taxable earnings which should not impact the dividends, right? Or am I thinking about this, or should I be thinking about this differently?

No, that's correct.

Okay. Great, thank you.

Thank you. I guess just, let me just follow-up on that question. What are the priorities for the firm right now, I just want to make sure everybody understands that, from the credit perspective, being an investment grade company is sacrosanct we have worked in tremendously hard over 10 year period. We have unencumbered our balance sheet, we have kept low leverage relative to all the other finance metrics we've seen in the marketplace. That remain number one priority two that dividend is important for shareholders, we think with timber sales well cushioned at this point we fundamentally believe that the dividend is something that's critically important. And then lastly I think our focus in on raising the capital to get busy. We've got a very large and talented organization that is proved over 15 years and it can make 15% to 20% returns on equity. We want to deploy that in a market that we think is as good as it's going to be for many-many years and I think if we do those three things well this year. We are going to be very well positioned going into 09, 010 and 011.

Great. Thanks Jay. And thanks to everybody for joining us this morning. If you do have any additional questions on today's earnings release or the call, please feel free to contact me directly here in New York, Kent will you please give the conference call replay instructions once again. Thank you, everybody.

Absolutely. Ladies and gentlemen, this conference will be available for replay after 12 PM today until March 13th at midnight. To access our playback service you may dial 1-800-475-6701 and enter the access code of 909339. International participants may dial 320-365-3844 and entering the access code of 909339. That does conclude our conference for today. Thank you for your participation and using AT&T. You may now disconnect.