Good day, ladies and gentlemen and welcome to the iStar Financial’s fourth quarter and fiscal year 2009 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, John and good morning everyone. Thank you for joining us today to review iStar Financial’s fourth quarter and fiscal year 2009 earnings report. With me today are Jay Sugarman, our Chairman and Chief Executive Officer; and Jim Burns, our Chief Financial Officer. This morning’s call is being webcast on our Web site at istarfinancial.com in the Investor Relations section. There will be a replay of the call beginning at 12:30 pm Eastern Time today. The dial-in for the replay is 1-800-475-6701 with a confirmation code of 145462. Before I turn the call over to Jay, I would like to remind everyone that statements in this earnings call, which are not historical facts will be forward looking. iStar Financials actual results may differ materially from these forward-looking statements and the risk factors that could cause these differences are detailed in our SEC reports. In addition, as stated more fully in our SEC reports, iStar disclaims any intent or obligations to update these forward-looking statements except as expressly required by law. Now, I’d like to turn the call over to iStar’s Chairman and CEO, Jay Sugarman. Jay?

Thanks Andy. 2009 was a very difficult year for iStar. Despite a lot of hard work, it seemed like we were climbing an ever-steepening hill. Asset impairment and negative surprises were large, painful and ongoing. The final quarter provided some positive signs of stabilization and high quality in cash flowing assets. The transitional assets remained out of favor and sellable only at meaningful discounts to normalized value. Market fundamentals continue to be weak in most areas and the macro economy remains fragile though on steadier ground than early last year. Our fourth quarter and year-end results reflected much of the second (inaudible) backdrop. Fourth quarter earnings were weak with provisions for loan losses driving a large adjusted loss totalling $1.47 per diluted share. And while slightly better than the third quarter, elevated losses have continued as we grind down the portfolio, we tried to work down both the left and right side of the balance sheet. Unfortunately, 2010 will likely be more of the same though we do think we have made progress in 2009 in reducing some of the flash points in the portfolio. While painful taking out lumps on certain assets and continued pay downs on various performing loans have enabled us to meet our funding obligations through the end of last year and should position us to meet remaining funding obligations and debt maturities through the first half of 2010. In addition, we will continue to explore the sales of the mix of both high quality assets and some lesser quality assets to prepare for future maturities and position the company to approach our banks regarding 2011 maturities. With respect to credit quality, as pay downs of good assets continue, the remaining asset portfolio will be made up of a higher and higher proportion of (inaudible) loans that will take longer to work out and monetize. As a result, our credit stats continue to look very poor. All we can do is continue to work these problem assets out and re-align the firm’s resources accordingly. Now, with that brief overview, let me turn it over to Jim. Jim?

Thanks Jay and good morning everyone. Let me start with our earnings results for the fourth quarter and the full year before moving to credit and liquidity. For the quarter, we reported an adjusted loss of $142 million or $1.47 per common share. Results this quarter included $216 million of additional loan loss provisions and $65 million of impairments related to OREOs, CTLs and other assets. Partially offsetting these loans were $100 million of gains associated with the retirement of debt at a discount. Revenues for the fourth quarter were $200 million versus $287 million for the fourth quarter of 2008. The year-over-year decrease is primarily due to a reduction of interest income as a result of an increase in non-performing assets including NPLs and OREOs as well as an overall smaller asset base. Net investment income for the quarter was $192 million versus $432 million for the fourth quarter 2008. The year-over-year decrease is primarily due to a smaller gain associated with the early extinguishment of debt as well as the lower interest income I just mentioned somewhat offset by lower interest expense. For the full year 2009, we reported an adjusted loss of $689 million or $6.88 per common share. Results for the year included $1.3 billion of loan loss provisions, $141 million of impairments, and $547 million of gains associated with retirement of debt including a one-time gain of $108 million we recorded upon completion of our bond exchange earlier in the year. Given the required accounting treatment, we still have approximately $228 million of unamortized gains associated with this exchange which we will amortize against interest expense over the life of the 2011 and 2014 secured notes. Net investment income for the year was $911 million versus $966 million last year. Revenues for the year were…

Thanks Jim. Lastly I hope 2009 would be a transition year setting us back on course. That did not happen as some borrowers we believe would work aggressively to recover value and protect our position, instead threw in the towel, walked away from their investment or worse actively blocked and impeded our value to recover proceeds due to iStar. It will now be up to us in many cases to find a way to extract value from these assets, and we hope to be able to shore many of these assets and put them back on solid ground. The bigger question is how do we get iStar back on solid footing. And given sufficient time, we believe we can create significant value for shareholders from the existing portfolio. Gaining time and creating a long enough runway to be able to maximize asset values will continue to be our key focus in 2010. But execution on the left side of the balance sheet will be very sensitive to execution on the right side of the balance sheet. On the right side, we need to work down our leverage, protect book value, stay within convent guidelines, and find ways to meet debt maturities and funding commitments. This is the same fine line we have been walking for sometime now. We expect to continue to have little margin available [ph] in our execution. However with funding commitments mostly coming to an end over the next 12 months, our main focus can now be on meeting our future debt maturity. We will obviously keep you updated throughout the year on how we plan to do that. With that, let us go ahead and open it up for questions. Operator?

Thank you. (Operator instructions) We will go to Joshua Barber with Stifel Nicolaus. Please go ahead.

Hi this is Dave Fick for Joshua Barber. Two quick questions, the loan sales in the quarter of $129 million, what percentage of par, original par were those sales done on average?

Move on David. David, what is your second question?

Your 8-K filing last week, you indicated that you had offers to sell roughly 40% of your CTL portfolio, first of all is this the one collateralizing the capital loan and what kind of cap rate indicators you are seeing and what sort of what is your strategy around selling those loans, I am sorry the CTL assets considering they are some of your more stable assets in the portfolio?

We have been over the last two years looking for opportunities to monetize the assets. We do believe the market for strong stable assets is actually quite attractive right now given the dearth of very long life and very stable cash flow assets that are actually available in the marketplace, lot of capital out there that we think needs to find a home given the low treasury interest rate environment it finds itself in, and we think the sales leaseback product is one of the more attractive ones out there and for those who do not want to take near term macro economic or real estate risk. It is not to say we are going to do anything there David. Our view right now is, we are exploring the opportunity as a result of a number of inbound calls. We do think that values could approach levels that would be attractive to us, but we will obviously know that relatively soon and make a decision going forward.

Can you say anything about what kinds of yields you are seeing in that marketplace?

Yes, I think the last two trades that have gone down on a sale leaseback basis that we monitor very closely, the best was about 7.5 cap on a suburban Princeton office building leased to a large pharma company. 7.5 cap is probably close to or just behind where that would have traded probably two or three years ago. We have seen some industrial stuff trade in the high 7, and we have seen some second-tier properties trading in the low 8. So, we think there is a strong bid for assets that, at least in the near term, people are not having to guess where the economy is going or where the real estate market is going. We think really high caliber assets like some of the ones in our portfolio should be attractively priced at both of the benchmarks.

These sales would not affect if they occur your changeable net worth calculation but they would affect your liquidity obviously and I am sure that is behind your call here.

To the extent they are game, they would impact tangible network.

Okay, thanks.

David, just getting back to you on your first question, the loan assets that we sold in the first quarter, I am sorry in the fourth quarter, we realized just a hair under 90% recovery on those assets.

Well, that is very strong. Okay, great, thank you.

Thanks David. Next question John?

(Operator instructions) We will go to the line of Jim Shanahan with Wells Fargo. Please go ahead.

This is Jim Shanahan. Good morning, everyone. The question that I have is the company has continued to obviously to see opportunities that require outstanding debt and retire the debt for gains. However I am guessing here that the largest gain potential is not likely to be with the near term maturities, it is just to make sure, I wanted to verify, is any of the debt that was retired in the fourth quarter, is any of that the March or April maturities that we have been discussing?

Yes, as I mentioned in my talk, our March and April debt maturities now are down to about $300 million. So, we did repurchase some of those in the fourth quarter.

(inaudible) in this has commented two other earnings conference calls going on, so regarding the other liquidity, did you provide an update Jim of the liquidity position today and the outlook for the repayment of those debt maturities as scheduled?

No, we talked about where we were at the end of the quarter. We have had some repayments and some asset sales thus far already this year and that included we did get back almost $200 million on our great position which got a fair amount of publicity. So, we now have the $300 million of March and April that we expect to repay in March and April. We think in the first half of the year, we have got about $300 million of unfunded commitments that we need to meet, and then in the second half of the year, probably another $130 million of unfunded commitments mostly related to construction loans. Our December 2010, unsecured bond which we had also being buying back a little bit back of is now down to $250 million. And in September of this year, as part of our first-lien bank line credit facility, if we do not make a $500 payment, it is not a mandatory repayment but if we do not pay it down by $500 million repayments of principal in any asset sales of the collateral that is in that pool goes to pay down the banks until they receive the $500 million pay down there. So that is kind of where we are.

Thank you for that review.

Thanks Jim. John?

I think we have time for one more question that will be from the line of Ian Goltra with Forward Management. Please go ahead.

Good morning Jay. Of the $4.2 billion of NPLs currently, how many of those are maturity defaults or what dollar amount of maturity defaults versus non-payment of P&I [ph] is occurring?

You know, I do not have the exact amount but it is mostly maturity defaults. We have got three buckets, we have got maturity defaults, we have things being delinquent by 90 days, interest being delinquent from 90 days, and then we also have assets where we think the borrowers no longer making an effort to repay the loan and it is a vast, vast majority of those assets that are NPL are maturity defaults.

In which case you are receiving P&I on an ongoing basis?

In most cases in the maturity defaults, we are not receiving interests either. Some cases, it will go NPL before maturity if someone stops paying interest but no, for the cases if there is a maturity default, not always but in most cases there is no more interest to be paid either.

I want to be careful there. I think most of the NPLs are impaired assets, they are not simply passage of time issues. It is actually a credit issue.

Okay. And then lastly the reserve at roughly $0.33 on a dollar relative to the NPLs, are you guys using fairly draconian assumptions at this point or can you talk to a minute about sort of your qualitative assessment of loans and the risk ratings and where you are with – I assume there is varying shades of grey here relative to those NPLs, and just kind of where you are in terms of draconian versus say fair value assumptions?

Yes, we are spending a lot of time on that, Ian. I guess, the number that gets tossed out in the world is 40% decline in value as the baseline. In our experience, I would break that down for you and tell you for high quality, strong, stable, cash flowing assets, it is probably 0 to maybe as much as 20%. If it is high quality but the cash flows are somewhat transitional or second-tier assets with somewhat stable cash flows, I would say you probably lost 20% to 40% of value. If it is high quality and it has got no cash flow or negative cash flow, particularly in the hospitality area, or you have got second-tier assets with cash flows and transitions, you are probably down 40%, 50% even 60%. And then if you are second-tier assets really with negative or no cash flow, you can be down as much as 60% to 80%. So I think the 40% base line is an interesting number but as we look through the portfolio and try to assess real value diminution, a lot of it comes down to an assessment of where it is in that sort of cycle of cash flows and qualitative issues with respect to the real estate. We think the 33% number while interesting, hard to generalize from each individual asset, could be from very little reserves to very, very, very significant reserves. The average just happens to be kind of in the 33% range, which if you think values on average have fallen 40% and we were at kind of 65% or 70% of initial value feels adequate, but I will tell you there are probably about 50 high data assets in the portfolio. We guess it is very difficult to make an assessment of the outcome. It is almost binary. So we are making judgment calls on how things are going to fall out and again I think we have gone several steps beneath the surface to try to analyze exactly what we think outcomes will be, severities will be, and see the end result but I would caution you that it is a very granular approach.

In a dollar value sense, those significant assets represent what percent of the total NPLs?

Not just NPLs it is --

Across the board.

It is 10% of the total number of assets, it is more than that on the dollar amount.

Okay.

We think fundamentally, we have to break it down for you, we look at value and say if a borrower paid more than the replacement cost in the last three years, that money is lost and never coming back. It is pretty easy to assess those. I think where replacement costs have changed, the borrower paid replacement costs, we lent against then current replacement costs, we think those numbers are down 10% to 20%. Most cases, we are probably fine. Borrowers probably lost the money but we are probably fine. I think the loss of leverage on some of these deals is impacting value. We think time may heal some of that but it clearly will not heal all of it. And then we think fundamentals have weakened. There has simply been a flat out reduction in cash flow particularly in hospitality, retail, and even for multi-family but we think that is something that actually will come back as the economy comes back. So, we look at those factors and we try to decide where is value been permanently diminished versus where things that with the passage of time may be recovered and that is how we are trying to assess both severities and the timeframe in which we will recover our basics.

Then lastly, shifting gears, you had a small impairment of $22 million against the CTL portfolio, do you think it is a particular event or is it just market conditions? Can you articulate what is it that caused that?

Yes, we had a transaction we thought was going to close last year on a parcel of land in California. The zoning did not happen and so there is more work to be done there before that value can be realized. Based on GAAP, we had to take that impairment.

Thank you.

I will turn it back to you, Mr Backman.

Great. Thank you John. Thank you Jay, Jim and everybody for joining us this morning. As always, if you have any additional questions on today’s earnings release, please feel free to contact me directly here in New York. John, would you go ahead and give the conference call replay instructions once again, thank you.

Certainly. Ladies and gentlemen, this replay will end March 5 at midnight. You can access the replay at anytime by dialing 800-475-6701 and entering the access code 145462. The number again, 800-475-6701 and entering the access code 145462. That does conclude your conference for today. Thank you for your participation. You may now disconnect.