Good day ladies and gentlemen, and welcome to iStar Financial’s Third Quarter 2012 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 Mr. Jason Fooks, Vice President of Investor Relations and Marketing. Please go ahead, sir.

Thank you, John, and good morning everyone. Thank you for joining us today to review iStar Financial’s third quarter 2012 earnings report. With me today are Jay Sugarman, Chairman and Chief Executive Officer and David DiStaso, our Chief Financial Officer. This morning’s call is being webcast on our website at www.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 1800-475-6701 with a confirmation code of 268-531. 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 will be forward-looking. iStar Financial’s 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 obligation 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 Jason. Thank you for joining us on the call this morning. Since our last call, we’ve made progress on a number of fronts, as we continue to move iStar into position for increased investment activity. During the third quarter, we again paid down significant amounts of debt and shortly after quarter end, executed a longer term refinancing for a sizable portion of the asset base. Together with the improved access to longer term unsecured capital, the successful execution of this new five year secure facility, gives us the opportunity to begin focusing the company on deploying capital in 2013 for new investments, as well as for continued debt reduction and refinancing activity. Our portfolio is now falling into several distinct business lines, and as we move forward, we will being highlighting of this different areas are contributing to overall cooperate results. Roughly speaking, we define these lines of businesses as real estate finance, net lease, the operating portfolio, the managed land portfolio and strategic investments. In each category, there are assets that are performing well and contributing to earnings and other assets that remain in transition and are negatively impacting earnings. As we mentioned before, unlocking value in these assets will require additional investment and significant management time. We’re building a growing pool of profitable examples that gives us confidence we will be able to make that happen. Let me go through a quick overview of the business lines. Our real estate finance focus is currently over $2.1 billion and we break the business down into the performing loan book and the non-performing loan book. Returns on the performing loans totalling just over 1.5 billion are quite healthy with yields in the LIBOR plus 600 region for floating and 8.5% for fix. But the NPL book of approximately $650…

Thanks Jay and good morning everyone. I’ll begin by discussing our financial results for the third quarter 2012 and recent capital markets activities for moving on to discuss our portfolio and then update an on liquidity. For the quarter, we reported a net loss of 72 million or a loss of $0.86 per diluted common share compared to a net loss of 62 million or $0.71 per diluted common share for the third quarter 2011. Adjusted income for the quarter was a loss of 26 million, compared to a loss of 19 million for the same quarter last year. Results in the prior year period included a 22 million, one time gain from discontinued operations associated with the previous net leased assets portfolio sale. Excluding this item, the year-over-year improvement was due to the income we’re now generating from our condo sales. Increased earnings form equity method investments, as well as a reduction in G&A costs. This was partially offset by decreasing interest income from an overall smaller real estate finance portfolio. Adjusted EBIDTA for our third quarter was 77 million compared to 83 million for the same period last year. Our press release contains the calculations of adjusted income and adjusted EBITDA as well as reconciliations to GAAP net income. We’ve continued to reduce our overall debt levels, during the third quarter we repaid a 148 million on the A1 tranche of our 2011 secured credit facility and 66 million on the A1 tranche of our 2012 secured credit facility. As we previously announced, subsequent to the end of the quarter, we refinanced the balance of our 2011 secured credit facility with a new 1.82 billion senior secured credit facility due October 2017 marking our third capital raise this year. The transaction has a number of important benefits for…

Thanks Dave. Well there’s really not much more to add other than we’ll keep pushing forward and look to make further progress on our plans as we head into 2013. So let’s go ahead and open it up for questions operator.

(Operator Instructions) And first go to the line of Joshua Barber with Stifel Nicolaus. Please go ahead.

I am wondering if you could talk a bit about the reserves. Maybe this is more of an accounting based question, but you guys have close to 40 million of general reserves. At what point do you just start dipping into that rather than taking quarterly and asset specific reserves?

Joshua, from that perspective, we continue to look at asset specific reserves, as we go ahead and evaluate loans each quarter, from an accounting perspective, if assets require specific reserves, we would continue to provision for them. The general reserves are just for the remainder of the portfolio subject to conditions we’re not yet aware of.

Okay. But you are adding it back when it comes to calculating your book leverage and stuff like, do you expect to use that at some point or do you think that that just may be excess reserves at this point?

At this point, they are just general reserves that are not identified for the specific assets.

But Josh, the simple answer is yes, we would expect to use them, they are done a based algorithmically against performing loans, but I think it’s fair to say I think that $40 million will get used over the next couple of years.

Okay. When we’re looking at your land portfolio especially with home building and land being on everybody’s mind today, are you seeing better interest in just buying land parcels or at least partnering with you guys on land parcels for some of your assets and how is that changed over the last six months?

Yes, we've seen a material upturn as you probably read in the press, the public home builders are active and engaged now. There are markets where shortages of lots have become acute and so it’s not only what can I buy for today’s needs but people are actually starting to engage in productive dialogue around what they need for future needs. But there is still work to be done to really position properties for the right market that we see down the road. So lot of those conversations are about particular portions of a project. I think we still think there is value to be added on our own ownership before we want to think about seriously engaging those conversations.

That makes sense. Dave, I may have missed it but do you have a 2013 capital spending or CapEx target for that, speaking about land portfolio?

On the land side, CapEx, so we are projecting somewhere in the range of $75 million to $100 million for land related expenditures.

One last question, AMF always seems to popup in the news at some point, can you just remind us what the total amount of cash rents that you are getting from AMF today?

Yes, AMF is about a $27 million GAAP number and obviously we see what’s in the press, all I would say is, and our conversations are focused on improving the quality of our lease and improving the credit of our tenant. We’re pleased if that outcome can help both parties, so we think that's a safe and secure piece of paper for us.

Our next question is from Michael Kim with CRT Capital Group. Please go ahead.

Just had a question on LNR, what is that mark on the balance sheet at quarter end, under other investments?

I'm not sure, whether you can see there, but it's somewhere in the $180 million range, Mike.

And I guess of the 23 million of earnings from equity method investments during the quarter, how much of that was related to LNR?

About two thirds.

And just to follow-up on the question on AMF, our understanding that AMF is currently working under a short term forbearance agreement to allow for a balance sheet restructuring plan and part of this forbearance is AMF looking to negotiate a new mass lease agreement with iStar and if so, is this going to address lease projections, concessions or closures?

As I already said, Mike, I think our goal is just to improve the quality of our lease and I know the tenant here would like to improve the overall credit of the company and those are both good things for us. So I think rather than go into specific details, I'll just tell you again, we think we're in a nice safe position and certainly hope the outcome of this is a stronger tenant.

And on the land side, I really appreciate all the color that you just provided on the call. I'll bet 60% targeted for production by 2014, now how much in CapEx is required over the next two years and of that amount how much do you think will be mass client communities versus the other category for water front resort and other land.

Let me see if our guys can break it down for you. But on the land side we are investing in all those properties, some are dollar investments and are just capital intensive or making infrastructure improvements. Others are much more I would say, sweat equity, we're repositioning, re-entitling, re-envisioning where some of these properties need to go. We like the markets, we like the potential in those, but we really don't want to spend money unless we see some long term return on it. So, they give you a number of 75 to 100 million. That doesn't go away unfortunately. These are big projects; they continue to have multiple phases. So we think that run rate number is probably a pretty good number for a while. The mix between the more urban waterfront stuff and the big master plan community stuff, I can’t probably give you a dollar number but I can tell you the larger projects right now are out in production moving forward, but we do think some of those urban projects are going to get kicked off here pretty soon in a more meaningful way. So, there will be money spent on both and I just don’t have a breakdown, I can give you off the top of my head.

Our next question is from Mark Palmer with BTIG. Please go ahead.

Could you provide some timing with regard to addressing the 2013 maturities and in particular can you talk about the balance between the cost of taking out in particular the June 13 maturity versus waiting, particular given the uncertainty that we may see in the not too distant future with regard to the U.S. election, the fiscal cliff and Europe?

Absolutely, it’s very topical question. We did the longer refinancing on the secured piece really to give us as many options as possible as we start to think about ‘13. One of the positive benefits of that exercise, we’ve got a lot of reverse inquire on other parts of the capital stag. I think there is some good ideas in there that obviously have a trade-off between, you’re doing now or you’re doing later and then what sizes. Obviously, we’re not going to wait for the last minute. We do think there are things we should do sooner rather than later. But there is a cost to all those decisions and at 8 5/8 every time, we’ll save a little bit of money, but we don’t think it’s prudent to postpone all of our 2013 thinking for long time.

Our next question is from Jonathan Feldman with Nomura Securities. Please go ahead.

Just have three questions. One is, if you guys were prepared to give any sort of informal guidance if you will on cash burn for next year. Second question is, just where you’re seeing the best investment opportunities in the portfolio and should we expect the capital that you’re committing to existing portfolio investments or new investments to grow as your balance sheet continues to improve. And then I guess just third, was wondering if you could amplify your thoughts on whether you think it’s make sense and/or is feasible to raise capital in a context other than repaying debt. And where you think the cost capital would need to be for that to be attractive to you. Thanks so much.

As we think about supplying capital Jonathan, obviously the decisions we’re making on the ground all need to be net present value positive to us. So we are trying to pick among the best alternatives in the portfolio we could obviously spend even, well beyond the numbers they throughout. If we had lower cost to capital, we were most indiscriminate in how we thought about this stuff. But right now there is a pretty high bar and obviously the money we do spend we think we’re generating returns. The stuff that goes into new leasing or to building an add-on building for our tenant that’s going come into production right away, you’re going to can see returns right away. We built some additional multifamily. We built some things that you can see the results immediately. Other investments particularly in the land, you’re not going to see those show-up in earnings anytime soon, there is a lot of upfront cost, a lot of upfront soft cost associated with those projects that’s why we keep cautioning that, while we think there’re going to be big contributor long term, those are not the kind of instantaneous satisfaction you get from fixing a condominium or putting a new tenant in place or building a multifamily project, those returns are tangible and we can kind of point you to that pool of examples where we see the profitability of those and it gives us great confidence that as we continue to work away at the non-income generating assets, we’re going to be able to show a pretty compelling case that with time and money and effort we have been making that a pool start to perform. But I don’t think we can give you specific numbers about how we’re going to go about allocating money…

(Operator Instructions) And we will go to Amanda Lynam with Goldman Sachs.

My initial question was on timing for addressing the 2013 maturities that since we have already cover that, could you talk a little bit about whether there are parts of the capital structure you might consider, would you add a convert back to the balance sheet specifically. And then secondly is your goal still to ultimately return to investment grade debt ratings and do you view that as necessary to really get back into the full swing of writing new business or do you think that you can write some attractive new business opportunities without regaining those investment grade ratings? Thanks.

Yes, it would be fantastic if I thought we could get investment grade ratings in the near term, I just don’t see that as a possibility, but I do think upgrades from where we are today are certainly feasible and we run this business as kind of a 4B level many times and for many years in our past. And it will be a very profitable business at those levels. So that’s a good interim target for us and probably a more realistic target in any sort of relevant timeframe. We were pleased that Moody’s was part of the upgrade story this year. Certainly next year we think we’ll have more good news to share with both S&P and Moody’s and we will look forward to an opportunity to continue to make progress with both of them. When we think about our capital stack, you’ve seen us looking at all parts of the equation we brought stock. We've certainly been thoughtful about where the best places are to either raise capital or deploy capital. So we don’t ever exclude anything but I guess I would say the reverse inquiry God gave us some ideas about where attractive capital could be priced and we will consider all those factors, when we think about the best way to move forward.

And Mr. Fooks, we have no further questions.

Thank you. Thanks John. Thanks everyone for joining us this morning, if you have any additional questions on today's earnings release please feel free to contact me directly. John, please give the conference call replay instructions, once again. Thank you.

Certainly and ladies and gentlemen, this conference starts at 12:30 p.m. Eastern Time and will last until November 8 at midnight. You may access the replay at any time by dialing 800-475-6701 and entering the access code 268-531. That does conclude your conference for today. Thank you for your participation. You may now disconnect.