Good day, ladies and gentlemen and welcome to iStar Financial’s third quarter 2009 earnings conference call. (Operator Instructions) 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.

Thank you, John and good morning everyone. Thank you for joining us today to review iStar Financial’s third quarter earnings report. With me today are Jay Sugarman, Chairman and Chief Executive Officer; and Jim Burns, 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 1-800-475-6701 with the confirmation code of 118047. Before I turn the call over to Jay, let me remind you once again 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’d like to turn the call over to iStar’s Chairman and CEO, Jay Sugarman. Jay.

Thanks, Andy. Thanks to all of you for joining us today. The third quarter saw continued challenges throughout the loan portfolio, offset somewhat by continued steady performance in the sale leaseback portfolio. Borrowers continue to struggle to find sources of refinancing, and transitional assets and assets without predictable cash flows remain particularly at risk. We saw strong rallies in both the corporate credit markets and in the credit markets for many of the largest publicly traded REITs and that suggest to us that the freefall in asset values is probably reaching an end, but we do continue to expect a very painful period of value adjustment in all, but the very highest quality assets and our third quarter results reflected this difficult environment. Adjusted earnings were negative $2.37 per share, driven like last quarter by large loss provisions on the loan portfolio and lost income from the high level of nonperforming loans. We were more constrained in our ability to retire outstanding debt at discounts to face and the number of non-earning assets continues to drag down earnings. We did see an increasing number of foreclosures being completed and the ability to control our collateral will give us a chance to enhance value and recapture as much of our original basis as possible. We were disappointed that our flow of funds liquidity in the third quarter remained negative, with fundings under existing commitments continuing to exceed repayments, net of the Fremont A note and Repayments remain below expectations, and we don’t currently expect to see a positive flow of funds dynamic kicking in until the end of the year or early 2010. Selective asset sales were again used to make up for any shortfalls. With respect to troubled loans, we currently own just under $1 billion of foreclosed real estate and we are deploying the appropriate resources to help extract the maximum value from these assets. We do expect the size of the REO portfolio to continue to grow, based on loans currently in foreclosure and we are focusing on preserving value or partnering with the right operators wherever possible. I want to talk a little more about the market and what we need to see happen to start turning a corner, let me have Jim to cover the third quarter details first. Jim.

Thanks, Jay and good morning, everyone. Let me start with third quarter results before moving to credit and liquidity. Adjusted earnings for the quarter were a loss of $234 million or a loss of $2.37 per common share. Results this quarter included $346 million of additional loan loss provisions and $26 million of impairments relating to REOs, CTLs, and other assets. Partially offsetting these losses were $92 million of gains in the quarter associated with retirement of debt at a discount. Revenues for the third quarter were $210 million versus $337 million for the third quarter of 2008. The year-over-year decrease is primarily due to a reduction of interest income as a result of an increase in nonperforming loans, an overall smaller asset base and lower interest rates. Net investment income for the quarter was $180 million versus $210 million for the third quarter of 2008. This year-over-year decrease is primarily due to the lower interest income I just mentioned, offset by lower interest expense and increased gains on early extinguishment of debt. At the end of the third quarter, our leverage defined as book debt net of unrestricted cash divided by the sum of book equity, accumulated depreciation, and loan loss reserves, was 2.9 times compared to 2.8 times at the end of the second quarter. As I mentioned last quarter, we continue to expect to reduce our debt and the size of our balance sheet. During the third quarter, we funded a total of $283 million under preexisting commitments. We generated $586 million in gross proceeds from repayments and loan sales versus $556 million received last quarter. We also generated $48 million of proceeds from REO and CTL sales. Based on principal repayments and asset sales associated with the Fremont portfolio during the quarter, the A participation interest…

Thanks, Jim. So the question we continue to grapple with is how and when we can turn the corner on the existing portfolio. Losses continue to be stubbornly high, repayments stubbornly low and negative asset performance too frequent. Here are the four markers we need to see to believe we’ve reached a bottom. One, repayments inflows must exceed funding outflows. To rebuild liquidity, the monthly flow of funds needs to turn from negative to positive. We’ve hoped this would happen in the fourth quarter; we now think it will happen towards the end of the year or early 2010, and this is a key part of our 2010 plan. Two, credit losses must begin to slow. Obviously, values across the real estate market have fallen pretty dramatically and in some markets it’s still difficult to determine where exactly they will settle. Borrowers are still assessing how much capital they’re willing to commit to stay in the game and in control their assets and to work them back to health. Until confidence returns about fundamentals and values stabilize, credit losses will likely continue at very high levels. Three, the number of negative performance reports we get in our asset management meetings much go down versus the number of positive reports. To-date, the negative reports have significantly outweighed the positive one, and when those are more balanced, it may signal the portfolio has stabilized. Four, the last marker we have to reach is getting to the point where we have the ability to borrow on a more normalized basis in order to refinance maturities in 2011 and 2012. We know that it’s a tall order, but that piece has to fall into place before we can climb off the bottom. While we’re making slow progress, none of these markers were in a good place in the third quarter, so we have a lot of ground to make up as we head into 2010. That’s how we see it, and now Operator, let’s open it up for questions.

John, could you queue up the questions, please?

(Operator Instructions) First with the line of David Fick with Stifel Nicolaus; please go ahead.

Good morning. Thank you for taking my call. The debt buybacks appear to be a very good use of capital, but I’m just wondering how you look at creating those gains versus your needs for capital, given the negative net investment proceeds that you’re seeing today. How do you think about managing that?

David, I think we’re looking at conserving liquidity wherever possible, but we do think where we have some excess liquidity or where we have an asset sale that we can match up with some sort of liability retirement that makes sense. We’re going to go ahead and try to do that. Obviously, we’re not in control of the supply and demand in the credit markets in terms of what is available to us. So it’s not something we can predict quarter-to-quarter very easily, but we have made a number of asset sales that have created a little bit of incremental liquidity and when possible, we’ll use that to continue to shrink the balance sheet.

Thank you. Jay, you indicated that on one hand you’re predicting worsening news on credit, on the other hand, you’re anticipating or maybe I’m hearing that you’re hoping, that you’re going to have repayment increase by the end of the year or early next year to offset your forward funding requirements. What indicators do you have that would show better performance on repayments?

Let’s be a little bit careful. In terms of the fund flow flipping over, it’s as much the fact that the forward commitments are shrinking as it is repayments increasing. So I don’t think we’re relying entirely on repayments to increase. We just know the natural rundown of the unfunded forward commitments will help that indicator turn positive. We are still a little bit skeptical in terms of repayments, given the difficulty borrowers seem to have refinancing or accessing new equity to pay us down; second part of your question?

Let me just ask it a different way. What ratio of forward payment to maturities do you expect in your models?

I think David, as we’ve kind of talked about the situation has been in flux for quite a while and what we try to do is see what the level of repayments are that are coming in, and to the extent that they are insufficient to meet our funding requirements, the additional fundings that we have to make on our construction projects or debt maturities or any other obligations. We’re filling those holes with asset sales and we’ll continue to manage it that way.

One last, very broad question for Jay, I guess. You’re obviously watching creation of new peer entities with de novo structures out there, under the predicate that there will be a ton of opportunity to invest and yet, iStar is obviously still in a position of playing defense and trying to turn the corner on the existing portfolio. How do you look at those new entities and is there any way that you could see iStar participating in that opportunity? Do you think the opportunity even exists?

Yes, my instincts are the opportunity will exist. We see it more in a three to five year cycle than quarter-to-quarter, but we do think the dynamics are in place for a very attractive real estate finance business opportunity set. I will also say after 15 years we also now hard it is to build a business as opposed to doing some smart investing. I think the opportunity to invest capital over the next two or three years is very attractive. Turning that into a fully-integrated, internally-managed and serviced lending platform is a lot more difficult. We still own and control a 250 person fully-integrated, developed, and experienced platform and that should be a very valuable thing. It will take others a while to get to that size and that integration. Unfortunately right now we are still looking to protect the existing portfolio, but we are watching the markets very carefully. We have seen some transactions that we have passed on to other investors that we thought were quite attractive. We do think we have some relatively unique insights into both where the opportunities exist and how to attack them and so, we will look for ways, if we can, to take those opportunities and rather than passing them along, to bring them home, but that’s not an easy thing to do.

Our next question from Don Fandetti with Citigroup; please go ahead.

Jay, just getting to the good job kind of covering all the metrics, I was just curious on your thoughts on the commercial real estate property markets. I mean I think prices are down maybe 40% year-over-year. Where do you think we are in that cycle if you could comment on that?

Yes, I mean I think everybody has seen a remarkable SnapBack, certainly in the corporate credit markets. We’ve begun to see that in the higher echelons of the real estate market. We’ve obviously seen, as you have, that the large public REITs that now have access to capital at very attractive cost of debt. The stocks seemed to have recovered nicely from the March lows. So that part of the market is starting to feel reasonably good and I think very high quality assets are starting to get quite a bit of interest, both domestically and offshore, at prices that on an historical basis look reasonably fair and attractive, but there’s a whole slow of assets I would describe as not in the top 10% that is very poor pricing, little financing that’s the part of the market I think certainly the Fed is concerned about, the FDIC is concerned about. Where is that market going to settle and I would tell you fundamentals continue to deteriorate in a lot of those asset types and a lot of the secondary and tertiary markets probably even more than the 40% number that we’ve seen turned around. So, I can’t tell you that we feel like that obtain over we certainly think the panic has ended. We think there is enough capital being deployed against the real estate sector that good assets will find a home at reasonable prices. There’s a lot of transitional assets out there. There’s a lot of non-cash flowing assets out there on the market really has not healed sufficiently to know where the bottom is for those, but as the overall macro environment continues on a steady course, I think over the next 12 months to 18 months you will at least know where the bottom is. I’m not sure we’ll have taken enough pain to stabilize out sector, but it’s becoming pretty clear in our minds that if there is not a macroeconomic sharp in the next 12 to 18 months, we’re going to see where the bottom is.

(Operator Instructions) We go to line of James Shanahan with Wells Fargo; go ahead.

Thank you, good morning. I had a question I’m going to apologize in advance because I may have missed this in your prepared remarks, but I’d like to know if you can give us an update on your comfort level with your minimum tangible network requirements.

Sure. We have been as a result of our losses, our tangible network has been decreasing, but we’ve also had some things that we’ve been able to do to offset some of the losses that have been primarily coming through its provisions for loan loss reserves. The largest of those, as we kind of talked about a little bit earlier, the ability to repurchase some of our debt at attractive levels has been able to absorb some of those losses. We did do a bond exchange earlier this year and so we have some things that we are able to do to heal some parts of the left hand side of the balance sheet by using the right hand side of the balance sheet. So, it’s our intention, Jim to keep using whatever levers we have at our disposal to continue to manage that covenant so that we maintain our compliance with that covenant and all of our covenants.

If my math is correct here, you’re kind of in the neighborhood of $1.8 billion versus the minimum tangible network requirement of $1.5 billion. Is that correct?

Yes, that’s correct.

I guess my follow up question then would be how serious an event is it if you violate that minimum tangible network requirement? Is that something that you would expect to handle by simply paying a fee and renegotiating or is that a very serious event?

Again, our intention is to try to not have-to-have that conversation and continue to manage the network so that we don’t get there, but the covenant is on our secured bank facilities and we’re always, obviously in close discussion with all of our bankers and that would be something that we’d have to have a discussion with at some point.

I think you can say that would be serious, but our view right now as we continue to work not to be in a position where we need to go to our bank.

That will conclude the Q-and-A session. I’ll turn it back to you, Mr. Backman.

Great, thanks John and thanks to everyone for joining us this morning. As always, if you should have any additional questions on today’s earnings release, please feel free to contact me directly here in New York and John, if you wouldn’t mind, please give the conference call replay instructions once again. Thank you.

Ladies and gentlemen, the replay starts today at 12.30 pm Eastern and the dial-in for the replay is 1-800-475-6701 and the confirmation code is 118047. That does conclude your conference for today. Thank you for your participation. You may now disconnect.