Good day ladies and gentlemen, and welcome to the iStar Financial’s Fourth Quarter and fiscal year 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 fourth quarter and fiscal year 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 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 282728. 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 and thank you for joining us this morning. As we laid out on our last call, our business is now comprised of several distinct segments. Real estate finance, net leasing, commercial and condominium operating properties and land development currently make up the main focus of our activity and our goal in 2013 is to continue pushing each segment contribute to the overall iStar story with improving metrics and forward momentum In the fourth quarter we continued to work on the existing portfolio and returned to the capital markets several times to position the company for increased investment activity. By successfully lowering our cost of funds extending debt maturities and accessing multiple sources of capital, we’ve achieved our key capital market goals for 2012. The previously announced agreement to sell LNR will also free up significant additional capital and senior management resources and together with increased capital market access it should enable us to begin targeting larger investments what we have traditionally found better value. We are currently focused on several opportunities to put capital work and would hope to begin closing on some of those opportunities in the second quarter. Let me go through a quick review of the business lines. Our real estate finance book is currently just under $1.9 billion and includes $1.36 billion of performing loans yielding 7.5% and $500 million plus in non-performing loans. We expect progress throughout the year in reducing the size of the NPL book and are targeting turning a minimum of 40% of NPL assets into cash or into performing assets by the end of this year. Unlocking the earnings potential of the NPL book will again be an important focus this year. The net lease book has a gross book value of just over $1.65 billion and it’s generating…

Thanks Jay and good morning everyone. Let me begin by discussing our financial results for the fourth quarter and full year 2012, as well as recent capital markets activities, before moving on to discuss our real estate and loan portfolios. For the quarter, we reported a net loss of $87 million or a loss of $1.04 per diluted common share, compared to a net loss of $35 million or $0.43 per diluted common share for the fourth quarter of 2011. Adjusted income for the quarter was a loss of $23 million, compared to earnings of $19 million for the same quarter last year. Results in the quarter included a $35 million of expenses, of which $12 million was non-cash associated with the $2.3 billion of capital markets transactions we executed during the quarter. In addition, results in the prior period included a $30 million gain associated with the sale of our investment in Oak Hill Advisors. Excluding the impact of these items, our net loss for the quarter was $53 million versus a loss of $65 million in the fourth quarter of the prior year. For adjusted income, we would have been approximately breakeven versus a $10 million loss in the fourth quarter of 2011. Excluding those items, the year-over-year improvement was due to increased income from a residential condominium sales, increased earnings from equity method investments, as well as a reduction in G&A costs, partially offset by decreasing interest income from an overall smaller real estate finance portfolio. For the full year 2012, we reported a net loss of $273 million or $3.26 per diluted common share, compared to a net loss of $62.4 million or $0.70 per diluted common share in 2011. Adjusted income for the year was a loss of $54 million, compared to $3 million loss…

Thanks Dave. I expect with the new reporting segments there might be quite a few questions. So, operator, why don’t we go ahead and open it up?

Michael Kim – CRT Capital Group: Hi, good morning. Congratulations on the quarter and the recent capital market transactions, also really appreciate the added disclosure in the press release and in your prepared remarks. And I guess to start off, Jay, for the commercial operating property portfolio, could you remind us what level of occupancy is required to be considered a stabilized asset and looking at the $633 million of transitional commercial properties, what sort of weighted average effective yield do you envision once you achieve a stabilized profile and I guess how long do you think that will take to get there and then what level of investment might be required?

Hi, Mike, yes I guess the thing I would say about the transitional stuff is that’s across a wide range of assets in geographic markets, so you’ve got multi office, you’ve got industrial, you’ve got hospitality. So I think stabilization might mean something a little bit different in different geographies and different sub-markets but, we can or maybe think when we reach a stabilized level it means, typically there is now lot of upside left. There is some sort of embedded system vacancy that’s probably not going to go away. So high 80 is kind of for most markets and most product types, you’ve kind of tapped out. Michael Kim – CRT Capital Group: Okay.

We think that yield is somewhere in the 6% to 7% to 8% range, depending on the market, depending on the product type but, of the stuff we have stabilizes in the 90% range kind of 7-ish percent, sometimes a little bit higher. That seems to be a place where we can start looking at alternatives for either selling those assets or financing them on a longer term basis. So in our mind, that’s kind of stabilization. Michael Kim – CRT Capital Group: And I appreciate it. Thank you. And I guess, my second question, thank you very much for that disclosure on the land portfolio. I guess, what is the buyer profile look like for the current entitlements that you have in place for your master plan communities, just thinking about between entry level move up, second move up or even active adult. I know the press release says there is about 25,000 lots that are currently entitled, just curious to know if your repositioning efforts are looking to also modify the entitlements. For example, could we see some sort of shift in mix where the entitle lot figure may come down, but you are going to be focused on a move up or a second move up profile?

It’s tough to generalize across lots of different properties and markets, but I would say there will be an active adult component. We think demographically that’s going to be a piece of the puzzle that we have some very good land for. Certainly move up, always going to be part of the story and we’ve got entry level momentum on a couple projects that frankly we think in 2013, we should be able to tell, give you some more story line throughout at least the few of these assets that are now in production beginning to sell. And we haven’t gone deep dive on individual assets because we are still in the entitlement process on a number of those and politically this is going to take us some time. So we are still working through a big chunk the assets that we took back and are repositioning, but you will hear us talk in more detail about individual projects as the year goes on. Michael Kim – CRT Capital Group: And I appreciate it. And lastly, my last question, I was actually pleasantly surprised to hear that 40% of your NPL to be kind of put into performing or either monetized or reaching some sort of event. Is that being moved by just a handful of assets? Is it pretty concentrated in kind of the larger sized loans? Or seeing some sort of resolution later this year? Or you have that visibility? Or I’m just kind of curious how we should think about that?

Yes, I think, time is probably the biggest factor. We’ve been working on those for quite a while. We do see resolutions in sites, hard to peg them down quarter-by-quarter, but we do see by the end of the year reasonably realistic our goals. It will be dependent on a couple transactions that maybe get to the finish line and we certainly think that’s going to happen and are making a focus of that. But you can just feel over time these things are coming to resolution. We got our shoulder against them for a couple of years. So, unless something unexpected happens, we would expect to get that done by year end. Michael Kim – CRT Capital Group: That’s great. All right, thank you very much.

The next is from Joshua Barber with Stifel. Please go ahead. Joshua Barber – Stifel, Nicolaus: Hi thanks, good morning. I am wondering if you could talk about the loss reserves and impairment especially being that they are up fairly big year-over-year. Can you discuss, number one, what’s driving that, especially as the markets are starting to stabilize? And second of all, how many of those are on mezzanine and junior loans? And what those are carried at today since on a dollar?

Well, let me talk about it more generically, this is hard. I think the reserves now become fairly idiosyncratic, they are individual asset situation. We talked a little bit about Europe. We talked a little bit about some of the things in the land portfolio. We’ve decided to invest then there are other things. We have decided it’s probably not the wisest decision to continue to commit capital and those would change business plans and are likely just to monetize or move out of those. So we’ve appropriately reserved those assets that we think are specific issues around them. Overall I feel like the book is working through the issues on a reasonable timeframe and certainly we would expect the impairment loss numbers to bounce around a little bit. But certainly, the trend should be towards pushing out most of the problems in the portfolio. So, I do think specific assets still have some issues and some of the business plans around those may change. But I wouldn’t read too much into any single quarter’s events. Joshua Barber – Stifel, Nicolaus: Okay, you made some comments before about looking for opportunities to put capital out in the second quarter; can you talk broadly about where that capital might be placed today? Is it back in the core commercial real estate business or would it be elsewhere?

No, again I think the history of iStar $35 billion plus of transactions leads us into a lot places where we have historical knowledge or historical relationships. We focused on the top 20 metro markets. So it’s likely to be in those markets. We are working with borrowers who we think have proven through the tough times that those are right kind of players to be in business with. I think the biggest issue for us right now is really spooling up the investment side from small deals to larger deals. As you guys know, it takes just as long to do a $10 million deal, it does a $50 million deal and what we have right now is activity but spooling it up into larger deals takes time. We wanted the capital market transaction to get done, so we had the confidence to do the larger deals. I think you will see us transition more into that part of the market where historically we’ve seen a better value and a more hurdled place for us to use our skill set. So that right now is a big focus, transitioning from asset management and capital structure really to figuring out where the veins of opportunity are on the investing side. And while we are finding some interesting places, it’s typically been in smaller size, we need to now spool that up into larger size transactions. Joshua Barber – Stifel, Nicolaus: Okay, when we are looking at the condo portfolio, I guess your average sale per unit in 2012 was about $485,000 per unit. How comparable do you think that will be given the current inventory that you have with the sales in 2015 and 2014?

It’s a good question, I mean, we have high end and some low end stuff. So the mix can change. I would say we’ve got, in many cases we are selling up the building. So, typically prices are going up in individual projects. But how that relates overall is really dependent on selling season. We still got high end products in some key markets around the country. So, we would expect that number to stay reasonably high. But if some of the higher priced units sell off in certain markets you could see a bounce around. What I would say is, again we are tending to move up buildings as we go. So, we’ve seen very good profitability as we’ve done that markets have been strong, but certain projects are selling out and the velocity and volume of sales will probably trail off as the size of the portfolio shrinks. Joshua Barber – Stifel, Nicolaus: Got it, very helpful. Thank you.

(Operator Instructions) And we go to Jonathan Feldman with Nomura Securities. Please go ahead. Jonathan Feldman – Nomura Securities: Good morning. Just wondering if you have an – at present for the CapEx and other investments that you are planning to make in 2013?

Yes, hi, Jonathan, how are you doing? Jonathan Feldman – Nomura Securities: Pretty good, thanks.

From that perspective, as Jay indicated, we are looking to ramp up investment activity and we do see ourselves continuing to create value within the portfolio and we would look to spend significant amounts in combination of that. Much larger than what we have spent during the current year. The CapEx side, we would look at that at being approximately in the $200 million range for the entire year. Jonathan Feldman – Nomura Securities: And is the bulk of the increase is going to be around continuing investment in the land portfolio and other transitional assets?

That’s correct. It will be a combination of looking at additional CapEx for the operating portfolio and then more so in the land side as we continue to ramp up that activity. Jonathan Feldman – Nomura Securities: Got it. And then also just in terms of other sort of carrying costs associated with the land portfolio. Do you have any assessments in terms of what your litigation expenses were into 2012 and where you would see that number trending going into this year?

On the land side, I think as we made progress on getting title to those assets, we would expect legal expenses to beyond the decrease throughout 2013. Jonathan Feldman – Nomura Securities: Can you remind as to what, do you have an estimate what that number was in 2012?

We are waiting for the bills, but the number that’s going down, I think it’s a couple million dollars on the East Coast and a couple million on the West Coast, but… Jonathan Feldman – Nomura Securities: Okay, so it’s not that sizable to that state?

Not in any individual year. Jonathan Feldman – Nomura Securities: Got it, and then just you talked about the path to profitability in your prepared remarks I think, those I’ve asked for a long-term followers see that, but just was wondering if you could speak to may be in a little bit more detail, I mean, do you think 2000, without asking for formal guidance I mean, do you see 2014 as a reasonable expectation in terms of when that might occur? Do you have any sort of more specific thoughts on that path?

I think that the near term variables are the impairment provision line. We are working very hard this year to start really turning some of the situations around and that will be a big piece of it. I think you’ve heard us give our expectation and target for turning some of the NPLs around. Those are things that I think can happen near term and certainly as we look at the real estate finance, net leasing and operating property segments, that’s places where we like to see real progress in the kind of the 2013, 2014 timeframe. Land is a little bit of a different animal. The big battleship we have made a lot of progress, but it is much slower moving. As you can see from the segment allocations, they are big negative weights on that earnings number. So part of our thinking is, really to focus near term on the real estate finance, net leased operating piece due to the things we can do there and then really focus on the embedded value of the land not focus so much on the earnings piece of it. We have very significant own real estate now. I think we’ve got almost 400 plus million of depreciation on the books. That’s almost 5 bucks a share. We want to make those properties perform so that gross book value is fair market value or better. That’s there is a lot of upside there, but that’s not going to turn the overall earnings story until land really turns around and we are going to have to think about in terms of our land book when and how and how much longer we want to continue to kind of lump all those pieces together versus looking at the value of the land and then looking at the earnings power of the rest of the business. Jonathan Feldman – Nomura Securities: And just on that subject, do you think, do you see yourselves as likely the long-term owners of these land assets or do you think we should think with a improving housing market that you are likely to partner or otherwise sell these assets as a recovery and it takes hold?

What I’d like to say is, we want to be the long-term extractors of value from the land books doesn’t mean necessarily that they need to sit on our balance sheet or that we need to be the operating control. Certainly, we’ve looked at JVs with a number of builders around the country those conversations are freshening as the lot scarcity shows up in key markets. So we are very open-minded, Jonathan. We just know how hard it’s been and how much work we’ve put in and how much capital we expended. And we would certainly look to extract full and fair value for the home theme. Jonathan Feldman – Nomura Securities: It makes a lot of sense. And then just finally, wanted to go back to your comment in terms of new investment activity and having a more significant capital to invest to that end. In terms of investment opportunities are you guys thinking that that’s likely to be on the debt side or the equity side historically we’ve been more of the debt investors/lender. But, just wondered if that’s likely to change respectively in terms of your assessment of the retro in different parts of the capital structure?

Yes, it’s an interesting question. I mean, right now the pipeline is definitely debt focused. We see opportunities again in some of the historic places we play. We are seeing some decent net lease activity. But these are things we are just pooling up now. So I would say it could change over time. The only reason to look deeper into the equity side is if debt capital markets get off the rails again and become too borrower-friendly and right now we are seeing opportunities on the debt side and that’s mostly where our eyes are focused.

Thanks, Jonathan. Jonathan Feldman – Nomura Securities: Great, thank you so much.

And Mr. Fooks, there are no further questions in queue.

Thanks John and thanks to 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, would you please give the conference call replay instructions, once again? Thank you.

Certainly and ladies and gentlemen, the replay starts today at 12:30 p.m. Eastern Time and will last until March 13 at midnight. You may access the replay at any time by dialing 1800-475-6701 and entering the access code 282728 that number again, 1800-475-6701 and the access code 282728. That does conclude your conference for today. Thank you for your participation. You may now disconnect.