Welcome to iStar's Third Quarter of 2015 Earnings Conference Call. [Operator Instructions]. At this time for opening remarks and introductions I would like to turn the conference over to 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 iStars third quarter 2015 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 iStar.com in the Investor 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 371425. 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'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 and our investor presentation which is posted on our website. iStar disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Now I would like to turn the call over to iStar's Chairman and CEO, Jay Sugarman. Jay?

Thanks, Jason. Thank you all for joining us today. The third quarter played out pretty much as expected with profitable asset realizations in the equity portfolio and steady but cautious levels of new investment on the finance side generating growing earnings and offsetting a still significant percentage of non-contributing assets. Stock market weakness and the successful tender for all of our HPU common stock equivalents enabled us to ramp up our repurchase activity and led to an increase in the size or our repurchase authorization. While our cash balances are already high. We will continue to look to monetize assets where we feel the pricing is right and we'll continue to watch warily as lenders offer increasingly lender unfriendly terms to win new deals. Earnings for the quarter were on track with adjusted income of about $0.25 per share helped by some good momentum in the transitional operating property book. We see more opportunities in our equity portfolio to take advantage of a strongly bid market and while timing is never easy to predict we hope to see some more realizations on repositioned assets as we head into 2016. We also continue to explore areas where we think iStar can provide uncommon capital to borrowers, partners, and projects that need our blend of skills to unlock value. These efforts may take time to reach scale but we think are important long term value creators that are worth the R&D efforts we are putting into them now. With that overview let me turn over to Dave for the financials. Dave?

Thanks Jay. And good morning everyone. Let me begin by discussing our financial results for the third quarter of 2015 before moving on to investment activity and the performance of our business segments. Finally, I'll finish with an update on recent capital markets activity. For the quarter our adjusted income allocable to common shareholders was 28 million or $0.25 per diluted common share compared to 58 million or $0.48 per diluted common share for the same quarter last year. The primary driver of this change was due to a gain on the sale of an asset in the prior year which generated 33 million of additional earnings from equity method investments. We also monetized several operating properties over the past year resulting in a 5 million decrease in operating lease income. These items were offset in part by positive trends over the past year such as a 6 million decrease in real estate expenses, a 3 million increase in land and development gross margins as sales increased and the 3 million rise in interest income from new originations. Our net loss allocable to common shareholders for the quarter was 6 million compared to net income of 22 million for the same period last year. Let me now turn to investment activity in our real estate and loan portfolios. During the quarter. We funded a total of 219 million associated with new investments, prior financing commitments and ongoing development. We also generated 283 million of proceeds from repayments in sales within our portfolio this quarter. We ended the quarter with 657 million of cash that may be used for future investments. At the end of the third quarter our portfolio totaled 5.2 billion, our real estate finance segment generated 22 million of segment profit for the quarter an improvement from 14…

Thanks, Dave. Why don’t we go ahead and open it up for questions. Operator?

[Operator Instructions]. And we will go to Jade Rahmani with KBW. Please go ahead.

Just firstly on capital deployment, I was wondering if you can give any color on your thoughts on how you prioritize capital particularly given the cautious commentary around investment and lending market in particular? Are you starting to ramp up investment too late in the cycle and do you think iStar may be chronically overcapitalized given the frothy pricing environment?

Well look here's the scenario we see, we see asset prices being bid up. We see finance terms being bid down and we see stock market weakness. So you know the response is pretty clear, we're going to sell assets into that strong asset bid. We're going to go look for new non-commodity areas to finance and we're going to buy shares when the stock is weak. So I think whether we're in the early part of the cycle, late part of the cycle, those indicators tell us pretty clearly what we should be doing and then we’re going out and doing that. You know I don't think we're trying to push money out the door; one of the questions we ask is are other deals getting done that we think are great that we're missing and the answer is no. We can win as many deals as we want right now. We think unfortunately the market is competitive and some of the terms don't make sense to us. Not necessarily on pricing but on some of the stuff that really creates you know essence of our business, call protection duration, and convexity. So you know I think you know these periods come and go in our market. We're fortunate we have lots of other engines of growth. We'll use those engines to continue to push earnings until we find places that we think are quite interesting and where the risk award is in our favor.

Can you give any color on the land market apartment deal just specifically how much cash you expect to receive on a net basis and if that will trigger any gains?

That's a loan deal that we have been receiving repayments as the company monetizes assets, so it's not a gain situation what we're receiving very significant current return and when they fully pay us off that will stop.

And do you expect a full payoff in 4Q?

I don’t know exactly what the timing is going to be but yes they're in the process of some transactions that should fully pay off that position.

Can you just talk to unfunded commitments, 2016 debt maturities and how you expect that to play out including the 1.5% converts?

Well we’re looking at 2016 maturities, obviously we have some things in there that are rolling off at some pretty high rate that will free up some assets under one of our secured deals later in the year we have someone secured stuff coming due. We think some relatively manageable sizes throughout the year and we'll try to pick market windows where we can be pretty effective, extending our maturities and lowering our cost. Right now the viewpoint is we expect to have a pretty sizable investment pipeline throughout next year but we've also got as I said a number of asset sales that we think probably are reaching a price point that's quite interesting as well. So you'll probably see us monetize some assets, create some liquidity there, we’re obviously sitting on a lot of liquidity right now and as the market conditions look attractive we will start pushing out some of those maturities in the most cost effective way we can.

Do you think there's any prospect of initiating a dividend in 2016 given the earnings that you expect?

I think the earnings story is going to be quite good but I don't think dividend component is really something we're focused on right now. You know that can change but right now we see the opportunity to put that money to work at some pretty interesting returns.

Just turning to the earnings goals that you’ve laid out that you did at your investment presentation. Obviously this quarter was a strong one for assets gains. In terms of walking from the $0.75 EPS goal you gave for 2015 to the $1.75 in 2016, are the key drivers continued asset gains or a more material ramp in the pace of a regular way land sales?

I think we said number of land projects are reaching a point where we can start thinking about different ways to monetize them whether that’s a longer term retail strategy or a shorter term wholesale strategy. We definitely expect some meaningful gains to come out of that book over the next 12 to 18 months so yes, that's part of the '16 story. I also think with the strong asset bid in the market some of the stuff in our equity portfolio is certainly ripe to be monetized and realized upon and that'll be part of the story. I think the wild card for us a little bit is what we see on the finance side. We're making some of these smaller - I will call them R&D investments because we don't know how big they could grow into. But they look attractive, right now they seem less competitive, the risk reward seems more favorable. If those are opportunities to scale a little bit that would be great but I would say that's the piece of the story we're still refining to figure out what that finance piece will look like. I think you'll definitely see activity on the land side, you'll definitely see activity on the equity portfolio side.

In terms of the condos how much remaining duration is there in that book?

We’re down to the last couple 100 units, it's been a great run. There's still some nice gains in there and so we'll continue to realize those but they just won't be at the same level they were in the past.

And then just on the land side, are you expecting any additional projects to go into active production in 2016? And labor has been a significant issue in the homebuilding market, is that going to weigh on results at all?

The only think I would say whether it goes into production or whether it's ready to be monetized and can be sold are kind of the same question for us. We may take it all the way through the retail opponents or we may try to monetize if we think there's a strong enough bid. So I will say that we think more things will be in that position next year whether we actually take them into production and become the – person to put in the capital in to finish them out as is a different question. I think you know interestingly to us there are things going on in the land market. Labor, a little bit I wouldn't say that's the biggest one on our mind, I'd say, California and the water situation, we've been spending quite a bit of time on that. Hopefully you know some of the tougher regulations that are being proposed that are being implemented if they can get some rain maybe they will be rolled back but that's one we have to keep on the radar.

And then finally on the non-stabilized operating properties close to 500 million remaining, over what time frame do you think those can get to stabilized occupancy rate and could you quantify the percentage you think you yourselves would take to that stabilized occupancy rate and what percentage you could do you know similar deals to what you did this quarter? You know selling participation interests or even the whole asset.

Yes I think we said in the past, Jade. In our minds much of that portfolio is a liquidating portfolio. Some of it we think will stabilize in a form and in a structure that actually we'd like to hold long term. But the majority of our portfolio we’re trying to lease up or put in a position where somebody will pay us an attractive value for. And we saw a lot of progress on that this year. So we will be testing the market on a number of assets maybe before they're fully stabilized. Can't tell you exactly what the market response will be but based on what we saw certainly in Scottsdale we're hopeful that we don't have to take these things all the way to perfect stabilization for people to see the value we've created.

[Operator Instructions]. And we will go to Sean Monaghan with Penn Capital Management. Please go ahead.

I'm just curious, a lot of it's already being answered but just curious from the condominium side and on the unfunded commitment side, how quickly do you guys expect to go through that I know it can get kind of lumpy but is there any target that you guys are tending to do a quarter or does it really depend on completion and--

I mean if you look at the overall number and you kind of spread it out over the next 6, 7 quarters, that should run through the entire amount. That's kind of how we look at it. You know some of these projects will either speed up or get delayed and in our business it's usually better to bet on the delay side than the speed up side. So those numbers might stretch a little bit but I would say you know take that number and divide it over the next six plus quarters and you'll see it -- the existing commitments burn down pretty.

And in terms of capital markets next year and with A2 tranche [ph], the ability for you guys to look at that. How are you guys thinking about you know capital markets activity for you guys and what you guys are going to refinance some of the debt that you guys have a come and do next year.

Well the two big goals obviously are extend the maturity profile little bit. You know we'd like to move that out and spread it out a little more and then to get a cost of funds that allows us to be competitive in larger slices of the market. And I think we have effective cost structure for some of our asset types but particularly in the finance side we need a lower cost solution to really compete for a lot of deals that we get shown and we do actually be probably the right player to provide. But on our ROE basis we just can't make them work with the current cost of funds. So we're looking at solutions on that front, the more we unencumber the balance sheet, the we still have a pocket of assets that we can secure and stay within our sort of 80:20 unencumbered assets and cumbered assets goal. So we that we'd like to find a cost effective solution that gives us both lower cost funds and also gives us a little more flexibility on the maturity side.

And just one more, are you guys getting more visibility in the land side and what are you expecting for land sales to be in the fourth quarter and are you seeing any visibility into '16?

Yes you'll probably never hear us predict quarter by quarter land sales. You know as I said a lot of these projects we're not going to take all the way through retail where we could tell you we're going to sell 100 lots and we're going to sell 20 pads, we're likely to be a lot chunkier in that because when we get to that moment of truth there is both tax implications and just general valuation issues, we're going to look at whether make sense to sell things in bulk or take components through whether we go vertical on some of these projects, we've done that in the multifamily space that's a good REIT asset, it's tax efficient when we find a right local partner and we can go vertical that’s been the right choice the last 12 to 18 months. But good looking [indiscernible] some of these land deals you know it's not clear in our mind whether we're going to get a bid that makes more sense just to let somebody else take the project on. So it will be lumpy I can promise you that. We do see some sizable opportunities shaping up to test the market and we will do that and we expect some fairly significant gains to come out of that book sooner rather than later.

And Mr. Fooks we have no further questions in queue.

Thanks, John and thanks to everyone for joining us this morning. If you should 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. Thanks.

Ladies and gentlemen this conference is available for replay and starts today at 12:30 PM Eastern Time will last until November 17 at midnight. You may access the replay at any time by dialing 800-475-6701 and entering the access code 371425. That does conclude your conference for today. Thank you for your participation. You may now disconnect.