Exhibit 99.1
[LOGO] iSTAR | FINANCIAL
Creative Capital Solutions(SM)
$200,000,000 Senior Notes due 2008
Investor Presentation
August 2001
Disclaimer ------------------------
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Statements in this presentation which are not historical fact may be deemed
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although
iStar Financial Inc. believes the expectations reflected in any forward-looking
statements are based on reasonable assumptions, the Company can give no
assurance that its expectations will be attained. Factors that could cause
actual results to differ materially from iStar Financial Inc.'s expectations
include completion of pending investments, continued ability to originate new
investments, the availability and cost of capital for future investments,
competition within the finance and real estate industries, economic conditions,
and other risks detailed from time to time in iStar Financial Inc.'s SEC
reports.
2
The Offering ------------------------
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o Issuer iStar Financial Inc. (NYSE: SFI)
o Issue $200,000,000 Senior Notes (Public Filing)
o Maturity Seven years (2008), Non-Callable
o Ratings Moody's: Ba1
S&P: BB+
Fitch: BB+ (positive)
o Use of Proceeds Pay Down Secured Revolving Credit Facilities
o Financial Covenants 1. Fixed Charge Coverage
2. Total Indebtedness to Net Worth
3. Senior Recourse Indebtedness to Net Worth Plus
Subordinated Debt
4. Unencumbered Assets to Unsecured Debt
(maintenance)
o Timing Roadshow 7/31 - 8/9
3
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Jay Sugarman
Chairman and Chief Executive Officer
4
Our Market Focus ------------------------
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We are the dominant provider of structured financing for transactions where the
corporate credit, real estate and capital markets intersect.
[The following table was depicted as a graph in the original material.]
Corporate Tenant
Leasing
Corporate Credit Real Estate
Markets Markets
iStar
Corporate Structured Real
Finance Capital Markets Estate Finance
5
What We Do ------------------------
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We have built a unique business platform servicing high-end
private and corporate owners of real estate who require highly
structured financing.
[The following table was depicted as a graph in the original material.]
Price ^
|
|
|
Higher Expertise Required, Higher Margins Achievable
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($100 bn market)
iStar Financial
(few competitors)
($600 bn market)
Life Companies,
Commercial Banks
(multiple competitors)
($250 bn market)
Conduits
(pure commodity) -------------->
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Service
Efficient Market - Commodity Products Inefficient Market - Structured Products
6
What We Do ------------------------
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[The following table was depicted as a pie chart in the original material.]
$4.0 Billion
Owned Receivables
Loans Leases
----- ------
$2.3 Billion $1.7 Billion
> 61 Loans. Loans > 116 Investments.
> 426 Properties. Leases > 161 Properties.
> 71% LTV. > 52% Investment Grade.
7
What We Do ------------------------
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Our diversified product lines and investment strategy reflect eight years of
intensive experience in a very focused, niche lending business.
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Average
Investment % of % of
Product Line Description Size (millions) Assets Revenue
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Lending:
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Structured Finance Mortgages and other loan products, $36.4 24.7% 23.6%
secured by institutional-quality single
assets in supply-constrained markets.
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Corporate Finance Secured and unsecured loans to leading $52.5 13.2% 12.2%
public and private companies engaged in
real estate-related businesses.
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Portfolio Finance Mortgages and other loan products cross $40.6 9.2% 10.0%
collateralized by diversified pools of real
estate assets.
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Loan Acquisition Opportunistic purchases of loans and loan $51.3 9.1% 9.6%
participations secured by real estate assets.
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Subtotal: 56.2% 55.4%
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Leasing:
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Corporate Tenant Leasing Strategic office and industrial facilities $14.6 43.8% 44.6%
net-leased to creditworthy corporate
customers.
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Superior Business Model ------------------------
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o Non-Commodity Focus: Core value proposition: provide level of service,
knowledge, creativity and flexibility unavailable from other lenders.
> Do not compete on price.
> Avoid commodity businesses such as conduit lending, CMBS, RMBS.
o Lower Leverage, Higher ROE: Non-commodity focus creates better ROAs and
higher ROEs with lower leverage.
> Nearly $2 billion of tangible equity capital in place to support
future expansion.
o Tax-Advantaged Returns: Tax-exempt structure creates attractive returns on
invested capital at a fraction of the leverage of taxable finance
companies.
o Match-Funding Discipline: Broad array of capital sources and
asset-liability matching reduce liquidity risks and exposure to changes in
interest rates.
> 100 basis point move in short-term rates impacts annual adjusted
earnings by 1.4%.
o Management Expertise: Management team with leading talent/experience
across all key success disciplines - principals, not processors.
> Executive management team averages over 20 years of experience.
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Deep Senior Management Team ------------------------
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Management's expertise includes extensive experience across all key disciplines
necessary to execute our business plan.
o Investments
o Capital Markets
o Legal
o Risk Management / Servicing
------------
Sugarman*
Chairman/CEO
13 years
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| |
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| Haber*
| President/CFO --------------------------|
| 13 years |
| ------------ |
| |
| |
| |
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| | | | | | | | |
- ----------- ----------- ----------- ----------- ----------- | ------------- ------------ ---------
Olmstead* Digel* Lodge* Jones* Dorsch* | Matis* Curtis* O'Connor*
EVP - EVP - EVP - EVP - EVP - | EVP - General SVP - Credit EVP - COO
Investments Investments Investments Investments Investments | Counsel
21 years 20 years 19 years 21 years 18 years | 29 years 16 years 20 years
- ----------- ----------- ----------- ----------- ----------- | ------------- ------------ ---------
| | | | | | | |
| | | | | | | |
-------------------------------------------------------- | | |
| | |
| | |---------------|
| | | |
-------------- ------------------------------------------- ----| | | |
| | | | | | | | |
- ----------- ----------- ------------------ ---------- --------------- ------------- --------------- | ----------
Blomquist Cozzi* Merchant Tretola Sinnett Richardson Dugan | Rubin
SVP - SVP - VP - VP - SVP - SVP - Capital SVP - HR, Asst. | SVP - Loan
Investments Investments Investor Relations Controller Project Finance Markets Gen. Counsel | Servicing
- ----------- ----------- ------------------ ---------- --------------- ------------- --------------- | ----------
| | | | | | | | |
| | | | | | | | |
-------------- ----------------------------------------------- | | |
| | ------------- | |
| | Legal | |
| | 2 | |
| | Professionals | |
| | ------------- | |
| | | |
| | ------------------ |
| | | | |
------------- ---------------- ------------- ------------- -------------
Investments Finance / Acctg. Project Mgmt. Asset Mgmt. Loan Servicing
9 22 6 35 11
Professionals Professionals Professionals Professionals Professionals
------------- ---------------- ------------- ------------- -------------
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* Denotes member of Investment Committee.
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Managing Growth ------------------------
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We have structured and originated $5 billion of financing transactions with over
$1.6 billion of volume from repeat customers and no losses.
Cumulative Financing Transactions ($ in millions)
-----------
Zero Losses
-----------
[The following table was depicted as a bar chart in the original material.]
iStar Financial Predecessors iStar Financial
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12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 3/31/01 6/30/01
$768(1) $933(1) $1,120 $2,250 $3,267 $4,283 $4,539 $4,910
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(1) Includes third-party senior positions originated, placed and/or structured
by SFI.
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Asset Quality and Diversification ------------------------
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Our asset base is broadly diversified by year of origination, asset type,
obligor, geography and property type.
[The following tables were depicted as bar charts in the original material.]
Owned Receivables at June 30, 2001 ($4.0 billion)
================================================================================
Asset Type
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Corporate Tenant Leases 44%
First Mortgages 26%
Corporate/Partnership Loans 22%
Second Mortgages 8%
Geographic Region
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West 31%
Northeast 21%
South 16%
Southeast 9%
Central 7%
Mid-Atlantic 7%
Northwest 5%
North Central 2%
Southwest 2%
Various is less than 1%
Property Type
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Office 48%
Hotel 20%
Resort/Entertainment 8%
Industrial 7%
Retail 5%
Apartment/Residential 4%
Mixed Use 4%
R&D 3%
Homebuilder/Land 1%
Various is less than 1%
================================================================================
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Asset Quality and Diversification ------------------------
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[The following table was depicted as a pie chart in the original material.]
Loans Leases
----- $4.0 Billion ------
$2.3 Billion Owned Receivables $1.7 Billion
----------- ----------------
Third-Party
First Senior Debt Investment Grade
Dollar ----------- 31.8% 52%
"Average" Loans
iStar Leases ----------------
Investment
Last ----------- Unrated
Dollar Borrower 71.4% 26%
Equity ----------------
----------- Non-Investment
Grade 22%
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Summary Statistics
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> 61 loans/426 properties
> Average size: $37.3 million / borrower
$5.3 million / property
> Weighted average maturity: 4.1 years
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Summary Statistics
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> 116 investments / 161 properties
> Average size: $14.6 million / investment
$10.5 million / property
> Weighted average term: 8.6 years
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Case Study: Portfolio Finance ------------------------
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San Diego Office Portfolio
[PHOTO OMITTED]
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o Collateral: Cross collateralized portfolio of downtown office buildings
totaling 1.1 million sf.
o Equity Sponsor: Southwest Value Partners, a leading private real estate
investment firm.
o Investment Structure: 1st and 2nd mortgages.
o Credit Statistics:
> LTV: 0% - 76%.
> DSCR: 1.68x.
o Match Funding Vehicle: STARs(SM).
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Case Study: Portfolio Finance ------------------------
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140 Apartment Communities
[PHOTO OMITTED]
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o Collateral: Diversified portfolio of 140 apartment communities located
primarily in 10 major U.S. markets.
o Equity Sponsor: Olympus Real Estate, a large institutional private equity
firm.
> $400 million equity investment junior to iStar
o Investment Structure: Mezzanine
o Credit Statistics:
> LTV: 59% - 77%.
> DSCR: 1.33x.
o Match Funding Vehicle: Syndicated term loan.
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Case Study: Corporate Tenant Leasing ------------------------
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17 Hotels in Northwestern U.S.
[PHOTO OMITTED]
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o Collateral: Bondable lease recourse to Baa3 credit and cross
collateralized portfolio of 17 full-service hotels (3,989 rooms).
o Corporate Customer: Hilton Hotels.
o Credit Rating: BBB- / Baa3.
o Investment Structure: Bondable credit tenant lease.
o Participation: 7.5% of gross revenue over 1996 base.
o Credit Statistics:
> LTV: 54%.
> Lease Coverage: 2.11x.
o Match Funding Vehicle: Securitized term loan.
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16
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Spencer Haber
President and Chief Financial Officer
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Investment / Underwriting Process ------------------------
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o Initial transaction screening and evaluation using proprietary Six Point
Methodology(SM).
o Intensive underwriting process provides for comprehensive review of
potential investments from all key disciplines.
o Multi-tiered approval process.
> $0 - $30 Million: Management Investment Committee
> $30 - $50 Million: Board Investment Committee
> Over $50 Million: Full Board of Directors
o Extensive management controls built into loan/lease documentation:
Structured Finance Assets
> Extensive borrower reporting requirements.
> Budget submissions and approvals.
> Lease approvals.
> Lock box administration.
> Escrow funding and administration.
> Covenant requirements.
Corporate Tenant Leases
> On-site facilities management.
> Annual core compliance inspections.
> Corporate tenant lease approvals.
> Credit enhancements: letters of credit, cash deposits, guarantees.
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Comprehensive Risk Management ------------------------
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iStar Financial has one of the lowest loss ratios in the finance industry.
o 50+ person risk management team with in-house expertise in asset
management, corporate credit, loan servicing, project management and
engineering.
o Proactive strategy centered around information sharing, frequent customer
contact and "early warning" system.
o Compilation and analysis of asset information is distributed on-line to
all iStar Financial professionals on a continuous, real-time basis.
o Comprehensive risk rating process that enables us to evaluate, monitor and
pro-actively manage asset-specific credit issues and identify credit
trends on a portfolio-wide basis.
Weighted Average Structured Finance Risk Ratings
(1 = lowest risk; 5 = highest risk)
[The following table was depicted as a bar chart in the printed material.]
Dec-98 2.71
Mar-99 2.64
Jun-99 2.62
Sep-99 2.63
Dec-99 2.54
Mar-00 2.55
Jun-00 2.55
Sep-00 2.59
Dec-00 2.50
Mar-01 2.53
Jun-01 2.68
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Lease Expiration Profile ------------------------
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At June 30, 2001, the weighted average remaining lease term of iStar Financial's
corporate tenant leasing portfolio was 8.6 years, and the portfolio was 96.7%
leased (99.2% excluding a vacant facility currently under contract for sale).
Lease Expiration Profile
(at March 31, 2001)
[The following table was depicted as a bar chart in the printed material.]
% of Q2'01 annualized
total revenue
2001 0.9%
2002 2.8%
2003 4.0%
2004 5.0%
2005 3.5%
2006 5.7%
2007 3.9%
2008 1.6%
2009 and thereafter 22.7%
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Deep, Broad Capital Resources ------------------------
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Secured Credit Facilities
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o State-of-the-art, committed revolvers from RBS, Deutsche Bank and Lehman
Brothers.
o $1.9 billion (capacity) in place.
o $790 million outstanding (Q/E).
o Primary source of working capital.
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Unsecured Credit Facilities
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o Leading commercial banks, including Bank of America, Deutsche Bank, Fleet
and UBS.
o $300 million (capacity).
o $159 million outstanding (Q/E).
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Match Funding Facilities
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o iStar Asset Receivables (STARs(SM)).
> Recent upgrades strengthen funding capabilities and lower costs.
o Term lending relationships with a dozen commercial banks and insurance
companies.
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Unsecured Corporate Bonds
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o Ba1 / BB+ / BB+ senior unsecured credit ratings.
o $475 million outstanding (pro forma).
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As of June 30, 2001.
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Conservative Financial Policies ------------------------
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o SFI's leverage policies provide for a maximum targeted 1.5 - 2.0x book
debt/equity ratio.
o Maximum leverage range developed by satisfying three primary objectives:
> No losses to creditors in high severity stress test.
> Ability to match-fund in long-term, secured debt markets if credit
facilities, corporate debt or equity is unavailable.
> 15 - 20% sustainable ROE target.
o Maintain large equity base.
> $1.8 billion tangible book equity.
o Maintain diversified sources of investment capital.
o Match-funding discipline: maturities and interest rates.
> 100 basis point change in short term rates equals a 1.4% change in
adjusted earnings.
o Comprehensive reserve policies.
> No losses experienced to date.
> Loan loss reserves (including accumulated CTL depreciation) equals
205 basis points of owned receivables.
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Reliable Cash Flow Performance ------------------------
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EBITDA
[The following table was depicted as a bar chart in the printed material.]
($ in millions)
1998(1) $148.6
1999 $234.9
2000 $423.9
LTM 6/30/01 $439.0
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(1) 1998 EBITDA represents 2Q - 4Q '98 actual performance annualized (Company
went public in 3/98).
23
Attractive Returns on Invested Capital ------------------------
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[The following table was depicted as a bar chart in the printed material.]
ROAA ROAE
9/30/98 6.0% 12.3%
12/31/98 5.3% 13.0%
3/31/99 6.3% 13.6%
6/30/99 6.0% 14.1%
9/30/99 6.4% 14.7%
12/31/99 6.6% 15.1%
3/31/00 6.6% 15.1%
6/30/00 6.7% 15.5%
9/30/00 6.7% 16.1%
12/31/00 6.8% 16.7%
3/31/01 7.0% 17.3%
6/30/01 7.2% 17.5%
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Conservative Leverage ------------------------
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Debt-to-Book Equity
[The following table was depicted as a bar chart in the printed material.]
9/30/98 1.3x
12/31/98 1.1x
3/31/99 1.2x
6/30/99 1.2x
9/30/99 1.1x
12/31/99 1.1x
3/31/00 1.1x
6/30/00 1.2x
9/30/00 1.2x
12/31/00 1.2x
3/31/01 1.2x
6/30/01 1.2x
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Strong Credit Statistics ------------------------
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[The following table was depicted as a bar chart in the printed material.]
GAAP EBITDA/Interest GAAP EBITDA/Fixed Charges
9/30/98 2.5x 2.5x
12/31/98 2.3x 2.2x
3/31/99 2.5x 2.0x
6/30/99 2.5x 2.0x
9/30/99 2.5x 2.0x
12/31/99 2.7x 2.1x
3/31/00 2.6x 2.1x
6/30/00 2.5x 2.0x
9/30/00 2.4x 2.0x
12/31/00 2.4x 2.0x
3/31/01 2.4x 2.0x
6/30/01 2.6x 2.1x
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Pro Forma Capitalization ------------------------
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($ in millions)
6/30/01 6/30/01 % of
Actual Adjustments Pro Forma Capitalization
-------- ----------- -------- --------------
Total Assets $4,053.4 $5.0 $4,058.4
iStar Asset Receivables Secured Notes 486.4 486.4
Secured Term Loans(1) 459.8 459.8
Secured Revolving Credit Facilities 789.9 (195.0) 594.8
-------- ------ -------- -----
Total Secured Debt 1,736.1 (195.0) 1,541.1 38.0%
Unsecured Revolving Credit Facilities 159.0 159.0
Unsecured Subsidiary Notes(2) 257.9 257.9
Unsecured Notes Due 2008 -0- 200.0 200.0
-------- ------ -------- -----
Total Unsecured Debt 416.9 200.0 616.9 15.2%
-------- ------ -------- -----
Total Debt Outstanding $2,153.0 $5.0 $2,158.0 53.2%
Other Liabilities 69.2 69.2 1.7%
Shareholders' Equity 1,831.1 1,831.1 45.1%
-------- ------ -------- -----
Total Capitalization $4,053.4 $5.0 $4,058.4 100.0%
======== ====== ======== =====
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(1) Includes $16.6 million of other debt obligations.
(2) Includes $17.1 million of debt discounts.
27
Attractive Credit Statistics ------------------------
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($ in millions)
Pro Forma
---------
EBITDA / GAAP Interest Expense 2.52x
EBITDA / Fixed Charges 2.08x
Total Debt / Total Shareholders' Equity 1.18x
Unencumbered Assets / Unsecured Debt 2.21x
28
Significant Ratings Upside Potential ------------------------
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iStar Financial outscores the A-rated finance company peer group on both risk
and profitability metrics.
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iStar Peer Group Peer Group
Financial Mean(1) Median(1)
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Senior Unsecured Credit Rating Ba1 / BB+ A3 / A- A3 / A-
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Tangible Book Equity ($in millions) $1,831 $1,853 $1,420
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Total Liabilities / Tangible Equity 1.2x 8.2x 7.7x
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EBIDA / Interest 2.6x 1.7x 1.6x
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ROAA 7.2% 1.4% 1.3%
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ROAE 17.5% 10.6% 10.3%
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G&A / Revenue 6.4% 19.0% 18.8%
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Rating Agency Risk-Based Capital
Adequacy Score 2.55 0.89 1.06
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- ----------
(1) Peer Group includes CIT Group Inc., GATX Capital, Heller Financial and
Textron Financial.
29
Significant Ratings Upside Potential ------------------------
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Our objective is to achieve an investment grade senior unsecured credit rating
within 12 - 24 months.
o What we need to do:
> Continue to demonstrate leading business franchise.
> Continue to season as a public company.
> Continue to execute through current economic cycle.
> Continue to diversify debt structure as we grow.
30
Investment Highlights ------------------------
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o Largest independent finance company in attractive $100 - $150 billion
market niche.
o Consistent, eight-year track record of superior results.
o Non-commodity focus and tax-advantaged structure create attractive returns
with significantly lower leverage.
o Large tangible equity capital base and match funding discipline.
o Intensive risk management and employee ownership lead to best loss
performance in finance industry.
o Significant ratings upside potential with non-call life structure.
31