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Exhibit 99.1
(i)STAR|FINANCIAL
Creative Capital Solutions(SM)
EQUITY OFFERING
October 2001
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DISCLAIMER (i)STAR|FINANCIAL [LOGO]
================================================================================
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. (the "Company") 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 the Company'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 the Company's SEC reports.
2
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OFFERING SUMMARY (i)STAR|FINANCIAL [LOGO]
================================================================================
<Table>
SHARES OFFERED: 15 million secondary common shares
RECENT PRICE: $25.80
CURRENT DIVIDEND YIELD: 9.5%
BOOK-RUNNER: Merrill Lynch & Co.
JOINT LEAD MANAGER: Lehman Brothers
CO-MANAGERS: Banc of America Securities LLC
Bear, Stearns & Co. Inc.
Salomon Smith Barney
UBS Warburg
</Table>
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OUR MARKET FOCUS (i)STAR|FINANCIAL [LOGO]
================================================================================
Dominant provider of structured financing for transactions where corporate
credit, real estate and capital markets intersect.
<Table>
CORPORATE TENANT
LEASING
CORPORATE CREDIT REAL ESTATE
MARKETS MARKETS
iSTAR
CORPORATE STRUCTURED REAL
FINANCE CAPITAL MARKETS ESTATE FINANCE
</Table>
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WHAT WE DO (i)STAR|FINANCIAL [LOGO]
================================================================================
Unique business platform servicing high-end private and corporate owners of real
estate who require highly structured financing.
<Table>
PRICE
^ HIGHER EXPERTISE REQUIRED, HIGHER MARGINS ACHIEVABLE
($100 bn market)
iSTAR FINANCIAL
(few competitors)
($600 bn market)
LIFE COMPANIES,
COMMERCIAL BANKS
(multiple competitors)
($250 bn market)
CONDUITS
(pure commodity) --->
--------------------------------------------------------------------------------
SERVICE
Efficient Market - Commodity Products Inefficient Market - Structured Products
</Table>
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WHAT WE DO (i)STAR|FINANCIAL [LOGO]
================================================================================
<Table>
$4.1 BILLION
OWNED RECEIVABLES
LOANS LEASES
$2.4 BILLION $1.7 BILLION
o 46% 1ST MORTGAGES o 52% INVESTMENT GRADE
> 0% - 66% LTV o 8.4 YEAR AVERAGE TERM
--------------
o 54% CORPORATE LOANS / LOANS / LEASES o 120 INVESTMENTS /
PARTNERSHIP LOANS / -------------- 162 FACILITIES
2ND MORTGAGES
> 57% - 75% LTV
o 68 LOANS / 426 PROPERTIES
</Table>
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WHAT WE DO (i)STAR|FINANCIAL [LOGO]
================================================================================
Diversified product lines and investment strategy reflect eight years of
intensive experience in a very focused, niche lending business.
<Table>
<Caption>
------------------------------------------------------------------------------------------------------
AVERAGE %
INVESTMENT OF
PRODUCT LINE DESCRIPTION SIZE (MILLIONS) REVENUE
------------------------------------------------------------------------------------------------------
LENDING:
------------------------------------------------------------------------------------------------------
STRUCTURED FINANCE Institutional-quality single assets. $35.2 24.8%
------------------------------------------------------------------------------------------------------
CORPORATE FINANCE Secured and unsecured loans to public and $40.5 14.3%
private companies.
------------------------------------------------------------------------------------------------------
PORTFOLIO FINANCE Cross collateralized pools of real estate $36.9 7.9%
assets.
------------------------------------------------------------------------------------------------------
LOAN ACQUISITION Opportunistic loan purchases. $46.5 7.3%
-------------------------------------------------------------------------------------------------=====
TOTAL: 54.3%
------------------------------------------------------------------------------------------------------
LEASING:
------------------------------------------------------------------------------------------------------
CORPORATE TENANT LEASING Strategic facilities net-leased to $14.4 45.7%
corporate customers.
------------------------------------------------------------------------------------------------------
</Table>
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SUPERIOR BUSINESS MODEL (i)STAR|FINANCIAL [LOGO]
================================================================================
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: Higher ROA yields higher ROE with lower
leverage.
> Nearly $2 billion of tangible equity capital in place to support
future expansion.
o TAX-ADVANTAGED RETURNS: Tax-exempt structure creates additional benefits.
> REIT structure provides superior returns on equity at a fraction of
the leverage of taxable finance companies.
o MATCH-FUNDING DISCIPLINE: Minimal exposure to changes in interest rates
and mismatched maturities.
> 100 basis point move in short-term rates has no impact on earnings.
o MANAGEMENT EXPERTISE: Management team with leading talent/experience
across all key success disciplines - principals, not processors.
> Highly disciplined risk management minimizes losses and surprises.
o EQUITY-INCENTIVIZED MANAGEMENT: Employees and directors own approximately
$160 million of the Company's common equity.
> No one is compensated for production.
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MANAGING GROWTH (i)STAR|FINANCIAL [LOGO]
================================================================================
Structured and originated over $5 billion of financing transactions in
eight-year history, with $1.9 billion of volume from repeat customers.
[The following table was represented by a bar chart in the printed material.]
<Table>
<Caption>
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 9/30/01
$768.0(1) $933.0(1) $1,210.3 $2,250.1 $3,266.8 $4,283.4 $5,114.9
iSTAR Financial Predecessors iSTAR Financial
(Starwood Mezzanine Investors
and Starwood Opportunity Fund
IV)
</Table>
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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 (i)STAR|FINANCIAL [LOGO]
================================================================================
Asset base broadly diversified by year of origination, asset type, obligor,
geography and property type.
Owned Receivables at September 30, 2001 ($4.1 billion)
====================== ============================ ==========================
Asset Type Geographic Region Property Type
---------------------- ---------------------------- ------------------------
[PIE CHART OMITTED] [PIE CHART OMITTED] [PIE CHART OMITTED]
================================================================================
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INVESTMENT / UNDERWRITING PROCESS (i)STAR|FINANCIAL [LOGO]
================================================================================
o Initial transaction screening and evaluation using proprietary Six Point
Methodology(SM).
> Transaction Source/Review > Structure/Control
> Collateral Quality > Alternative Investment Test
> Equity Sponsor/Corporate Lessee > Liquidity/Match Funding
o Intensive underwriting process provides for comprehensive review of
potential investments from all key disciplines.
> Investments
> Credit
> Risk Management
> Legal
> Capital Markets
o Multi-tiered approval process.
> $0 - $30 Million: Management Investment Committee
> $30- $50 Million: Board Investment Committee
> Over $50 Million: Full Board of Directors
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CASE STUDY: PORTFOLIO FINANCE (i)STAR|FINANCIAL [LOGO]
================================================================================
San Diego Office Portfolio
-------------------------- ------------------------------------------------
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.
[PHOTO]
o Credit Statistics:
> LTV: 76%.
> DSCR: 1.94x.
o Match Funding Vehicle: STARs(SM).
o Match Funded ROE: 14.01%.
-------------------------- ------------------------------------------------
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CASE STUDY: CORPORATE FINANCE (i)STAR|FINANCIAL [LOGO]
================================================================================
140 Apartment Communities
-------------------------- ------------------------------------------------
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.
[PHOTO]
o Investment Structure: Mezzanine
o Credit Statistics:
> LTV: 59% -77%.
> DSCR: 1.33x.
o Match Funding Vehicle: Syndicated term loan.
o Match Funded ROE: 22.22%.
-------------------------- ------------------------------------------------
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COMPREHENSIVE RISK MANAGEMENT (i)STAR|FINANCIAL [LOGO]
================================================================================
iSTAR FINANCIAL HAS ONE OF THE LOWEST LOSS RATIOS Io 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.
[The following table was represented by a bar chart in the printed material.]
WEIGHTED AVERAGE STRUCTURED FINANCE RISK RATINGS
(1=LOWEST RISK; 5=HIGHEST RISK)
<Table>
Dec-98 Mar-99 Jun-99 Sep-99 Dec-99 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Sep-01
2.71 2.64 2.62 2.63 2.54 2.55 2.55 2.59 2.50 2.53 2.68 2.82
</Table>
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LEASE EXPIRATION PROFILE (i)STAR|FINANCIAL [LOGO]
================================================================================
At September 30, 2001, the weighted average remaining lease term of iSTAR
Financial's corporate tenant leasing portfolio was 8.4 years. The portfolio is
over 99% leased.
Lease Expiration Profile
(at September 30, 2001)
[The following table was represented by a bar chart in the printed material.]
<Table>
2001 2002 2003 2004 2005 2006 2007 2008 2009
0.7% 2.1% 3.4% 5.0% 2.9% 5.9% 3.8% 1.5% 21.0%
and
thereafter
(% of Q3'01 annualized total revenue)
</Table>
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POTENTIAL INVESTOR CONSIDERATIONS (i)STAR|FINANCIAL [LOGO]
================================================================================
HOTEL LENDING EXPOSURE:
o Hotel lending is not an overly large concentration for the Company. Twelve
hotel loans totaling $538 million represent approximately 13% of total
assets.
> All hotel loans have lock boxes and ten of the 12 loans have cash
traps that are triggered before debt service coverage gets to 1.0x.
o Leading downtown properties in supply-constrained markets and large,
diversified pools of cross collateralized assets.
> Hotel collateral is broadly diversified with over 110 underlying
properties in over 75 geographic markets.
> No resort assets.
o Hotel loans averaged over 1.7x TTM actual debt service coverage prior to
September 11, creating substantial capacity for large drops in collateral
cash flows prior to our loans being impacted.
o $27 million of reserves (excluding insurance and tax reserves). Including
these reserves, underlying collateral cash flows would have to decrease by
approximately 50% to create 1.0x coverage on our loans.
o Significant borrower cash equity junior to us.
> $752 million of borrower equity underlying our loans.
o Hotel collateral operating performance has steadily improved since
September 17 and borrowers have aggressively cut costs.
> Average occupancy has been steadily increasing, with latest
available weekday figure of 70%.
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POTENTIAL INVESTOR CONSIDERATIONS (i)STAR|FINANCIAL [LOGO]
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TECH/TELECOM EXPOSURE:
o Lending exposure not meaningful (2.9% of 3Q'01 total revenues).
o CTL exposure dominated by leading publicly-traded software, equipment and
service companies; no "dot coms."
o 5 of Top 10 CTL exposures are investment grade: IBM, Nokia, Verizon,
Mitsubishi and HP.
o CUMULATIVE California CTL rollover through 12/02 just 0.7% of SFI 3Q'01
total revenues.
o SFI's exposure is backed by corporate credit AND hard real estate assets
at attractive book basis.
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DEEP, BROAD CAPITAL RESOURCES (i)STAR|FINANCIAL [LOGO]
================================================================================
--------------------------------------------------------------------------------
Secured Credit Facilities
--------------------------------------------------------------------------------
o State-of-the-art, committed revolvers from RBS, Deutsche Bank and Lehman
Brothers.
o $1.9 billion (capacity) in place.
o $693 million outstanding.
o Primary source of working capital.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Unsecured Credit Facilities
--------------------------------------------------------------------------------
o Leading commercial banks, including Bank of America, Deutsche Bank, Fleet
and UBS.
o $300 million (capacity).
o $0 outstanding.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Match Funding Facilities
--------------------------------------------------------------------------------
o iSTAR Asset Receivables (STARsSM).
> Recent upgrades strengthen funding capabilities and lower costs.
o Term lending relationships with a dozen commercial banks and insurance
companies. Unsecured Corporate Bonds
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Unsecured Corporate Bonds
--------------------------------------------------------------------------------
o Ba1 / BB+ / BB+ (positive) senior unsecured credit ratings.
> Positive credit momentum should lead to investment grade rating
within 12-24 months.
o $625 million outstanding.
--------------------------------------------------------------------------------
----------
As of September 30, 2001.
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CONSERVATIVE FINANCIAL POLICIES (i)STAR|FINANCIAL [LOGO]
================================================================================
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 the following primary
objectives:
> 15 - 20% sustainable ROE target.
> Ability to match-fund in long-term, secured debt markets if credit
facilities, corporate debt or equity is unavailable.
o Maintain large equity base.
> $1.8 billion tangible book equity.
o Match-funding discipline: maturities and interest rates.
> 100 basis point change in short term rates has no impact on adjusted
earnings.
o Comprehensive reserve policies.
> No losses experienced to date.
> Loan loss reserves (including accumulated CTL depreciation) equals
220 basis points of owned receivables.
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SUPERIOR RISK-ADJUSTED RETURNS (i)STAR|FINANCIAL [LOGO]
================================================================================
SFI has generated superior risk-adjusted returns on invested capital...
[The following table was represented by a bar chart in the printed material.]
<Table>
<Caption>
9/30/1998 12/31/1998 3/31/1999 6/30/1999 9/30/1999 12/31/1999 3/31/2000 6/30/2000 9/30/2000 12/31/2000
ROAA 6.0% 5.3% 5.9% 6.0% 6.4% 6.5% 6.6% 6.7% 6.7% 6.8%
ROAE 12.3% 13.0% 13.6% 14.1% 14.7% 14.8% 15.1% 15.5% 16.1% 16.7%
<Caption>
3/31/2001 6/30/2001 9/30/2001
ROAA 7.0% 7.2% 7.2%
ROAE 17.3% 17.5% 17.9%
</Table>
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CONSERVATIVE LEVERAGE (i)STAR|FINANCIAL [LOGO]
================================================================================
...while maintaining conservative leverage ratios...
[The following table was represented by a bar chart in the printed material.]
<Table>
<Caption>
9/30/1998 12/31/1998 3/31/1999 6/30/1999 9/30/1999 12/31/1999 3/31/2000 6/30/2000 9/30/2000 12/31/2000
Debt / Equity 1.3x 1.1x 1.2x 1.2x 1.1x 1.1x 1.1x 1.2x 1.2x 1.2x
<Caption>
3/31/2001 6/30/2001 9/30/2001
Debt / Equity 1.2x 1.2x 1.3x
</Table>
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SOLID EARNINGS GROWTH (i)STAR|FINANCIAL [LOGO]
================================================================================
...and generating solid growth in adjusted earnings per share.
[The following table was represented by a bar chart in the printed material.]
<Table>
<Caption>
9/30/1998 12/31/1998 3/31/1999 6/30/1999 9/30/1999 12/31/1999 3/31/2000 6/30/2000 9/30/2000 12/31/2000
Sales $ 0.43 $ 0.45 $ 0.46 $ 0.49 $ 0.52 $ 0.60 $ 0.64 $ 0.66 $ 0.68 $ 0.69
<Caption>
3/31/2001 6/30/2001 9/30/2001
Sales $ 0.71 $ 0.72 $ 0.73
</Table>
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Adjusted Earnings = Net Income + Depreciation + Amortization.
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THREE SOURCES OF INVESTOR UPSIDE (i)STAR|FINANCIAL [LOGO]
================================================================================
o Continued earnings growth and attractive dividend.
o Multiple expansion based on compelling valuation relative to peer group.
<Table>
<Caption>
($ IN MILLIONS, EXCEPT SHARE PRICE)
----------------------------------------------------------------------------------------------------------------------------------
Share Common
Price Market Cap. LTM Price/ Dividend
Company Ticker (10/15/01) ($ MM) AEPS (1) AEPS ROAA ROAE Yield
--------------------------- ------ ---------- ---------- -------- ------ ---- ---- --------
iSTAR Financial SFI $25.80 $2,277 $2.80 9.2x 7% 18% 9.5%
Allied Capital Corp. (2) ALD 22.40 2,109 2.12 10.6x 9% 16% 9.1%
American Capital Strategies ACAS 26.90 914 2.17 12.4x 9% 12% 8.3%
------ ---- ----
ALD/ACAS AVERAGE 11.5X 9% 14%
Heller Financial, Inc. (3) HF 35.90 3,527 3.35 10.7x 2% 16% 1.1%
iSTAR FINANCIAL @ ALD/ACAS AVERAGE $32.17
</Table>
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Source: Public filings as of 6/30/01; figures are last 12 months; share count is
diluted outstanding.
(1) Adjusted Earnings = Net Income + Depreciation + Amortization.
(2) ROAA and ROAE exclude net unrealized gains.
(3) Heller price as of 7/27/01, one-day prior to acquisition announcement by
GE Capital Corp. at $53.75 per share. 16.0x LTM AEPS transaction multiple.
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THREE SOURCES OF INVESTOR UPSIDE (i)STAR|FINANCIAL [LOGO]
================================================================================
o Significant ratings upside potential. iSTAR Financial outscores the
A-rated finance company peer group on both risk and profitability metrics.
<Table>
<Caption>
--------------------------------------------------------------------------------
iSTAR PEER GROUP PEER GROUP
FINANCIAL MEAN(1) MEDIAN(1)
--------------------------------------------------------------------------------
SENIOR UNSECURED CREDIT RATING BA1 / BB+ A3 / A- A3 / A-
--------------------------------------------------------------------------------
TANGIBLE BOOK EQUITY ($ IN MILLIONS) $ 1,821 $ 1,833 $ 1,421
--------------------------------------------------------------------------------
TOTAL LIABILITIES / TANGIBLE EQUITY 1.3X 8.5x 8.1x
--------------------------------------------------------------------------------
EBIDA / INTEREST 2.7X 1.7x 1.6x
ROAA 7.2% 1.4% 1.3%
--------------------------------------------------------------------------------
ROAE 17.9% 10.6% 10.3%
--------------------------------------------------------------------------------
G&A / REVENUE 5.5% 19.1% 18.8%
RATING AGENCY RISK-BASED CAPITAL
ADEQUACY SCORE 2.43 0.89 0.94
--------------------------------------------------------------------------------
</Table>
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(1) Peer Group includes CIT Group Inc., GATX Capital, Heller Financial and
Textron Financial.
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INVESTMENT HIGHLIGHTS (i)STAR|FINANCIAL [LOGO]
================================================================================
o Largest independent finance company in attractive $100 - $150 billion
market niche.
o Consistent, eight-year track record of superior results.
o Intensive risk management and employee ownership lead to best loss
performance in finance industry.
o Significant upside potential for investors from:
> Strong total rate of return (growth and dividends).
> Multiple expansion.
> Ratings upgrade.
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