UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  May 2, 2008

iStar Financial Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:  (212) 930-9400

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

On May 2, 2008, iStar Financial Inc. issued an earnings release announcing its financial results for the first quarter ended March 31, 2008.  A copy of the earnings release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

The information in this Current Report, including the exhibit hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.  The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.

Exhibit 99.1        Earnings Release.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

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EXHIBIT INDEX

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Exhibit 99.1

iStar Financial Announces First Quarter 2008 Results

·                       Adjusted earnings per diluted common share were $0.87 for the first quarter 2008.

·                       Total revenues were $422.4 million; up 48% year-over-year.

·                       Company pays off interim facility used to finance acquisition of Fremont.

·                       Company to recognize approximately $250 million gain on sale of TimberStar Southwest joint venture.

·                       Company revises full year 2008 adjusted earnings per diluted common share guidance to $3.20 - $3.60 and diluted GAAP earnings per share of $3.70 - $4.10.

NEW YORK - May 2, 2008 - iStar Financial Inc. (NYSE: SFI), a leading publicly traded finance company focused on the commercial real estate industry, today reported results for the first quarter ended March 31, 2008.

iStar reported adjusted earnings for the quarter of $0.87 per diluted common share. This compares with $0.93 per diluted common share for the first quarter 2007. Adjusted earnings allocable to common shareholders for the first quarter 2008 were $117.4 million on a diluted basis, compared to $118.6 million for the first quarter 2007. Adjusted earnings represent net income computed in accordance with GAAP, adjusted for preferred dividends, depreciation, depletion, amortization, gain (loss) from discontinued operations and ineffectiveness on interest rate hedges.

Net income allocable to common shareholders for the first quarter was $74.2 million, or $0.55 per diluted common share, compared to $81.7 million, or $0.64 per diluted common share for the first quarter 2007. Please see the financial tables that follow the text of this press release for a detailed reconciliation of adjusted earnings to GAAP net income.

Net investment income for the quarter was $186.4 million, compared to $120.5 million for the first quarter 2007. The year-over-year increase was due to growth in the overall loan portfolio, primarily due to the addition of the Fremont assets, as well as the amortization of $28.3 million of Fremont loan portfolio purchase discount recognized in the quarter. Net investment income represents interest income, operating lease income and earnings (loss) from equity method investments, less interest expense, operating costs for corporate tenant lease assets and gain (loss) on early extinguishment of debt.

Consistent with its expectations for slower overall asset growth, the Company announced that during the first quarter it closed four new financing commitments for a total of $101.2 million. Of that amount, $20.7 million was funded during the quarter. In addition, the Company funded $921.4 million under pre-existing commitments and received $1.3 billion in principal repayments. Pursuant to the terms of the Fremont agreement, $0.6 billion of the principal received was utilized for principal reduction on Fremont’s A-participation interest.

During the first quarter, the Company recorded $44.2 million in Other Income from a profit participation related to one of its investments. Additionally, the Company completed the sale of two non-strategic corporate tenant lease assets for total proceeds of $8.2 million, net of costs, resulting in a total net book gain of approximately $2.1 million.

For the quarter ended March 31, 2008, the Company generated adjusted return on average common book equity of 20.2%. The Company’s equity represented 22.4% of total capitalization at quarter end and its debt to book equity plus accumulated depreciation/depletion and loan loss reserves, each as determined in accordance with GAAP, was 3.5x.

The Company’s net finance margin, calculated as the rate of return on assets less the cost of debt, was 4.11% for the quarter. Excluding the impact of the amortization of the Fremont loan portfolio purchase discount, the Company’s net finance margin was 3.42% for the quarter, versus 3.16% in the previous quarter.

As of March 31, 2008, a one percentage point increase in short-term rates, excluding the impact of interest floors in certain loan assets, would have increased the Company’s adjusted earnings by 1.89%, which is consistent with its match funding policy.

Summary of Capital Markets and Other Initiatives

As of March 31, 2008, the Company had $838.0 million available under $3.9 billion in revolving credit facilities. During the quarter, the Company amended its $500 million senior secured revolving credit facility to allow it to extend its maturity from September 2008 to September 2009. As of March 31, 2008, the Company had $1.3 billion outstanding on its interim facility used to fund the acquisition of Fremont General’s commercial real estate lending business. Subsequent to the end of the first quarter, the Company repaid the entire balance of the interim facility.

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On May 1, 2008, the Company entered into a $960 million first mortgage financing transaction secured by 34 properties, representing $1.1 billion of net book value and an appraised value of $1.6 billion. The Company has received approximately $810 million of proceeds from the initial closing of the financing and expects to receive the balance of the proceeds prior to the end of the second quarter, subject to the satisfaction of customary real estate closing conditions. The three-year financing is being provided by a major financial institution and is pre-payable in 20 months.

During the first quarter, the Company entered into a $300 million, 364-day term loan secured by collateral within the company’s corporate loan and debt portfolio. In addition, the Company completed a $53 million mortgage financing on a small pool of corporate tenant lease assets within its AutoStar portfolio.

As previously announced, on April 1, 2008, the Company closed on the sale of its TimberStar Southwest joint venture and the venture’s approximately 900,000-acre portfolio of forestland and related assets for $1.7 billion, including the assumption of debt. TimberStar Southwest purchased the properties in October 2006 for approximately $1.2 billion. iStar received net proceeds of approximately $400 million, representing a gain of approximately $250 million.

Risk Management

At March 31, 2008, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 86.4% of the Company’s asset base, versus 87.0% in the prior quarter. The Company’s loan portfolio consisted of 78.4% floating rate and 21.6% fixed rate loans, with a weighted average maturity of 2.8 years.

The weighted average last dollar loan-to-value ratio for all structured finance assets was 69.5%. At quarter end, the Company’s corporate tenant lease assets were 95.6% leased with a weighted average remaining lease term of 11.8 years. At March 31, 2008, the weighted average risk ratings of the Company’s structured finance and corporate tenant lease assets were 3.12 and 2.51, respectively, versus 3.07 and 2.50, respectively, in the previous quarter.

On March 31, 2008, the Company had 30 loans on non-performing loan (NPL) status representing $1.1 billion of gross loan value, compared to 31 loans on NPL status representing $1.2 billion of gross loan value in the prior quarter. Gross loan values represent iStar’s book value plus Fremont’s A-participation interest. During the quarter, the Company took title to three properties that served as collateral on its loans, resulting in $36.5 million of charge-offs against the Company’s reserve for loan losses. All of the loans were previously on NPL status and had a gross loan value of $191.5 million, prior to the Company receiving title to the properties.

At the end of the first quarter, the Company had 30 loans on its watch list representing $1.2 billion of gross loan value, compared to 40 loans on its watch list representing $1.6 billion of gross loan value in the prior quarter.

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Excluding Fremont’s A-participation interest on the associated assets, NPL and watch list assets were $796.9 million and $1.0 billion, respectively, compared to NPL and watch list assets in the prior quarter of $719.4 million and $1.2 billion, respectively. The Company’s policy is to stop the accrual of interest on loans placed on NPL status. The Company believes it has adequate collateral and loan loss reserves to support the book value for each of the NPL and watch list assets.

The Company had $252.9 million in loan loss reserves at March 31, 2008 versus $217.9 million at December 31, 2007. During the first quarter, the Company recorded $89.5 million in loan loss provision versus $113.0 million in the prior quarter. The provision reflects the continued deterioration in the overall credit markets and its impact on the Company’s portfolio as determined in its regular quarterly risk ratings review process.

The Company’s total loss coverage, defined as the combination of loan loss reserves of $252.9 million and remaining purchase discount from the Fremont acquisition of $114.2 million, was $367.1 million or 2.8% of gross loan value at the end of the first quarter. This compares to total loss coverage of $384.7 million or 2.8% of gross loan value in the prior quarter. The Company continues to believe its loss coverage provides adequate protection against future loan losses.

Summary of Fremont Contributions to Quarterly Results

At the end of the first quarter, the Fremont portfolio, including additional fundings made during the quarter, had a gross loan value of $4.9 billion consisting of 193 loans versus $5.4 billion consisting of 221 loans at the end of the fourth quarter 2007.

At the end of the first quarter, the value of Fremont’s A-participation interest in the portfolio was $2.4 billion versus $3.0 billion on December 31, 2007. The book value of iStar’s B-participation interest at the end of the first quarter was $2.5 billion versus $2.4 billion on December 31, 2007. During the quarter, iStar received $803.6 million in principal repayments of which the Company retained 30%. The balance of principal repayments was paid to Fremont through its participation interest. The weighted average maturity of the portfolio is approximately nine months.

During the first quarter, iStar funded $411.7 million of commitments related to the portfolio. Unfunded commitments at the end of the first quarter were $1.5 billion, of which the Company expects to fund approximately $1.4 billion based upon its comprehensive review of the portfolio. This compares to unfunded commitments of $2.2 billion on December 31, 2007.

At March 31, 2008, there were 20 Fremont loans on NPL status with a gross loan value of $494.1 million versus 23 loans at the prior quarter end, with $825.4 million of gross loan value. In addition, there were 14 loans on the Company’s watch list with a gross loan value of $405.4 million versus 25 loans at the prior quarter end, with $733.7 million of gross loan value. Excluding Fremont’s A-participation interest on the associated assets, NPL and watch list assets for the Fremont portfolio were $238.1 million and $233.3 million, respectively, versus $351.1 million and $358.5 million in the prior quarter.

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Earnings Guidance

Consistent with the Securities and Exchange Commission’s Regulation FD and Regulation G, iStar Financial comments on earnings expectations within the context of its regular earnings press releases. For fiscal year 2008, the Company expects diluted adjusted earnings per common share of $3.20 - $3.60, and diluted GAAP earnings per common share of $3.70 - $4.10.

Dividend

On March 7, 2008, iStar Financial declared a regular quarterly dividend of $0.87 per share. The first quarter dividend was paid on April 30, 2008 to shareholders of record on March 17, 2008.

Annual Meeting

The Company will host its Annual Meeting of Shareholders at The Harvard Club of New York City, located at 35 West 44th Street, New York, New York 10036 on Wednesday, May 28, 2008 at 9:00 a.m. ET. All shareholders are cordially invited to attend.

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[Financial Tables to Follow]

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iStar Financial Inc. is a leading publicly traded finance company focused on the commercial real estate industry. The Company primarily provides custom-tailored investment capital to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, as well as corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust (“REIT”), seeks to deliver strong dividends and superior risk-adjusted returns on equity to shareholders by providing innovative and value added financing solutions to its customers.

iStar Financial will hold a quarterly earnings conference call at 10:00 a.m. ET today, May 2, 2008. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through iStar Financial’s website, www.istarfinancial.com, under the “Investor Relations” section. To listen to the live call, please go to the website’s “Investor Relations” section at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the iStar Financial website.

(Note: Statements in this press release 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 mix of originations between structured finance and corporate tenant lease assets, repayment levels, the timing of receipt of prepayment penalties, the availability and cost of capital for future investments, competition within the finance and real estate industries, economic conditions, loss experience and other risks detailed from time to time in iStar Financial Inc.’s SEC reports.)

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Selected Income Statement Data

(In thousands)

(unaudited)

Selected Balance Sheet Data

(In thousands)

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iStar Financial Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)

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iStar Financial Inc.

Earnings Per Share Information

(In thousands, except per share amounts)

(unaudited)

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iStar Financial Inc.

Reconciliation of Adjusted Earnings to GAAP Net Income

(In thousands, except per share amounts)

(unaudited)

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iStar Financial Inc.

Consolidated Balance Sheets

(In thousands)

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iStar Financial Inc.

Supplemental Information

(In thousands)

(unaudited)

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iStar Financial Inc.

Supplemental Information

(In thousands)

(unaudited)

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iStar Financial Inc.

Supplemental Information

(In thousands)

(unaudited)

RISK MANAGEMENT STATISTICS

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iStar Financial Inc.

Supplemental Information

(In thousands, except per share amounts)

(unaudited)

LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

RECONCILIATION OF DILUTED GAAP EPS GUIDANCE

TO DILUTED ADJUSTED EPS GUIDANCE (2) 

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iStar Financial Inc.

Supplemental Information

(In millions)

(unaudited)

PORTFOLIO STATISTICS AS OF MARCH 31, 2008 (1)

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