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): October 27, 2011

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 October 27, 2011, iStar Financial Inc. issued an earnings release announcing its financial results for the third quarter ended September 30, 2011.  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.

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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 Third Quarter 2011 Results

·      Net income (loss) allocable to common shareholders for the third quarter 2011 was ($62.2) million or ($0.71) per diluted common share.

·      Company repurchased 12.1 million shares of its common stock during the quarter, reducing total common shares outstanding by 13.0% from the end of the prior quarter.

·      Company recorded $19.1 million of loan loss provision and impairments for the quarter versus $83.8 million for the same period last year.

·      Subsequent to quarter end, Company sold a substantial portion of its interests in Oak Hill Advisors and related entities; expects to record a pre-tax gain of approximately $30 million in fourth quarter.

NEW YORK — October 27, 2011 — iStar Financial Inc. (NYSE: SFI) today reported results for the third quarter ended September 30, 2011.

iStar reported net income (loss) allocable to common shareholders for the third quarter of ($62.2) million, or ($0.71) per diluted common share, compared to ($83.5) million, or ($0.89) per diluted common share, for the third quarter 2010. The year-over-year improvement is due to lower loan loss provision and impairments of $19.1 million versus $83.8 million in the same period last year, as well as a $22.2 million gain from discontinued operations previously deferred as part of the June 2010 sale of a portfolio of 32 net lease assets. This increase was partially offset by lower revenue of $97.4 million versus $133.3 million in the same period last year, as well as higher interest expense.

Adjusted EBITDA for the third quarter was $83.1 million, compared to $97.4 million for the same period last year. The year-over-year decrease is due to lower revenues from a smaller overall asset base, partially offset by an increase in gains from discontinued operations versus the same period last year. Please see the financial tables that follow the text of this press release for details regarding the Company’s calculation of Adjusted EBITDA.

During the third quarter, the Company generated $318.2 million of proceeds from its portfolio, comprised of $271.8 million in principal repayments and $46.4 million from sales of other real estate owned (OREO) assets, primarily comprised of unit sales. Additionally, the Company funded a total of $55.1 million of investments.

Subsequent to quarter end, the Company sold a substantial portion of its interests in Oak Hill Advisors and related entities and expects to record a pre-tax gain in the fourth quarter of approximately $30 million on the carrying value of the investment. The Company continues to retain an interest in certain Oak Hill funds as well as certain fee streams.

“We have built a strong relationship with Oak Hill over the past six years and will continue to share ideas regarding the corporate credit and real estate finance markets,” said Jay Sugarman, iStar’s chairman and chief executive officer.

Capital Markets

During the quarter, the Company repaid the remaining $170.4 million of its 5.65% senior unsecured notes due September 2011 and repurchased $48.3 million par value of its senior unsecured notes. In addition, the Company repaid $183.8 million on the A-1 Tranche of its secured credit facility during the quarter. The cumulative amount repaid on the A-1 Tranche is $428.7 million, exceeding the minimum amortization required as of December 30, 2011. The Company’s weighted average effective cost of debt for the quarter was 5.7%, and leverage was 2.1x at September 30, 2011, unchanged from the prior quarter. Please see the financial tables that follow the text of this press release for a calculation of the Company’s leverage.

During the quarter, the Company repurchased approximately 12.1 million shares of its common stock for $77.0 million, utilizing virtually all of the Company’s previously authorized share repurchase capacity. At the end of the quarter, the Company had 80.5 million common shares outstanding, a reduction of 13.0% from the end of the prior quarter.

Portfolio Overview

At September 30, 2011, the Company’s total portfolio had a carrying value of $7.37 billion, gross of general loan loss reserves. The portfolio was comprised of $3.36 billion of loans and other lending investments, $1.76 billion of net lease assets, $1.62 billion of owned real estate and $621.2 million of other investments.

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At September 30, 2011, the Company’s $2.34 billion of performing loans and other lending investments had a weighted average last dollar loan-to-value ratio of 77.6% and maturity of 3.4 years. The performing loans consisted of 53.1% floating rate loans that generated a weighted average effective yield for the quarter of 6.3%, or approximately 605 basis points over the average one-month LIBOR rate for the quarter, and 46.9% fixed rate loans that generated a weighted average effective yield for the quarter of 7.8%. The weighted average risk rating of the Company’s performing loans was 3.35, unchanged from the prior quarter. Included in the performing loan balance were $41.8 million of watch list assets, a decrease from $74.3 million in the prior quarter.

At September 30, 2011, the Company’s non-performing loans (NPLs) had a carrying value of $1.02 billion, net of $613.2 million of specific reserves. This compares to $1.07 billion, net of $589.0 million of specific reserves, at the end of the prior quarter.

At the end of the quarter, the Company’s $1.76 billion of net lease assets, net of $355.2 million of accumulated depreciation, were 88.7% leased with a weighted average remaining lease term of 12.3 years. The weighted average risk rating of the Company’s net lease assets was 2.70,  versus 2.69 in the prior quarter. For the quarter, the Company’s occupied net lease assets generated a weighted average effective yield of 9.9% and the total net lease assets generated a weighted average effective yield of 8.5%.

At the end of the quarter, the Company’s $1.62 billion owned real estate portfolio was comprised of $669.3 million of OREO and $954.6 million of real estate held for investment (REHI). The Company’s OREO assets are considered held for sale based on management’s current intention to market and sell the assets in the near term, while management’s current intent and strategy is to hold, operate or develop its REHI assets over a longer term. During the quarter, the Company took title to a property with a carrying value of $69.4 million. The Company also recorded $9.3 million of impairments within its OREO portfolio. For the quarter, the Company recorded $8.2 million of revenue, offset by $19.8 million of expenses and funded $18.9 million of capital expenditures associated with its owned real estate portfolio.

For the third quarter, the Company recorded $9.2 million in loan loss provision versus $10.4 million in the prior quarter. At September 30, 2011, loan loss reserves totaled $710.1 million or 17.9% of total gross carrying value of loans. This compares to loan loss reserves of $701.2 million or 16.3% of total gross carrying value of loans at June 30, 2011.

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[Financial Tables to Follow]

*                   *                *

iStar Financial Inc. (NYSE: SFI) is a fully-integrated finance and investment company focused on the commercial real estate industry. The Company provides custom-tailored investment capital to high-end private and corporate owners of real estate and invests directly across a range of real estate sectors. The Company, which is taxed as a real estate investment trust (“REIT”), has invested more than $35 billion over the past two decades. Additional information on iStar Financial is available on the Company’s website at www.istarfinancial.com.

iStar Financial will hold a quarterly earnings conference call at 10:00 a.m. ET today, October 27, 2011. 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 the Company’s ability to generate liquidity and to repay indebtedness as it comes due, additional loan loss provisions, the amount and timing of asset sales (including OREO assets), increases in NPLs, repayment levels, the Company’s ability to reduce its indebtedness, the Company’s ability to maintain compliance with its debt covenants, economic conditions, the availability of liquidity for commercial real estate transactions and other risks detailed from time to time in iStar Financial Inc.’s SEC reports.)

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iStar Financial Inc.

Consolidated Statements of Operations

(In thousands)

(unaudited)

(1) For the three months ended September 30, 2011 and 2010, includes $7,153 and $3,883 of stock-based compensation expense, respectively. For the nine months ended September 30, 2011 and 2010, includes $15,622 and $13,597 of stock-based compensation expensive, respectively.

(2) HPU holders are current and former Company employees who purchased high performance common stock units under the Company’s High Performance Unit Program. Participating Security holders are Company employees and directors who hold unvested restricted stock units and common stock equivalents under the Company’s LTIP that are currently eligible to receive dividends.

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iStar Financial Inc.

Earnings Per Share Information

(In thousands, except per share amounts)

(unaudited)

(1) Excludes preferred dividends and net (income) loss from noncontrolling interests.

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iStar Financial Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)

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iStar Financial Inc.

Supplemental Information

(In thousands)

(unaudited)

(1) Adjusted EBITDA should be examined in conjunction with net income (loss) as shown in the Consolidated Statements of Operations. Adjusted EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of the Company’s performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor is this measure indicative of funds available to fund the Company’s cash needs or available for distribution to shareholders. It should be noted that the Company’s manner of calculating Adjusted EBITDA may differ from the calculations of similarly-titled measures by other companies. Depreciation and amortization excludes adjustments from discontinued operations of $263 for the three months ended September 30, 2011. Depreciation and amortization and impairment of assets exclude adjustments from discontinued operations of $669 and $1,543, respectively, for the three months ended September 30, 2010. Depreciation and amortization and impairment of assets exclude adjustments from discontinued operations of $789 and ($25), respectively, for the nine months ended September 30, 2011. Interest expense, depreciation and amortization and impairment of assets exclude adjustments from discontinued operations of $30,515, $8,329, and $1,861, respectively, for the nine months ended September 30, 2010.

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iStar Financial Inc.

Supplemental Information

(In thousands)

(unaudited)

(1) Calculation includes $406,710 of accumulated depreciation, $76,700 of general loan loss reserves and $633,417 of specific loan loss reserves, as stated.

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iStar Financial Inc.

Supplemental Information

(In thousands)

(unaudited)

LOANS AND OTHER LENDING INVESTMENTS CREDIT STATISTICS

(1) Gross carrying value represents iStar’s carrying value of loans, gross of loan loss reserves.

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iStar Financial Inc.

Supplemental Information

(In millions)

(unaudited)

PORTFOLIO STATISTICS AS OF SEPTEMBER 30, 2011 (1)

(1) Based on carrying value of the Company’s total investment portfolio, gross of general loan loss reserves.

- end -

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