iStar to redeem 8¾% notes with preferred offering proceeds

New York, Feb. 24 - iStar Financial Inc. (Ba1/BB+) said that it plans to redeem $88 million of its outstanding 8¾% senior notes due 2008 using part of the proceeds from its upcoming offering of four million shares of new cumulative redeemable preferred stock.

iStar, a New York based commercial real estate financing company, did not give a specific timetable for the expected redemption but said that it is expected to be completed in the first quarter. The notes will be redeemed at 108.75% of their principal amount, plus accrued interest up to the redemption date.

Following the redemption of the notes, $262 million will remain outstanding from the $350 million of the notes that were originally issued in August 2001.

The redemption of the 8¾% notes will result in a charge to iStar's adjusted earnings and net income (determined in accordance with Generally Accepted Accounting Principles) of $7.7 million and $9.2 million, respectively, in the 2004 first quarter due to the payment of the redemption premium. This anticipated charge was not reflected in the earnings guidance that the company issued on Feb. 12.

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