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IStar Financial 10-K 2010

Documents found in this filing:

  1. 10-K/A
  2. Ex-31.0
  3. Ex-32.0
  4. Ex-32.0

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-K/A

Amendment No. 1

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)    
ý   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                               to                              

Commission File No. 1-15371



iSTAR FINANCIAL INC.
(Exact name of registrant as specified in its charter)

Maryland   95-6881527
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification Number)

1114 Avenue of the Americas, 39th Floor
New York, NY

 

10036
(Address of principal executive offices)   (Zip code)

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



Securities registered pursuant to Section 12(b) of the Act:

Title of each class: Name of Exchange on which registered:
 
Name of Exchange on which registered:
Common Stock, $0.001 par value   New York Stock Exchange
8.000% Series D Cumulative Redeemable
Preferred Stock, $0.001 par value
  New York Stock Exchange
7.875% Series E Cumulative Redeemable
Preferred Stock, $0.001 par value
  New York Stock Exchange
7.8% Series F Cumulative Redeemable
Preferred Stock, $0.001 par value
  New York Stock Exchange
7.65% Series G Cumulative Redeemable
Preferred Stock, $0.001 par value
  New York Stock Exchange
7.50% Series I Cumulative Redeemable
Preferred Stock, $0.001 par value
  New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ý No o

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes o No ý

          Indicate by check mark whether the registrant: (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports); and (ii) has been subject to such filing requirements for the past 90 days.    Yes ý No o

          Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes o No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer ý

Non-accelerated filer o
(Do not check if a smaller reporting company)

 

Smaller reporting company o

          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes o No ý

          As of June 30, 2009 the aggregate market value of the common stock, $0.001 par value per share of iStar Financial Inc. ("Common Stock"), held by non-affiliates (1) of the registrant was approximately $267.1 million, based upon the closing price of $2.84 on the New York Stock Exchange composite tape on such date.

          As of February 16, 2010, there were 94,195,478 shares of Common Stock outstanding.

(1)
For purposes of this Annual Report only, includes all outstanding Common Stock other than Common Stock held directly by the registrant's directors and executive officers.

DOCUMENTS INCORPORATED BY REFERENCE

1.
Portions of the registrant's definitive proxy statement for the registrant's 2010 Annual Meeting, to be filed within 120 days after the close of the registrant's fiscal year, are incorporated by reference into Part III of this Annual Report on Form 10-K.


Table of Contents

TABLE OF CONTENTS


Table of Contents


EXPLANATORY NOTE

        iStar Financial Inc. filed its Annual Report on Form 10-K for the year ended December 31, 2009 on February 26, 2010. This Amendment is being filed to correct an inadvertent error in the fixed charge coverage ratios included in explanatory note 8 to the Selected Financial Data Table in Item 6 of the Form 10-K. The corrected ratios, which conform to those disclosed by iStar Financial Inc. in its earnings press release issued on February 17, 2010 and accompanying public conference call, are included in this Amendment. Except as otherwise expressly noted herein, this Amendment does not reflect events occurring after the filing of iStar Financial Inc.'s original Form 10-K on February 26, 2010. Accordingly, this Amendment should be read in conjunction with iStar Financial's original Form 10-K.

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Table of Contents


PART II

Item 6.    Selected Financial Data

        The following table sets forth selected financial data on a consolidated historical basis for the Company. This information should be read in conjunction with the discussions set forth in Item 7—"Management's Discussion and Analysis of Financial Condition and Results of Operations." Certain prior year amounts have been reclassified to conform to the 2009 presentation.

 
  For the Years Ended December 31,  
 
  2009   2008   2007   2006   2005  
 
  (In thousands, except per share data and ratios)
 

OPERATING DATA:

                               

Interest income

  $ 557,809   $ 947,661   $ 998,008   $ 575,598   $ 406,668  

Operating lease income

    305,007     308,742     306,513     285,555     262,625  

Other income

    30,468     97,851     99,938     70,824     80,133  
                       
 

Total revenue

    893,284     1,354,254     1,404,459     931,977     749,426  
                       

Interest expense

    481,116     666,706     629,260     429,613     312,806  

Operating costs-corporate tenant lease assets

    23,467     23,059     27,915     22,159     20,622  

Depreciation and amortization

    97,869     94,726     83,690     66,258     61,609  

General and administrative

    127,044     143,902     156,534     95,358     61,971  

Provision for loan losses

    1,255,357     1,029,322     185,000     14,000     2,250  

Impairment of other assets

    122,699     295,738     144,184     5,683      

Impairment of goodwill

    4,186     39,092              

Other expense

    104,795     37,234     8,927     874     2,014  
                       
 

Total costs and expenses

    2,216,533     2,329,779     1,235,510     633,945     461,272  
                       

Income (loss) before earnings from equity method investments, minority interest and other items

    (1,323,249 )   (975,525 )   168,949     298,032     288,154  
 

Gain (loss) on early extinguishment of debt

    547,349     393,131     225         (46,004 )
 

Gain on sale of joint venture interest

        280,219              
 

Earnings from equity method investments

    5,298     6,535     29,626     12,391     3,016  
                       

Income (loss) from continuing operations

    (770,602 )   (295,640 )   198,800     310,423     245,166  
 

Income (loss) from discontinued operations

    (11,671 )   22,415     29,970     41,384     37,373  
 

Gain from discontinued operations

    12,426     91,458     7,832     24,227     6,354  
                       

Net income (loss)

    (769,847 )   (181,767 )   236,602     376,034     288,893  
 

Net (income) loss attributable to noncontrolling interests

    1,071     991     816     (1,207 )   (980 )
 

Gains attributable to noncontrolling interests

        (22,249 )            
                       

Net income (loss) attributable to iStar Financial Inc. 

    (768,776 )   (203,025 )   237,418     374,827     287,913  
 

Preferred dividend requirements

    (42,320 )   (42,320 )   (42,320 )   (42,320 )   (42,320 )
                       

Net income (loss) attributable to iStar Financial Inc. and allocable to common shareholders, HPU holders and Participating Security holders(1)

  $ (811,096 ) $ (245,345 ) $ 195,098   $ 332,507   $ 245,593  
                       

Per common share data(2):

                               
 

Income (loss) attributable to iStar Financial Inc. from continuing operations:

                               
   

Basic

  $ (7.89 ) $ (2.68 ) $ 1.19   $ 2.25   $ 1.75  
   

Diluted(3)

  $ (7.89 ) $ (2.68 ) $ 1.18   $ 2.23   $ 1.74  
 

Net income (loss) attributable to iStar Financial Inc.:

                               
   

Basic

  $ (7.88 ) $ (1.85 ) $ 1.48   $ 2.81   $ 2.13  
   

Diluted(3)

  $ (7.88 ) $ (1.85 ) $ 1.47   $ 2.78   $ 2.11  

Per HPU share data(2):

                               
 

Income (loss) attributable to iStar Financial Inc. from continuing operations:

                               
   

Basic

  $ (1,503.13 ) $ (505.47 ) $ 224.40   $ 425.60   $ 331.00  
   

Diluted(3)

  $ (1,503.13 ) $ (505.47 ) $ 223.27   $ 422.07   $ 327.73  
 

Net income (loss) attributable to iStar Financial Inc.:

                               
   

Basic

  $ (1,501.73 ) $ (349.87 ) $ 279.53   $ 530.94   $ 402.73  
   

Diluted(3)

  $ (1,501.73 ) $ (349.87 ) $ 278.07   $ 526.47   $ 398.73  

Dividends declared per common share(4)

      $ 1.74   $ 3.60   $ 3.08   $ 2.93  

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Table of Contents

 
  For the Years Ended December 31,  
 
  2009   2008   2007   2006   2005  
 
  (In thousands, except per share data and ratios)
 

SUPPLEMENTAL DATA:

                               

Adjusted diluted earnings (loss) attributable to iStar Financial, Inc. and allocable to common shareholders and HPU holders(5)(6)

  $ (708,595 ) $ (359,295 ) $ 355,707   $ 429,922   $ 391,884  

EBITDA(6)(7)

  $ (168,362 ) $ 612,325   $ 1,013,087   $ 904,537   $ 687,571  

Ratio of earnings to fixed charges(8)

    (0.5 )x   0.6x     1.3x     1.7x     1.8x  

Ratio of earnings to fixed charges and preferred stock dividends

    (0.5 )x   0.6x     1.3x     1.6x     1.6x  

Weighted average common shares outstanding—basic

    100,071     131,153     126,801     115,023     112,513  

Weighted average common shares outstanding—diluted

    100,071     131,153     127,542     116,057     113,668  

Weighted average HPU shares outstanding—basic and diluted

    15     15     15     15     15  

Cash flows from:

                               
 

Operating activities

  $ 76,276   $ 418,529   $ 561,337   $ 431,224   $ 515,919  
 

Investing activities

    726,221     (27,943 )   (4,745,080 )   (2,529,260 )   (1,406,121 )
 

Financing activities

    (1,074,402 )   1,444     4,182,299     2,088,617     917,150  

BALANCE SHEET DATA:

                               

Loans and other lending investments, net

  $ 7,661,562   $ 10,586,644   $ 10,949,354   $ 6,799,850   $ 4,661,915  

Corporate tenant lease assets, net

    2,885,896     3,044,811     3,309,866     3,084,794     3,115,361  

Total assets

    12,810,575     15,296,748     15,848,298     11,059,995     8,532,296  

Debt obligations, net

    10,894,903     12,486,404     12,363,044     7,833,437     5,859,592  

Redeemable noncontrolling interests

    7,444     9,190     17,773     9,229     9,228  

Total equity

    1,656,118     2,446,662     2,972,170     3,016,372     2,470,954  

Explanatory Notes:


(1)
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 granted under the Company's Long Term Incentive Plan.

(2)
See Note 14 of the Company's Notes to the Consolidated Financial Statements.

(3)
For the years ended December 31, 2007, 2006 and 2005, net income used to calculate earnings per diluted common share and HPU share includes joint venture income of $85, $115, and $28, respectively.

(4)
The Company generally declares common dividends in the month subsequent to the end of the quarter. During 2009, no common dividends were declared. During 2008, no common dividends were declared for the three month periods ended September 30, 2008 and December 31, 2008. In December of 2007, the Company declared a special $0.25 dividend due to higher taxable income generated as a result of the Company's acquisition of Fremont CRE.

(5)
Adjusted earnings represents net income allocable to common shareholders and HPU holders computed in accordance with GAAP, before depreciation, depletion, amortization, gain from discontinued operations, ineffectiveness on interest rate hedges, impairment of goodwill and intangible assets, extraordinary items and cumulative effect of change in accounting principle. (See Item 7—"Management's Discussion and Analysis of Financial Condition and Results of Operations," for a reconciliation of adjusted earnings to net income).

(6)
Both adjusted earnings and EBITDA should be examined in conjunction with net income (loss) as shown in the Company's Consolidated Statements of Operations. Neither adjusted earnings nor EBITDA should be considered as an alternative to net income (loss) (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 either measure indicative of funds available to fund the Company's cash needs or available for distribution to shareholders. Rather, adjusted earnings and EBITDA are additional measures the Company uses to analyze how its business is performing. As a commercial finance company that focuses on real estate lending and corporate tenant leasing, the Company records significant depreciation on its real estate assets and amortization of deferred financing costs associated with its borrowings. It should be noted that the Company's manner of calculating adjusted earnings and EBITDA may differ from the calculations of similarly-titled measures by other companies.

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Table of Contents

(7)
EBITDA is calculated as net income (loss) attributable to iStar Financial Inc. plus the sum of interest expense, income taxes, depreciation, depletion and amortization.

   
  For the Years Ended December 31,  
   
  2009   2008   2007   2006   2005  
   
  (in thousands)
 
 

Net income (loss) attributable to iStar Financial Inc

  $ (769,847 ) $ (181,767 ) $ 236,602   $ 376,034   $ 288,893  
 

Add: Interest expense(1)

    481,116     666,706     629,260     429,613     312,806  
 

Add: Income taxes

    4,141     10,175     6,972     891     2,014  
 

Add: Depreciation, depletion and amortization(2)

    98,238     102,745     99,427     83,058     75,574  
 

Add: Joint venture depreciation, depletion and amortization

    17,990     14,466     40,826     14,941     8,284  
                         
 

EBITDA

  $ (168,362 ) $ 612,325   $ 1,013,087   $ 904,537   $ 687,571  
                         
    Explanatory
    Notes:  

    (1)
    For the years ended December 31, 2007, 2006 and 2005, interest expense includes $12, $194, and $247, respectively, of interest expense reclassified to discontinued operations.

    (2)
    For the years ended December 31, 2009, 2008, 2007, 2006, and 2005, depreciation, depletion and amortization includes $1,419, $6,717, $10,677, $12,567, and $11,461, respectively, of depreciation, depletion and amortization reclassified to discontinued operations.
(8)
This ratio of earnings to fixed charges is calculated in accordance with GAAP. The Company's bank credit facilities and senior notes both have fixed charge coverage covenants, however, each is calculated differently in accordance with the terms of the respective agreements. In addition, the fixed charge covenant in the bank credit facilities is a maintenance covenant while the covenant in the senior notes is an incurrence covenant. The fixed charge coverage ratios for the bank credit facilities and senior notes were 2.4x and 2.3x, respectively as of December 31, 2009.

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Table of Contents


PART IV

Item 15.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

        The following exhibits are filed as part of this Amendment No.1:

Exhibit
Number
  Document Description
  31.0   Certifications pursuant to Section 302 of the Sarbanes-Oxley Act.

 

32.0

 

Certifications pursuant to Section 906 of the Sarbanes-Oxley Act.

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Table of Contents


SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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.

    iSTAR FINANCIAL INC.
Registrant

Date: March 10, 2010

 

/s/ JAY SUGARMAN

Jay Sugarman
Chairman of the Board of Directors and Chief Executive Officer (Principal executive officer)

Date: March 10, 2010

 

/s/ JAMES D. BURNS

James D. Burns
Chief Financial Officer
(Principal financial and accounting officer)

8



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