Fitch: iStar Facing Inevitable Default; IDR Downgraded to ‘C’

NEW YORK, NY–29  Sept. 29,  2010:  Absent a significant improvement in commercial  real  estate fundamentals which would result in iStar Financial
Inc. (iStar)  receiving  a  substantial amount of loan repayments from its borrowers, it is inevitable that the company will need to effect a coercive debt  exchange  (CDE) with its second lien noteholders to avoid bankruptcy,
according to Fitch Ratings.

A CDE is considered a default as outlined in Fitch’s global criteria report
'Coercive Debt Exchange Criteria', published on March 3, 2009. In response,
Fitch  has  downgraded  iStar’s  Issuer  Default  Rating  (IDR) and certain
outstanding debt ratings.

For a complete copy of Fitch Ratings' news release and its ranking of iStar, please contact:

Primary Analyst
Steven Marks
Managing Director
+1-212-908-9161
Fitch, Inc.
One State Street Plaza
New York, NY 10004