Big loss for iStar

TRD New York /
Jul.July 31, 2008 03:34 PM

 
IStar Financial Inc., a New York-based commercial real estate lender, said it lost $200 million from operations in the second-quarter and warned of further weakness lasting into next year as the market remains unstable and defaults increase.

“Our thought process is things will remain as bad as they are now for the foreseeable future,” Chief Financial Officer Catherine Rice said on a conference call today with financial analysts.

The company, which previously operated under the name Starwood Financial, reported a $1.46 cents a share loss, compared with year-ago earnings of $1.02 a share, or $132.9 million. 

Earlier this month, iStar Financial warned investors that it would lose between $1.45 and $1.55 a share on an adjusted basis, citing continued deterioration of the credit markets.

Following the warning, Fitch Ratings downgraded the company’s issuer default rating to ‘BBB-‘ from ‘BBB,’ citing the continued slowdown in commercial real estate debt markets and weakness in the iStar loan portfolio. The rating reflects the company’s ability to meet its financial obligations on a timely basis. 

IStar’s net income fell 79 percent to $20 million, or 15 cents a share, compared with $96.3 million or 75 cents per share last year.

Revenue rose 5.7 percent to $324 million in the quarter.

IStar now expects to lose between $1.00 and $1.75 cents a share for the year on an adjusted basis.

IStar said it recorded $267.1 million in loan loss provisions during the quarter, which are set aside for bad loans. By the end of the quarter, iStar said it had a total of $460.1 million in loan loss reserves, compared with $252.9 at the end of March.

As of June 30, iStar said it had listed 39 of its 408 total loans as non-performing, representing $1.3 billion or 10.5 percent of its total portfolio. It said its largest problem loan continues to be a $200 million loan for a development site in midtown Manhattan. It did not disclose the owner of the site.

IStar shares have fallen sharply in recent months amid concerns about the overall credit markets and bad loans that it bought from Fremont General Corp., a California-based lender that was heavily involved in subprime mortgages.

IStar, which had mainly operated as a real estate investment trust, acquired the Fremont portfolio in 2007 for $1.9 billion.

The company earlier this year filed suit in New York State Supreme Court against developer Kent Swig after he defaulted on a pair of tenement buildings at 201 West 92nd Street. Swig had financed the purchase through Fremont in 2005. However, he abandoned his bid to construct nine additional stories of condos on top of the buildings and sold the property for $61 million to Brooklyn developer Eugene Mendlowits.


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
Cohen Brothers' Charles Cohen and Stephen Fredericks (Getty; iStock; LinkedIn)

Cohen Brothers employees allege harassment, endangerment

Cohen Brothers employees allege harassment, endangerment
After a lost summer, Coney Island businesses are struggling to imagine how to survive the winter. (Getty)

Lost summer, failed plan haunt Coney Island

Lost summer, failed plan haunt Coney Island
Jeff Bezos (Getty, iStock)

“We are erring on the side of having too much capacity”: Amazon reports massive Q3

“We are erring on the side of having too much capacity”: Amazon reports massive Q3
Bob Sulentic (Getty, iStock)

CBRE income falls nearly 10%

CBRE income falls nearly 10%
From left: Paramount CEO Albert Behler, 1301 6th Avenue, 712 5th Avenue, 31 West 52nd Street (Getty; Google Maps)

Paramount Group back at work, but tenants waiting until 2021

Paramount Group back at work, but tenants waiting until 2021
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...