ISTAR FINANCIAL INC
S-3, 2000-06-02
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>

      As filed with the Securities and Exchange Commission on June 2, 2000

                                                                REGISTRATION NO.
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                   -------------------------------------------
                                    FORM S-3
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                   -------------------------------------------
                              iSTAR FINANCIAL INC.
             (Exact Name of Registrant as Specified in its Charter)

               MARYLAND                                       95-6881527
   (State or other Jurisdiction of                         (I.R.S. Employer
    Incorporation or Organization)                        Identification No.)

                    1114 AVENUE OF THE AMERICAS - 27TH FLOOR
                            NEW YORK, NEW YORK 10036
                                 (212) 930-9400
   (Address, including Zip Code, and Telephone Number, including Area Code, of
                   Registrant's Principal Executive Offices)
          -------------------------------------------------------------
                                  JAY SUGARMAN
                      CHAIRMAN AND CHIEF EXECUTIVE OFFICER
                              iSTAR FINANCIAL INC.
       1114 Avenue of the Americas - 27th Floor, New York, New York 10036
                                 (212) 930-9400

 (Name, Address, including Zip Code, and Telephone Number, including Area Code,
                             of Agent for Service)

                                    COPY TO:
                            KATHLEEN L. WERNER, ESQ.
                       CLIFFORD CHANCE ROGERS & WELLS, LLP
                                 200 Park Avenue
                            New York, New York 10166
                                (212) 878-8000

                     --------------------------------------

         Approximate date of commencement of proposed sale to the public: At any
time and from time to time after the effective date of this Registration
Statement in light of market conditions and other factors.

                     --------------------------------------

         If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: /X/

         If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. / /

         If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

         If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /

         If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /

                         CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
---------------------------------------- ------------------- ----------------------- ------------------------- ---------------------
                                                                PROPOSED MAXIMUM         PROPOSED MAXIMUM
  TITLE OF CLASS OF SECURITIES BEING        AMOUNT TO BE      AGGREGATE PRICE PER       AGGREGATE OFFERING          AMOUNT OF
              REGISTERED                   REGISTERED(1)            SHARE(2)                 PRICE(2)            REGISTRATION FEE
---------------------------------------- ------------------- ----------------------- ------------------------- ---------------------

<S>                                          <C>                     <C>                   <C>                       <C>
Common stock, $.001 par value per share      8,000,000               $19.15                $153,200,000              $40,445
---------------------------------------- ------------------- ----------------------- ------------------------- ---------------------
</TABLE>

(1)  Plus such  additional  number of shares as may be required in the event of
     a stock  dividend,  reverse stock split,  split-up,  recapitalization  or
     other similar event.
(2)  This estimate is based on the average of the high and low sales price on
     the New York Stock Exchange of the common stock of iStar Financial Inc. on
     May 30, 2000, pursuant to Rule 457(c) under the Securities Act, and is made
     solely for the purposes of determining the registration fee.

                    -----------------------------------------
         THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

================================================================================



<PAGE>

             PRELIMINARY, SUBJECT TO COMPLETION, DATED JUNE 2, 2000

              DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN

                        8,000,000 SHARES OF COMMON STOCK

                              iSTAR FINANCIAL INC.

         We have created a Dividend Reinvestment and Direct Stock Purchase Plan
and are offering participation in that plan by means of this prospectus. The
plan has two components: a dividend reinvestment component and a direct stock
purchase component. The dividend reinvestment component permits our shareholders
to designate all or a portion of the cash dividends on their iStar common stock
for reinvestment in additional shares of our common stock. The direct stock
purchase component permits our shareholders and new investors to purchase shares
of our common stock directly from us in an economical and convenient manner. The
Administrator of the plan is First Chicago Trust Company of New York, a division
of EquiServe Trust Company, N.A. (the "Administrator"). Some of the significant
features of the plan are as follows:

-        Participants may purchase additional shares of our common stock without
         payment of brokerage commissions or service charges by automatically
         reinvesting all or a portion of their common stock cash dividends.

-        Participants and new investors may purchase shares of our common stock
         without payment of brokerage commissions or service charges through the
         direct stock purchase component of the plan by making optional cash
         investments of $100 to $10,000 per month.

-        Participants and new investors may, at our sole discretion, make
         optional cash investments in excess of $10,000 without payment of
         brokerage commissions or service charges.

-        Participation in the plan is entirely voluntary, and participants may
         terminate their participation at any time. Shareholders who do not
         choose to participate in the plan will continue to receive cash
         dividends, as declared, in the usual manner.

-        The Administrator will purchase our common stock directly from us or in
         open market or privately negotiated transactions, as we determined from
         time to time, to fulfill requirements for the plan. We expect that
         shares usually will be purchased directly from us.

-        Participants will receive a quarterly statement showing all
         year-to-date activity.

         To enroll in the plan you must complete and return an enrollment form
to the Administrator. If you are a new investor, you also must submit or arrange
for your initial investment payment. For further enrollment information, you
should contact:

                  EquiServe Trust Company, N.A.
                  Attn: iStar Financial Inc. Stock Purchase Plan
                  P.O. Box 2598
                  Jersey City, NJ  07303-2598

                  Telephone:        800-[428-9578] (for shareholders)
                                    888-[280-3848] (for non-shareholders)

                  TDD: 1-201-222-4955-a telecommunications device for the
                  hearing impaired is available. Internet: Messages forwarded on
                  the Internet will receive a prompt reply. EquiServe's
                  Internet address is: "http://www.equiserve.com"
<PAGE>

         The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is not
permitted.

         The shares of common stock, both those outstanding and those offered
through this prospectus, are subject to repurchase by us under certain
conditions and are subject to restrictions on ownership and transferability
which prohibit any single person from owning shares in excess of 9.8% of the
number of shares or value of any class or series of our outstanding capital
stock.

         We will bear the costs relating to the registration of the common stock
being offered by this prospectus, estimated to be approximately $80,000.


          NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
   SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR
   DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION
                     TO THE CONTRARY IS A CRIMINAL OFFENSE.

                 The date of this prospectus is June ___, 2000.


<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                               PAGE

<S>                                                                                                          <C>
FORWARD-LOOKING INFORMATION......................................................................................3

iSTAR FINANCIAL INC..............................................................................................4

SUMMARY OF THE PLAN..............................................................................................4

Purpose Of Plan..................................................................................................4

Eligibility and Enrollment.......................................................................................4

Reinvestment of Dividends........................................................................................4

Optional Cash Investments Up To $10,000..........................................................................4

Optional Cash Investments in Excess of $10,000 -- Request for Waiver.............................................4

Purchase Date....................................................................................................5

Source of Shares.................................................................................................5

Purchase Price...................................................................................................5

Number Of Shares Offered.........................................................................................6

Advantages of the Plan...........................................................................................6

Disadvantages of the Plan........................................................................................6

THE PLAN ........................................................................................................7

Purpose ........................................................................................................ 7

Administration...................................................................................................7

Eligibility......................................................................................................8

Enrollment Procedures............................................................................................8

Dividend Options.................................................................................................9

Changing Dividend Options .......................................................................................9

Discontinuing Dividend Reinvestment ............................................................................10

Optional Cash Investments Up To $10,000.........................................................................10

Optional Cash Investments in Excess of $10,000 -- Request for Waiver............................................10

Purchase Date...................................................................................................11

Source of Shares................................................................................................12

Purchase Price..................................................................................................12

Reinvested Dividends ...........................................................................................12

Investment Options..............................................................................................14

Direct Deposit of Dividends.....................................................................................15

Share Safekeeping and Share Certificate Mailings................................................................15

Certificates for Shares.........................................................................................16

Sale of Shares..................................................................................................16

Gifts and Transfers of Shares...................................................................................16

Stock Splits, Stock Dividends and Rights Offerings..............................................................17
</TABLE>

                                      -1-


<PAGE>


                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                              PAGE

<S>                                                                                                          <C>
Plan Reports....................................................................................................17

Plan Costs......................................................................................................17

Pledging of Shares in Participant's Accounts....................................................................17

Voting Rights of Shares in Participant's Accounts...............................................................18

Termination, Suspension or Modification of the Plan.............................................................18

Limitations on Liability........................................................................................18

Termination of a Participant....................................................................................18

Governing Law...................................................................................................18

MATERIAL FEDERAL INCOME TAX CONSIDERATIONS......................................................................18

RESTRICTIONS ON OWNERSHIP OF SHARES.............................................................................21

PLAN OF DISTRIBUTION AND UNDERWRITERS...........................................................................22

USE OF PROCEEDS.................................................................................................22

LEGAL OPINIONS AND EXPERTS......................................................................................22

WHERE YOU CAN FIND MORE INFORMATION.............................................................................23
</TABLE>


                                      -2-
<PAGE>


         YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR
TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THE
PROSPECTUS OR IN THE DOCUMENTS TO WHICH WE HAVE REFERRED YOU IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.

                           FORWARD-LOOKING INFORMATION

         We make forward-looking statements about our business in our filings
with the Securities and Exchange Commission. Although we believe the
expectations reflected in those forward-looking statements are reasonable, it is
possible they will prove not to have been correct. Among the factors which can
affect our future performance are:

-        the success or failure of our efforts to implement our current business
         strategy;

-        economic conditions generally and in the commercial real estate and
         finance markets specifically;

-        the performance and financial condition of our borrowers and tenants;

-        the actions of our competitors and our ability to respond to those
         actions;

-        the cost of our capital, which depends in part on our asset quality,
         the nature of our relationships with our lenders and other capital
         providers, our business prospects and outlook and general market
         conditions;

-        changes in governmental regulations, tax rates and similar matters; and

-        legislative and regulatory changes (including changes to laws governing
         the taxation of REITs).


                                      -3-
<PAGE>



                              iSTAR FINANCIAL INC.

         We are the leading publicly traded finance company focused on the
commercial real estate industry. We provide structured mortgage, mezzanine and
lease financing through our origination, acquisition and servicing platform. Our
mission is to maximize risk-adjusted returns on equity by providing innovative
and value-added financing solutions to private and corporate owners of
commercial properties in major metropolitan markets nationwide. We are taxed as
a real estate investment trust.

                               SUMMARY OF THE PLAN

         The following summary description of our Dividend Reinvestment and
Direct Stock Purchase Plan is qualified by reference to the full text of the
plan which is contained in this prospectus. Terms used in the summary have the
meanings given to them in the plan.

PURPOSE OF PLAN

         The purpose of the plan is to provide an economical and convenient way
for our shareholders to invest all or a portion of their cash dividends in
additional shares of our common stock and for our shareholders and new investors
to purchase shares of our common stock directly from us. The plan also provides
us with a means of raising additional capital through the direct sale of our
common stock.

ELIGIBILITY AND ENROLLMENT

         You can participate in the plan if you currently own shares of our
stock by submitting a completed authorization form. You may obtain an
authorization form from the Administrator. You may participate directly in the
plan only if you hold our stock in your own name. If you hold shares through a
brokerage or other account, you may arrange to have your broker or other
custodian participate on your behalf. If you do not own any shares of our stock,
you can participate in the plan by making an initial investment in common stock
through the plan with a minimum initial investment of $100.

REINVESTMENT OF DIVIDENDS

         If you are currently a shareholder, you can reinvest your cash
dividends on some or all of your common stock in additional shares of our common
stock without having to pay brokerage commissions or service fees. We may, from
time to time, offer up to a 3% discount on shares of common stock purchased with
reinvested cash dividends.

OPTIONAL CASH INVESTMENTS UP TO $10,000

         If you are currently a shareholder or if you wish to become a
shareholder, you can buy shares of our common stock directly from us without
having to pay brokerage commissions or service fees. You can invest a minimum of
$100 and a maximum of $10,000 in any one calendar month. We may, from time to
time, offer up to a 3% discount on shares of common stock purchased pursuant to
this option.

OPTIONAL CASH INVESTMENTS IN EXCESS OF $10,000 -- REQUEST FOR WAIVER

         Optional cash investments made pursuant to a request for waiver are not
subject to a predetermined maximum limit on the amount of the investment or on
the number of shares that may be purchased. The discount, if any, on optional
cash investments made pursuant to a request for waiver will



                                      -4-
<PAGE>

range from 0-3% and will be established at our discretion, along with, any other
terms, after a review of current market conditions, the level of participation
and our current and projected capital needs.

PURCHASE DATE

         When the Administrator purchases shares of common stock from us, such
purchases shall be made on the "Purchase Date" in each month. If the
Administrator is buying shares of common stock directly from us through dividend
reinvestment, or through optional cash investments of up to $10,000, then the
Purchase Date will occur on either (1) the dividend payment date during any
month in which we pay a cash dividend or (2) the last trading day of any month
in which we do not pay a cash dividend. If the Administrator is buying shares of
common stock directly from us through an optional cash investment pursuant to a
request for waiver, then the Administrator will purchase the common stock over a
ten day pricing period, with each day being considered a Purchase Date, as more
fully discussed below.

         If the Administrator purchases shares of common stock in the open
market or in privately negotiated transactions, then the Administrator will
purchase such shares as soon as is practical on or after the day that would be
deemed the Purchase Day if the common stock was purchased from us.

SOURCE OF SHARES

         The Administrator will purchase shares of common stock either directly
from us as newly issued shares of common stock, or from parties other than us,
either in the open market or in privately negotiated transactions.

PURCHASE PRICE

         If the Administrator purchases shares of common stock directly from us,
with reinvested dividends or optional cash investments of up to $10,000, the
Administrator will pay a price equal to 100% (subject to change as provided
below) of the average of the daily high and low sales prices for a share of
common stock reported by the New York Stock Exchange on the applicable Purchase
Date, or, if no trading occurs in shares of common stock on the applicable
Purchase Date, the first trading day immediately preceding the Purchase Date for
which trades are reported, computed to seven decimal places, if necessary.

         If the Administrator purchases shares of common stock directly from us,
with optional cash investments of greater than $10,000, the Administrator will
purchase the common stock pro rata over a ten day pricing period, with each day
being a Purchase Date. On each of the ten Purchase Dates the Administrator will
pay a price equal to 100% (subject to change as provided below) of the average
of the daily high and low sales prices of our common stock reported by the New
York Stock Exchange computed up to seven decimal places, if necessary. Purchases
by the Administrator during the pricing period may be subject to a minimum
waiver amount, as more fully described below.

         The price the Administrator will pay us for shares of common stock in
the case of dividend reinvestments, optional cash purchases up to $10,000 and
optional cash purchases in excess of $10,000 may be discounted by 0-3% at our
discretion.

         If the Administrator purchases shares of common stock in the open
market or in privately negotiated transactions, then the Administrator will pay
a price equal to the weighted average purchase price paid by the Administrator
for such shares, computed up to seven decimal places, if necessary. The
Administrator will purchase such shares as soon as is practical on or after the
Purchase Date.



                                      -5-
<PAGE>

NUMBER OF SHARES OFFERED

         Initially, 8,00,000 shares of common offered stock are authorized to be
issued and registered under the Securities Act for offering pursuant to the
plan. Because we expect to continue the plan indefinitely, we expect to
authorize and register additional shares from time to time as necessary for
purposes of the plan.

ADVANTAGES OF THE PLAN

-        The plan provides participants with the opportunity to reinvest cash
         dividends in additional shares of our common stock without having to
         pay brokerage commissions or service charges.

-        The plan provides participants with the opportunity to make monthly
         optional cash investments, subject to minimum and maximum amounts, for
         the purchase of shares of our common stock without having to pay any
         brokerage commissions or service charges.

-        From time to time the plan may provide a 0-3% discount on shares of
         common stock purchased from us through reinvested dividends, optional
         cash purchases up to $10,000 or optional cash purchases in excess of
         $10,000.

-        All cash dividends paid on our shares enrolled in the dividend
         reinvestment program can be fully invested in additional shares of our
         common stock because the plan permits fractional shares to be credited
         to plan accounts. Dividends on fractional shares, as well as on whole
         shares, will also be reinvested in additional shares which will be
         credited to participants' plan accounts.

-        At no charge and at the election of participants, the Administrator
         will send certificates to participants for optional shares purchased or
         provide for the safekeeping of stock certificates for shares credited
         to each plan account.

-        A participant may deposit with the Administrator certificates
         representing any other shares of our common stock held by the
         shareholder for safekeeping without charge.

-        Periodic statements reflecting all current activity, including
         purchases of plan shares and the most recent plan account balance,
         should simplify participants' record keeping.

DISADVANTAGES OF THE PLAN

-        We will pay no interest on dividends or optional cash investments held
         pending reinvestment or investment. In addition, optional cash
         investments of less than $100 and that portion of any optional cash
         investment which exceeds the maximum monthly purchase limit of $10,000,
         unless that limit has been waived, are subject to return to the
         participant without interest.

-        With respect to optional cash investments made pursuant to a request
         for waiver, the actual number of shares to be issued to the participant
         or the participant's plan account will not be determined until after
         the end of the relevant pricing period. Therefore, during the pricing
         period, participants will not know the actual price per share or number
         of shares they have purchased.

-        Because optional cash investments are not necessarily invested by the
         Administrator immediately on receipt, those payments may be exposed to
         changes in market conditions for a longer period of time than in the
         case of typical secondary market transactions.

-        Resales of shares of common stock credited to a participant's plan
         account will involve a nominal fee per transaction to be deducted from
         the proceeds of the sale by the Administrator (if the resale is made by
         the Administrator at the request of a participant), plus any brokerage
         commissions and any applicable stock transfer taxes on the resales.


                                      -6-
<PAGE>




-        Shares of common stock deposited in the participant's plan account
         cannot be pledged until the shares are withdrawn from the plan.

-        From time to time, financial intermediaries may engage in positioning
         transactions in order to benefit from the discount from the market
         price of the shares of common stock acquired through the reinvestment
         of dividends and optional cash investments under the plan. Transactions
         of this type may cause fluctuations in the trading volume of our common
         stock. We reserve the right to modify, suspend or terminate
         participation in the plan by otherwise eligible holders of our stock in
         order to eliminate practices which are not consistent with the purposes
         of the plan.



                                   THE PLAN

         The provisions of the plan, in effect as of the date of this
prospectus, are provided below. Shareholders who do not elect to participate in
the plan will receive cash dividends, as declared and paid in the usual manner.

PURPOSE

         The purpose of the plan is to provide our shareholders and other
investors with a convenient and economical method of purchasing shares of our
common stock and investing all or a portion of their cash dividends in
additional shares of our common stock. The plan allows current shareholders and
interested new investors the opportunity to invest cash dividends and optional
cash investments in additional shares of our common stock without payment of any
brokerage commission or service charge. To the extent additional shares are
purchased directly from us, the plan also provides us a means of raising
additional capital through the direct sale of common stock. The plan is
primarily intended for the benefit of long-term investors, and not for the
benefit of individuals or institutions who engage in short-term trading
activities that could cause aberrations in the price or trading volume of our
common stock.

ADMINISTRATION

         The plan will be administered by First Chicago Trust Company of New
York, a division of EquiServe Trust Company, N.A. The Administrator acts as
agent for participants, processes the purchasing of common stock acquired under
the plan, keeps records of the accounts of participants, sends regular reports
of account activity to participants and performs other duties relating to the
plan. Shares purchased for each participant under the plan will be held by the
Administrator and will be registered in the name of the Administrator or its
nominee on behalf of the participants, unless and until a participant requests
that a stock certificate for all or part of the shares be issued. The
Administrator also serves as dividend disbursement agent, transfer agent and
registrar for our common stock. The Administrator reserves the right to resign
at any time upon reasonable notice to us.

         Participants can contact the Administrator toll free as follows:

-        Shareholder customer service (including sales of shares):
         1-800-[428-9578]

-        Non-shareholder requests for information about the plan:
         l-888-[280-3848]

         You can also obtain information about your account via the Internet on
EquiServe's web site www.equiserve.com. At the web site, you can access your
share balance, sell shares, request a stock certificate, and obtain online forms
and other information about your account. To get access, you will require a
password which will be sent to you, or you can request one by calling toll free
1-877-THE-WEB7 (1-877-843-9327).



                                      -7-
<PAGE>

         The Administrator's mailing address:

                  EquiServe Trust Company, N.A.
                  Attn: iStar Financial Inc. Divided Reinvestment and Stock
                  Purchase Plan
                  P.O. Box 2598
                  Jersey City, NJ  07303-2598

         You may also write to the Administrator by telefax at [(201) 222-4861].

ELIGIBILITY

         All interested persons and entities, whether or not holders of record
of our common stock, may participate in the plan. A shareholder whose shares of
common stock are registered in our stock transfer books in his or her name may
participate in the plan directly. A "beneficial owner" (which means a
shareholder whose shares of common stock are registered in a name other than his
or her name, for example, in the name of a broker, bank or other nominee) must
either become a registered holder by having the shares transferred into his or
her name or by making arrangements with his or her broker, bank or other nominee
to participate in the plan on the participant's behalf. In addition, a new
investor may participate in the plan by making an initial optional cash
investment in our common stock of not less than $100 or more than $10,000 unless
a request for waiver has been granted (in which case such initial investment may
exceed $10,000).

         The right to participate in the plan is not transferable to another
person apart from a transfer of the underlying shares of common stock. We
reserve the right to exclude from participation in the plan persons who utilize
the plan to engage in short-term trading activities that cause aberrations in
the trading volume of our common stock. We also reserve the right to exclude
initial cash investments for any reason, including compliance with securities
laws.

         In order to participate, you must fulfill conditions of participation
described below under the caption "Enrollment Procedures"; and if you are a
citizen or resident of a country other than the United States, its territories
and possessions, your participation must not violate local laws applicable to
you, us or the plan. Participants residing in jurisdictions in which their
participation in the plan would be unlawful will not be eligible to participate
in the plan.

ENROLLMENT PROCEDURES

         If you are interested in participating in the plan, the Administrator
will mail you introductory plan materials, including a prospectus and an
enrollment form. Enrollments in the plan are made by:

-        non-shareholders by submitting a completed initial investment form to
         the Administrator together with a minimal initial investment of $100 by
         check, or by authorizing automatic deductions from a U.S. bank account
         as described below, or

-        by registered shareholders (i.e., holders of record), by submitting a
         completed enrollment authorization form to the Administrator with your
         name exactly as it appears on your common stock certificate.

         If you are a beneficial owner of shares of common stock registered in
the name of a financial intermediary (for example, a bank, broker or other
nominee), you may participate in the plan by directing your financial
intermediary to re-register your shares directly in your name. Costs associated
with that registration will be borne by you. You may then enroll in the plan as
a registered shareholder, without having to make an initial investment.
Alternatively, you may instruct your financial intermediary to re-register your
shares directly in your name in electronic registration form through the Direct




                                      -8-
<PAGE>

Registration System. The Direct Registration System permits an investor to hold
common stock as the registered owner in electronic registration form on our
stock transfer books. Please contact the Administrator at 1-800-428-9578 for
more specific information on the Direct Registration System. After you have
registered, you may enroll in the plan, as a registered shareholder, without
having to make an initial investment.

         Both the initial investment form and the enrollment authorization
appoint the Administrator as the participant's agent for purposes of the plan
and direct the Administrator to apply to the purchase of additional shares of
common stock all of the cash dividends on the specified number of shares of
common stock owned by the participant on the applicable record date for the
dividends which have been designated by the participant to be reinvested through
the plan. The enrollment and initial investment form and the enrollment
authorization form also direct the Administrator to purchase additional shares
of common stock with any optional cash investments that the participant may
elect to make.

         While both the enrollment authorization form (for registered
shareholders who are not already enrolled in the plan) and the initial
investment form (for investors who are not presently shareholders) direct the
Administrator to reinvest ALL cash dividends on shares enrolled in the plan,
participants may elect "Partial Dividend Reinvestment" or "Optional Cash
Investments Only." Any of these options may be selected by providing a letter to
the Administrator providing instructions as to the number of shares, if any, for
dividends to be paid in cash.

         The Administrator will process initial investment and enrollment
authorization forms as promptly as practicable. Participation in the plan will
begin after the properly completed form and any required payments have been
accepted by the Administrator.

DIVIDEND OPTIONS

         We typically pay cash dividends on our common stock on the last
business day in the months of December, April, July and October. The payment of
dividends in the future and the amount of dividend payments, if any, will depend
upon our financial condition and other factors as the Board of Directors deems
relevant.

         You may select from the following dividend options:

-        Cash Dividends: You may elect to receive all or part of your dividends
         in cash by designating your election on the enrollment authorization
         form or initial investment form. Dividends paid in cash will be sent to
         you by check in the usual manner or by direct deposit, if you have
         elected the direct deposit option described below under the caption
         "Direct Deposit of Dividends." If you elect a partial cash payment of
         your cash dividends, you must specify the number of whole shares for
         which you want to receive cash dividends. Dividends paid on all other
         shares registered in your name in stock certificate form and/or
         credited to your account will be reinvested under the plan in
         additional shares of common stock.

-        Reinvestment of Cash Dividends: You may elect to reinvest all or part
         of your cash dividends by designating your election on the enrollment
         authorization form or initial investment form. Automatic reinvestment
         of your dividends does not relieve you of liability for income taxes
         that may be owed on your dividends. Dividends paid on shares credited
         to your account will be included in information provided both to you
         and the Internal Revenue Service.

CHANGING DIVIDEND OPTIONS

         You may change dividend options by telephoning or writing to the
Administrator or by submitting a new election on an enrollment authorization
form to the Administrator. To be effective for a



                                      -9-
<PAGE>

specific dividend, any change must be received by the Administrator before
the record date for that dividend. The record date is usually the fifteenth
day of the month in which a dividend is paid.

DISCONTINUING DIVIDEND REINVESTMENT

         You may discontinue reinvestment of cash dividends at any time by
giving telephone or written instructions to the Administrator. If the
Administrator receives the request to discontinue dividend reinvestment on or
after the record date for a dividend, the Administrator may either pay the
dividend in cash or reinvest it under the plan on the next Purchase Date to
purchase common stock on your behalf. If reinvested, the Administrator may sell
the shares purchased and send the proceeds to you less any service fee,
applicable brokerage commission and any other costs of sale. After processing
your request to discontinue dividend reinvestment, any shares credited to your
account under the plan will continue to be held in electronic registration form.
Dividends on any shares held in electronic registration form, and on any shares
you held in stock certificate form, will be paid in cash by check or by direct
deposit to a pre-designated bank account of your choice.

         FOR EACH METHOD OF DIVIDEND REINVESTMENT, CASH DIVIDENDS WILL BE
REINVESTED ON ALL SHARES OTHER THAN THOSE DESIGNATED FOR PAYMENT OF CASH
DIVIDENDS IN THE MANNER SPECIFIED ABOVE UNTIL THE PARTICIPANT SPECIFIES
OTHERWISE OR WITHDRAWS FROM THE PLAN ALTOGETHER, OR UNTIL THE PLAN IS
TERMINATED.

OPTIONAL CASH INVESTMENTS UP TO $10,000

         If you are a current shareholder, or if you wish to become a
shareholder, you may make optional cash investments by personal check, money
order or automatic deduction from a U.S. bank account in the minimum amount of
$100, up to a maximum amount of $10,000 monthly.

         In no event can the aggregate of your plan investments exceed $10,000
per month. Optional cash investment amounts must be received by the
Administrator for purchases of common stock before the second business day prior
to the next Purchase Date. Cash received after that date will be held by the
Administrator for purchases to be made on the next Purchase Date. NO INTEREST
WILL BE PAID ON PAYMENTS RECEIVED FOR PURCHASES AND HELD PENDING INVESTMENT BY
THE ADMINISTRATOR.

         We may adjust all minimum and maximum plan investment amounts at our
discretion from time to time after notification to all participants. Optional
cash investments will be returned to you upon your telephone or written request
received by the Administrator not less than two business days before the
Purchase Date.

         PARTICIPANTS SHOULD BE AWARE THAT SINCE INVESTMENTS UNDER THE PLAN ARE
MADE AS OF SPECIFIED DATES, ONE MAY LOSE ANY ADVANTAGE THAT OTHERWISE MIGHT BE
AVAILABLE FROM BEING ABLE TO SELECT THE TIMING OF AN INVESTMENT. NEITHER THE WE
NOR THE ADMINISTRATOR CAN ASSURE A PROFIT OR PROTECT AGAINST A LOSS ON SHARES OF
COMMON STOCK PURCHASED UNDER THE PLAN.

OPTIONAL CASH INVESTMENTS IN EXCESS OF $10,000 -- REQUEST FOR WAIVER

         If you wish to make an optional cash investment in excess of $10,000
for any Purchase Date, you must obtain our prior written approval. To obtain our
approval, you must submit a request for waiver. To make a request for waiver,
you should complete the enclosed Request For Waiver Form and send it to Lianne
A. Merchant, our Vice President-Investor Relations, via facsimile at (212)
930-9494 no later than



                                      -10-
<PAGE>

one (1) business day before the start of the Waiver Cash Payment Due Date
provided in Exhibit A for the applicable Purchase Date. If we have approved your
request for waiver, then you must send the Administrator a copy of our written
waiver approval along with your optional cash investment of greater than
$10,000. The Administrator must receive your optional cash investment in good
funds pursuant to a Request For Waiver by the Waiver Cash Payment Due Date
provided in Exhibit A.

         We have the sole discretion to approve any request to make an optional
cash investment in excess of the $10,000 maximum allowable amount. We may grant
such requests for waiver in order of receipt or by any other method that we
determine to be appropriate. We also may determine the amount that you may
invest pursuant to a waiver. In deciding whether to approve your request for
waiver, we may consider, among other things, the following factors:

         -        whether, at the time of such request, the Administrator is
                  acquiring shares of common stock for the plan directly from us
                  or in the open market or in privately negotiated transactions
                  with third parties;

         -        our need for additional funds;

         -        our desire to obtain such additional funds through the sale of
                  common stock as compared to other sources of funds;

         -        the purchase price likely to apply to any sale of common
                  stock;

         -        the extent and nature of your prior participation in the plan;

         -        the number of shares of common stock you hold of record; and

         -        the total amount of optional cash investments in excess of
                  $10,000 for which requests for waiver have been submitted.

         If you do not receive a response from us in connection with your
request for waiver, you should assume that we have denied your request.

PURCHASE DATE

         The Purchase Date is the date or dates on which shares of our common
stock are purchased with reinvested dividends and optional cash payments. The
Purchase Date under the plan depends on how you purchase the shares and whether
we issue new shares to you or the plan obtains your shares by purchasing them
from parties other than us.

         -        Reinvested Dividends: If the Administrator acquires shares
                  directly from us, the Purchase Date for reinvested dividends
                  is the date or dates declared by our Board of Directors for
                  the payment of quarterly dividends or distributions. If the
                  Administrator acquires shares from parties other than us
                  either in open market or privately negotiated purchases, the
                  Purchase Date will be the date or dates of the actual
                  purchases, but no later than ten business days following the
                  date on which we paid the applicable cash dividend. The record
                  date associated with a particular dividend is referred to in
                  this plan as a "dividend record date."

         -        Optional Cash Investments up to $10,000: If the Administrator
                  purchases the shares directly from us, the Purchase Date for
                  optional cash investments up to $10,000 will be on either (1)
                  the dividend payment date during any month in which we pay a
                  cash dividend or (2) the last trading day of any month in
                  which we do not pay a cash dividend. If the Administrator
                  acquires shares from parties other than us either in open
                  market or privately negotiated purchases, the Purchase Date
                  will be the date or dates of the actual purchases, but no
                  later



                                      -11-
<PAGE>

                  than ten business days following the date on which we paid the
                  applicable cash dividend. Optional cash investments must be
                  received by the Administrator before the second business day
                  prior to a Purchase Date, otherwise the cash will not be
                  invested until the next Purchase Date.

         -        Optional Cash Investments in Excess of $10,000: If the
                  Administrator is buying shares of common stock directly from
                  us with an optional cash investment in excess of $10,000
                  pursuant to a request for waiver, then there will be ten (10)
                  Purchase Dates, each of which will occur on a separate day on
                  which the New York Stock Exchange is open for business in a
                  Pricing Period (as defined in the next paragraph), with
                  one-tenth (1/10) of your optional cash investment being
                  invested on each such day, subject to the qualifications set
                  forth under "Minimum Waiver Price" below.

                  The "Pricing Period" is the period encompassing the ten
                  consecutive trading days ending on either (1) the dividend
                  payment date during any month in which we pay a cash dividend
                  or (2) the last trading day of any month in which we do not
                  pay a cash dividend. For your reference we've attached as
                  Exhibit A to this prospectus a list of the expected Pricing
                  Period commencement and conclusion dates.

         DIVIDENDS ARE PAID AS AND WHEN DECLARED BY OUR BOARD OF DIRECTORS.
THERE CAN BE NO ASSURANCE AS TO THE DECLARATION OR PAYMENT OF A DIVIDEND, AND
NOTHING CONTAINED IN THE PLAN OBLIGATES US TO DECLARE OR PAY ANY DIVIDEND ON OUR
COMMON STOCK. THE PLAN DOES NOT REPRESENT A GUARANTEE OF FUTURE DIVIDENDS.

SOURCE OF SHARES

         Shares will be, at our discretion, purchased: (1) directly from us in
the form of either authorized but unissued shares or treasury shares; (2) on the
open market; or (3) a combination of the above.

         Full and fractional shares acquired under the plan will be calculated
and credited to participants' accounts. The number of shares purchased will be
the total amount invested divided by the applicable purchase price per share as
described below.

PURCHASE PRICE

         The Purchase Price is the price at which the Administrator purchases
our common stock with reinvested dividends and optional cash payments. The
Purchase Price under the plan depends in part on whether the Administrator
purchases the common shares from us or from parties other than us. The Purchase
Price also depends on whether we are offering discounts on purchases under the
plan at that time.

REINVESTED DIVIDENDS

         If the Administrator purchases shares of common stock directly from us
with reinvested dividends, the Administrator will pay a price equal to 100%
(subject to change as provided below) of the average of the daily high and low
sales prices for a share of common stock reported by the New York Stock Exchange
on the applicable Purchase Date, or, if no trading occurs in shares of common
stock on the applicable Purchase Date, the first trading day immediately
preceding the Purchase Date for which trades are reported, computed to seven
decimal places, if necessary. The Purchase Price may be reduced by up to 3% if
we are offering a discount on purchases with reinvested dividends on the
applicable Purchase Date.

                                      -12-
<PAGE>

         If the Administrator purchases shares of common stock in the open
market or in privately negotiated transactions, then the Administrator will pay
a price equal to the weighted average purchase price paid by the Administrator
for such shares, computed up to seven decimal places, if necessary. The
Administrator will purchase such shares within ten days after the Purchase Date.
Discounts are not available when shares are purchased from persons other than
us.

OPTIONAL CASH INVESTMENTS UP TO $10,000

         If the Administrator purchases shares of common stock directly from us
with optional cash investments of up to $10,000, the Administrator will pay a
price equal to 100% (subject to change as provided below) of the average of the
daily high and low sales prices for a share of common stock reported by the New
York Stock Exchange on the applicable Purchase Date, or, if no trading occurs in
shares of common stock on the applicable Purchase Date, the first trading day
immediately preceding the Purchase Date for which trades are reported, computed
to seven decimal places, if necessary. The Purchase Price may be reduced by up
to 3% if we are offering a discount on purchases with optional cash investments
up to $10,000 on the applicable Purchase Date.

         If the Administrator purchases shares of common stock in the open
market or in privately negotiated transactions, then the Administrator will pay
a price equal to the weighted average purchase price paid by the Administrator
for such shares, computed up to seven decimal places, if necessary. The
Administrator will purchase such shares within ten days after the Purchase Date.
Discounts are not available when shares are purchased from persons other than
us.

OPTIONAL CASH INVESTMENTS IN EXCESS OF $10,000

         If the Administrator purchases shares of common stock directly from us,
then with respect to optional cash investments in excess of $10,000, the
Administrator will pay a price equal to 100% (subject to change as provided
below) of the average of the daily high and low sales prices of our common stock
reported by the New York Stock Exchange for the trading day relating to each of
the ten Purchase Dates during the Pricing Period, computed up to seven decimal
places, if necessary. The Purchase Price may be reduced by any discount that we
have provided for optional cash investments in excess of $10,000 on such
purchase Date.

         We may set a minimum purchase price per share (the "Minimum Waiver
Price") for optional cash investments made pursuant to requests for waiver for
any Pricing Period. We will determine whether to set a Minimum Waiver Price,
and, if so, its amount, at least three business days before the first day of the
pricing Period. We will notify the Administrator of the Minimum Waiver Price, if
any. In deciding whether to set a Minimum Waiver Price, we will consider current
market conditions, the level of participation in the Plan and our current and
projected capital needs.

         We will fix the Minimum Waiver Price for a Pricing Period as a dollar
amount that the average of the high and low sale prices reported by the New York
Stock Exchange for each trading day of such Pricing Period (not adjusted for
discounts, if any) must equal or exceed. We will exclude from the Pricing Period
and from the determination of the purchase price any trading day within the
Pricing Period that does not meet the Minimum Waiver Price. We also will exclude
any day in which no trades of common stock are made on the New York Stock
Exchange. Thus, for example, if the Minimum Waiver Price is not met for two of
the ten trading days in a pricing Period, then we will base the purchase price
upon the remaining eight trading days in which the Minimum Waiver Price was met.

         In addition, we will return a portion of each optional cash investment
for each trading day of a Pricing Period for which the Minimum Waiver Price is
not met or for each day in which no trades of common stock are reported on the
New York Stock Exchange. The returned amount will equal one-tenth



                                      -13-
<PAGE>

(1/10) of the total amount of such optional cash investment (not just the amount
exceeding $10,000) for each trading day that the Minimum Waiver Price is not met
for each day in which sales are reported. Thus, for example, if the minimum
waiver price is not met or no sales of our common stock are reported for two of
the ten trading days in a Pricing Period, then we will return two-tenths (2/10)
(or 20%) of such optional cash investment to you without interest.

         The establishment of the Minimum Waiver Price and the possible return
of a portion of the investment applies only to optional cash investments in
excess of $10,000 made pursuant to a request for waiver. Setting a Minimum
Waiver Price for a Pricing Period will not affect the setting of a Minimum
Waiver Price for any other Pricing Period. We may waive our right to set a
Minimum Waiver Price for any particular month. Neither we nor the Administrator
is required to give you notice of the Minimum Waiver Price for an pricing
period.

         If the Administrator purchases shares of common stock in the open
market or in privately negotiated transactions, then the Administrator will pay
a price equal to the weighted average purchase price paid by the Administrator
for such shares, computed up to seven decimal places, if necessary. The
Administrator will purchase such shares within ten days after the Purchase Date.
Discounts are not available when shares are purchased from persons other than
us.

DISCOUNT

         The discount rate of 0% to 3% that may be offered with respect to a
particular Purchase Date to participants on purchases of our stock through
dividend reinvestment, optional cash investments up to $10,000, and optional
cash investments in excess of $10,000, may be obtained by contacting the
Administrator at the phone numbers listed or by visiting our website at
www.istarfinancial.com. We will announce the discount rate, if any, by the third
business day before the Purchase Date with respect to dividend reinvestments and
optional cash investments up to $10,000. The discount rate, if any, on optional
cash purchases in excess of $10,000 will be announced as provided on Exhibit A
to this prospectus.

INVESTMENT OPTIONS

         Full investment of funds in common stock is possible under the plan.
Fractional, as well as full shares, will be credited to your account.
Certificates for full shares will be issued by the Administrator upon your
request. All fractional shares will remain in electronic registration form until
withdrawn.

CHECK INVESTMENT

         You may make initial investments and optional cash investments by
personal check or money order payable in United States dollars to
"EquiServe-iStar Financial Inc." To be effective for a particular Purchase Date,
the Administrator must receive your optional cash investment at least two
business days before that Purchase Date. You should mail your optional cash
investment to the Administrator with the transaction form attached to each
statement of account sent to you by the Administrator.

AUTOMATIC INVESTMENTS

         You may make automatic optional cash investments of a specified amount
(not less than $100 per purchase nor more than $10,000 monthly) by electronic
funds transfer from a pre-designated United States bank account.

         If automatic deductions are used for optional cash investments, you
must complete and sign the section entitled "authorization form for automatic
deductions" on either the initial investment form or the enrollment
authorization form and return it to the Administrator, with either a voided
blank check or a



                                      -14-
<PAGE>

deposit form for the bank account from which funds are to be drawn. The
automatic deduction forms will be processed and will become effective as
promptly as practicable. However, you should allow four to six weeks for the
first investment to be initiated using this automatic investment feature.

         Once automatic deductions begin, funds will be withdrawn from your bank
account on either the first or 15th day of each month, or both (as chosen by
you), or the next business day if either of those days is not a business day.

         Automatic deductions must be for at least five consecutive purchases
and will continue indefinitely until you notify the Administrator by telephone
or in writing that the automatic deductions are to stop. An authorization form
for automatic deductions is included on the reverse side of the initial
investment form.

         You may change or stop automatic deductions by notifying the
Administrator by telephone, fax or in writing. You must complete a new
authorization form for automatic deductions when you transfer ownership of
shares or otherwise establish a new account on the Administrator's records, or
close or change your designated bank account, or are assigned a new account
number by your bank. To be effective for a particular Purchase Date, the
Administrator must receive your new instructions at least six business days
before that Purchase Date.

DIRECT DEPOSIT OF DIVIDENDS

         Through the plan's direct deposit feature, instead of receiving
dividend checks, you may elect to have your cash dividends paid by electronic
funds transfer to your pre-designated checking or savings bank account on the
dividend payment date. To receive dividends by direct deposit, you must
complete, sign and return to the Administrator a direct deposit authorization
form. You may obtain a direct deposit authorization form by calling the
Administrator at 1-800-870-2340.

         Direct deposit authorization forms will be processed and will become
effective as promptly as practicable after receipt by the Administrator. You may
change your designated bank account for automatic direct deposit or discontinue
this feature at any time by submitting to the Administrator a new direct deposit
authorization form or by written instruction to the Administrator.

SHARE SAFEKEEPING AND SHARE CERTIFICATE MAILINGS

         You may use the plan's "share safekeeping" service to deposit any
common stock certificates in your possession with the Administrator. Shares
deposited will be recorded in electronic registration form and credited to your
account. By using the plan's share safekeeping service, you no longer bear the
risks associated with loss, theft or destruction of stock certificates.

         The Administrator will promptly send you a statement confirming each
certificate deposit. Shares deposited and credited to your account with the
Administrator may be transferred or sold in a convenient and efficient manner.
See "Certificates for Shares" and "Sale of Shares" below.

         Stock certificates sent to the Administrator for safekeeping should not
be endorsed. To insure against loss resulting from mailing certificates to the
Administrator, the plan provides for mail insurance, free of charge, for
certificates valued at up to $25,000 current market value (maximum coverage)
when mailed first class, using a brown, pre-addressed envelope provided by the
Administrator. Envelopes may be obtained by calling the Administrator at
1-800-[428-9578].

         If you do not use a brown pre-addressed envelope provided by the
Administrator, you should send certificates to the address listed above by
registered mail, return receipt requested, and insured for possible mail loss
for 2% of the market value (minimum of $20). This represents the approximate
cost to



                                      -15-
<PAGE>

you of replacing certificates if they are lost in the mail. For information
about mailing certificates to the Administrator having a current market value in
excess of $25,000, you should contact the Administrator.

         Mail insurance covers the replacement of shares of stock, but in no way
protects you against any loss resulting from fluctuations in the value of the
shares from the time you mail the certificates until the time replacement can be
made. To be eligible for certificate mailing insurance, you must notify the
Administrator of any lost certificate claim within 30 calendar days of the date
the certificates were mailed.

CERTIFICATES FOR SHARES

         Common stock purchased under the plan, and any certificated shares you
may deposit for safekeeping, will be recorded in electronic registration form
and credited to your account. The Administrator will report the number of shares
(including fractional shares) credited to your account as promptly as
practicable after each purchase. You may obtain a certificate for all or any
portion of the whole shares credited to your account at any time upon telephone
or written request to the Administrator. Any remaining whole or fractional
shares will continue to be credited to your account. If you request a
certificate for all shares credited to your account, a certificate will be
issued for the whole shares and a cash payment will be made for any remaining
fractional share. That cash payment will be based upon the then current market
price of the common stock, less any service fee, any applicable brokerage
commission and any other costs of sale. Withdrawal of shares in the form of a
certificate in no way affects dividend reinvestment or payment of cash dividends
on those shares (see "Cash Dividends" and "Reinvestment of Cash Dividends"
above).

SALE OF SHARES

         You may direct the Administrator to sell all or a portion of the shares
of common stock credited to your account at any time by giving telephone or
written instructions to the Administrator. The Administrator will make every
effort to process your order on the day it is received. However, your
instructions must be received before 1:00 p.m., New York City time on a business
day during which the Administrator and the relevant securities market are open
for your sale order to be processed on that day.

         Sales will be made at the then-current market price of the common stock
and the Administrator will send you a check for the sales proceeds, less any
service fee, any applicable brokerage commission and any other costs of sale.

GIFTS AND TRANSFERS OF SHARES

         You may transfer the ownership of all or part of the shares credited to
your account to an account for another person without requiring the issuance of
stock certificates. This could include a gift or private sale. Transfers of less
than all of the shares credited to your account must be made in whole share
amounts. No fractional share may be transferred unless your entire account
balance is transferred. Requests for these transfers must meet the same
requirements as are applicable to the transfer of common stock certificates,
including the requirement of a medallion stamp guarantee. Simply call the
Administrator to obtain the proper instructions, requirements and documents
necessary to complete your transfer. Shares that are transferred will be
credited in electronic registration form to the transferee's account. An account
will be opened in the name of the transferee, if the transferee is not already a
registered shareholder and the transferee's account will be enrolled in the plan
under the same dividend option as the transferor unless the transferor specifies
differently. The transferee may change the dividend option after the transfer
has been made as described under "Dividend Options" above. After the transfer,
the transferee will receive an account statement showing the number of shares
transferred to and held in the transferee's account.

                                      -16-
<PAGE>

STOCK SPLITS, STOCK DIVIDENDS AND RIGHTS OFFERINGS

         Any dividends in common stock or split shares of common stock
distributed by us on shares credited to your account or held by you in the form
of stock certificates will be credited to your account. In a rights offering by
us, you will receive rights based upon the total number of whole shares
registered in your name, including shares held by you in stock certificate form
and shares credited in electronic registration form to your account.

PLAN REPORTS

         Whenever you purchase, sell or deposit shares through the plan, you
will promptly receive from the Administrator a statement with the details of the
transaction. All shares you hold or purchase through the plan are recorded in
the same account. After each dividend reinvestment, you will receive from the
Administrator a detailed statement showing the amount of the latest dividend
reinvested, the purchase price per share, the number of shares purchased and the
total shares credited to your account. The statement also will show all
year-to-date account activity, including purchases, sales and certificate
deposits or withdrawals. In addition, you will receive a comprehensive year-end
statement summarizing all activity in your account for the entire year. You
should retain these statements to establish the cost basis of shares of common
stock purchased under the plan for income tax purposes.

         In addition, you will receive copies of the same communications sent to
all other holders of record of our common stock. This includes our annual report
to shareholders, quarterly reports to shareholders, notice of annual meeting and
proxy statement. You will also be furnished with Internal Revenue Service
information for reporting dividends paid and proceeds derived from any sale of
shares credited to your account in the form and manner as the Internal Revenue
Service may require. All notices, statements and reports from the Administrator
to you will be addressed to our latest address of record with the Administrator.
Therefore, you must promptly notify the Administrator of any change of address.

PLAN COSTS

         All costs for the purchase of shares and administration of the plan
will be paid by us with the exception of:

-        Costs associated with automatic investments which may be assessed by
         your financial institution (as described under "Automatic Investments"
         above).

-        Any costs resulting from your having insufficient funds to effect
         payment for initial and/or optional cash investments.

-        Those costs associated with your direction to the Administrator to sell
         all or a portion of your shares (as described under "Sale of Shares"
         above).

-        Those costs related to a sale of a fractional share (as described under
         "Certificates for Shares: and "Sale of Shares" above).

PLEDGING OF SHARES IN PARTICIPANT'S ACCOUNTS

         Except as described under "Gifts and Transfer of Shares" above, common
stock credited to your account may not be pledged or assigned. If you wish to
pledge shares of common stock credited to your account, you must request that
certificates for those shares be issued in your name as described under
"Certificates for Shares" above.


                                      -17-
<PAGE>

VOTING RIGHTS OF SHARES IN PARTICIPANT'S ACCOUNTS

         If you participate in the plan, you, as a holder of our common stock,
will have the same rights as every other holder of our common stock. You will be
provided with all required documentation to vote whole shares of common stock
you hold under the plan. Fractional shares may not be voted. You will receive a
proxy card indicating the number of whole shares directly held under the plan
for voting instructions to us and signing. A properly signed proxy will be voted
according to your instructions, with no vote being recorded for the shares
represented by an abstention.

TERMINATION, SUSPENSION OR MODIFICATION OF THE PLAN

         We reserve the right to terminate, suspend or modify the plan at any
time in whole, in part, in respect to participants in one or more jurisdictions.
All affected participants will receive notice of any termination, suspension or
modification of the plan.

LIMITATIONS ON LIABILITY

         Neither we nor the Administrator (nor any of our agents,
representatives, employees, officers, directors, or subcontractors) will be
liable for any act done in good faith or for any good faith omission to act.
You must recognize that neither we nor the Administrator can assure a profit
or protect against a loss on shares purchased under the plan. The prices of
shares purchased and sold under the plan will be determined by market
conditions. Participants also cannot waive federal securities law liability.

         We are authorized to take any actions to carry out the plan as may be
consistent with the terms and conditions of the plan. We reserve the right to
interpret and regulate the plan as we deem desirable or necessary in connection
with the plan's operations. The establishment and maintenance of the plan does
not constitute assurances with respect to either the value of our common stock,
whether or not we will continue to pay dividends on our common stock or at what
rate any dividends will be paid.

TERMINATION OF A PARTICIPANT

         If you do not own at least one whole share registered in your name in
stock certificate form or credited in electronic registration form to your
account, your participation in the plan may be terminated. In that event, you
would receive a cash payment for the fractional share remaining in your account
based on the current market price of common stock, less any service fee, any
applicable brokerage commission and any other costs of sale.

GOVERNING LAW

         The plan and its operations are governed by the laws of the State of
New York and federal securities laws, if applicable.

                   MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

         The following summary is based upon interpretations of current federal
tax law. It is important for participants to consult their own tax advisors to
determine their particular tax consequences, including state income tax (and
other taxes, such as stock transfer tax) consequences, which vary from state to
state and which may result from participation in the plan and subsequent
disposition of shares acquired pursuant to the plan. Income tax consequences to
participants residing outside the United States will vary from jurisdiction to
jurisdiction.

                                      -18-
<PAGE>

DIVIDEND REINVESTMENT PROGRAM

         Participants in the dividend reinvestment program under the plan will
be treated for federal income tax purposes as having received, on the Purchase
Date, a distribution in an amount equal to the fair market value on that date of
the shares acquired with reinvested dividends plus the amount of any brokerage
fee or commission incurred by us to acquire shares for you. Those shares will
have a tax basis equal to the same amount. For federal income tax purposes, the
fair market value of shares acquired under the plan will likely be treated as
equal to 100% of the average of the high and low sale prices of shares on the
related Purchase Date. The trading value on that specific date may vary from the
market price determined under the plan for the shares.

         The distribution will be taxable as a dividend to the extent of our
current or accumulated earnings and profits. To the extent the distribution is
in excess of our current or accumulated earnings and profits, the distribution
will be treated first as a tax-free return of capital, reducing the tax basis in
a participant's shares, and the distribution in excess of a participant's tax
basis will be taxable as gain realized from the sale of shares.

Example 1:

         The following example may be helpful to illustrate the federal income
tax consequences of the reinvestment of dividends at a 3% discount from the
market price, where the fair market value for tax purposes is the same as the
market price and where none of the dividends constitutes a tax-free return of
capital.

<TABLE>
<CAPTION>
<S>                                                                                           <C>
         Cash dividends reinvested......................................................      $   100.00
         Assumed market price*..........................................................      $    20.00
         Less 3% discount per share.....................................................      $    (0.60)
                                                                                              ---------------
         Net purchase price per share...................................................      $    19.40
         Number of shares purchased ($100.00/$19.40)....................................            5.155
         Total taxable dividend resulting from transaction (20.00 X 5.155)**............          103.10
</TABLE>

----------------
*        This price is assumed for illustrative purposes only, and will vary
         with the market price of the common stock.

**       Assumes trading price on Purchase Date also equals $20.00.



                                      -19-
<PAGE>


Example 2:

         The following example may be helpful to illustrate the federal income
tax consequences of the optional cash investment feature at a 3% discount from
the market price where the fair market value for tax purposes differs from the
market price and where the participant also is enrolled in the dividend
reinvestment plan and where none of the dividends constitutes a tax-free return
of capital.

<TABLE>
<CAPTION>
<S>                                                                                           <C>
         Cash dividends reinvested......................................................      $   100.00
         Assumed market price*..........................................................      $    20.00
         Less 3% discount per share.....................................................      $    (0.60)
                                                                                              ---------------
         Net purchase price per share...................................................      $    19.40
         Number of shares purchased ($100.00/$19.40)....................................            5.155
         Total taxable dividend resulting from transaction (20.00 X 5.155 -
         $100.00)**.. ..................................................................            3.10
</TABLE>

--------------
*        This price is assumed for illustrative purposes only, and will vary
         with the market price of the common stock.

**       Assumes trading price on Purchase Date also equals $20.00.

STOCK PURCHASE PROGRAM

         The tax consequences relating to a discount associated with an optional
cash investment are not entirely clear under current law. Nonetheless, the
Internal Revenue Service has indicated in a private ruling that the discount
associated with an optional cash investment will be treated as a distribution to
a participant in a REIT's dividend reinvestment and direct stock purchase plan
if and only if that participant also is enrolled in the dividend reinvestment
program aspect of that plan at the time of the optional cash investment.
Accordingly, if the participant is enrolled in the dividend reinvestment
program, then the participant should be treated as having received a
distribution, upon the purchase of shares with an optional cash investment, in
an amount equal to (i) the excess, if any, of the fair market value of the
shares on the Purchase Date over the amount of the optional cash investment plus
(ii) the amount of any brokerage fee or commission incurred by us to acquire
shares for you. However, if the participant is not enrolled in the dividend
reinvestment program, then the participant should not be treated as having
received a distribution on account of the discount associated with the optional
cash investment. Participants should be aware that the private ruling described
above is not binding on the IRS with respect to the plan and that the tax
characterization of discounts on optional cash investment remains unsettled.
Notwithstanding the private ruling described above, we also may determine that
we should report and/or the IRS may require that we and participants treat the
excess value of shares acquired under the stock purchase program as a
distribution, regardless of whether the participants are enrolled in the
dividend reinvestment plan. Participants are strongly encouraged to consult
their own tax advisors in this regard.

         Shares acquired through the stock purchase program under the plan
should have a tax basis equal to the amount of the payment plus the excess, if
any, of the fair market value of the shares purchased over the amount of the
payment, but only to the extent such excess is treated as a distribution taxable
as a dividend. The fair market value on a Purchase Date may differ from the
market price determined under the plan for those shares.

SHAREHOLDERS SUBJECT TO WITHHOLDING

         Under certain backup withholding requirements, dividends that are
reinvested and the proceeds of the sale of any share under the plan will be
subject to a 31% withholding tax if: (1) you fail to certify to the
Administrator that you are not subject to backup withholding and that your
taxpayer identification



                                      -20-
<PAGE>

number on your account is correct (on Form W-8 or W-9); or (2) the IRS notifies
us or the Administrator that you are subject to backup withholding. Any amounts
withheld will be deducted from the dividends and/or from the proceeds of any
sale of shares and the remaining amount will be reinvested or paid as you have
instructed. Some shareholders (including most corporations) are, however, exempt
from the withholding requirements.

         If you are a foreign participant, under withholding requirements of
Federal income tax laws, dividends that are reinvested under the plan will be
subject to the withholding tax unless reduced or eliminated pursuant to an
applicable tax treaty. Any required withholding tax will be deducted from
dividends payable to you and the remaining amount will be reinvested or paid as
you have instructed. If a participant is a foreign shareholder whose dividends
are subject to federal income tax withholding at the 30% rate (or a lower treaty
rate), the appropriate amount will be withheld and the balance in shares will be
credited to the participant's account.

ADDITIONAL INFORMATION

         The holding period for shares of common stock purchased under the plan
will begin the day after the date the shares are acquired. You will not realize
any taxable income when you receive certificates for whole shares of common
stock credited to your account, either upon a request for the certificates or
upon withdrawal from or termination of the plan. However, upon withdrawal from
or termination of the plan, a cash payment for the sale of whole or fractional
shares held in your account will result in gain or loss measured by the
difference between the amount of the cash payment received and your basis in
those shares or fractional share. That gain or loss will be capital gain or loss
if the shares or fractional share are a capital asset in your hands.

         All the dividends paid to you and any brokerage commissions that we pay
on your behalf for the purchase of shares through the plan will be reported to
you and to the Internal Revenue Service on IRS Form 1099-DIV which will be
mailed by January 31. All shares of stock that are sold through the
Administrator will be reported to the IRS as required by law. IRS Form 1099-B
will be mailed by January 31 to all those who sold stock through the plan. The
1099-B form will only include proceeds you received from the sale of your
shares. You are responsible for calculating the cost basis of the shares you
sold and any gain or loss on the sale.

                       RESTRICTIONS ON OWNERSHIP OF SHARES

         In order for us to qualify as a REIT for federal income tax purposes,
no more than 50% of the value of our outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the law to
include certain entities) during the last half of a taxable year or during a
proportionate part of a shorter taxable year, and our common stock must also be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year or during a proportionate part of a shorter taxable year. In addition, any
single person is prohibited from owning shares in excess of 9.8% of the value of
any class or series of our outstanding capital stock. Because we expect to
continue to qualify as a REIT, our amended and restated charter contains
restrictions intended to ensure compliance with these requirements which
authorizes, but does not require, the Board of Directors to refuse to give
effect to a transfer of common stock which, in its opinion, might jeopardize our
status as a REIT. This provision also renders null and void any purported
acquisition of shares which would result in our disqualification as a REIT. The
provision also gives the Board of Directors the authority to take such actions
as it deems advisable to enforce our stock ownership restrictions. Such actions
might include, but are not limited to, refusing to give effect to, or seeking to
enjoin, a transfer which might jeopardize our status as a REIT. The provision
also requires any shareholder to provide us such information regarding his
direct and indirect ownership of common stock as we may reasonably require.


                                      -21-
<PAGE>

                      PLAN OF DISTRIBUTION AND UNDERWRITERS

         Pursuant to the plan, we may be requested to approve optional cash
investments in excess of the allowable maximum amounts pursuant to requests for
waiver on behalf of participants that may be engaged in the securities business.
In deciding whether to approve such a request, we will consider relevant factors
including, but not limited to, whether the plan is then acquiring newly issued
shares of common stock or acquiring shares through open market purchases or
privately negotiated transactions, our need for additional funds, the
attractiveness of obtaining those funds by the sale of common stock under the
plan in comparison to other sources of funds, the purchase price likely to apply
to any sale of common stock, the participant submitting the request, including
the extent and nature of the participant's prior participation in the plan and
the number of shares of common stock held of record by the participant, the
aggregate number of requests for waiver that have been submitted by all
participants and federal and state securities laws.

         Persons who acquire shares of common stock through the plan and resell
them shortly after acquiring them, including coverage of short positions, under
certain circumstances, may be participating in a distribution of securities that
would require compliance with Regulation M under the Exchange Act and may be
considered to be underwriters within the meaning of the Securities Act. We will
not extend to any person any rights or privileges other than those to which it
would be entitled as a participant, nor will we enter into any agreement with
any person regarding their purchase of shares or any resale or distribution
shares. We may, however, approve requests for optional cash investments by them
in excess of allowable maximum limitations. If requests are submitted for an
aggregate amount in excess of the amount we are willing to accept, we may honor
requests in order of receipt, pro rata or by any other method which we determine
to be appropriate.

                                 USE OF PROCEEDS

         The plan will raise additional capital for us to the extent that the
plan purchases newly-issued shares of common stock or treasury shares from us
(rather than shares acquiring shares in the open market). We do not know the
number of shares of common stock that will ultimately be purchased pursuant to
the plan, or the prices at which the shares will be purchased. We currently
intend to issue new shares to satisfy demand for shares under the plan;
therefore, the plan is expected to raise additional capital for us. We intend to
use the net proceeds from the sale of common stock for one or more of the
following: repayment of indebtedness, investments in assets, working capital,
and general corporate purposes. Pending those uses, we may temporarily invest
the net proceeds in short-term investments consistent with our investment
policies.

                           LEGAL OPINIONS AND EXPERTS

         Clifford Chance Rogers & Wells LLP, our counsel, has passed upon the
legality of our common stock offered by this prospectus and all legal matters in
connection with the plan for us. Clifford Chance Rogers & Wells LLP is located
at 200 Park Avenue, New York, New York 10166.

         The financial statements incorporated in this Registration Statement
by reference to the Annual Report on Form 10-K of iStar Financial Inc. for
the year ended December 31, 1999, have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.


                                      -22-
<PAGE>

                       WHERE YOU CAN FIND MORE INFORMATION

         We are subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended, and we file reports and proxy statements and other
information with the Commission under that act. Our reports, proxy statements
and other information can be inspected and copied at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Copies of those materials can be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, at prescribed rates. Our SEC filings are also available to the public at
the SEC's web site at http://www.sec.gov. Our shares are listed on the New York
Stock Exchange under the ticker symbol "SFI" and all reports, proxy statements
and other information filed by Starwood Financial with the NYSE may be inspected
at the NYSE's office 20 Broad Street, New York, New York 10005.

         The SEC allows us to "incorporate by reference" some of the information
we file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this registration statement and prospectus, and later
information filed with the SEC will automatically update and supersede this
information. We incorporate by reference any future filings, as of the date of
those filings, with the SEC under Section 13(a), 14, or 15(d) of the Securities
and Exchange Act of 1934.

         Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any other subsequently filed document that
also is or is deemed to be incorporated by reference in this prospectus modifies
or supersedes the statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
registration statement and prospectus.

         We incorporate by reference the documents listed below:

-        our annual report on Form 10-K for the fiscal year ended December 31,
         1999.

-        our quarterly report on Form 10-Q for the fiscal quarter ended March
         31, 2000.

-        the description of our common stock contained in our registration
         statement on Form 8-A filed on October 5, 1999, as that description has
         been altered by amendments or reports filed for the purpose of updating
         it.

         Any person receiving a copy of this prospectus may obtain, without
charge, upon request, a copy of any of the documents incorporated by reference
in it (except for the exhibits to those documents, unless the exhibits are
specifically incorporated by reference into such documents). You may obtain a
copy of each of the above-listed documents at no cost by writing or telephoning
us at the following address:

         iStar Financial Inc.
         1114 Avenue of the America, 27th Floor
         New York, New York 10036
         Attention: Lianne A. Merchant, Vice President-Investor Relations
         Telephone:  (212) 930-9400
         Fax:  (212) 930-9494

         We have filed with the Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act with respect to the
shares of common stock covered by our dividend reinvestment and direct stock
purchase plan. This prospectus, which constitutes part of the registration
statement, omits some of the information contained in the registration statement
and the exhibits to it on



                                      -23-
<PAGE>

file with the Commission pursuant to the Securities Act and the rules and
regulations of the Commission under that act. The registration statement,
including exhibits thereto, may be inspected and copied at the public reference
facilities maintained by the Commission. Statements contained in this prospectus
as to the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy of the
contract or other document filed as an exhibit to the registration statement.

         In accordance with Section 2-210 of the Maryland General Corporation
Law, as amended, the Board of Directors has authorized the issuance of some or
all of the shares of any or all of our classes or series of capital stock
without certificates. We have the authority to designate and issue more than one
class or series of capital stock having various preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption. In addition, our amended
and restated charter imposes limitations on the ownership and transfer of our
capital stock. We will furnish a full statement of the relative rights and
preferences of each class or series of our capital stock which has been
designated with preferences and any restrictions on the ownership or transfer of
capital stock to any shareholder upon request and without charge. Written
requests for those copies should be directed to: iStar Financial Inc., One
Embarcadero Center, 33rd Floor, San Francisco, California 94111, Attention:
Geoffrey M. Dugan, Vice President and Assistant General Counsel.



                                      -24-
<PAGE>


                              iSTAR FINANCIAL INC.
                                   (Exhibit A)
<TABLE>
<CAPTION>

        Minimum
   Waiver Price/Waiver                  Waiver Cash                Pricing Period
        Discount                        Payment Due                 Commencement                Pricing Period
        Set Date                         Set Date                     Set Date                  Conclusion Date
   --------------------                 -----------                ---------------              ---------------
<S>                                <C>                        <C>                          <C>
        June 14, 2000                  June 16, 2000                June 19, 2000                June 30, 2000
        July 13, 2000                  July 17, 2000                July 18, 2000                July 31, 2000
       August 15, 2000                August 17, 2000              August 18, 2000              August 31, 2000
      September 13, 2000            September 15, 2000           September 18, 2000           September 29, 2000
       October 13, 2000              October 17, 2000             October 18, 2000             October 31, 2000
      November 13, 2000              November 15, 2000            November 16, 2000            November 30, 2000
      December 12, 2000              December 14, 2000            December 15, 2000            December 29, 2000
       January 12, 2001              January 17, 2001             January 18, 2001             January 31, 2001
       February 9, 2001              February 13, 2001            February 14, 2001            February 28, 2001
        March 14, 2001                March 16, 2001               March 19, 2001               March 30, 2001
        April 11, 2001                April 16, 2001               April 17, 2001               April 30, 2001
         May 14, 2001                  May 16, 2001                 May 17, 2001                 May 31, 2001
        June 13, 2001                  June 15, 2001                June 18, 2001                June 29, 2001
        July 13, 2001                  July 17, 2001                July 18, 2001                July 31, 2001
       August 15, 2001                August 17, 2001              August 20, 2001              August 31, 2001
      September 12, 2001            September 14, 2001           September 17, 2001           September 28, 2001
       October 15, 2001              October 17, 2001             October 18, 2001             October 31, 2001
      November 13, 2001              November 15, 2001            November 16, 2001            November 30, 2001
      December 12, 2001              December 14, 2001            December 17, 2001            December 31, 2001
       January 15, 2002              January 17, 2002             January 18, 2002             January 31, 2002
      February 11. 2002              February 13, 2002            February 14, 2002            February 28, 2002
        March 12, 2002                March 14, 2002               March 15, 2002               March 28, 2002
        April 12, 2002                April 16, 2002               April 17, 2002               April 30, 2002
         May 14, 2002                  May 16, 2002                 May 17, 2002                 May 31, 2002
        June 12, 2002                  June 14, 2002                June 17, 2002                June 28, 2002
</TABLE>





                                      -25-
<PAGE>




================================================================================

                              iSTAR FINANCIAL INC.



                              DIVIDEND REINVESTMENT
                                       AND
                           DIRECT STOCK PURCHASE PLAN

                        8,000,000 SHARES OF COMMON STOCK











                             ----------------------

                                   PROSPECTUS

                             ----------------------











                               ,____________, 2000


================================================================================


<PAGE>





                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.      OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

         The expenses expected to be incurred in connection with the issuance
and distribution of the securities being registered are as set forth below. All
such expenses, except for the SEC registration and filing fees, are estimated:

<TABLE>
<CAPTION>
<S>                                                                                        <C>
         SEC
         Registration................................................................      $40,445
         Legal Fees and Expenses.....................................................       10,000
         Accounting Fees and Expenses................................................       10,000
         Printing and Engraving Fees.................................................       10,000
         Miscellaneous...............................................................        9,555
                                                                                            ------
         Total.......................................................................      $80,000
</TABLE>

ITEM 15.      INDEMNIFICATION OF DIRECTORS AND OFFICERS

LIMITATION OF LIABILITY AND INDEMNIFICATION

         Our charter and bylaws, each as amended, provide for limitations on the
liability of Directors and officers for monetary damages to us. The charter and
bylaws obligate us to indemnify our Directors and officers, and permit us to
indemnify our employees and other agents, against certain liabilities incurred
in connection with their service in those capacities. We have also entered into
an indemnification agreement with each of the members of the Board of Directors
who are not officers of pursuant to which we have agreed to indemnify the
independent directors against certain liabilities incurred in connection with
their service as Directors. These provisions and contracts could reduce the
legal remedies available to us and our shareholders against these individuals.

         The Maryland General Corporation Law generally permits the liability of
Directors and officers to a corporation or its shareholders for money damages to
be limited, unless it is proved that: (1) (a) the Director or officer actually
received an improper personal benefit in money, property or services, (b) the
Director of officer acted in bad faith, or (c) the Director's or officer's act
or omission was the result of active and deliberate dishonesty; and (2) the
Director's or officer's act or omission was material to the matter giving rise
to the proceeding. However, if the proceeding was one by or in our right,
indemnification may not be made in respect of any proceeding in which the
Director or officer shall have been adjudged to be liable to us. These
provisions do not limit our ability or the ability of our shareholders to obtain
other relief, such as an injunction or rescission.

ITEM 16.      EXHIBITS

     5.1   Opinion of Clifford Chance Rogers & Wells LLP, as to legality.
     23.1  Consent of Clifford Chance Rogers & Wells LLP (included in
           Exhibit 5.1).

                                      II-1
<PAGE>

     23.2  Consent of PricewaterhouseCoopers LLP, independent accountants.
     24.1  Power of Attorney (set forth on signature page).
     99.1  Form of Authorization.*
     99.3  Form of Request for Waiver.*

-----------------
*    To be filed by amendment.

ITEM 17.      UNDERTAKINGS

(1)      The undersigned registrant hereby undertakes:

         To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

         (a)      To include any prospectus required by Section 10(a) (3) of the
                  Securities Act of 1933;

         (b)      To reflect in the prospectus any facts or events arising after
                  the effective date of the registration statement (or the most
                  recent post-effective amendment thereof) which, individually
                  or in the aggregate, represent a fundamental change in the
                  information set forth in the registration statement.
                  Notwithstanding the foregoing, any increase or decrease in
                  volume of securities offered (if the total dollar value of
                  securities offered would not exceed that which was registered)
                  and any deviation from the low or high end of the estimated
                  maximum offering range may be reflected in the form of
                  prospectus filed with the Commission pursuant to Rule 424(b)
                  if, in the aggregate, the changes in volume and price
                  represent no more than a 20% change in the maximum aggregate
                  offering price set forth in the "Calculation of Registration
                  Fee" table in the effective registration statement; and

         (c)      To include any material information with respect to the plan
                  of distribution not previously disclosed in the registration
                  statement or any material change to such information in the
                  registration statement;

PROVIDED, HOWEVER, that paragraphs 1(a) and 1(b) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in the periodic reports filed by the Registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.

         That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

         To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(2)      The registrant hereby undertakes that, for purposes of determining any
         liability under the Securities Act each filing of the registrant's
         annual report pursuant to Section 13 (a) or 15 (d) of the Exchange Act
         that is incorporated by reference in the Registration Statement shall
         be deemed to be a new registration statement relating to the securities
         offered therein, and the offering of such securities at that time shall
         be deemed to be the initial bona fide offering thereof.

(3)      Insofar as indemnification for liabilities arising under the Securities
         Act of 1933 may be permitted to directors, officers and controlling
         persons of the Registrant, pursuant to the foregoing provisions, or
         otherwise, the Registrant has been advised that in the opinion of the
         Securities and Exchange Commission, such indemnification is against
         public policy as expressed in the Act and is, therefore, unenforceable.
         In the event that a claim for indemnification against such liabilities
         (other than the payment by the Registrant of expenses incurred or paid
         by a


                                      II-2
<PAGE>

         director, officer or controlling person of the Registrant in the
         successful defense of any action, suit or proceeding) is asserted by
         such director, officer or controlling person in connection with the
         securities begin registered, the Registrant will, unless in the opinion
         of its counsel the matter has been settled by controlling precedent,
         submit to court of appropriate jurisdiction the question whether such
         indemnification by it is against public policy as expressed in the Act
         and will be governed by the final adjudication of such issue.


                                      II-3
<PAGE>





                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that its has reasonable grounds to believe it meets all
of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York on this
2nd day of June, 2000.

                                                     iSTAR FINANCIAL INC.

                                      By: /s/ Jay Sugarman
                                          ______________________________________

                                           Jay Sugarman
                                           Chairman and Chief Executive Officer

         KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of iStar Financial Inc., hereby severally constitute Jay Sugarman and
Spencer B. Haber, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, the Registration Statement filed herewith, a
registration statement on Form S-3 that may subsequently be filed pursuant to
Rule 462(b) of the Securities Act of 1933, as amended, and that would
incorporate by reference this Registration Statement, and any and all amendments
to either of said registration statements, and generally to do all such things
in our names and in our capacities as officers and directors to enable IStar
Financial Inc. to comply with the provisions of the Securities Act of 1933, as
amended, and all requirements of the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorneys, or any of them, to said Registration Statement and any and all
amendments thereto.

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.


<TABLE>
<CAPTION>

                 SIGNATURE                                   CAPACITY                                DATE
                 ---------                                   --------                                ----

<S>                                  <C>                                                    <C>
/s/ Jay Sugarman
________________________________                Chairman of the Board of Directors,         June 2, 2000
Jay Sugarman                                   Chief Executive Officer and President
                                                   (Principal Executive
                                                           Officer)
/s/ Spencer B. Haber
________________________________              Executive Vice President-Finance, Chief       June 2, 2000
Spencer B. Haber                             Financial Officer, Secretary and Director
                                                (Principal Financial and Accounting
                                                             Officer)
/s/ Willis Anderson, Jr.
________________________________
Willis Andersen, Jr.                                         Director

/s/ Jeffrey G. Dishner
________________________________                                                            June 2, 2000
Jeffrey G. Dishner                                           Director
</TABLE>


                                      II-4
<PAGE>

<TABLE>
<CAPTION>
<S>                                  <C>                                                    <C>
/s/ Jonathan D. Eilian
________________________________                                                            June 2, 2000
Jonathan D. Eilian                                           Director

/s/ Madison F. Grose
________________________________                                                            June 2, 2000
Madison F. Grose                                             Director

/s/ Robert W. Holman, Jr.
________________________________                                                            June 2, 2000
Robert W. Holman, Jr.                                        Director

/s/ Robin Josephs
________________________________                                                            June 2, 2000
Robin Josephs                                                Director

/s/ Merrick R. Kleeman
________________________________                                                            June 2, 2000
Merrick R. Kleeman                                           Director

/s/ William M. Matthes
________________________________                                                            June 2, 2000
William M. Matthes                                           Director

/s/ John G. McDonald
________________________________                                                            June 2, 2000
John G. McDonald                                             Director

/s/ Michael G. Medzigian
________________________________                                                            June 2, 2000
Michael G. Medzigian                                         Director

/s/ Stephen B. Oresman
________________________________                                                            June 2, 2000
Stephen B. Oresman                                           Director

/s/ George R. Puskar
________________________________                                                            June 2, 2000
George R. Puskar                                             Director

/s/ Barry S. Sternlicht
________________________________                                                            June 2, 2000
Barry S. Sternlicht                                          Director

/s/ Kneeland C. Youngblood
________________________________                                                            June 2, 2000
Kneeland C. Youngblood                                       Director
</TABLE>










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