Notice to iStar Financial, Inc. Shareholders of Voluntary Dismissal

On May 28, 2010, plaintiff Addie Vancil filed a shareholder derivative action on behalf of iStar Financial, Inc. (“iStar”), styled Vancil v. Sugarman, et al., No. 10-CV-4312 (RJS) (the “Action”) against members of iStar’s Board of Directors and certain current and former executive officers (“Individual Defendants”).  The Action alleges that the Individual Defendants breached their fiduciary duties to iStar and its shareholders by publishing material misstatements and omissions during December 2007 – March 2008 concerning the value of iStar’s loan portfolio and certain debt securities and the probability that their value would materially decline in the unfolding real estate and credit market crises.  Plaintiff Vancil presented iStar’s Board of Directors with a litigation demand, asking the Board to investigate and pursue claims for breaches of fiduciary duty, unjust enrichment, gross mismanagement, and waste of corporate assets against the Individual Defendants.  The Action alleges that the Board wrongfully refused the litigation demand.  Defendants deny the allegations.  A motion to dismiss the Action was denied, in part.

Defendants contend that the demand underlying this Action is identical to two other shareholders’ demands that were investigated by a Special Committee appointed by iStar’s Board of Directors to evaluate the merits of the claims, and that the Special Committee’s report recommending that no action be brought with respect to such claims reflected a proper exercise of business judgment.  One other shareholder derivative action alleging similar claims, Kautz v. Sugarman, et al., No. 10-CV-3478 (RJS), was dismissed by the United States District Court for the Southern District of New York on March 31, 2011.

Plaintiff Vancil has sought leave to voluntarily dismiss the Action due to health issues.  The dismissal sought would be without prejudice to other shareholders, but its practical effect may be to bar other shareholders from pursuing the claims.  On January 3, 2012, Judge Richard J. Sullivan of the United States District Court for the Southern District of New York ordered the parties to post notice of the proposed voluntary dismissal of the Action on the websites of iStar Financial Inc. and Plaintiff Vancil’s counsel, Robbins Arroyo LLP, for 30 days, commencing no later than January 9, 2012.  Pursuant to the Court’s Order, iStar shareholders are hereby advised:

iStar shareholders may object to the proposed voluntary dismissal.  Any shareholder who wishes to object must file their objection with the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, NY 10007-1312, not later than February 10, 2012.  The parties’ responses to any objections shall be filed not later than February 17, 2012.  A public hearing regarding the voluntary dismissal shall be held by the District Court on February 24, 2012, at 4:00 p.m., in Courtroom 21C.

The Court file may be accessed at the Clerk’s office, 8:30 a.m. to 5:00 p.m., Monday through Friday, located at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, NY 10007.  For more information concerning the voluntary dismissal, you may also call or write to:

Plaintiffs’ Counsel                                                   Counsel for iStar Financial, Inc.

Robbins Arroyo LLP                                                  Katten Muchin Rosenman LLP
c/oCraig W. Smith                                                      c/o Carl E. Volz
600 B Street, Suite 1900                                            525 W. Monroe Street
San Diego, CA 92101                                                Chicago, IL 60661
(619) 525-3990                                                         (312) 902-5362