April 29, 2010 / 12:37 PM / in 9 years

UPDATE 2-IStar posts narrower-than-expected Q1 loss, shares up

* Q1 loss/shr $0.26 vs est loss/shr $1.48

* Loan-loss provision $89.5 mln vs $258 mln a year ago

* Says direction of loan loss provisions unclear * Shares up more than 15 pct

April 29 (Reuters) - U.S. commercial real estate lender iStar Financial Inc SFI.N reported a much narrower-than-expected first-quarter loss, helped by a drop in loan loss provision, sending its shares up about 17 percent.

The company, however, is unclear about the direction of loan loss provisions in the coming quarters, it said on a conference call with analysts. Net loss allocable to common shareholders was $25.4 million, or $0.27 a share, for the quarter, compared with a year-ago loss of $93.9 million, or $0.89 cents a share.

Excluding certain items, the loss was $0.26 a share. Analysts were expecting iStar to post a loss of $1.48 a share, excluding items, according to Thomson Reuters I/B/E/S.

Quarterly revenue fell more than 23 percent to $173.5 million.

“The year-over-year decrease is primarily due to a reduction of interest income resulting from an increase in non-performing loans and an overall smaller asset base,” the company said in a statement.

The company saw its net investment income for the quarter plunge to around half the year-ago level at $119.2 million.

Provision for loan losses stood at $89.5 million from $216.4 million sequentially.

The credit crisis has forced lenders such as iStar to take provisions for possible loan defaults and write down the value of some of their loans.

At the end of the quarter, 72 of iStar’s 212 loans were on a non-performing loan status, which represented $3.5 billion or 42.3 percent of its managed loans.

The company said it had $640.9 million of unrestricted cash compared with $224.6 million at the end of the prior quarter.

iStar said it is currently in compliance with all of its bank and bond covenants.

Shares of the company were trading up 15 percent at $6.58 in morning trade. They touched a high of $6.65 in early trade Thursday on the New York Stock Exchange. (Reporting by Archana Shankar in Bangalore; Editing by Roshni Menon)

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