As Values Increase, iStar Looks to Dig Out --- Sugarman Aims for Commercial-Property Firm to Sell More Assets to Pay Off Debt; Coming in June, $2.2 Billion in Payments
Few people appreciate the rise in commercial real-estate values over the past year more than Jay Sugarman, the embattled chief executive of iStar Financial Inc.</br></br>For the past two years, Mr. Sugarman has been struggling to steer the commercial-property lender and owner clear of bankruptcy protection. For much of that time, Wall Street was betting against the company as a number of its borrowers defaulted and iStar grappled with its own debt obligations.</br></br>But now, as real-estate values rise in many parts of the country, there are signs Mr. Sugarman might pull it off. The company's success at selling assets at higher-than-expected prices has helped it reduce its debt level by about $3.7 billion, to about $7 billion, in the last 12 months. The company's shares, which traded below $1 in February 2009, hit a 52-week intraday high of $8.30 this month, and iStar was the second-best-performing real-estate investment trust in 2010 behind Glimcher Realty Trust. Tuesday, iStar's shares fell six cents, or 0.7%, to $8.20, in 4 p.m. New York Stock Exchange composite trading.</br></br>"We've been able to generate a significant amount of cash from our portfolio," Mr. Sugarman said in an interview last week.</br></br>To be sure, there still is a big hurdle ahead. To avoid bankruptcy, the company has to refinance $2.2 billion in debt due in June, including $1.7 billion in notes issued as part of a 2009 restructuring with bank lenders.