iStar Outlook Revised to Negative

Fitch Ratings has revised the rating outlook to negative for iStar Financial Inc., which provides structured financing and corporate leasing of commercial real estate, while affirming the company's triple-B Issuer Default Rating. The rating agency cited iStar's acquisition of Fremont General Corp.'s CRE lending business as a concern. "Although the loans acquired by [iStar] are first mortgages, the acquisition structure of the Fremont transaction places [iStar] effectively in the first-loss position," Fitch said. "In addition, the majority of the portfolio consists of condominium construction loans. Fitch is concerned that the continued slowdown in the single-family residential mortgage market, which drives the purchase of condominium units, may impact the timing and amount of ultimate repayment of loans made to many [iStar] borrowers." In addition to affirming iStar's IDR, Fitch also affirmed the New York-based company's debt and preferred stock ratings.