Other Investments

The Company's other investments and its proportionate share of results from equity method investments were as follows ($ in thousands):



	Carrying Value				Equity in Earnings
	As of December 31,				For the Years Ended December 31,
	2013		2012		2013		2012		2011
LNR	$	—	$	205,773	$	16,465	$	60,669	$	53,861
Madison Funds	67,782		56,547		14,796		10,246		3,641
Oak Hill Funds	21,366		29,840		4,174		5,844		1,918
Real estate equity investments	62,205		47,619		2,753		21,636		(5,273		)
Other equity method investments(1)	45,954		47,939		3,332		4,614		40,944
Total equity method investments	$	197,307	$	387,718	$	41,520	$	103,009	$	95,091
Other	9,902		11,125
Total other investments	$	207,209	$	398,843

Explanatory Note:

_______________________________________________________________________________


(1)	For the year ended December 31, 2011, equity in earnings includes $38.4 million of earnings related to Oak Hill Advisors, L.P. and related entities that were sold in October 2011.

LNR—In July 2010, the Company acquired an ownership interest of approximately 24% in LNR Property Corporation ("LNR"). LNR is a servicer and special servicer of commercial mortgage loans and CMBS and a diversified real estate investment, finance and management company. In the transaction, the Company and a group of investors, including other creditors of LNR, acquired 100% of the common stock of LNR in exchange for cash and the extinguishment of existing senior notes of LNR's parent holding company (the "Holdco Notes"). The Company contributed $100.0 million aggregate principal amount of Holdco Notes and $100.0 million in cash in exchange for an equity interest of $120.0 million.

Beginning in September 2012, the Company and other owners of LNR entered into negotiations with potential purchasers of LNR. After an extensive due diligence and negotiation process, the LNR owners entered into a definitive contract to sell LNR in January 2013 at a fixed sale price which, from the Company's perspective, reflected in part the Company's then-current expectations about the future results of LNR and potential volatility in its business. The definitive sale contract provided that LNR would not make cash distributions to its owners during the fourth quarter of 2012 through the closing of the sale. Notwithstanding the fixed terms of the contract, our investment balance in LNR increased due to equity in earnings recorded which resulted in our recognition of other than temporary impairment on our investment during the year ended December 31, 2013. In April 2013, the Company completed the sale of its 24% equity interest in LNR and received $220.3 million in net proceeds. Approximately $25.2 million of net proceeds were placed in escrow for potential indemnification obligations through April 2014. The Company is not currently aware that any material indemnification claims are probable of occurring.

The following table represents investee level summarized financial information for LNR ($ in thousands)(1):



	For the Period from October 1, 2012 to April 19,			For the Years Ended September 30,
	2013			2012			2011
Income Statements
Total revenue(2)	$	179,373		$	332,902		$	327,032
Income tax (expense) benefit(3)	$	(2,137	)	$	(6,731	)	$	76,558
Net income attributable to LNR(4)	$	113,478		$	253,039		$	225,190
iStar's ownership percentage	24		%	24		%	24		%
iStar's equity in earnings from LNR(5)	$	45,375		$	60,669		$	53,861



	As of September 30,
	2013			2012
Balance Sheets
Total assets(2)	$	—		$	98,513,452
Total debt(2)	$	—		$	97,521,520
Total liabilities(2)	$	—		$	97,639,696
Noncontrolling interests	$	—		$	8,067
LNR Property LLC equity	$	—		$	865,689
iStar's ownership percentage	—		%	24		%
iStar's equity in LNR(6)	$	—		$	205,773



	For the Period from October 1, 2012 to April 19,			For the Years Ended September 30,
	2013			2012			2011
Cash Flows
Operating cash flows	$	(127,075	)	$	(85,909	)	$	170,703
Cash flows from investing activities	$	(36,543	)	$	(55,686	)	$	45,488
Cash flows from financing activities	$	217,241		$	229,634		$	(123,506	)
Net cash flows	$	53,623		$	88,039		$	92,685
Cash distributions	$	—		$	61,179		$	73,916
iStar's ownership percentage	24		%	24		%	24		%
Cash distributions received by iStar	—			14,690			17,722

Explanatory Notes:

_______________________________________________________________________________

(1)

The Company recorded its investment in LNR, which was sold in April 2013, on a one quarter lag, therefore, amounts in the Company's financial statements for the year ended December 31, 2013 are based on balances and results from LNR for the period from October 1, 2012 to April 19, 2013. The amounts in the Company's financial statements for the year ended December 31, 2012 and 2011 are based on balances and results from LNR for the years ended September 30, 2012 and 2011, respectively.

(2)

LNR consolidates certain commercial mortgage-backed securities and collateralized debt obligation trusts that are considered VIEs (and for which it is the primary beneficiary), that have been included in the amounts presented above. As of September 30, 2012, the assets of these trusts, which aggregated $97.52 billion, were the sole source of repayment of the related liabilities, which aggregated $97.21 billion and are non-recourse to LNR and its equity holders, including the Company. Excluding the amounts related to VIEs, as of September 30, 2012, total assets were $1.38 billion , total debt was $398.9 million, and total liabilities were $517.1 million. In addition, total revenue presented above includes $55.5 million, $95.4 million, and $119.0 million for the period from October 1, 2012 to April 19, 2013 and for the years ended September 30, 2012 and 2011, respectively, of servicing fee revenue that is eliminated upon consolidation of the VIE's at the LNR level. This income is then added back through consolidation at the LNR level as an adjustment to income allocable to noncontrolling entities and has no net impact on net income attributable to LNR.


(3)	During the year ended December 31, 2011, LNR recorded an income tax benefit from the settlement of certain tax liabilities.

(4)

Subsequent to the sale of the Company's interest in LNR, LNR reported a reduction in their earnings of $66.2 million related to a purchase price allocation adjustment. The reduction was reflected in LNR's operations for the three months ended March 31, 2013, which resulted in a net loss for the period. Because the Company recorded its investment in LNR on a one quarter lag, the adjustment was reflected in the quarter ended June 30, 2013. There was no net impact on the Company's previously reported equity in earnings as the Company limited its proportionate share of earnings from LNR as described above.


(5)	LNR reported a net loss for the period from April 1, 2013 to April 19, 2013 which had already been considered in the Company's other than temporary impairment assessment. As such, no equity in earnings was recorded during the quarter ended September 30, 2013. The total equity in earnings recognized for LNR was $45.4 million for the year ended December 31, 2013.


(6)	Represents the Company's investment in LNR at December 31, 2013 and 2012, respectively.

The following table reconciles the activity related to the Company's investment in LNR for the three months ended March 31, 2013 and June 30, 2013, the six months ended December 31, 2013 and for the year ended December 31, 2013 ($ in thousands):



	For the Three Months Ended March 31, 2013			For the Three Months Ended June 30, 2013			For the Six Months Ended December 31, 2013		For the Year Ended December 31, 2013
Carrying value of LNR at beginning of period	$	205,773		$	220,281		$	—	$	205,773
Equity in earnings of LNR for the period(1)	$	45,375		$	—		$	—	$	45,375		(a)
Balance before other than temporary impairment	$	251,148		$	220,281		$	—	$	251,148
Other than temporary impairment(1)	$	(30,867	)	$	—		$	—	$	(30,867	)	(b)
Sales proceeds pursuant to contract	$	—		$	(220,281	)	$	—	$	(220,281	)
Carrying value of LNR at end of period	$	220,281		$	—		$	—	$	—

Explanatory Notes:

_______________________________________________________________________________

(1)

For the year ended December 31, 2013, the amount that was recognized as income in the Company's Consolidated Statements of Operations is the sum of items (a), (b) and $1.7 million of income recognized for the release of other comprehensive income related to LNR upon sale, or $16.5 million.

Madison Funds—As of December 31, 2013, the Company owned a 29.52% interest in Madison International Real Estate Fund II, LP, a 32.92% interest in Madison International Real Estate Fund III, LP and a 29.52% interest in Madison GP1 Investors, LP (collectively, the "Madison Funds"). The Madison Funds invest in ownership positions of entities that own real estate assets. The Company determined that these entities are variable interest entities and that the Company is not the primary beneficiary.

Oak Hill Funds—As of December 31, 2013, the Company owned a 5.92% interest in OHA Strategic Credit Master Fund, L.P. ("OHASCF"). OHASCF was formed to acquire and manage a diverse portfolio of assets, investing in distressed, stressed and undervalued loans, bonds, equities and other investments. The Company determined that this entity is a variable interest entity and that the Company is not the primary beneficiary.

Real estate equity investments—During the year ended December 31, 2013, the Company sold land for net proceeds of $21.4 million to a newly formed unconsolidated entity in which the Company had a preferred partnership interest and a 47.5% equity interest. The Company's proportionate share of the assets retained on a carryover basis on the date of sale was $10.6 million. The Company held a preferred partnership interest of $6.6 million, which was repaid and no longer outstanding at December 31, 2013. As of December 31, 2013, the Company had a recorded equity interest of $5.5 million.

During the year ended December 31, 2013, the Company contributed land to a newly formed unconsolidated entity in which the Company received an equity interest of 75.6%. As of December 31, 2013, the Company had a recorded equity interest of $18.0 million. In addition, during the year ended December 31, 2013, the Company contributed land to a newly formed unconsolidated entity in which the Company also received a 50.0% equity interest. As of December 31, 2013, the Company had a recorded equity interest of $3.5 million.

In addition, as of December 31, 2013, the Company's other real estate equity investments included equity interests in real estate ventures ranging from 31% to 70%, comprised of investments of $16.4 million in net lease assets, $16.0 million in operating properties and $2.7 million in land assets. As of December 31, 2012, the Company's real estate equity investments included $16.4 million in net lease assets, $25.7 million in operating properties and $5.5 million in land assets. One of the Company's equity investments in operating properties represents a 33% interest in residential property units. During the years ended December 31, 2013 and 2012, the Company's earnings from its interest in this property includes income from sales of residential units of $4.7 million and $26.0 million, respectively.

Oak Hill Advisors—In October 2011, the Company sold a substantial portion of its interests in Oak Hill Advisors, L.P. and related entities for $183.7 million of net cash proceeds, which resulted in a net gain of $30.3 million that was recorded in "Earnings from equity method investments" on the Company's Consolidated Statements of Operations. Glenn R. August, a former director of the Company and the president and senior partner of Oak Hill Advisors, L.P., participated in the transaction as a purchaser. In conjunction with the sale of its interests in Oak Hill Advisors, L.P., the Company retained interests in its share of certain unearned incentive fees of various funds. These fees are contingent on the future performance of the funds and the Company will recognize income related to these fees if and when the amounts are realized.

Other investments—The Company also had smaller investments in real estate related funds and other strategic investments in several other entities that were accounted for under the equity method or cost method.

Summarized financial information—The following table presents the investee level summarized financial information of the Company's equity method investments, excluding LNR ($ in thousands):



	For the Years Ended December 31,
	2013		2012		2011
Income Statements
Revenues	$	284,513	$	401,870	$	198,340
Net income attributable to parent entities	$	206,198	$	304,960	$	97,066



	As of December 31,
	2013		2012
Balance Sheets
Total assets	$	2,980,737	$	2,758,889
Total liabilities	$	303,100	$	170,997
Noncontrolling interests	$	333	$	2,253
Total equity	$	2,677,304	$	2,585,639