Sec Form 4 Filing - LUSTIG MATTHEW J @ ISTAR FINANCIAL INC - 2004-04-08

FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person LUSTIG MATTHEW J 2. Issuer Name and Ticker or Trading Symbol ISTAR FINANCIAL INC [ SFI] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) X __ Director _____ 10% Owner _____ Officer (give title below) _____ Other (specify below) (Last) (First) (Middle) C/O LAZARD FRERES REAL ESTATE INVESTORS, 30 ROCKEFELLER PLAZA 3. Date of Earliest Transaction (MM/DD/YY) 04/08/2004 (Street) NEW YORK, NY10020 4. If Amendment, Date Original Filed (MM/DD/YY) 6. Individual or Joint/Group Filing (Check Applicable Line) __ X __ Form filed by One Reporting Person _____ Form filed by More than One Reporting Person (City) (State) (Zip)

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned 1.Title of Security (Instr. 3) 2. Transaction Date (MM/DD/YY) 2A. Deemed Execution Date, if any (MM/DD/YY) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock 04/08/2004 C 546,131.29 A $ 34.35 ( 1 ) 546,131.29 I See footnote ( 2 )

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned ( e.g. , puts, calls, warrants, options, convertible securities) 1. Title of Derivative Security (Instr. 3) 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (MM/DD/YY) 3A. Deemed Execution Date, if any (MM/DD/YY) 4. Transaction Code (Instr. 8) 5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5) 6. Date Exercisable and Expiration Date (MM/DD/YY) 7. Title and Amount of Underlying Securities (Instr. 3 and 4) 8. Price of Derivative Security (Instr. 5) 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4) 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4) 11. Nature of Indirect Beneficial Ownership (Instr. 4) Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares Warrant $ 34.35 04/08/2004 C( 3 ) 1 12/15/1999 12/15/2005 Common Stock 3,031,519.29 ( 4 ) 0 I See footnote ( 2 )

Reporting Owners Reporting Owner Name / Address Relationships Director 10% Owner Officer Other LUSTIG MATTHEW J C/O LAZARD FRERES REAL ESTATE INVESTORS 30 ROCKEFELLER PLAZA NEW YORK, NY10020 X Signatures /s/ Matthew J. Lustig 04/12/2004 Signature of Reporting Person Date

Explanation of Responses:

( 1 )In lieu of paying an exercise price, Lazard Freres Real Estate Fund II L.P. ("Onshore") exercised its right to acquire the shares using the cashless net exercise method set forth in the Warrant. Onshore surrendered the warrant certificate for cancellation and received in exchange therefor 546,131.29 shares representing (x) the total number of shares specified in the Warrant, as adjusted (i.e., 3,031,519.29) less (y) the number of shares with a fair market value (as defined in the Warrant) equal to the aggregate exercise price that would have been payable for the number of shares in clause (x) above absent the use of the cashless net exercise method (i.e., 2,485,388 shares with a fair market value of $41.9005 per share representing an aggregate exercise price of $104,139,000). ( 2 )Mr. Matthew J. Lustig is Managing Principal of Lazard Fr?res Real Estate Investors L.L.C. ("LFREI") and a Managing Director of Lazard Fr?res & Co. LLC ("LFC"). LFC is the managing member of LFREI. LFREI is the sole general partner of Onshore. Matthew J. Lustig disclaims any and all beneficial ownership of the shares held by Onshore except to the extent of his indirect pecuniary interest as an officer and director of LFREI and LFC. LFREI is also the investment advisor to Lazard Fr?res Real Estate Offshore Fund II L.P (which owns 345,349.39 shares of common stock having exercised its warrants to purchase 1,916,999.37 shares utilizing the cashless net exercise method) and LF Offshore Investment L.P. (which owns 209,812.51 shares of common stock having exercised its warrants to purchase 1,164,647.89 shares utilizing the cashless net exercise method) but has no right to bind them or otherwise direct their actions. ( 3 )Exercise of cashless net exercise feature set forth in Warrant to acquire the Common Stock disclosed in Table I above. ( 4 )The Warrant was acquired in connection with a preferred stock investment in the Issuer.

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* If the form is filed by more than one reporting person, see Instruction 4(b)(v).

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