The Company purchases from third parties, and may retain from whole loans it originates and securitizes or sells, subordinate interests referred to as B Notes. B Notes are loans secured by a first mortgage and subordinated to a senior interest, referred to as an A Note. The subordination of a B Note is generally evidenced by a co-lender or participation agreement between the holders of the related A Note and the B Note.

The Company invests in mezzanine loans that are senior to the borrower’s common and preferred equity in, and subordinate to a first mortgage loan on, a property. These loans are secured by pledges of ownership interests, in whole or in part, in entities that directly or indirectly own the real property. The Company structures its mezzanine loans so that it receives a stated fixed or variable interest rate on the loan as well as a percentage of gross revenues and a percentage of the increase in the fair market value of the property securing the loan, payable upon maturity, refinancing or sale of the property.

The Company acquires commercial mortgage-backed securities, or CMBS, that are created when commercial loans are pooled and securitized. These securities may or may not be rated investment grade by rating agencies. The Company also originates CMBS from pools of commercial loans it assembles, in which event it expects to retain the more junior interests. The Company expects a majority of its CMBS investments to be rated by at least one nationally-recognized rating agency, and to consist of securities that are part of a capital structure or securitization where the rights of such class to receive principal and interest are subordinated to senior classes but senior to the rights of lower rated classes of securities. The Company intends to invest in CMBS that will yield high current interest income and where it considers the return of principal to be likely.

The Company makes joint venture investments in entities that directly or indirectly own commercial real estate. Joint venture investments are not secured, but holders have priority relative to common equity holders on cash flow distributions and proceeds of capital events.

The Company also may make investments in other types of commercial real estate assets. These may include acquisitions of real property, net leased property, distressed and stressed debt securities, RMBS, CDOs and equity and debt issued by REITs or other real estate companies. The Company has authority to issue its common stock or other equity or debt securities in exchange for property. Subject to gross income and asset tests necessary for REIT qualification, the Company may also invest in securities of other REITs, or other entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities.

Other income of $3.1 million for the period from inception through December 31, 2005.

Interest expense was $2.7 million for the period from inception though December 31, 2005.

Management fees of $3.2 million for the period from inception through December 31, 2005.

Stock-based compensation expenses were $1.8 million for the period from inception through December 31, 2005.

General and administrative expenses were $2.8 million for the period from inception through December 31, 2005.