In acquiring real estate related assets, the competition is in the face of other mortgage real estate investment trusts, or REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, other lenders, governmental bodies and other entities.

In addition, there are numerous mortgage REITs with similar asset acquisition objectives, and others may be organized in the future. The effect of the existence of additional REITs may be to increase competition for the available supply of mortgage assets suitable for purchase.

In addition to existing companies, other companies may be organized for similar purposes, including companies organized as REITs focused on purchasing mortgage assets. A proliferation of such companies may increase the competition for equity capital and thereby adversely affect the market price of the common stock.

The Company invests in pass-through RMBS, which are securities representing interests in mortgage loans secured by residential real property in which payments of both principal and interest are generally made monthly, net of any fees paid to the issuer, servicer or guarantor of the securities.

The Company intends to invest in CMBS, which are secured by, or evidence ownership interests in, a single commercial mortgage loan or a pool of mortgage loans secured by commercial properties. These securities may be senior, subordinated, investment grade or non-investment grade.

The Company expects to invest in investment grade and non-investment grade consumer ABS. Consumer ABS are generally securities for which the underlying collateral consists of assets such as home equity loans, credit card receivables and auto loans. Issuers of consumer ABS generally are special purpose entities owned or sponsored by banks and finance companies, captive finance subsidiaries of non-financial corporations or specialized originators such as credit card lenders.

The Company makes investments in senior secured and unsecured loans and related derivatives which reference loans made by banks or other financing entities, including credit default swaps. In addition to term loans, bank loans may also include revolving credit facilities, under which the lender is obligated to advance funds to the borrower under the credit facility. This type of investment is commonly referred to as a syndicated bank loan. The Company expects that a significant amount of these loans will be secured by mortgages or liens on assets.

The Company expects to invest in corporate mezzanine loans which usually rank subordinate in priority of payment to senior debt, such as senior bank debt, and are often unsecured. However, corporate mezzanine loans rank senior to common and preferred equity in a borrower's capital structure. Corporate mezzanine loans may have elements of both debt and equity instruments, offering the fixed returns in the form of interest payments and principal payments associated with senior debt, while providing lenders an opportunity to participate in the capital appreciation of a borrower, if any, through an equity interest.

The Company intends to make investment in high yield corporate bonds which are below investment grade debt obligations of corporations and other non-governmental entities. To the extent the Company invests in these bonds, it expects that a significant portion will not be secured by mortgages or liens on assets. A substantial portion may have an interest-only payment schedule, with the principal amount staying outstanding and at risk until the bond's maturity. High yield bonds are typically issued by companies with significant financial leverage.

Operating expenses for the period from December 23, 2004 through December 31, 2004 were $176,000 primarily comprised of organizational expenses.

Base management fees under a management agreement, which were $160,000 for the period from December 23, 2004 through December 31, 2004, are based on a percentage of the Company’s equity.

Professional services expense for the period from December 23, 2004 through December 31, 2004 of $61,000 includes auditing and accounting services provided to the Company.