Investments In Real Estate

6 Months Ended

Jun. 30, 2011

Investments In Real Estate

Investments In Real Estate

NOTE 5: INVESTMENTS IN REAL ESTATE

The table below summarizes our investments in real estate:

	As of June 30, 2011					As of December 31, 2010
	Book Value			Number of Properties		Book Value			Number of Properties
Multi-family real estate properties	$	590,280			33	$	602,183			33
Office real estate properties		247,413			10		219,567			9
Retail real estate properties		48,243			2		41,838			2
Parcels of land		22,208			3		22,208			3
Subtotal		908,144			48		885,796			47
Plus: Escrows and reserves		9,894					2,296
Less: Accumulated depreciation and amortization		(56,228	)				(46,604	)
Investments in real estate	$	861,810				$	841,488

As of June 30, 2011, our investments in real estate of $908,144 are financed through $99,305 of mortgages held by third parties and $767,598 of mortgages held by our consolidated securitizations. Together, along with commercial real estate loans held by these securitizations, these mortgages serve as collateral for the CDO notes payable issued by our consolidated securitizations. All intercompany balances and interest charges are eliminated in consolidation.

Acquisitions:

During the six-month period ended June 30, 2011, we converted three loans with a carrying value of $85,388, relating to one office property and two multi-family properties, to owned real estate. Upon conversion, we recorded the investment in real estate acquired including any related working capital at fair value of $78,167.

The following table summarizes the aggregate estimated fair value of the assets and liabilities associated with the three properties acquired during the six-month period ended June 30, 2011, on the respective date of each conversion, for the real estate accounted for under FASB ASC Topic 805.

Description	Estimated Fair Value
Assets acquired:
Investments in real estate	$	78,300
Cash and cash equivalents		402
Restricted cash		582
Other assets		137
Total assets acquired		79,421

Description	Estimated Fair Value
Liabilities assumed:
Accounts payable and accrued expenses		775
Other liabilities		479
Total liabilities assumed		1,254
Estimated fair value of net assets acquired	$	78,167

The following table summarizes the consideration transferred to acquire the real estate properties and the amounts of identified assets acquired and liabilities assumed at the respective conversion date:

Description	Estimated Fair Value
Fair value of consideration transferred:
Commercial real estate loans	$	78,300
Other considerations		(133	)
Total fair value of consideration transferred	$	78,167

During the six-month period ended June 30, 2011, these investments contributed revenue of $1,620 and a net income allocable to common shares of $751. During the six-month period ended June 30, 2011, we did not incur any third-party acquisition-related costs.

Our consolidated unaudited pro forma information, after including the acquisition of real estate properties, is presented below as if the acquisition occurred on January 1, 2010. These pro forma results are not necessarily indicative of the results which actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods:

Description	For the Six-Month Period Ended June 30, 2011			For the Six-Month Period Ended June 30, 2010
Total revenue, as reported	$	117,142		$	126,614
Pro forma revenue		119,922			130,960
Net income (loss) allocable to common shares, as reported		(14,331	)		53,601
Pro forma net income (loss) allocable to common shares		(13,536	)		54,741

These amounts have been calculated after adjusting the results of the acquired businesses to reflect the additional depreciation that would have been charged assuming the fair value adjustments to our investments in real estate had been applied from January 1, 2010 together with the consequential tax effects.

We have not yet completed the process of estimating the fair value of assets acquired and liabilities assumed. Accordingly, our preliminary estimates and the allocation of the purchase price to the assets acquired and liabilities assumed may change as we complete the process. In accordance with FASB ASC Topic 805, changes, if any, to the preliminary estimates and allocation will be reported in our financial statements retrospectively.

Dispositions:

During the six-month period ended June 30, 2011, we sold two multi-family properties for a total purchase price of $67,550. We recorded losses on the sale of these assets of $168.