8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 10, 2011

CAPITAL TRUST, INC.

(Exact Name of Registrant as specified in its charter)

Maryland	1-14788	94-6181186
(State or other jurisdiction	(Commission File	(IRS Employer
of incorporation)	Number)	Identification No.)

410 Park Avenue, 14th Floor, New York, NY 10022
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 655-0220

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

          On May 10, 2011, Capital Trust, Inc. (the “Company”) issued a press release reporting the financial results for its fiscal quarter ended March 31, 2011. A copy of the press release is attached to this Current Report on Form 8-K (this “Current Report”) as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure.

          On May 11, 2011, the Company held a conference call to discuss the financial results of the Company for its first fiscal quarter ended March 31, 2011. A copy of the transcript of the call is attached to this Current Report as Exhibit 99.2 and is incorporated herein solely for purposes of this Item 2.02 disclosure. The transcript has been selectively edited to facilitate the understanding of the information communicated during the conference call.

          The information in this Current Report, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act, regardless of any incorporation by reference language in any such filing.

Item 9.01 Financial Statements and Exhibits

          (d) Exhibits

Exhibit Number	Description
99.1	Press release dated May 10, 2011
99.2	Transcript from first quarter ended March 31, 2011 earnings conference call held on May 11, 2011

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name:	Geoffrey G. Jervis
	Title:	Chief Financial Officer

Date: May 16, 2011

Exhibit Index

Exhibit Number	Description
99.1	Press release dated May 10, 2011
99.2	Transcript from first quarter ended March 31, 2011 earnings conference call held on May 11, 2011

EX-99.1

Exhibit 99.1

Contact: Douglas Armer
(212) 655-0220

Capital Trust Reports First Quarter 2011 Results

NEW YORK, NY — May 10, 2011 — Capital Trust, Inc. (NYSE: CT) today reported results for the quarter ended March 31, 2011.

• Operating Results:

o Reported net income of $254.6 million, or $11.35 per share for the first quarter.

§	Net income was driven primarily by $250.0 million of gain on extinguishment of debt (of which $174.8 million was associated with the Company’s March 31st restructuring), $10.7 million of net interest income on the legacy loan and securities portfolio, a $9.2 million recovery of previous provisions for loan loss, and $1.9 million of investment management and servicing fees.
§	Significant expenses included $10.3 million of general and administrative expenses (which includes one-time expenses related to the March 31st restructuring), and $8.2 million of credit impairments on securities.
§	Consolidated assets were $3.9 billion as of March 31, 2011, offset by consolidated liabilities of $4.0 billion, resulting in a shareholders’ deficit of $111.0 million.

o Beginning this quarter, the Company reported adjusted earnings and an adjusted balance sheet, which generally exclude consolidated securitization trusts and loan participations sold from the Company’s operating results and financial position. These adjustments are described in further detail later in this press release.

o Adjusted earnings for the first quarter were $179.3 million, or $7.99 per share.

§	The quarter’s results were driven primarily by $174.8 million of gains recognized on extinguishment of debt associated with the Company’s March 31 restructuring. Excluding these gains, adjusted earnings was $4.4 million, or $0.20 per share for the first quarter.
§	Other components of adjusted net income included a $7.9 million recovery of previous provisions for loan loss, $4.9 million of net interest income on the legacy loan and securities portfolio, and $2.1 million of investment management and servicing fees. This was

Page 1 of 8

	partially offset by $8.7 million of general and administrative expenses (which includes one-time expenses related to the March 31st restructuring), and $1.7 million of credit impairments on securities.
§	Adjusted assets were $110.9 million as of March 31, 2011, offset by adjusted liabilities of $13.5 million, resulting in adjusted shareholders’ equity of $97.4 million. Based on 24.8 million shares outstanding (fully diluted basis) at quarter end, adjusted book value per share was $3.93.

• Restructuring:

o On March 31, 2011, the Company restructured, amended, or extinguished all of its outstanding recourse debt obligations.

o Certain legacy assets were transferred to a newly formed subsidiary, CT Legacy REIT Mezz Borrower, Inc. (“CT Legacy REIT”).

o The Company’s legacy repurchase obligations were assumed by CT Legacy REIT, and its senior credit facility and junior subordinated notes were extinguished.

o The restructuring was financed with a new $83.0 million mezzanine loan to CT Legacy REIT.

Capital Trust, Inc.

Following the completion of the Company’s March 2011 restructuring, the Company no longer has any recourse debt obligations and has unencumbered ownership of 100% of: (i) its investment management platform, CT Investment Management Co., LLC, (ii) its co-investment in CT Opportunity Partners I, LP, (iii) its residual ownership interests in CT CDOs I, II, and IV, and (iv) its net operating loss carryforwards. Furthermore, the Company has a 52% equity interest in CT Legacy REIT. The Company’s economic interest in CT Legacy REIT, however, is subject to (i) its secured notes, (ii) management incentive awards that provide for the participation in the recovery of CT Legacy REIT, and (iii) the subordinate class B common stock of CT Legacy REIT owned by the Company’s former junior subordinate noteholders.

In addition to the Company’s interest in the common stock of CT Legacy REIT, it also owns 100% of CT Legacy REIT’s class A preferred stock. The class A preferred stock initially entitles the Company to cumulative preferred dividends of $7.5 million per annum, which dividends will be reduced in 2013 as the CT Legacy REIT portfolio assets repay or are sold.

• Assets:

o Cash of $27.8 million as of March 31, 2011.

o $10.1 million co-investment in CT Opportunity Partners I, LP ($25.0 million commitment, of which $14.9 million remains unfunded).

Page 2 of 8

o Equity interest in the CT Legacy REIT portfolio of $70.7 million on an adjusted basis.

• Liabilities:

o No recourse liabilities following the Company’s March 2011 restructuring.

o $7.8 million face amount of notes (payoff amount of $11.7 million) secured by 93.5% of the Company’s equity interests in CT Legacy REIT. The secured notes mature on March 31, 2016 and bear interest at a rate of 8.2%, which may be deferred until maturity.

CT Legacy REIT

In connection with its March 2011 restructuring, the Company transferred substantially all of its directly held interest earning assets to CT Legacy REIT. The transferred assets included: (i) all of the loans and securities which serve as collateral for the legacy repurchase obligations, except for certain subordinate interests in CT CDOs I and II, (ii) the Company’s subordinate interests in CT CDO III, and (iii) 100% of the Company’s previously unencumbered loans and securities.

CT Legacy REIT, which will be taxed as a REIT commencing in 2011, is owned 52% by the Company, 24% by an affiliate of the mezzanine loan lender, and 24% by the Company’s former lenders under its senior credit facility. In addition, the former holders of the Company’s junior subordinated notes received a subordinate class of common stock of CT Legacy REIT. The Company will manage CT Legacy REIT as a liquidating portfolio.

• Assets:

o Cash of $4.2 million as of March 31, 2011.

o 27 loans with a principal balance of $642.9 million, adjusted book balance of $495.4 million, and fair value of $427.2 million

§	No new impairments recorded during the quarter (total impairments in the portfolio of $146.8 million against seven loans)
§	Collected $29.4 million on three loans representing a 69% recovery in the aggregate

o 14 securities with a principal balance of $144.4 million, adjusted book balance of $30.0 million, and fair value (excluding CDO residual interests) of $3.5 million.

§ $1.7 million of new credit impairments recorded during the quarter (total credit impairments in the portfolio of $111.6 million against nine securities)

Page 3 of 8

• Liabilities:

o $304.8 million of repurchase obligations with three counterparties

§	JP Morgan facility ($173.5 million) has a cost of LIBOR + 2.50%, and matures on December 15, 2014
§	Morgan Stanley facility ($93.2 million) has a cost of LIBOR + 2.50%, and matures on January 31, 2013
§	Citigroup facility ($38.1 million) has a cost of LIBOR + 1.50%, and matures on March 31, 2013
§	All three repurchase facilities are subject to predetermined paydown hurdles and periodic rate increases

o $83.0 million mezzanine loan from Five Mile Capital

§ 15.0% interest rate (8.0% paid current, 7.0% deferred); matures on March 31, 2016

Investment Management

All of the Company’s investment management activities are conducted through its wholly-owned, investment management subsidiary, CT Investment Management Co., LLC (“CTIMCO”). CTIMCO is headquartered in New York, employs all 27 of the Company’s employees, and is operated as a taxable subsidiary of the Company. Since its inception, CTIMCO has originated over $14 billion of commercial real estate debt and related investments and has raised over $3.9 billion of private equity capital and over $550 million of public equity capital, as well as over $10 billion of public and private debt capital. CTIMCO currently manages in excess of $5 billion of assets including its public company parent, CT Legacy REIT, five commercial real estate CDOs, three private equity funds and one separate account. In addition, CTIMCO is an approved special servicer by all three rating agencies.

• Active Investment Vehicles:

o CT Opportunity Partners I — $540 million of total equity commitments, $322 million remains undrawn

o CT High Grade Partners II — $667 million of total equity commitments, $160 million remains undrawn

• Revenues from third party investment management fees totaled $2.5 million in the first quarter of 2011 on a gross basis, of which inter-company fees of $657,000 were eliminated in the consolidation of CTIMCO.

• During the quarter, CTIMCO originated three new investments ($16.5 million face value; $16.0 million purchase price) for its investment management vehicles.

Page 4 of 8

Adjusted Balance Sheet and Operating Results

The consolidated financial statements of the Company include 11 consolidated securitization vehicles which are all non-recourse, as well as assets and liabilities related to loan participations sold which did not qualify as sales under accounting principals generally accepted in the United States (“GAAP”). This has resulted in a presentation of gross assets and liabilities, provisions/impairments, and operations being recorded in excess of the Company’s economic interests in such entities.

The Company’s adjusted balance sheet and operating results (i) eliminate loan participations sold, and (ii) deconsolidate securitization vehicles which are presented gross in accordance with GAAP, and show instead the Company’s cash investment in these non-recourse entities, adjusted for losses expected or incurred, and the cash income earned thereon. Due to the non-recourse nature of these entities, the Company’s investment amount as well as its income from these entities cannot be less than zero on a cash basis.

In addition, the adjusted balance sheet and operating results separately show the Company’s financial position and operations from those of CT Legacy REIT.

The Company’s adjusted balance sheet is not an alternative or substitute for its consolidated balance sheet prepared in accordance with GAAP as a measure of its financial position, and the Company’s adjusted operating results are not an alternative or substitute for net income reported in accordance with GAAP as a measure of the Company’s performance. Rather, the Company believes that its adjusted balance sheet and operating results provide meaningful information to consider, in addition to its consolidated balance sheet and statement of operations prepared in accordance with GAAP, because these measures help the Company evaluate its financial position and performance without the effects of certain transactions and GAAP adjustments that are not necessarily indicative of the Company’s current investment portfolio, capitalization, or shareholders’ equity.

The Company’s adjusted balance sheet should not be viewed as an alternative measure of shareholders’ equity. Similarly, adjusted earnings should not be viewed as an alternative measure of either the Company’s operating liquidity or funds available for its cash needs. In addition, the Company may not prepare its adjusted balance sheet or adjusted earnings in the same manner as other companies that use similarly titled measures.

Page 5 of 8

Adjusted Balance Sheet Transition as of March 31, 2011

							Adjusted Balance Sheet
	Consolidated GAAP			Deconsolidation &			CT Legacy		Capital
(in thousands)	Capital Trust, Inc.			Eliminations (1)(2)			REIT		Trust, Inc.
Assets
Cash and cash equivalents	$	27,779		$	—		$	—	$	27,779
Loans receivable, net		86,570			(86,570	)		—		—
Equity investments in unconsolidated subsidiaries		9,519			—			—		9,519
Investment in CT Legacy REIT		—			70,703			—		70,703
Deferred income taxes		658			—			—		658
Prepaid expenses and other assets		2,263			—			—		2,263
Subtotal		126,789			(15,867	)		—		110,922
Assets of Consolidated VIEs
CT Legacy REIT, Excluding Securitization Vehicles
Restricted cash		4,213			—			4,213		—
Securities held-to-maturity		3,577			26,431			30,008		—
Loans receivable, net		495,412			—			495,412		—
Accrued interest receivable and other assets		10,149			—			10,149		—
Subtotal		513,351			26,431			539,782		—
Assets of consolidated securitization vehicles		3,250,980			(3,250,980	)		—		—
Total assets	$	3,891,120		$	(3,240,416	)	$	539,782	$	110,922
Liabilities & Shareholders’ Equity
Accounts payable and accrued expenses	$	5,727		$	—		$	—	$	5,727
Secured notes		7,778			—			—		7,778
Participations sold		86,570			(86,570	)		—		—
Subtotal		100,075			(86,570	)		—		13,505
Non-Recourse Liabilities of Consolidated VIEs
CT Legacy REIT, Excluding Securitization Vehicles
Accounts payable and accrued expenses		65			—			65		—
Repurchase obligations		304,750			—			304,750		—
Mezzanine loan, net of unamortized discount		67,236			—			67,236		—
Participations sold		97,465			(97,465	)		—		—
Interest rate hedge liabilities		7,518			—			7,518		—
Subtotal		477,034			(97,465	)		379,569		—
Liabilities of consolidated securitization vehicles		3,438,345			(3,438,345	)		—		—
Total liabilities		4,015,454			(3,622,380	)		379,569		13,505
Total equity		(111,043	)		368,673			160,213		97,417
Noncontrolling interests		(13,291	)		13,291			—		—
Total liabilities and shareholders’ equity	$	3,891,120		$	(3,240,416	)	$	539,782	$	110,922
Capital Trust, Inc. book value/adjusted book value per share:
Basic	$	(4.88	)						$	4.28
Diluted (3)	$	(4.88	)						$	3.93

(1)	All securitization vehicles have been deconsolidated and reported at the Company’s cash investment amount, adjusted for current losses relative to its equity investment in each vehicle. Due to the non-recourse nature of these entities, the Company’s investment cannot be less than zero on a cash basis.
(2)	Loan participations which have been sold to third-parties, and did not qualify for sale accounting, have been eliminated.
(3)	Diluted book value per share includes the impact of outstanding warrants and options to purchase the Company’s common stock as of March 31, 2011, using the treasury stock method.

Page 6 of 8

Adjusted Income Statement Transition for the Three Months Ended March 31, 2011

							Adjusted Income Statement
	Consolidated GAAP			Deconsolidation &			CT Legacy			Capital
(in thousands)	Capital Trust, Inc.			Eliminations (1)(2)			REIT			Trust, Inc.
Income from loans and other investments:
Interest and related income	$	36,991		$	(28,238	)	$	—		$	8,753
Less: Interest and related expenses		26,247			(22,306	)		74			3,867
Income from loans and other investments, net		10,744			(5,932	)		(74	)		4,886
Other revenues:
Management fees from affiliates		1,580			—			—			1,580
Servicing fees		310			223			—			533
Total other revenues		1,890			223			—			2,113
Other expenses:
General and administrative		10,280			(270	)		1,310			8,700
Total other expenses		10,280			(270	)		1,310			8,700
Total other-than-temporary impairments on securities		(4,933	)		4,920			—			(13	)
Portion of other-than-temporary impairments on securities recognized in other comprehensive income		(3,271	)		1,631			—			(1,640	)
Net impairments recognized in earnings		(8,204	)		6,551			—			(1,653	)
Recovery of provision for loan losses		9,161			(1,247	)		—			7,914
Gain on extinguishment of debt		250,040			(75,194	)		—			174,846
Income from equity investments		955			—			—			955
Loss from CT Legacy REIT		—			—			—			(715	)
Income (loss) before income taxes		254,306			(75,329	)		(1,384	)		179,646
Income tax provision		389			—			—			389
Net income (loss) before noncontrolling interests		253,917			(75,329	)		(1,384	)		179,257
Less: Net loss attributable to noncontrolling interests		668			(668	)		—			—
Net income (loss)	$	254,585		$	(75,997	)	$	(1,384	)	$	179,257
Earnings/adjusted earnings per share:
Basic	$	11.35								$	7.99
Diluted (3)	$	11.04								$	7.77

(1)	All securitization vehicles have been deconsolidated; adjusted balances include only cash income received from such vehicles. Due to the non-recourse nature of these entities, the Company’s income from such entities cannot be less than zero on a cash basis.
(2)	Loan participations which have been sold to third-parties, which did not qualify for sale accounting, have been eliminated.
(3)	Diluted earnings per share includes the impact of outstanding warrants and options to purchase the Company’s common stock as of March 31, 2011, using the treasury stock method

Page 7 of 8

******

The Company will conduct a management conference call at 10:00 a.m. Eastern Time on Wednesday, May 11, 2011 to discuss first quarter 2011 results. Interested parties can access the call toll free by dialing (800) 862-9098 or 785-424-1051 for international participants. The conference ID is “CAPITAL.” A recorded replay will be available from noon on Wednesday, May 11, 2011 through midnight on Wednesday, May 25, 2011. The replay call number is (800) 283-8486 or (402) 220-0869 for international callers.

Forward-Looking Statements

This news release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to future financial results and business prospects. The forward-looking statements contained in this news release are subject to certain risks and uncertainties including, but not limited to, the continued credit performance and recovery from the Company’s retained balance sheet and transferred legacy assets, the success of the Company’s efforts to raise additional capital and re-commence balance sheet investment activity, its asset/liability mix, the effectiveness of the Company’s hedging strategy and the rate of repayment of the Company’s portfolio assets and the impact of these events, conditions and uncertainties on the Company’s cash flow, as well as other risks indicated from time to time in the Company’s Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events or circumstances.

About Capital Trust

Capital Trust, Inc. is a fully integrated, self-managed real estate finance and investment management company that specializes in credit sensitive structured financial products. To date, the Company’s investment programs have focused primarily on loans and securities backed by commercial real estate assets, investing both for its balance sheet and for third party vehicles. Capital Trust is a real estate investment trust traded on the New York Stock Exchange under the symbol “CT.” The Company is headquartered in New York City.

Page 8 of 8

EX-99.2

Exhibit 99.2

Capital Trust Management Conference Call

May 11, 2011

10:00 am ET

Operator:	Hello and welcome to the Capital Trust First Quarter 2011 Results Conference Call. Before we begin, please be advised that the forward looking statements contained on this conference call are subject to certain risks and uncertainties including but not limited to the continued credit performance of the company’s loan and CMBS investments, its asset liability mix, the effectiveness of the company’s hedging strategy, the rate of repayment of the company’s portfolio assets and the impact of these events on the company’s cash flow as well as other risks indicated from time to time in the company’s form 10-K and form 10-Q filings with the Securities and Exchange Commission. The company assumes no obligation to update or supplement forward looking statements that become untrue because of subsequent events or circumstances. There will be a Q&A session following the conclusion of this presentation. At that time I will provide instructions for submitting a question to management. I will now turn the call over to Stephen Plavin, CEO of Capital Trust.
Stephen Plavin:	Thank you. Good morning everyone. Thank you for joining us and for your interest in Capital Trust.
	With me are Geoff Jervis, our Chief Financial Officer and Tom Ruffing our Chief Credit Officer and Head of Asset Management.
	Last night, we filed our 10Q and announced our results for the first quarter which was highlighted by the comprehensive restructuring of all of our legacy recourse liabilities in a transaction that closed March 31. Geoff will take you through the key points of the restructure and the quarterly results and also

introduce our Adjusted Balance Sheet and Operating Results. I will focus my remarks on post-restructure CT and the commercial mortgage market.

Completing the debt restructure was a necessary step in the evolution of Capital Trust. Our financial condition is greatly improved. We have isolated the downside risk associated with our peak of the market balance sheet assets while maintaining management control and a significant ownership interest. By having established the necessary time to work and collect our legacy assets in an improving market, we will maximize the recovery for all Legacy REIT stakeholders as well as the CT shareholders.

In fact, we have already paid down over $100MM of Legacy REIT debt from underlying loan repayments since quarter-end. Although there is still great volatility within the Legacy REIT portfolio, we do expect to achieve additional paydowns over the next 12 months as we work the assets and progress toward the beginning of the equity realization, which is still likely a few years out.

Post restructure, CT maintains full economic and management control of CT Investment Management Co, or CTIMCO, our wholly-owned management subsidiary. CTIMCO manages its public company parent, the newly-formed legacy asset REIT, four CT sponsored private equity funds, five CDO’s, and loan workouts and restructurings as a CMBS special servicer. We have maintained all of the capabilities of our platform and are now very well positioned to continue our capital raising, lending, investing and asset management activities.

We see great opportunity in commercial mortgage finance. The floating rate market, an historic area of strength for CT, is still dislocated and highly inefficient; the commercial banks, CMBS originators and CMBS investors

	have not returned to the floating rate market which is now significantly funded by private bridge lenders with a high cost of capital. The steep yield curve helps this market from a demand perspective while LIBOR provides a hedge to interest rates likely to rise over time.
	The need for mezzanine financing to fill the proceeds gap on recapitalizations will continue to expand as the peak of the market 5-year loans mature. There will also be more distressed opportunities for our special servicer and opportunistic fund.
	We have been active in the low LTV mezzanine space through our High Grade funds, providing efficient financing junior to investment grade loans being securitized. We see continuing investment opportunity in this segment, particularly as the CMBS market expands to better handle large financing requests.
	While the specific opportunities in commercial mortgage finance will evolve and change over time, we believe that the scale of the opportunity is great and emerging now, and that our platform is very well positioned to exploit these opportunities.
	With our recapitalization now more than a month behind us, we are evaluating all of our options regarding how, to best position CT for the future. We expect to significantly advance this process over the next quarter, so stay tuned. And with that, I will turn it over to Geoff.
Geoffrey Jervis:	Thank you Steve and good morning everyone.
	As Steve mentioned, last night we reported our earnings for the first quarter and filed our Form 10Q. Net income for the period was $254.6 million or

$11.35 per share, driven by $250.0 million of gains on the extinguishment of debt (primarily associated with our March 31st restructuring).

Total assets on the balance sheet at quarter end stood at $3.9 billion, down $230 million from year end as the portfolio continued to experience repayments. Total liabilities were $4.0 billion and shareholders’ equity was negative $111 million. On a per share basis, based upon 22.8 million shares outstanding, book value per share was negative $4.88.

As these GAAP numbers show, we continue to be plagued by the distortions of GAAP required consolidation regimes. This quarter, as we promised on the last earnings call, we began reporting an adjusted income statement and balance sheet. We believe that these adjusted statements allow investors to better understand the economic condition of the Company. These financials can be found in the earnings press release we filed last night and also in the MD&A section of our Form 10Q. The adjustments to our GAAP financials are three: first, we eliminate the consolidation of securitization vehicles under FAS 167, showing only our net investment in such vehicles and, since all of the liabilities in these vehicles are non-recourse, we only record a net investment to the extent that it has a positive value. Second, we eliminate the assets and liabilities on our GAAP financials associated with assets that we sold, but where the sales did not meet GAAP criteria for sale accounting, and remain consolidated on our financials...we refer to these as participations sold. Finally, the third adjustment is that we divide the resulting financial statements into those for CT Legacy REIT and those specific to Capital Trust, Inc.

On this basis, adjusted earnings for Capital Trust for the first quarter was $179.3 million, or $7.99 per share, driven primarily by $174.8 million of gains recognized on the extinguishment of debt associated with our March 31st

restructuring. Excluding these gains, adjusted earnings was $4.4 million or $0.20 per share for the first quarter. Other components of adjusted net income include a $7.9 million recovery of previous provisions for loan loss, $4.9 million of net interest income on the legacy loan and securities portfolio, and $2.1 million of investment management and servicing fees, all offset by $8.7 million of general and administrative expenses (a number that includes one-time expenses related to the March 31st restructuring), and $1.7 million of securities impairments. It is important to note that, going forward, Capital Trust’s adjusted earnings will not include the Legacy Assets that we contributed to CT Legacy REIT (or the attendant liabilities) and, therefore, earnings will be isolated to the assets that CT owns post restructuring (mainly the investment management business that we operate through CT Investment Management Co, or CTIMCO). Had the restructuring closed on December 31st, CT’s adjusted earnings would have been basically breakeven.

Before we discuss the adjusted balance sheet for CT, I want to spend a moment discussing the economic aspects of CT post restructuring. Today, we no longer have any recourse debt obligations and have unencumbered ownership of 100% of: (i) our CTIMCO investment management platform, (ii) our co-investment in CT Opportunity Partners I, (iii) our residual ownership interests in CT CDOs I, II, and IV, and (iv) our net operating loss carryforwards. Furthermore, we have a 52% equity interest in CT Legacy REIT. Our economic interest in CT Legacy REIT, however, is subject to (i) our secured notes, (ii) management incentive awards that provide for the participation in the recovery of CT Legacy REIT, and (iii) the subordinate class B common stock of CT Legacy REIT owned by our former junior subordinate noteholders. In addition to our interest in the common stock of CT Legacy REIT, we also own 100% of CT Legacy REIT’s class A preferred stock. The class A preferred stock initially entitles us to cumulative preferred dividends of $7.5 million per annum (expected to be paid currently), which

dividends will be reduced in 2013 as the CT Legacy REIT portfolio assets repay or are sold.

Looking at the adjusted balance sheet, this economic picture translates into $110.9 million of assets as of March 31st. Assets included: cash of $27.8 million, our $10.1 million co-investment in CT Opportunity Partners I, (a $25.0 million commitment, of which $14.9 million remains unfunded), and our equity interest in the CT Legacy REIT portfolio of $70.7 million on an adjusted basis.

Adjusted liabilities at CT were $13.5 million as of March 31st — with none of the liabilities being recourse to CT. Liabilities included: $7.8 million of non-recourse secured notes that are collateralized by 93.5% of our common equity interests in CT Legacy REIT. The secured notes bear interest at a fixed rate of 8.2%, which may be deferred until maturity. Any prepayment of the notes will incur a prepayment penalty, resulting in an ultimate payment amount of $11.7 million.

Adjusted shareholders’ equity was $97.4 million at quarter end and, based on 22.8 million shares outstanding, adjusted book value was $4.28 per share...on a fully diluted basis, inclusive of the warrants we issued to the former repurchase agreement lenders in March of 2009, CT has 24.8 million shares outstanding and fully diluted book value per share was $3.93.

Moving over to CT Legacy REIT:

As we discussed on our last call, in connection with our March 2011 restructuring, we transferred substantially all of our directly held interest earning assets to CT Legacy REIT. The transferred assets included: (i) all of the loans and securities which serve as collateral for the legacy repurchase

obligations, except for certain subordinate interests in CT CDOs I and II, (ii) our subordinate interests in CT CDO III, and (iii) 100% of our previously unencumbered loans and securities.

CT Legacy REIT is owned 52% by us, 24% by an affiliate of the mezzanine loan lender, and 24% by our former lenders under our senior credit facility. In addition, the former holders of our junior subordinated notes received a subordinate class of common stock of CT Legacy REIT that entitles them to 25% of CT’s cash flow from its common shares in CT Legacy REIT after a gross $50 million recovery to CT Legacy REIT’s common shareholders.

At March 31st, CT Legacy REIT’s portfolio included 27 loans with a principal balance of $642.9 million, adjusted book balance of $495.4 million, and fair value of $427.2 million as well as 14 securities with a principal balance of $144.4 million, adjusted book balance of $30.0 million, and fair value (excluding CDO residual interests) of $3.5 million. At quarter-end, our legacy portfolio included total impairments of $146.8 million against seven loans, and $111.6 million against nine securities, on an adjusted basis.

CT Legacy REIT’s liabilities include $304.8 million of repurchase obligations with three counterparties at a weighted-average cash cost of LIBOR + 2.38% and an $83.0 million mezzanine loan. The mezzanine loan has a 15% fixed rate, of which 8.0% must be paid current, and 7.0% may be deferred.

Adjusted shareholders’ equity at CT Legacy REIT was $160.2 million at quarter end. As mentioned earlier, CT’s interest in CT Legacy REIT, recorded on an adjusted basis, is $70.7 million, reflecting our 52% ownership interest net of the class B dilution.

Given the timing of the restructuring, occurring on the last day of the first quarter, the adjusted income statement does not provide a meaningful picture of CT Legacy REIT’s operations. As we mentioned in the past, our goal is to manage CT Legacy REIT in order to maximize the recovery to its shareholders, being mindful of the timeframe in which we realize that value. From an operational standpoint, cash flow will be directed to pay operating expenses, debt service, the preferred A dividend and to amortize the repurchase obligations and the mezzanine loan. Only after the repayment of all of CT Legacy REIT’s obligations, will dividends begin to be paid to the common shareholders.

Turning to our investment management business:

All of our investment management activities are conducted through CTIMCO, our wholly-owned, investment management subsidiary. CTIMCO currently manages in excess of $5 billion of assets including the assets of its public company parent, CT Legacy REIT, five CDOs, three private equity funds and one separate account. In addition, CTIMCO is an approved special servicer by all three rating agencies.

CTIMCO currently has two active investment vehicles: CT Opportunity Partners I, which has $540 million of total equity commitments, $322 million of which remains available to be invested...and...CT High Grade Partners II, which has $667 million of total equity commitments, $160 million of which remains available to be invested.

Revenues from third party investment management fees totaled $2.5 million in the first quarter of 2011 on a gross basis, of which inter-company fees of $657,000 were eliminated in consolidation.

	As Steve mentioned, as we look forward, we see a very attractive commercial real estate lending environment with favorable supply/demand and competitive dynamics. Management and the board are currently assessing the best manner in which Capital Trust and its CTIMCO platform can address that opportunity.
	And with that, I will turn it back to Steve.
Stephen Plavin:	Thank you, Geoff. Josh, you can open the call to questions.
Operator:	Thank you. At this time if you would like to ask a question you may press * then 1 on your phone. Again to ask a question, it is *1. We’ll pause for a moment for any questions to populate the queue. At this time there are no questions, but one more reminder. If you would like to ask a question, please press * then 1. Our first question comes from the site of Chris Mittleman from Mittleman Brothers. Please go ahead. Your line is open.
Chris Mittleman:	Hi, guys. I was wondering — you said the opportunities for taking advantage of the environment exists at the CTIMCO level, but in terms of your own balance sheet, are you considering maybe doing a rights offering to raise some capital to take advantage on your own balance sheet directly maybe to put the NOL to a little bit of better use?
Stephen Plavin:	We are certainly evaluating all means of raising capital. Historically, we’ve raised capital both publically and privately. We’re definitely considering, from a balance sheet standpoint, how best to raise capital and certainly a rights offering is one of the structures that we’re giving serious thought to.
Chris Mittleman:	Okay. Great. Thank you.

Operator:	There are no further questions, but one final reminder. If you would like to ask a question, please press * then 1. We still have no questions, so at this point I would like to turn it back over to Mr. Plavin for his further remarks.
Stephen Plavin:	Thank you everyone for joining us. We look forward to reporting to you next quarter.

END