8-K

UNITED STATES
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): November 2, 2011

CAPITAL TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland	1-14788	94-6181186
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer 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:

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 November 2, 2011, Capital Trust, Inc. (the “Company”) issued a press release reporting the financial results for its fiscal quarter ended September 30, 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 November 2, 2011, the Company held a conference call to discuss the financial results of the Company for its fiscal quarter ended June 30, 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 November 2, 2011
	99.2	Transcript from fiscal quarter ended September 30, 2011 earnings conference call held on November 2, 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: November 7, 2011

Exhibit Index

Exhibit Number		Description
	99.1	Press release dated November 2, 2011
	99.2	Transcript from fiscal quarter ended September 30, 2011 earnings conference call held on November 2, 2011

EX-99.1

Exhibit 99.1

Contact:	Douglas Armer
	(212) 655-0220

Capital Trust Reports Third Quarter 2011 Results

NEW YORK, NY — November 1, 2011- Capital Trust, Inc. (NYSE: CT) today reported results for the quarter ended September 30, 2011.

• Operating Results:

• Reported consolidated net income of $13.7 million, or $0.60 per share for the third quarter ($0.57 per share on a diluted basis).

• Consolidated assets were $1.54 billion as of September 30, 2011 and consolidated liabilities were $1.65 billion, resulting in a shareholders’ deficit of $100.2 million.

• On an adjusted basis¹, the Company recorded a loss for the third quarter of $3.1 million, or $(0.13) per share, which is primarily attributable to the loss it recognized from its investment in CT Legacy REIT (CT Legacy REIT recorded an adjusted loss of $10.8 million for the quarter, of which the Company recognized $4.5 million).Absent this loss, the Company’s adjusted net income was $1.4 million, driven primarily by special servicing fees earned during the quarter. The Company’s cash-basis adjusted net income was $1.3 million for the quarter.

• Adjusted assets were $104.4 million as of September 30, 2011, and adjusted liabilities were $15.4 million, resulting in adjusted shareholders’ equity of $89.0 million. Based on 24.6 million shares outstanding (fully diluted basis) at quarter end, adjusted book value per share was $3.61.

• Investment management platform earned $4.0 million of fees during the quarter, of which $816,000 were eliminated in consolidation under GAAP.

Capital Trust, Inc.

• As of September 30, 2011, the Company’s adjusted assets were comprised of:

• The Company’s investment management and special servicing platform which is operated through its subsidiary, CT Investment Management Co., LLC (“CTIMCO”) and has assets under management of $4.5 billion with mandates including: (i) management of its public company parent, Capital Trust, Inc. (ii) management of CT Legacy REIT (iii) the Company’s private equity management business;(iv) collateral management of five commercial real estate CDOs; and (v) special servicing of securitized loan investments for both CTIMCO-managed vehicles and third parties.

¹ The Company’s adjusted earnings and balance sheet reflect the exclusion of consolidated securitization vehicles and loan participations sold as well as certain non-cash expenses related to interest rate hedges.

• Unrestricted cash of $28.2 million.

• $11.3 million funded under its co-investment commitment to CT Opportunity Partners I, LP ($25.0 million commitment, of which $13.7 million remains unfunded).

• Equity interest in the CT Legacy REIT portfolio (52%) with an adjusted book value of $61.1 million. Net of its obligations under the secured notes and management incentive awards plan, the Company’s equity interest in the CT Legacy REIT portfolio is $41.2 million on an adjusted basis.

• The secured notes have a $7.7 million face amount (payoff amount of $11.1 million) and are secured solely by the Company’s initial equity interests in the common stock of 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.

• The management incentive awards provide for the participation in up to 6.75% of the net recovery of CT Legacy REIT.

• 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 January 2013 to the greater of (i) 2.5% of CT Legacy REIT’s assets, and (ii) $1.0 million per annum.

• The Company has no recourse liabilities.

• Significant net operating loss carryforwards are available to the Company to offset taxable income in future periods.

CT Investment Management Co., LLC

All of the Company’s investment management activities are conducted through its wholly-owned, investment management subsidiary, CTIMCO. CTIMCO is headquartered in New York, employs all 29 of the Company’s employees, and is operated as a taxable subsidiary of the Company. Since its inception, CTIMCO has originated approximately $12.0 billion of commercial real estate debt and related investments and has raised over $3.5 billion of private equity capital, as well as over $10 billion of public and private debt capital. CTIMCO currently manages approximately $4.5 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 and is the named special servicer on $2.3 billion of loans.

• CTIMCO earned $4.0 million of fees during the quarter, and $9.0 million year-to-date ($816,000 and $1.9 million of fees were eliminated in consolidation under GAAP, respectively).

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• CTIMCO is currently investing CT Opportunity Partners I, a fund with $539.9 million of total equity commitments of which $296.0 million remains undrawn.

• CTIMCO manages three other funds with total original equity commitments of $1.4 billion and total investments of $1.0 billion.

• During the quarter, CTIMCO originated three new investments, $137.7 million in the aggregate, for its investment management vehicles.

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, and either transferred or extinguished all of its recourse liabilities.

CT Legacy REIT, which is expected to 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, CT Legacy REIT issued a subordinate class of common stock to the Company’s former junior subordinated noteholders. The Company manages CT Legacy REIT as a liquidating portfolio.

• Adjusted Operating Results:

• CT Legacy REIT’s adjusted net loss of $10.8 million for the quarter was primarily driven by (i) $23.5 million of securities impairments, and (ii) $1.9 million of preferred dividends, offset by (iii) a $14.5 million recovery of previous loan loss provisions. CT Legacy REIT’s cash-basis adjusted net income was $734,000 for the quarter.

• Assets:

• Cash of $13.7 million as of September 30, 2011.

• Collected asset repayments of $265.9 million during the second and third quarters, representing 50.0% of the initial net book value of the CT Legacy REIT portfolio.

• 18 loans with a principal balance of $379.5 million, adjusted book balance of $239.1 million, and fair value of $208.0 million.

• $14.5 million recovery of previous loan impairments recorded during the quarter (total impairments in the portfolio of $140.3 million against six loans).

• 14 securities with a principal balance of $143.7 million, adjusted book balance of $7.9 million, and fair value (excluding CDO residual interests) of $3.5 million.

• $23.5 million of credit impairments recorded during the quarter (total credit impairments in the portfolio of $135.2 million against 11 securities).

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• Liabilities:

• Repayment of $238.1 million of repurchase obligations during the second and third quarters (78.1% of their post-restructuring balance), including the full repayment and termination of the Morgan Stanley and Citigroup facilities and a release of their remaining collateral. The only remaining repurchase obligation is a $66.7 million facility with JP Morgan.

• Interest rate LIBOR+2.50%

• Matures December 15, 2014

• Subject to scheduled pay down hurdles and rate increases

• $64.1 million mezzanine loan (down from an initial balance of $83.0 million)

• 15.0% interest rate (8.0% paid current, 7.0% deferred)

• Matures on March 31, 2016

Adjusted Balance Sheet and Operating Results

The consolidated financial statements of the Company include 10 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 principles 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, non-cash interest expense recognized due to interest rate swaps no longer designated as cash flow hedges is eliminated.

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Also, 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.

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Adjusted Balance Sheet as of September 30, 2011
(in thousands, except per share data)

							Adjusted Balance Sheet
	Consolidated GAAP						CT Legacy		Capital
	Capital Trust, Inc.			Adjustments(1)(2)(3)			REIT		Trust, Inc.
Assets
Cash and cash equivalents	$	28,219		$	—		$	—	$	28,219
Loans receivable, net		24,945			(24,945	)		—		—
Equity investments in unconsolidated subsidiaries		10,611			—			—		10,611
Investment in CT Legacy REIT		—			61,098			—		61,098
Deferred income taxes		1,750			—			—		1,750
Prepaid expenses and other assets		2,109			625			—		2,734
Subtotal		67,634			36,778			—		104,412
Assets of Consolidated VIEs
CT Legacy REIT, Excluding Securitization Vehicles
Restricted cash		13,715			—			13,715		—
Securities held-to-maturity		2,591			5,320			7,911		—
Loans receivable, net		207,028			—			207,028		—
Loans held-for-sale, net		32,107			—			32,107		—
Accrued interest receivable and other assets		4,638			—			4,638		—
Subtotal		260,079			5,320			265,399		—
Assets of consolidated securitization vehicles		1,212,176			(1,212,176	)		—		—
Total/adjusted assets	$	1,539,889		$	(1,170,078	)	$	265,399	$	104,412
Liabilities & Shareholders’ Equity
Accounts payable and accrued expenses	$	7,717		$	—		$	—	$	7,717
Secured notes		7,686			—			—		7,686
Participations sold		24,945			(24,945	)		—		—
Subtotal		40,348			(24,945	)		—		15,403
Non-Recourse Liabilities of Consolidated VIEs
CT Legacy REIT, Excluding Securitization Vehicles
Accounts payable and accrued expenses		683			625			1,308		—
Repurchase obligations		66,637			—			66,637		—
Mezzanine loan, net of unamortized discount		53,367			—			53,367		—
Participations sold		97,465			(97,465	)		—		—
Interest rate hedge liabilities		9,326			—			9,326		—
Subtotal		227,478			(96,840	)		130,638		—
Liabilities of consolidated securitization vehicles		1,382,916			(1,382,916	)		—		—
Total/adjusted liabilities		1,650,742			(1,504,701	)		130,638		15,403
Total/adjusted equity		(100,165	)		323,935			134,761		89,009
Noncontrolling interests		(10,688	)		10,688			—		—
Total/adjusted liabilities and shareholders’ equity	$	1,539,889		$	(1,170,078	)	$	265,399	$	104,412
Capital Trust, Inc. book value/adjusted book value per share:
Basic	$	(4.40	)						$	3.91
Diluted	$	(4.40	)						$	3.61

(1)	All securitization vehicles have been deconsolidated and reported at their cash investment amount, adjusted for current losses relative to the Company’s 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. See note 11 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of consolidated securitization vehicles.
(2)	Loan participations which have been sold to third-parties, and did not qualify for sale accounting, have been eliminated. See Note 8 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of loan participations sold.
(3)	Non-cash interest expense recognized due to interest rate swaps no longer designated as cash flow hedges has been eliminated. See Note 10 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of interest rate swaps not designated as hedging instruments.

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Adjusted Income Statement for the Nine Months Ended September 30, 2011
(in thousands, except per share data)

							Adjusted Income Statement
	Consolidated GAAP						CT Legacy			Capital
	Capital Trust, Inc.			Adjustments(1)(2)(3)			REIT			Trust, Inc.
Income from loans and other investments:
Interest and related income	$	95,187		$	(73,013	)	$	13,420		$	8,754
Less: Interest and related expenses		80,381			(60,492	)		15,784			4,105
Income from loans and other investments, net		14,806			(12,521	)		(2,364	)		4,649
Other revenues:
Management fees from affiliates		4,927			—			—			4,927
Servicing fees		2,208			632			—			2,840
Total other revenues		7,135			632			—			7,767
Other expenses:
General and administrative		19,868			(646	)		2,133			17,089
Total other expenses		19,868			(646	)		2,133			17,089
Total other-than-temporary impairments on securities		(35,620	)		12,131			(23,476	)		(13	)
Portion of other-than-temporary impairments on securities recognized in other comprehensive income		(3,098	)		1,458			—			(1,640	)
Impairments on real estate held-for-sale		(1,055	)		1,055			—			—
Net impairments recognized in earnings		(39,773	)		14,644			(23,476	)		(1,653	)
Recovery of (provision for) loan losses		34,401			(21,439	)		5,048			7,914
Valuation allowance on loans held-for-sale		(224	)		—			(224	)		—
Gain on extinguishment of debt		271,031			(96,185	)		—			174,846
Income from equity investments		2,105			—			—			2,105
Loss from CT Legacy REIT		—			—			—			(11,170	)
Intercompany dividends		—			—			(3,771	)		3,771
Income (loss)/adjusted income (loss) before income taxes		269,613			(114,223	)		(26,920	)		171,140
Income tax provision		1,214			—			—			1,214
Net income (loss)/adjusted net income (loss) before noncontrolling interests		268,399			(114,223	)		(26,920	)		169,926
Less: Net income attributable to noncontrolling interests		(1,935	)		1,935			—			—
Net income (loss)/adjusted net income (loss)	$	266,464		$	(112,288	)	$	(26,920	)	$	169,926
Earnings/adjusted earnings per share:
Basic	$	11.77								$	7.51
Diluted	$	11.08								$	7.06

(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 net income from such entities cannot be less than zero on a cash basis. See note 11 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of consolidated securitization vehicles.
(2)	Loan participations which have been sold to third-parties, which did not qualify for sale accounting, have been eliminated. See Note 8 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of loan participations sold.
(3)	Non-cash interest expense recognized due to interest rate swaps no longer designated as cash flow hedges has been eliminated. See Note 10 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of interest rate swaps not designated as hedging instruments.

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Adjusted Income Statement for the Three Months Ended September 30, 2011
(in thousands, except per share data)

							Adjusted Income Statement
	Consolidated GAAP						CT Legacy			Capital
	Capital Trust, Inc.			Adjustments(1)(2)(3)			REIT			Trust, Inc.
Income from loans and other investments:
Interest and related income	$	25,642		$	(19,763	)	$	5,879		$	—
Less: Interest and related expenses		21,838			(16,217	)		5,523			98
Income from loans and other investments, net		3,804			(3,546	)		356			(98	)
Other revenues:
Management fees from affiliates		1,753			—			—			1,753
Servicing fees		1,460			198			—			1,658
Total other revenues		3,213			198			—			3,411
Other expenses:
General and administrative		4,941			(323	)		305			4,313
Total other expenses		4,941			(323	)		305			4,313
Total other-than-temporary impairments on securities		(30,687	)		7,211			(23,476	)		—
Portion of other-than-temporary impairments on securities recognized in other comprehensive income		173			(173	)		—			—
Impairments on real estate held-for-sale		(1,055	)		1,055			—			—
Net impairments recognized in earnings		(31,569	)		8,093			(23,476	)		—
Recovery of (provision for) loan losses		17,152			(2,670	)		14,482			—
Gain on extinguishment of debt		20,054			(20,054	)		—			—
Income from equity investments		307			—			—			307
Loss from CT Legacy REIT		—			—			—			(4,480	)
Intercompany dividends		—			—			(1,875	)		1,875
Income (loss)/adjusted loss before income taxes		8,020			(17,656	)		(10,818	)		(3,298	)
Income tax benefit		(236	)		—			—			(236	)
Net income (loss)/adjusted net loss before noncontrolling interests		8,256			(17,656	)		(10,818	)		(3,062	)
Less: Net income attributable to noncontrolling interests		5,466			(5,466	)		—			—
Net income (loss)/adjusted net loss	$	13,722		$	(23,122	)	$	(10,818	)	$	(3,062	)
Earnings/adjusted earnings per share:
Basic	$	0.60								$	(0.13	)
Diluted	$	0.57								$	(0.13	)

(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 net income from such entities cannot be less than zero on a cash basis. See note 11 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of consolidated securitization vehicles.
(2)	Loan participations which have been sold to third-parties, which did not qualify for sale accounting, have been eliminated. See Note 8 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of loan participations sold.
(3)	Non-cash interest expense recognized due to interest rate swaps no longer designated as cash flow hedges has been eliminated. See Note 10 to the Company’s Form 10-Q, filed on November 2, 2011, for discussion of interest rate swaps not designated as hedging instruments.

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******

The Company will conduct a management conference call at 10:00 a.m. Eastern Time on Wednesday, November 2, 2011 to discuss third 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 November 2, 2011 through midnight on Wednesday, November 16, 2011. The replay call number is 800-695-2185 or 402-530-9028 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.

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EX-99.2

Exhibit 99.2

CAPITAL
Steven Plavin
Capital Trust
11/02/11
10:00 am ET

Operator: Hello and welcome to the Capital Trust Third 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 performance of the Company’s investments, the timing of collections, its capability to repay indebtedness as it comes due, competition for servicing and investment management assignments, its ability to originate investments, the availability of capital and the Company’s tax status, 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 Steve Plavin, CEO of Capital Trust.

Steve Plavin: 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 third quarter, our second full quarter of operating CT Legacy REIT, the entity formed March 31, 2011 to hold our legacy assets. Geoff will take you through our quarterly results and also discuss our Adjusted Balance Sheet and Operating Results.

During the quarter, we experienced continued strong repayment activity in CT Legacy REIT. The formation of CT Legacy REIT established the necessary time and flexibility to work and collect our legacy assets in a market that should improve over time. Our management of CT Legacy REIT is focused on maximizing the recovery for all stakeholders, the largest of which are the Capital Trust shareholders.

We collected 54 million dollars on 5 loans in Legacy REIT during the quarter bringing total collections since the March formation to $261 million on 15 loans representing over a 99% of par recovery. Total recoveries through September 30th equal 50% of the CT Legacy REIT net book value on March 31st. Although there are still significant credit challenges remaining within the Legacy REIT portfolio and we expect paydown velocity to slow, we remain confident that Tom and his team will continue to achieve great results.

CT Investment Management Co. or CTIMCO, our wholly-owned investment management subsidiary maintains strong capabilities in a wide array of activities: lending, investing, asset management, capital raising, special servicing and operating its public company parent. Although our primary business remains investment management, our special servicing business has expanded as the 5-year, peak-of-the-market loans approach final maturity. In particular, we have established a strong track record in working out large, structured floating rate loans with securitized senior mortgages and multiple tranches of subordinate debt.

As for the markets in general, volatility in global financial markets and economies combined with uncertain domestic economic and employment growth prospects, continue to chill the recovery in commercial real estate. The CMBS market remains dislocated with the investor base for bonds subordinate to senior AAA, largely absent from the market. Although credit performance of current vintage CMBS is likely to be very strong, investors remain uncomfortable with conduit offerings and pricing for junior bonds has gapped out. The restoration of investor confidence in the economy and related commercial real estate credit performance is necessary to boost conduit activity.

The reality continues to be that investors have not fully recovered from the shock of the 2008 CMBS market collapse and the constant reminders provided by continued weak credit performance of many legacy securitizations. And now, there is greater fear of event risk and related market volatility that keeps more investors on the sidelines. With Life companies already at peak origination levels and focused narrowly on primary properties and markets, permanent debt is not available for many assets.

While the specific opportunities in commercial mortgage finance will evolve and change over time, we believe that the scale of the opportunity for providers of capital is great and that our platform is very well positioned to take advantage of these opportunities. There is an expanding need for mezzanine financing to fill the proceeds gap on recapitalizations and acquisitions as the peak of the market 5-year loans mature. The floating rate bridge loan market, an historic area of strength for CT, is still dislocated and highly inefficient, funded primarily by private bridge lenders with a high cost of capital.

We also continue to see an expanding investment opportunity in the low LTV mezzanine segment, particularly as the CMBS market struggles to absorb large offerings. We continue to be active in this space through our High Grade funds and related separate accounts, providing low risk financing junior to investment grade loans on core assets.

As we aggressively manage our portfolios and continue to make new investments for our existing private funds, we have begun to work on our next generation of investment vehicles. We expect to significantly advance this process over the coming quarters. And with that, I will turn it over to Geoff.

Geoff Jervis: Thank you Steve and good morning everyone.

As Steve mentioned, last night we reported our earnings for the third quarter and filed our Form 10-Q. Consolidated net income for the third quarter was $13.7 million, or $0.57 per share on a diluted basis.

Total consolidated assets on the balance sheet at quarter-end stood at $1.5 billion and total consolidated liabilities were $1.6 billion, resulting in GAAP shareholders’ equity of negative $100 million.

As we have discussed on previous calls, our GAAP financial statements continue to be subject to required consolidation regimes, distorting the financial picture of CT. In order to address these presentational issues, we recently began reporting an adjusted income statement and balance sheet, which can be found in both the earnings press release we filed last night and also in the MD&A section of our Form 10-Q. We believe that these adjusted statements allow investors to better understand the economic condition of the Company. These financial statements include four adjustments to our GAAP financials: first, we eliminate the consolidation of CDOs and other securitization vehicles, 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 loans 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. Third, non-cash interest expense related to the mark to market of interest rate swaps that are no longer designated as cash flow hedges has been eliminated. Finally, the fourth adjustment is that we divide the resulting financial statements into those of CT Legacy REIT and those specific to Capital Trust.

All of the numbers discussed from here forward will be from the adjusted financials, and, as I mentioned earlier, these can be found at the back of our earnings press release and also in the MD&A section of our 10-Q.

Starting with Capital Trust:

On an adjusted basis, CT recorded a net loss for the third quarter of $3.1 million, or negative $0.13 per share. The net loss was primarily due to our recognition of the adjusted loss at CT Legacy REIT for the period — of which our share was $4.5 million. Absent this loss, CT’s adjusted net income was $1.4 million, driven primarily by fee income earned at our CTIMCO subsidiary during the quarter. Stripping it down to cash, our cash-basis adjusted net income for the quarter was $1.3 million.

Despite its complex GAAP financial statements, CT’s business is very straightforward when viewed on an adjusted basis. Our primary line of business is now our CTIMCO investment management and special servicing platform with $4.5 billion of assets under management from mandates that include: (i) management of Capital Trust, Inc., (ii) management of CT Legacy REIT, (iii) our private equity management mandates, (iv) collateral management of five commercial real estate CDOs, and (v) special servicing of securitized loan investments for both CTIMCO-managed vehicles and third parties.

In addition to CTIMCO, our adjusted assets as of September 30, 2011 included (i) unrestricted cash of $28 million, (ii) our $11 million co-investment in CT Opportunity Partners I, LP, (a $25 million commitment, of which $14 million remains unfunded), (iii) our common equity interest in the CT Legacy REIT portfolio recovery, (iv) our class A preferred stock in CT Legacy REIT, and (v) our net operating loss carryforwards. In the aggregate, our adjusted assets stood at $104.4 million as of quarter-end.

I will discuss our CTIMCO platform in further detail shortly, but would first like to give some additional color around our net investment in the CT Legacy REIT portfolio recovery. As of quarter-end, CT Legacy REIT had adjusted assets of $265.4 million and adjusted liabilities of $130.6 million, resulting in adjusted equity of $134.8 million. We own 100% of CT Legacy REIT’s class A-1 shares, 14% of its class A-2 shares, and 8% of its class B shares...resulting in an aggregate investment in CT Legacy REIT of $61.1 million on an adjusted basis.

Our interest in the recovery of the CT Legacy REIT portfolio, however, is further subject to our obligations under the related non-recourse secured notes and management incentive awards plan. The secured notes have a $7.7 million face amount; however, as mentioned earlier, they will require a cash repayment of $11 million in order to be satisfied. These notes are non-recourse to CT, and are secured solely by a portion of CT’s equity interests in the class A common stock of CT Legacy REIT. The management incentive awards provide for the participation in up to 6.75% of the net or equity recovery of CT Legacy REIT. Net of these two obligations, CT’s equity interest in the CT Legacy REIT portfolio is $41.2 million on an adjusted basis.

We also own 100% of the class A preferred stock of CT Legacy REIT, separate and distinct from our common equity interest in the recovery of the CT Legacy REIT portfolio. The class A preferred stock currently entitles us to cumulative preferred dividends of $7.5 million per annum, which will be reduced beginning in January 2013 to the greater of (i) 2.5% of CT Legacy REIT’s assets, and (ii) $1.0 million per annum.

We have no recourse debt, and our adjusted liabilities of $15.4 million are primarily comprised of the secured notes and the management incentive awards plan I just described, which are offsets to our recovery in the CT Legacy REIT portfolio.

Finally, adjusted shareholders’ equity was $89 million at quarter-end ... and based on 22.7 million shares outstanding, adjusted book value was $3.91 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 24.6 million shares outstanding and our fully diluted book value per share was $3.61.

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 approximately $4.5 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 and is the named special servicer on $2.3 billion of loans.

CTIMCO earned $4.0 million of gross fees during the quarter and $9.0 million year-to-date, continuing to be a positive cash flow business.

CTIMCO continues to invest CT Opportunity Partners I, which has $540 million of total equity commitments, with approximately $250 million of dry powder. CTIMCO’s other active private equity business line, the “High Grade” business, as we refer to it, is investing on a discretionary, separate account basis as CT High Grade Partners II’s investment period expired in May. We look forward to growing the successful High Grade series of funds going forward. In addition to these two business lines, we continue to develop plans to capitalize other business lines, including a bridge lending program.

As Steve mentioned, as we look forward, we see a very attractive commercial real estate lending environment with favorable supply/demand and competitive dynamics, and management and the board continue to assess the best manner in which Capital Trust and its CTIMCO platform can address that opportunity.

Turning to CT Legacy REIT:

As we discussed on previous calls, in connection with our March 2011 restructuring, we transferred substantially all of our directly held interest earning assets to a newly formed entity, CT Legacy REIT, along with all of our remaining legacy liabilities.

On an adjusted basis, CT Legacy REIT’s net loss for the third quarter was $10.8 million. This was driven primarily by $23.5 million of securities impairments and $1.9 million of preferred dividends paid to CT, offset by a $14.5 million recovery of previous loan loss provisions. Excluding impairments and other non-cash activity, CT Legacy REIT’s “cash-basis” adjusted net income was $734,000 for the quarter, and its quarter-end cash balance was $13.7 million.

At September 30th, CT Legacy REIT’s portfolio of interest earning assets included 18 loans with a principal balance of $380 million, adjusted book balance of $239 million, and fair value of $208 million. In addition, CT Legacy REIT held 14 securities with a principal balance of $144 million, adjusted book balance of $8 million, and fair value (excluding CDO residual interests) of $4 million. Altogether, interest earning assets totaled $247 million of adjusted book balance.

Since our March 31st restructuring, CT Legacy REIT has collected $266 million or 50% of the initial net book value of the legacy portfolio. The portfolio continues to perform as expected and, despite the flurry of payoffs received thus far, we do not anticipate similar activity in the near term as the portfolio has been culled down to the more difficult and longer term assets.

During the same timeframe, CT Legacy REIT has repaid $238 million of repurchase obligations, representing 78% of their post-restructuring balance, and includes the full repayment and termination of the Morgan Stanley and Citigroup facilities in the second quarter.

CT Legacy REIT’s remaining liabilities include a $67 million repurchase facility with JP Morgan, and a $64 million mezzanine loan from Five Mile Capital. The JP Morgan facility carries a cash cost of LIBOR + 2.50% and matures in December 2014, subject to annual paydown hurdles. The $64 mezzanine loan (down from an initial balance of $83 million) carries a 15% fixed rate, of which 8.0% must be paid current, and 7.0% may be deferred — and matures in March 2016.

At September 30th, adjusted shareholders’ equity at CT Legacy REIT was $135 million. As I mentioned previously, this translates to a $61.1 million investment at CT on an adjusted basis, or $41.2 million net of our obligations under the related secured notes and management incentive awards plan.

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 obligation and the mezzanine loan. Only after the repayment of all of CT Legacy REIT’s debt, will dividends begin to be paid to the common shareholders. Based upon our estimates of repayment timing, we expect CT Legacy REIT to commence paying common stock dividends in the 2013/2014 timeframe.

Before I hand it back to Steve, I want to take a moment to give a quick tax and regulatory update. From a tax standpoint, CT and its CT Legacy REIT subsidiary both operate as REITs and both continue to experience pressure on complying with the REIT rules as their respective portfolios liquidate. There are multiple tax planning options for both entities and we are exploring them now. From a regulatory standpoint, CTIMCO will be required to register as a Registered Investment Advisor under the mandates from the Dodd Frank Act — a process we will undertake in the fourth quarter. Finally, CT currently operates under an exemption from the Investment Company Act of 1940 and late this summer, the SEC issued two releases that called into question the current operation of the exemption used by CT and most of the mortgage REIT sector. We are currently working with our mortgage REIT peers to respond to the SEC and will keep you posted on all fronts.

And with that, I will turn it back to Steve.

Steve Plavin: Thanks, Geoff. Lindy, please open the call to any questions.

Operator: At this time, if you would like to ask a question, please press the * and 1 on your touchtone phone. You may remove your question from the queue at any time by pressing the # key. Once again, if you’d like to ask a question, please press the * and 1 keys now. We’ll pause for just a moment to allow questions to enter the queue. It appears we have no questions at this time.

Steve Plavin: Thank you, everyone. We look forward to reporting to you next quarter.

Operator: This concludes today’s program. You may disconnect at anytime. Thank you and have a great day.

END