EXHIBIT 99.1


                  FORWARD-LOOKING INFORMATION AND RISK FACTORS


The Company's Annual Report on Form l0-K for the year ended December 31, 2002,
the Company's 2002 Annual Report to Shareholders, any Quarterly Report on Form
10-Q or Current Report on Form 8-K of the Company, or any other oral or written
statements made in press releases or otherwise by or on behalf of the Company,
may contain forward-looking statements within the meaning of the Section 21E of
the Securities and Exchange Act of 1934, as amended, which involve certain risks
and uncertainties. Forward-looking statements are included with respect to,
among other things, the Company's current business plan, business and investment
strategy and portfolio management. These forward-looking statements are
identified by their use of such terms and phrases as "intends," "intend,"
"intended," "goal," "estimate," "estimates," "expects," "expect," "expected,"
"project," "projected," "projections," "plans," "anticipates," "anticipated,"
"should," "designed to," "foreseeable future," "believe," "believes" and
"scheduled" and similar expressions. The Company's actual results or outcomes
may differ materially from those anticipated. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date the statement was made. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

The actual results of the Company may differ significantly from any results
expressed or implied by these forward-looking statements. Factors that might
cause such a difference include but are not limited to, (a) the general
political, economic and competitive conditions, in the United States, (b) the
level and volatility of prevailing interest rates and credit spreads, adverse
changes in general economic conditions and real estate markets, the
deterioration of credit quality of borrowers and the risks associated with the
ownership and operation of real estate, (c) a significant compression of the
spreads of the interest rates earned on interest-earning assets over the
interest rates paid on interest-bearing liabilities that adversely affects
operating results, (d) adverse developments in the availability of desirable
loan and investment opportunities and the ability to obtain and maintain
targeted levels of leverage and borrowing costs, (e) adverse changes in local
market conditions, competition, increases in operating expenses and uninsured
losses, affecting a property owner's ability to cover operating expenses and the
debt service on financing provided by the Company, (f) authoritative generally
accepted accounting principles or policy changes from such standard-setting
bodies as the Financial Accounting Standards Board and the Securities and
Exchange Commission; and the risk factors set forth below.


Risk Factors Related to Our Business

Because we commenced our investment management business in March 2000, we are
subject to risks and uncertainties associated with developing and operating a
new business, and we may not achieve from this new business the investment
returns that we expect.

        Our investment management business commenced in March 2000 and therefore
has a limited track record of proven results upon which to evaluate our
performance. We will encounter risks and difficulties as we proceed to develop
and operate our investment management business. In order to achieve our goals as
an investment manager, we must:

        o  manage our mezzanine funds successfully by investing a majority of
           our fund capital in suitable investments that meet the funds'
           specified investment criteria,

        o  incent our management and professional staff to the task of
           developing and operating the investment management business,

        o  structure, sponsor and capitalize future real estate related funds
           and other investment products under our management that provide
           investors with attractive investment opportunities, and







        o  convince third party investors that an investment in our future funds
           will meet their investment objectives and will generate attractive
           returns.

        There can be no assurance that we will successfully develop and operate
our investment management business to achieve the investment returns we expect.

Our success in developing and operating the investment management business will
depend in part on the demand for real estate related investment opportunities
such as those provided by our mezzanine funds and other real estate related
funds and other investment products.

        Our ability to develop, operate and sustain our investment management
business will depend in part on the strength of the market for private equity
investments generally and the demand for real estate related private equity
investments in particular. Markets for real estate related investments can be
materially and adversely affected by factors beyond our control, including
volatility in the global capital markets, adverse changes in general economic
conditions, an unfavorable market for real estate and competition from other
investment opportunities available to third party investors.

We will face substantial competition from established participants in the
private equity market as we offer the mezzanine and other real estate related
funds to third party investors.

        We are a recent entrant into the investment management business. As we
offer our mezzanine and other real estate related funds as investment
opportunities to third party investors, we will face significant competition
from established Wall Street investment banking firms and large financial
institutions which have proven track records in marketing and managing private
equity investment funds and are otherwise competitively advantaged because they
have access to pre-existing third party investor networks into which they can
channel competing investment opportunities. If our competitors offer investment
products that are competitive with the mezzanine and other fund investments
offered by us, we will find it more difficult to attract investors and to
capitalize our mezzanine and other real estate related funds.

Our success in deploying our mezzanine funds' capital to originate or acquire a
targeted portfolio of assets will depend on the availability of, and the degree
of competition for, attractive investments.

        Our operating results will be dependent upon the availability of, as
well as our ability to identify, consummate, manage and realize, high yielding
real estate investment opportunities. If we are not successful in investing all
available equity capital for our funds, it will reduce the potential revenues we
earn following our funds' investment period when our management fee base shifts
from the amount of capital commitments to the amount of invested assets. We may
expend significant time and resources in identifying and consummating targeted
investments. In general, the availability of desirable high yielding real estate
opportunities and, consequently, our funds' investment returns will be affected
by the level and volatility of interest rates, by conditions in the financial
markets and by general economic conditions. No assurance can be given that we
will be successful in identifying and consummating investments which satisfy our
rate of return objectives or that such investments, once consummated, will
perform as anticipated. We will be engaged in a competitive business and will be
competing for attractive investments with traditional lending sources as well as
existing funds, or funds formed in the future, with similar investment
objectives.

Our loans and investments will expose us to a high degree of risk associated
with investing in commercial real estate related assets.

        Real estate historically has experienced significant fluctuations and
cycles in value that may result in reductions in the value of real estate
related investments. The performance and value of our loans and investments once
originated or acquired by us will depend on many factors beyond our control. The
ultimate performance and value of our investments will be subject to the varying
degrees of risk generally incident to the ownership and operation of the
commercial property which collateralize or support our investments. The ultimate
performance and value of our loans and investments depends upon the commercial
property owner's ability to operate the property so



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that it produces the revenues and cash flow needed to pay the interest and
principal due to us on the loans and investments. Revenues and cash flow may be
adversely affected by:

        o  changes in national economic conditions,

        o  changes in local real estate market conditions due to changes in
           national or local economic conditions or changes in neighborhood
           characteristics,

        o  competition from other properties offering the same or similar
           services,

        o  changes in interest rates and in the availability of mortgage
           financing on favorable terms,

        o  the impact of present or future environmental legislation and
           compliance with environmental laws,

        o  the ongoing need for capital improvements (particularly in older
           structures),

        o  changes in real estate tax rates and other operating expenses,

        o  adverse changes in governmental rules and fiscal policies, civil
           unrest, acts of God, including earthquakes, hurricanes and other
           natural disasters, acts of war or terrorism, which may result in
           uninsured losses,

        o  adverse changes in zoning laws, and

        o  other factors that are beyond our control and the control of the
           commercial property owners.

        In the event that any of the properties underlying our loans and
investments experience any of the foregoing events or occurrences, the value of,
and return on, such investments would be negatively impacted.

The impact of the events of September 11, 2001 and the effect thereon on
terrorism insurance expose the Company to certain risks.

        The terrorist attacks on September 11, 2001 disrupted the U.S. financial
markets and negatively impacted the U.S. economy in general. Any future
terrorist attacks and the anticipation of any such attacks, or the consequences
of the military or other response by the U.S. and its allies, may have a further
adverse impact on the U.S. financial markets, including real estate capital
markets, and the economy. It is not possible to predict the severity of the
effect that such future events would have on the U.S. financial markets and
economy.

        It is possible that the economic impact of terrorist attacks will
adversely affect the credit quality of some of the Company's loans and
investments. Some of the Company's loans and investments will be more
susceptible to the adverse effects than others, such as the hotel loans, which
may experience a significant reduction in occupancy rates following any future
attacks. While the Company's asset base is diversified and the Company employs a
variety of techniques to enhance the credit quality of the assets, the Company
may suffer losses as a result of the adverse impact of any future attacks and
these losses may adversely impact investors' returns.

        In addition, the events of September 11 created significant uncertainty
regarding the ability of real estate owners of high profile assets to obtain
insurance coverage protecting against terrorist attacks at commercially
reasonable rates, if at all. With the enactment of the Terrorism Risk Protection
Act of 2002, through the end of 2004, insurers must make terrorism insurance
available under their property and casualty insurance policies, but this
legislation does not regulate the pricing of such insurance. The absence of
affordable insurance coverage may affect the general real estate lending market,
lending volume and the market's overall liquidity and may reduce the number of
suitable investment opportunities available to the Company and the pace at which
its investments are made. Real estate valuations, particularly for assets at
high risk locations, may also be impacted, which may adversely impact the
Company's existing loans and investment.



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Our balance sheet asset portfolio continues to become more concentrated in
mark-to-market mortgage backed securities and related hedges which subjects us
to greater swings in equity and income as we record balance sheet gains and
losses on such assets.

        Our current venture agreement with affiliates of Citigroup Inc. has
placed restrictions on our ability to originate new assets for our balance sheet
until the end of the investment period for Fund II in April 2003. Our balance
sheet portfolio therefore has become more concentrated in mark-to-market
mortgage backed securities, which generally have longer terms than
non-mark-to-market loans that mature or may be paid off early. In an environment
of lower interest rates, there is a greater risk that our existing loans will
pay off early. We have adopted accounting policies under which such securities
will impact either or both shareholders' equity or net income depending on the
characterization of the change in market value. If a reduction in market value
is deemed to be permanent (generally due to a change in the credit risk), the
reduction in value will be recorded as a reduction of net income. If any of the
available-for-sale securities are sold, the resulting gain or loss will be
recorded through the income statement. All other changes in market value will
impact shareholders equity only. The more concentrated our balance sheet becomes
in mark-to-market assets, the greater the potential for swings in equity and
income as we record gains and losses on such assets on our balance sheet. If
interest rates fluctuate and affect significantly the market value of such
mark-to-market assets the corresponding reductions or increases in equity and
income may be significant.

We may not achieve our targeted rate of return on our investments.

        We will originate or acquire investments based on our estimates or
projections of internal rates of return and current returns, which in turn are
based on, among other considerations, assumptions regarding the performance of
assets, the amount and terms of available financing and the manner and timing of
dispositions, including possible asset recovery and remediation strategies, all
of which are subject to significant uncertainty. In addition, events or
conditions that have not been anticipated may occur and may have a significant
effect on the actual rate of return received on an investment.

We may not be able to obtain the level of leverage necessary to optimize our
return on investment. If we do incur significant leverage, we will be subject to
the risks of holding leveraged investments.

        Our return on investment will depend, in part, upon our ability to grow
our funds' portfolio of invested assets through the use of leverage. Our ability
to obtain the necessary leverage on attractive terms will ultimately depend upon
our ability to maintain interest coverage ratios meeting prevailing market
underwriting standards which will vary according to lenders' assessments of our
and our funds' creditworthiness and the terms of the borrowings. The failure to
obtain and/or maintain leverage at desired levels, or to obtain leverage on
attractive terms, could have a material adverse effect on our funds'
performance. Moreover, we are dependent upon a few lenders to provide the
primary credit facilities for our origination or acquisition of loans and
investments.

        Leverage creates an opportunity for increased net income, but at the
same time creates risks. For example, leveraging magnifies changes in the net
worth of our funds. We expect that our funds will leverage assets only when
there is an expectation that leverage will enhance returns, although there can
be no assurance that the use of leverage will prove to be beneficial. Where
pledged assets are marked-to-market, a decline in market value may require us to
pledge additional collateral to secure our borrowings. Moreover, there can be no
assurance that our funds will be able to meet their debt service obligations
and, to the extent that they cannot, they risk the loss of some or all of their
assets or a financial loss if they are required to liquidate assets at a
commercially inopportune time.

We are dependent upon our senior management team to develop and operate our
business.

        Our ability to develop and operate our business depends to a substantial
extent on the experience, relationships and expertise of our senior management
and key employees. There can be no assurance that these individuals will remain
in our employ. The employment agreement with our chief executive officer, John
R. Klopp, following the expected extension thereof, expires in 2003, unless
further extended. The loss of the services of our senior management and key
employees could have a material adverse effect on our operations.



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We will be exposed to the risks involved with making subordinated investments.

        Our investments will involve the additional risks attendant to
investments consisting of subordinated loan positions. In many cases, management
of our investments and our remedies with respect thereto, including the ability
to foreclose on the collateral securing such investments, will be subject to the
rights of senior lenders and the rights as set forth in certain intercreditor
agreements.

Our loans and investments may be subject to fluctuations in interest rates which
may not be adequately protected, or protected at all, by our hedging strategies.

        We intend to make loans with "floating" interest rates to protect
against fluctuations in interest rates. However, the funds may from time to time
make fixed rate loans. In such cases, the funds may employ various hedging
strategies to limit the effects of changes in interest rates on its operations,
including engaging in interest rate swaps, caps, floors and other interest rate
exchange contracts. No strategy can completely insulate the funds from the risks
associated with interest rate changes and there is a risk that they may provide
no protection at all. Hedging transactions involve certain additional risks such
as the legal enforceability of hedging contracts, the early repayment of hedged
transactions and the risk that unanticipated and significant changes in interest
rates may cause a significant loss of basis in the contract and a change in
current period expense. There can be no assurance that our funds will be able to
enter into hedging transactions or that such hedging transactions will
adequately protect the funds against the foregoing risks. In addition, cash flow
hedges which are not perfectly correlated with a variable rate financing will
impact our income as gains and losses on the ineffective portion of such hedges
will be recorded.

Our loans and investments may be illiquid which will constrain our ability to
vary our portfolio of investments.

        Real estate investments are relatively illiquid. Such illiquidity may
limit our ability to vary our funds' portfolio of investments in response to
changes in economic and other conditions. Illiquidity may result from the
absence of an established market for investments as well as the legal or
contractual restrictions on their resale. In addition, illiquidity may result
from the decline in value of a property securing one of the funds' investments.
There can be no assurance that the fair market value of any of the real property
serving as security will not decrease in the future, leaving the funds'
investment under-collateralized or not collateralized at all.

We may invest in troubled assets which are subject to a higher degree of
financial risk.

        We may make investments in non-performing or other troubled assets that
involve a higher degree of financial risk and there can be no assurance that our
investment objectives will be realized or that there will be any return on
investment. Furthermore, investments in properties operating in work-out modes
or under bankruptcy protection laws may, in certain circumstances, be subject to
additional potential liabilities that could exceed the value of an investor's
original investment, including equitable subordination and/or disallowance of
claims or lender liability.

We may not have control over certain of our loans and investments.

        Our ability to manage our portfolio of loans and investments will be
subject to the form in which they are made. In certain situations, we may:

        o  acquire only a minority interest,

        o  co-invest with third parties through partnerships, joint ventures or
           other entities, thereby acquiring non-controlling interests,

        o  rely on independent third party management or strategic partners with
           respect to the management of an asset, or

        o  acquire only a participation in an asset underlying an investment.



                                       5




        Therefore, we may not be able to exercise control over the loan or
investment. Such financial assets may involve risks not present in investments
where third party controlling investors or third parties are not involved. For
example, a third party partner or co-venturer may have financial difficulties
resulting in a negative impact on such asset, may have economic or business
interests or goals which are inconsistent with ours and those of the funds, or
may be in a position to take action contrary to the funds' investment
objectives. In addition, we may, in certain circumstances, be liable for the
actions of its third party partners or co-venturers.

Our mezzanine and other funds will be subject to the risk of defaults by third
party investors on their capital commitments.

        The capital commitments made by third party investors to our mezzanine
and other funds represent promises by those investors to contribute cash to the
funds from time to time as investments are made by the funds. We will therefore
be subject to general credit risks that the investors may default on their
capital commitments. If defaults occur, we may not be able to close loans and
investments we have identified and negotiated, which could materially and
adversely affect the fund's investment program or make us liable for breach of
contract, in either case to the detriment of our franchise in the private equity
market.

We must manage our portfolio and the portfolios of our funds in a manner that
allows us to rely on an exclusion from registration under the Investment Company
Act of 1940 in order to avoid the consequences of regulation under this Act.

        We rely on an exclusion from registration as an investment company
afforded by Section 3(c)(5)(C) of the Investment Company Act. Under this
exclusion, we are required to maintain, on the basis of positions taken by the
SEC staff in interpretive and no-action letters, a minimum of 55% of the value
of the total assets of our portfolio in "mortgages and other liens on and
interests in real estate." We refer to this category of investments herein as
"Qualifying Interests." In addition, we must maintain an additional minimum of
25% of the value of our total assets in Qualifying Interests or other real
estate-related assets. Because registration as an investment company would have
a material adverse effect on us and our share price, since it would
significantly affect our ability to engage in certain transactions or to
organize ourselves in the manner as we currently do, we intend to maintain our
qualification for this exclusion from registration.

        If our portfolio did not comply with the requirements of the exclusion
we rely upon, we could be forced to alter our portfolio by selling or otherwise
disposing of a substantial portion of the assets that are not Qualifying
Interests or by acquiring significant position in assets that are Qualifying
Interests. Altering our portfolio in this manner may have a material adverse
effect on our investment if we are forced to dispose of or acquire assets in an
unfavorable market.

Risk Factors Relating to Our Stock

Because a limited number of shareholders, including members of our management
team, own a substantial number of our shares, decisions made by them may be
detrimental to your interests.

        By virtue of their direct and indirect share ownership, John R. Klopp, a
director and our president and chief executive officer, Craig M. Hatkoff, a
director and former officer, and other shareholders indirectly owned by trusts
for the benefit of our chairman of the board, Samuel Zell, have the power to
significantly influence our affairs and are able to influence the outcome of
matters required to be submitted to shareholders for approval, including the
election of our directors, amendments to our charter, mergers, sales of assets
and other acquisitions or sales. The influence exerted by these shareholders
over the company's affairs might not be consistent with the interests of other
shareholders. We cannot assure you that these shareholders will not exercise
their influence over us in a manner detrimental to your interests. As of the
date hereof, these shareholders collectively own and control 7,694,181 shares of
our class A common stock representing approximately 47.3% of our outstanding
class A common stock. This concentration of ownership may have the effect of
delaying or preventing a change in control of our company and might affect the
market price of our class A common stock.



                                       6




        The conversion of the outstanding convertible trust preferred securities
held by EOP Operating Limited Partnership, Vornado Realty, L.P. and the General
Motors Employes Global Group Pension Trust could result in other significant
concentrated holdings of class A common stock. EOP Operating Limited
Partnership, Vornado Realty, L.P. and General Motors Employes Global Group
Pension Trust may each acquire 4,273,424 shares of our class A common stock.
Officers, directors or other related persons of these securityholders serve on
our board of directors and therefore have the power to significantly influence
our affairs. If these securityholders acquire a significant ownership position,
they may acquire the ability to influence the outcome of matters submitted for
shareholder approval.

Some provisions of our charter and bylaws and Maryland law may deter takeover
attempts, which may limit the opportunity of our shareholders to sell their
shares at a favorable price.

        Some of the provisions of our charter and bylaws and Maryland law
discussed below could make it more difficult for a third party to acquire us,
even if doing so might be beneficial to our shareholders, by providing them with
the opportunity to sell their shares at a premium to the then current market
price.

        Issuance of Preferred Stock Without Shareholder Approval. Following the
adoption of proposed amendments to our charter, our charter will authorize our
board of directors to authorize and issue up to 100,000,000 shares of preferred
stock and up to 100,000,000 shares of common stock. Our charter also authorizes
our board of directors, without shareholder approval, to classify or reclassify
any unissued shares of our common stock and preferred stock into other classes
or series of stock and to increase the aggregate number of shares of stock of
any class or series that may be issued. The board therefore has the power to
increase the number of shares of preferred stock we may issue without
shareholder approval. Preferred stock may be issued in one or more series, the
terms of which may be determined without further action by shareholders. These
terms may include preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption. No shares of preferred stock are currently outstanding and we
have no present plans for the issuance of any preferred stock. The issuance of
any preferred stock, however, could materially adversely affect the rights of
holders of our common stock, and therefore could reduce its value. In addition,
specific rights granted to future holders of preferred stock could be used to
restrict our ability to merge with, or sell assets to, a third party. The power
of the board of directors to issue preferred stock could make it more difficult,
delay, discourage, prevent or make it more costly to acquire or effect a change
in control, thereby preserving the current shareholders' control.

        Advance Notice Bylaw. Our bylaws contain advance notice procedures for
the introduction of business and the nomination of directors. These provisions
could discourage proxy contests and make it more difficult for you and other
shareholders to elect shareholder-nominated directors and to propose and approve
shareholder proposals opposed by management.

        Maryland Takeover Statutes. We are subject to the Maryland Business
Combination Act which might enable our management to resist an unsolicited
takeover of our company. The statute substantially restricts the ability of
third parties who acquire, or seek to acquire, control of our company to
complete mergers and other business combinations without the approval of our
board of directors even if such transaction would be beneficial to shareholders.
"Business combinations" between such a third party acquiror and our company are
prohibited if the acquiror becomes an "interested shareholder" by obtaining
beneficial ownership of 10 percent or more of shareholder voting power. If our
board of directors approved in advance the transaction that would otherwise give
rise to the acquiror attaining such status, the acquiror would not become an
interested shareholder and, as a result, it could enter into a business
combination with us. Our board of directors could choose not to negotiate with
an acquirer if the board determined in its business judgment that considering
such an acquisition was not in the strategic interests of our company. Even
after the lapse of the five-year prohibition period, any business combination
with an interested shareholder must be recommended by our board of directors and
approved by the affirmative vote of at least:

        o  80% of the votes entitled to be cast by shareholders and

        o  two-thirds of the votes entitled to be cast by shareholders other
           than the interested shareholder and affiliates and associates
           thereof.



                                       7




        The super-majority vote requirements do not apply if the transaction
complies with a minimum price requirement prescribed by the statute.

        Our board of directors has exempted any business combination involving
family partnerships controlled separately by John R. Klopp and Craig M. Hatkoff
and a limited liability company indirectly controlled by a trust for the benefit
of Samuel Zell and his family. As a result, the persons described above may
enter into business combinations with us without compliance with the
super-majority vote requirements and the other provisions of the statute.

        We are also subject to the Maryland Unsolicited Takeovers Act which
permits our board of directors, among other things, to elect on our company's
behalf to stagger the terms of directors, to increase the shareholder vote
required to remove a director and to provide that shareholder-requested meetings
may be called only upon the request of shareholders entitled to cast at least a
majority of the votes entitled to be cast at the meeting. Such an election would
significantly restrict the ability of third parties to wage a proxy fight for
control of our board of directors as a means of advancing a takeover offer. If
an acquirer was discouraged from offering to acquire us, or prevented from
successfully completing a hostile acquisition, you could lose the opportunity to
sell your shares at a favorable price.

Risk Factors Related to our REIT Election

Our proposed amended and restated charter does not permit ownership of over 2.5%
of our class A common stock by individuals, and attempts to acquire our common
stock in excess of the 2.5% limit would be void without the prior approval of
our board of directors.

        For the purpose of preserving our REIT qualification, our proposed
amended and restated charter would prohibit direct or constructive ownership by
any individual of more than 2.5% of the lesser of the total number or value of
the outstanding shares of our class A common stock as a means of preventing
ownership of more than 50% of our class A common stock by five or fewer
individuals. The amended and restated charter's constructive ownership rules are
complex and may cause the outstanding class A common stock owned by a group of
related individuals or entities to be deemed to be constructively owned by one
individual. As a result, the acquisition of less than 2.5% of our outstanding
class A common stock by an individual or entity could cause an individual to own
constructively in excess of 2.5% of our outstanding class A common stock, and
thus be subject to the amended and restated charter's ownership limit. The
ownership limit was established following a review of the aggregate ownership of
the top five direct or constructive individual shareholders. There can be no
assurance that our board of directors, as permitted in the amended and restated
charter, will increase this ownership limit in the future. Any attempt to own or
transfer shares of our class A common stock in excess of the ownership limit
without the consent of our board of directors shall be void, and will result in
the shares being transferred by operation of law to a charitable trust, and the
person who acquired such excess shares will not be entitled to any distributions
thereon or to vote such excess shares.

        After reviewing the top five shareholders treated as individuals for
REIT qualification purposes, our board of directors fixed the ownership limit at
2.5%. The amended and restated charter contains a provision that would exempt
certain of our officers and directors and related persons from the ownership
limit. Based on the number of shares outstanding on the date hereof, this
exemption would permit these top five shareholders collectively to hold up to
48.6% of our outstanding shares of class A common stock.

        The 2.5% ownership limit may have the effect of precluding a change in
control of Capital Trust by a third party without the consent of our board of
directors, even if such change in control would be in the interest of our
stockholders (and even if such change in control would not reasonably jeopardize
our REIT status).

There are no assurances of our ability to pay dividends in the future.

        We intend to pay quarterly dividends and to make distributions to our
shareholders in amounts such that all or substantially all of our taxable income
in each year, subject to certain adjustments, is distributed. This, along with
other factors, should enable us to qualify for the tax benefits accorded to a
REIT under the Internal Revenue Code.



                                       8




We have not established a dividend payment level. All distributions will be made
at the discretion of our board of directors and will depend on our earnings, our
financial condition, maintenance of our REIT status and such other factors as
our board of directors may deem relevant from time to time. There are no
assurances as to our ability to pay dividends in the future. In addition, some
of our distributions may include a return of capital.

An increase in market interest rates may lead prospective purchasers of our
class A common stock to expect a higher dividend yield, which would adversely
affect the market price of our class A common stock.

        One of the factors that will influence the price of our class A common
stock will be the dividend yield on our stock (distributions as a percentage of
the price of our stock) relative to market interest rates. An increase in market
interest rates may lead prospective purchasers of our common stock to expect a
higher dividend yield, which would adversely affect the market price of our
class A common stock.

Tax legislation proposed by President Bush may have negative consequences for
REITs.

        Recent tax legislation proposed by President Bush would, if enacted,
allow corporations to pay dividends that are tax-free to shareholders or, to the
extent dividends are not paid, allow shareholders to increase the tax basis of
their shares. As currently described, this proposal would not apply to REITs.
Although the proposal does not adversely affect the tax treatment of REITs, it
may cause investments in non-REIT corporations to become relatively more
desirable. As a result, the capital markets may be less favorable to REITs when
they seek to raise equity capital, and the prices at which REIT equity
securities trade may decline or underperform non-REIT corporations.

We will be dependent on external sources of capital to finance our growth.

        As with other REITs, but unlike corporations generally, our ability to
finance our growth must largely be funded by external sources of capital because
we generally will have to distribute to our shareholders 90% of our taxable
income in order to qualify as a REIT (including taxable income where we do not
receive corresponding cash). Our access to external capital will depend upon a
number of factors, including general market conditions, the market's perception
of our growth potential, our current and potential future earnings, cash
distributions and the market price of our stock.

If we do not maintain our qualification as a REIT, we will be subject to tax as
a regular corporation and face a substantial tax liability.

        We expect to operate so as to qualify as a REIT under the Internal
Revenue Code. However, qualification as a REIT involves the application of
highly technical and complex Internal Revenue Code provisions for which only a
limited number of judicial or administrative interpretations exist. Even a
technical or inadvertent mistake could jeopardize our REIT status. Furthermore,
new tax legislation, administrative guidance or court decisions, in each
instance potentially with retroactive effect, could make it more difficult or
impossible for us to qualify as a REIT. If we fail to qualify as a REIT in any
tax year, then:

        o  we would be taxed as a regular domestic corporation, which under
           current laws, among other things, means being unable to deduct
           distributions to shareholders in computing taxable income and being
           subject to federal income tax on our taxable income at regular
           corporate rates;

        o  any resulting tax liability could be substantial, could have a
           material adverse effect on our book value and could reduce the amount
           of cash available for distribution to shareholders; and

        o  unless we were entitled to relief under applicable statutory
           provisions, we would be required to pay taxes, and thus, our cash
           available for distribution to shareholders would be reduced for each
           of the years during which we did not qualify as a REIT.



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Complying with REIT requirements may cause us to forego otherwise attractive
opportunities.

        In order to qualify as a REIT for federal income tax purposes, we must
continually satisfy tests concerning, among other things, our sources of income,
the nature and diversification of our investments in commercial real estate and
related assets, the amounts we distribute to our shareholders and the ownership
of our stock. We may also be required to make distributions to shareholders at
disadvantageous times or when we do not have funds readily available for
distribution. The REIT provisions of the tax code may substantially limit our
ability to hedge our financial assets and related borrowings. Thus, compliance
with REIT requirements may hinder our ability to operate solely on the basis of
maximizing profits.

Complying with REIT requirements may force us to liquidate or restructure
otherwise attractive investments.

        In order to qualify as a REIT, we must also ensure that at the end of
each calendar quarter, at least 75% of the value of our assets consists of cash,
cash items, government securities and qualified REIT real estate assets. The
remainder of our investment in securities cannot include more than 10% of the
outstanding voting securities of any one issuer or 10% of the total value of the
outstanding securities of any one issuer. In addition, no more than 5% of the
value of our assets can consist of the securities of any one issuer. If we fail
to comply with these requirements, we must dispose of a portion of our assets
within 30 days after the end of the calendar quarter in order to avoid losing
our REIT status and suffering adverse tax consequences.

Complying with REIT requirements may force us to borrow to make distributions to
shareholders.

        From time to time, our taxable income may be greater than our cash flow
available for distribution to shareholders. If we do not have other funds
available in these situations, we may be unable to distribute substantially all
of our taxable income as required by the REIT provisions of the Internal Revenue
Code. Thus, we could be required to borrow funds, sell a portion of our assets
at disadvantageous prices or find another alternative. These options could
increase our costs or reduce our equity.





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