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): May 5, 2009

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 May 5, 2009, Capital Trust, Inc. (the “Company”) issued a press release reporting the financial results for its fiscal quarter ended March 31, 2009. A copy of the press release is attached to this Current Report on Form 8-K (“Current Report”) as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure.

On May 6, 2009, the Company held a conference call to discuss the financial results of the Company for its fiscal quarter ended March 31, 2009. 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 5, 2009
	99.2	Transcript from first quarter earnings conference call held on May 6, 2009

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 8, 2009

Exhibit Index

Exhibit Number		Description
	99.1	Press Release dated May 5, 2009
	99.2	Transcript from first quarter earnings conference call held on May 6, 2009

EX-99.1

Exhibit 99.1

Contact:	Douglas Armer
	(212) 655-0220

Capital Trust Reports First Quarter 2009 Results

NEW YORK, NY — May 5, 2009 — Capital Trust, Inc. (NYSE: CT) today reported results for the quarter ended March 31, 2009.

• Operating Results:

• Reported a net loss of $73.1 million or $3.28 per share for the period.

• First quarter net loss was driven primarily by $69.1 million in loan loss provisions and impairments and valuation allowances of $10.4 million related to two loans which were reclassified as available-for-sale.

• Adding back credit provisions, valuation allowances and a one time G&A expense of $3.1 million related to the Company’s Debt Restructuring (see below), net income for the period would have been $9.5 million.

• Portfolio Performance:

• At quarter end, the Company’s loan portfolio consisted of 69 assets with an aggregate net book value of $1.7 billion. During the first quarter, the Company recorded $58.8 million of provisions for possible loan losses on eight loans with an aggregate gross book value of $111.5 million. At March 31, 2009, the Company had taken total provisions of $116.3 million against 10 loans with an aggregate gross book value of $163.1 million.

• The Company’s securities portfolio was comprised of 77 securities with an aggregate book value of $834.3 million. During the first quarter, the Company recorded $14.6 million of other-than-temporary impairments on six securities, $9.0 million of which was recognized in earnings. Ratings activity for the quarter on the securities portfolio included a total of 11 downgrades and one upgrade.

• Loan Originations/Repayments:

• During the quarter, the Company made no new balance sheet investments. Fundings pursuant to previously existing loan commitments totaled $6.1 million and full and partial repayments during the first quarter totaled $8.1 million.

• Debt Restructuring:

• During the quarter, the Company completed its previously announced Debt Restructuring, reducing secured debt by $138.2 million (19.8%) from year end levels and modifying the terms of substantially all of its recourse obligations.

• Post quarter end, the Company settled its last remaining single asset secured recourse obligation, terminating an $18.0 million borrowing by transferring the collateral loan to the lender in full satisfaction of the Company’s debt. The collateral loan was classified as held-for-sale at quarter end.

• Investment Management:

• The Company originated $2.8 million of new investments for its investment management vehicles during the quarter as it continued to maintain a defensive posture in light of market volatility.

• During the quarter, the Company extended the investment period for CT High Grade Partners II, LLC for an additional 12 months to May 2010.

Balance Sheet

Total assets were $2.6 billion at March 31, 2009. The Company’s Interest Earning Assets are summarized below:

Interest Earning Assets

• Interest earning assets totaled $2.5 billion at March 31, 2009 and had a weighted average yield of 4.6%.

• $1.7 billion (67%) of the portfolio was comprised of loan investments with a weighted average yield of 4.1%.

• $834.3 million (33%) of the portfolio was comprised of securities investments with a weighted average yield of 6.8%.

During the quarter, the Company recorded $58.8 million of provisions for possible loan losses against eight loans with an aggregate gross book value of $111.5 million (resulting in a $46.6 million aggregate net book value including $6.0 million in previously-existing provisions). As of quarter end, including the aforementioned loans, the Company had provisions against 10 loans with an aggregate gross book value of $163.1 million (resulting in a $46.8 million net book value, after $116.3 million of total provisions). The Company does not accrue interest on loans against which it has provisions unless collected.

The Company identified four additional loans with an aggregate book value of $99.4 million as Watch List Loans during the quarter. Watch List Loans are performing loans without provisions that the Company aggressively monitors and manages to mitigate the risk of potential future non-performance. As of March 31, 2009, 15 loans with a book balance of $395.1 million were identified as Watch List loans.

Page 2 of 10

In the securities portfolio, other-than-temporary impairments totaling $14.6 million were recorded on six investments due to adverse changes in the expectation of future cash flows. Of this amount, $9.0 million was charged through the income statement and $5.6 million through other comprehensive income in accordance with the Financial Accounting Standards Board Staff Position No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”. Total other-than-temporary impairments at quarter end were $16.9 million relating to seven securities.

Also during the first quarter, the Company recorded a $1.3 million impairment to its single real estate held-for-sale asset (also referred to as real estate owned) to reflect the property at fair value. The Company also recorded a valuation allowance of $10.4 million against two loans reclassified to held-for-sale which have a combined gross book balance of $40.4 million.

At March 31, 2009, the Company had two equity investments in unconsolidated subsidiaries with an aggregate book value of $2.9 million, both co-investments in funds sponsored and managed by the Company.

Interest Bearing Liabilities

The Company’s interest bearing liabilities totaled $1.9 billion at March 31, 2009 and were comprised of collateralized debt obligations ($1.1 billion, 59.2% of total), repurchase obligations and other secured debt ($560.9 million, 29.1%), borrowings under the senior unsecured credit facility ($100.0 million, 5.2%) and junior subordinated debentures ($125.8 million, 6.5%). During the first quarter, the Company reduced repurchase obligations and other secured debt by $138.2 million (19.8%) compared to the prior quarter. At quarter end, the Company’s $1.9 billion of Interest Bearing Liabilities carried a weighted average cash coupon of 2.11% and a weighted average all-in cost of 2.42%.

On March 16, 2009, the Company entered into a restructuring of substantially all its non-CDO liabilities. Terms of the Debt Restructuring are detailed in the Form 10-Q filed with the SEC.

During the first quarter of 2009, certain of the Company’s CMBS collateral interests in each of its four CDOs were classified as impaired interests due to rating agency downgrades. The impairments resulted in a breach of the CDO II overcollateralization test and the reclassification of interest proceeds from certain CMBS collateral as principal proceeds in all four of the Company’s CDOs. Subsequent to quarter end, additional CMBS collateral downgrades and defaults led to impairment classifications in CDO I, which resulted in a breach of CDO I’s overcollateralization test.

At March 31, 2009, the Company’s GAAP shareholders’ equity was $327.3 million. Based on 22.4 million shares outstanding (fully diluted basis) at quarter end, book value per share was $14.64.

Current and prospective sources of liquidity as of March 31, 2009 include unrestricted cash ($18.3 million), net operating income, as well as principal payments and asset disposition proceeds. Prospective uses of liquidity include unfunded loan commitments ($19.7 million), capital commitments to the Company’s managed funds ($19.2 million) and debt repayments. At March 31, 2009, the Company’s debt-to-equity ratio (defined as the ratio of total Interest Bearing Liabilities to book equity) was 5.9-to-1.

Page 3 of 10

Investment Management

All of the Company’s investment management activities are conducted through its wholly-owned, taxable, investment management subsidiary, CT Investment Management Co., LLC (“CTIMCO”). At March 31, 2009, the Company managed five private equity funds and one separate account with total investments of $1.1 billion and undeployed equity commitments of approximately $933.5 million. Three of these funds and the separate account have ended their investment periods and are liquidating in the ordinary course of business. The other funds, CT Opportunity Partners I (“CTOPI”) and CT High Grade Partners II, are currently investing and capitalized with $540 million and $667 million of total equity commitments, respectively. Capital Trust, Inc. has committed to invest $25 million as a limited partner in CTOPI. The Company does not have a co-investment in CT High Grade Partners II. During the quarter, the Company extended the investment period for CT High Grade Partners II, LLC for an additional 12 months to May 2010. Revenues from third party investment management fees totaled $2.9 million in the first quarter of 2009.

Page 4 of 10

Operating Results Comparison

Comparison of Results of Operations: Three Months Ended March 31, 2009 vs. March 31, 2008

(in thousands, except per share data)	2009			2008			$Change			%Change
Income from loans and other investments:
Interest and related income	$	33,239		$	56,554			($23,315	)		(41.2	%)
Interest and related expenses		21,268			37,944			(16,676	)		(43.9	%)
Income from loans and other investments, net		11,971			18,610			(6,639	)		(35.7	%)
Other revenues:
Management fees		2,879			2,197			682			31.0	%
Servicing fees		1,179			178			1,001			562.4	%
Other interest income		128			188			(60	)		(31.9	%)
Total other revenues		4,186			2,563			1,623			63.3	%
Other expenses:
General and administrative		8,457			6,901			1,556			22.5	%
Depreciation and amortization		7			105			(98	)		(93.3	%)
Total other expenses		8,464			7,006			1,458			20.81	%
Total other-than-temporary impairments on securities		(14,646	)		—			(14,646	)		N/A
Portion of other-than-temporary impairments on securities recognized in other comprehensive income		5,624			—			5,624			N/A
Impairments on real estate held-for-sale		(1,333	)		—			(1,333	)		N/A
Net impairments recognized in earnings		(10,355	)		(10,355	)		(10,355	)		N/A
Provision for possible credit losses		(58,763	)		—			(58,763	)		N/A
Valuation allowance on loans held-for-sale		(10,363	)		—			(10,363	)		N/A
(Loss)/income from equity investments		(1,766	)		7			(1,773	)		(100.0	%)
Income tax benefit		(408	)		(599	)		191			(31.9	%)
Net (loss)/income	$	(73,146	)	$	14,773		$	(87,919	)		(595.1	%)
Net (loss)/income per share — diluted	$	(3.28	)	$	0.82		$	(4.10	)		(499.9	%)
Dividend per share	$	—		$	0.80		$	(0.80	)		(100.0	%)
Average LIBOR		0.46	%		3.31	%		(2.85	%)		(86.1	%)

Income from loans and other investments, net

A decline in Interest Earning Assets ($602 million or 19% from March 31, 2008 to March 31, 2009) and an 86% decrease in average LIBOR contributed to a $23.3 million, or 41%, decrease in interest income between the first quarter of 2008 and the first quarter of 2009. Lower LIBOR and a decrease in leverage of $398.0 million, or 17%, from March 31, 2008 to March 31, 2009 resulted in a $16.7 million, or 44%, decrease in interest expense for the period. On a net basis, net interest income decreased by $6.6 million, or 36%.

Page 5 of 10

Management fees

Base management fees from the investment management business increased $682,000, or 31%, during the first quarter of 2009 compared with the first quarter of 2008. The increase was attributed primarily to an increase of $920,000 in fees from CTOPI due to increased capital commitments, $146,000 in new fee income from CT High Grade II and was partially offset by a decrease in fee income from CT Large Loan.

Servicing fees

Servicing fees increased $1.0 million in the first quarter of 2009 compared with the first quarter of 2008, primarily due to a one-time special servicing fee of $1.2 million received by CTIMCO.

General and administrative expenses

General and administrative expenses include personnel costs, operating expenses and professional fees. Total general and administrative expenses increased $1.6 million, or 23%, between the first quarter of 2008 and the first quarter of 2009. The increase in 2009 was a result of $3.1 million in non-recurring costs associated with our debt restructuring partially offset by a decrease of $1.7 million in personnel costs.

Net impairments recognized in earnings

During the first quarter of 2009, the Company recorded an other-than-temporary impairment of $1.3 million on its single REO asset. The Company also recorded a gross other-than-temporary impairment of $14.6 million on six securities due to an adverse change in cash flow expectations on those securities. Of this, $5.6 million was included in other comprehensive income, resulting in a net $9.0 million other-than-temporary impairment included in earnings for the quarter. No other-than-temporary impairments were recorded during the first quarter of 2008.

Provision for possible credit losses

During the first quarter of 2009, the Company recorded an aggregate $58.8 million provision for possible credit losses against eight loans. No provision for possible credit losses was recorded during the first quarter of 2008.

Valuation allowance on loans held-for-sale

During the first quarter of 2009, the Company recorded a $10.4 million valuation allowance against two loans that were classified as held-for-sale to reflect these assets at fair value. No loans were classified as held-for-sale as of March 31, 2008.

(Loss)/income from equity investments

The loss from equity investments during the first quarter of 2009 resulted from the Company’s share of losses at CTOPI and Fund III. The Company’s share of losses from CTOPI was $1.6 million, primarily due to fair value adjustments on the underlying investments. The income from equity investments in the first quarter of 2008 resulted primarily from the Company’s share of operating income/(loss) at Fund III and CTOPI.

Page 6 of 10

Income tax benefit

During the first quarter of 2009, the Company received $408,000 in tax refunds that were recorded as an offset to income tax expense. CTIMCO is a taxable REIT subsidiary and subject to taxes on its earnings. In the first quarter of 2008, CTIMCO recorded an operating loss before income taxes, which resulted in a GAAP income tax benefit of $599,000, all of which was recorded.

Net (loss)/income

Net income decreased by $87.9 million from the first quarter of 2008 compared to the first quarter of 2009. The decrease in net income was primarily a result of $10.4 million in other-than-temporary impairments, $58.8 million in provisions for possible credit losses, and a $10.4 million valuation allowance recorded against loans held-for-sale. The Company also experienced a $6.6 million decrease in net interest margin due to lower levels of interest earning assets and lower LIBOR. On a diluted per share basis, net (loss)/income was ($3.28) and $0.82 in the first quarter of 2009 and 2008, respectively.

Dividends

The Company did not pay a dividend in the first quarter of 2009. In the first quarter of 2008, the Company paid a dividend of $0.80.

Page 7 of 10

The Company will conduct a management conference call at 10:00 a.m. Eastern Time on Wednesday, May 6, 2009 to discuss first quarter 2009 results. Interested parties can access the call toll free by dialing (800) 894-5910 or (785) 424-1052 for international participants. The conference ID is “CAPITAL.” A recorded replay will be available from noon on Wednesday, May 6, 2009 through midnight on Wednesday, May 20, 2009. The replay call number is (800) 283-8217 or (402) 220-0868 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 success of the Company’s debt restructuring and its ability to meet the amortization required thereby, the continued credit performance of the Company’s loan and CMBS investments, the asset/liability mix, the effectiveness of the Company’s hedging strategy and the rate of repayment of the Company’s portfolio assets, 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 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, and the Company has executed its business both as a balance sheet investor and as an investment manager. 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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Capital Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, 2009 and December 31, 2008
(in thousands except per share data)

	March 31,			December 31,
	2009			2008
	(unaudited)			(audited)
Assets
Cash and cash equivalents	$	18,268		$	45,382
Restricted cash		160			18,821
Securities		834,329			852,211
Loans receivable, net		1,688,528			1,791,332
Loans held-for-sale, net		30,014			92,175
Real estate held-for-sale		8,000			9,897
Equity investment in unconsolidated subsidiaries		2,931			2,383
Accrued interest receivable		4,907			6,351
Interest rate hedge assets		1,154			—
Deferred income taxes		1,706			1,706
Prepaid expenses and other assets		12,489			18,369
Total assets		2,602,486			2,838,627
Liabilities & Shareholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	6,653		$	10,918
Repurchase obligations		560,854			699,054
Collateralized debt obligations		1,142,097			1,156,035
Senior unsecured credit facility		100,000			100,000
Junior subordinated notes		125,837			128,875
Participations sold		292,674			292,669
Interest rate hedge liabilities		45,509			47,974
Deferred origination fees and other revenue		1,521			1,658
Total liabilities		2,275,145			2,437,183
Shareholders’ equity:
Class A common stock $0.01 par value 100,000 shares authorized, 21,749 and 21,740 shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively (“class A common stock”)		217			217
Restricted class A common stock $0.01 par value, 314 and 331 shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively (“restricted class A common stock” and together with class A common stock, “common stock”)		3			3
Additional paid-in capital		558,930			557,435
Accumulated other comprehensive loss		(45,704	)		(41,009	)
Accumulated deficit		(186,105	)		(115,202	)
Total shareholders’ equity		327,341			401,444
Total liabilities and shareholders’ equity	$	2,602,486		$	2,838,627

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Capital Trust, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended March 31, 2009 and 2008
(in thousands, except share and per share data)
(unaudited)

	Three Months Ended
	March 31,
	2009			2008
Income from loans and other investments:
Interest and related income	$	33,239		$	56,554
Less: Interest and related expenses		21,268			37,944
Income from loans and other investments, net		11,971			18,610
Other revenues:
Management fees		2,879			2,197
Servicing fees		1,179			178
Other interest income		128			188
Total other revenues		4,186			2,563
Other expenses:
General and administrative		8,457			6,901
Depreciation and amortization		7			105
Total other expenses		8,464			7,006
Total other-than-temporary impairments on securities		(14,646	)		—
Portion of other-than-temporary impairments on securities recognized in other comprehensive income		5,624			—
Impairment on real estate held-for-sale		(1,333	)		—
Net impairments recognized in earnings		(10,355	)		—
Provision for possible credit losses		(58,763	)		—
Valuation allowance on loans held-for-sale		(10,363	)		—
(Loss)/income from equity investments		(1,766	)		7
(Loss)/income before income taxes		(73,554	)		14,174
Income tax benefit		(408	)		(599	)
Net (loss)/income	$	(73,146	)	$	14,773
Per share information:
Net (loss)/earnings per share of common stock:
Basic	$	(3.28	)	$	0.82
Diluted	$	(3.28	)	$	0.82
Weighted average shares of common stock outstanding:
Basic		22,304,887			17,942,649
Diluted		22,304,887			18,017,413
Dividends declared per share of common stock	$	—		$	0.80

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EX-99.2

Exhibit 99.2

Capital Trust Q1’ 09 Earnings Call

May 6, 2009

Operator:

Hello and welcome to the Capital Trust first quarter 2009 results conference call. Before we begin, please be advised that the forward-looking statements expressed in today’s call are subject to certain risks and uncertainties including, but not limited to, the continued performance, new origination volume and the rate of repayment of the Company’s and its Funds’ loan and investment portfolios; the continued maturity and satisfaction of the Company’s portfolio assets; as well as other risks contained in the Company’s latest Form 10K and Form 10Q 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.

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 John Klopp, CEO of Capital Trust.

John Klopp:

Good morning everyone. Thank you for joining us and for your continued interest in Capital Trust.

Last night we reported our results for the first quarter and filed our 10-Q. As I have said too many times before on this call, we know that we are in the fight of our lives, and Q1 was an ugly, bloody round.

On the positive, we made great progress in stabilizing the right hand side of our balance sheet with the Debt Restructuring that closed in mid-March. We modified or terminated over $880 million of debt with 13 separate lenders, reducing secured recourse liabilities by almost 20%, extending maturities and mitigating mark-to-market pressure. Post quarter-end, we have continued the clean-up process, settling our last single-asset secured recourse obligation by selling the collateral to our lender in return for full satisfaction of their debt. In addition, we expect to complete the exchange of the remaining trust preferreds in the next week or two. While the process has been painful, the restructuring of our liabilities has now been essentially completed, gaining us precious time and a fighting chance to collect on CT’s assets.

On the negative, the pandemic afflicting commercial real estate spread rapidly during the quarter and its symptoms turned increasingly deadly. As expected, hotels were the hardest hit, with top line REVPAR routinely off 20-30% in the first quarter, and bottom line performance expected to be down as much as 40 to 60% for the year. Fundamental weakness is still bleeding though the retail, office and multifamily sectors, and we expect cash flows to continue to trend down in those asset classes well into 2010 and potentially even longer for office. CT’s portfolio was not immune: driven by $69 million of new loan loss provisions and bond impairments, we recorded a net loss of $73 million, or $3.28 per share, for the period. I’d like to sugar coat it, but the credit deterioration in our loan portfolio was dramatic and across-the-board. Of the eight assets that we took reserves against in the first quarter, two are hotel loans, two office, two multifamily, one retail and one corporate. Several of these loans are currently performing, but given the trajectory of the market we felt that provisions were warranted.

Page 2

The good news is that most of our loans are floaters which, with LIBOR under 50 basis points, can withstand significant cash flow deterioration and still cover debt service. In addition, most of our loans do not reach final maturity until 2011 or 2012, providing time for cash flows to rebound and capital markets to stabilize. The bad news is that borrowers today are stretched very thin and increasingly unable or unwilling to support underwater projects which need capital now.

Securities represent roughly 1/3 of our balance sheet portfolio, and the majority of our assets are older vintage bonds financed with CDOs. While we experienced some deterioration in expected future cash flows which translate into non-cash impairments, the actual credit performance of our CMBS portfolio was generally strong. However, the rating agencies continued their reversal on commercial real estate, downgrading virtually everything in sight except senior AAA CMBS. While downgrades don’t necessarily equate to losses, these actions caused us to trip the overcollateralization tests in two of our CDOs and triggered some recharacterization of interest to principal in all four. Going forward, the impact to CT will be a reduction in recurring cash flow and a gradual deleveraging of these structures.

Notwithstanding some recent signs that the overall economy may be bottoming, the road ahead for real estate, and for CT, will be rocky and treacherous. The terms of our restructured debt are tough and tight, and the ultimate outcomes on many of our loans depend on macro factors beyond our control. Washington seems to have recognized the magnitude of the CRE problem, and we can hope that TALF, PPIP and whatever program is next will begin to restart the capital markets later in the year.

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Our plan is to continue to fight on: aggressively managing our portfolio every day, selling assets to pay down debt wherever possible, and deploying the capital in our funds to take advantage of the unprecedented opportunities that we see ahead of us. The CT team has stuck together and hung in; I’m very proud of them and confident that together we will prevail.

Geoffrey Jervis:

Thank you John and good morning everyone.

Last night we reported results for the first quarter of 2009, recording a loss of $73 million or $3.28 per share.

The net loss for the quarter was primarily the result of reserves and valuation allowances against our loan and securities portfolios. Specifically, we recorded credit loss provisions of $59 million against eight loans, credit related impairments of $9 million on our securities and $1.3 million on real estate owned, and a $10 million valuation allowance against two loans that we reclassified as held for sale.

Net of these provisions, and $3.1 million of one time G&A charges associated with our debt restructuring, net income would have been $9.5 million or 42 cents per share.

Other drivers of the quarter’s net income were: lower net interest margin, primarily due to lower LIBOR; a $1.8 million loss from equity investments, as we picked up changes in the equity accounts at two of our private equity funds in which we have co-investments; offset partially by lower personnel costs and higher fee income.

Page 4

Over to the balance sheet, cash at quarter end was $18 million, down from $45 million at year end. Changes in cash were primarily a result of payments related to our restructuring plan and fundings of pre-existing commitments.

Our Securities portfolio stood at $834 million at quarter end, and experienced downgrades on 11 bonds and upgrades on one bond during the period. Six of our bonds were deemed other than temporarily impaired during the period and we recorded a $14.6 million impairment against these securities. At quarter end, seven of our Securities have been impaired for a total of $16.9 million.

Over to loans, our $1.7 billion portfolio, comprised of 69 loans, shrank by 6% or $103 million, primarily as a result of repayments of $8 million, the reclassification of $40 million of loans as ‘loans held for sale’, and reserves of $59 million – offset by fundings under existing loans. Last quarter, we began reporting a Watchlist and this quarter, four loans with a carrying value of $99 million were added to the Watchlist, for total Watchlist loans of $395 million.

In loans held for sale, we sold the four loans held in this account at year end for the recorded valuations and reclassified two additional loans as held for sale, resulting from our decision to sell these two loans with a gross carrying value of $40 million for $30 million. The first is a $26 million loan that we purchased with $18 million of seller financing from Lehman Brothers. The loan was sold in April for $18 million and the proceeds fully satisfied the Lehman Brothers financing. The second loan is a $14 million loan that carries a $5.6 million unfunded commitment that we expect to sell back to the borrower during Q2.

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Equity investments reflects our co-investment in our investment management funds and increased as we funded a portion of our $25 million commitment to the Opportunity Fund, offset by fair value adjustments in that fund that flow through to us under the equity method. In total, we have funded $5.8 million under our commitment to this fund.

On the liability side, we reduced borrowings under our secured credit facilities by almost $140 million through a combination of (i) extinguishing approximately $100 million of debt from Goldman Sachs and UBS, terminating both lending relationships, and (ii) making straight cash payments and sweep amortizing just under $40 million to our remaining lenders. At quarter end, our secured credit facility balances were $561 million, down almost 20% from year end and down $349 million or 38% from year ago levels. Since quarter end, we settled our secured credit facility with Lehman Brothers, extinguishing an additional $18 million of debt.

Our CDO balances remained roughly the same, however, from an operational standpoint, bond downgrades caused us to breach the overcollateralization tests in our CDO II at the end of the quarter and, subsequent to quarter end, we breached the same test in CDO I. These breaches redirect our cash flow on these CDOs to deleverage the structure. Furthermore, our CDOs require that “impaired” collateral assets, in our case, primarily CMBS securities that have been downgraded, have their income redirected to repay senior noteholders. This redirection will have varying degrees of impact on our other two CDOs.

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Our $100 million unsecured facility was set to mature March 22, and this facility was also extended under the debt restructuring. In connection with the restructuring, the facility, among other features, now carries quarterly amortization payments of $1.25 million that will commence in June 2009.

Our junior subordinated debentures, that we also refer to as trust preferred securities, were also partially restructured, with $103 million or 82% having been exchanged for new notes with a higher face balance and lower interim coupon. We are pursing a similar exchange with the remaining holders.

Interest rate hedges, a contingent liability, increased in value by $3.6 million with the change in value picked up as an increase to equity through the other comprehensive income account.

Finally, our shareholders equity account ended the quarter at $327 million, reflecting a $74 million reduction from year end levels. At March 31st, on a diluted basis, book value per share was $14.64.

As we look forward, we will continue to aggressively manage our portfolio, recognizing additional reserves as warranted, focus on meeting the extension targets under our secured credit facilities, having already met the paydown qualifications under the Citigroup agreement, and closely monitor liquidity as significant cash flow has been directed to pay down our secured and unsecured lenders.

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