----

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| Maryland                                      |   | 20-2297134               |
|-----------------------------------------------|--------|--------------------------|
| (State      or other jurisdiction of          |   | (I.R.S.      Employer    |
| incorporation      or organization)           |   | Identification      No.) |
|                                          |   |                     |
| 712      5th      Avenue, 10th      Floor     |   |                     |
| New      York, New York                       |   | 10019                    |
| (Address      of principal executive offices) |   | (Zip      code)          |

| (Registrant’s      telephone number, including area code):  212-506-3870 |
|------------------------------------------------------------------------------------------|

| Large      accelerated      filer                                     ̈      |                                               | Accelerated      filer                                   x |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Non-accelerated      filer                                       ̈ | (Do      not check if a smaller reporting Company) | Smaller      reporting      company                  ̈                                                                                           |

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|         |                                                                                                                   | PAGE               |
|--------------|------------------------------------------------------------------------------------------------------------------------|--------------------|
| PART      I  | FINANCIAL      INFORMATION                                                                                             |               |
|         |                                                                                                                   |               |
| Item 1.      | Financial      Statements                                                                                              |               |
|         | Consolidated      Balance Sheets – March 31, 2008 (unaudited) and December      31, 2007                         |  3            |
|         | Consolidated Statements of IncomeThree Months      Ended March 31, 2008 and 2007 (unaudited)                           |   4      |
|         | Consolidated Statement of Changes in Stockholders’      EquityThree Months      Ended March 31, 2008 (unaudited) |   5      |
|         | Consolidated Statements of Cash FlowsThree      Months Ended March 31, 2008 and 2007 (unaudited)                       |   6      |
|         | Notes to Consolidated Financial Statements – March 31, 2008      (unaudited)                                     |  8 – 29 |
|         |                                                                                                                   |               |
| Item      2. | Management’s Discussion and Analysis of Financial      Conditionand Results of      Operations                   | 30 − 50      |
|         |                                                                                                                   |               |
| Item      3. | Quantitative and Qualitative Disclosures about Market      Risk                                                        | 51 − 52      |
|         |                                                                                                                   |               |
| Item      4. | Controls and Procedures                                                                                                |  52           |
|         |                                                                                                                   |               |
| PART      II | OTHER      INFORMATION                                                                                                 |               |
|         |                                                                                                                   |               |
| Item      6. | Exhibits                                                                                                               |  53           |
|         |                                                                                                                   |
| SIGNATURES   |  54                                                                                                               |

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CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                      |   | March      31, |      |   | December      31 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|------------------|--------|
|                                                                                                                                                                                                      |   | 2008           |      |   | 2007             |   |
|                                                                                                                                                                                                      |   | (Unaudited)    |      |   |             |   |
| ASSETS                                                                                                                                                                                                    |   |           |      |   |             |   |
| Cash and cash      equivalents                                                                                                                                                                            |   | $              | 9,098     |   |             | $      | 6,029 |   |
| Restricted cash                                                                                                                                                                                           |   |           | 45,718    |   |             |   | 119,482 |   |
| Investment securities      available-for-sale, pledged as collateral, at fair value                                                                                                                       |   |           | 48,771    |   |             |   | 65,464 |   |
| Loans, pledged as collateral and      net of allowances of $6.7 million and $5.9 million                                                                                                                  |   |           | 1,806,117 |   |             |   | 1,766,639 |   |
| Direct financing leases and      notes, pledged as collateral and net of allowances of$0.3 million and $0.3 million      and net of unearned income                                                       |   |           | 94,252    |   |             |   | 95,030 |   |
| Investments in unconsolidated      entities                                                                                                                                                               |   |           | 1,548     |   |             |   | 1,805 |   |
| Interest    receivable                                                                                                                                                                                    |   |           | 9,554     |   |             |   | 11,965 |   |
| Principal paydown      receivables                                                                                                                                                                        |   |           | 189       |   |             |   | 836 |   |
| Other assets                                                                                                                                                                                              |   |           | 4,492     |   |             |   | 4,898 |   |
| Total assets                                                                                                                                                                                              |   | $              | 2,019,739 |   |             | $      | 2,072,148 |   |
| LIABILITIES                                                                                                                                                                                               |   |           |      |   |             |   |   |   |
| Borrowings                                                                                                                                                                                                |   | $              | 1,723,066 |   |             | $      | 1,760,969 |   |
| Distribution    payable                                                                                                                                                                                   |   |           | 10,432    |   |             |   | 10,366 |   |
| Accrued interest      expense                                                                                                                                                                             |   |           | 5,050     |   |             |   | 7,209 |   |
| Derivatives, at fair      value                                                                                                                                                                           |   |           | 24,454    |   |             |   | 18,040 |   |
| Accounts payable and other      liabilities                                                                                                                                                               |   |           | 3,419     |   |             |   | 3,958 |   |
| Total    liabilities                                                                                                                                                                                      |   |           | 1,766,421 |   |             |   | 1,800,542 |   |
| STOCKHOLDERS’      EQUITY                                                                                                                                                                           |   |           |      |   |             |   |   |   |
| Preferred stock, par value      $0.001:  100,000,000 shares authorized;no shares issued and      outstanding                                                                                    |   |           | −   |   |             |   | − |   |
| Common stock, par value      $0.001:  500,000,000 shares authorized;25,264,793 and 25,103,532      shares issued and outstanding(including 559,692 and 581,493      unvested restricted shares) |   |           | 26        |   |             |   | 25 |   |
| Additional paid-in      capital                                                                                                                                                                           |   |           | 355,286   |   |             |   | 355,205 |   |
| Accumulated other comprehensive      loss                                                                                                                                                                 |   |           | (55,623   | )      |             |   | (38,323 | ) |
| Distributions in excess of      earnings                                                                                                                                                                  |   |           | (46,371   | )      |             |   | (45,301 | ) |
| Total stockholders’      equity                                                                                                                                                                     |   |           | 253,318   |   |             |   | 271,606 |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                     |   | $              | 2,019,739 |   |             | $      | 2,072,148 |   |

----

CONSOLIDATED STATEMENTS OF INCOME

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Three      Months Ended |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | March      31,          |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 2008                    |       |   | 2007 |   |
| REVENUES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    |       |   |   |   |
| Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                       | 32,439     |   |   | $ | 30,281 |   |
| Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                    | 1,181      |   |   |   | 7,396 |   |
| Leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                    | 1,990      |   |   |   | 1,910 |   |
| Interest income −      other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                    | 1,373      |   |   |   | 423 |   |
| Interest income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                    | 36,983     |   |   |   | 40,010 |   |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                    | 23,148     |   |   |   | 26,789 |   |
| Net interest    income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                    | 13,835     |   |   |   | 13,221 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| OPERATING      EXPENSES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    |       |   |   |   |   |   |
| Management fee expense −      related party                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                    | 1,738      |   |   |   | 2,032 |   |
| Equity compensation expense −      related party                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                    | 81         |   |   |   | 486 |   |
| Professional      services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                    | 792        |   |   |   | 692 |   |
| Insurance    expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    | 128        |   |   |   | 121 |   |
| General and      administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                    | 355        |   |   |   | 412 |   |
| Income tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                    | 29         |   |   |   | 145 |   |
| Total expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                    | 3,123      |   |   |   | 3,888 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| NET      OPERATING INCOME                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                    | 10,712     |   |   |   | 9,333 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| OTHER      (EXPENSE) REVENUES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                    |       |   |   |   |   |   |
| Net realized (losses) gains on      sales of investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    | (2,346     | ) |   |   | 70 |   |
| Other      income                                                                                                                  |   |                    | 33         |   |   |   | 36 |   |
| Provision for loan and lease      loss                                                                                             |   |                    | (786       | ) |   |   | − |   |
| Gain on the extinguishment of      debt                                                                                            |   |                    | 1,750      |   |   |   | − |   |
| Total other (expenses)      revenues                                                                                                              |   |                    | (1,349     | ) |   |   | 106 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| NET      INCOME                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                       | 9,363      |   |   | $ | 9,439 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| NET      INCOME PER SHARE – BASIC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                       | 0.38       |   |   | $ | 0.39 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| NET      INCOME PER SHARE – DILUTED                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                       | 0.38       |   |   | $ | 0.38 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF SHARES OUTSTANDING      − BASIC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                    | 24,612,724 |   |   |   | 24,433,417 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF SHARES OUTSTANDING      − DILUTED                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                    | 24,883,444 |   |   |   | 24,837,709 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                    |       |   |   |   |   |   |
| DIVIDENDS      DECLARED PER SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                       | 0.41       |   |   | $ | 0.39 |   |

----

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’EQUITY

|                                                                      | Common      Stock |       |   |   |   |    |                                 |   |   |                                      |   |   |                   |    |   |                                     |   |    |                 |   |   |                                 |   |
|---------------------------------------------------------------------------|-------------------|------------|--------|--------|--------|---------|--------------------------------------|--------|--------|-------------------------------------------|--------|--------|------------------------|---------|--------|------------------------------------------|--------|---------|----------------------|--------|--------|--------------------------------------|--------|
|                                                                      | Shares            |       |   | Amount |   |    | Additional      Paid-In      Capital |   |   | Accumulated      Other Comprehensive Loss |   |   | Retained      Earnings |    |   | Distributions      in Excess of Earnings |   |    | Treasury      Shares |   |   | Total      Stockholders’Equity |   |   | Comprehensive      Loss |   |
| Balance,      January 1, 2008                                             |              | 25,103,532 |   |   | $      | 25      |                                 |   | $      | 357,976                                   |   |   | $                      | (38,323 | )      |                                     | $      | − |                 |   | $      | (45,301                              | )      |   | $ | (2,771 | ) |   | $ | 271,606 |   |   |   |   |
| Retirement      of treasury shares                                        |              | −    |   |   |   | − |                                 |   |   | (2,771                                    | )      |   |                   | − |   |                                     |   | − |                 |   |   | −                              |   |   |   | 2,771 |   |   |   | − |   |   |   |   |
| Stock      based compensation                                             |              | 161,261    |   |   |   | 1       |                                 |   |   | −                                   |   |   |                   | − |   |                                     |   | − |                 |   |   | −                              |   |   |   | − |   |   |   | 1 |   |   |   |   |
| Amortization      of stock based      compensation                        |              | −    |   |   |   | − |                                 |   |   | 81                                        |   |   |                   | − |   |                                     |   | − |                 |   |   | −                              |   |   |   | − |   |   |   | 81 |   |   |   |   |
| Net      income                                                           |              | −    |   |   |   | − |                                 |   |   | −                                   |   |   |                   | − |   |                                     |   | 9,363   |                 |   |   | −                              |   |   |   | − |   |   |   | 9,363 |   |   |   | 9,363 |   |
| Available-for-sale,      fair      value adjustment                       |              | −    |   |   |   | − |                                 |   |   | −                                   |   |   |                   | (6,729  | )      |                                     |   | − |                 |   |   | −                              |   |   |   | − |   |   |   | (6,729 | ) |   |   | (6,729 | ) |
| Designated      derivatives, fair value         adjustment |              | −    |   |   |   | − |                                 |   |   | −                                   |   |   |                   | (10,571 | )      |                                     |   | − |                 |   |   | −                              |   |   |   | − |   |   |   | (10,571 | ) |   |   | (10,571 | ) |
| Distributions      on common stock                                        |              | −    |   |   |   | − |                                 |   |   | −                                   |   |   |                   | − |   |                                     |   | (9,363  | )                    |   |   | (1,070                               | )      |   |   | − |   |   |   | (10,433 | ) |   |   |   |   |
| Comprehensive      loss                                                   |              | −    |   |   |   | − |                                 |   |   | −                                   |   |   |                   | − |   |                                     |   | − |                 |   |   | −                              |   |   |   | − |   |   |   | − |   |   | $ | (7,937 | ) |
| Balance,      March 31, 2008                                              |              | 25,264,793 |   |   | $      | 26      |                                 |   | $      | 355,286                                   |   |   | $                      | (55,623 | )      |                                     | $      | − |                 |   | $      | (46,371                              | )      |   | $ | − |   |   | $ | 253,318 |   |   |   |   |   |

----

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                       |   | Three      Months Ended |         |
|--------------------------------------------------------------------------------------------|--------|-------------------------|--------------|
|                                                                                       |   | March      31,          |         |
|                                                                                       |   | 2008                    |         |   | 2007 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                 |   |                    |         |   |   |   |
| Net income                                                                                 |   | $                       | 9,363        |   |   | $ | 9,439 |   |
| Adjustments to reconcile net      income to net cash provided byoperating      activities: |   |                    |         |   |   |   |   |   |
| Depreciation and      amortization                                                         |   |                    | 196          |   |   |   | 175 |   |
| Amortization of net premium      (discount) on investments                                 |   |                    | (184         | ) |   |   | (296 | ) |
| Amortization of discount on      notes                                                     |   |                    | 41           |   |   |   | 3 |   |
| Amortization of debt issuance      costs                                                   |   |                    | 729          |   |   |   | 523 |   |
| Amortization of stock based      compensation                                              |   |                    | 81           |   |   |   | 486 |   |
| Non-cash incentive compensation      to the Manager                                        |   |                    | 141          |   |   |   | 186 |   |
| Net realized losses on      derivative instruments                                         |   |                    | 21           |   |   |   | 15 |   |
| Net realized losses (gains) on      investments                                            |   |                    | 2,346        |   |   |   | (70 | ) |
|      Gain on      the extinguishment of debt                      |   |                    | (1,750  | )  |   |   |  − |   |
| Provision for loan and lease      losses                                                   |   |                    | 786          |   |   |   | − |   |
| Changes in operating assets and      liabilities:                                          |   |                    |         |   |   |   |   |   |
| Decrease (increase) in      restricted cash                                                |   |                    | 2,534        |   |   |   | (1,208 | ) |
| Decrease (increase) in      interest receivable, net of purchased interest                 |   |                    | 2,412        |   |   |   | (3,551 | ) |
| Decrease in accounts      receivables                                                      |   |                    | 716          |   |   |   | − |   |
| Decrease (increase) in      principal paydowns receivable                                  |   |                    | 647          |   |   |   | (992 | ) |
| Increase in management and      incentive fee payable                                      |   |                    | 408          |   |   |   | 26 |   |
| Increase in security      deposits                                                         |   |                    | 483          |   |   |   | 78 |   |
| Decrease in accounts payable      and accrued liabilities                                  |   |                    | (1,601       | ) |   |   | (1,189 | ) |
| (Decrease) increase in accrued      interest expense                                       |   |                    | (2,308       | ) |   |   | 2,752 |   |
| Increase in other      assets                                                              |   |                    | (477         | ) |   |   | (149 | ) |
| Net cash provided by(used in) operating      activities                                    |   |                    | 14,584       |   |   |   | 6,228 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                 |   |                    |         |   |   |   |   |   |
| Restricted cash                                                                            |   |                    | 71,230       |   |   |   | (16,242 | ) |
| Purchase of securities      available-for-sale                                             |   |                    | −      |   |   |   | (28,916 | ) |
| Principal payments on securities      available-for-sale                                   |   |                    | 74           |   |   |   | 3,707 |   |
| Proceeds from sale of securities      available-for-sale                                   |   |                    | 8,000        |   |   |   | 29,867 |   |
| Distribution from unconsolidated      entities                                             |   |                    | 257          |   |   |   | − |   |
| Purchase of loans                                                                          |   |                    | (85,000      | ) |   |   | (245,921 | ) |
| Principal payments received on      loans                                                  |   |                    | 37,829       |   |   |   | 98,224 |   |
| Proceeds from sales of      loans                                                          |   |                    | 6,629        |   |   |   | 65,713 |   |
| Purchase of direct financing      leases and notes                                         |   |                    | (6,208       | ) |   |   | (6,747 | ) |
| Proceeds payments received on      direct financing leases and notes                       |   |                    | 6,991        |   |   |   | 6,615 |   |
| Proceeds from sale of direct      financing leases and notes                               |   |                    | −      |   |   |   | 1,214 |   |
| Net cash provided by investing      activities                                             |   |                    | 39,802       |   |   |   | (92,486 | ) |

----

|                                                                                  |   | Three      Months Ended |    |
|---------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                  |   | March      31,          |    |
|                                                                                  |   | 2008                    |    |   | 2007 |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                            |   |                    |    |   |   |   |
| Net proceeds from issuance of      common stock (net of offering costsof $0 and $285) |   |                    | − |   |   |   | 14,895 |   |
| Proceeds from      borrowings:                                                        |   |                    |    |   |   |   |   |   |
| Repurchase    agreements                                                              |   |                    | − |   |   |   | 180,058 |   |
| Collateralized debt      obligations                                                  |   |                    | 12,589  |   |   |   | − |   |
| Unsecured revolving credit      facility                                              |   |                    | − |   |   |   | − |   |
| Secured term    facility                                                              |   |                    | 2,675   |   |   |   | 6,387 |   |
| Payments on      borrowings:                                                          |   |                    |    |   |   |   |   |   |
| Repurchase    agreements                                                              |   |                    | (44,358 | ) |   |   | (91,682 | ) |
| Secured term    facility                                                              |   |                    | (4,429  | ) |   |   | (6,574 | ) |
| Use of unrestricted cash for      early extinguishment of debt                        |   |                    | (3,250  | ) |   |   | − |   |
| Settlement of derivative      instruments                                             |   |                    | (4,178  | ) |   |   | − |   |
| Distributions paid on common      stock                                               |   |                    | (10,366 | ) |   |   | (7,663 | ) |
| Net cash provided by (used in)      financing activities                              |   |                    | (51,317 | ) |   |   | 95,421 |   |
| NET      INCREASE IN CASH AND CASH EQUIVALENTS                                        |   |                    | 3,069   |   |   |   | 9,163 |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 |   |                    | 6,029   |   |   |   | 5,354 |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                                       |   | $                       | 9,098   |   |   | $ | 14,517 |   |
| NON-CASH      INVESTING AND FINANCING ACTIVITIES:                                     |   |                    |    |   |   |   |   |   |
| Distributions on common stock      declared but not paid                              |   | $                       | 10,433  |   |   | $ | 9,748 |   |
| Issuance of restricted      stock                                                     |   | $                       | 1,335   |   |   | $ | 3,176 |   |
| Purchase of loans on warehouse      line                                              |   | $                       | − |   |   | $ | (254,012 | ) |
| Proceeds from warehouse      line                                                     |   | $                       | − |   |   | $ | 254,012 |   |
| SUPPLEMENTAL      DISCLOSURE:                                                         |   |                    |    |   |   |   |   |   |
| Interest expense paid in      cash                                                    |   | $                       | 25,372  |   |   | $ | 26,090 |   |
| Income taxes paid in      cash                                                        |   | $                       | 335     |   |   | $ | − |   |

----

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|   | · | RCC      Real Estate, Inc. (“RCC Real Estate”) holds real estate investments,      including commercial real estate loans.  RCC Real Estate owns      100% of the equity of the followingentities: |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Resource      Real Estate Funding CDO 2006-1 (“RREF 2006-1”), a Cayman Islands limited      liability company and qualified real estate investment trust (“REIT”)      subsidiary (“QRS”).  RREF 2006-1 was established to complete a      collateralized debt obligation (“CDO”) issuance secured by a portfolio of      commercial real estate loans and commercial mortgage-backed      securities. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Resource      Real Estate Funding CDO 2007-1 (“RREF 2007-1”), a Cayman Islands limited      liability company and QRS.  RREF 2007-1 was established to      complete a CDO issuance secured by a portfolio of commercial real estate      loans and      commercial mortgage-backed securities. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | RCC      Commercial, Inc. (“RCC Commercial”) holds bank loan investments and real      estate investments, including commercial and residential real      estate-related securities.  RCC Commercial owns 100% of the      equity of the following entities: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Apidos      CDO I, Ltd. (“Apidos CDO I”), a Cayman Islands limited liability company      and taxable REIT subsidiary (“TRS”).  Apidos CDO I was      established to complete a CDO secured by a portfolio of bank      loans. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Apidos      CDO III, Ltd. (“Apidos CDO III”), a Cayman Islands limited liability      company and TRS.  Apidos CDO III was established to complete a      CDO secured by a portfolio of bankloans. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Apidos      Cinco CDO, Ltd. (“Apidos Cinco CDO”), a Cayman Islands limited liability      company and TRS.  Apidos Cinco CDO was established to complete a      CDO secured by a portfolio of bankloans. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Resource      TRS, Inc. (“Resource TRS”), the Company’s directly-owned TRS, holds all      the Company’s direct financing leases andnotes. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Allowance      for loan loss at January 1, 2008 |   | $      | 5,918   |   |
|-------------------------------------------------|--------|--------|---------|--------|
| Provision for loan      loss                    |   |   | 786     |   |
| Loans    charged-off                            |   |   | − |   |
| Recoveries                                      |   |   | − |   |
| Allowance      for loan loss at March 31, 2008  |   | $      | 6,704   |   |

| Allowance      for lease loss at January 1, 2008 |   | $      | 293     |   |
|--------------------------------------------------|--------|--------|---------|--------|
| Provision for lease      loss                    |   |   | − |   |
| Leases    charged-off                            |   |   | − |   |
| Recoveries                                       |   |   | − |   |
| Allowance      for lease loss at March 31, 2008  |   | $      | 293     |   |

----

----

|                                  |   | Amortized Cost (1) |   |   | UnrealizedGains |   |    | Unrealized    Losses |   |   | Fair Value(1) |   |
|---------------------------------------|--------|--------------------|--------|--------|-----------------|--------|---------|----------------------|--------|--------|---------------|--------|
| March 31,      2008:                  |   |               |   |   |            |   |    |                 |   |   |          |   |
| Commercial      MBS private placement |   | $                  | 72,410 |   |            | $      | − |                 |   | $      | (23,928       | )      |   | $ | 48,482 |   |
| Other      ABS                        |   |               | 5,665  |   |            |   | − |                 |   |   | (5,376        | )      |   |   | 289 |   |
| Total                                 |   | $                  | 78,075 |   |            | $      | − |                 |   | $      | (29,304       | )      |   | $ | 48,771 |   |
| December 31,      2007:               |   |               |   |   |            |   |    |                 |   |   |          |   |   |   |   |   |
| Commercial      MBS private placement |   | $                  | 82,373 |   |            | $      | − |                 |   | $      | (17,809       | )      |   | $ | 64,564 |   |
| Other      ABS                        |   |               | 5,665  |   |            |   | − |                 |   |   | (4,765        | )      |   |   | 900 |   |
| Total                                 |   | $                  | 88,038 |   |            | $      | − |                 |   | $      | (22,574       | )      |   | $ | 65,464 |   |

----

| (1) | As      of March 31, 2008 and December 31, 2007, all securities were pledged as      collateral security under relatedfinancings. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

----

| Weighted      Average Life                                                                                                                                                                                                                                                                                                                                                                                  |   | Fair      Value |   |   | Amortized      Cost |   |   | Weighted      Average Coupon |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------|---------------------|--------|--------|------------------------------|--------|
| March      31, 2008:                                                                                                                                                                                                                                                                                                                                                                                        |   |            |   |   |                |   |   |                         |   |
| Less than one      year                                                               |   | $               | 17,162 |   |                | $      | 25,344 |                         |   |   | 4.23% |   |
| Greater than one year and less      than five years                                                                                                                                                                                                                                                                                                                                                         |   |            | 6,592  |   |                |   | 8,997  |                         |   |   | 4.32% |   |
| Greater than five years and less      than ten years                                                                                                                                                                                                                                                                                                                                                        |   |            | 25,017 |   |                |   | 43,734 |                         |   |   | 5.64% |   |
| Total                                                                                           |   | $               | 48,771 |   |                | $      | 78,075 |                         |   |   | 5.06% |   |
| December      31, 2007:                                                                                                                                                                                                                                                                                                                                                                                     |   |            |   |   |                |   |   |                         |   |   |   |   |
| Less than one      year                                                               |   | $               | 11,908 |   |                | $      | 12,824 |                         |   |   | 6.15% |   |
| Greater than one year and less      than five years                                                                                                                                                                                                                                                                                                                                                         |   |            | 19,042 |   |                |   | 21,589 |                         |   |   | 6.16% |   |
| Greater than five years and less      than ten years                                                                                                                                                                                                                                                                                                                                                        |   |            | 34,514 |   |                |   | 53,625 |                         |   |   | 5.85% |   |
| Total                                                                                           |   | $               | 65,464 |   |                | $      | 88,038 |                         |   |   | 5.96% |   |

|                                                                                                                                                                                                                                              |   | Less      than 12 Months |   |   | More      than 12 Months     |   |    | Total           |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|------------------------------|--------|---------|-----------------|--------|
|                                                                                                                                                                                                                                              |   | Fair      Value          |   |   | Gross      Unrealized Losses |   |    | Fair      Value |   |   | Gross      Unrealized Losses |   |   | Fair      Value |   |   | Gross      Unrealized Losses |   |
| March      31, 2008:                                                                                                                                                                                                                              |   |                     |   |   |                         |   |    |            |   |   |   |   |   |   |   |   |   |   |
| Commercial MBS private      placement                                   |   | $                        | 42,013 |   |                         | $      | (19,015 | )               |   | $ | 6,469 |   |   | $ | (4,913 | ) |   | $ | 48,482 |   |   | $ | (23,928 | ) |
| Other      ABS                                                |   |                     | 289    |   |                         |   | (5,376  | )               |   |   | − |   |   |   | − |   |   |   | 289 |   |   |   | (5,376 | ) |
| Total temporarily impaired      securities                                                                                                                                                                                                        |   | $                        | 42,302 |   |                         | $      | (24,391 | )               |   | $ | 6,469 |   |   | $ | (4,913 | ) |   | $ | 48,771 |   |   | $ | (29,304 | ) |
| December      31, 2007:                                                                                                                                                                                                                           |   |                     |   |   |                         |   |    |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial MBS private      placement                                                                                                                                                 |   | $                        | 64,564 |   |                         | $      | (17,809 | )               |   | $ | − |   |   | $ | − |   |   | $ | 64,564 |   |   | $ | (17,809 | ) |
| Other      ABS                                                |   |                     | 900    |   |                         |   | (4,765  | )               |   |   | − |   |   |   | − |   |   |   | 900 |   |   |   | (4,765 | ) |
| Total temporarily impaired      securities                                                                                                                                                                                                        |   | $                        | 65,464 |   |                         | $      | (22,754 | )               |   | $ | − |   |   | $ | − |   |   | $ | 65,464 |   |   | $ | (22,574 | ) |

|   | · | the      length of time the market value has been less than amortized      cost; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | the      Company’s intent and ability to hold the security for a period of time      sufficient to allow for any anticipated recovery in market      value; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      severity of the impairment; |
|--------|--------|--------------------------------------|

|   | · | the      expected loss of the security as generated by third party      software; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | credit      ratings from the rating agencies;and |
|--------|--------|--------------------------------------------------|

|   | · | underlying      credit fundamentals of the collateral backing the    securities. |
|--------|--------|----------------------------------------------------------------------------------|

----

| Loan      Description                                                                                                                                                                                                                                                                                                                                                                                |   | Principal |      |   | Unamortized(Discount)Premium |   |    | AmortizedCost (1) |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-----------|--------|------------------------------|--------|---------|-------------------|--------|
| March 31,      2008:                                                                                                                                                                                                                                                                                                                                                                                 |   |      |      |   |                         |   |    |              |   |
| Bank      loans                                                                          |   | $         | 951,043   |   |                         | $      | (2,093  | )                 |   | $ | 948,950 |   |
| Commercial real estate      loans:                                                                                                                                                                                                                                                                                                                                                                   |   |      |      |   |                         |   |    |              |   |   |   |   |
| Whole      loans                                                                                        |   |      | 566,132   |   |                         |   | (3,141  | )                 |   |   | 562,991 |   |
| B      notes                                                                                            |   |      | 89,353    |   |                         |   | 109     |              |   |   | 89,462 |   |
| Mezzanine      loans                                                                                    |   |      | 215,946   |   |                         |   | (4,528  | )                 |   |   | 211,418 |   |
| Total commercial real estate      loans                                                                                                                                                                                                                                                                                                                                                              |   |      | 871,431   |   |                         |   | (7,560  | )                 |   |   | 863,871 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                 |   |      | 1,822,474 |   |                         |   | (9,653  | )                 |   |   | 1,812,821 |   |
| Allowance for loan      loss                                                                            |   |      | (6,704    | )      |                         |   | − |              |   |   | (6,704 | ) |
| Total                                                                                                                            |   | $         | 1,815,770 |   |                         | $      | (9,653  | )                 |   | $ | 1,806,117 |   |
| December 31,      2007:                                                                                                                                                                                                                                                                                                                                                                              |   |      |      |   |                         |   |    |              |   |   |   |   |
| Bank      loans                                                                          |   | $         | 931,107   |   |                         | $      | (6      | )                 |   | $ | 931,101 |   |
| Commercial real estate      loans:                                                                                                                                                                                                                                                                                                                                                                   |   |      |      |   |                         |   |    |              |   |   |   |   |
| Whole      loans                                                                                        |   |      | 532,277   |   |                         |   | (3,559  | )                 |   |   | 528,718 |   |
| B      notes                                                                                            |   |      | 89,448    |   |                         |   | 129     |              |   |   | 89,577 |   |
| Mezzanine      loans                                                                                    |   |      | 227,597   |   |                         |   | (4,435  | )                 |   |   | 223,162 |   |
| Total commercial real estate      loans                                                                                                                                                                                                                                                                                                                                                              |   |      | 849,322   |   |                         |   | (7,865  | )                 |   |   | 841,457 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                 |   |      | 1,780,429 |   |                         |   | (7,871  | )                 |   |   | 1,772,558 |   |
| Allowance for loan      loss                                                             |   |      | (5,919    | )      |                         |   | − |              |   |   | (5,919 | ) |
| Total                                                                                                   |   | $         | 1,774,510 |   |                         | $      | (7,871  | )                 |   | $ | 1,766,639 |   |

----

| (1) | Substantially      all loans are pledged as collateral under various borrowings at March 31,      2008 and December 31, 2007. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

----

| Description                         |   | Quantity |      |   | Amortized      Cost |   | ContractedInterest      Rates |   | Range      ofMaturity      Dates          |
|-------------------------------------|--------|----------|-----------|--------|---------------------|--------|-------------------------------|--------|-------------------------------------------|
| March 31,      2008:                |   |     |      |   |                |   |                          |   |                                      |
| Whole      loans, floating rate     |   |     |  29  |   |                | $      | 464,697                       |   | LIBOR      plus 1.50% to LIBOR plus 4.40% |   | May      2008 toJuly      2010 |
| Whole      loans, fixed rate        |   |     | 7         |   |                |   | 98,294                        |   | 6.98%      to 8.57%                       |   | May      2009 toAugust      2012 |
| B      notes, floating rate         |   |     | 3         |   |                |   | 33,557                        |   | LIBOR      plus 2.50% to LIBOR plus 3.01% |   | July      2008 toMarch      2009 |
| B      notes, fixed rate            |   |     | 3         |   |                |   | 55,905                        |   | 7.00%      to 8.66%                       |   | July      2011 toJuly      2016 |
| Mezzanine      loans, floating rate |   |     |  10  |   |                |   | 130,201                       |   | LIBOR      plus 2.15% to LIBOR plus 3.45% |   | August      2008 toMay      2009 |
| Mezzanine      loans, fixed rate    |   |     | 7         |   |                |   | 81,217                        |   | 5.78%      to 11.00%                      |   | November      2009 toSeptember      2016 |
| Total                               |   |     |  59  |   |                | $      | 863,871                       |   |                                      |   |   |
|                                |   |     |      |   |                |   |                          |   |                                      |   |   |
| December 31,      2007:             |   |     |      |   |                |   |                          |   |                                      |   |   |
| Whole      loans, floating rate     |   |     |  28  |   |                | $      | 430,776                       |   | LIBOR      plus 1.50% to LIBOR plus 4.25% |   | May      2008 toJuly      2010 |
| Whole      loans, fixed rates       |   |     | 7         |   |                |   | 97,942                        |   | 6.98%      to 8.57%                       |   | May      2009 toAugust      2012 |
| B      notes, floating rate         |   |     | 3         |   |                |   | 33,570                        |   | LIBOR      plus 2.50% to LIBOR plus 3.01% |   | March      2008 toOctober      2008 |
| B      notes, fixed rate            |   |     | 3         |   |                |   | 56,007                        |   | 7.00%      to 8.68%                       |   | July      2011 toJuly      2016 |
| Mezzanine      loans, floating rate |   |     |   11 |   |                |   | 141,894                       |   | LIBOR      plus 2.15% to LIBOR plus 3.45% |   | February      2008 toMay      2009 |
| Mezzanine      loans, fixed rate    |   |     | 7         |   |                |   | 81,268                        |   | 5.78%      to 11.00%                      |   | November      2009 toSeptember      2016 |
| Total                               |   |     |  59  |   |                | $      | 841,457                       |   |                                      |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | March      31, |   |   | December      31, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008           |   |   | 2007              |   |
| Direct      financing leases,      net                                                                                     |   | $              | 26,524 |   |              | $      | 28,880 |   |
| Notes      receivable                                                                                                      |   |           | 67,728 |   |              |   | 66,150 |   |
| Total                                                                                                                                     |   | $              | 94,252 | (1)    |              | $      | 95,030 | (1) |

----

| (1) | Includes      a $293,000 provision for leaselosses. |
|-----|-----------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | March      31, |   |   | December      31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2008           |   |   | 2007              |   |
| Total      future minimum lease      payments                                                                                     |   | $              | 31,143 |   |              | $      | 34,009 |   |
| Unguaranteed      residual                                                                                                        |   |           | 21     |   |              |   | 21 |   |
| Unearned      income                                                                                                              |   |           | (4,640 | )      |              |   | (5,150 | ) |
| Total                                                                                                                                            |   | $              | 26,524 |   |              | $      | 28,880 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                       |   | Outstanding      Borrowings |      |   | Weighted      Average Borrowing Rate |   | Weighted      Average Remaining Maturity |   | Value      of Collateral |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|--------|--------------------------------------|--------|------------------------------------------|--------|--------------------------|--------|
| March 31,      2008:                                                                                                                                                                                                                                                                                                                                                                       |   |                        |      |   |                                 |   |                                     |   |                     |   |
| Repurchase      Agreements (1)                                                                |   | $                           | 71,915    |   |                                 |   | 4.29%                                    |   | 18.2      days           |   | $ | 139,004 |   |
| RREF      CDO 2006-1 Senior Notes (2)                                                                                                                                                                                                                                                                                                                                                      |   |                        | 260,673   |   |                                 |   | 3.47%                                    |   | 38.4      years          |   |   | 328,405 |   |
| RREF      CDO 2007-1 Senior Notes (3)                                                                                                                                                                                                                                                                                                                                                      |   |                        | 353,801   |   |                                 |   | 3.27%                                    |   | 38.5      years          |   |   | 456,425 |   |
| Apidos      CDO I Senior Notes (4)                                                            |   |                        | 318,026   |   |                                 |   | 3.75%                                    |   |  9.3      years     |   |   | 293,007 |   |
| Apidos      CDO III Senior Notes (5)                                                          |   |                        | 259,289   |   |                                 |   | 3.35%                                    |   | 12.2      years          |   |   | 239,974 |   |
| Apidos      Cinco CDO Senior Notes (6)                                                                                                                                                                                                                                                                                                                                                     |   |                        | 317,829   |   |                                 |   | 3.57%                                    |   | 12.1      years          |   |   | 298,185 |   |
| Secured      Term      Facility                                                               |   |                        | 89,985    |   |                                 |   | 6.74%                                    |   |  2.0      years     |   |   | 94,252 |   |
| Unsecured      Junior Subordinated Debentures (7)                                                                                                                                                                                                                                                                                                                                          |   |                        | 51,548    |   |                                 |   | 6.92%                                    |   | 28.4 years               |   |   | − |   |
| Total                                                                                         |   | $                           | 1,723,066 |   |                                 |   | 3.79%                                    |   | 20.5 years               |   | $ | 1,849,252 |   |
|                                                                                                                                                                                                                                                                                                                                                                                       |   |                        |      |   |                                 |   |                                     |   |                     |   |   |   |   |
| December 31,      2007:                                                                                                                                                                                                                                                                                                                                                                    |   |                        |      |   |                                 |   |                                     |   |                     |   |   |   |   |
| Repurchase      Agreements (1)                                                                |   | $                           | 116,423   |   |                                 |   | 6.33%                                    |   | 18.5      days           |   | $ | 190,914 |   |
| RREF      CDO 2006-1 Senior Notes (2)                                                                                                                                                                                                                                                                                                                                                      |   |                        | 260,510   |   |                                 |   | 5.69%                                    |   | 38.6      years          |   |   | 282,849 |   |
| RREF      CDO 2007-1 Senior Notes (3)                                                                                                                                                                                                                                                                                                                                                      |   |                        | 345,986   |   |                                 |   | 5.49%                                    |   | 38.8      years          |   |   | 444,715 |   |
| Apidos      CDO I Senior Notes (4)                                                            |   |                        | 317,882   |   |                                 |   | 5.47%                                    |   |  9.6      years     |   |   | 309,495 |   |
| Apidos      CDO III Senior Notes (5)                                                          |   |                        | 259,178   |   |                                 |   | 5.59%                                    |   | 12.5      years          |   |   | 253,427 |   |
| Apidos      Cinco CDO Senior Notes (6)                                                                                                                                                                                                                                                                                                                                                     |   |                        | 317,703   |   |                                 |   | 5.38%                                    |   | 12.4      years          |   |   | 311,813 |   |
| Secured      Term      Facility                                                               |   |                        | 91,739    |   |                                 |   | 6.82%                                    |   |        2.3 years    |   |   | 95,030 |   |
| Unsecured      Junior Subordinated Debentures (7)                                                                                                                                                                                                                                                                                                                                          |   |                        | 51,548    |   |                                 |   | 8.86%                                    |   | 28.7 years               |   |   | − |   |
| Total                                                                                         |   | $                           | 1,760,969 |   |                                 |   | 5.73%                                    |   | 20.1 years               |   | $ | 1,888,243 |   |

----

| (1) | For      March 31, 2008, collateral consists of available-for-sale securities with      a fair value of $24.2 million and loans of $114.8 million.  For      December 31, 2007, collateral consists of available-for-sale securities      with a fair value of $34.2 million and loans of $156.7      million. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Amount      represents principal outstanding of $265.5 million less unamortized      issuance costs of $4.8 million and $5.0 million as of March 31, 2008 and      December 31, 2007, respectively.  This CDO transaction closed in      August 2006. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Amount      represents principal outstanding of $360.3 million less unamortized      issuance costs of $6.5 million as of March 31, 2008 and principal      outstanding of $352.7 million less unamortized issuance costs of $6.7      million as of December 31, 2007.  This CDO transaction closed in      June 2007. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Amount      represents principal outstanding of $321.5 million less unamortized      issuance costs of $3.5 million as of March 31, 2008 and $3.6 million as of      December 31, 2007.  This CDO transaction closed in August      2005. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Amount      represents principal outstanding of $262.5 million less unamortized      issuance costs of $3.2 million as of March 31, 2008 and $3.3 million as of      December 31, 2007.  This CDO transaction closed in May      2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Amount      represents principal outstanding of $322.0 million less unamortized      issuance costs of $4.2 million as of March 31, 2008 and $4.3 million as of      December 31, 2007.  This CDO transaction closed in May      2007. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Amount      represents junior subordinated debentures issued to Resource Capital Trust      I and RCC Trust II in May 2006 and September 2006,      respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Amount      at Risk      (1) |   |   | Weighted      Average Maturity in Days |   |          | Weighted      Average Interest Rate |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|--------|----------------------------------------|--------|---------------|-------------------------------------|--------|
| March 31,      2008:                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         |   |   |                                   |   |          |                                |   |
| Natixis      Real Estate Capital,      Inc.                                                                  |   | $                            | 47,983 |   |                                   |   | 18            |                                |   |   | 4.21% |   |
| Credit      Suisse Securities (USA)      LLC                                                                 |   | $                            | 16,501 |   |                                   |   | 28            |                                |   |   | 4.70% |   |
| J.P.      Morgan Securities,      Inc.                                                                       |   | $                            | 2,030  |   |                                   |   |        2 |                                |   |   | 3.65% |   |
| Bear,      Stearns International      Limited                                                                |   | $                            | 1,219  |   |                                   |   | 18            |                                |   |   | 4.07% |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         |   |   |                                   |   |          |                                |   |   |   |   |
| December 31,      2007:                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                         |   |   |                                   |   |          |                                |   |   |   |   |
| Natixis      Real Estate Capital,      Inc.                                                                  |   | $                            | 58,155 |   |                                   |   | 18            |                                |   |   | 6.42% |   |
| Credit      Suisse Securities (USA)      LLC                                                                 |   | $                            | 15,626 |   |                                   |   | 25            |                                |   |   | 5.91% |   |
| J.P.      Morgan Securities,      Inc.                                                                       |   | $                            | 886    |   |                                   |   |        9 |                                |   |   | 5.63% |   |
| Bear,      Stearns International      Limited                                                                |   | $                            | 1,170  |   |                                   |   | 15            |                                |   |   | 6.22% |   |

----

| (1) | Equal      to the estimated fair value of securities or loans sold, plus accrued      interest income, minus the sum of repurchase agreement liabilities plus      accrued interest expense. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                       |   | Manager |     |   | Non-Employee      Directors |   |    | Non-Employees |   |   | Total   |   |
|--------------------------------------------|--------|---------|----------|--------|-----------------------------|--------|---------|---------------|--------|--------|---------|--------|
| Unvested      shares as of January 1, 2008 |   |    | 113,332  |   |                        |   | 4,404   |          |   |   | 463,757 |   |   |   | 581,493 |   |
| Issued                                     |   |    | −  |   |                        |   | 17,261  |          |   |   | 144,000 |   |   |   | 161,261 |   |
| Vested                                     |   |    | (113,332 | )      |                        |   | (4,404  | )             |   |   | (65,326 | )      |   |   | (183,062 | ) |
| Forfeited                                  |   |    | −  |   |                        |   | − |          |   |   | − |   |   |   | − |   |
| Unvested      shares as of March 31, 2008  |   |    | −  |   |                        |   | 17,261  |          |   |   | 542,431 |   |   |   | 559,692 |   |

----

|                                   |   | Number      of Options |    |   | Weighted      Average Exercise Price |   |    | Weighted      Average Remaining Contractual Term (in years) |   |   | Aggregate      Intrinsic Value (in thousands) |   |
|----------------------------------------|--------|------------------------|---------|--------|--------------------------------------|--------|---------|-------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|
| Outstanding      as of January 1, 2008 |   |                   | 640,166 |   |                                 | $      | 14.99   |                                                        |   |   |                                          |   |   |   |
| Granted                                |   |                   | − |   |                                 |   | − |                                                        |   |   |                                          |   |   |   |
| Exercised                              |   |                   | − |   |                                 |   | − |                                                        |   |   |                                          |   |   |   |
| Forfeited                              |   |                   | − |   |                                 |   | − |                                                        |   |   |                                          |   |   |   |
| Outstanding      as of March 31, 2008  |   |                   | 640,166 |   |                                 | $      | 14.99   |                                                        |   |   | 7                                             |   |   | $ | 30 |   |
| Exercisable      at March 31, 2008     |   |                   | 194,833 |   |                                 | $      | 15.03   |                                                        |   |   | 7                                             |   |   | $ | 7 |   |

| Unvested      Options            |   | Options |     |   | Weighted      Average Grant-Date Fair Value |   |
|----------------------------------|--------|---------|----------|--------|---------------------------------------------|--------|
| Unvested      at January 1, 2008 |   |    | 205,722  |   |                                        | $      | 14.97 |   |
| Granted                          |   |    | −  |   |                                        | $      | − |   |
| Vested                           |   |    | (142,389 | )      |                                        | $      | 15.04 |   |
| Forfeited                        |   |    | −  |   |                                        | $      | − |   |
| Unvested      at March 31, 2008  |   |    | 63,333   |   |                                        | $      | 15.18 |   |

----

| Vested      Options                    |   | Number      of Options |    |   | Weighted      Average Exercise Price |   |    | Weighted      Average Remaining Contractual Term (in years) |   |   | Aggregate      Intrinsic Value (in thousands) |   |
|----------------------------------------|--------|------------------------|---------|--------|--------------------------------------|--------|---------|-------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|
| Outstanding      as of January 1, 2008 |   |                   | 357,944 |   |                                 | $      | 15.00   |                                                        |   |   |                                          |   |   |   |
| Vested                                 |   |                   | 142,389 |   |                                 |   | 15.04   |                                                        |   |   |                                          |   |   |   |
| Exercised                              |   |                   | − |   |                                 |   | − |                                                        |   |   |                                          |   |   |   |
| Forfeited                              |   |                   | − |   |                                 |   | − |                                                        |   |   |                                          |   |   |   |
| Vested as      of March 31, 2008  |   |                   | 500,333 |   |                                 | $      | 15.01   |                                                        |   |   | 7                                             |   |   | $ | 307 |   |

|                |   | As      ofMarch      31, 2008 |              |   | As      ofDecember      31, 2007 |   |
|---------------------|--------|-------------------------------|-------------------|--------|----------------------------------|--------|
| Expected      life  |   | 7      years                  |              |   | 7      years                     |   |
| Discount      rate  |   |                          |        3.34% |   |                             |   |        3.97% |   |
| Volatility          |   |                          | 51.09%            |   |                             |   | 42.84% |   |
| Dividend      yield |   |                          | 26.75%            |   |                             |   | 17.62% |   |

|                                                        |   | Three      Months Ended |   |
|-------------------------------------------------------------|--------|-------------------------|--------|
|                                                        |   | March      31,          |   |
|                                                        |   | 2008                    |   |   | 2007 |   |
| Options      granted to Manager and non-employees           |   | $                       | (58    | ) |   | $ | (11 | ) |
| Restricted      shares granted to Manager and non-employees |   |                    | 117    |   |   |   | 480 |   |
| Restricted      shares granted to non-employee directors    |   |                    | 22     |   |   |   | 17 |   |
| Total      equity compensation expense                      |   | $                       | 81     |   |   | $ | 486 |   |

----

|                                                                     |   | March      31, |       |
|--------------------------------------------------------------------------|--------|----------------|------------|
|                                                                     |   | 2008           |       |   | 2007 |   |
| Basic:                                                                   |   |           |       |   |   |   |
| Net income                                                               |   | $              | 9,363      |   |   | $ | 9,439 |   |
| Weighted average number of shares      outstanding                       |   |           | 24,612,724 |   |   |   | 24,433,417 |   |
| Basic net income per      share                                          |   | $              | 0.38       |   |   | $ | 0.39 |   |
|                                                                     |   |           |       |   |   |   |   |   |
| Diluted:                                                                 |   |           |       |   |   |   |   |   |
| Net income                                                               |   | $              | 9,363      |   |   | $ | 9,439 |   |
| Weighted average number of shares      outstanding                       |   |           | 24,612,724 |   |   |   | 24,433417 |   |
| Additional shares due to assumed      conversion of dilutive instruments |   |           | 270,720    |   |   |   | 404,292 |   |
| Adjusted weighted-average number      of common shares outstanding       |   |           | 24,883,444 |   |   |   | 24,837,709 |   |
| Diluted net income per      share                                        |   | $              | 0.38       |   |   | $ | 0.38 |   |

----

----

| ·            | Commercial      Mortgage Backed Securities with no secondary trading except for distressed      sellers and markets reflecting forced liquidations are valued using an      income approach and utilizing an appropriate current market yield, time      value and estimated losses from default assumptions based on historical      analysis. |
|--------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·            | Other      ABS is priced using consensus pricing and a dealer  quote. |
|--------------------------------------------|-----------------------------------------------------------------------|

| ·      | Derivatives      (Interest rate swap contracts), both assets and liabilities, are valued by      a third-party pricing agent using an income approach and utilizing models      that use as their primary basis readily observable market parameters. This      valuation process considers factors including interest rate yield curves,      time value, credit factors and volatility  factors. |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | Quoted Prices in Active Markets Level      1 |    |   | Significant      Other Observable InputsLevel      2 |   |    | Significant      Unobservable InputsLevel      3 |   |   | Balance      as of March      31, 2008 |   |
|------------------------------------|--------|----------------------------------------------|---------|--------|------------------------------------------------------|--------|---------|--------------------------------------------------|--------|--------|----------------------------------------|--------|
| Securities      available-for-sale |   | $                                            | − |   |                                                 | $      | − |                                             |   | $      | 48,771                                 |   |   | $ | 48,771 |   |
| Derivatives,      net              |   |                                         | − |   |                                                 |   | (24,454 | )                                                |   |   | −                                |   |   |   | (24,454 | ) |
| Total                              |   | $                                            | − |   |                                                 | $      | (24,454 | )                                                |   | $      | 48,771                                 |   |   | $ | 24,317 |   |

----

|                                                    |   | Fair      Value Measurements Using Significant Unobservable Inputs (Level      3)SecuritiesAvailable-for-Sale |   |
|---------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|
| Beginning      balance                                  |   | $                                                                                                             | 65,464 |   |
| Total      gains or losses (realized/unrealized):       |   |                                                                                                          |   |   |
| Included      in earnings                               |   |                                                                                                          | (2,000 | ) |
| Purchases,      sales, issuances, and settlements (net) |   |                                                                                                          | (7,963 | ) |
| Included      in other comprehensive income             |   |                                                                                                          | (6,730 | ) |
| Ending      balance                                     |   | $                                                                                                             | 48,771 |   |

----

----

ITEM2.      

----

----

|                                            |   | Three      Months Ended March 31, 2008 |    |
|-------------------------------------------------|--------|----------------------------------------|---------|
| Allowance      for loan loss at January 1, 2008 |   | $                                      | 5,918   |   |
| Provision for loan      loss                    |   |                                   | 786     |   |
| Loans    charged-off                            |   |                                   | − |   |
| Recoveries                                      |   |                                   | − |   |
| Allowance      for loan loss at March 31, 2008  |   | $                                      | 6,704   |   |

|                                             |   | Three      Months Ended March 31, 2008 |    |
|--------------------------------------------------|--------|----------------------------------------|---------|
| Allowance      for lease loss at January 1, 2008 |   | $                                      | 293     |   |
| Provision for lease      loss                    |   |                                   | − |   |
| Leases    charged-off                            |   |                                   | − |   |
| Recoveries                                       |   |                                   | − |   |
| Allowance      for lease loss at March 31, 2008  |   | $                                      | 293     |   |

| ·           | Commercial      Mortgage Backed Securities with no secondary trading except for distressed      sellers and markets reflecting forced liquidations are valued using an      income approach and utilizing an appropriate current market yield, time      value and estimated losses from default assumptions based on historical      analysis. |
|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·           | Other      ABS is priced using consensus pricing and a dealer  quote. |
|--------------------------------------|-----------------------------------------------------------------------|

----

| ·           | Derivatives      (Interest rate swap contracts), both assets and liabilities, are valued by      a third-party pricing agent using an income approach and utilizing models      that use as their primary basis readily observable market parameters. This      valuation process considers factors including interest rate yield curves,      time value, credit factors and volatility  factors. |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | Quoted      Prices in Active Markets Level      1 |    |   | Significant      Other Observable InputsLevel      2 |   |    | Significant      Unobservable InputsLevel      3 |   |   | Balance      as of March      31, 2008 |   |
|------------------------------------|--------|---------------------------------------------------|---------|--------|------------------------------------------------------|--------|---------|--------------------------------------------------|--------|--------|----------------------------------------|--------|
| Securities      available-for-sale |   | $                                                 | − |   |                                                 | $      | − |                                             |   | $      | 48,771                                 |   |   | $ | 48,771 |   |
| Derivatives,      net              |   |                                              | − |   |                                                 |   | (24,454 | )                                                |   |   | −                                |   |   |   | (24,454 | ) |
| Total                              |   | $                                                 | − |   |                                                 | $      | (24,454 | )                                                |   | $      | 48,771                                 |   |   | $ | 24,317 |   |

|                                                    |   | Fair      Value Measurements Using Significant Unobservable Inputs (Level      3)SecuritiesAvailable-for-Sale |   |
|---------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|
| Beginning      balance                                  |   | $                                                                                                             | 65,464 |   |
| Total      gains or losses (realized/unrealized):       |   |                                                                                                          |   |   |
| Included      in earnings                               |   |                                                                                                          | (2,000 | ) |
| Purchases,      sales, issuances, and settlements (net) |   |                                                                                                          | (7,963 | ) |
| Included      in other comprehensive income             |   |                                                                                                          | (6,730 | ) |
| Ending      balance                                     |   | $                                                                                                             | 48,771 |   |

----

----

|                                                                                      |   | Three      Months EndedMarch      31, 2008 |    |   | Three      Months EndedMarch      31, 2007 |   |
|-------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|--------|--------------------------------------------|--------|
|                                                                                      |   |                                       |    |   | Weighted      Average                      |   |   |   |   |   | Weighted      Average |   |
|                                                                                      |   | Interest      Income                       |    |   | Yield                                      |   |   | Balance |   |   | Interest      Income |   |   | Yield |   |   | Balance |   |
| Interest income from      loans:                                                          |   |                                       |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank loans                                                                                |   |  $                                    | 16,163  |   |                                       |   | 6.62% |   |   | $ | 940,832 |   |   |  $ | 15,559 |   |   |   | 7.53% |   |   | $ | 815,184 |   |
| Commercial real estate      loans                                                         |   |                                       | 16,276  |   |                                       |   | 7.35% |   |   | $ | 860,019 |   |   |   | 14,722 |   |   |   | 8.43% |   |   | $ | 671,540 |   |
| Total interest income from      loans                                                     |   |                                       | 32,439  |   |                                       |   |   |   |   |   |   |   |   |   | 30,281 |   |   |   |   |   |   |   |   |   |
|                                                                                      |   |                                       |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income from securities      available-for-sale:                                  |   |                                       |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ABS-RMBS                                                                                  |   |                                       | − |   |                                       |   | N/A |   |   |   | N/A |   |   |   | 6,287 |   |   |   | 7.04% |   |   | $ | 350,279 |   |
| CMBS                                                                                      |   |                                       | − |   |                                       |   | N/A |   |   |   | N/A |   |   |   | 401 |   |   |   | 5.48% |   |   | $ | 28,283 |   |
| Other ABS                                                                                 |   |                                       | (51     | )      |                                       |   | (3.34%) |   |   | $ | 6,006 |   |   |   | 354 |   |   |   | 6.78% |   |   | $ | 20,476 |   |
|  CMBS-private      placement                                                         |   |                                       | 1,232   |   |                                       |   | 5.58% |   |   | $ | 81,973 |   |   |   | 354 |   |   |   | 5.49% |   |   | $ | 25,868 |   |
| Total interest income      fromsecurities      available-for-sale                         |   |                                       | 1,181   |   |                                       |   |   |   |   |   |   |   |   |   | 7,396 |   |   |   |   |   |   |   |   |   |
|                                                                                      |   |                                       |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Leasing                                                                                   |   |                                       | 1,990   |   |                                       |   | 8.68% |   |   | $ | 94,568 |   |   |   | 1,910 |   |   |   | 8.74% |   |   | $ | 87,308 |   |
|                                                                                      |   |                                       |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income –      other:                                                       |   |                                       |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income - other (1)                                                               |   |                                       | 997     |   |                                       |   | N/A |   |   |   | N/A |   |   |   | − |   |   |   | N/A |   |   |   | N/A |   |
| Temporary investment      in    over-night      repurchase agreements |   |                                       | 376     |   |                                       |   | N/A  |   |   |   | N/A |   |   |   | 423 |   |   |   | N/A  |   |   |   | N/A |   |
| Total interest income −      other                                                  |   |                                       | 1,373   |   |                                       |   |   |   |   |   |   |   |   |   | 423 |   |   |   |   |   |   |   |   |   |
| Total      interest income                                                                |   | $                                          | 36,983  |   |                                       |   |   |   |   |   |   |   |   | $ | 40,010 |   |   |   |   |   |   |   |   |   |

----

| (1) | Represents      cash received on our 90% equity investment in Ischus CDO II in excess of      our investment.  Income on this investment is recognized using      the cost recovery method. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | a      decrease in the weighted average rate to 7.35% for the three months ended      March 31, 2008 from 8.43% for the three months ended March 31, 2007,      primarily as a result of the decrease in LIBOR which is a reference index      for the rates payable by these loans;and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      acceleration of loan origination fees of $495,000 for the three months      ended March 31, 2007 as a result of the sale of loans. There was no such      acceleration of loan origination fees for the three months ended March 31,      2008. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | Three      Months EndedMarch      31, 2008 |    |   | Three      Months EndedMarch      31, 2007 |   |
|-----------------------------------|--------|--------------------------------------------|---------|--------|--------------------------------------------|--------|
|                              |   |                                       |    |   | Weighted      Average                      |   |   |   |   |   | Weighted      Average |   |
|                              |   | Interest      Expense                      |    |   | Yield                                      |   |   | Balance |   |   | Interest      Expense |   |   | Yield |   |   | Balance |   |
| Bank loans                        |   | $                                          | 10,886  |   |                                       |   | 4.63% |   |   | $ | 906,000 |   |   | $ | 11,600 |   |   |   | 5.88% |   |   | $ | 783,528 |   |
| Commercial real estate      loans |   |                                       | 8,474   |   |                                       |   | 4.53% |   |   | $ | 705,524 |   |   |   | 6,546 |   |   |   | 6.46% |   |   | $ | 405,526 |   |
| ABS-RMBS / CMBS /      ABS        |   |                                       | − |   |                                       |   | N/A |   |   |   | N/A |   |   |   | 5,604 |   |   |   | 5.84% |   |   | $ | 376,000 |   |
| CMBS-private      placement       |   |                                       | 77      |   |                                       |   | 5.57% |   |   | $ | 6,291 |   |   |   | 337 |   |   |   | 5.39% |   |   | $ | 25,091 |   |
| Leasing                           |   |                                       | 1,285   |   |                                       |   | 6.57% |   |   | $ | 92,547 |   |   |   | 1,411 |   |   |   | 6.39% |   |   | $ | 85,397 |   |
| General                           |   |                                       | 2,426   |   |                                       |   | 2.36% |   |   | $ | 392,465 |   |   |   | 1,291 |   |   |   | 3.00% |   |   | $ | 161,387 |   |
| Total      interest expense       |   | $                                          | 23,148  |   |                                       |   |   |   |   |   |   |   |   | $ | 26,789 |   |   |   |   |   |   |   |   |   |

|   | · | The      increase of $122.5 million in the weighted average balance of debt to      $906.0 million for the three months ended March 31, 2008 from $783.5      million for the three months ended March 31, 2007 primarily related to the      accumulation of investments by, and the closing of our third bank loan      CDO, Apidos Cinco CDO, which closed on May 30, 2007 and issued $322.0      million of debt. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | We      amortized $381,000 of deferred debt issuance costs related to the CDO      financings for the three months ended March 31, 2008 as compared to      $232,000 for the three months ended March 31,  2007. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      increase of $300.0 million in the weighted average balance of debt      primarily related to the accumulation of investments by, and the closing      of our second CRE CDO, RREF 2007-1, which closed on June 26, 2007 and      issued $348.9 million of debt. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      amortized $348,000 of deferred debt issuance costs related to the CDO      financings for the three months ended March 31, 2008 as compared to      $144,000 for the three months ended March 31,  2007. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | Three      Months EndedMarch      31, |   |
|------------------------------------------------|--------|---------------------------------------|--------|
|                                           |   | 2008                                  |   |   | 2007 |   |
| Management fee – related      party      |   | $                                     | 1,738  |   |   | $ | 2,032 |   |
| Equity compensation − related      party |   |                                  | 81     |   |   |   | 486 |   |
| Professional    services                       |   |                                  | 792    |   |   |   | 692 |   |
| Insurance                                      |   |                                  | 128    |   |   |   | 121 |   |
| General and      administrative                |   |                                  | 355    |   |   |   | 412 |   |
| Income tax expense                             |   |                                  | 29     |   |   |   | 145 |   |
| Total                                          |   | $                                     | 3,123  |   |   | $ | 3,888 |   |

----

|   | · | a      $52,000 increase in legal fees mostly related to    compliance. |
|--------|--------|------------------------------------------------------------------------|

|   | · | a      $27,000 increase in LEAF servicing expense due to the increase in managed      assets in the three months ended March 31,2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      $24,000 increase in trustee fees due to the addition of the Apidos Cinco      and RREF 2007-1 CDOs in May and June 2007, respectively.  No      trustee fees were paid for these CDOs during the three months ended March      31, 2007. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Three      Months EndedMarch      31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2008                                  |   |   | 2007 |   |
| Net realized (losses) gains on      sales of investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $                                     | (2,346 | ) |   | $ | 70 |   |
| Other      income                                                                                                             |   |                                  | 33     |   |   |   | 36 |   |
| Provision for loan and lease      loss                                                                                        |   |                                  | (786   | ) |   |   | − |   |
| Gain on the extinguishment of      debt                                                                                       |   |                                  | 1,750  |   |   |   | − |   |
| Total                                                                                                                                   |   | $                                     | (1,349 | ) |   | $ | 106 |   |

----

----

|                                                                                                                                                                                                                                                                     |   | Amortized      cost |      |   | Dollar      price |   |               | Net      carrying amount      (4) |   |   | Dollar      price |   |   | Net      carrying amount less amortized cost |              |   | Dollar      price |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|-------------------|--------|--------------------|-----------------------------------|--------|--------|-------------------|--------|--------|----------------------------------------------|-------------------|--------|-------------------|--------|
| March      31, 2008                                                                                                                                                                                                                                                      |   |                |      |   |              |   |               |                              |   |   |              |   |   |                                         |              |   |              |   |
| Floating rate                                                                                                                                                                                                                                                            |   |                |      |   |              |   |               |                              |   |   |              |   |   |                                         |              |   |              |   |
| CMBS-private      placement                                                                                                                                                                                                                                              |   | $                   | 35,751    |   |              |   |        94.19% |                              |   | $      | 25,445            |   |   |                                         | 67.04%            |   |              | $      | (10,306 | ) |   |   | -27.15%   |   |
| Other      ABS                                                   |   |                | 5,665     |   |              |   |        94.42% |                              |   |   | 289               |   |   |                                         |        4.82% |   |              |   | (5,376 | ) |   |   | -89.60%   |   |
| B      notes (1)                                                 |   |                | 33,557    |   |              |   | 100.07%            |                              |   |   | 33,474            |   |   |                                         | 99.82%            |   |              |   | (83 | ) |   |   | -0.25% |   |
| Mezzanine      loans (1)                                         |   |                | 130,201   |   |              |   | 100.05%            |                              |   |   | 129,876           |   |   |                                         | 99.80%            |   |              |   | (325 | ) |   |   | -0.25% |   |
| Whole      loans (1)                                             |   |                | 464,697   |   |              |   |        99.47% |                              |   |   | 463,536           |   |   |                                         | 99.22%            |   |              |   | (1,161 | ) |   |   | -0.25% |   |
| Bank      loans (2)                                              |   |                | 948,950   |   |              |   |        99.78% |                              |   |   | 831,166           |   |   |                                         | 87.40%            |   |              |   | (117,784 | ) |   |   | -12.38%   |   |
| Total floating      rate                                                   |   | $                   | 1,618,821 |   |              |   |        99.57% |                              |   | $      | 1,483,786         |   |   |                                         | 91.26%            |   |              | $      | (135,035 | ) |   |   | -8.31% |   |
| Fixed rate                                                                                                                                                                                                                                                               |   |                |      |   |              |   |               |                              |   |   |              |   |   |                                         |              |   |              |   |   |   |   |   |   |   |
| CMBS      – private placement                                                                                                                                                                                                                                      |   | $                   | 36,659    |   |              |   |        95.30% |                              |   | $      | 23,037            |   |   |                                         | 59.89%            |   |              | $      | (13,622 | ) |   |   | -35.41%   |   |
| B      notes (1)                                                 |   |                | 55,905    |   |              |   | 100.15%            |                              |   |   | 55,765            |   |   |                                         | 99.90%            |   |              |   | (140 | ) |   |   | -0.25% |   |
| Mezzanine      loans (1)                                         |   |                | 81,217    |   |              |   |        94.65% |                              |   |   | 79,963            |   |   |                                         | 93.19%            |   |              |   | (1,254 | ) |   |   | -1.46% |   |
| Whole      loans (1)                                             |   |                | 98,294    |   |              |   |        99.34% |                              |   |   | 98,048            |   |   |                                         | 99.09%            |   |              |   | (246 | ) |   |   | -0.25% |   |
| Equipment      leases and notes (3)                                                                                                                                                                                                                                      |   |                | 94,545    |   |              |   | 100.00%            |                              |   |   | 94,252            |   |   |                                         | 99.69%            |   |              |   | (293 | ) |   |   | -0.31% |   |
| Total fixed      rate                                                      |   | $                   | 366,620   |   |              |   |        98.14% |                              |   | $      | 351,065           |   |   |                                         | 93.97%            |   |              | $      | (15,555 | ) |   |   | -4.17% |   |
| Grand      total                                                                          |   | $                   | 1,985,441 |   |              |   |        99.30% |                              |   | $      | 1,834,851         |   |   |                                         | 91.77%            |   |              | $      | (150,590 | ) |   |   | -7.53% |   |
|                                                                                                                                                                                                                                                                     |   |                |      |   |              |   |               |                              |   |   |              |   |   |                                         |              |   |              |   |   |   |   |   |   |   |
| December      31, 2007                                                                                                                                                                                                                                                   |   |                |      |   |              |   |               |                              |   |   |              |   |   |                                         |              |   |              |   |   |   |   |   |   |   |
| Floating rate                                                                                                                                                                                                                                                            |   |                |      |   |              |   |               |                              |   |   |              |   |   |                                         |              |   |              |   |   |   |   |   |   |   |
| CMBS-private      placement                                                                                                                                                                                                                                              |   | $                   | 54,132    |   |              |   |        93.40% |                              |   | $      | 41,524            |   |   |                                         | 71.65%            |   |              | $      | (12,608 | ) |   |   | -21.75%   |   |
| Other      ABS                                                   |   |                | 5,665     |   |              |   |        94.42% |                              |   |   | 900               |   |   |                                         | 15.00%            |   |              |   | (4,765 | ) |   |   | -79.42%   |   |
| B      notes (1)                                                 |   |                | 33,570    |   |              |   | 100.10%            |                              |   |   | 33,486            |   |   |                                         | 99.85%            |   |              |   | (84 | ) |   |   | -0.25% |   |
| Mezzanine      loans (1)                                         |   |                | 141,894   |   |              |   | 100.09%            |                              |   |   | 141,539           |   |   |                                         | 99.83%            |   |              |   | (355 | ) |   |   | -0.26% |   |
| Whole      loans (1)                                             |   |                | 430,776   |   |              |   |        99.35% |                              |   |   | 429,699           |   |   |                                         | 99.10%            |   |              |   | (1,077 | ) |   |   | -0.25% |   |
| Bank      loans (2)                                              |   |                | 931,101   |   |              |   | 100.00%            |                              |   |   | 874,736           |   |   |                                         | 93.95%            |   |              |   | (56,365 | ) |   |   | -6.05% |   |
| Total floating      rate                                                   |   | $                   | 1,597,138 |   |              |   |        99.58% |                              |   | $      | 1,521,884         |   |   |                                         | 94.88%            |   |              | $      | (75.254 | ) |   |   | -4.69% |   |
| Fixed rate                                                                                                                                                                                                                                                               |   |                |      |   |              |   |               |                              |   |   |              |   |   |                                         |              |   |              |   |   |   |   |   |   |   |
| CMBS      – private placement                                                                                                                                                                                                                                      |   | $                   | 28,241    |   |              |   |        98.95% |                              |   | $      | 23,040            |   |   |                                         | 80.73%            |   |              | $      | (5,201 | ) |   |   | -18.22%   |   |
| B      notes (1)                                                 |   |                | 56,007    |   |              |   | 100.17%            |                              |   |   | 55,867            |   |   |                                         | 99.92%            |   |              |   | (140 | ) |   |   | -0.25% |   |
| Mezzanine      loans (1)                                         |   |                | 81,268    |   |              |   |        94.69% |                              |   |   | 80,016            |   |   |                                         | 93.23%            |   |              |   | (1,252 | ) |   |   | -1.46% |   |
| Whole      loans (1)                                             |   |                | 97,942    |   |              |   |        99.24% |                              |   |   | 97,697            |   |   |                                         | 98.99%            |   |              |   | (245 | ) |   |   | -0.25% |   |
| Equipment      leases and notes (3)                                                                                                                                                                                                                                      |   |                | 95,323    |   |              |   | 100.00%            |                              |   |   | 95,030            |   |   |                                         | 99.69%            |   |              |   | (293 | ) |   |   | -0.31% |   |
| Total fixed      rate                                                      |   | $                   | 358,781   |   |              |   |        98.49% |                              |   | $      | 351,650           |   |   |                                         | 96.53%            |   |              | $      | (7,131 | ) |   |   | -1.9% |   |
| Grand      total                                                                          |   | $                   | 1.955,919 |   |              |   |        99.37% |                              |   | $      | 1,873,534         |   |   |                                         | 95.19%            |   |              | $      | (82,385 | ) |   |   | -4.18% |   |

----

| (1) | Net      carrying amount includes an allowance for loan losses of $3.2 million at      March 31, 2008, allocated as follows:  B notes ($0.2 million),      mezzanine loans ($1.6 million) and whole loans ($1.4      million).  Net carrying amount includes an allowance for loan      losses of $3.2 million at December 31, 2007, allocated as      follows:  B notes ($0.2 million), mezzanine loans ($1.6 million)      and whole loans ($1.4 million). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Net      carrying amount includes a $3.5 million and $2.7 million allowance for      loan losses at March 31, 2008 and December 31, 2007,      respectively. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Net      carrying amount includes a $293,000 allowance for lease losses at March      31, 2008 and December 31, 2007,respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Bank      loan portfolio is carried at amortized cost less allowance for loan      loss. |
|-----|------------------------------------------------------------------------------------------|

----

|                                 |   | March      31, 2008 |    |   | December      31, 2007 |   |
|--------------------------------------|--------|---------------------|---------|--------|------------------------|--------|
|                                 |   | Amortized      Cost |    |   | Dollar      Price      |   |   | Amortized      Cost |   |   | Dollar      Price |   |
| Moody’s      Ratings Category: |   |                |    |   |                   |   |   |   |   |   |   |   |
| Aaa                                  |   | $                   | − |   |                   |   | N/A |   |   | $ | 10,000 |   |   |   | 100.00% |   |
| Baa1      through Baa3               |   |                | 65,413  |   |                   |   | 94.22% |   |   |   | 65,377 |   |   |   | 94.07% |   |
| Ba1      through Ba3                 |   |                | 6,997   |   |                   |   | 99.95% |   |   |   | 6,996 |   |   |   | 99.94% |   |
| Total                                |   | $                   | 72,410  |   |                   |   | 94.75% |   |   | $ | 82,373 |   |   |   | 95.23% |   |
|                                 |   |                |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| S&P      Ratings Category:       |   |                |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                                 |   |                |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| AAA                                  |   | $                   | − |   |                   |   | N/A |   |   | $ | 10,000 |   |   |   | 100.00% |   |
| BBB+      through BBB-               |   |                | 72,410  |   |                   |   | 94.75% |   |   |   | 72,373 |   |   |   | 94.61% |   |
| Total                                |   | $                   | 72,410  |   |                   |   | 94.75% |   |   | $ | 82,373 |   |   |   | 95.23% |   |
|                                 |   |                |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average rating factor  |   |                | 550     |   |                   |   |   |   |   |   | 497 |   |   |   |   |   |

|                                 |   | March      31, 2008 |   |   | December      31, 2007 |   |
|--------------------------------------|--------|---------------------|--------|--------|------------------------|--------|
|                                 |   | Amortized      cost |   |   | Dollar      price      |   |   | Amortized      cost |   |   | Dollar      price |   |
| Moody’s      ratings category: |   |                |   |   |                   |   |   |   |   |   |   |   |
| Baa1      through Baa3               |   | $                   | 5,665  |   |                   |   | 94.42% |   |   | $ | 5,665 |   |   |   | 94.42% |   |
| Total                                |   | $                   | 5,665  |   |                   |   | 94.42% |   |   | $ | 5,665 |   |   |   | 94.42% |   |
|                                 |   |                |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| S&P      ratings category:       |   |                |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| BBB+      through BBB-               |   | $                   | 5,665  |   |                   |   | 94.42% |   |   | $ | 5,665 |   |   |   | 94.42% |   |
| Total                                |   | $                   | 5,665  |   |                   |   | 94.42% |   |   | $ | 5,665 |   |   |   | 94.42% |   |
|                                 |   |                |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average rating factor  |   |                | 610    |   |                   |   |   |   |   |   | 610 |   |   |   |   |   |

----

| Description                         |   | Quantity |      |   | Amortized      Cost |   | ContractedInterest      Rates |   | Maturity      Dates                       |
|-------------------------------------|--------|----------|-----------|--------|---------------------|--------|-------------------------------|--------|-------------------------------------------|
| March 31,      2008:                |   |     |      |   |                |   |                          |   |                                      |
| Whole      loans, floating rate     |   |     |  29  |   |                | $      | 464,697                       |   | LIBOR      plus 1.50% to LIBOR plus 4.40% |   | May      2008 toJuly      2010 |
| Whole      loans, fixed rate        |   |     | 7         |   |                |   | 98,294                        |   | 6.98%      to 8.57%                       |   | May      2009 toAugust      2012 |
| B      notes, floating rate         |   |     | 3         |   |                |   | 33,557                        |   | LIBOR      plus 2.50% to LIBOR plus 3.01% |   | July      2008 toMarch      2009 |
| B      notes, fixed rate            |   |     | 3         |   |                |   | 55,905                        |   | 7.00%      to 8.66%                       |   | July      2011 toJuly      2016 |
| Mezzanine      loans, floating rate |   |     |  10  |   |                |   | 130,201                       |   | LIBOR      plus 2.15% to LIBOR plus 3.45% |   | August      2008 toMay      2009 |
| Mezzanine      loans, fixed rate    |   |     | 7         |   |                |   | 81,217                        |   | 5.78%      to 11.00%                      |   | November      2009 toSeptember      2016 |
| Total (1)                           |   |     |  59  |   |                | $      | 863,871                       |   |                                      |   |   |
|                                |   |     |      |   |                |   |                          |   |                                      |   |   |
| December 31,      2007:             |   |     |      |   |                |   |                          |   |                                      |   |   |
| Whole      loans, floating rate     |   |     |  28  |   |                | $      | 430,776                       |   | LIBOR      plus 1.50% to LIBOR plus 4.25% |   | May      2008 toJuly      2010 |
| Whole      loans, fixed rate        |   |     | 7         |   |                |   | 97,942                        |   | 6.98%      to 8.57%                       |   | May      2009 toAugust      2012 |
| B      notes, floating rate         |   |     | 3         |   |                |   | 33,570                        |   | LIBOR      plus 2.50% to LIBOR plus 3.01% |   | March      2008 toOctober      2008 |
| B      notes, fixed rate            |   |     | 3         |   |                |   | 56,007                        |   | 7.00%      to 8.68%                       |   | July      2011 toJuly      2016 |
| Mezzanine      loans, floating rate |   |     |   11 |   |                |   | 141,894                       |   | LIBOR      plus 2.15% to LIBOR plus 3.45% |   | February      2008 toMay      2009 |
| Mezzanine      loans, fixed rate    |   |     | 7         |   |                |   | 81,268                        |   | 5.78%      to 11.00%                      |   | November      2009 toSeptember      2016 |
| Total (1)                           |   |     |  59  |   |                | $      | 841,457                       |   |                                      |   |   |

----

| (1) | The      total does not include a provision for loan losses of $3.2 million      recorded as of March 31, 2008 and December 31,  2007. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------|

----

|                                 |   | March      31, 2008 |    |   | December      31, 2007 |   |
|--------------------------------------|--------|---------------------|---------|--------|------------------------|--------|
|                                 |   | Amortized      cost |    |   | Dollar      price      |   |   | Amortized      cost |   |   | Dollar      price |   |
| Moody’s      ratings category: |   |                |    |   |                   |   |   |   |   |   |   |   |
| A1      through A3                   |   | $                   | 5,750   |   |                   |   | 100.00% |   |   | $ | − |   |   |   | − |   |
| Baa1      through Baa3               |   |                | 10,121  |   |                   |   |        99.22% |   |   |   | 5,914 |   |   |   |        98.65% |   |
| Ba1      through Ba3                 |   |                | 520,057 |   |                   |   |        99.81% |   |   |   | 500,417 |   |   |   | 100.02% |   |
| B1      through B3                   |   |                | 358,162 |   |                   |   |        99.72% |   |   |   | 386,589 |   |   |   | 100.01% |   |
| Caa1      through Caa3               |   |                | 23,368  |   |                   |   | 100.20% |   |   |   | 20,380 |   |   |   | 100.20% |   |
| Ca      through C                    |   |                | − |   |                   |   | − |   |   |   | 1,000 |   |   |   | 100.00% |   |
| No      rating provided              |   |                | 31,492  |   |                   |   |        99.85% |   |   |   | 16,800 |   |   |   |        99.44% |   |
| Total                                |   | $                   | 948,950 |   |                   |   |        99.78% |   |   | $ | 931,100 |   |   |   | 100.00% |   |
| S&P      ratings category:       |   |                |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| BBB+      through BBB-               |   | $                   | 67,227  |   |                   |   |        99.95% |   |   | $ | 14,819 |   |   |   | 100.15% |   |
| BB+      through BB-                 |   |                | 451,166 |   |                   |   |        99.78% |   |   |   | 433,624 |   |   |   | 100.00% |   |
| B+      through B-                   |   |                | 322,458 |   |                   |   |        99.92% |   |   |   | 405,780 |   |   |   | 100.06% |   |
| CCC+      through CCC-               |   |                | 4,204   |   |                   |   | 100.00% |   |   |   | 4,207 |   |   |   | 100.00% |   |
| No      rating provided              |   |                | 103,895 |   |                   |   |        99.15% |   |   |   | 72,670 |   |   |   |        99.59% |   |
| Total                                |   | $                   | 948,950 |   |                   |   |        99.78% |   |   | $ | 931,100 |   |   |   | 100.00% |   |
| Weighted      average rating factor  |   |                | 1,883   |   |                   |   |   |   |   |   | 2,000 |   |   |   |   |   |

|                         |   | March      31,2008 |   |   | December      31, 2007 |   |
|------------------------------|--------|--------------------|--------|--------|------------------------|--------|
| Direct      financing leases |   | $                  | 26,524 |   |                   | $      | 28,880 |   |
| Notes      receivable        |   |               | 67,728 |   |                   |   | 66,150 |   |
| Total                        |   | $                  | 94,252 | (1)    |                   | $      | 95,030 | (1) |

----

| (1) | Includes      a $293,000 provision for leaselosses. |
|-----|-----------------------------------------------------|

----

----

|                    | Benchmark      rate |   | Notional      value |    |   | Pay      rate |   |   | Effective      date |   | Maturity      date |   | Fair      value |   |
|-------------------------|---------------------|--------|---------------------|---------|--------|---------------|--------|--------|---------------------|--------|--------------------|--------|-----------------|--------|
| Interest      rate swap | 1      month LIBOR  |   | $                   | 12,750  |   |          |   | 5.27%  |                |   | 07/25/07           |   | 08/06/12        |   | $ | (1,192 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 12,965  |   |          |   | 4.63%  |                |   | 12/04/06           |   | 07/01/11        |   |   | (790 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 28,000  |   |          |   | 5.10%  |                |   | 05/24/07           |   | 06/05/10        |   |   | (1,651 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 12,675  |   |          |   | 5.52%  |                |   | 06/12/07           |   | 07/05/10        |   |   | (865 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 1,880   |   |          |   | 5.68%  |                |   | 07/13/07           |   | 03/12/17        |   |   | (260 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 15,235  |   |          |   | 5.34%  |                |   | 06/08/07           |   | 02/25/10        |   |   | (882 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 10,435  |   |          |   | 5.32%  |                |   | 06/08/07           |   | 05/25/09        |   |   | (380 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 12,150  |   |          |   | 5.44%  |                |   | 06/08/07           |   | 03/25/12        |   |   | (1,171 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 7,000   |   |          |   | 5.34%  |                |   | 06/08/07           |   | 02/25/10        |   |   | (405 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 44,943  |   |          |   | 4.13%  |                |   | 01/10/08           |   | 05/25/16        |   |   | (1,115 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 82,986  |   |          |   | 5.58%  |                |   | 06/08/07           |   | 04/25/17        |   |   | (9,834 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 1,726   |   |          |   | 5.65%  |                |   | 06/28/07           |   | 07/15/17        |   |   | (210 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 1,681   |   |          |   | 5.72%  |                |   | 07/09/07           |   | 10/01/16        |   |   | (209 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 3,850   |   |          |   | 5.65%  |                |   | 07/19/07           |   | 07/15/17        |   |   | (468 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 4,023   |   |          |   | 5.41%  |                |   | 08/07/07           |   | 07/25/17        |   |   | (422 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 21,264  |   |          |   | 5.32%  |                |   | 03/30/06           |   | 09/22/15        |   |   | (1,268 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 8,430   |   |          |   | 5.31%  |                |   | 03/30/06           |   | 11/23/09        |   |   | (202 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 6,317   |   |          |   | 5.41%  |                |   | 05/26/06           |   | 08/22/12        |   |   | (278 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 3,825   |   |          |   | 5.43%  |                |   | 05/26/06           |   | 04/22/13        |   |   | (239 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 3,521   |   |          |   | 5.72%  |                |   | 06/28/06           |   | 06/22/16        |   |   | (279 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 1,325   |   |          |   | 5.52%  |                |   | 07/27/06           |   | 07/22/11        |   |   | (50 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 3,116   |   |          |   | 5.54%  |                |   | 07/27/06           |   | 09/23/13        |   |   | (222 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 5,579   |   |          |   | 5.25%  |                |   | 08/18/06           |   | 07/22/16        |   |   | (455 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 4,116   |   |          |   | 5.06%  |                |   | 09/28/06           |   | 08/22/16        |   |   | (236 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 2,251   |   |          |   | 4.97%  |                |   | 12/22/06           |   | 12/23/13        |   |   | (139 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 3,442   |   |          |   | 5.22%  |                |   | 01/19/07           |   | 11/22/16        |   |   | (215 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 2,250   |   |          |   | 5.05%  |                |   | 04/23/07           |   | 09/22/11        |   |   | (83 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 2,970   |   |          |   | 5.42%  |                |   | 07/25/07           |   | 04/24/17        |   |   | (219 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 8,385   |   |          |   | 4.53%  |                |   | 11/29/07           |   | 10/23/17        |   |   | (394 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 5,455   |   |          |   | 4.40%  |                |   | 12/26/07           |   | 11/22/17        |   |   | (261 | ) |
| Interest      rate swap | 1      month LIBOR  |   |                | 5,445   |   |          |   | 3.35%  |                |   | 01/23/08           |   | 12/22/14        |   |   | (60 | ) |
| Total                   |                |   | $                   | 339,990 |   |          |   | 5.14%  |                |   |               |   |            |   | $ | (24,454 | ) |

----

|   | · | In      June 2007, we closed Resource Real Estate Funding CDO 2007-1, a $500.0      million CDO transaction that provided financing for commercial real estate      loans.  The investments held by Resource Real Estate Funding CDO      2007-1 collateralized $390.0 million of senior notes issued by the CDO      vehicle, of which RCC Real Estate, Inc., or RCC Real Estate, purchased      100% of the class H senior notes, class K senior notes, class L senior      notes and class M senior notes for $68.0 million and $5.0 million of the      class J senior notes purchased during the quarter ended March 31,      2008.  In addition, Resource Real Estate Funding 2007-1 CDO      Investor, LLC, a subsidiary of RCC Real Estate, purchased a $41.3 million      equity interest representing 100% of the outstanding preference      shares.  At March 31, 2008, Resource Real Estate Funding CDO      2007-1 had $1.3 million of uninvested principal and $23.3 million of A1-R      availability to fund future funding commitments on commercial real estate      loans.  At March 31, 2008, the notes issued to outside investors      had a weighted average borrowing rate of3.27%. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      May 2007, we closed Apidos Cinco CDO, a $350.0 million CDO transaction      that provided financing for bank loans.  The investments held by      Apidos Cinco CDO collateralized $322.0 million of senior notes issued by      the CDO vehicle, of which RCC Commercial Inc., or RCC Commercial,      purchased a $28.0 million equity interest representing 100% of the      outstanding preference shares.  At March 31, 2008, Apidos Cinco      CDO had $2.8 million in uninvested principal and $2.2 million in a credit      facility reserve.  At March 31, 2008, the notes issued to      outside investors had a weighted average borrowing rate of      3.57%. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      August 2006, we closed Resource Real Estate Funding CDO 2006-1, a $345.0      million CDO transaction that provided financing for commercial real estate      loans.  The investments held by Resource Real Estate Funding CDO      2006-1 collateralized $308.7 million of senior notes issued by the CDO      vehicle, of which RCC Real Estate, Inc., or RCC Real Estate, purchased      100% of the class J senior notes and class K senior notes for $43.1      million.  At March 31, 2008, Resource Real Estate Funding CDO      2006-1 had $1.3 million of uninvested principal.  At March 31,      2008, the notes issued to outside investors had a weighted average      borrowing rate of 3.47%. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      May 2006, we closed Apidos CDO III, a $285.5 million CDO transaction that      provided financing for bank loans.  The investments held by      Apidos CDO III collateralized $262.5 million of senior notes issued by the      CDO vehicle.  At March 31, 2005, Apidos CDO III had $4.7 million      in uninvested principal and $878,000 in a credit facility      reserve.  At March 31, 2008, the notes issued to outside      investors had a weighted average borrowing rate of  3.35%. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      August 2005, we closed Apidos CDO I, a $350.0 million CDO transaction that      provided financing for bank loans.  The investments held by      Apidos CDO I collateralize $321.5 million of senior notes issued by the      CDO vehicle, of which RCC Commercial purchased $23.0 million equity      interest representing 100% of the outstanding preference      shares.  At March 31, 2008, Apidos CDO I had $9.7 million in      uninvested principal and $851,000 in a credit facility      reserve.  At March 31, 2008, the notes issued to outside      investors had a weighted average borrowing rate of  3.75%. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      July 2005, we closed Ischus CDO II, a $403.0 million CDO transaction that      provided financing for MBS and other asset-backed.  The      investments held by Ischus CDO II collateralize $376.0 million of senior      notes issued by the CDO vehicle, of which RCC Commercial purchased $28.5      million equity interest representing 100% of the outstanding preference      shares.  At November 13, 2007, we sold 10% of our equity      interest and are no longer deemed to be the primary      beneficiary.  As a result, we deconsolidated Ischus CDO II at      that date. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Three      Months Ended |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | March      31,          |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 2008                    |    |   | 2007 |   |
| Net      income                                                                                                                                   |   | $                       | 9,363   |   |   | $ | 9,439 |   |
| Adjustments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    |    |   |   |   |   |   |
| Share-based compensation to      related      parties                                                                                                            |   |                    | (147    | ) |   |   | 5 |   |
| Incentive management fee expense      to related parties paid in shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                    | − |   |   |   | 186 |   |
| Capital loss carryover      (utilization)/losses from the sale of securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                    | 2,000   |   |   |   | − |   |
| Provisions for loan and lease      losses      unrealized                                                                                                        |   |                    | 56      |   |   |   | − |   |
| Net book to tax adjustments for      the Company’s taxable foreign REITsubsidiaries                                                                                       |   |                    | 775     |   |   |   | − |   |
| Other net book to tax      adjustments                                                                                                                           |   |                    | 8       |   |   |   | 41 |   |
| Estimated      REIT taxable      income                                                                                                           |   | $                       | 12,055  |   |   | $ | 9,671 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                    |    |   |   |   |   |   |
| Amounts      per share –      diluted                                                                                                       |   | $                       | 0.48    |   |   | $ | 0.39 |   |

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|   | · | Restricted      - $66.6 million of principal repayments on investments held by our CDO      issuers and $12.6 million of CDO future funding  advances. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |                                                                                                                                                                                                                                     |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | Unrestricted      - $17.5 million from the transfer of commercial real estate loans to RREF      CDO 2006-1 after the repayment of related repurchase agreements and $10.0      million from the sale of available for sale  securities. |

|   | · | unrestricted      cash and cash equivalents of $7.5 million, and restricted cash of $8.9      million comprised of $5.5 million in margin call accounts and $3.4 million      related to our leasing portfolio; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | capital      available for reinvestment in our five CDOs of $56.0 million, which is      made up of $34.4 million of restricted cash and $21.6 million of      availability to finance future funding commitments on commercial real      estate loans; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | financing      available under existing borrowing facilities of $19.7 million, comprised      of $12.1 million of available cash from our three year non-recourse      secured financing facility and $7.6 million of unused capacity under our      unsecured revolving credit facility.  We also have $85.8 million      of unused capacity under our three-year non-recourse commercial real      estate repurchase facility, which, however, requires approval of      individual repurchase transactions by the repurchase      counterparty. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                                                                                                                                                                                      |   | Contractual      commitments(dollars      in thousands) |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                      |   | Payments      due by period                             |      |
|                                                                                                                                                                                                                                                                                                                      |   | Total                                                   |      |   | Less      than 1 year |   |   | 1 –      3 years |   |   | 3 –      5 years |   |   | More      than 5 years |   |
| Repurchase      agreements (1)                                                 |   | $                                                       | 71,915    |   |   | $ | 71,915 |   |   | $ | − |   |   | $ | − |   |   | $ | − |   |
| CDOs                                                                           |   |                                                    | 1,509,618 |   |   |   | − |   |   |   | 318,026 |   |   |   | 577,118 |   |   |   | 614,474 |   |
| Secured      term      facility                                                |   |                                                    | 90,000    |   |   |   | − |   |   |   | 90,000 |   |   |   | − |   |   |   | − |   |
| Junior      subordinated debentures heldby unconsolidated trusts      thatissued trust preferred      securities                                                                                                                                                                                                          |   |                                                    | 51,548    |   |   |   | − |   |   |   | − |   |   |   | − |   |   |   | 51,548 |   |
| Base      management fees(2)                                                   |   |                                                    | 4,749     |   |   |   | 4,749 |   |   |   | − |   |   |   | − |   |   |   | − |   |
| Total                                                                          |   | $                                                       | 1,727,830 |   |   | $ | 76,664 |   |   | $ | 408,026 |   |   | $ | 577,118 |   |   | $ | 666,022 |   |

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| (1) | Includes      accrued interest of $104,000. |
|-----|---------------------------------------------|

| (2) | Calculated      only for the next 12 months based on our current equity, as defined in our      management agreement. |
|-----|-----------------------------------------------------------------------------------------------------------------------|

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ITEM3.    

|                                         |   | March      31, 2008                           |    |
|----------------------------------------------|--------|-----------------------------------------------|---------|
|                                         |   | Interest      rates fall 100basis      points |    |   | Unchanged |   |   | Interest      rates rise 100basis      points |   |
| ABS-RMBS,      CMBS and other ABS(1)         |   |                                          |    |   |   |   |   |   |   |
| Fair value                                   |   | $                                             | 28,719  |   |   | $ | 27,049 |   |   | $ | 11,425 |   |
| Change in fair    value                      |   | $                                             | 1,670   |   |   | $ | − |   |   | $ | (15,624 | ) |
| Change as a percent of fair      value       |   |                                          | 6.17%   |   |   |   |   |   |   |   | 57.76% |   |
|                                         |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Repurchase      and warehouse agreements (2) |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Fair value                                   |   | $                                             | 161,796 |   |   | $ | 161,796 |   |   | $ | 161,796 |   |
| Change in fair    value                      |   | $                                             | − |   |   | $ | − |   |   | $ | − |   |
| Change as a percent of fair      value       |   |                                          |    |   |   |   | − |   |   |   | − |   |
|                                         |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Hedging      instruments                     |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Fair value                                   |   | $                                             | (41,267 | ) |   | $ | (24,454 | ) |   | $ | (11,875 | ) |
| Change in fair    value                      |   | $                                             | (16,813 | ) |   | $ | − |   |   | $ | 12,579 |   |
| Change as a percent of fair      value       |   |                                          | n/m     |   |   |   | − |   |   |   | n/m |   |

|                                         |   | December      31, 2007                        |    |
|----------------------------------------------|--------|-----------------------------------------------|---------|
|                                         |   | Interest      rates fall 100basis      points |    |   | Unchanged |   |   | Interest      rates rise 100basis      points |   |
| CMBS      – private placement (1)      |   |                                          |    |   |   |   |   |   |   |
| Fair value                                   |   | $                                             | 28,756  |   |   | $ | 27,154 |   |   | $ | 11,519 |   |
| Change in fair    value                      |   | $                                             | 1,602   |   |   | $ | − |   |   | $ | (15,635 | ) |
| Change as a percent of fair      value       |   |                                          | 5.90%   |   |   |   | − |   |   |   | 57.58% |   |
|                                         |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Repurchase      and warehouse agreements (2) |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Fair value                                   |   | $                                             | 207,908 |   |   | $ | 207,908 |   |   | $ | 207,908 |   |
| Change in fair    value                      |   | $                                             | − |   |   | $ | − |   |   | $ | − |   |
| Change as a percent of fair      value       |   |                                          | − |   |   |   | − |   |   |   | − |   |
|                                         |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Hedging      instruments                     |   |                                          |    |   |   |   |   |   |   |   |   |   |
| Fair value                                   |   | $                                             | (33,731 | ) |   | $ | (18,040 | ) |   | $ | (3,234 | ) |
| Change in fair    value                      |   | $                                             | (15,691 | ) |   | $ | − |   |   | $ | 14,806 |   |
| Change as a percent of fair      value       |   |                                          | N/M     |   |   |   | − |   |   |   | N/M |   |

----

| (1) | Includes      the fair value of other available-for-sale investments that are sensitive      to interest rate changes. |
|-----|------------------------------------------------------------------------------------------------------------------------|

| (2) | The      fair value of the repurchase agreements and warehouse agreements would not      change materially due to the short-term nature of these      instruments. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

ITEM4.    

----

ITEM6.    

|   | Exhibit      No. | Description                                                                                                                                                                                                               |
|--------|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.1              | Restated      Certificate of Incorporation of Resource Capital Corp. (1)                                                                                                                                                  |
|   | 3.2              | Amended      and Restated Bylaws of Resource Capital Corp. (1)                                                                                                                                                            |
|   | 4.1              | Form      of Certificate for Common Stock for Resource Capital Corp. (1)                                                                                                                                                  |
|   | 4.2              | Junior      Subordinated indenture between Resource Capital Corp. and Wells Fargo      Bank, N.A., as Trustee, dated May 25, 2006. (3)                                                                                    |
|   | 4.3              | Amended      and Restated Trust Agreement among Resource Capital Corp., Wells Fargo      Bank, N.A., Wells Fargo Delaware Trust Company and the Administrative      Trustees named therein, dated May 25, 2006. (3)       |
|   | 4.4              | Junior      Subordinated Note due 2036 in the principal amount of $25,774,000, dated      May 25, 2006. (3)                                                                                                               |
|   | 4.5              | Junior      Subordinated Indenture between Resource Capital Corp. and Wells Fargo      Bank, N.A., as Trustee, dated September 29, 2006. (4)                                                                              |
|   | 4.6              | Amended      and Restated Trust Agreement among Resource Capital Corp., Wells Fargo      Bank, N.A., Wells Fargo Delaware Trust Company and the Administrative      Trustees named therein, dated September 29, 2006. (4) |
|   | 4.7              | Junior      Subordinated Note due 2036 in the principal amount of $25,774,000, dated      September 29, 2006. (4)                                                                                                         |
|   | 10.1             | Management      Agreement between Resource Capital Corp., Resource Capital Manager, Inc.      and Resource America, Inc. dated as of March 8, 2005.  (1)                                                        |
|   | 10.2             | 2005      Stock Incentive Plan (1)                                                                                                                                                                                        |
|   | 10.3             | Form      of Stock Award Agreement (1)                                                                                                                                                                                    |
|   | 10.4             | Form      of Stock Option Agreement (1)                                                                                                                                                                                   |
|   | 10.5             | Form      of Warrant to Purchase Common Stock (1)                                                                                                                                                                         |
|   | 10.6             | Third      Amendment dated April 11, 2008 but effective as of March 31, 2008 to the      Loan Agreement dated December 15, 2005, by and among Resource Capital      Corp. and Commerce Bank, N.A.      (5)                |
|   | 10.7a            | Master      Repurchase Agreement between RCC Real Estate SPE 3, LLC and Natixis Real      Estate Capital. (2)                                                                                                             |
|   | 10.7b            | Guaranty      made by Resource Capital Corp. as guarantor, in favor of Natixis Real      Estate Capital, Inc., dated April 20, 2007. (2)                                                                                  |
|   | 31.1             | Rule      13a-14(a)/Rule 15d-14(a) Certification of Chief Executive      Officer.                                                                                                                                         |
|   | 31.2             | Rule      13a-14(a)/Rule 15d-14(a) Certification of Chief Financial      Officer.                                                                                                                                         |
|   | 32.1             | Certification      of Chief Executive Officer pursuant to Section 1350 of Chapter 63 of Title      18 of the United States Code.                                                                                          |
|   | 32.2             | Certification      of Chief Financial Officer pursuant to Section 1350 of Chapter 63 of Title      18 of the United States Code.                                                                                          |

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| (1) | Filed      previously as an exhibit to the Company’s registration statement on Form      S-11, Registration No. 333-126517. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (2) | Filed      previously as an exhibit to the Company’s Current Report on Form 8-K filed      on April 23, 2007. |
|-----|---------------------------------------------------------------------------------------------------------------------|

| (3) | Filed      previously as an exhibit to the Company’s quarterly report on Form 10-Q      for the quarter ended June 30,2006. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (4) | Filed      previously as an exhibit to the Company’s quarterly report on Form 10-Q      for the quarter ended September 30,2006. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Filed      previously as an exhibit to the Company’s Current Report on Form 8-K filed      on April 11, 2008. |
|-----|---------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

|                    | RESOURCE      CAPITAL CORP.                                                                                                                                                                                                                                                                                                                                       |
|-------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    | (Registrant)                                                                                                                                                                                                                                                                                                                                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                              |
| Date:      May 12, 2008 | By:           /s/ Jonathan Z.      Cohen                                            |
|                    | Jonathan Z.    Cohen                                                                                                                                                                                                                                                                                                                                              |
|                    | Chief Executive Officer and      President                                                                                                                                                                                                                                                                                                                        |
|                    |                                                                                                                                                                                                                                                                                                                                                              |

| Date:      May 12, 2008 | By:           /s/ David J.      Bryant                                 |
|-------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    | David J.  Bryant                                                                                                                                                                                                                                                                              |
|                    | Chief Financial Officer and      Chief Accounting Officer                                                                                                                                                                                                                                     |
|                    |                                                                                                                                                                                                                                                                                          |

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