SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


(Mark One)


  X       QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
-----     EXCHANGE ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006


                                       OR


          TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
-----     EXCHANGE ACT OF 1934


                         Commission File Number 1-13237


                                   CHARTERMAC
         (Exact name of Registrant as specified in its Trust Agreement)


            DELAWARE                                             13-3949418
(State or other jurisdiction of                             (I.R.S. Employer
  incorporation or organization)                             Identification No.)

 625 MADISON AVENUE, NEW YORK, NEW YORK                            10022
(Address of principal executive offices)                         (Zip Code)

                                 (212) 317-5700
               Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer or a  non-accelerated  filer (as defined in Rule 12b-2 of the
Exchange Act). Large Accelerated filer [X] Accelerated filer [ ] Non-accelerated
filer [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As  of  April  28,  2006,  there  were  52,096,063  outstanding  shares  of  the
registrant's shares of beneficial interest.


<PAGE>



                                TABLE OF CONTENTS

                                   CHARTERMAC

                                    FORM 10-Q

<TABLE>
<CAPTION>

                                                                                             PAGE
<S>           <C>         <C>                                                                 <C>
PART I
              Item 1.     Financial Statements                                                 3
              Item 2.     Management's Discussion and Analysis of Financial Condition and
                              Results of Operations                                           26
              Item 3.     Quantitative and Qualitative Disclosures about Market Risks         36
              Item 4.     Controls and Procedures                                             37

PART II
              Item 1.     Legal Proceedings                                                   38
              Item 1A.    Risk Factors                                                        38
              Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds         38
              Item 3.     Defaults Upon Senior Securities                                     38
              Item 4.     Submission of Matters to a Vote of Security Holders                 38
              Item 5.     Other Information                                                   38
              Item 6.     Exhibits                                                            38

SIGNATURES                                                                                    39

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       2
<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                           CHARTERMAC AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                         March 31,      December 31,
                                                                           2006            2005
                                                                        -----------     -----------
                                                                        (UNAUDITED)

                                               ASSETS

<S>                                                                     <C>             <C>
Mortgage revenue bonds-at fair value                                    $ 2,310,468     $ 2,294,787
Other investments                                                           185,825         298,590
Cash and cash equivalents                                                   171,704         161,295
Restricted cash                                                              34,119          34,025
Goodwill and intangible assets, net                                         443,341         439,175
Other assets                                                                166,725         144,670
Investments held by consolidated partnerships                             3,058,796       3,025,762
Other assets of consolidated partnerships                                   602,532         580,524
                                                                        -----------     -----------

Total assets                                                            $ 6,973,510     $ 6,978,828
                                                                        ===========     ===========

                                LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Financing arrangements                                               $ 1,521,959     $ 1,429,692
   Preferred shares of subsidiary (subject to mandatory
    repurchase)                                                             273,500         273,500
   Notes payable                                                            200,325         304,888
   Accounts payable, accrued expenses and other liabilities                 164,726         179,275
   Notes payable and other liabilities of consolidated
    partnerships                                                          1,528,615       1,627,556
                                                                        -----------     -----------

Total liabilities                                                         3,689,125       3,814,911
                                                                        -----------     -----------

Minority interests in consolidated subsidiaries                             258,999         262,274
                                                                        -----------     -----------
Preferred shares of subsidiary (not subject to mandatory                    104,000         104,000
   repurchase)
                                                                        -----------     -----------
Partners' interests in consolidated partnerships                          1,895,395       1,747,808
                                                                        -----------     -----------

Commitments and contingencies

Shareholders' equity:
   Beneficial owners equity:
     4.4% Convertible CRA preferred shares; no par value; 2,160
        shares issued and outstanding in 2006 and 2005                      104,498         104,498
     Convertible CRA shares; no par value; 6,552 shares issued
       and outstanding in 2006 and 2005                                     103,125         104,369
     Special preferred voting shares; no par value (14,865
      shares issued and outstanding in 2006 and 14,885 shares
      issued and outstanding in 2005)                                           149             150
     Common shares; no par value (100,000 shares authorized;
       52,388 issued and 52,047 outstanding in 2006 and 52,309
       issued and 51,988 outstanding in 2005)                               739,956         752,042
   Restricted shares granted                                                   --            (4,193)
   Treasury shares of beneficial interest - common, at cost
    (341 shares in 2006 and 321 shares in 2005)                              (7,571)         (7,135)
   Accumulated other comprehensive income                                    85,834         100,104
                                                                        -----------     -----------
Total shareholders' equity                                                1,025,991       1,049,835
                                                                        -----------     -----------

Total liabilities and shareholders' equity                              $ 6,973,510     $ 6,978,828
                                                                        ===========     ===========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                  Three Months Ended
                                                                       March 31,
                                                                 ---------------------
                                                                   2006         2005
                                                                 --------     --------
<S>                                                              <C>          <C>
Revenues:
   Mortgage revenue bond interest income                         $ 36,522     $ 36,367
   Other interest income                                            5,939        3,563
   Fee income                                                      16,071        9,584
   Other revenues                                                   4,321        3,530
   Revenues of consolidated partnerships                            8,245        4,902
                                                                 --------     --------
     Total revenues                                                71,098       57,946
                                                                 --------     --------

Expenses:
   Interest expense                                                17,107       10,580
   Interest expense of consolidated partnerships                    6,946        6,889
   Interest expense - distributions to preferred shareholders
     of subsidiary                                                  4,724        4,725
   General and administrative                                      31,768       26,212
   Depreciation and amortization                                    8,913        7,696
   Other expenses of consolidated partnerships                     15,281       11,047
                                                                 --------     --------
     Total expenses                                                84,739       67,149
                                                                 --------     --------

Loss before other income                                          (13,641)      (9,203)

Equity and other income                                               752          524
Gain on sale of loans and repayment of mortgage revenue bonds       5,430        1,696
Loss on investments held by consolidated partnerships             (62,149)     (49,939)
                                                                 --------     --------

Loss before allocations and income taxes                          (69,608)     (56,922)

Income allocated to preferred shareholders of subsidiary           (1,556)      (1,556)
Minority interests in consolidated subsidiaries, net of tax        (5,879)      (6,065)
Loss allocated to partners of consolidated partnerships            88,781       70,963
                                                                 --------     --------

Income before income taxes                                         11,738        6,420
Income tax benefit                                                  2,919        8,365
                                                                 --------     --------

Net income                                                       $ 14,657     $ 14,785
                                                                 ========     ========

Allocation of net income to:
   4.4% Convertible CRA preferred shareholders                   $  1,188     $     --
   Common shareholders                                             11,962       13,110
   Convertible CRA shareholders                                     1,507        1,675
                                                                 --------     --------
     Total                                                       $ 14,657     $ 14,785
                                                                 ========     ========

Net income per share:
   Basic                                                         $   0.23     $   0.26
                                                                 ========     ========
   Diluted                                                       $   0.23     $   0.25
                                                                 ========     ========

Weighted average shares outstanding:
   Basic                                                           58,578       57,821
                                                                 ========     ========
   Diluted                                                         58,895       58,236
                                                                 ========     ========

Dividends declared per share                                     $   0.42     $   0.41
                                                                 ========     ========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                              Three Months Ended
                                                                                   March 31,
                                                                            -----------------------
                                                                               2006          2005
                                                                            ---------     ---------
<S>                                                                         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                               $  14,657     $  14,785
   Adjustments to reconcile net income to net cash provided by operating
    activities:
   (Gain) loss on repayment of mortgage revenue bonds                            (891)            9
   Depreciation and amortization                                                8,913         7,696
   Equity in income of unconsolidated entities                                   (510)         (524)
   Income allocated to preferred shareholders of subsidiary                     1,556         1,556
   Income allocated to minority interests in consolidated subsidiaries          5,879         6,065
   Non-cash compensation expense                                                2,035         1,823
   Other non-cash expense                                                       1,342         1,148
   Deferred taxes                                                                  --        (2,880)
   Distributions received from equity investees                                 1,374           555
   Changes in operating assets and liabilities:
    Mortgage servicing rights                                                  (3,951)       (3,115)
    Mortgage loans held for sale                                               95,412       (20,251)
    Loan to affiliate                                                              --         4,600
    Deferred revenues                                                          (2,502)      (13,268)
    Other assets                                                              (29,558)       11,578
    Accounts payable, accrued expenses and other liabilities                  (12,766)       (3,777)
                                                                            ---------     ---------

Net cash provided by operating activities                                      80,990         6,000
                                                                            ---------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Principal amortization and repayments of mortgage revenue bonds             31,509        10,499
   Mortgage revenue bond acquisitions and fundings                            (60,675)     (111,751)
   Investments in notes receivable                                             (1,250)           --
   Repayments of notes receivable                                                 667         2,700
   Acquisitions, net of cash acquired                                             113         8,558
   Loans to Capri Capital                                                          --        (6,000)
   Advances to partnerships                                                   (28,103)      (29,304)
   Collection of advances to partnerships                                      38,120        25,749
   Deferred investment acquisition costs                                          (46)       (1,175)
   Increase in cash and cash equivalents - restricted                             (94)         (380)
   Other investing activities                                                  (1,172)       (9,813)
                                                                            ---------     ---------

Net cash used in investing activities                                         (20,931)     (110,917)
                                                                            ---------     ---------

</TABLE>

                                   (continued)

     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                         Three Months Ended
                                                                              March 31,
                                                                       -----------------------
                                                                         2006           2005
                                                                       ---------     ---------
<S>                                                                    <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions to shareholders                                         (25,914)      (23,896)
   Distributions to preferred shareholders of subsidiary                  (1,556)       (1,556)
   Distributions to Special Common Unit and Special Membership Unit       (8,916)       (8,663)
    holders
   Proceeds from financing arrangements                                   96,968       247,792
   Repayments of financing arrangements                                   (4,701)     (112,715)
   (Decrease) increase in notes payable                                 (105,531)       28,692
   Proceeds from stock options exercised                                      --             8
   Deferred financing costs                                                   --          (796)
                                                                       ---------     ---------


Net cash (used in) provided by financing activities                      (49,650)      128,866
                                                                       ---------     ---------

Net increase in cash and cash equivalents                                 10,409        23,949
Cash and cash equivalents at the beginning of the year                   161,295        71,287
                                                                       ---------     ---------

Cash and cash equivalents at the end of the period                     $ 171,704     $  95,236
                                                                       =========     =========

Acquisition activity:

   Redemption of preferred stock and advances                          $   7,170     $      --
   Conversion of note receivable                                              --        70,000
   Assets acquired                                                        (8,421)      (73,989)
   Liabilities assumed                                                     1,364        12,547
                                                                       ---------     ---------
Net cash received in acquisitions                                      $     113     $   8,558
                                                                       =========     =========

Non-cash investing and financing activities:
        Share grants                                                   $   3,662     $   1,439
                                                                       ---------     ---------
        Conversion of SCUs to common shares                            $     358     $      --
                                                                       ---------     ---------
        Treasury stock purchases via employee withholding              $     435     $   1,946
                                                                       ---------     ---------

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       6
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 1 - BASIS OF PRESENTATION

The unaudited condensed  consolidated  financial statements include the accounts
of CharterMac,  its wholly owned and majority owned subsidiary statutory trusts,
other  non-trust  subsidiary  companies it controls  and  entities  consolidated
pursuant to the adoption of FASB  Interpretation  No. 46(R) ("FIN  46(R)").  All
intercompany  accounts and transactions  have been eliminated in  consolidation.
Unless  otherwise  indicated,  "the  Company",  "we",  "our" and  "us",  as used
throughout   this   document,   refers  to  CharterMac   and  its   consolidated
subsidiaries.   For  the  entities   identified   throughout  this  document  as
"consolidated partnerships", the financial information included is as of and for
the periods ended December 31, 2005, the latest practical date available.

The accompanying  interim financial statements have been prepared without audit.
In the opinion of management,  the financial  statements contain all adjustments
(consisting of only normal  recurring  adjustments)  necessary to present fairly
the financial  statements of the interim  periods.  However,  given the seasonal
nature of our business, the operating results for the interim periods may not be
indicative of the results for the full year.

Certain  information and footnote  disclosures  normally  included in the annual
consolidated   financial  statements  prepared  in  accordance  with  accounting
principles generally accepted in the United States of America ("GAAP") have been
condensed  or  omitted.   It  is  suggested  that  these   unaudited   condensed
consolidated  financial  statements be read in conjunction with the consolidated
financial  statements  and notes thereto  included in our Form 10-K for the year
ended December 31, 2005.

Our annual report on Form 10-K for the year ended December 31, 2005,  contains a
summary of our  significant  accounting  policies.  There have been no  material
changes to these  items since  December  31,  2005,  nor have there been any new
accounting  pronouncements pending adoption that would have a significant impact
on  our  unaudited  condensed  consolidated  financial  statements,   except  as
indicated below.

We are responsible for the unaudited condensed consolidated financial statements
included  in this  document.  Our  unaudited  condensed  consolidated  financial
statements  are prepared on the accrual basis of  accounting in accordance  with
GAAP. The  preparation of financial  statements in conformity with GAAP requires
us to make estimates and assumptions  that affect the reported amounts of assets
and liabilities  and the disclosure of contingent  assets and liabilities at the
date of the financial statements as well as the reported amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Certain  amounts from prior years have been  reclassified to conform to the 2006
presentation.

NEW ACCOUNTING PRONOUNCEMENTS

During the first quarter of 2006, we adopted  Statement of Financial  Accounting
Standards No.  123(R),  SHARE-BASED  PAYMENT,  which  replaces SFAS No. 123. The
impact  of  adopting  this  Standard  was not  material  to us,  as we had  been
accounting for share-based  payments following the fair value provisions of SFAS
No. 123.

In March 2006, the FASB issued Statement of Financial  Accounting  Standards No.
156,  ACCOUNTING  FOR  SERVICING  OF FINANCIAL  Assets  ("SFAS No.  156").  This
statement  stipulates the accounting for mortgage  servicing rights ("MSRs") and
requires  that they be recorded  initially  at fair value.  The  statement  also
permits,  but does not require,  that we may  subsequently  record those MSRs at
fair value with changes in fair value recognized in the statement of operations.
Alternatively, we may continue to amortize the MSRs over their projected service
periods. We will adopt SFAS No. 156, as required,  in the first quarter of 2007.
We are currently determining the impact, if any, on our financial statements.

NOTE 2 - ACQUISITIONS

Effective  March 1, 2006,  we  acquired  Capri Real Estate  Services  from Capri
Capital Advisors LLC ("CCA"),  and renamed it CharterMac Real Estate  Securities
("CRES").  CRES is a manager of hedge  funds and other  funds  concentrating  on
investing in securities of publicly traded real estate operating companies.

The  consideration  paid was approximately  $7.2 million,  subject to additional
consideration  based on growth of assets under  management by CRES.  The initial
consideration  included the redemption of the preferred interest we held in CCA,
valued at $4.1 million, plus approximately $3.1 million of costs and advances we
had made to CCA with respect to this business.

We accounted for the acquisition as a purchase and, accordingly, we included the
results of operations in the condensed  consolidated  financial  statements from
the  acquisition  date. We allocated our cost of the acquisition on the basis of


                                       7
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



the estimated fair values of the assets and liabilities  assumed.  The excess of
the purchase price over the net of the amounts  assigned to the assets  acquired
and  liabilities  assumed  was  recognized  as goodwill  of  approximately  $7.9
million. Certain allocations are preliminary as of March 31, 2006, including the
allocation to goodwill,  and will be refined as we gather further information on
fair value and determine the fair values of intangible assets acquired.

Pro forma  information is not presented,  as this acquisition is not material to
our revenues, net income or assets.

NOTE 3 - MORTGAGE REVENUE BONDS

The following table summarizes our mortgage revenue bond portfolio:

<TABLE>
<CAPTION>

                                                   March 31,        December 31,
         (In thousands)                              2006              2005
----------------------------------                -----------       -----------
<S>                                               <C>               <C>
Amortized cost basis                              $ 2,446,023       $ 2,417,185
Gross unrealized gains                                104,405           116,541
Gross unrealized losses                               (16,331)          (11,424)
                                                  -----------       -----------
Subtotal/fair value                                 2,534,097         2,522,302
  Less: eliminations (1)                             (223,629)         (227,515)
                                                  -----------       -----------
Total fair value per balance sheet                $ 2,310,468       $ 2,294,787
                                                  ===========       ===========

</TABLE>

(1)  These bonds are either  recorded as  liabilities  on the balance  sheets of
     certain  consolidated  partnerships  or are recorded as liabilities of real
     estate owned and are therefore eliminated in consolidation.

The fair  value  and gross  unrealized  losses of our  mortgage  revenue  bonds,
aggregated  by length of time that  individual  bonds have been in a  continuous
unrealized loss position, is summarized in the table below:

<TABLE>
<CAPTION>

                                 Less than      12 Months
(Dollars in thousands)           12 Months       or More         Total
----------------------           ---------      ---------      ---------
<S>                               <C>            <C>            <C>
MARCH 31, 2006

Number of bonds                         51             65            116
Fair value                        $341,392       $357,840       $699,232
Gross unrealized loss             $ 10,702       $  5,629       $ 16,331

                                  --------------------------------------

DECEMBER 31, 2005

Number                                  36             55             91
Fair value                        $253,063       $327,183       $580,246
Gross unrealized loss             $  6,775       $  4,649       $ 11,424

</TABLE>

The unrealized  losses related to these mortgage revenue bonds are due primarily
to changes in interest  rates,  in that we calculate  present  values based upon
future  cash flows from the bonds and  discount  these cash flows at the current
rate on our  recent  bond  issuances;  as  rates  rise,  the  fair  value of our
portfolio  decreases.  We have the  intent and  ability  to hold these  bonds to
recovery  and  have  therefore  concluded  that  these  declines  in  value  are
temporary.


                                       8
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



The following summarizes the maturity dates of mortgage revenue bonds we held as
of March 31, 2006:

<TABLE>
<CAPTION>

                                                                     Weighted
                                     Outstanding                      Average
        (In thousands)               Bond Amount     Fair Value    Interest Rate
------------------------------       -----------     ----------    -------------
<S>                                  <C>             <C>               <C>
Due in less than one year            $      719      $      672        8.08%
Due between one and five years            9,344           9,265        6.12
Due after five years                  2,432,063       2,524,160        6.63
                                     ----------      ----------        ----
Total / weighted average              2,442,126       2,534,097        6.63%
                                                                       ====
   Less: eliminations (1)              (226,696)       (223,629)
                                     ----------      ----------
      Total                          $2,215,430      $2,310,468
                                     ==========      ==========

</TABLE>

(1)   These bonds are either  recorded as  liabilities  on the balance sheets of
      certain  consolidated  partnerships or are recorded as liabilities of real
      estate owned and are therefore eliminated in consolidation.

The following  table  summarizes our  acquisition  activity for the three months
ended March 31, 2006:

<TABLE>
<CAPTION>

                                                        Weighted        Weighted
                                                         Average         Average
                                            Face      Construction      Permanent
            (In thousands)                 Amount     Interest Rate   Interest Rate
--------------------------------------    --------    -------------   -------------
<S>                                       <C>            <C>              <C>
Construction/rehabilitation properties    $ 60,675       5.82%            5.82%

</TABLE>

The following table  summarizes  mortgage  revenue bonds repaid for three months
ended March 31, 2006:

<TABLE>
<CAPTION>

                                        Net Book                   Realized
         (In thousands)                  Value       Proceeds   Gains (Losses)
---------------------------------       --------     --------   --------------
<S>                                      <C>          <C>          <C>
Participating, stabilized                $12,755      $13,652      $   897
Non-participating, stabilized             11,814       11,808           (6)
Non-participating, not stabilized          1,450        1,450           --
                                         -------      -------      -------
Total                                    $26,019      $26,910      $   891
                                         =======      =======      =======

</TABLE>

At March 31, 2006,  mortgage  revenue bonds with an aggregate fair value of $2.3
billion  were  securitized  or pledged as  collateral  in relation to  financing
arrangements.  Of these,  21 bonds  with a fair  value of  approximately  $223.6
million are eliminated in consolidation as noted in the tables above.

See also Note 17 regarding  the status of other  mortgage  revenue  bonds in our
portfolio  for  which  we have  assumed  the  general  partner  interest  in the
associated property-level partnership.


                                       9
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 4 - OTHER INVESTMENTS

Investments other than mortgage revenue bonds consisted of:

<TABLE>
<CAPTION>

                                                        March 31,   December 31,
                (In thousands)                            2006         2005
--------------------------------------------------      --------    -----------
<S>                                                     <C>          <C>
Investment in equity interests in LIHTC properties      $ 36,997     $ 46,985
Investment in properties under development                 4,271        4,300
Investment in ARCap                                       18,811       19,874
CCA loans and preferred stock                             20,150       26,884
Mortgage loans held for sale                              57,956      153,277
Notes receivable                                          32,003       32,670
Other investments                                         15,637       14,600
                                                        --------     --------
   Total other investments                              $185,825     $298,590
                                                        ========     ========

</TABLE>

The balance of "CCA loans and  preferred  stock" at December 31, 2005,  included
$4.1 million of  preferred  stock that was redeemed and $2.7 million of advances
that were forgiven as part of the purchase price of CRES (see Note 2).

 "Notes  receivable"  includes a $26.0 million  investment in a mortgage loan in
which we have co-invested with American Mortgage Acceptance Company ("AMAC"), an
affiliated,  publicly  traded  real  estate  investment  trust we manage  (which
invested $5.0 million pursuant to a Subordinated  Participation  Agreement).  We
sold the investment at par to AMAC in April 2006 (see Note 18).

 "Other investments" includes $5.0 million invested in a fund sponsored by CRES,
which is not consolidated in our financial statements.

NOTE 5 - OTHER ASSETS

The components of other assets were as follows:

<TABLE>
<CAPTION>

                                                        March 31,    December 31,
(In thousands)                                            2006          2005
----------------------------------------------------    ---------    -----------
<S>                                                     <C>           <C>
Deferred financing and other costs                      $  37,298     $ 38,059
Less: Accumulated amortization                            (14,860)     (14,031)
                                                        ---------     --------

Net deferred costs                                         22,438       24,028

Real estate owned                                          36,431       35,608

Interest receivable                                        17,153       16,964
Fees receivable, net                                       34,985       30,774
Due from unconsolidated partnerships, net                  13,568        7,668
Furniture, fixtures and leasehold improvements, net         9,014        8,178
Income tax receivable                                       6,063        4,276
Interest rate swap at fair value                            6,276        4,857
Deferred taxes                                                857        1,849
Other                                                      19,940       10,468
                                                        ---------     --------

Total                                                   $ 166,725     $144,670
                                                        =========     ========

</TABLE>


                                       10
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consisted of the following:

<TABLE>
<CAPTION>

                                               March 31,      December 31,
        (In thousands)                           2006            2005
------------------------------                 --------       -----------
<S>                                            <C>              <C>
Goodwill                                       $243,375         $235,684
Other intangible assets, net                    137,377          141,301
Mortgage servicing rights, net                   62,589           62,190
                                               --------         --------

Total                                          $443,341         $439,175
                                               ========         ========

</TABLE>

A. GOODWILL

The following table provides information regarding goodwill by segment:

<TABLE>
<CAPTION>

                                            Fund         Mortgage
        (In thousands)                   Management      Banking         Total
----------------------------             ----------     ---------     ----------
<S>                                      <C>            <C>           <C>
Balance at December 31, 2005             $ 197,937      $  37,747     $ 235,684
Additions                                    7,888             --         7,888
Reductions                                    (197)            --          (197)
                                         ---------      ---------     ---------
Balance at March 31, 2006                $ 205,628      $  37,747     $ 243,375
                                         =========      =========     =========

</TABLE>

The increase in Fund Management goodwill relates to the acquisition of CRES (see
Note 2). The reduction in Fund Management  goodwill  pertained to the conversion
of SCUs,  the  deferred  tax  impact of which  served to  effectively  lower the
purchase price of CharterMac Capital LLC ("CharterMac Capital").


B. OTHER INTANGIBLE ASSETS

The components of other identified intangible assets are as follows:

<TABLE>
<CAPTION>
                                         Estimated
                                           Useful
                                            Life             Gross                 Accumulated
            (In thousands)               (in Years)      Carrying Amount           Amortization                   Net
---------------------------------------  ----------  ----------------------    ----------------------    ----------------------
                                                     March 31,  December 31,   March 31,  December 31,   March 31,  December 31,
                                                       2006        2005          2006        2005          2006        2005
                                                     --------   ------------   --------   ------------   --------   ------------
<S>                                         <C>      <C>          <C>          <C>          <C>          <C>          <C>
Amortized identified intangible assets:
  Partnership service contracts              9.4     $ 47,300     $ 47,300     $ 11,982     $ 10,718     $ 35,318     $ 36,582
  Transactional relationships               16.7      103,000      103,000       19,971       17,864       83,029       85,136
  General partner interests                  9.0        5,100        5,100        1,343        1,201        3,757        3,899
  Joint venture developer relationships      5.0        4,800        4,800        2,275        2,035        2,525        2,765
  Mortgage banking broker relationships      5.0        1,080        1,080          234          180          846          900
  Other identified intangibles               9.3        4,427        4,427        3,298        3,181        1,129        1,246
                                            ----     --------     --------     --------     --------     --------     --------
Subtotal/weighted average life              13.8      165,707      165,707       39,103       35,179      126,604      130,528
                                            ====

Unamortized identified intangible assets:
  Mortgage banking licenses and approvals
    with no expiration                                 10,773       10,773           --           --       10,773       10,773
                                                     --------     --------     --------     --------     --------     --------

Total identified intangible assets                   $176,480     $176,480     $ 39,103     $ 35,179     $137,377     $141,301
                                                     ========     ========     ========     ========     ========     ========

                                                                                 2006         2005
                                                                               --------     --------
Amortization expense recorded for the
  three months ended March 31,                                                 $  3,924     $  4,170
                                                                               ========     ========

</TABLE>


                                       11
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



The amortization of "other identified  intangibles"  (approximately $477,000 per
year) is included as a reduction  to mortgage  revenue bond  interest  income as
they pertain to the acquisition of such bond investments.

NOTE 7 - FINANCING ARRANGEMENTS AND NOTES PAYABLE

Our CharterMac Capital warehouse line was extended until October 2006. The terms
of the  renewed  line are  similar to  previous  terms  except that the rate was
reduced to LIBOR plus 1.70% from LIBOR plus 2.00%.

The CharterMac  Mortgage Capital ("CMC")  warehouse line was reduced from $250.0
million  to $175.0  million  in 2006  pursuant  to terms  arranged  with Bank of
America. This facility matures in May 2006 and is subject to annual renewal.

NOTE 8 - DERIVATIVE INSTRUMENTS

As of March 31, 2006, we had interest rate swaps with varying  expiration  dates
and an aggregate  notional  amount of $450.0  million,  which are  designated as
hedging  instruments in cash flow hedges with the hedged item being the variable
interest payments on our floating rate securitizations. These swaps are recorded
at fair market value,  with changes in fair market value recorded in accumulated
other  comprehensive  income to the extent the hedges are effective in achieving
offsetting cash flows. There was no ineffectiveness in the hedging relationships
during the periods reported.  Amounts in accumulated other comprehensive  income
will be  reclassified  into  earnings  in the same  period and during  which the
hedged  forecasted  transaction  affects  earnings.  Since  we are  hedging  the
variable interest payments in our floating rate securitizations,  the forecasted
transactions are the interest payments.

We expect  all of the swaps will be highly  effective  in  achieving  offsetting
changes in cash flows throughout their terms.

As of March 31, 2006, we also had an interest  rate swap with a notional  amount
of $26.0 million that is hedging the change in the fair value of a $26.0 million
investment.  We did not elect to apply hedge accounting to this fair value swap.
Any  change in the fair  value of this swap is  therefore  included  in  current
period net income.  This swap will be  terminated  in the second  quarter as the
related investment was sold to AMAC subsequent to March 31, 2006 (see Note 18).

Interest rate swaps for which we were in a net settlement liability position are
recorded in accounts  payable,  accrued expenses and other liabilities and those
for  which we are in a net  settlement  asset  position  are  recorded  in other
assets. The amounts recorded at March 31 were as follows:

<TABLE>
<CAPTION>

                        (In thousands)                                2006        2005
                                                                    --------    --------
<S>                                                                  <C>         <C>
        Net liability position                                       $    --     $   502
        Net asset position                                           $ 6,276     $ 2,909

Interest expense included the following related to our swaps:

        Interest expense                                             $    96     $ 1,382
        Interest income                                                 (181)         --
        Change in fair value of free standing swap                      (750)         --
                                                                     -------     -------

        Total                                                        $  (835)    $ 1,382
                                                                     =======     =======

</TABLE>

We estimate that  approximately $1.3 million of the net unrealized gain included
in accumulated  other  comprehensive  income will reduce interest expense within
the next twelve months.


                                       12
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 9 - ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES

Accounts  payable,  accrued  expenses  and other  liabilities  consisted  of the
following:

<TABLE>
<CAPTION>

                                           March 31,         December 31,
            (In thousands)                   2006               2005
------------------------------------       --------          -----------
<S>                                        <C>                <C>
Deferred revenues                          $ 67,684           $ 70,025
Distributions payable                        41,106             41,080
Accounts payable                             24,835             22,314
Salaries and benefits                         8,161             15,816
Other                                        22,940             30,040
                                           --------           --------

Total                                      $164,726           $179,275
                                           ========           ========

</TABLE>

NOTE 10 - MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES

Minority interests in consolidated subsidiaries consisted of the following:

<TABLE>
<CAPTION>

                                           March 31,         December 31,
            (In thousands)                   2006               2005
------------------------------------       --------          -----------
<S>                                        <C>                <C>
Convertible Special Common Units
   ("SCUs") of a subsidiary                $247,674           $250,866
Convertible Special Membership
   Units ("SMUs") of a subsidiary            11,325             11,408
                                           --------           --------

Total                                      $258,999           $262,274
                                           ========           ========

</TABLE>

Income allocated to minority interests was as follows:

<TABLE>
<CAPTION>

                                               Three Months Ended
                                                   March 31,
                                          ----------------------------
(in thousands)                              2006                2005
                                          --------            --------
<S>                                       <C>                 <C>
Convertible SCUs                          $  5,729            $  6,065
Convertible SMUs                               150                  --
                                          --------            --------

Total                                     $  5,879            $  6,065
                                          ========            ========

</TABLE>

In the first three  months of 2006,  the holders of 20,000  SCUs  converted  the
units  to an  equivalent  number  of  common  shares,  and the  related  special
preferred voting shares were redeemed at par.


                                       13
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 11 - CONSOLIDATED PARTNERSHIPS

Assets and liabilities of consolidated partnerships consisted of:

<TABLE>
<CAPTION>

                                               March 31,       December 31,
           (In thousands)                        2006             2005
------------------------------------          ----------       ----------
<S>                                           <C>              <C>
Investments in property partnerships          $3,058,796       $3,025,762

Land, buildings and improvements,
   net of accumulated depreciation               323,602          329,869
Cash                                             189,442          172,622
Other assets                                      89,488           78,033
                                              ----------       ----------
    Subtotal                                     602,532          580,524
                                              ----------       ----------

Total assets                                  $3,661,328       $3,606,286
                                              ==========       ==========

Notes payable                                 $  567,777       $  565,877
Due to property partnerships                     830,543          896,031
Other liabilities                                130,295          165,648
                                              ----------       ----------

Total liabilities                             $1,528,615       $1,627,556
                                              ==========       ==========

</TABLE>

Of the notes payable  balance,  $459.2  million are guaranteed by certain equity
partners  of the  investment  funds.  Per  partnership  agreements,  the  equity
partners are also obligated to pay the principal and interest on the notes.  The
remaining  balance  of $108.6  million  is  collateralized  with the  underlying
properties  of the  consolidated  operating  partnerships.  All of this  debt is
non-recourse to the Company.


NOTE 12 - RELATED PARTY TRANSACTIONS

General and administrative expense includes shared services fees paid or payable
to The Related Companies,  L.P. ("TRCLP"), a company controlled by our chairman.
These fees totaled  $163,000  for the three  months  ended March 31,  2006,  and
$138,000 for the three months ended March 31, 2005.

In  addition,  a  subsidiary  of  TRCLP  earned  fees  for  performing  property
management  services for various  properties  held in investment  funds which we
manage.  These  fees,  which are  included  in other  expenses  of  consolidated
partnerships,  totaled  approximately  $1.0  million for the three  months ended
March 31, 2006, and approximately  $963,000 for the three months ended March 31,
2005.

We collect asset management, incentive management and expense reimbursement fees
from AMAC, an affiliated,  publicly traded real estate investment  trust.  These
fees,  which are  included in fund  sponsorship  income,  totaled  approximately
$952,000 for the three months ended March 31, 2006, and  approximately  $648,000
for the three  months ended March 31,  2005.  We entered  into a new  agreement,
effective as of April 2006 whereby the basis of certain of the fees we will earn
will  be  changed,  although  we do not  expect  the  fees  we  earn  to  differ
significantly from the existing agreement absent the effect of AMAC's growth.

In June 2004, we entered into an unsecured  revolving  credit facility with AMAC
to provide it up to $20.0 million, bearing interest at LIBOR plus 3.0%, which is
to be used by  AMAC  to  purchase  new  investments  and for  general  corporate
purposes.  In the  opinion  of  management,  the  terms  of  this  facility  are
consistent with those of loan transactions with independent third parties. As of
March 31, 2006, there were no outstanding  advances to AMAC under this facility.
No interest  income was earned from this  facility  for the three  months  ended
March 31,  2006,  and  approximately  $73,000 was  recorded for the three months
ended March 31, 2005. In April 2006, we extended and increased the facility (see
Note 18).


                                       14
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 13 - COMPREHENSIVE INCOME

Comprehensive income was as follows:

<TABLE>
<CAPTION>

                                                                               Three months Ended
                                                                                    March 31,
                                                                             ---------------------
                            (In thousands)                                     2006         2005
-------------------------------------------------------------------------    --------     --------
<S>                                                                          <C>          <C>
Net income                                                                   $ 14,657     $ 14,785
Net unrealized gain on interest rate derivatives                                  591        4,174
Net unrealized gain on marketable securities and equity investments              (285)          --
Net unrealized gain on mortgage revenue bonds:
   Unrealized loss during the period                                          (13,685)      (4,021)
   Reclassification adjustment for net (gain) loss included in net income        (891)           9
                                                                             --------     --------
Comprehensive income                                                         $    387     $ 14,947
                                                                             ========     ========

</TABLE>

NOTE 14 - SHARE BASED COMPENSATION

A. THE PLAN

As approved by shareholders in 1997 and amended and restated in 2003, we have an
Amended and Restated Incentive Share Plan (the "Plan"),  the purpose of which is
to:

o    attract and retain qualified persons as trustees and officers; and
o    provide  incentive and more closely  align the  financial  interests of our
     employees,  officers and trustees with the interests of our shareholders by
     providing them with a financial interest in our success.

The  Compensation  Committee  of our  board of  trustees  administers  the Plan.
Pursuant to the Plan, the maximum number of common shares that may be awarded is
the lesser of:

o    10% of the number of total shares  outstanding  as of December 31 preceding
     issuances of such awards; and
o    the  limits  prescribed  by the  national  security  exchange  or  national
     quotation system on which the shares may then be listed.

The Plan allows for the  issuance of share  options,  restricted  share  grants,
share appreciation rights, restricted and deferred shares, performance units and
performance shares.

B. SHARE OPTIONS

All options  granted have an exercise  price equal to or greater than the market
price of our common  shares on the grant date.  The  maximum  option term is ten
years from the date of grant and options  granted  pursuant to the Plan may vest
immediately  upon  issuance  or over a  period  determined  by our  compensation
committee.

We granted the following options pursuant to the Plan:

<TABLE>
<CAPTION>

                                     Weighted Average               Vesting
 Year                    Number       Exercise Price     Term        Period
 ------------------------------------------------------------------------------
<S>                      <C>              <C>          <C>          <C>
 2005                    656,515          $24.35       10 years     3 years
 2006                    384,490          $22.03       10 years     3 years

</TABLE>


                                       15
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



We used the following  assumptions in the Black-Scholes  option pricing model to
determine fair values of options granted:

<TABLE>
<CAPTION>

                                                      2006             2005
                                                    --------         --------
<S>                                                  <C>              <C>
Risk free interest rate                               4.50%            3.01%
Expected years until exercise                         2.00             2.00
Expected stock volatility                            24.09%           20.38%
Dividend yield                                        7.63%            6.71%

</TABLE>

The following table  summarizes share option activity for the three months ended
March 31, 2006:

<TABLE>
<CAPTION>

                                                            Weighted
                                                             Average
                                                            Exercise
                                              Options        Price
                                             ---------     ----------
<S>                                          <C>             <C>
Outstanding at beginning of year             1,510,341       $20.42

Granted                                        384,490        22.03
Forfeited                                           --           --
Exercised                                           --           --
                                            ----------       ------
Outstanding at end of period                 1,894,831       $20.75
                                            ==========       ======

Exercisable at end of period                   613,174       $21.16
                                            ==========       ======

Fair value of options granted
  during the period (in thousands)          $     800
                                            =========

Compensation cost recorded (in thousands)   $     226
                                            =========

</TABLE>

The following table summarizes  information about share options  outstanding and
exercisable at March 31, 2006:

<TABLE>
<CAPTION>

                                                Weighted
                                                Average
                                               Remaining
                             Number         Contractual Life       Number
      Exercise Price       Oustanding          (in Years)       Exercisable
      --------------       ----------       ----------------    -----------
      <S>                  <C>                     <C>            <C>
      $11.56                  51,576               4.1             51,576
      $17.56                   2,250               6.5              2,250
      $17.78                 800,000               7.6            200,000
      $21.61                  20,000               9.2                 --
      $24.44                 636,515               8.8            359,348
      $22.03                 384,490               9.8                 --
                           ---------              ----            -------
                           1,894,831               8.4            613,174
                           =========              ====            =======

</TABLE>

As of March 31,  2005,  there were  approximately  4.3 million  options or share
grants available for issuance under the Plan.


                                       16
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



C. NONVESTED SHARES AND SCUS

The following table summarizes  information  about nonvested shares and SCUs for
the three months ended March 31, 2006:

<TABLE>
<CAPTION>

                                                  Weighted
                                                   Average               Weighted
                                                    Grant                 Average
                                      Nonvested   Date Fair  Nonvested  Grant Date
                                       shares       Value       SCUs    Fair Value
                                      ---------   ---------  ---------  ----------
<S>                  <C>               <C>         <C>        <C>         <C>
Nonvested at January 1, 2006           241,194     $20.25     310,400     $17.92
Granted                                165,906      21.32          --         --
Vested                                  58,872      20.96          --         --
Forfeited                                   36      23.48          --         --
                                       -------     ------     -------     ------
Nonvested at March 31, 2006            348,192     $20.64     310,400     $17.92
                                       =======     ======     =======     ======

</TABLE>

NOTE 15 - EARNINGS PER SHARE

For basic EPS, the number of shares includes  common and  Convertible  Community
Reinvestment Act Preferred Shares ("Convertible CRA Shares"), as the Convertible
CRA  Shares  have the same  economic  benefits  as  common  shares,  and  income
represents  net income less  dividends  for the 4.4%  Convertible  CRA Preferred
Shares.

Diluted  EPS  is  calculated   using  the  weighted  average  number  of  shares
outstanding  during the period  plus the  additional  dilutive  effect of common
share equivalents. The dilutive effect of outstanding share options and unvested
share grants is calculated using the treasury stock method. The 4.4% Convertible
CRA Preferred Shares and our subsidiaries' SCUs and SMUs are not included in the
calculation as their assumed conversions would be antidilutive.

<TABLE>
<CAPTION>


                                                          Three Months Ended                Three Months Ended
                                                            March 31, 2006                    March 31, 2005
                                                     ------------------------------   ------------------------------
    (In thousands, except per share amounts)         Income      Shares   Per Share   Income      Shares   Per Share
-------------------------------------------------    -------    -------   ---------   -------    -------   ---------
 <S>                                                  <C>        <C>       <C>        <C>         <C>        <C>
 Net income                                          $14,657                          $14,785
 Preferred dividends                                   1,188                               --
                                                     -------                          -------
 Net income allocable to shareholders (Basic EPS)     13,469     58,578    $  0.23     14,785     57,821     $ 0.26
                                                                           =======                           ======
 Effect of dilutive securities                            --        317                    --        415
                                                     -------    -------               -------    -------
 Diluted EPS                                         $13,469     58,895    $  0.23    $14,785      58,236    $ 0.25
                                                     =======    =======    =======    =======    ========    ======

</TABLE>


                                       17
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 16 - BUSINESS SEGMENTS

We operate in four business segments:

1.   Portfolio Investing,  which includes  subsidiaries that invest in primarily
     tax-exempt  first  mortgage  revenue bonds issued by various state or local
     governments,  agencies or  authorities  and other  investments  designed to
     produce federally  tax-exempt  income. The proceeds of the mortgage revenue
     bonds are used to finance the new construction, substantial rehabilitation,
     acquisition,  or refinancing of affordable  multifamily  housing throughout
     the United States.

     Through  this  segment,  we also  invest  in  other  entities,  such as our
     preferred and common  investments in ARCap, our participating  loan to CCA,
     our preferred  investment in CCA prior to the  acquisition of CRES, and our
     investments in funds that CCA and CRES sponsor.

2.   Fund Management, which includes:

o    Subsidiaries   that  sponsor  real  estate  equity  investment  funds  that
     primarily  invest in LIHTC  properties.  In  exchange  for  sponsoring  and
     managing these funds, we receive fee income for providing asset management,
     underwriting, origination and other services;
o    A subsidiary that provides advisory services to AMAC;
o    Subsidiaries  that  participate  in  credit  intermediation   transactions,
     including those for pools of mortgage loans and providing specified returns
     to investors in LIHTC equity funds, in exchange for fees; and
o    A subsidiary that provides pension advisory services.

3.   Mortgage  Banking,  which includes  subsidiaries that originate and service
     primarily multifamily mortgage loans on behalf of third parties, including:

o    Fannie Mae;
o    Freddie Mac;
o    the FHA;
o    AMAC; and
o    Insurance companies and conduits.

     In exchange for these  origination  and  servicing  activities,  we receive
origination and servicing fees.

4.   Consolidated  Partnerships,  primarily  the LIHTC  equity  funds we sponsor
     through  the  Fund  Management  segment's  subsidiaries  and  which  we are
     required to  consolidate  in  accordance  with FIN 46(R),  as well as other
     partnerships we control but in which we have little or no equity interest.

Segment results include all direct and contractual revenues and expenses of each
segment and  allocations of indirect  expenses based on specific  methodologies.
These reportable  segments are strategic  business units that primarily generate
revenue  streams  that  are  distinctly  different  and  are  generally  managed
separately.

The  table  below  includes  Cash  Available  for  Distribution  ("CAD"),  and a
reconciliation  from CAD to net income,  as the performance  measure used by our
chief decision-maker to allocate resources among the segments.


                                       18
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



The following table provides more information regarding our segments:

<TABLE>
<CAPTION>

                                                          THREE MONTHS ENDED
                                                               MARCH 31,
                                                        -----------------------
(In thousands)                                            2006           2005
                                                        --------       --------
<S>                                                     <C>            <C>
REVENUES
   Portfolio Investing                                  $ 44,300       $ 39,481
   Fund Management                                        22,923         16,417
   Mortgage Banking                                       13,251          5,871
   Consolidated Partnerships                               8,245          4,902
   Elimination of intersegment transactions              (17,621)        (8,725)
                                                        --------       --------
Consolidated                                            $ 71,098       $ 57,946
                                                        ========       ========

CAD
   Portfolio Investing                                  $ 23,214       $ 27,857
   Fund Management                                         1,452          3,163
   Mortgage Banking                                        4,012             38
                                                        --------       --------
   Total Segment CAD                                      28,678         31,058
   Preferred dividends                                    (1,188)            --
   Subsidiary equity distributions                        (8,905)        (8,640)
   Dividends on subsidiary preferred stock                (6,281)        (6,281)
   Current tax benefit                                     2,951             --
                                                        --------       --------
   Consolidated CAD                                       15,255         16,137
   Fees deferred for GAAP (1)                                837         (4,430)
   Depreciation and amortization expense                  (8,913)        (7,696)
   Mortgage revenue bond yield adjustments (2)              (163)           490
   Gain on sale of loans (3)                               4,623          1,637
   Tax adjustment (4)                                        (32)         8,365
   Non-cash compensation (5)                              (2,035)        (1,958)
   Difference between subsidiary equity
    distributions and income allocated to
    subsidiary equity holders (6)                          3,025          2,575
   Preferred dividends                                     1,188             --
   Other, net                                                872           (335)
                                                        --------       --------
Consolidated Net Income                                 $ 14,657       $ 14,785
                                                        ========       ========

DEPRECIATION AND AMORTIZATION
   Portfolio Investing                                  $    788       $    961
   Fund Management                                         4,383          4,598
   Mortgage Banking                                        3,742          2,137
   Consolidated Partnerships                                  --             --
   Elimination of intersegment transactions                   --             --
                                                        --------       --------
Consolidated                                            $  8,913       $  7,696
                                                        ========       ========

</TABLE>

(1)  Represents  the net  difference  between  fees  received  at the  time of a
     transaction  that are recognized  immediately  for CAD but are deferred and
     recognized  over time for GAAP  accounting  (e.g.:  fund  sponsorship  fees
     recognized over the relevant  service  periods) or upon a later event (such
     as mortgage origination fees recognized upon settlement of a loan sale).
(2)  Represents the adjustment  for  amortization  of bond discounts or premiums
     that are  recognized  immediately  for CAD but are deferred and  recognized
     over time for GAAP  accounting,  as well as the  difference  between actual
     interest  income received and income  recognized  under the effective yield
     method.
(3)  Represents  non-cash  gain  recognized  on  sale  of  mortgage  loans  when
     servicing rights are retained and gains on sales of mortgage revenue bonds.
(4)  Represents the difference between the tax benefit recorded and the net cash
     amount we expect to pay or receive in relation to the current period.
(5)  Represents the add-back of amortization of costs recognized for share-based
     compensation.
(6)  Represents  the  difference  between  actual  distributions  to SCU and SMU
     holders  (which  is  based  on the  common  share  distribution  rate)  and
     accounting  allocation  of  earnings,  which is  based  on the  represented
     portion of combined  common,  CRA and subsidiary  equity in allocating GAAP
     net income.


                                       19
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 17 - COMMITMENTS AND CONTINGENCIES

PRS/CRG

PRS Companies  ("PRS") and Capitol Realty Group ("CRG") were sponsors of certain
LIHTC  partnerships  for which we hold  mortgage  revenue  bonds and/or to which
investment funds we sponsor have contributed equity. Information with respect to
these  partnerships  is set forth in the table  below.  A  construction  company
affiliate of PRS also served as general contractor for those partnerships.

Due to  financial  difficulties  experienced  by PRS,  we  ceased  our  business
dealings with them and, among other provisions of an agreement  reached in April
2005,  assumed the general partner interest in certain of the "PRS Partnerships"
indicated in the table below.

Also in April  2005,  affiliates  of ours  acquired  by  assignment  the general
partnership  interests owned by CRG in five of the "CRG Partnerships"  indicated
in the table below.  We sought control of the CRG  Partnerships  because PRS was
the construction  general  contractor for those  partnerships and PRS' financial
difficulties caused construction  finance shortfalls that have created liquidity
problems for those  partnerships.  We entered into  settlement  agreements  that
provided for, among other things:

o    a  non-revolving  line of credit  from us to be used to  stabilize  the CRG
     Partnerships  which is collateralized by contractual  rights to development
     fees to CRG and its  affiliates  to receive  fees and other  consideration.
     This  includes  interim  loans to satisfy  amounts  due to  subcontractors,
     material suppliers and other vendors providing materials and/or services on
     the CRG projects;
o    reaffirmation of various guarantee agreements;
o    the assignment of the interests in the CRG Partnerships to our affiliates;
o    an  operating  agreement,  whereby an affiliate of CRG will operate the CRG
     projects subject to our discretion; and
o    various releases by and amongst the CRG Settlement  parties,  excluding any
     reaffirmation of guaranty  agreements and any other exclusions set forth in
     the CRG Settlement Agreements.

The  CRG  Settlement  Agreements  also  provide  that  the  general  partnership
interests  will be returned to CRG if they provide us with a letter of credit to
secure advances made and/or such advances are paid in full by a date certain.

Additionally,  there were two other projects, for which PRS was the construction
company--O'Fallon and Peine Lakes (the "GCG Partnerships").  With respect to the
O'Fallon  project,  in August 2005 the Gundaker  Commercial  Group,  Inc and its
affiliates  ("GCG")  and our  affiliates  negotiated  a letter of  intent  which
provides for:

o    additional mortgage debt financing by an affiliate of ours;
o    the  assignment  of a portion of our  affiliates  interest in the  O'Fallon
     Partnership to an affiliate of GCG;
o    the execution of a new construction contract; and
o    amendments to several fee agreements.

With  respect  to the  Peine  Lakes  project,  it  continues  to move  along its
construction phase and is now substantially  complete.  GCG has assumed the full
general partner interest and agreed to fund  approximately $1.0 million into the
Peine Partnership to aid in any cost overruns and any amounts due and owing as a
result of the action of PRS on the  project.  Should cost  overruns  exceed $1.0
million,  we will share in the excess in return  for a partial  general  partner
interest.

In addition  to the PRS  Partnerships,  CRG  Partnerships  and GCG  Partnerships
described  above, we own bonds that finance other  partnerships in which PRS was
the  general  partner  or in which CRG is the  general  partner  and PRS was the
construction  general contractor.  These partnerships are also summarized in the
table below.  On those deals in which our funds are not the equity  sponsor,  we
will  look  to  the  respective  equity  investor  to  take  control,   complete
construction and stabilize the partnerships.  Absent a satisfactory  resolution,
we may  exercise our  available  remedies to protect our  investments.  In those
situations, there is substantial equity in the form of LIHTCs in addition to the
real estate, both of which are our collateral.


                                       20
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



There can be no assurance  that a bankruptcy by or against PRS or its affiliates
may not give rise to additional claims concerning these partnerships.

Our potential exposure falls into three categories as follows:

     Cash required to bring the properties to break-even operation - Our current
          estimate of the maximum  amount of cash that we may need to provide to
          bring the  properties  to  break-even  operation,  taking into account
          delays in construction,  is approximately $15.0 million $20.0 million.
          This estimate is based upon our ongoing  analyses and may increase due
          to unforeseen  construction delays and other factors, while the amount
          may be reduced by  additional  contributions  by investors  (which may
          generate  additional  tax  credits),  reserves at the property  level,
          syndication  of state tax  credits or other  factors.  As of March 31,
          2006, advances outstanding totaled  approximately $17.2 million either
          to the partnerships or through the revolving line of credit to the CRG
          partnerships.  These  advances,  and  additional  loans,  are assessed
          periodically  for  collectibility  and  the  impact  on the  potential
          impairment  of  existing   mortgage  revenue  bonds.   Given  existing
          loan-to-value ratios and the variability of the likelihood of funding,
          we cannot yet  determine  the  ultimate  amount of any such loans.  At
          present,  we do not  anticipate  that any such loans  would  require a
          charge to expense.

     Potential impact on mortgage revenue bonds - Our current estimate, based on
          available information, is that expected cash flows from the underlying
          properties are sufficient to provide debt service.  As a result, we do
          not believe that there is  other-than-temporary  impairment  of any of
          the affected bonds.

     Potential cost to provide  specified  yields - As noted in the table below,
          10 of the  partnerships in question are part of equity funds for which
          we are obligated to provide specified  yields. As construction  delays
          are likely to reduce the expected yields of the properties themselves,
          performance  of the  funds is  likely  to be  impacted  as  well.  The
          obligations,   however,  provide  for  expected  yields  on  pools  of
          properties, some of which are performing above expected levels and the
          funds  themselves  often provide for  adjustors  that may mitigate the
          negative impact that would arise from the construction delays over the
          guarantee period covered by the agreements. Our current estimate given
          these factors,  and assuming that the property level partnerships meet
          their obligations under existing  partnership  agreements,  is that no
          exposure under these agreements is probable at this time.

With  respect  to one  property  in early  stages  of  construction,  we  halted
construction  and have since exercised our right to foreclosure as holder of the
first mortgage and plan to sell the property at our current carrying value after
recognizing a write-down in the second quarter of 2005.

With respect to another  property in the early stages of  construction,  we have
likewise determined that construction should not be continued.  We do not hold a
bond with respect to this property,  but a fund we sponsored provided equity. We
have received  preliminary  bids to sell our general partner and limited partner
interests that would allow us to fully recover the fund's  investment.  As such,
we expect no loss with respect to this property.

We  consolidated  the  partnerships  for  which  we  have  assumed  the  general
partnership  interests (except for the GCG  Partnerships,  which do not give our
affiliates operational control of the partnerships) effective April 2005.


                                       21
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



The partnerships in question are summarized as follows:

<TABLE>
<CAPTION>

                                                                                                  (In thousands)
                                                                                                           Fair Value of
                               CharterMac   CharterMac                                                       Mortgage
                                Holds  or     Capital                                              Loan       Revenue
                               Will Hold     Sponsored    Included    CharterMac     Third       Amounts       Bonds
                                Mortgage      Fund is     in Credit    Capital       Parties    Upon Full   Outstanding
                                Revenue       Equity    Intermediated  Holds GP     Provided       Draw     at March 31,
                    Number        Bond        Partner      Funds       Interest      Equity        Down         2006
                   --------    ----------   ----------  ------------- ----------    --------    ---------   -----------
<S>                      <C>          <C>          <C>          <C>          <C>          <C>    <C>          <C>
PRS
  PARTNERSHIPS
Construction              2            2            1            1            1            1     $ 21,900     $ 22,307
Lease-Up                  8            7            4            2            4            4       89,900       90,369
Rehab                     2            2            1            1            1            1       30,400       31,599
Stabilized                2            2           --           --           --            2       18,595       18,859
                   --------     --------     --------     --------     --------     --------     --------     --------
Subtotal                 14           13            6            4            6            8      160,795      163,134
                   --------     --------     --------     --------     --------     --------     --------     --------

CRG
  PARTNERSHIPS
Construction              1            1            1           --            1           --        7,130           --
Lease-Up                  3            1            3            2            1           --       10,532       10,628
Rehab                     3            3            3            3            3           --       71,564       72,463
Stabilized               --           --           --           --           --           --           --           --
                   --------     --------     --------     --------     --------     --------     --------     --------
Subtotal                  7            5            7            5            5           --       89,226       83,091
                   --------     --------     --------     --------     --------     --------     --------     --------

GCG
  PARTNERSHIPS
Construction              2            2            2            1           --           --       27,770       14,600
Lease-Up                 --           --           --           --           --           --           --           --
Rehab                    --           --           --           --           --           --           --           --
Stabilized               --           --           --           --           --           --           --           --
                   --------     --------     --------     --------     --------     --------     --------     --------
Subtotal                  2            2            2            1           --           --       27,770       14,600
                   --------     --------     --------     --------     --------     --------     --------     --------

Total                    23           20           15           10           11            8     $277,791     $260,825
                   ========     ========     ========     ========     ========     ========     ========     ========
Total eliminated in consolidation                                                                $155,475     $150,343
                                                                                                 ========     ========

</TABLE>

FORWARD TRANSACTIONS

At March 31, 2006, our Mortgage Banking  subsidiaries had forward commitments of
approximately  $217.4  million for mortgages to be funded in 2006 and later.  As
each lending  commitment has an associated sale  commitment,  the fair values of
these  commitments  offset  each other and,  as a result,  we record no asset or
liability.  In addition,  those  subsidiaries  had commitments to sell mortgages
totaling $109.9 million.  Approximately  $31.5 million of this amount was funded
as of March 31, 2006,  and is included in Other  Investments  as Mortgage  Loans
Held for Sale. The balance of approximately  $78.4 million is to be funded later
in 2006.

We have  entered  into  transactions  to  purchase  mortgage  revenue  bonds  at
predetermined  prices  and  interest  rates,  but  only if  construction  of the
property is completed.  These forward commitments create derivative  instruments
under  SFAS No.  133,  which  have been  designated  as a cash flow hedge of the
anticipated  funding of the  mortgage  revenue  bonds and are  recorded  at fair
value,  with changes in fair value recorded in other  accumulated  comprehensive
income until the mortgage  revenue bonds are funded.  The total potential amount
we could be required to fund is $102.1 million.

Additionally,  we have certain  other bonds that we fund on an as needed  basis.
The remaining balance to be funded on these drawdown bonds is approximately $6.8
million at March 31, 2006.


                                       22
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



MORTGAGE BANKING LOSS SHARING AGREEMENT

Under a master loss sharing agreement with Fannie Mae, we assume  responsibility
for a portion  of any loss that may  result  from  borrower  defaults,  based on
Fannie Mae loss sharing  formulas.  At March 31, 2006,  all but one of our loans
sold to Fannie Mae consisted of Level I loans,  meaning,  in most cases, that we
are responsible for the first 5% of the unpaid  principal  balance and a portion
of any additional losses to a maximum of 20% of the original  principal balance;
Fannie  Mae  bears  any  remaining  loss.  Pursuant  to this  agreement,  we are
responsible for funding 100% of mortgagor  delinquency  (principal and interest)
and  servicing  (taxes,  insurance and  foreclosure  costs)  advances  until the
amounts  advanced  exceed  5% of the  unpaid  principal  balance  at the date of
default. Thereafter, we may request interim loss sharing adjustments which allow
us to fund 25% of such advances until final settlement under the agreement.

We also participate in loss sharing  transactions  under Freddie Mac's Delegated
Underwriting  Initiative  ("DUI")  program  whereby we originate  loans that are
purchased by Freddie Mac. The aggregate of all loans we can originate under this
program shall not exceed $100.0 million.

Under the terms of our master  agreement  with Freddie Mac, we are  obligated to
reimburse  Freddie Mac for a portion of any loss that may result  from  borrower
defaults on DUI transactions.  For such loans, if a default occurs, our share of
the loss will be the first 5% of the  unpaid  principal  balance  and 25% of the
next 20% of the remaining  unpaid  principal  balance to a maximum of 10% of the
unpaid  principal  balance.  The loss on a defaulted  loan is  calculated as the
unpaid principal amount due, unpaid interest due and default  resolutions  costs
(taxes, insurance, operation and foreclosure costs) less recoveries.

Our  maximum  exposure at March 31,  2006,  pursuant  to these  agreements,  was
approximately $868.9 million  (representing what we would owe in accordance with
the loss sharing  percentages with Fannie Mae and Freddie Mac described above if
every loan  defaulted),  although  this amount is not  indicative  of our actual
potential  losses. We maintain an allowance for loan losses for loans originated
under these product lines at a level that, in management's judgment, is adequate
to  provide  for  estimated   losses.  At  March  31,  2006,  that  reserve  was
approximately $12.7 million, which, we believe,  represents our actual potential
losses at that time.

Our Mortgage Banking subsidiaries  maintained,  as of March 31, 2006, collateral
consisting  of treasury  notes,  and Fannie Mae and Freddie  Mac  securities  of
approximately  $11.4 million and a money market  account of  approximately  $3.2
million,  which is included in cash and cash equivalents,  including  restricted
cash, in the  consolidated  balance sheet, to satisfy the Fannie Mae and Freddie
Mac collateral requirements of $12.7 million.

We are also  required  by the master  agreement  with  Freddie  Mac to provide a
letter of  credit  in the  amount of 8% of the  original  principal  balance  as
collateral security for payment of the reimbursement obligation. A reimbursement
agreement with the Bank of America to provide a master letter of credit covering
the  collateral  requirement  up to $8  million  covers  this  letter  of credit
requirement.  At March 31, 2006, commitments under this reimbursement  agreement
totaled $1.9 million.

MORTGAGE POOL CREDIT INTERMEDIATION

In December 2001, we completed a credit intermediation  transaction with Merrill
Lynch Capital Services, Inc. ("MLCS"). Pursuant to the terms of the transaction,
we assumed  MLCS's first loss position on a pool of tax-exempt  weekly  variable
rate  multifamily  mortgage  loans.  TRCLP  has  provided  us with an  indemnity
covering  50% of any losses  that we incur as part of this  transaction.  As the
loans  mature or prepay,  the first loss  exposure  and the fees we receive  are
reduced.  The latest maturity date on any loan in the portfolio  occurs in 2009.
Fannie  Mae and  Freddie  Mac have  assumed  the  remainder  of the real  estate
exposure after the first loss position.  In connection with the transaction,  we
have posted  collateral,  initially  in an amount equal to 50% of the first loss
amount,  which may be reduced to 40% if certain post closing conditions are met.
Our maximum exposure under the terms of the transaction as of March 31, 2006, is
approximately $7.4 million.

We  performed  due  diligence  on  each  property  in  the  pool,  including  an
examination  of  loan-to-value  and debt service  coverage both on a current and
"stressed"  basis. We analyzed the portfolio on a "stressed" basis by increasing
capitalization  rates and assuming an increase in the low floater bond rate.  As
of March 31, 2006, the credit-intermediated  properties are performing according
to their  contractual  obligations  and we do not  anticipate  any  losses to be
incurred on this  guarantee.  Should our  analysis of risk of loss change in the
future, a provision for probable loss might be required  pursuant to SFAS No. 5,
ACCOUNTING FOR CONTINGENCIES.


                                       23
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



YIELD TRANSACTIONS

We have entered into several credit  intermediation  agreements with either IXIS
Financial   Products,   Inc.   ("IXIS")  or  Merrill   Lynch  (each  a  "Primary
Intermediator") to provide  agreed-upon rates of return for pools of multifamily
properties each owned by a local partnership which in turn, is majority-owned by
a fund sponsored by CharterMac Capital. In return, we have or will receive fees,
generally at the start of each credit  intermediation  period. There are a total
of 11 outstanding agreements to provide the specified returns:

o    through the construction and lease-up phases of the properties;
o    for the period from the completion of the  construction and lease-up phases
     through the operating phase of the properties; or
o    covering both periods.

Total potential exposure pursuant to these transactions is approximately  $787.2
million,  assuming the funds achieve no return whatsoever.  We have analyzed the
expected operations of the underlying properties and believe there is no risk of
loss at this time, as we have never yet been called upon to make payments  under
these  agreements.  Should our analysis of risk of loss change in the future,  a
provision for possible losses might be required pursuant to SFAS No. 5. The fair
value of these obligations, representing the deferral of the fee income over the
obligation  periods,  was $22.1  million as of March 31,  2006.  This  amount is
included in deferred revenues on our consolidated  balance sheet.  Refer also to
PRS / CRG above, regarding potential exposure under existing obligations.

Some of the property-level  partnerships have financed their properties with the
proceeds  of  our  mortgage   revenue  bonds.   In  these  cases,   the  Primary
Intermediator has required that those mortgage revenue bonds be deposited into a
trust pursuant to which the mortgage  revenue bonds were divided into senior and
subordinated  interests  with  approximately  50% of each mortgage  revenue bond
being subordinated.  We have financed the senior trust interest and a portion of
certain of the subordinate trust interests using credit  intermediation from the
Primary  Intermediator as part of the P-FLOATs/RITES and TIC/TOC  securitization
programs.  We use the  remaining  subordinate  trust  interests as collateral in
these  programs.  In connection with these  transactions,  we have posted $232.1
million as collateral with a Primary Intermediator in the form of either cash or
mortgage revenue bonds as of March 31, 2006.

OTHER

We have entered into several transactions pursuant to the terms of which we will
provide credit support to construction lenders for project completion and Fannie
Mae conversion.  In some instances,  we have also agreed to acquire subordinated
bonds to the extent the construction  period bonds do not fully convert. We also
provide payment, operating deficit, recapture and replacement reserve guarantees
as business  requirements for developers to obtain construction  financing.  Our
maximum  aggregate  exposure  relating to these  transactions  is  approximately
$223.2  million  as of March  31,  2006.  The fair  value of these  obligations,
representing  the deferral of the fee income over the  obligation  periods,  was
$1.6  million as of March 31,  2006.  To date,  we have had minimal  exposure to
losses  under  these   transactions   and   anticipate  no  material   liquidity
requirements in satisfaction of any guarantee issued.

OTHER CONTINGENCIES

At March 31,  2006,  we had unused  letters of credit  totaling  $43.0  million,
including  the $8.0  million  described  in the  MORTGAGE  BANKING  LOSS SHARING
AGREEMENTS above.

We are subject to routine litigation and administrative  proceedings  arising in
the ordinary  course of business.  Management does not believe that such matters
will have a  material  adverse  impact on our  financial  position,  results  of
operations or cash flows.


                                       24
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (UNAUDITED)



NOTE 18 - SUBSEQUENT EVENTS

During April 2006,  we sold an  investment  to AMAC,  at its  approximate  $26.0
million par value.  We subsequently  terminated the fair value hedge  associated
with the investment.

During  April 2006,  we amended our loan  agreement  with AMAC on the  unsecured
revolving  credit facility to increase it's borrowing  capacity to $50.0 million
(see Note 12). The maturity of the facility was also extended to June 2007.

During May 2006, we amended our Capri  acquisition lines with Bank of America to
increase it's borrowing  capacity to $110.0 million.  The maturity date was also
extended to June 2006.


                                       25
<PAGE>



ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Forward-Looking Statements
--------------------------

Certain   statements  made  in  this  report  may  constitute   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended.
These  forward-looking  statements  are not  historical  facts,  but  rather our
beliefs and expectations and are based on our current  expectations,  estimates,
projections,  beliefs and assumptions about our Company and industry. Words such
as  "anticipates,"   "expects,"   "intends,"   "plans,"   "believes,"   "seeks,"
"estimates"  and similar  expressions  are intended to identify  forward-looking
statements.  These  statements are not guarantees of future  performance and are
subject to risks,  uncertainties and other factors, some of which are beyond our
control,  are  difficult  to predict  and could cause  actual  results to differ
materially from those expressed or forecasted in the forward-looking statements.
Some of these risks include, among other things:

o    adverse changes in the real estate markets  including,  among other things,
     competition with other companies;
o    interest rate fluctuations;
o    general economic and business  conditions,  which will, among other things,
     affect the availability and credit worthiness of prospective tenants, lease
     rents and the terms and  availability of financing for properties  financed
     by mortgage revenue bonds we own;
o    environment/safety requirements;
o    changes in applicable laws and regulations;
o    our  tax  treatment,  the tax  treatment  of our  subsidiaries  and the tax
     treatment of our investments;
o    risk of  default  associated  with the  mortgage  revenue  bonds  and other
     securities held by us or our subsidiaries;
o    the risk that  relationships  with key  investors  and  developers  may not
     continue;
o    our ability to generate fee income may not continue; and
o    risks related to the form and structure of our financing arrangements.

These  risks  are  more  fully  described  in our Form  10-K for the year  ended
December  31,  2005.  We  caution  you not to  place  undue  reliance  on  these
forward-looking  statements,  which reflect our view only as of the date of this
report.

Factors Affecting Comparability
-------------------------------

We acquired Capri Capital Limited Partnership  ("CCLP") in March 2005. Operating
results in our Portfolio Investing segment prior to the acquisition date include
interest income on a loan made to CCLP in July 2004.  Following the acquisition,
operating results of CCLP are included in our Mortgage Banking segment.

Results of Operations
---------------------

The  following is a summary of our  operations  for the three months ended March
31, 2006 and 2005:

<TABLE>
<CAPTION>

                                             % of                      % of
      (In thousands)           2006        Revenues      2005        Revenues     % Change
--------------------------   --------      --------    --------      --------     --------
<S>                           <C>           <C>         <C>           <C>           <C>
Revenues                      $71,098       100.0%      $57,946       100.0%        22.7 %
Income before income taxes    $11,738        16.5%      $ 6,420        11.1%        82.8 %
Net income                    $14,657        20.6%      $14,785        25.5%        (0.9)%

</TABLE>

Compared  to 2005,  the  first  quarter  of 2006  benefited  from the  continued
expansion of all of our  businesses and a full quarter of operations for CCLP in
the Mortgage Banking segment as compared to only one month in 2005. In addition,
revenues in 2006  include $8.2 million  generated by  consolidated  partnerships
compared  to  $4.9  million  in  2005.  Offsetting  the  revenue  gains  is  the
elimination  of  revenues  earned  by  our  subsidiaries  in  transactions  with
partnerships  we have  consolidated  but in which we have  virtually  no  equity
interest.  Although the amounts are eliminated in consolidation,  the net losses
recognized by those  partnerships  in  connection  with these  transactions  are
absorbed by their equity partners; as such, the elimination in consolidation has
an insignificant impact on our net income.

Revenue  gains and the overall  growth of other income in our  Mortgage  Banking
business  led to an increase in income  before  income taxes while a decrease in
the tax benefit recognized led to a slight decrease in net income.


                                       26
<PAGE>



REVENUES

Our revenues were as follows:

<TABLE>
<CAPTION>

                                                For the Three Months Ended March 31,
                                                ------------------------------------
            (In thousands)                          2006        2005      % Change
----------------------------------------          --------    --------    --------
<S>                                               <C>         <C>           <C>
Mortgage revenue bond interest income             $36,522     $36,367        0.4 %

Other interest income                               5,939       3,563       66.7

Fee income:
   Mortgage banking                                 7,854       4,081       92.5
   Fund sponsorship                                 6,514       3,779       72.4
   Credit intermediation                            1,703       1,724       (1.2)
                                                  -------     -------      -----
Total fee income                                   16,071       9,584       67.7

Other revenues:
   Construction service fee                         1,148         870       32.0
   Expense reimbursements                           1,227       1,459      (15.9)
   Administration fees                                401         334       20.1
   Prepayment penalties                               812         254      219.7
   Other                                              733         613       19.6
                                                  -------     -------      -----
Total other revenues                                4,321       3,530       22.4

Subtotal                                           62,853      53,044       18.5
                                                  -------     -------      -----

Revenues of consolidated partnerships               8,245       4,902       68.2
                                                  -------     -------      -----

   Total revenues                                 $71,098     $57,946       22.7 %
                                                  =======     =======      =====

</TABLE>

Mortgage  revenue  bond  interest  income  increased  due to an  increase in the
average  portfolio  balance  over  comparable  periods  although  the growth was
partially offset by a higher level of eliminations  following the  consolidation
of a group of property  level  partnerships  in mid-2005.  Fee income  variances
primarily  relate to  continued  growth of  businesses  and are  detailed in the
discussions of results for the Fund Management and Mortgage Banking segments.

Other  interest  income  includes  income from temporary  investments,  interest
earned on Mortgage  Banking escrow  balances and interest earned on our loans to
Capri. The increase from the 2005 period relates to:

o    the expansion of the Mortgage  Banking  business due to the  acquisition of
     CCLP and the increase in origination volume; and
o    higher cash balances  coupled with  increasing  market  interest  rates for
     temporary investments.

The increase in prepayment  penalties is principally  due to higher  refinancing
volume in the Mortgage Banking business.

Revenue of consolidated  partnerships increased due to an increase in the number
of those partnerships over the past year.  Results of consolidated  partnerships
are also discussed below.

In the first quarter of 2006 and 2005, the following amounts were eliminated, as
they represented  transactions between  consolidated  partnerships and our other
component businesses:

<TABLE>
<CAPTION>

                                         For the Three Months Ended March 31,
                                         ------------------------------------
           (In thousands)                    2006        2005      % Change
-------------------------------------      --------    --------    --------
<S>                                        <C>         <C>           <C>
Mortgage revenue bond interest income      $ 1,539     $   259       494.2%
Fund sponsorship fees                        9,014       6,503        38.6
Credit intermediation                          812         715        13.6
Other revenues                               1,287         512       151.4
                                           -------     -------       -----

Total                                      $12,652     $ 7,989        58.4%
                                           =======     =======       =====

</TABLE>


                                       27
<PAGE>



EXPENSES

Our expenses were as follows:

<TABLE>
<CAPTION>

                                                    For the Three Months Ended March 31
                                                    -----------------------------------
                  (In thousands)                        2006       2005      % Change
--------------------------------------------------    --------   --------    --------
<S>                                                   <C>        <C>           <C>
Interest expense                                      $17,107    $10,580       61.7%
Interest expense - preferred shares of subsidiary       4,724      4,725         --

Salaries and benefits                                  19,902     16,621       19.7
Fund origination and property acquisition expenses      2,406        899      167.6
General and administrative                              9,460      8,692        8.8
                                                      -------    -------      -----
   Subtotal                                            31,768     26,212       21.2
                                                      -------    -------      -----

Depreciation and amortization                           8,913      7,696       15.8
                                                      -------    -------      -----

   Subtotal                                            62,512     49,213       27.0

Interest expense of consolidated partnerships           6,946      6,889        0.8
Other expenses of consolidated partnerships            15,281     11,047       38.3
                                                      -------    -------      -----

Total expenses                                        $84,739    $67,149       26.2%
                                                      =======    =======      =====

</TABLE>

The  increase  in  interest   expense   reflects  the  higher   amount  of  debt
(approximately  $1.7  billion  and $1.4  billion as of March 31,  2006 and 2005,
respectively) to fund continuing mortgage revenue bond and LIHTC investments and
mortgage  originations.  In addition,  our average borrowing rate increased as a
result of increases in Bond Market Association  Municipal Swap Index ("BMA") and
LIBOR  rates in 2005 as  compared  to 2006.  The  effect of rate  increases  was
tempered,  however,  by the interest rate swaps we have in place as the majority
are now in the money  although  one swap in effect in the 2005  period has since
expired.  Our average  borrowing  rate increased to 3.8% in the first quarter of
2006 as compared to 3.1% in the first quarter of 2005.

The  increases in salaries and benefits and general and  administrative  expense
relates to the growth of our component  businesses as well as the acquisition of
CCLP in March 2005,  which doubled the size of our Mortgage Banking business and
is  comparable  to the  increase  in  revenue.  The 2006  period  also  includes
approximately   $900,000  of  severance   related  costs   associated  with  the
realignment of certain functions in our businesses.

Fund origination and property  acquisition  expenses represent costs incurred in
connection with  originating  tax-credit  equity  investment funds and acquiring
properties for those  investment  funds (see FUND  MANAGEMENT  section below for
related revenue discussion). The increase compared to last year is the result of
a higher  level of fund  sponsorship  activity in 2006 and the recovery of costs
which occurred in the first quarter of 2005  pertaining to prior periods.  While
we recognize  the billing of these costs in the period a fund closes as revenue,
we record  estimates of the  expenses  that offset the revenue  amounts.  To the
extent that such  estimated  costs are not ultimately  incurred,  we reverse the
reserves accordingly.

Depreciation and amortization expenses were higher in the 2005 period, primarily
due to higher  amortization  of mortgage  servicing  rights  following  the CCLP
acquisition  and the  expansion  of the  Mortgage  Banking  business.  This  was
partially  offset by the absence of amortization of a sizable  intangible  asset
that we wrote off at the end of 2005.

Expenses of the consolidated  partnerships  increased due to the increase in the
number  of  consolidated  entities  due  to  the  incremental  fund  sponsorship
activity.  Virtually all of the expenses of the  consolidated  partnerships  are
absorbed by their equity partners.


                                       28
<PAGE>



OTHER ITEMS

<TABLE>
<CAPTION>

                                                               For the Three Months Ended March 31,
                                                               -----------------------------------
                  (In thousands)                                   2006         2005    % Change
---------------------------------------------------              --------     --------  --------
<S>                                                              <C>          <C>           <C>
Equity and other income                                          $    752     $    524      43.5 %

Gain on sale of loans                                            $  4,539     $  1,705     166.2 %
Gain (loss) on repayment of mortgage revenue bonds                    891           (9)       --
                                                                 --------     --------   -------
Gain on repayment of mortgage revenue bonds and sale of loans    $  5,430     $  1,696     220.2 %


Income allocated to preferred shareholders of subsidiary         $ (1,556)    $ (1,556)       --

Income allocated to SCUs                                         $ (5,729)    $ (6,065)     (5.5)%
Income allocated to SMUs                                             (150)        --          --
                                                                 --------     --------   -------
  Total income allocated to minority interests                   $ (5,879)    $ (6,065)     (3.1)%

Loss allocated to partners of consolidated partnerships          $ 88,781     $ 70,963      25.1 %

</TABLE>

Equity and other income  primarily  includes  dividends  from our  investment in
ARCap Investors,  LLC, and property  operations of real estate owned,  offset by
losses from tax advantaged investment vehicles similar to those we sponsor.

Gains  related to  mortgage  revenue  bonds and loans  fluctuate  in relation to
relative  activity  levels  in the  Portfolio  Investing  and  Mortgage  Banking
businesses. See RESULTS BY SEGMENT below.

The  income  allocation  to  SCUs  and  SMUs  of  subsidiaries   represents  the
proportionate  share of after-tax  income  attributable to holders of subsidiary
equity  as if they were all  converted  to  common  shares.  There was no income
allocated to SMUs in the first  quarter of 2005,  as the units were first issued
in May 2005.

The loss  allocation to partners of  consolidated  partnerships  represents  the
operating losses of the partnerships, of which we have absorbed an insignificant
portion (approximately $3,000).


                                       29
<PAGE>



Results by Segment
------------------

PORTFOLIO INVESTING

The table below shows  selected  information  regarding our Portfolio  Investing
activities:

<TABLE>
<CAPTION>

                                                             For the Three Months Ended March 31,
                                                            -------------------------------------
                     (In thousands)                            2006          2005       % Change
--------------------------------------------------------    ----------    ----------    ---------
<S>                                                         <C>           <C>            <C>
New mortgage revenue bond acquisitions                      $   34,579    $  102,000     (66.1)%
Funding of mortgage revenue bonds acquired in prior years           --         9,751        --
Acquisitions related to prior period forward commitments        26,096            --        --
                                                            ----------    ----------    ------
Total acquisition and funding activity                      $   60,675    $  111,751     (45.7)%
Forward commitments issued but not funded                   $       --    $    8,000        --

Mortgage revenue bonds repaid                               $   26,908    $      459        --

Average portfolio balance (fair value)                      $2,359,059    $2,191,793       7.6 %

Weighted average permanent interest rate of bonds
  acquired                                                        5.82 %        6.33  %
Weighted average yield of portfolio                               6.19 %        6.65  %
Average borrowing rate (includes effect of swaps)                 3.77 %        3.06  %
Average BMA rate                                                  3.08 %        1.86  %
                                                            ----------    ----------

Mortgage revenue bond interest income (1)                   $   38,304    $   36,626       4.6  %
Other interest income (1)                                        5,494         2,424     126.7
Prepayment penalties                                                 5            63     (92.1)
Other revenues (1)                                                 497           368      35.1
                                                            ----------    ----------    ------
                                                            $   44,300    $   39,481      12.2  %
                                                            ==========    ==========    ======

Interest expense and securitization fees (1)                $   16,146    $   10,025      61.1  %
Gain (loss) on repayments of mortgage revenue bonds         $      891    $       (9)       --
                                                            ----------   -----------    ------

</TABLE>

(1) Prior to intersegment eliminations.

The increase in mortgage  revenue bond  interest  income is primarily due to the
increased  investment base resulting from new bonds funded during later quarters
of 2005 and first three months of 2006,  although the volume of  investment  and
the decline in the interest  rate of bonds  acquired  reflects  the  challenging
market conditions experienced since 2004, such as increased competition and some
potential investments not meeting our underwriting standards.

While the decline in interest  rates has gradually  lowered the average yield of
our  portfolio,  we  continue  to  earn a  positive  spread  on  our  portfolio.
Corresponding  with an increase in the average portfolio  balance,  our level of
securitizations  increased  and  along  with a  higher  average  borrowing  rate
resulted in the increase in interest expense and securitization  fees. While our
borrowing  costs have been  increasing  along with  market  rates,  we have been
exploring options to reduce the ancillary costs of our securitization  programs.
Although  there can be no assurance as to when it will commence  operations,  we
expect  the  involvement  of  our  credit   intermediation   subsidiary  in  our
securitizations will reduce such costs.


                                       30
<PAGE>



FUND MANAGEMENT

The  table  below  shows  selected  information  regarding  our Fund  Management
activities:

<TABLE>
<CAPTION>

                                                 For the Three Months Ended March 31,
                                                 ------------------------------------
              (In thousands)                        2006        2005      % Change
-------------------------------------------       --------    --------    ---------
<S>                                               <C>         <C>           <C>
Equity raised                                     $ 60,905    $ 15,212      300.4%
Equity invested by investment funds (1)           $149,764    $123,942       20.8%

Fees based on equity raised                       $  2,234    $    990      125.7%
Fees based on equity invested                     $  6,404    $  5,130       24.8%

Fees based on management of other entities:
   Partnership and asset management fees          $  6,945    $  4,284       62.1%
   Construction fees                                 1,148         870       32.0
   Investment origination fees                          --          34         --
                                                  --------    --------      -----
   Subtotal                                          8,093       5,188       56.0
                                                  --------    --------      -----

Total fund sponsorship fees (2)                     16,731      11,308       48.0

Credit intermediation fees (2)                       2,515       2,439        3.1
Expense reimbursement (2)                            2,908       2,221       30.9
Other revenues (2)                                     769         449       71.3
                                                  --------    --------      -----
  Total                                           $ 22,923    $ 16,417       39.6%
                                                  ========    ========      =====

</TABLE>

(1) Excludes  warehoused  properties that have not yet closed into an investment
fund.
(2) Prior to intersegment eliminations.

Our  Fund  Management  activities  generate  origination  and  acquisition  fees
associated with sponsoring  tax-credit equity investment funds and for assisting
the funds in acquiring assets, which we recognize when the equity is invested by
the investment  fund. We also receive  partnership and asset management fees for
the  services  we  perform  for the  funds  once  they are  operating,  which we
recognize over the service periods.  As many of our revenues are recognized over
time following the sponsorship of a new fund, many of the 2006 increases  relate
to the funds closed since the end of the first quarter of 2005.

FEES BASED ON EQUITY RAISED

We earn  Organization  and Offering  ("O&O") service and partnership  management
fees based upon the level of equity we raise for  tax-credit  equity funds.  O&O
fees are realized immediately while we earn the partnership management fees over
five-year periods. O&O fees increased approximately 361% in the first quarter of
2006 as  compared to the same period in 2005  primarily  due to the  increase in
equity raised.

Fees earned for partnership management services increased approximately 82.9% to
$1.5 million  compared to $837,000 for the same period in 2005. This increase is
primarily the result of ongoing revenues for fund  sponsorships  completed after
the first quarter of 2005.

FEES BASED ON EQUITY INVESTED

We earn property acquisition fees and acquisition  allowance fees based upon the
level of fund equity invested.  The increase in fees is higher than the increase
of equity invested because of a higher fee rate realized,  stemming from changes
in the mix of funds originated.

FEES BASED ON MANAGEMENT OF OTHER ENTITIES

Partnership and asset management fees increased in 2006, primarily  attributable
to the higher level of assets under  management  and an  improvement of the cash
position  of  certain  investment  funds,  allowing  us  to  collect  additional
management   fees  in  2006  which  we  did  not  previously   recognize   until
collectibility was reasonably assured.

OTHER REVENUES

Credit intermediation,  expense reimbursement and other revenues in this segment
consist   largely  of  service  fees  charged  to  entities   managed  by  these
subsidiaries (including consolidated partnerships) and fluctuate with the growth
of the number of those entities and their cash flows.


                                       31
<PAGE>



MORTGAGE BANKING

The table  below shows  selected  information  regarding  our  Mortgage  Banking
activities:

<TABLE>
<CAPTION>

                                                       For the Three Months Ended March 31,
                                                       -----------------------------------
                   (In thousands)                         2006          2005     % Change
---------------------------------------------------    ----------    ----------  ---------
<S>                                                    <C>           <C>           <C>
Originations                                           $  281,156    $  104,062    170.2 %
Mortgage portfolio at March 31                         $8,935,959    $9,051,266     (1.3)%
Fair value of mortgage servicing rights at March 31    $   62,589    $   74,398    (15.9)%
                                                       ----------    ----------    -----

Mortgage origination fees (1)                          $    2,108    $      757    178.5 %
Mortgage servicing fees                                     5,746         3,323     72.9
                                                       ----------    ----------    -----
Total fee income                                            7,854         4,080     92.5

Interest income                                             4,268         1,235    245.6
Prepayment penalties                                          807           190    324.7
Other revenues                                                322           366    (12.0)
                                                       ----------    ----------    -----
                                                       $   13,251    $    5,871    125.7 %
                                                       ==========    ==========    =====

Gain on sale of mortgages                              $    4,539    $    1,705    166.2 %
                                                       ==========    ==========    =====

</TABLE>

(1) Prior to intersegment eliminations.

Mortgage   origination   fees   increased  in  proportion  to  the  increase  in
originations.  The  higher  volume  of  originations  in  2006  resulted  from a
significant  increase in Fannie Mae  originations,  due to the CCLP  acquisition
(due to the fact that CCLP had  traditionally  conducted a large  portion of its
business  through Fannie Mae).  The 2006 period  includes a full quarter of CCLP
origination  as  compared  to only  one  month  during  the 2005  period  as the
acquisition did not occur until March 2005. Conduit  originations also increased
sharply  as we  continued  to  pursue  business  that  does not  warrant  agency
execution in response to market demand.

Originations for the three months ended March 31 are broken down as follows:

<TABLE>
<CAPTION>

 (In thousands)           2006      % of total     2005      % of total
-----------------       --------    ----------   --------    ----------
<S>                     <C>           <C>        <C>           <C>
Fannie Mae              $209,466       74.5 %    $ 88,598       85.1 %
Freddie Mac               50,625       18.0         2,650        2.6
Conduit and other         21,065        7.5        12,814       12.3
                        --------      -----      --------      -----
Total                   $281,156      100.0 %    $104,062      100.0 %
                        ========      =====      ========      =====

</TABLE>

The  increase in  servicing  fees is a result of the CCLP  acquisition  in March
2005. Adjusting for the impact of the acquisition,  servicing fee income in 2006
declined  approximately 7.1% as compared to the same period in 2005. The decline
was  caused  by a higher  level of  payoffs  and  amortization  as  compared  to
service-retained  originations  that led to a decrease  in the  comparable-basis
servicing portfolio.

Interest  income  relates  primarily  to that  earned  on  escrow  balances  and
benefited  from  increased  market  rates  earned.  The  increase in  prepayment
penalties relates to a higher level of refinancing activity in the current year.
Other  revenues  include a  significantly  higher  level of fees for  processing
assumptions in the 2006 quarter as compared to the 2005 quarter.  All categories
also increased due to the CCLP acquisition.

Gain on sale of  mortgages  increased  in 2006 as  compared  to 2005  due to the
increased origination volume where we have retained mortgage servicing rights.

CONSOLIDATED PARTNERSHIPS

The results of consolidated  partnerships  reflected in our financial statements
are for entities we control according to the definitions of FIN 46(R), and other
partnerships we control, but in which we have no equity interest or, in the case
of 14  partnerships,  an  insignificant  equity  interest.  Our Fund  Management
segment  earns  fees  from  many of the  entities,  however,  and our  Portfolio
Investing  business  earns  interest on mortgage  revenue  bonds for which these
partnerships are the obligors.  The consolidated  partnerships are primarily tax
credit  equity  investment  funds we sponsor  and  manage,  while the others are
property  level  partnerships  for  which we have  assumed  the role of  general
partner.


                                       32
<PAGE>



The increased  revenue  amounts in 2006 are due to the origination of nine funds
and the  assumption  of the  general  partner  interests  in 13  property  level
partnerships in the past year.

As third party investors hold virtually all of the equity partnership  interests
in these  entities,  we allocate  all results of  operations  to those  partners
except for  approximately  $3,000,  representing  our  nominal  ownership.  As a
result, the consolidation of these  partnerships has an insignificant  impact on
our net income.

Income Taxes
------------

A large majority of our pre-tax  income is derived from our Portfolio  Investing
businesses,  which are structured as partnership  entities; as such, income from
those  investments  is not  subject to income  taxes.  The Fund  Management  and
Mortgage  Banking  businesses are conducted in  corporations  and are subject to
income taxes.  Because the distributions paid on the minority interests in these
corporate  subsidiaries  effectively  provide a tax deduction,  as well as other
factors within these businesses, they often have losses for book purposes.

We provide for income taxes for these corporate  subsidiaries in accordance with
SFAS No. 109,  ACCOUNTING  FOR INCOME TAXES ("SFAS No. 109") which  requires the
recognition of deferred tax assets and  liabilities  for the expected future tax
consequences of temporary  differences  between the financial statement carrying
amounts and the tax bases of assets and liabilities.

The effective tax rate on a consolidated  basis for three months ended March 31,
2006 and 2005 was (24.6)% and (130.3)%, respectively. The effective rate for our
corporate  subsidiaries  that were  subject to taxes was 31.0% and 55.2% for the
three months ended March 31, 2006 and 2005, respectively.

The tax benefit disclosed  relates to the book losses of the taxable  businesses
and the tax  deductible  distributions  on their  subsidiary  equity.  The lower
effective  rate in the  2006  period  is a result  of  recognizing  a  valuation
allowance against deferred tax assets.  Management  determined that, in light of
the projected  taxable losses in the corporate  subsidiaries for the foreseeable
future,  not all of the  deferred tax assets will likely be realized and hence a
valuation  allowance  was  provided.  As the  proportion  of our pre-tax  income
contributed by the businesses  generating taxable income and losses changes, the
resulting tax benefit or provision may appear  incongruous with our consolidated
income before income taxes.

Inflation
---------

Inflation  did not  have a  material  effect  on our  results  for  the  periods
presented.

Liquidity and Capital Resources
-------------------------------

We fund our short-term  business needs  (including  investments)  primarily with
cash provided by  operations,  securitization  of  investments  and revolving or
warehouse  credit  facilities.  Our primary sources of capital to meet long-term
liquidity needs  (including  acquisitions)  are debt and various types of equity
offerings,  including equity of our subsidiaries.  We believe that our financing
capacity  and  cash  flow  from  current  operations  are  adequate  to meet our
immediate and long term liquidity requirements.  Nonetheless,  as business needs
warrant, we may issue other types of debt or equity in the future.

Debt and Securitizations
------------------------

Short-term liquidity provided by operations comes primarily from interest income
from  mortgage  revenue  bonds and  promissory  notes in  excess of the  related
financing  costs,  and fee income  receipts.  We  typically  generate  funds for
investment purposes from corresponding financing activities.

We have the following debt and  securitization  facilities to provide short-term
and long-term liquidity:

o    $175.0 million, used for mortgage banking needs, which matures in May 2006,
     and is renewable annually;
o    $90.0  million,  used to acquire  equity  interests  in property  ownership
     entities prior to the inclusion of these equity  interests into investments
     funds, which matures in October 2006;
o    $110.0  million,  used  initially  to provide the loans to CCA and CCLP and
     since used for general corporate purposes which matures in June 2006;
o    $40.0 million,  established in connection with the CMC  acquisition,  which
     expires in December 2006;
o    $650.0 million in MBIA credit  intermediation  capacity through 2011, under
     which we can  complete up to $425.0  million of  variable-rate  demand note
     securitizations and $225.0 million of auction-rate securitizations;
o    securitization  through  the  Merrill  Lynch  P-FLOATs/RITES  program  of a
     specified  percentage  of the fair  value of  mortgage  revenue  bonds  not
     otherwise securitized or pledged as collateral; and
o    securitization  through the Goldman  Sachs  TIC/TOC  program of a specified
     percentage  of the fair  value of  mortgage  revenue  bonds  not  otherwise
     securitized or credit intermediated.


                                       33
<PAGE>



As of March 31, 2006, we had  approximately  $333.4 million  available to borrow
under these debt and securitization  facilities without exceeding limits imposed
by debt  covenants and our by-laws.  Although  certain of the  facilities  noted
above  mature  in 2006,  we  expect  to  renew,  replace  or  refinance  them as
necessary, and we are in negotiations to replace the maturing lines listed above
(except for the mortgage  banking  credit line),  with a master credit  facility
with these same lenders as our current  lines.  While we believe that we will be
able to do so, there is no  assurance  that we will  achieve  refinancing  terms
favorable to us.

Equity
------

We have the ability to issue  $500.0  million of equity  securities  pursuant to
registration  statements we have filed with the SEC. We currently  have no plans
to issue any such securities.

Liquidity Requirements after March 31, 2006
-------------------------------------------

During May 2006, equity distributions will be paid as follows:

<TABLE>
<CAPTION>

(In thousands)
<S>                                               <C>
Common/CRA shareholders                           $24,764
SCU/SMU holders                                     8,904
4.4% CRA Preferred shareholders                     1,188
Equity Issuer Preferred shareholders                6,281
                                                  -------


Total                                             $41,137
                                                  =======

</TABLE>

In  connection  with  the  formation  of  our  Centerbrook  credit  intermediary
subsidiary,  we will be capitalizing the entity with approximately $50.0 million
to $70.0 million during 2006, utilizing available cash.

Management is not aware of any trends or events,  commitments or  uncertainties,
which  have not  otherwise  been  disclosed  that  will or are  likely to impact
liquidity in a material way.

Summary of Cash Flows
---------------------

The net  increase  in cash and cash  equivalents  during 2006 was lower than the
increase  in 2005  despite  significantly  higher  operating  inflows  and lower
investing  outflows.  These positive items were offset by net financing outflows
in 2006 as compared to net cash provided by financing in 2005.

Operating cash flows were higher in the 2006 period by a margin of $75.0 million
due  primarily  to the sale of mortgage  loans in the  quarter  whereas the 2005
period  experienced  net  fundings  of such loans.  Additionally,  the timing of
receipts and payments in operating asset and liability  accounts  contributed to
this increase.

Investing  outflows  were lower in 2006 as compared to 2005 by a margin of $89.9
million. The decrease was due to:

o    a lower level of mortgage revenue bond  acquisitions  coupled with a higher
     level of repayments; and
o    a net decrease in advances to  partnerships as compared to a net investment
     outflow in 2005;

These  factors were offset in part by a high level of cash acquired from CCLP in
2005 with a much smaller amount acquired with CRES in the 2006 period.

Financing  inflows in the 2006 period were lower than in 2005 by $178.5 million.
The  primary  reason  for the  higher  outflows  in 2006  was the  repayment  of
borrowings associated with the mortgage loans sold during the quarter and a much
lower net level of securitized borrowings during the current year. Additionally,
financing  outflows increased due to distributions on the higher level of equity
outstanding.


                                       34
<PAGE>



Commitments, Contingencies and Off Balance Sheet Arrangements
-------------------------------------------------------------

Note 17 to the unaudited condensed  consolidated financial statements contains a
summary of the Company's guarantees and off-balance sheet arrangements.

The  following  table  reflects our maximum  exposure and carrying  amount as of
March 31, 2006, for guarantees we and our subsidiaries have entered into:

<TABLE>
<CAPTION>

                                                        Maximum       Carrying
(In thousands)                                          Exposure       Amount
--------------------------------------------           ----------     --------
<S>                                                    <C>            <C>
Repayment guarantees (1)                               $    3,602     $     --
Completion guarantees (1)                                  37,980           --
Development deficit guarantees (1)                         26,666        1,566
Operating deficit guarantees (1)                            6,960           --
ACC transition guarantees (1)                               3,245           --
Recapture guarantees (1)                                   96,324           --
Replacement reserve (1)                                     2,998           --
Guarantee of payment (1)                                   45,471           --
Mortgage pool credit intermediation (2)                     7,446           --
LIHTC credit intermediation (2)                           787,175       22,080
Mortgage banking loss sharing agreements (3)              868,899       12,747
                                                       ----------     --------

                                                       $1,886,766     $ 36,393
                                                       ==========     ========

</TABLE>

(1) These guarantees generally relate to business requirements for developers to
obtain  construction  financing.  As part of our role as co-developer of certain
properties,  we issue these  guarantees in order to secure  properties as assets
for the funds we manage.  To date, we have had minimal  exposure to losses under
these   guarantees  and  anticipate  no  material   liquidity   requirements  in
satisfaction of any guarantee issued.

(2) We see these  transactions  as  opportunities  to expand our Fund Management
business by offering broad capital solutions to customers.  To date, we have had
minimal exposure to losses and anticipate no material liquidity  requirements in
satisfaction of any  arrangement.  The carrying values disclosed above relate to
the fees we earn for the transactions, which we recognize as their fair values.

(3) The loss  sharing  agreements  with  Fannie Mae and Freddie Mac are a normal
part of the DUS and DUI lender  programs  and afford a higher level of fees than
we earn for other comparable funding sources. The carrying value disclosed above
is our estimate of potential exposure under the guarantees, although any funding
requirements  for such exposure is based on the contractual  requirements of the
underlying  loans we sell to Fannie Mae and Freddie Mac, which vary as to amount
and duration, up to a maximum of 30 years.

The maximum  exposure  amount is not indicative of our expected losses under the
guarantees.


                                       35
<PAGE>



CONTRACTUAL OBLIGATIONS

The  following  table  provides our  commitments  as of March 31, 2006,  to make
future payments under our debt agreements and other contractual obligations:

<TABLE>
<CAPTION>

                                                                Payments due by period
                                           ------------------------------------------------------------------
                                                         Less than                                 More than
            (In thousands)                    Total        1 year      1-3 years     3-5 years      5 years
----------------------------------------   ----------    ----------    ----------    ----------    ----------
<S>           <C>                          <C>           <C>           <C>           <C>           <C>
Notes payable (1)                          $  200,325    $  199,358    $      967    $       --    $       --
Notes payable of consolidated
   partnerships (2)                           567,777       178,788       116,582        26,853       245,554
Operating lease obligations                    69,001         6,764        13,468        12,496        36,273
Unfunded loan commitments (3)                 326,307       244,380        81,927            --            --
Financing arrangements (1)                  1,521,959     1,521,959            --            --            --
Preferred shares of subsidiary (subject
  to mandatory repurchase)                    273,500            --            --            --       273,500
                                           ----------    ----------    ----------    ----------    ----------

   Total                                   $2,958,869    $2,151,249    $  212,944    $   39,349    $  555,327
                                           ==========    ==========    ==========    ==========    ==========

</TABLE>

(1)  The amounts included in each category reflect the current expiration, reset
     or renewal date of each facility or security  certificate.  Management  has
     the  ability and intent to renew,  refinance  or  remarket  the  borrowings
     beyond their current due dates.

(2)  Of the notes payable of consolidated partnerships, $459.2 million relate to
     equity  subscriptions  and are guaranteed by certain equity partners of the
     investment funds. Per partnership agreements,  the equity partners are also
     obligated to pay the  principal  and interest on the notes.  The  remaining
     balance of $108.6 million is collateralized with the underlying  properties
     of  the  consolidated   operating   partnerships.   All  of  this  debt  is
     non-recourse to us.

(3)  Of  this  amount,  $217.4  million  represents  mortgage  loan  origination
     commitments with corresponding sale commitments.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We invest in certain financial instruments, primarily mortgage revenue bonds and
other bond related investments that are subject to various forms of market risk,
including  interest  rate risk.  We seek to prudently  and actively  manage such
risks to earn  sufficient  compensation to justify the undertaking of such risks
and to  maintain  capital  levels  which  are  commensurate  with  the  risks we
undertake.

The  assumptions  related to the  following  discussion  of market risk  involve
judgments   involving  future  economic  market  conditions,   future  corporate
decisions and other interrelating  factors, many of which are beyond our control
and all of which are difficult or  impossible to predict with precise  accuracy.
Although  we  believe  that  the  assumptions   underlying  the  forward-looking
information  are  reasonable,  any of the  assumptions  could be inaccurate and,
therefore,  there  can be no  assurance  that  the  forward-looking  information
included herein will prove to be accurate. Due to the significant  uncertainties
inherent in  forward-looking  information,  the  inclusion  of such  information
should not be regarded as our representation that our objectives and plans would
be achieved.

INTEREST RATE RISK
------------------

The nature of our  investments  and the  instruments  used to raise  capital for
their acquisition expose us to income and expense volatility due to fluctuations
in market  interest rates.  Market  interest rates are highly  sensitive to many
factors,  including governmental  policies,  domestic and international economic
and  political  considerations  and other factors  beyond our control.  A rising
interest rate environment could reduce the demand for multifamily tax-exempt and
taxable  financing,  which could limit our ability to invest in mortgage revenue
bonds or to  structure  transactions.  Conversely,  falling  interest  rates may
prompt historical renters to become homebuyers, in turn potentially reducing the
demand for multifamily housing.

Our exposure to interest rate is twofold:

o    the potential increase in interest expense on our variable rate debt; and
o    the impact of interest rates on the fair value of our assets.


                                       36
<PAGE>



IMPACT ON EARNINGS

Our  investments  in mortgage  revenue  bonds  generally  bear interest at fixed
rates, or pay interest according to the cash flows of the underlying properties,
which do not fluctuate with changes in market interest rates.

In contrast,  payments required under our variable rate securitization  programs
fluctuate  with  market  interest  rates  based on the BMA index and are  re-set
weekly or every 35 days. In addition,  we have variable rate debt related to our
acquisition financing and our warehouse  facilities,  with rates based on LIBOR.
Other  long-term  sources of  capital,  such as our  preferred  shares of Equity
Issuer and our 4.4%  Convertible  CRA preferred  shares,  carry a fixed dividend
rate and as such, are not impacted by changes in market interest rates.

With the  exception  of $450.0  million of debt  hedged via  interest  rate swap
agreements,  the  full  amount  of our  liabilities  labeled  on  our  unaudited
condensed consolidated balance sheet as Financing Arrangements and Notes Payable
are variable rate debts.  We estimate that an increase of 1.0% in interest rates
would decrease our annual pre-tax income by approximately $12.7 million.

Conversely,  we have large escrow  balances  maintained by our Mortgage  Banking
business and we are entitled to the interest  earned on those  balances.  A 1.0%
increase  in interest  rates  would  therefore  increase  our pre-tax  income by
approximately $1.8 million.

We manage  interest rate risk through the use of interest  rate swaps,  interest
rate caps and forward bond origination commitments, as described in the notes to
our unaudited  condensed  consolidated  financial  statements.  In addition,  we
manage our exposure by striving for diversification in our businesses to include
those less susceptible to interest rate changes and by managing our leverage.

IMPACT ON VALUATION OF ASSETS

Changes in market  interest  rates would also impact the estimated fair value of
our  portfolio of mortgage  revenue  bonds.  We estimate the fair value for each
revenue bond as the present value of its expected  cash flows,  using a discount
rate for comparable tax-exempt investments.  Therefore, as market interest rates
for tax-exempt  investments  increase,  the estimated fair value of our mortgage
revenue bonds will generally  decline,  and a decline in interest rates would be
expected to result in an increase in their  estimated fair values.  For example,
we estimate that, using the same methodology used to estimate the portfolio fair
value  under  SFAS No.  115,  a 1%  increase  in  market  rates  for  tax-exempt
investments  would reduce the estimated  fair value of our portfolio of mortgage
revenue bonds by approximately  $141.0 million and a 1% decrease would result in
an increase of approximately $158.4 million. Changes in the estimated fair value
of the mortgage revenue bonds do not impact our reported net income,  net income
per share,  distributions  or cash  flows,  but are  reported as  components  of
accumulated other comprehensive income and affect reported shareholders' equity,
and  may  affect  our  borrowing   capability  to  the  extent  that  collateral
requirements are sometimes based on our asset values.

ITEM 4. CONTROLS AND PROCEDURES

(a)     EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.  The Company maintains
        disclosure  controls  and  procedures  that are  designed to ensure that
        information  required to be  disclosed  in the reports  that the Company
        files or submits  under the  Securities  and  Exchange  Act is recorded,
        processed, summarized, and reported within the time periods specified in
        the SEC's rules and forms,  and that such information is accumulated and
        communicated to the Company's management,  including its Chief Executive
        Officer and Chief Financial  Officer,  as  appropriate,  to allow timely
        decisions regarding required disclosures.

        As of the end of the  period  covered by this  Quarterly  Report on Form
        10-Q, the Company  carried out an evaluation,  under the supervision and
        with the participation of the Company's management,  including the Chief
        Executive Officer and Chief Financial  Officer,  of the effectiveness of
        the design and  operation  of our  disclosure  controls  and  procedures
        pursuant to the Securities and Exchange Act Rule 13a-15. Based upon this
        evaluation as of March 31, 2006, the Chief  Executive  Officer and Chief
        Financial Officer have concluded that the Company's  disclosure controls
        and procedures are effective to ensure that  information  required to be
        disclosed  by the  Company  in the  reports  that the  Company  files or
        submits under the Exchange Act is recorded,  processed,  summarized  and
        reported,  within the time periods specified in the SEC rules and forms,
        and to ensure that such  information is accumulated and  communicated to
        the  Company's  management,  including the Chief  Executive  Officer and
        Chief  Financial  Officer,  as  appropriate,  to allow timely  decisions
        regarding required disclosure.

(b)     INTERNAL  CONTROL  OVER  FINANCIAL   REPORTING.   In  January  2006,  we
        implemented  an internal  audit function and contracted a specialty firm
        to assist in the  execution.  Other than the  foregoing,  there have not
        been any  significant  changes in our internal  control  over  financial
        reporting  during the fiscal  quarter to which this report  relates that
        have materially affected, or are reasonably likely to materially affect,
        our internal control over financial reporting.


                                       37
<PAGE>



                           PART II. OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS

         We are subject to routine  litigation  and  administrative  proceedings
         arising in the ordinary course of business. Management does not believe
         that such matters will have a material  adverse impact on our financial
         position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

         There have been no material changes to the risk factors as disclosed in
         our filing on form 10-K for the year ended December 31, 2005.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         Securities purchased by us

         The following table presents  information related to our repurchases of
         our  equity  securities  during  the  first  quarter  of 2006 and other
         information related to our repurchase program:

<TABLE>
<CAPTION>

                                           Purchases of Equity Securities

                                    (a)                (b)                (c)                    (d)

                                                                       Total number
                                                                        of shares
                                   Total            Weighted        purchased as part       Maximum number
                                 number of           average           of publicly       of shares that may yet
                                   shares          price paid        announced plans     be purchased under the
            Period             purchased (1)        per share          or programs          plans or programs
    -----------------------    ---------------    --------------    -----------------    ----------------------
<S>                                  <C>             <C>                   <C>                 <C>
    January 1-31, 2006                  746          $ 22.04               --
    February 1-28, 2006               1,164            22.15               --
    March 1-31, 2006                 17,802            21.73               --
                                  ---------          -------             ----

    Total                            19,712          $ 21.77               --                  1,491,600
                               ===============       =======             =====                ==========

</TABLE>

     (1)  These  repurchases  were in  payment  of tax  withholding  obligations
     incurred by holders of newly vested  restricted  shares and were outside of
     our share repurchase program.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None

ITEM 5.  OTHER INFORMATION - None

ITEM 6.  EXHIBITS

         31.1  Chief Executive Officer certification  pursuant to Section 302 of
               the Sarbanes-Oxley Act of 2002.*

         31.2  Chief Financial Officer certification  pursuant to Section 302 of
               the Sarbanes-Oxley Act of 2002.*

         32.1  Chief Executive Officer and Chief Financial Officer certification
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

               *  Filed herewith


                                       38
<PAGE>



                                   SIGNATURES



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



                                   CHARTERMAC
                                  (Registrant)



Date:  May 10, 2006            By: /s/ Marc D. Schnitzer
                                   ---------------------
                                   Marc D. Schnitzer
                                   Managing Trustee, Chief Executive Officer
                                   and President



Date:  May 10, 2006            By: /s/ Alan P. Hirmes
                                   ------------------
                                   Alan P. Hirmes
                                   Managing Trustee, Chief Financial Officer and
                                   Chief Operating Officer


<PAGE>



                                                                    Exhibit 31.1



                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002



I, Marc D. Schnitzer, hereby certify that:

     1.  I have  reviewed  this  quarterly  report on Form  10-Q for the  period
         ending March 31, 2006 of CharterMac;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
         statement of a material fact or omit to state a material fact necessary
         in order to make the  statements  made,  in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included in this  report,  fairly  present in all material
         respects the financial condition,  results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

     4.  The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules  13a-15(e)  and  15d-15(e))  and internal
         control  over  financial  reporting  (as defined in Exchange  Act Rules
         13a-15(f) and 15d-15(f)) for the registrant and have:

         a) designed such  disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to  ensure  the  material  information  relating  to  the
         registrant,  including its consolidated subsidiaries,  is made known to
         us by others within those entities,  particularly  during the period in
         which this report is being prepared;

         b) designed such internal control over financial  reporting,  or caused
         such internal control over financial reporting to be designed under our
         supervision,  to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles;

         c) evaluated the effectiveness of the registrant's  disclosure controls
         and procedures and presented in this report our  conclusions  about the
         effectiveness of the disclosure controls and procedures,  as of the end
         of the period covered by this report based on such evaluation; and

         d)  disclosed  in this report any change in the  registrant's  internal
         control over financial  reporting that occurred during the registrant's
         most  recent  fiscal  quarter  that  has  materially  affected,  or  is
         reasonably  likely to  materially  affect,  the  registrant's  internal
         control over financial reporting; and

     5.  The registrant's other certifying  officer and I have disclosed,  based
         on our most  recent  evaluation  of  internal  control  over  financial
         reporting,  to the registrant's auditors and the audit committee of the
         registrant's  board of directors (or persons  performing the equivalent
         functions):

         a) all significant  deficiencies and material  weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the  registrant's  ability to
         record, process, summarize and report financial information; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  registrant's
         internal control over financial reporting.


         Date:  May 10, 2006                        By:  /s/ Marc D. Schnitzer
                                                         ---------------------
                                                         Marc D. Schnitzer
                                                         Chief Executive Officer


<PAGE>



                                                                    Exhibit 31.2



                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002



I, Alan P. Hirmes, hereby certify that:

     1.  I have  reviewed  this  quarterly  report on Form  10-Q for the  period
         ending March 31, 2006 of CharterMac;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
         statement of a material fact or omit to state a material fact necessary
         in order to make the  statements  made,  in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included in this  report,  fairly  present in all material
         respects the financial condition,  results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

     4.  The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules  13a-15(e)  and  15d-15(e))  and internal
         control  over  financial  reporting  (as defined in Exchange  Act Rules
         13a-15(f) and 15d-15(f)) for the registrant and have:

         a) designed such  disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to  ensure  the  material  information  relating  to  the
         registrant,  including its consolidated subsidiaries,  is made known to
         us by others within those entities,  particularly  during the period in
         which this report is being prepared;

         b) designed such internal control over financial  reporting,  or caused
         such internal control over financial reporting to be designed under our
         supervision,  to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles;

         c) evaluated the effectiveness of the registrant's  disclosure controls
         and procedures and presented in this report our  conclusions  about the
         effectiveness of the disclosure controls and procedures,  as of the end
         of the period covered by this report based on such evaluation; and

         d)  disclosed  in this report any change in the  registrant's  internal
         control over financial  reporting that occurred during the registrant's
         most  recent  fiscal  quarter  that  has  materially  affected,  or  is
         reasonably  likely to  materially  affect,  the  registrant's  internal
         control over financial reporting; and

     5.  The registrant's other certifying  officer and I have disclosed,  based
         on our most  recent  evaluation  of  internal  control  over  financial
         reporting,  to the registrant's auditors and the audit committee of the
         registrant's  board of directors (or persons  performing the equivalent
         functions):

         a) all significant  deficiencies and material  weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the  registrant's  ability to
         record, process, summarize and report financial information; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  registrant's
         internal control over financial reporting.


         Date:  May 10, 2006                        By:  /s/ Alan P. Hirmes
                                                         ------------------
                                                         Alan P. Hirmes
                                                         Chief Financial Officer


<PAGE>



                                                                    Exhibit 32.1



        CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
            (UNITED STATES CODE, TITLE 18, CHAPTER 63, SECTION 1350)
                  ACCOMPANYING QUARTERLY REPORT ON FORM 10-Q OF
                 CHARTERMAC FOR THE QUARTER ENDED MARCH 31, 2006


In  connection  with the  Quarterly  Report on Form 10-Q of  CharterMac  for the
quarterly  period  ending  March 31,  2006,  as filed  with the  Securities  and
Exchange  Commission on the date hereof (the "Report"),  Marc D.  Schnitzer,  as
Chief Executive  Officer of our Company,  and Alan P. Hirmes, as Chief Financial
Officer of our Company,  each hereby  certifies,  pursuant to 18 U.S.C.  Section
1350, that:


    (1) The Report fully  complies  with the  requirements  of Section  13(a) or
15(d), as applicable, of the Securities Exchange Act of 1934; and


    (2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of our Company.



By:  /s/ Marc D. Schnitzer                          By:  /s/ Alan P. Hirmes
     ---------------------                               ------------------
     Marc D. Schnitzer                                   Alan P. Hirmes
     Chief Executive Officer                             Chief Financial Officer
     May 10, 2006                                        May 10, 2006