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

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

| Delaware                                                            |   | 13-3949418                                |
|---------------------------------------------------------------------|--------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |   | (I.R.S.      Employer Identification No.) |
|                                                                |   |                                      |
| 625      Madison Avenue, New York, New York                         |   | 10022                                     |
| (Address      of principal executive offices)                       |   | (Zip      Code)                           |

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

----

| PART      I – Financial Information          | Page               |
|----------------------------------------------------|--------------------|
|                                               |               |   |   |
|                                               | Item      1        | Financial      Statements |   |
|                                               |               | Condensed      Consolidated Balance Sheets | 3 |
|                                               |               | Condensed      Consolidated Statements of Operations | 4 |
|                                               |               | Condensed      Consolidated Statements of Cash Flows | 5 |
|                                               |               |  Notes      to Condensed Consolidated Financial Statements |   |
|                                               |               | Note      1 – Description of Business and Basis of Presentation | 7 |
|                                               |               | Note      2 – Market Conditions and Liquidity | 8 |
|                                               |               | Note      3 – Available-for-Sale Investments | 10 |
|                                               |               | Note      4 – Equity Method Investments | 15 |
|                                               |               | Note      5 – Other Investments | 15 |
|                                               |               | Note      6 – Goodwill and Intangible Assets, Net | 16 |
|                                               |               | Note      7 – Deferred Costs and Other Assets, Net | 18 |
|                                               |               | Note      8 – Assets of Consolidated Partnerships | 18 |
|                                               |               | Note      9 – Notes Payable | 22 |
|                                               |               | Note      10 – Financing Arrangements and Secured Financing | 23 |
|                                               |               | Note      11 – Accounts Payable, Accrued Expenses and Other    Liabilities | 24 |
|                                               |               | Note      12 – Liabilities of Consolidated Partnerships | 24 |
|                                               |               | Note      13 – Minority Interests in Consolidated Subsidiaries, net of      tax | 25 |
|                                               |               | Note      14 – Redeemable Securities | 26 |
|                                               |               | Note      15 – Comprehensive Loss | 27 |
|                                               |               | Note      16 – General and Administrative Expenses | 28 |
|                                               |               | Note      17 – Revenues and Expenses of Consolidated Partnerships | 28 |
|                                               |               | Note      18 – Earnings per Share | 30 |
|                                               |               | Note      19 – Financial Risk Management and Derivatives | 31 |
|                                               |               | Note      20 – Fair Value Disclosures | 33 |
|                                               |               | Note      21 – Related Party Transactions | 39 |
|                                               |               | Note      22 – Business Segments | 41 |
|                                               |               | Note      23 – Commitments and Contingencies | 43 |
|                                               |               | Note      24 – Subsequent Events | 48 |
|                                               |  Item      2  |  Management’s      Discussion and Analysis of Financial Condition andResults      of Operations (see Table of Contents at front of section) | 50 |
|                                               |  Item      3  |  Quantitative      and Qualitative Disclosures about Market Risk | 86 |
|                                               |  Item      4  |  Controls      and Procedures | 87 |
|   PART      II – Other Information |               |
|                                               |  Item      1  | Legal      Proceedings | 88 |
|                                               |  Item      1A | Risk      Factors | 89 |
|                                               |  Item      2  | Unregistered      Sales of Equity Securities and Use of Proceeds | 91 |
|                                               |  Item      3  | Defaults      Upon Senior Securities | 91 |
|                                               |  Item      4  | Submission      of Matters to a Vote of Security Holders | 91 |
|                                               |  Item      5  | Other      Information | 91 |
|                                               |  Item      6  | Exhibits | 91 |
|  SIGNATURES                                   |               |   |

----

|                                                                                                                                                                 |   | September      30,2008 |      | December      31,2007 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|-----------------------|--------|
|                                                                                                                                                                 |   | (Unaudited)            |      |                  |   |
|  ASSETS                                                                                                                                                         |
|  Cash      and cash equivalents                                                                                                                                 |   | $                      | 116,958   |                  | $      | 137,111 |   |
| Restricted      cash                                                                                                                                                 |   |                   | 11,768    |                  |   | 32,548 |   |
| Investments:                                                                                                                                                         |   |                   |      |                  |   |   |   |
| Available-for-sale      (Note 3)                                                                                                                                     |   |                   | 683,839   |                  |   | 938,378 |   |
| Equity      method (Note 4)                                                                                                                                          |   |                   | 28,288    |                  |   | 38,761 |   |
| Other      (Note 5)                                                                                                                                                  |   |                   | 139,673   |                  |   | 182,277 |   |
| Investments      in and loans to affiliates, net (Note 21)                                                                                                           |   |                   | 15,350    |                  |   | 107,175 |   |
| Goodwill      and intangible assets, net (Note 6)                                                                                                                    |   |                   | 377,691   |                  |   | 504,273 |   |
| Deferred      costs and other assets, net (Note 7)                                                                                                                   |   |                   | 146,710   |                  |   | 139,498 |   |
| Consolidated      partnerships (Note 8):                                                                                                                             |   |                   |      |                  |   |   |   |
| Investments:                                                                                                                                                         |   |                   |      |                  |   |   |   |
| Available-for-sale                                                                                                                                                   |   |                   | 960,579   |                  |   | 1,782,543 |   |
| Equity      method                                                                                                                                                   |   |                   | 4,269,561 |                  |   | 4,178,206 |   |
| Other                                                                                                                                                                |   |                   | 288,069   |                  |   | 414,377 |   |
| Land,      buildings and improvements, net                                                                                                                           |   |                   | 706,031   |                  |   | 661,380 |   |
| Other      assets                                                                                                                                                    |   |                   | 435,152   |                  |   | 371,735 |   |
|  Total      assets                                                                                                                                              |   | $                      | 8,179,669 |                  | $      | 9,488,262 |   |
|  LIABILITIES      AND EQUITY                                                                                                                                    |
|  Liabilities:                                                                                                                                                   |   |                   |      |                  |   |   |   |
| Notes      payable (Note 9)                                                                                                                                          |   | $                      | 382,355   |                  | $      | 505,888 |   |
| Financing      arrangements and secured financing (Note 10)                                                                                                          |   |                   | 489,209   |                  |   | 562,502 |   |
| Accounts      payable, accrued expenses and other liabilities (Note 11, Note      19)                                                                                |   |                   | 205,486   |                  |   | 311,310 |   |
| Preferred      shares of subsidiary (subject to mandatory repurchase)                                                                                                |   |                   | 273,500   |                  |   | 273,500 |   |
| Consolidated      partnerships (Note 12):                                                                                                                            |   |                   |      |                  |   |   |   |
| Financing      arrangements                                                                                                                                          |   |                   | 1,123,188 |                  |   | 1,122,906 |   |
| Notes      payable                                                                                                                                                   |   |                   | 702,653   |                  |   | 458,367 |   |
| Repurchase      agreements                                                                                                                                           |   |                   | 62,111    |                  |   | 416,059 |   |
| Due      to property partnerships                                                                                                                                    |   |                   | 715,851   |                  |   | 970,602 |   |
| Other      liabilities (Note 19)                                                                                                                                     |   |                   | 206,881   |                  |   | 193,020 |   |
|  Total      liabilities                                                                                                                                         |   |                   | 4,161,234 |                  |   | 4,814,154 |   |
|  Minority      interests in consolidated subsidiaries, net of tax (Note    13)                                                                                  |   |                   | 99,476    |                  |   | 176,716 |   |
| Preferred      shares of subsidiary (not subject to mandatory repurchase)                                                                                            |   |                   | 104,000   |                  |   | 104,000 |   |
| Redeemable      securities (Note 14)                                                                                                                                 |   |                   | 326,147   |                  |   | 69,888 |   |
| Limited      partners’ interests in consolidated partnerships                                                                                                  |   |                   | 3,845,737 |                  |   | 3,782,912 |   |
|  Commitments      and contingencies (Note 23)                                                                                                                   |   |                   |      |                  |   |   |   |
|  Shareholders’      (deficit) equity:                                                                                                                     |   |                   |      |                  |   |   |   |
| 4.4%      Convertible CRA preferred shares; no par value; no shares issued and      outstanding in 2008 and 1,060 shares issued and outstanding      2007            |   |                   | --        |                  |   | 51,281 |   |
| Convertible      CRA preferred shares; no par value; 519 shares issued and outstanding in      2008 and 5,306 shares issued and outstanding in 2007                  |   |                   | 3,802     |                  |   | 66,879 |   |
| Special      preferred voting shares; no par value; 14,131 shares issued and      outstanding in 2008 and 14,298 shares issued and outstanding in      2007          |   |                   | 141       |                  |   | 143 |   |
| Common      shares; no par value; 160,000 shares authorized; 55,161 issued and 51,550      outstanding in 2008 and 53,943 issued and 50,567 outstanding in      2007 |   |                   | 390,629   |                  |   | 592,505 |   |
| Treasury      shares of beneficial interest – common, at cost; 3,611 shares in 2008 and      3,376 shares in 2007                                              |   |                   | (65,256   | )                     |   | (64,312 | ) |
| Accumulated      other comprehensive loss (Note 15)                                                                                                                  |   |                   | (686,241  | )                     |   | (105,904 | ) |
|  Total      shareholders’ (deficit) equity                                                                                                                |   |                   | (356,925  | )                     |   | 540,592 |   |
|  Total      liabilities and equity                                                                                                                              |   | $                      | 8,179,669 |                  | $      | 9,488,262 |   |

----

|                                                                        |   | Three      Months EndedSeptember      30, |     | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------------------------------------------|--------|-------------------------------------------|----------|------------------------------------------|--------|
|                                                                        |   | 2008                                      |     | 2007                                     |   | 2008 |   | 2007 |   |
| Revenues:                                                                   |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Interest      income                                                        |   | $                                         | 22,562   |                                     | $      | 55,039 |   | $ | 75,854 |   | $ | 157,899 |   |
| Fee      income                                                             |   |                                      | 16,405   |                                     |   | 24,005 |   |   | 48,439 |   |   | 58,614 |   |
| Other                                                                       |   |                                      | 3,357    |                                     |   | 2,201 |   |   | 9,164 |   |   | 7,456 |   |
| Consolidated      partnerships (Note 17):                                   |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Interest      income                                                        |   |                                      | 66,404   |                                     |   | 53,720 |   |   | 200,800 |   |   | 134,043 |   |
| Rental      income                                                          |   |                                      | 17,119   |                                     |   | 15,969 |   |   | 51,375 |   |   | 41,397 |   |
| Other                                                                       |   |                                      | 2,341    |                                     |   | 7,417 |   |   | 6,517 |   |   | 11,171 |   |
| Total      revenues                                                         |   |                                      | 128,188  |                                     |   | 158,351 |   |   | 392,149 |   |   | 410,580 |   |
|  Expenses:                                                             |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| General      and administrative (Note 16)                                   |   |                                      | 40,930   |                                     |   | 43,607 |   |   | 128,057 |   |   | 142,168 |   |
| Interest                                                                    |   |                                      | 23,119   |                                     |   | 41,980 |   |   | 56,473 |   |   | 99,723 |   |
| Interest      – distributions to preferred shareholders of subsidiary |   |                                      | 4,724    |                                     |   | 4,724 |   |   | 14,173 |   |   | 14,173 |   |
| Depreciation      and amortization                                          |   |                                      | 11,003   |                                     |   | 11,841 |   |   | 34,350 |   |   | 33,533 |   |
| Write-off      of goodwill and intangible assets                            |   |                                      | 118,069  |                                     |   | -- |   |   | 118,069 |   |   | -- |   |
| Impairment      of investments and other assets                             |   |                                      | 615      |                                     |   | 548 |   |   | 22,055 |   |   | 19,933 |   |
| Consolidated      partnerships (Note 17):                                   |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Interest                                                                    |   |                                      | 29,976   |                                     |   | 25,700 |   |   | 97,781 |   |   | 72,014 |   |
| Other      expenses                                                         |   |                                      | 115,156  |                                     |   | 27,563 |   |   | 209,728 |   |   | 82,728 |   |
| Total      expenses                                                         |   |                                      | 343,592  |                                     |   | 155,963 |   |   | 680,686 |   |   | 464,272 |   |
|  (Loss)      income before other income                                |   |                                      | (215,404 | )                                        |   | 2,388 |   |   | (288,537 | ) |   | (53,692 | ) |
|  Other      (loss) income:                                             |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Equity      and other (loss) income                                         |   |                                      | (76,421  | )                                        |   | 327 |   |   | (78,800 | ) |   | (77 | ) |
| Gain      from repayment or sale of investments                             |   |                                      | 518      |                                     |   | 3,408 |   |   | 1,313 |   |   | 6,996 |   |
| Other      losses from consolidated partnerships                            |   |                                      | (69,668  | )                                        |   | (72,182 | ) |   | (215,657 | ) |   | (212,493 | ) |
|  Loss      before allocations                                          |   |                                      | (360,975 | )                                        |   | (66,059 | ) |   | (581,681 | ) |   | (259,266 | ) |
|  (Income)      loss allocations:                                       |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Preferred      shares of subsidiary                                         |   |                                      | (1,556   | )                                        |   | (1,556 | ) |   | (4,669 | ) |   | (4,669 | ) |
| Minority      interests in subsidiaries, net of tax (Note 13)               |   |                                      | 59,840   |                                     |   | (5,307 | ) |   | 73,010 |   |   | (898 | ) |
| Limited      partners of consolidated partnerships, net                     |   |                                      | 152,981  |                                     |   | 82,003 |   |   | 340,666 |   |   | 260,890 |   |
|  (Loss)      income before income taxes                                |   |                                      | (149,710 | )                                        |   | 9,081 |   |   | (172,674 | ) |   | (3,943 | ) |
| Income      tax (provision) benefit                                         |   |                                      | (1,015   | )                                        |   | 1,561 |   |   | (2,019 | ) |   | 4,820 |   |
|  Net      (loss) income                                                |   |                                      | (150,725 | )                                        |   | 10,642 |   |   | (174,693 | ) |   | 877 |   |
|  Dividends      for preferred and redeemable securities                |   |                                      | (5,014   | )                                        |   | (1,188 | ) |   | (15,337 | ) |   | (3,564 | ) |
| Effect      of redeemable share conversions                                 |   |                                      | (1,577   | )                                        |   | -- |   |   | (15,597 | ) |   | -- |   |
| Net      (loss) income for earnings per share calculations                  |   | $                                         | (157,316 | )                                        | $      | 9,454 |   | $ | (205,627 | ) | $ | (2,687 | ) |
|  Net      (loss) income per share (Note 18):                           |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Basic                                                                       |   | $                                         | (3.03    | )                                        | $      | 0.17 |   | $ | (3.97 | ) | $ | (0.05 | ) |
| Diluted                                                                     |   | $                                         | (3.03    | )                                        | $      | 0.16 |   | $ | (3.97 | ) | $ | (0.05 | ) |
|  Weighted      average shares outstanding (Note 18):                   |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Basic                                                                       |   |                                      | 51,931   |                                     |   | 56,582 |   |   | 51,840 |   |   | 57,248 |   |
| Diluted                                                                     |   |                                      | 51,931   |                                     |   | 57,736 |   |   | 51,840 |   |   | 57,248 |   |
|  Dividends      declared per common share                              |   | $                                         | --       |                                     | $      | 0.42 |   | $ | 0.225 |   | $ | 1.26 |   |

----

|                                                                                |   | Nine      Months EndedSeptember      30, |     |
|-------------------------------------------------------------------------------------|--------|------------------------------------------|----------|
|                                                                                |   | 2008                                     |     | 2007 |   |
|  CASH      FLOWS FROM OPERATING ACTIVITIES:                                    |   |                                     |     |   |   |   |   |
| Net      (loss) income                                                              |   | $                                        | (174,693 | ) | $ | 877 |   |
| Reconciling      items:                                                             |   |                                     |     |   |   |   |   |
| Gain      from repayment or sale of investments                                     |   |                                     | (1,313   | ) |   | (972 | ) |
| Impairment      of investments and other assets                                     |   |                                     | 22,055   |   |   | 19,933 |   |
| Write-off      of goodwill and intangible      assets                          |   |                                     | 118,069  |   |   | -- |   |
| Depreciation      and amortization                                                  |   |                                     | 34,350   |   |   | 33,533 |   |
| Equity      in losses of unconsolidated entities, net                               |   |                                     | 78,800   |   |   | 118 |   |
| Income      allocated to preferred shares of subsidiary                             |   |                                     | 4,669    |   |   | 4,669 |   |
| (Loss)      income allocated to minority interests in subsidiaries                  |   |                                     | (73,010  | ) |   | 898 |   |
| Non-cash      compensation expense                                                  |   |                                     | 11,796   |   |   | 22,758 |   |
| Other      non-cash income, net                                                     |   |                                     | (5,277   | ) |   | (8,634 | ) |
| Deferred      taxes                                                                 |   |                                     | (356     | ) |   | 1,188 |   |
| Reserves      for bad debts, net of reversals                                       |   |                                     | (1,416   | ) |   | 4,701 |   |
| Changes      in fair value of interest rate derivatives                             |   |                                     | (34,120  | ) |   | -- |   |
| Changes      in operating assets and liabilities:                                   |   |                                     |     |   |   |   |   |
| Mortgage      loans held for sale                                                   |   |                                     | 47,105   |   |   | 58,738 |   |
| Deferred      revenues                                                              |   |                                     | (24,311  | ) |   | 8,735 |   |
| Receivables                                                                         |   |                                     | 6,826    |   |   | 64,741 |   |
| Other      assets                                                                   |   |                                     | 5,389    |   |   | 1,072 |   |
| Accounts      payable, accrued expenses and other liabilities                       |   |                                     | (11,554  | ) |   | 10,518 |   |
|  Net      cash flow from operating activities                                  |   |                                     | 3,009    |   |   | 222,873 |   |
|  CASH      FLOWS FROM INVESTING ACTIVITIES:                                    |   |                                     |     |   |   |   |   |
| Sale      and repayment of available-for-sale securities                            |   |                                     | 76,931   |   |   | 26,220 |   |
| Purchases      of available-for-sale securities                                     |   |                                     | (48,760  | ) |   | (203,233 | ) |
| Acquisition      of mortgage loans held for investment                              |   |                                     | (45,785  | ) |   | (164,130 | ) |
| Sale      and repayments of mortgage loans held for investment                      |   |                                     | 50,060   |   |   | 173,282 |   |
| Advances      to partnerships                                                       |   |                                     | (46,653  | ) |   | (154,709 | ) |
| Collection      of advances to partnerships                                         |   |                                     | 65,581   |   |   | 129,163 |   |
| Deferred      investment acquisition costs                                          |   |                                     | (1,588   | ) |   | (1,154 | ) |
| Decrease      (increase) in restricted cash, escrows and other cash      collateral |   |                                     | 7,962    |   |   | (9,725 | ) |
| Return      of capital from equity investees                                        |   |                                     | 515      |   |   | -- |   |
| Acquisition      of furniture, fixtures and leasehold improvements                  |   |                                     | (5,908   | ) |   | -- |   |
| Acquisition      of asset management contract                                       |   |                                     | (7,505   | ) |   | -- |   |
| Acquisition      of AMAC common and preferred shares                                |   |                                     | --       |   |   | (11,564 | ) |
| Loan      to AMAC                                                                   |   |                                     | (2,192   | ) |   | (24,300 | ) |
| Equity      investments and other investing activities                              |   |                                     | (50,128  | ) |   | (36,189 | ) |
|  Net      cash flow from investing activities                                  |   |                                     | (7,470   | ) |   | (276,339 | ) |

----

|                                                                      |   | Nine      Months EndedSeptember      30, |     |
|---------------------------------------------------------------------------|--------|------------------------------------------|----------|
|                                                                      |   | 2008                                     |     | 2007 |   |
|  CASH      FLOWS FROM FINANCING ACTIVITIES:                          |   |                                     |     |   |   |   |   |
| Repayments      of financing arrangements                                 |   |                                     | (14,275  | ) |   | (79,628 | ) |
| Proceeds      from financing arrangements and secured financing           |   |                                     | 62,572   |   |   | 179,278 |   |
| Distributions      to shareholders                                        |   |                                     | (42,694  | ) |   | (78,797 | ) |
| Distributions      to preferred shareholders of subsidiary                |   |                                     | (4,669   | ) |   | (4,669 | ) |
| Distributions      to minority interests in consolidated subsidiaries     |   |                                     | (23,834  | ) |   | (29,315 | ) |
| Repayment      of term loan                                               |   |                                     | (75,000  | ) |   | -- |   |
| Proceeds      from term loan                                              |   |                                     | 10,000   |   |   | -- |   |
| (Decrease)      increase in notes payable                                 |   |                                     | (58,533  | ) |   | 49,783 |   |
| Minority      interest contribution                                       |   |                                     | 1,900    |   |   | 3,225 |   |
| Proceeds      from 11.0% Preferred shares                                 |   |                                     | 131,235  |   |   | -- |   |
| Proceeds      from 11.0% Preferred shares rights offering                 |   |                                     | 4,365    |   |   | -- |   |
| Retirement      of minority interests and special preferred voting shares |   |                                     | --       |   |   | (2,803 | ) |
| Treasury      stock purchases                                             |   |                                     | (4,365   | ) |   | (33,345 | ) |
| Deferred      financing and equity offering costs                         |   |                                     | (2,394   | ) |   | (531 | ) |
|  Net      cash flow from financing activities                        |   |                                     | (15,692  | ) |   | 3,198 |   |
|  Net      decrease in cash and cash equivalents                      |   |                                     | (20,153  | ) |   | (50,268 | ) |
| Cash      and cash equivalents at the beginning of the period             |   |                                     | 137,111  |   |   | 178,813 |   |
|  Cash      and cash equivalents at the end of the period             |   | $                                        | 116,958  |   | $ | 128,545 |   |
|  Non-cash      investing and financing activities:                   |   |                                     |     |   |   |   |   |
| Recognized      sale of re-securitized mortgage revenue bonds:            |   |                                     |     |   |   |   |   |
| Reductions      in secured financing liability                            |   | $                                        | (153,282 | ) | $ | -- |   |
| Reduction      in mortgage revenue bonds                                  |   | $                                        | 178,265  |   | $ | -- |   |
| Increase      in Series A Freddie Mac Certificates                        |   | $                                        | (16,070  | ) | $ | -- |   |
| Increase      in Series B Freddie Mac Certificates                        |   | $                                        | (15,902  | ) | $ | -- |   |
| Leasehold      improvements accrued                                       |   | $                                        | (12,500  | ) |   |   |   |
| Share      grants issued                                                  |   | $                                        | 7,882    |   | $ | 16,106 |   |
| Conversion      of minority interests to common shares                    |   | $                                        | 2,977    |   | $ | -- |   |
| Treasury      stock purchase via employee withholding                     |   | $                                        | 945      |   | $ | 1,917 |   |

----

----

| ·   | for      our new corporate credit facility(see Note 9) and 11.0% Cumulative      Convertible Preferred Shares, Series A-1 (“11.0% Preferred Shares”) (see      Note 14), the terms include a higher rate of interest or dividends, a more      rapid amortization of principal and more stringent covenants than had been      the norm in prior periods; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for      asset based financing (such as we use to fund mortgage originations in our      Commercial Real Estate Group), the availability of credit has been limited      and the costs of such borrowings haveincreased; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for      subscription financing (whereby funds we establish borrow to invest, with      such borrowings secured by the equity commitments of their investors), the      availability of credit is virtually non-existent, hampering our ability to      close new funds; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | with      respect to short term repurchase financing, which we have used to      accumulate investments in our Commercial Real Estate Group and CMBS Fund      Partnerships within the Consolidated Partnerships segment, advance rates      for such agreements have declined and costs have increased, compounding      the effect on borrowing capacity as market values of the collateral assets      have declined.  We have terminated many of these facilities and      one remaining line will be terminated no later than November      2008.  Additionally, the market for issuing CDO financing has      deteriorated substantially, impeding our ability to replace the repurchase      financing with more cost effective permanent financing;  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      share price and the general environment for equity offerings have made      obtaining equity capital extremelydifficult. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Obtaining      financing for investments that are not pledged as security for asset-based      borrowings; |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | Instituting      measures to reduce general and administrative expenses, including salaries      and other costs; |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | Recommending      to our Board of Trustees that common and preferred dividends be suspended      or deferred until economic conditions improve;  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selling      investments that do not meet our long term investment      criteria. |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | amend      the amortization schedule of or repay the Term  Loan; |
|--------------------|-----------------------------------------------------------------------|

| ·   | extend      the maturity of both the Term Loan and Revolving Credit Facility;      and |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | refinance      or retire our Commercial Real Estate repurchase  line. |
|--------------------|-----------------------------------------------------------------------|

----

| (in      thousands)                                    |   | Carrying      amount |    |
|--------------------------------------------------------|--------|----------------------|---------|
|                                                   |   |                 |    |   |
| Series      B Freddie Mac Certificates                 |   | $                    | 191,490 |   |
| Mortgage      loans held for investment                |   |                 | 11,055  |   |
| Loan      to AMAC                                      |   |                 | 9,600   |   |
| Loan      to CMBS Fund Partnership                     |   |                 | 22,268  |   |
| Marketable      securities                             |   |                 | 1,766   |   |
| Construction      loans to LIHTC property partnerships |   |                 | 749     |   |
| Miscellaneous      other investments                   |   |                 | 3,528   |   |
|  Total                                            |   | $                    | 240,456 |   |

| ·   | $90.2      million of cash maintained as capital for Centerline      Financial; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | the      stabilization escrow account we established as part of the December 2007      re-securitization transaction ($90.2 million of cash with a calculated      present value of $77.9 million – see Note 5);  and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $76.0      million of cash deposits held by third parties as collateral (see Note      7). |
|--------------------|--------------------------------------------------------------------------------------------|

| (in      thousands)             |   | September      30,2008 |    | December      31, 2007 |   |
|---------------------------------|--------|------------------------|---------|------------------------|--------|
|                            |   |                   |    |                   |   |   |   |
| Freddie      Mac Certificates:  |   |                   |    |                   |   |   |   |
| Series      A-1                 |   | $                      | 315,480 |                   | $      | 288,672 |   |
| Series      B                   |   |                   | 152,815 |                   |   | 153,468 |   |
| Mortgage      revenue bonds     |   |                   | 174,226 |                   |   | 376,432 |   |
| Retained      CMBS certificates |   |                   | 24,872  |                   |   | 75,328 |   |
| CMBS                            |   |                   | 7,508   |                   |   | 13,361 |   |
| Syndicated      corporate debt  |   |                   | 7,172   |                   |   | 27,749 |   |
| Marketable      securities      |   |                   | 1,766   |                   |   | 3,368 |   |
|  Total                     |   | $                      | 683,839 |                   | $      | 938,378 |   |

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | September      30,2008 |    | December      31, 2007 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|------------------------|--------|
|  Fair      value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                      | 397,345 |                   | $      | 377,500 |   |
| Less:      eliminations (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                   | (81,865 | )                      |   | (88,828 | ) |
|  Consolidated      fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                      | 315,480 |                   | $      | 288,672 |   |
|  (1)        A portion of the Series A-1 Certificates related to re-securitized      mortgage revenue bonds that were not reflected as      sold.  Accordingly, that portion is eliminated in      consolidation.  The amounts eliminated in consolidation      decreased in 2008 when we recognized certain re-securitized mortgage      revenue bonds as sold offset by others previously recognized as sold that      we re-recognized as assets (see B. Mortgage Revenue      Bonds below). |   |

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | September      30,2008 |    | December      31, 2007 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|------------------------|--------|
|  Face      amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                      | 140,028 |                   | $      | 140,028 |   |
| Interest      receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                   | 1,234   |                   |   | -- |   |
| Gross      unrealized gains                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                   | 50,228  |                   |   | 72,873 |   |
| Subtotal/fair      value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                   | 191,490 |                   |   | 212,901 |   |
| Less:      eliminations (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                   | (38,675 | )                      |   | (59,433 | ) |
|  Consolidated      fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                      | 152,815 |                   | $      | 153,468 |   |
|  (1)        A portion of the Series B Certificates related to re-securitized      mortgage revenue bonds that were not reflected as      sold.  Accordingly, that portion is eliminated in      consolidation.  The amounts eliminated in consolidation      decreased in 2008 when we recognized certain re-securitized mortgage      revenue bonds as sold offset by others previously recognized as sold that      we re-recognized as assets (see B. Mortgage Revenue      Bonds below). |   |

|                                |   | September      30,2008 |        | December      31,2007 |        |
|-------------------------------------|--------|------------------------|-------------|-----------------------|-------------|
|                                |   |                   |        |                  |        |
| Weighted      average discount rate |   | 11.6                   | %           | 11.0                  | %           |
| Constant      prepayment rate       |   | 90.0                   | %           | 90.0                  | %           |
| Weighted      average life          |   | 11.1                   |  years | 11.6                  |  years |
| Constant      default rate          |   | 2.0                    | %           | 2.0                   | %           |

----

| (in      thousands)                                                                                                                                                          |   | September      30,2008 |     | December      31, 2007 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------|------------------------|--------|
|  Amortized      cost basis                                                                                                                                              |   | $                      | 600,048  |                   | $      | 774,594 |   |
| Gross      unrealized gains                                                                                                                                                  |   |                   | 1,443    |                   |   | 2,351 |   |
| Gross      unrealized losses                                                                                                                                                 |   |                   | (3,197   | )                      |   | (3,624 | ) |
| Subtotal/fair      value                                                                                                                                                     |   |                   | 598,294  |                   |   | 773,321 |   |
| Less:      eliminations (1)                                                                                                                                                  |   |                   | (424,068 | )                      |   | (396,889 | ) |
|  Consolidated      fair value                                                                                                                                           |   | $                      | 174,226  |                   | $      | 376,432 |   |
|  (1)   Certain      bonds are recorded as liabilities on the balance sheets of consolidated      partnerships and therefore eliminated in consolidation. |   |

----

| (dollars      in thousands)   |   | Less      than12      Months |    | 12      Monthsor      More |   | Total   |   |
|-------------------------------|--------|------------------------------|---------|----------------------------|--------|---------|--------|
|  September 30,      2008 |   |                         |    |                       |   |    |   |   |   |   |
|  Number                  |   |                         | 1       |                       |   | 17      |   |   | 18 |   |
| Fair      value               |   | $                            | 930     |                       | $      | 221,698 |   | $ | 222,628 |   |
| Gross      unrealized losses  |   | $                            | 150     |                       | $      | 3,047   |   | $ | 3,197 |   |
|  December 31,      2007  |   |                         |    |                       |   |    |   |   |   |   |
|  Number                  |   |                         | 18      |                       |   | 3       |   |   | 21 |   |
| Fair      value               |   | $                            | 234,248 |                       | $      | 36,559  |   | $ | 270,807 |   |
| Gross      unrealized losses  |   | $                            | 3,244   |                       | $      | 380     |   | $ | 3,624 |   |

| (dollars      in thousands) |   | Face      Amount |          | Accreted      Cost |   | Unrealized      Gain |   | Unrealized      Loss |   | Fair      Value |   | Percentage      of Fair Value |   |
|-----------------------------|--------|------------------|---------------|--------------------|--------|----------------------|--------|----------------------|--------|-----------------|--------|-------------------------------|--------|
|  Security      Rating: |   |             |          |               |   |                 |   |                 |   |            |   |                          |   |   |   |   |   |   |
| AAA      Interest Only      |   | $                | --            |               | $      | 12,622               |   | $                    | --     |            | $      | (105                          | )      | $ | 12,517 |   | 50.3 | % |
| CCC-                        |   |             |  119,671 |               |   |  40,537         |   |                 | --     |            |   | (28,801                       | )      |   |  11,736 |   | 47.2 |   |
| D                           |   |             |  16,153  |               |   |  64             |   |                 | --     |            |   | (64                           | )      |   | -- |   | -- |   |
| Non-rated                   |   |             |  30,971  |               |   |  1,588          |   |                 | --     |            |   | (969                          | )      |   |  619 |   | 2.5 |   |
|  Total                 |   | $                | 166,795       |               | $      | 54,811               |   | $                    | --     |            | $      | (29,939                       | )      | $ | 24,872 |   | 100.0 | % |

----

| (dollars      in thousands) |   | Face      Amount |   | Accreted      Cost |   | Unrealized      Gain |   | Unrealized      Loss |   | Fair      Value |   | Percentage      of Fair Value |   |
|-----------------------------|--------|------------------|--------|--------------------|--------|----------------------|--------|----------------------|--------|-----------------|--------|-------------------------------|--------|
|  Security      Rating: |   |             |   |               |   |                 |   |                 |   |            |   |                          |   |   |   |   |   |   |
| BB+                         |   | $                | 3,898  |               | $      | 2,312                |   | $                    | --     |            | $      | (1,627                        | )      | $ | 685 |   | 9.1 | % |
| BB                          |   |             | 3,898  |               |   | 2,166                |   |                 | --     |            |   | (1,518                        | )      |   | 648 |   | 8.6 |   |
| BB-                         |   |             | 3,898  |               |   | 2,030                |   |                 | --     |            |   | (1,417                        | )      |   | 613 |   | 8.2 |   |
| B+                          |   |             | 10,395 |               |   | 4,350                |   |                 | --     |            |   | (2,427                        | )      |   | 1,923 |   | 25.6 |   |
| B                           |   |             | 2,599  |               |   | 526                  |   |                 | --     |            |   | (110                          | )      |   | 416 |   | 5.5 |   |
| B-                          |   |             | 6,698  |               |   | 1,336                |   |                 | --     |            |   | (398                          | )      |   | 938 |   | 12.5 |   |
| Non-rated                   |   |             | 25,819 |               |   | 5,057                |   |                 | --     |            |   | (2,772                        | )      |   | 2,285 |   | 30.5 |   |
|  Total                 |   | $                | 57,205 |               | $      | 17,777               |   | $                    | --     |            | $      | (10,269                       | )      | $ | 7,508 |   | 100.0 | % |

| (in      thousands)                |   | September      30,2008 |   | December      31,2007 |   |
|------------------------------------|--------|------------------------|--------|-----------------------|--------|
|  Amortized      cost basis    |   | $                      | 7,172  |                  | $      | 27,839 |   |
| Gross      unrealized losses       |   |                   | --     |                  |   | (90 | ) |
|  Consolidated      fair value |   | $                      | 7,172  |                  | $      | 27,749 |   |

| (in      thousands)                                         |   |   |   |
|-------------------------------------------------------------|--------|--------|--------|
|  Recorded      as impairment in periods prior to sale: |   |   |   |   |
| Year      ended December 31, 2007                           |   | $      | 75     |   |
| Nine      months ended September 30, 2008                   |   |   | 930    |   |
|  Recorded      as loss in period of sale               |   |   | 735    |   |
|  Total                                                 |   | $      | 1,740  |   |

----

| (in      thousands)                               |   | September      30,2008 |   | December      31,2007 |   |
|---------------------------------------------------|--------|------------------------|--------|-----------------------|--------|
|  Equity      interests in LIHTC partnerships |   | $                      | 28,288 |                  | $      | 38,761 |   |

| (in      thousands)                                    |   | September      30,2008 |    | December      31,2007 |   |
|--------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Mortgage      loans held for sale                |   | $                      | 46,460  |                  | $      | 91,065 |   |
| Mortgage      loans held for investment                |   |                   | 11,055  |                  |   | 15,687 |   |
| Stabilization      escrow                              |   |                   | 77,881  |                  |   | 62,565 |   |
| Construction      loans to LIHTC property partnerships |   |                   | 749     |                  |   | 6,379 |   |
| Miscellaneous      investments                         |   |                   | 3,528   |                  |   | 6,581 |   |
|  Total                                            |   | $                      | 139,673 |                  | $      | 182,277 |   |

| (in      thousands)                                                               |   | September      30,2008 |    | December      31,2007 |   |
|-----------------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Cash      balance                                                           |   | $                      | 90,247  |                  | $      | 76,032 |   |
| Present      value discount net of eliminations and accumulated      amortization |   |                   | (12,366 | )                     |   | (13,467 | ) |
|  Total                                                                       |   | $                      | 77,881  |                  | $      | 62,565 |   |

----

| (in      thousands)                 |   | September      30,2008 |    | December      31,2007 |   |
|-------------------------------------|--------|------------------------|---------|-----------------------|--------|
|                                |   |                   |    |                  |   |   |   |
| Goodwill                            |   | $                      | 282,311 |                  | $      | 342,667 |   |
| Other      intangible assets, net   |   |                   | 41,611  |                  |   | 103,077 |   |
| Mortgage      servicing rights, net |   |                   | 53,769  |                  |   | 58,529 |   |
|  Total                         |   | $                      | 377,691 |                  | $      | 504,273 |   |

| (in      thousands)                      |   | Total  |    |
|------------------------------------------|--------|--------|---------|
|  Balance      at December 31, 2007  |   | $      | 342,667 |   |
| Additions                                |   |   | --      |   |
| Impairment                               |   |   | (60,000 | ) |
| Reductions                               |   |   | (356    | ) |
|  Balance      at September 30, 2008 |   | $      | 282,311 |   |

----

| (dollars in      thousands)                                     |   | Estimated      UsefulLife(in      Years) |   | Gross      Carrying Amount   |    | Accumulated      Amortization |   | Net                    |   |
|-----------------------------------------------------------------|--------|------------------------------------------|--------|------------------------------|---------|-------------------------------|--------|------------------------|--------|
|                                                            |   |                                     |   |  September      30,2008 |    | December      31,2007         |   | September      30,2008 |   | December      31,2007 |   | September      30,2008 |   | December      31,2007 |   |
| Amortized      intangible assets:                               |   |                                     |   |                         |    |                          |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional      relationships                                |   | 5.3                                      |   | $                            | 103,000 |                          | $      | 103,000                |   | $ | 95,577 |   | $ | 34,721 |   | $ | 7,423 |   | $ | 68,279 |   |
| Partnership      service contracts                              |   | 9.4                                      |   |                         | 44,421  |                          |   | 47,300                 |   |   | 30,928 |   |   | 28,057 |   |   | 13,493 |   |   | 19,243 |   |
| General      partner interests                                  |   | 7.0                                      |   |                         | 13,521  |                          |   | 6,016                  |   |   | 4,030 |   |   | 2,547 |   |   | 9,491 |   |   | 3,469 |   |
| Joint      venture developer relationships                      |   | 5.0                                      |   |                         | 4,800   |                          |   | 4,800                  |   |   | 4,675 |   |   | 3,955 |   |   | 125 |   |   | 845 |   |
| Mortgage      banking broker relationships                      |   | 5.0                                      |   |                         | 1,080   |                          |   | 1,080                  |   |   | 774 |   |   | 612 |   |   | 306 |   |   | 468 |   |
| Weighted      average life/subtotal                             |   | 6.6                                      |   |                         | 166,822 |                          |   | 162,196                |   |   | 135,984 |   |   | 69,892 |   |   | 30,838 |   |   | 92,304 |   |
|  Unamortized      intangible assets:                       |   |                                     |   |                         |    |                          |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      banking licenses and approvals with no expiration |   |                                     |   |                         | 10,773  |                          |   | 10,773                 |   |   | -- |   |   | -- |   |   | 10,773 |   |   | 10,773 |   |
|  Total                                                     |   |                                     |   | $                            | 177,595 |                          | $      | 172,696                |   | $ | 135,984 |   | $ | 69,892 |   | $ | 41,611 |   | $ | 103,077 |   |

|                      |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|---------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
| (in      thousands)       |   | 2008                                      |   | 2007                                     |   | 2008 |   | 2007 |   |
| Amortization      expense |   | $                                         | 3,209  |                                     | $      | 3,656 |   | $ | 10,396 |   | $ | 11,819 |   |

----

| (in      thousands)                                      |   | September      30,2008 |    | December      31,2007 |   |
|----------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Deferred      financing and other costs            |   | $                      | 37,764  |                  | $      | 39,599 |   |
| Less:  Accumulated      amortization           |   |                   | (12,555 | )                     |   | (5,176 | ) |
|  Net      deferred costs                            |   |                   | 25,209  |                  |   | 34,423 |   |
|  Collateral      deposits receivable                |   |                   | 75,957  |                  |   | 59,957 |   |
| Interest      receivable, net                            |   |                   | 4,530   |                  |   | 10,550 |   |
| Fees      receivable, net                                |   |                   | 3,938   |                  |   | 4,291 |   |
| Furniture,      fixtures and leasehold improvements, net |   |                   | 22,246  |                  |   | 8,366 |   |
| Other                                                    |   |                   | 14,830  |                  |   | 21,911 |   |
|  Total                                              |   | $                      | 146,710 |                  | $      | 139,498 |   |

|                                                           |   | September      30, 2008                   |      | December      31, 2007                          |   |
|----------------------------------------------------------------|--------|-------------------------------------------|-----------|-------------------------------------------------|--------|
| (in      thousands)                                            |   | LIHTC      Fund and Property Partnerships |      | CMBS      and High-Yield Debt Fund Partnerships |   | Total |   | LIHTC      Fund and Property Partnerships |   | CMBS      and High-Yield Debt Fund Partnerships |   | Total |   |
|  Available-for-sale                                       |   |                                      |      |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CMBS                                                           |   | $                                         | --        |                                            | $      | 579,463 |   | $ | 579,463 |   | $ | -- |   | $ | 1,235,059 |   | $ | 1,235,059 |   |
| Retained      CMBS certificates                                |   |                                      | --        |                                            |   | 313,299 |   |   | 313,299 |   |   | -- |   |   | 482,424 |   |   | 482,424 |   |
| CDO      equity                                                |   |                                      | --        |                                            |   | 67,817 |   |   | 67,817 |   |   | -- |   |   | 65,060 |   |   | 65,060 |   |
|                                                           |   |                                      | --        |                                            |   | 960,579 |   |   | 960,579 |   |   | -- |   |   | 1,782,543 |   |   | 1,782,543 |   |
| Equity      Method                                             |   |                                      |      |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity      interests in LIHTC properties                      |   |                                      | 4,269,561 |                                            |   | -- |   |   | 4,269,561 |   |   | 4,178,206 |   |   | -- |   |   | 4,178,206 |   |
|  Other                                                    |   |                                      |      |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      loans held for investment, net                   |   |                                      | --        |                                            |   | 225,257 |   |   | 225,257 |   |   | -- |   |   | 336,322 |   |   | 336,322 |   |
| Other      investments                                         |   |                                      | 62,812    |                                            |   | -- |   |   | 62,812 |   |   | 78,055 |   |   | -- |   |   | 78,055 |   |
|                                                           |   |                                      | 62,812    |                                            |   | 225,257 |   |   | 288,069 |   |   | 78,055 |   |   | 336,322 |   |   | 414,377 |   |
|  Total      investments held by consolidated partnerships |   |                                      | 4,332,373 |                                            |   | 1,185,836 |   |   | 5,518,209 |   |   | 4,256,261 |   |   | 2,118,865 |   |   | 6,375,126 |   |
|  Land,      buildings and improvements, net               |   |                                      | 706,031   |                                            |   | -- |   |   | 706,031 |   |   | 661,380 |   |   | -- |   |   | 661,380 |   |
| Other      assets                                              |   |                                      | 334,516   |                                            |   | 100,636 |   |   | 435,152 |   |   | 290,076 |   |   | 81,659 |   |   | 371,735 |   |
|  Total      assets                                        |   | $                                         | 5,372,920 |                                            | $      | 1,286,472 |   | $ | 6,659,392 |   | $ | 5,207,717 |   | $ | 2,200,524 |   | $ | 7,408,241 |   |

----

| (dollars      in thousands) |   | Face      Amount |          | Accreted      Cost |   | Unrealized      Gain |   | Unrealized      Loss |      | Fair      Value |   | Percentage      of Fair Value |   |
|-----------------------------|--------|------------------|---------------|--------------------|--------|----------------------|--------|----------------------|-----------|-----------------|--------|-------------------------------|--------|
|  Security      Rating: |   |             |          |               |   |                 |   |                 |      |            |   |                          |   |   |   |   |   |   |
| BBB+                        |   | $                | 17,000        |               | $      | 17,000               |   | $                    | --        |            | $      |  (13,770                 | )      | $ | 3,230 |   | 0.5 | % |
| BBB                         |   |             |  86,139  |               |   |  75,277         |   |                 | --        |            |   | (54,991                       | )      |   |  20,286 |   | 3.5 |   |
| BBB-                        |   |             |  417,065 |               |   |  282,244        |   |                 | --        |            |   | (190,205                      | )      |   |  92,039 |   | 15.9 |   |
| BB+                         |   |             |  337,441 |               |   |  281,846        |   |                 | --        |            |   | (180,913                      | )      |   |  100,933 |   | 17.4 |   |
| BB                          |   |             |  273,943 |               |   |  222,834        |   |                 | --        |            |   | (155,609                      | )      |   |  67,225 |   | 11.6 |   |
| BB-                         |   |             |  314,408 |               |   |  226,574        |   |                 | --        |            |   | (152,080                      | )      |   |  74,494 |   | 12.9 |   |
| B+                          |   |             |  257,029 |               |   |  168,497        |   |                 | --        |            |   | (115,102                      | )      |   |  53,395 |   | 9.2 |   |
| B                           |   |             |  172,743 |               |   |  100,203        |   |                 |  78  |            |   | (71,218                       | )      |   |  29,063 |   | 5.0 |   |
| B-                          |   |             |  219,507 |               |   |  96,384         |   |                 |  275 |            |   | (64,470                       | )      |   |  32,189 |   | 5.6 |   |
| CCC+                        |   |             |  17,064  |               |   |  12,692         |   |                 | --        |            |   | (10,030                       | )      |   |  2,662 |   | 0.5 |   |
| CCC                         |   |             |  6,826   |               |   |  4,340          |   |                 | --        |            |   | (3,521                        | )      |   |  819 |   | 0.1 |   |
| CCC-                        |   |             |  16,239  |               |   |  7,949          |   |                 | --        |            |   | (4,330                        | )      |   |  3,619 |   | 0.6 |   |
| Non-rated                   |   |             |  970,333 |               |   |  283,868        |   |                 |  979 |            |   | (185,338                      | )      |   |  99,509 |   | 17.2 |   |
|  Total                 |   | $                | 3,105,737     |               | $      | 1,779,708            |   | $                    | 1,332     |            | $      | (1,201,577                    | )      | $ | 579,463 |   | 100.0 | % |

| (dollars      in thousands)   |   | Less      than 12 Months |    | 12      Months or More |   | Total   |   |
|-------------------------------|--------|--------------------------|---------|------------------------|--------|---------|--------|
|  September      30, 2008 |   |                     |    |                   |   |    |   |   |   |   |
|  Number                  |   |                     | 107     |                   |   | 232     |   |   | 339 |   |
| Fair      Value               |   | $                        | 167,344 |                   | $      | 408,815 |   | $ | 576,159 |   |
| Gross      Unrealized loss    |   | $                        | 297,054 |                   | $      | 904,523 |   | $ | 1,201,577 |   |

----

| (dollars      in thousands)  |   | Face      Amount |          | Accreted      Cost |   | Unrealized      Gain |   | Unrealized      Loss |      | Fair      Value |   | Percentage      of Fair Value |   |
|------------------------------|--------|------------------|---------------|--------------------|--------|----------------------|--------|----------------------|-----------|-----------------|--------|-------------------------------|--------|
|  Security      Rating:  |   |             |          |               |   |                 |   |                 |      |            |   |                          |   |   |   |   |   |   |
| AAA                          |   | $                |  147,900 |               | $      |  145,072        |   | $                    | --        |            | $      | (25,535                       | )      | $ |  119,537 |   | 38.0 | % |
| AA+                          |   |             |  51,100  |               |   |  49,443         |   |                 | --        |            |   | (12,897                       | )      |   |  36,546 |   | 11.7 |   |
| AA                           |   |             |  15,400  |               |   |  16,126         |   |                 | --        |            |   | (5,625                        | )      |   |  10,501 |   | 3.4 |   |
| A+                           |   |             |  62,600  |               |   |  62,697         |   |                 | --        |            |   | (22,415                       | )      |   |  40,282 |   | 12.9 |   |
| A                            |   |             |  66,500  |               |   |  71,020         |   |                 | --        |            |   | (32,426                       | )      |   |  38,594 |   | 12.3 |   |
| A-                           |   |             |  30,700  |               |   |  28,760         |   |                 | --        |            |   | (11,663                       | )      |   |  17,097 |   | 5.5 |   |
| BBB+                         |   |             |  49,600  |               |   |  45,601         |   |                 | --        |            |   | (25,162                       | )      |   |  20,439 |   | 6.5 |   |
| CCC-                         |   |             |  220,326 |               |   |  133,110        |   |                 | --        |            |   | (110,896                      | )      |   |  22,214 |   | 7.1 |   |
| Non-rated                    |   |             |  186,416 |               |   |  7,146          |   |                 | --        |            |   | (3,774                        | )      |   |  3,372 |   | 1.1 |   |
| Non-rated      Interest Only |   |             |  --      |               |   |  4,254          |   |                 |  523 |            |   | (60                           | )      |   |  4,717 |   | 1.5 |   |
|  Total                  |   | $                | 830,542       |               | $      |  563,229        |   | $                    |  523 |            | $      | (250,453                      | )      | $ |  313,299 |   | 100.0 | % |

| (dollars      in thousands)   |   | Less      than12      Months |    | 12      Monthsor      More |   | Total   |   |
|-------------------------------|--------|------------------------------|---------|----------------------------|--------|---------|--------|
|  September      30, 2008 |   |                         |    |                       |   |    |   |   |   |   |
|  Number                  |   |                         | 7       |                       |   | 25      |   |   | 32 |   |
| Fair      Value               |   | $                            | 128,407 |                       | $      | 180,173 |   | $ | 308,580 |   |
| Gross      Unrealized loss    |   | $                            | 59,678  |                       | $      | 190,775 |   | $ | 250,453 |   |

----

| (dollars      in thousands) |   | Face      Amount |          | Accreted      Cost |   | Unrealized      Gain |   | Unrealized      Loss |   | Fair      Value |   | Percentage      of Fair Value |   |
|-----------------------------|--------|------------------|---------------|--------------------|--------|----------------------|--------|----------------------|--------|-----------------|--------|-------------------------------|--------|
|  Security      Rating: |   |             |          |               |   |                 |   |                 |   |            |   |                          |   |   |   |   |   |   |
| BBB                         |   | $                | 9,750         |               | $      | 9,467                |   | $                    | --     |            | $      | (5,567                        | )      | $ | 3,900 |   | 5.8 | % |
| BBB-                        |   |             |  28,550  |               |   |  27,134         |   |                 | --     |            |   | (17,950                       | )      |   |  9,184 |   | 13.5 |   |
| BB+                         |   |             |  42,300  |               |   |  40,208         |   |                 | --     |            |   | (28,886                       | )      |   |  11,322 |   | 16.7 |   |
| BB                          |   |             |  17,413  |               |   |  16,421         |   |                 | --     |            |   | (12,073                       | )      |   |  4,348 |   | 6.4 |   |
| BB-                         |   |             |  11,325  |               |   |  10,557         |   |                 | --     |            |   | (7,728                        | )      |   |  2,829 |   | 4.2 |   |
| B+                          |   |             |  18,575  |               |   |  17,181         |   |                 | --     |            |   | (13,627                       | )      |   |  3,554 |   | 5.2 |   |
| B                           |   |             |  7,124   |               |   |  6,352          |   |                 | --     |            |   | (4,927                        | )      |   |  1,425 |   | 2.1 |   |
| B-                          |   |             |  17,325  |               |   |  16,529         |   |                 | --     |            |   | (13,705                       | )      |   |  2,824 |   | 4.2 |   |
| Non-rated                   |   |             |  118,576 |               |   |  103,099        |   |                 | --     |            |   | (74,668                       | )      |   |  28,431 |   | 41.9 |   |
|  Total                 |   | $                | 270,938       |               | $      | 246,948              |   | $                    | --     |            | $      | (179,131                      | )      | $ | 67,817 |   | 100.0 | % |

| (dollars      in thousands)   |   | Less      than12      Months |   | 12      Monthsor      More |   | Total  |
|-------------------------------|--------|------------------------------|--------|----------------------------|--------|--------|
|  September      30, 2008 |   |                         |   |                       |   |   |   |   |   |
|  Number                  |   |                         | 9      |                       |   | 7      |   |   | 16 |
| Fair      value               |   | $                            | 40,027 |                       | $      | 27,790 |   | $ | 67,817 |
| Gross      unrealized loss    |   | $                            | 91,076 |                       | $      | 88,055 |   | $ | 179,131 |

----

| (dollars      in thousands)                                                                                                                                                                                   |   | TotalCommitment |    | CarryingValue      (1) |   | Allocation      byProduct      Type |   | Yield      (2) |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|---------|------------------------|--------|-------------------------------------|--------|----------------|--------|
|  Product      Type:                                                                                                                                                                                      |   |            |    |                   |   |                                |   |           |   |   |   |
| Bridge      loans, variable rate                                                                                                                                                                              |   | $               | 15,000  |                   | $      | 4,419                               |   | 4.2            | %      | 7.05 | % |
| Bridge      loans, fixed rate                                                                                                                                                                                 |   |            | 17,496  |                   |   | 17,159                              |   | 4.9            |   | 7.36 |   |
| Subordinated      notes, variable rate                                                                                                                                                                        |   |            | 71,800  |                   |   | 64,116                              |   | 19.9           |   | 8.49 |   |
| Subordinated      notes, fixed rate                                                                                                                                                                           |   |            | 16,875  |                   |   | 14,166                              |   | 4.7            |   | 7.74 |   |
| Mezzanine      loans, variable rate                                                                                                                                                                           |   |            | 149,926 |                   |   | 46,651                              |   | 41.5           |   | 7.15 |   |
| Mezzanine      loans, fixed rate                                                                                                                                                                              |   |            | 88,032  |                   |   | 77,442                              |   | 24.4           |   | 5.66 |   |
| First      mortgage, variable rate                                                                                                                                                                            |   |            | 2,025   |                   |   | 1,304                               |   | 0.4            |   | 5.00 |   |
|  Total/Average                                                                                                                                                                                           |   | $               | 361,154 |                   | $      | 225,257                             |   | 100.0          | %      | 7.06 | % |
|  (1)        Net of valuation allowance of $79.4 million.(2)        Represents either the      fixed rate or the average yield for variable rate loans as of September      30, 2008. |   |

| (in      thousands)                           |   | September      30,2008 |    | December      31,2007 |   |
|-----------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Term      loan                          |   | $                      | 75,000  |                  | $      | 140,000 |   |
| Revolving      credit facility                |   |                   | 233,000 |                  |   | 210,000 |   |
| CMC      warehouse line                       |   |                   | 32,460  |                  |   | 32,302 |   |
| Multifamily      ASAP plus facility           |   |                   | 14,127  |                  |   | 58,413 |   |
| Commercial      real estate repurchase lines  |   |                   | 19,818  |                  |   | 56,912 |   |
| Syndicated      corporate debt warehouse line |   |                   | 7,717   |                  |   | 5,423 |   |
| Other                                         |   |                   | 233     |                  |   | 2,838 |   |
|  Total                                   |   | $                      | 382,355 |                  | $      | 505,888 |   |

----

| (in      thousands)                      |   | September      30,2008 |    | December      31,2007 |   |
|------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Freddie      Mac secured financing |   | $                      | 426,637 |                  | $      | 548,227 |   |
| Bond      securitizations                |   |                   | 62,572  |                  |   | 14,275 |   |
|  Total                              |   | $                      | 489,209 |                  | $      | 562,502 |   |

----

| (in      thousands)                                  |   | September      30,2008 |    | December      31,2007 |   |
|------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Deferred      revenues                         |   | $                      | 75,740  |                  | $      | 100,610 |   |
| Transactions      costs payable                      |   |                   | 30,914  |                  |   | 35,314 |   |
| Accounts      payable                                |   |                   | 27,094  |                  |   | 15,976 |   |
| Interest      rate swaps at fair value (Note 19)     |   |                   | 17,567  |                  |   | 50,445 |   |
| Salaries      and benefits payable                   |   |                   | 15,668  |                  |   | 30,513 |   |
| Distributions      payable                           |   |                   | 7,107   |                  |   | 41,016 |   |
| Accrued      fund organization and offering expenses |   |                   | 7,169   |                  |   | 8,484 |   |
| Deposits      payable                                |   |                   | 155     |                  |   | 3,760 |   |
| Accrued      interest payable                        |   |                   | 6,124   |                  |   | 1,350 |   |
| Unsettled      investment purchases                  |   |                   | --      |                  |   | 15,000 |   |
| Income      tax reserves                             |   |                   | 2,511   |                  |   | 2,442 |   |
| Other                                                |   |                   | 15,437  |                  |   | 6,400 |   |
|  Total                                          |   | $                      | 205,486 |                  | $      | 311,310 |   |

----

|                              |   | September      30, 2008                   |      | December      31, 2007                                |   |
|-----------------------------------|--------|-------------------------------------------|-----------|-------------------------------------------------------|--------|
| (in      thousands)               |   | LIHTC      Fund and Property Partnerships |      |  CMBS      and High-Yield Debt Fund Partnerships |   | Total |   | LIHTC      Fund and Property Partnerships |   | CMBS      and High-Yield Debt Fund Partnerships |   | Total |   |
|  Financing      arrangements |   | $                                         | --        |                                                  | $      | 1,123,188 |   | $ | 1,123,188 |   | $ | -- |   | $ | 1,122,906 |   | $ | 1,122,906 |   |
| Notes      payable                |   |                                      | 407,653   |                                                  |   | 295,000 |   |   | 702,653 |   |   | 422,904 |   |   | 35,463 |   |   | 458,367 |   |
| Repurchase      agreements        |   |                                      | --        |                                                  |   | 62,111 |   |   | 62,111 |   |   | -- |   |   | 416,059 |   |   | 416,059 |   |
| Due      to property partnerships |   |                                      | 715,851   |                                                  |   | -- |   |   | 715,851 |   |   | 970,602 |   |   | -- |   |   | 970,602 |   |
| Other      liabilities            |   |                                      | 182,021   |                                                  |   | 24,860 |   |   | 206,881 |   |   | 177,979 |   |   | 15,041 |   |   | 193,020 |   |
|  Total      liabilities      |   | $                                         | 1,305,525 |                                                  | $      | 1,505,159 |   | $ | 2,810,684 |   | $ | 1,571,485 |   | $ | 1,589,469 |   | $ | 3,160,954 |   |

| (in      thousands)                                                                                                   |   | September      30,2008 |   | December      31,2007 |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|-----------------------|--------|
|                                                                                                                  |   |                   |   |                  |   |   |   |
| Convertible      SCUs of a subsidiary; 14,131 outstanding in 2008 and 14,298 outstanding in      2007                 |   | $                      | 88,299 |                  | $      | 165,717 |   |
| Convertible      Special Common Interests (“SCIs”) of a subsidiary; 268 outstanding in 2008      and 2007 |   |                   | 2,903  |                  |   | 3,984 |   |
| Other                                                                                                                 |   |                   | 8,274  |                  |   | 7,015 |   |
|  Total                                                                                                           |   | $                      | 99,476 |                  | $      | 176,716 |   |

----

|                                               |   | Three      Months EndedSeptember      30, |    | Nine      Months EndedSeptember      30, |   |
|----------------------------------------------------|--------|-------------------------------------------|---------|------------------------------------------|--------|
| (in      thousands)                                |   | 2008                                      |    | 2007                                     |   | 2008 |   | 2007 |   |
|  SCUs                                         |   | $                                         | (59,141 | )                                        | $      | 4,398 |   | $ | (71,757 | ) | $ | 371 |   |
| SCIs                                               |   |                                      | (805    | )                                        |   | 57 |   |   | (976 | ) |   | 6 |   |
| Special      Membership Units (“SMUs”) |   |                                      | --      |                                     |   | 60 |   |   | -- |   |   | 7 |   |
| Other                                              |   |                                      | 106     |                                     |   | 792 |   |   | (277 | ) |   | 514 |   |
|  Total                                        |   | $                                         | (59,840 | )                                        | $      | 5,307 |   | $ | (73,010 | ) | $ | 898 |   |

| Nine      Months EndedSeptember      30, |   | Number      redeemed |   | Common      shares      issued |   | Cash      paid      |   |
|------------------------------------------|--------|----------------------|--------|--------------------------------|--------|---------------------|--------|
|                                     |   |                 |   |                           |   | (in      thousands) |   |
|  2007                               |   | 132,000              |   | --                             |   | $                   | 2,803  |   |
|                                     |   |                 |   |                           |   |                |   |   |
| 2008                                     |   | 166,120              |   | 166,120                        |   |                | --     |   |

| (in      thousands)                                |   | September      30, 2008 |    | December      31, 2007 |   |
|----------------------------------------------------|--------|-------------------------|---------|------------------------|--------|
| Series                                             |   | Carrying      Value     |    | Number      of Shares  |   |  Number      of common shares if converted |   | Carrying      Value |   | Number      of Shares |   | Number      of common shares if converted |   |
|  Convertible      Redeemable CRA Shares       |   | $                       | 89,597  |                   | 5,763  |   | 5,698 |   | $ | 13,893 |   | 974 |   | 652 |   |
| Redeemable      CRA Shares                         |   |                    | 4,626   |                   | 271    |   | -- |   |   | 4,502 |   | 271 |   | -- |   |
| Convertible      Redeemable CRA Preferred Shares   |   |                    | 50,065  |                   | 1,060  |   | 1,153 |   |   | -- |   | -- |   | -- |   |
| Redeemable      CRA Preferred Shares               |   |                    | 52,454  |                   | 1,100  |   | -- |   |   | 51,493 |   | 1,100 |   | -- |   |
| 11.0%      Cumulative Convertible Preferred Shares |   |                    | 129,405 |                   | 11,217 |   | 12,208 |   |   | -- |   | -- |   | -- |   |
|  Total                                        |   | $                       | 326,147 |                   | 19,411 |   | 19,059 |   | $ | 69,888 |   | 2,345 |   | 652 |   |

----

|                                                                                                           |   | Nine      Months EndedSeptember      30, |     |
|----------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|----------|
| (in thousands)                                                                                                 |   | 2008                                     |     | 2007 |   |
|  Net      (loss) income                                                                                   |   | $                                        | (174,693 | ) | $ | 877 |   |
|  Net      unrealized gain (loss) on interest rate derivatives:                                            |   |                                     |     |   |   |   |   |
| Unrealized      gain (loss) during the period                                                                  |   |                                     | (3,600   | ) |   | (10,793 | ) |
| Reclassification      adjustment to net loss                                                                   |   |                                     | 1,245    |   |   | -- |   |
|  Net      unrealized gain (loss) on available-for-sale securities:                                        |   |                                     |     |   |   |   |   |
| Unrealized      gain (loss) during the period                                                                  |   |                                     | (58,222  | ) |   | 8,700 |   |
| Reclassification      adjustment to net loss                                                                   |   |                                     | 18,165   |   |   | 19,637 |   |
|  Net      unrealized gain (loss) on equity investees, net of amounts allocated to      minority interests |   |                                     | (74,297  | ) |   | (38,277 | ) |
| Net      unrealized loss attributable to minority interests                                                    |   |                                     | (463,628 | ) |   | -- |   |
|  Comprehensive      loss                                                                                  |   | $                                        | (755,030 | ) | $ | (19,856 | ) |

----

| (in      thousands)                                     |   | September      30,2008 |     | December      31,2007 |   |
|---------------------------------------------------------|--------|------------------------|----------|-----------------------|--------|
|                                                    |   |                   |     |                  |   |   |   |
| Derivatives                                             |   | $                      | (11,622  | )                     | $      | (14,099 | ) |
| Available-for-sale      securities                      |   |                   | (47,201  | )                     |   | (2,312 | ) |
| Equity      investments                                 |   |                   | (136,136 | )                     |   | (61,842 | ) |
| Net      unrealized loss allocated to minority interest |   |                   | (491,282 | )                     |   | (27,654 | ) |
|  Total                                             |   | $                      | (686,241 | )                     | $      | (105,907 | ) |

|                                                 |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
| (in      thousands)                                  |   | 2008                                      |   | 2007                                     |   | 2008 |   | 2007 |   |
|  Salaries      and benefits                     |   | $                                         | 21,706 |                                     | $      | 27,572 |   | $ | 72,507 |   | $ | 91,460 |   |
| Other:                                               |   |                                      |   |                                     |   |   |   |   |   |   |   |   |   |
| Professional      fees                               |   |                                      | 4,478  |                                     |   | 3,685 |   |   | 12,457 |   |   | 9,923 |   |
| LIHTC      Fund origination and property acquisition |   |                                      | 1,134  |                                     |   | 3,576 |   |   | 4,961 |   |   | 6,602 |   |
| Miscellaneous                                        |   |                                      | 13,612 |                                     |   | 8,774 |   |   | 38,132 |   |   | 34,183 |   |
|  Total                                          |   | $                                         | 40,930 |                                     | $      | 43,607 |   | $ | 128,057 |   | $ | 142,168 |   |

----

|                                     |   | Three      Months Ended September 30,     |   |
|------------------------------------------|--------|-------------------------------------------|--------|
|                                     |   | 2008                                      |   | 2007 |   |
| (in      thousands)                      |   | LIHTC      Fund and Property Partnerships |   |  CMBS      and High-Yield Debt Fund Partnerships |   | Total |   | LIHTC      Fund and Property Partnerships |   | CMBS      and High-Yield Debt Fund Partnerships |   | Total |   |
|  Interest      income               |   | $                                         | 2,258  |   | $ | 64,146 |   | $ | 66,404 |   | $ | 3,080 |   | $ | 50,640 |   | $ | 53,720 |   |
| Rental      income                       |   |                                      | 17,119 |   |   | -- |   |   | 17,119 |   |   | 15,969 |   |   | -- |   |   | 15,969 |   |
| Other                                    |   |                                      | 2,209  |   |   | 132 |   |   | 2,341 |   |   | 1,886 |   |   | 5,531 |   |   | 7,417 |   |
|  Total      revenues                |   | $                                         | 21,586 |   | $ | 64,278 |   | $ | 85,864 |   | $ | 20,935 |   | $ | 56,171 |   | $ | 77,106 |   |
|  Interest      expense              |   | $                                         | 3,524  |   | $ | 26,452 |   | $ | 29,976 |   | $ | 3,501 |   | $ | 22,199 |   | $ | 25,700 |   |
|  Asset      management fees         |   |                                      | 7,078  |   |   | -- |   |   | 7,078 |   |   | 5,877 |   |   | -- |   |   | 5,877 |   |
| Property      operating expenses         |   |                                      | 7,375  |   |   | -- |   |   | 7,375 |   |   | 6,184 |   |   | -- |   |   | 6,184 |   |
| General      and administrative expenses |   |                                      | 6,089  |   |   | 1,275 |   |   | 7,364 |   |   | 4,754 |   |   | 547 |   |   | 5,301 |   |
| Depreciation      and amortization       |   |                                      | 7,978  |   |   | 251 |   |   | 8,229 |   |   | 8,619 |   |   | 1,096 |   |   | 9,715 |   |
| Impairment      of investments           |   |                                      | --     |   |   | 83,458 |   |   | 83,458 |   |   | -- |   |   | -- |   |   | -- |   |
| Other      expenses                      |   |                                      | 1,652  |   |   | -- |   |   | 1,652 |   |   | 301 |   |   | 185 |   |   | 486 |   |
| Subtotal                                 |   |                                      | 30,172 |   |   | 84,984 |   |   | 115,156 |   |   | 25,735 |   |   | 1,828 |   |   | 27,563 |   |
|  Total      expenses                |   | $                                         | 33,696 |   | $ | 111,436 |   | $ | 145,132 |   | $ | 29,236 |   | $ | 24,027 |   | $ | 53,263 |   |

|                                     |   | Nine      Months Ended September 30,      |    |
|------------------------------------------|--------|-------------------------------------------|---------|
|                                     |   | 2008                                      |    | 2007 |   |
| (in      thousands)                      |   | LIHTC      Fund and Property Partnerships |    |  CMBS      and High-Yield Debt Fund Partnerships |   | Total |   | LIHTC      Fund and Property Partnerships |   | CMBS      and High-Yield Debt Fund Partnerships |   | Total |   |
|  Interest      income               |   | $                                         | 8,010   |   | $ | 192,790 |   | $ | 200,800 |   | $ | 10,565 |   | $ | 123,478 |   | $ | 134,043 |   |
| Rental      income                       |   |                                      | 51,375  |   |   | -- |   |   | 51,375 |   |   | 41,397 |   |   | -- |   |   | 41,397 |   |
| Other                                    |   |                                      | 6,200   |   |   | 317 |   |   | 6,517 |   |   | 5,093 |   |   | 6,078 |   |   | 11,171 |   |
|  Total      revenues                |   | $                                         | 65,585  |   | $ | 193,107 |   | $ | 258,692 |   | $ | 57,055 |   | $ | 129,556 |   | $ | 186,611 |   |
|  Interest      expense              |   | $                                         | 11,942  |   | $ | 85,839 |   | $ | 97,781 |   | $ | 15,949 |   | $ | 56,065 |   | $ | 72,014 |   |
|  Asset      management fees         |   |                                      | 21,502  |   |   | -- |   |   | 21,502 |   |   | 18,480 |   |   | -- |   |   | 18,480 |   |
| Property      operating expenses         |   |                                      | 23,244  |   |   | -- |   |   | 23,244 |   |   | 19,481 |   |   | -- |   |   | 19,481 |   |
| General      and administrative expenses |   |                                      | 18,728  |   |   | 2,165 |   |   | 20,893 |   |   | 14,698 |   |   | 1,758 |   |   | 16,456 |   |
| Depreciation      and amortization       |   |                                      | 25,354  |   |   | 4,021 |   |   | 29,375 |   |   | 22,674 |   |   | 2,301 |   |   | 24,975 |   |
| Impairment      of investments           |   |                                      | --      |   |   | 109,138 |   |   | 109,138 |   |   | -- |   |   | -- |   |   | -- |   |
| Other      expenses                      |   |                                      | 5,576   |   |   | -- |   |   | 5,576 |   |   | 3,336 |   |   | -- |   |   | 3,336 |   |
| Subtotal                                 |   |                                      | 94,404  |   |   | 115,324 |   |   | 209,728 |   |   | 78,669 |   |   | 4,059 |   |   | 82,728 |   |
|  Total      expenses                |   | $                                         | 106,346 |   | $ | 201,163 |   | $ | 307,509 |   | $ | 94,618 |   | $ | 60,124 |   | $ | 154,742 |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                  |   | Three      Months EndedSeptember      30, |     | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|----------|------------------------------------------|--------|
| (in      thousands, except per share amounts)                                                                                                                                                                                                                                                                                                                         |   | 2008                                      |     | 2007                                     |   | 2008 |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                  |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Numerator:                                                                                                                                                                                                                                                                                                                                                            |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                                                                                                                                                                                                                                                                                                                                |   | $                                         | (150,725 | )                                        | $      | 10,642 |   | $ | (174,693 | ) | $ | 877 |   |
| Preferred      dividends                                                                                                                                                                                                                                                                                                                                              |   |                                      | (5,014   | )                                        |   | (1,188 | ) |   | (14,071 | ) |   | (3,564 | ) |
| Dividends      for other redeemable securities                                                                                                                                                                                                                                                                                                                        |   |                                      | --       |                                     |   | -- |   |   | (1,266 | ) |   | -- |   |
| Undistributed      (loss) income                                                                                                                                                                                                                                                                                                                                      |   |                                      | (155,739 | )                                        |   | 9,454 |   |   | (190,030 | ) |   | (2,687 | ) |
| Effect      of redeemable share conversions                                                                                                                                                                                                                                                                                                                           |   |                                      | (1,577   | )                                        |   | -- |   |   | (15,597 | ) |   | -- |   |
| Net      (loss) income for EPS calculations                                                                                                                                                                                                                                                                                                                           |   | $                                         | (157,316 | )                                        | $      | 9,454 |   | $ | (205,627 | ) | $ | (2,687 | ) |
|  Denominator:                                                                                                                                                                                                                                                                                                                                                    |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                                                                                                                                                                                                                                                                                              |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
|  Basic                                                                                                                                                                                                                                                                                                                                                           |   |                                      | 51,931   |                                     |   | 56,582 |   |   | 51,840 |   |   | 57,248 |   |
| Effect      of dilutive shares (1)                                                                                                                                                                                                                                                                                                                                    |   |                                      | --       |                                     |   | 1,154 |   |   | -- |   |   | -- |   |
| Diluted                                                                                                                                                                                                                                                                                                                                                               |   |                                      | 51,931   |                                     |   | 57,736 |   |   | 51,840 |   |   | 57,248 |   |
|  Calculation      of EPS:                                                                                                                                                                                                                                                                                                                                        |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                  |   |                                      |     |                                     |   |   |   |   |   |   |   |   |   |
| Net      (loss) income as computed above                                                                                                                                                                                                                                                                                                                              |   | $                                         | (157,316 | )                                        | $      | 9,454 |   | $ | (205,627 | ) | $ | (2,687 | ) |
| Weighted      average shares outstanding – basic                                                                                                                                                                                                                                                                                                                |   |                                      | 51,931   |                                     |   | 56,582 |   |   | 51,840 |   |   | 57,248 |   |
| Net      (loss) income per share – basic                                                                                                                                                                                                                                                                                                                        |   | $                                         | (3.03    | )                                        | $      | 0.17 |   | $ | (3.97 | ) | $ | (0.05 | ) |
|  Net      (loss) income as computed above                                                                                                                                                                                                                                                                                                                        |   | $                                         | (157,316 | )                                        | $      | 9,454 |   | $ | (205,627 | ) | $ | (2,687 | ) |
| Weighted      average shares outstanding – diluted (1)                                                                                                                                                                                                                                                                                                          |   |                                      | 51,931   |                                     |   | 57,736 |   |   | 51,840 |   |   | 57,248 |   |
| Net      (loss) income per share – diluted                                                                                                                                                                                                                                                                                                                      |   | $                                         | (3.03    | )                                        | $      | 0.16 |   | $ | (3.97 | ) | $ | (0.05 | ) |
|  (1)        In accordance with SFAS 128, 1.8 million common share equivalents      have been excluded from the Diluted EPS calculation in the nine months      ended September 30, 2007, as we reported a net loss after preferred      dividends.  Common share equivalents excluded from the 2008      periods were less than 0.1 million. |   |

----

|                                                                                                                                                                                                                                                        |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
| (in      thousands)                                                                                                                                                                                                                                         |   | 2008                                      |   | 2007                                     |   | 2008 |   | 2007 |   |
|  Interest      payments – cash flow hedges                                                                                                                                                                                                       |   | $                                         | 8,413  |                                     | $      | -- |   | $ | 21,622 |   | $ | -- |   |
| Interest      receipts – cash flow hedges                                                                                                                                                                                                             |   |                                      | (3,934 | )                                        |   | (937 | ) |   | (10,534 | ) |   | (2,511 | ) |
| Change      in fair value of free- standing derivatives(1)                                                                                                                                                                                                  |   |                                      | 3,428  |                                     |   | 7,259 |   |   | (3,102 | ) |   | 6,361 |   |
| Ineffectiveness                                                                                                                                                                                                                                             |   |                                      | 1,239  |                                     |   | 203 |   |   | 1,876 |   |   | 602 |   |
|  Net                                                                                                                                                                                                                                                   |   | $                                         | 9,146  |                                     | $      | 6,525 |   | $ | 9,862 |   | $ | 4,452 |   |
|  (1)        The nine months ended September 30, 2008 amount includes a $6.3      million reduction to interest expense ($0.6 million reduction for the      third quarter) related to credit value adjustments as required by SFAS      157. |

----

| (in      thousands)               |   | September      30,2008 |   | December      31,2007 |   |
|-----------------------------------|--------|------------------------|--------|-----------------------|--------|
|  Net      liability position |   | $                      | 17,567 |                  | $      | 50,445 |   |

|                                        |   |                  |   |                            |    |                               |   | Gain      (Loss) onTermination      Date |   | Gain      (Loss) Included inStatement      of OperationsSubsequent      to Termination Date |   | Gain      (Loss) Included in Acc. Other Comp. Loss at September 30,    2008 |   |
|---------------------------------------------|--------|-----------------------|--------|---------------------------------|---------|------------------------------------|--------|------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|
| (in      thousands)                         |   | Termination      Date |   | Notional      Amount Terminated |    | Cash      Paid on Termination Date |   | Included      in Statement of Operations |   | Included      in Acc. Other Comp. Loss                                                      |   |  Three      Months Ended September 30, 2008                            |   | Nine      Months Ended September 30, 2008 |   |   |
|  CMBS      Fund Partnership            |   | February      2008    |   | $                               | 187,756 |                               | $      | 14,050                                   |   | $                                                                                           | --     |                                                                        | $      | (14,050 | )  | $ | -- |   | $ | -- |   | $ | (14,050 | ) |
|  CMBS      Fund Partnership            |   | July      2008        |   |                            | 21,340  |                               |   | 1,835                                    |   |                                                                                        | 126    |                                                                        |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
|  CMBS      Fund Partnership            |   | July      2008        |   |                            | 27,655  |                               |   | 1,416                                    |   |                                                                                        | 37     |                                                                        |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
|  High-Yield      Debt Fund Partnership |   | January      2008     |   |                            | 73,006  |                               |   | 5,598                                    |   |                                                                                        | --     |                                                                        |   | (5,598 | ) |   | (143 | ) |   | (543 | ) |   | (709 | ) |
|  Total                                 |   |                  |   | $                               | 309,757 |                               | $      | 22,899                                   |   | $                                                                                           | 163    |                                                                        | $      | (19,648 | ) | $ | (143 | ) | $ | (543 | ) | $ | (14,759 | ) |

----

| ·   | Level      1 inputs utilize quoted prices (unadjusted) in active markets for      identical assets or liabilities that we have the ability to      access. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level      2 inputs utilize other-than-quoted prices that are observable, either      directly or indirectly.  Level 2 inputs include quoted prices      for similar assets and liabilities in active markets, and inputs such as      interest rates and yield curves that are observable at commonly quoted      intervals. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level      3 inputs are unobservable and are typically based on our own assumptions,      including situations where there is little, if any, market      activity. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in      thousands)                                |   | Level      1 |   | Level      2 |   | Level      3 |   | Balanceas      ofSeptember      30,2008 |    |
|----------------------------------------------------|--------|--------------|--------|--------------|--------|--------------|--------|-----------------------------------------|---------|
|                                               |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Measured      on a recurring basis:                |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
|  Assets                                       |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Available-for-sale      investments:               |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Freddie      Mac Certificates:                     |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Series      A-1                                    |   | $            | --     |         | $      | --           |   | $                                       | 315,480 |   | $ | 315,480 |   |
| Series      B                                      |   |         | --     |         |   | --           |   |                                    | 152,815 |   |   | 152,815 |   |
| Mortgage      revenue bonds                        |   |         | --     |         |   | --           |   |                                    | 174,226 |   |   | 174,226 |   |
| Retained      CMBS Certificates                    |   |         | --     |         |   | --           |   |                                    | 24,872  |   |   | 24,872 |   |
| CMBS                                               |   |         | --     |         |   | --           |   |                                    | 7,508   |   |   | 7,508 |   |
| Syndicated      corporate debt                     |   |         | 7,172  |         |   | --           |   |                                    | --      |   |   | 7,172 |   |
| Marketable      securities                         |   |         | 1,766  |         |   | --           |   |                                    | --      |   |   | 1,766 |   |
| Total      available-for-sale investments          |   | $            | 8,938  |         | $      | --           |   | $                                       | 674,901 |   | $ | 683,839 |   |
|  Liabilities                                  |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Derivatives                                        |   | $            | --     |         | $      | 17,567       |   | $                                       | --      |   | $ | 17,567 |   |
|                                               |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Measured      on a non-recurring basis:            |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
|  Assets                                       |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Mortgage      loans held-for-sale                  |   | $            | --     |         | $      | 46,460       |   | $                                       | --      |   | $ | 46,460 |   |
| Mortgage      loans held for investment - impaired |   |         | --     |         |   | 927          |   |                                    | --      |   |   | 927 |   |
| Mortgage      servicing rights                     |   |         | --     |         |   | --           |   |                                    | 53,769  |   |   | 53,769 |   |

|                                                                                                                                                                                                     |   | Three      Months Ended September 30, 2008     |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
| in      thousands)                                                                                                                                                                                       |   |  Series      A-1 Freddie Mac Certificates |    | Series      B Freddie MacCertificates |   | Mortgage      revenue bonds |   | Retained      CMBS certificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                                     |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at June 30, 2008                                                                                                                                                                            |   | $                                              | 302,116 |   | $ | 160,682 |   | $ | 186,232 |   | $ | 33,152 |   | $ | 11,139 |   | $ | 693,321 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                                    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                                |   |                                           | --      |   |   | (300 | ) |   | -- |   |   | (105 | ) |   | -- |   |   | (405 | ) |
| Included      in other comprehensive loss                                                                                                                                                                |   |                                           | 15,674  |   |   | (5,674 | ) |   | 722 |   |   | (7,300 | ) |   | (3,610 | ) |   | (188 | ) |
| Amortization      or accretion                                                                                                                                                                           |   |                                           | --      |   |   | (2,004 | ) |   | 30 |   |   | (875 | ) |   | (21 | ) |   | (2,870 | ) |
| Purchases,      issuances, settlements and other adjustments                                                                                                                                             |   |                                           | (2,310  | ) |   | 111 |   |   | (12,758 | ) |   | -- |   |   | -- |   |   | (14,957 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                                              |   |                                           | --      |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2008                                                                                                                                                                       |   | $                                              | 315,480 |   | $ | 152,815 |   | $ | 174,226 |   | $ | 24,872 |   | $ | 7,508 |   | $ | 674,901 |   |
|  Amount      of total gains (losses) for the period included in earnings attributable      to the change in unrealized gains or losses relating to assets still held      at September 30, 2008 (1) |   | $                                              | --      |   | $ | (300 | ) | $ | -- |   | $ | (105 | ) | $ | -- |   | $ | (405 | ) |

| (1) | Recorded      in “Impairment of Investments and Other Assets” in the Condensed      Consolidated Statement ofOperations. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                     |   | Nine      Months Ended September 30, 2008      |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
| in      thousands)                                                                                                                                                                                       |   |  Series      A-1 Freddie Mac Certificates |    | Series      B Freddie Mac Certificates |   | Mortgage      revenue bonds |   | Retained      CMBS certificates |   | CMBS |   | Total |   |
|                                                                                                                                                                                                     |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2008                                                                                                                                                                          |   | $                                              | --      |   | $ | 153,468 |   | $ | 376,432 |   | $ | 75,328 |   | $ | 13,361 |   | $ | 618,589 |   |
| Total      realized and unrealized gains or (losses):                                                                                                                                                    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                                |   |                                           | --      |   |   | (7,968 | ) |   | (10,928 | ) |   | (1,182 | ) |   | -- |   |   | (20,078 | ) |
| Included      in other comprehensive loss                                                                                                                                                                |   |                                           | 15,674  |   |   | (2,277 | ) |   | (480 | ) |   | (45,525 | ) |   | (9,583 | ) |   | (42,191 | ) |
| Amortization      or accretion                                                                                                                                                                           |   |                                           | --      |   |   | (5,009 | ) |   | 246 |   |   | (3,749 | ) |   | 66 |   |   | (8,446 | ) |
| Purchases,      issuances, settlements and other adjustments                                                                                                                                             |   |                                           | 11,134  |   |   | 14,601 |   |   | (191,044 | ) |   | -- |   |   | 3,664 |   |   | (161,645 | ) |
| Net      transfers in and/or out of Level 3                                                                                                                                                              |   |                                           | 288,672 |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | 288,672 |   |
| Balance      at September 30, 2008                                                                                                                                                                       |   | $                                              | 315,480 |   | $ | 152,815 |   | $ | 174,226 |   | $ | 24,872 |   | $ | 7,508 |   | $ | 674,901 |   |
|  Amount      of total gains (losses) for the period included in earnings attributable      to the change in unrealized gains or losses relating to assets still held      at September 30, 2008 (1) |   | $                                              | --      |   | $ | (7,968 | ) | $ | (3,700 | ) | $ | (1,182 | ) | $ | -- |   | $ | (12,850 | ) |

| (1) | Recorded      in “Impairment of Investments and Other Assets” in the Condensed      Consolidated Statement ofOperations. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

| (in      thousands)                                                                            |   | Level      1 |   | Level      2 |   | Level      3 |   | Balanceas      ofSeptember      30,2008 |    |
|------------------------------------------------------------------------------------------------|--------|--------------|--------|--------------|--------|--------------|--------|-----------------------------------------|---------|
|                                                                                           |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Measured      on a recurring basis:                                                            |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
|                                                                                           |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Assets                                                                                         |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Available-for-sale      investments:                                                           |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| CMBS                                                                                           |   | $            | --     |         | $      | --           |   | $                                       | 579,463 |   | $ | 579,463 |   |
| Retained      CMBS certificates                                                                |   |         | --     |         |   | --           |   |                                    | 313,299 |   |   | 313,299 |   |
| CDO      equity                                                                                |   |         | --     |         |   | --           |   |                                    | 67,817  |   |   | 67,817 |   |
| Total      available-for-sale investments                                                      |   | $            | --     |         | $      | --           |   | $                                       | 960,579 |   | $ | 960,579 |   |
|  Liabilities                                                                              |   |         |   |         |   |         |   |                                    |    |   |   |   |   |
| Derivatives      (included in “Other liabilities of consolidated    partnerships”) |   | $            | --     |         | $      | 7,205        |   | $                                       | --      | $ | 7,205 |   |
|  Measured      on a non-recurring basis:                                                  |   |         |   |         |   |         |   |                                    |    |   |   |   |
|                                                                                           |   |         |   |         |   |         |   |                                    |    |   |   |   |
| Assets                                                                                         |   |         |   |         |   |         |   |                                    |    |   |   |   |
| Mortgage      loans held for investment – impaired (1)                                   |   | $            | --     |         | $      | 25,117       |   | $                                       | --      | $ | 25,117 |   |

| (1) | We      recorded impairment charges for six loans during the third quarter of 2008      (see Note 8).  No other loans had further impairments during      2008. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                      |   | Three      Months Ended September 30, 2008 |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|----------|
| (in      thousands)                                                                                                                                                                       |   | CMBS                                       |     |  Retained      CMBS      certificates |   | CDO      equity |   | Total |   |
|                                                                                                                                                                                      |   |                                       |     |   |   |   |   |   |   |   |   |   |   |
| Balance      at June 30, 2008                                                                                                                                                             |   | $                                          | 795,315  |   | $ | 378,230 |   | $ | 76,221 |   | $ | 1,249,766 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                        |   |                                       |     |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                 |   |                                       | (4,421   | ) |   | (2,826 | ) |   | -- |   |   | (7,247 | ) |
| Included      in other comprehensive loss                                                                                                                                                 |   |                                       | (210,946 | ) |   | (63,005 | ) |   | (9,209 | ) |   | (283,160 | ) |
| Amortization      or accretion                                                                                                                                                            |   |                                       | (485     | ) |   | 900 |   |   | 691 |   |   | 1,106 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                              |   |                                       | --       |   |   | -- |   |   | 114 |   |   | 114 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                               |   |                                       | --       |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2008                                                                                                                                                        |   | $                                          | 579,463  |   | $ | 313,299 |   | $ | 67,817 |   | $ | 960,579 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at September 30,      2008 (1) |   | $                                          | (4,421   | ) | $ | (2,826 | ) | $ | -- |   | $ | (7,247 | ) |

|                                                                                                                                                                                      |   | Nine      Months Ended September 30, 2008 |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-----------|
| (in      thousands)                                                                                                                                                                       |   | CMBS                                      |      |  Retained      CMBS      certificates |   | CDO      equity |   | Total |   |
|                                                                                                                                                                                      |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 1, 2008                                                                                                                                                           |   | $                                         | 1,235,059 |   | $ | 482,424 |   | $ | 65,060 |   | $ | 1,782,543 |   |
| Total      realized and unrealized gains (losses):                                                                                                                                        |   |                                      |      |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings                                                                                                                                                                 |   |                                      | (12,406   | ) |   | (20,520 | ) |   | -- |   |   | (32,926 | ) |
| Included      in other comprehensive loss                                                                                                                                                 |   |                                      | (689,190  | ) |   | (150,961 | ) |   | (141,152 | ) |   | (981,303 | ) |
| Amortization      or accretion                                                                                                                                                            |   |                                      | (1,540    | ) |   | 2,356 |   |   | 1,776 |   |   | 2,592 |   |
| Purchases,      issuances, settlements and other adjustments                                                                                                                              |   |                                      | 47,540    |   |   | -- |   |   | 142,133 |   |   | 189,673 |   |
| Net      transfers in and/or out of Level 3                                                                                                                                               |   |                                      | --        |   |   | -- |   |   | -- |   |   | -- |   |
| Balance      at September 30, 2008                                                                                                                                                        |   | $                                         | 579,463   |   | $ | 313,299 |   | $ | 67,817 |   | $ | 960,579 |   |
|  Amount      of total gains (losses) included in earnings attributable to the change in      unrealized gains or losses relating to assets still held at September 30,      2008 (1) |   | $                                         | (12,406   | ) | $ | (20,520 | ) | $ | -- |   | $ | (32,926 | ) |

| (1) | Included      in “other expenses of consolidated partnerships” in the Condensed      Consolidated Statement of Operations (see Note  17). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| Series      A-1 Freddie Mac Certificates: | The      Series A-1 Freddie Mac Certificates are fixed-rate, tax-exempt, credit      enhanced certificates that have terms consistent with preferred shares of      our Centerline Equity Issuer Trust I (“Equity Issuer”)      subsidiary.  We determine fair value based on observable market      transactions of similar instruments.  Because these certificates      typically have a limited market, in the absence of observable market      transactions, we estimate fair value for each certificate utilizing the      present value of the expected cash flows discounted at a rate for      comparable tax-exempt investments and then comparing it against any      similar market transactions.  During the second quarter of 2008,      management evaluated the number of transactions conducted with instruments      similar to the Series A-1 Freddie Mac Certificates and concluded that due      to the unique terms of the certificates, such population was now too      limited to continue a Level 2 designation as determined upon adoption of      SFAS 157.  As a result, we have re-classified these investments      as Level 3 assets.  |
|-------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Series      B Freddie Mac Certificates:                   | We      determine fair value of the Series B Freddie Mac Certificates, which      represent the retained residual interests in connection with the December      2007 re-securitization of our mortgage revenue bond portfolio, based upon      a discounted cash flow model that follows the contractual provisions of      the certificates.  The significant assumptions of the valuation      include projecting the cash flows of the underlying mortgage revenue bonds      and an appropriate discount rate.                                                                                                                                                                                                                               |
|-----------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Mortgage      revenue bonds:                              | We      base the fair value of our mortgage revenue bonds on observable market      transactions, which may indicate a fair value approximating the unpaid      principal balance.  Because mortgage revenue bonds typically      have a limited market, in the absence of observable market transactions,      we estimate fair value for each bond by utilizing the present value of the      expected cash flows discounted at a rate for comparable tax-exempt      investments and then comparing it against any similar market      transactions.                                                                                                                                                                                           |
| Retained      CMBS certificates, CMBS, and CDO Equity:    | We      generally estimate fair value of CMBS, similar retained interests, and CDO      equity based on market prices provided by certain dealers who make a      market in these financial instruments, although such markets may not be      active. We      perform additional analysis on prices received based on broker      quotes.  This process includes analyzing the securities based on      vintage year, rating and asset type and converting the price received to a      spread.  The calculated spread is then compared to market      information available for securities of similar type, vintage year and      rating.  We utilize this process to validate the prices received      from brokers.  |
| Syndicated      corporate debt and marketable securities: | We      estimate fair value based on readily available market prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Derivatives:                                              | The      fair values of interest rate swaps are determined using the market      standard methodology of netting the discounted future fixed cash receipts      (or payments) and the discounted expected variable cash payments (or      receipts).  The variable cash payments (or receipts) are based      on an expectation of future interest rates (forward curve) derived from      observable market interest rate curves.  In adjusting the fair      value of our derivative contracts for the effect of nonperformance risk,      we have considered the impact of netting and any applicable credit      enhancements, such as thresholds and guarantees.                                                                   |
| Mortgage      loans held for sale                         | We      record mortgage loans held for sale at the lower of cost or      market.  As we originate loans held for sale only when we have a      firm sale commitment for the principal amount of the loan, we carry these      loans at their respective principalbalances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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| Mortgage      loans held for investment – impaired | When      a loan is deemed impaired, we record a valuation allowance to write the      loan down to its fair value.  We measure the fair market value      of a loan using the observable market price for sales of similar assets or      the market value of the loan’s collateral if the loan is      collateral-dependent.  Market prices are determined by using a      combination of updated appraised values and broker quotes or services      supplying market and sales data in various geographical locations where      the collateral is located.                                                                                                                                                                                                     |
|----------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Mortgage      servicing rights                           | Although      we have elected to account for our mortgage servicing rights under the      amortization method, they are originally recorded at fair value and we      value the portfolio annually for the purpose of testing for      impairment.  We obtain valuations of originated mortgage      servicing rights from a third-party valuation specialist.  The      inputs include contractual servicing fees, our projected cost to service      as well estimates of default rates, prepayment speeds and an appropriate      discount rate.  While there is an active market for similar      assets and certain of the inputs such as fee rates and discount rates are      observable, most of the other inputs are based on historical company      data. |

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                 |   | September      30,2008 |    | December      31,2007 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Loan      to AMAC                                                                                                                                                                                                                                                                                                                                                             |   | $                      | 79,877  |                  | $      | 77,685 |   |
| Investment      in AMAC common and preferred shares                                                                                                                                                                                                                                                                                                                                 |   |                   | 12,195  |                  |   | 12,195 |   |
| Interest      receivable on loan to AMAC                                                                                                                                                                                                                                                                                                                                            |   |                   | 2,839   |                  |   | 529 |   |
| Fees      receivable from AMAC                                                                                                                                                                                                                                                                                                                                                      |   |                   | 1,290   |                  |   | 1,257 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 96,201  |                  |   | 91,666 |   |
| Cumulative      equity losses and accumulated other comprehensive loss on investment in      AMAC                                                                                                                                                                                                                                                                                   |   |                   | (12,195 | )                     |   | (5,285 | ) |
| Reserves      on loan to AMAC, interest and fees receivable                                                                                                                                                                                                                                                                                                                         |   |                   | (74,011 | )                     |   | -- |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 9,995   |                  |   | 86,381 |   |
|  Co-investment      in consolidated CMBS and High-Yield Debt Fund Partnerships (1)                                                                                                                                                                                                                                                                                             |   |                   | (30,594 | )                     |   | 36,101 |   |
| Co-investment      in CUC                                                                                                                                                                                                                                                                                                                                                           |   |                   | 3,448   |                  |   | 4,184 |   |
| Due      from partnerships                                                                                                                                                                                                                                                                                                                                                          |   |                   | 48,391  |                  |   | 35,025 |   |
| Fees      receivable, net                                                                                                                                                                                                                                                                                                                                                           |   |                   | 1,063   |                  |   | 8,310 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                            |   |                   | 32,303  |                  |   | 170,001 |   |
| Less:      Eliminations (2)                                                                                                                                                                                                                                                                                                                                                         |   |                   | (16,953 | )                     |   | (62,826 | ) |
|  Total                                                                                                                                                                                                                                                                                                                                                                         |   | $                      | 15,350  |                  | $      | 107,175 |   |
|  (1)    Represents the carrying amount of      these co-investments, net of our share of accumulated other comprehensive      loss.(2)  Given the minority economic interest we have in      consolidated partnerships, for internal purposes, we treat consolidated      partnerships, particularly the CMBS Fund Partnerships, as equity      interests. |   |

----

|                                                                                             |   | Three      Months EndedSeptember      30, |    | Nine      Months EndedSeptember      30, |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|------------------------------------------|--------|
| (in      thousands)                                                                              |   | 2008                                      |    | 2007                                     |   | 2008 |   | 2007 |   |
|  AMAC      asset management fees, incentive management fees and expense      reimbursements |   | $                                         | (12     | )                                        | $      | 953 |   | $ | 1,201 |   | $ | 2,794 |   |
| AMAC      credit facility interest income                                                        |   |                                      | 1,145   |                                     |   | 856 |   |   | 3,513 |   |   | 1,758 |   |
| AMAC      servicing fee income                                                                   |   |                                      | 98      |                                     |   | 177 |   |   | 290 |   |   | 494 |   |
| Equity      in (loss) earnings of AMAC                                                           |   |                                      | (75,775 | )                                        |   | 647 |   |   | (78,057 | ) |   | 662 |   |
| Equity      in loss of CUC                                                                       |   |                                      | (490    | )                                        |   | (62 | ) |   | (592 | ) |   | (62 | ) |
| TRCLP      shared service fee recovery (expense)                                                 |   |                                      | --      |                                     |   | 39 |   |   | -- |   |   | (243 | ) |
| TRCLP      property management services expense                                                  |   |                                      | (1,327  | )                                        |   | (1,061 | ) |   | (3,760 | ) |   | (3,261 | ) |

----

----

|                                                                                              |   | Three      Months Ended September      30, |     | Nine      Months Ended September      30, |   |
|---------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|----------|------------------------------------------------|--------|
| (in      thousands)                                                                               |   | 2008                                            |     | 2007                                           |   | 2008 |   | 2007 |   |
|  Revenue                                                                                     |   |                                            |     |                                           |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                           |   | $                                               | 40,984   |                                           | $      | 73,739 |   | $ | 125,087 |   | $ | 204,191 |   |
| Commercial      Real Estate                                                                       |   |                                            | 17,630   |                                           |   | 21,128 |   |   | 48,007 |   |   | 52,507 |   |
| Portfolio      Management                                                                         |   |                                            | 11,065   |                                           |   | 17,202 |   |   | 34,145 |   |   | 46,488 |   |
| Credit      Risk Products                                                                         |   |                                            | 2,212    |                                           |   | 4,054 |   |   | 6,757 |   |   | 11,633 |   |
| Corporate                                                                                         |   |                                            | 8,540    |                                           |   | 5,057 |   |   | 20,442 |   |   | 17,225 |   |
| Consolidated      Partnerships                                                                    |   |                                            | 85,864   |                                           |   | 77,106 |   |   | 258,692 |   |   | 186,611 |   |
| Eliminations                                                                                      |   |                                            | (38,107  | )                                              |   | (39,935 | ) |   | (100,981 | ) |   | (108,075 | ) |
| Consolidated      Revenues                                                                        |   | $                                               | 128,188  |                                           | $      | 158,351 |   | $ | 392,149 |   | $ | 410,580 |   |
|  Depreciation      and Amortization                                                          |   |                                            |     |                                           |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                           |   | $                                               | 214      |                                           | $      | 221 |   | $ | 934 |   | $ | 698 |   |
| Commercial      Real Estate                                                                       |   |                                            | 3,105    |                                           |   | 4,196 |   |   | 9,270 |   |   | 12,647 |   |
| Portfolio      Management                                                                         |   |                                            | 962      |                                           |   | 1,777 |   |   | 3,197 |   |   | 4,879 |   |
| Credit      Risk Products                                                                         |   |                                            | 40       |                                           |   | 17 |   |   | 119 |   |   | 55 |   |
| Corporate                                                                                         |   |                                            | 6,682    |                                           |   | 5,630 |   |   | 20,830 |   |   | 15,254 |   |
| Consolidated      Depreciation and Amortization                                                   |   | $                                               | 11,003   |                                           | $      | 11,841 |   | $ | 34,350 |   | $ | 33,533 |   |
| Depreciation      and Amortization of Consolidated Partnerships                                   |   | $                                               | 8,229    |                                           | $      | 9,715 |   | $ | 29,375 |   | $ | 24,975 |   |
|  Adjusted      Net Income (Loss)                                                             |   |                                            |     |                                           |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                                                                           |   | $                                               | 12,834   |                                           | $      | 18,382 |   | $ | 12,241 |   | $ | 29,448 |   |
| Commercial      Real Estate                                                                       |   |                                            | (77,859  | )                                              |   | 7,113 |   |   | (67,794 | ) |   | 4,466 |   |
| Portfolio      Management                                                                         |   |                                            | 2,929    |                                           |   | 10,350 |   |   | 9,645 |   |   | 21,486 |   |
| Credit      Risk Products                                                                         |   |                                            | (504     | )                                              |   | 7,025 |   |   | (5,275 | ) |   | 4,264 |   |
| Corporate                                                                                         |   |                                            | (5       | )                                              |   | (25,316 | ) |   | (30,894 | ) |   | (58,703 | ) |
| Consolidated      Partnerships                                                                    |   |                                            | 2,219    |                                           |   | 10,003 |   |   | 12,959 |   |   | 20,284 |   |
| Eliminations                                                                                      |   |                                            | (4,260   | )                                              |   | (11,828 | ) |   | (12,754 | ) |   | (3,248 | ) |
| Total      Adjusted Net Income (Loss)                                                             |   |                                            | (64,646  | )                                              |   | 15,729 |   |   | (81,872 | ) |   | 17,997 |   |
| Amortization      or write-off of acquired intangible assets, net of minority      interests      |   |                                            | (85,173  | )                                              |   | (2,653 | ) |   | (90,141 | ) |   | (8,002 | ) |
| Amortization      of acquisition-related share-based compensation, net of minority      interests |   |                                            | (906     | )                                              |   | (2,434 | ) |   | (2,680 | ) |   | (9,118 | ) |
| Net      (loss) income                                                                            |   | $                                               | (150,725 | )                                              | $      | 10,642 |   | $ | (174,693 | ) | $ | 877 |   |

----

----

|                        |   | Number |   | Centerline      Capital Sponsored Fund      is Equity Partner |   | Included      in Credit Intermediated Funds |   | Centerline      Holds      GP Interest |   | Third      Party is Equity Partner |   |
|-----------------------------|--------|--------|--------|---------------------------------------------------------------|--------|---------------------------------------------|--------|----------------------------------------|--------|------------------------------------|--------|
|  PRS      Partnerships |   |   |   |                                                          |   |                                        |   |                                   |   |                               |   |   |   |
| Lease-Up                    |   |   | 7      |                                                          |   | 6                                           |   |                                   | 3      |                               |   | 6 |   |   | 1 |   |
| Stabilized                  |   |   | 5      |                                                          |   | --                                          |   |                                   | --     |                               |   | -- |   |   | 5 |   |
| Subtotal                    |   |   | 12     |                                                          |   | 6                                           |   |                                   | 3      |                               |   | 6 |   |   | 6 |   |
|                        |   |   |   |                                                          |   |                                        |   |                                   |   |                               |   |   |   |   |   |   |
| CRG      Partnerships       |   |   |   |                                                          |   |                                        |   |                                   |   |                               |   |   |   |
| Lease-Up                    |   |   | 8      |                                                          |   | 7                                           |   |                                   | 4      |                               |   | 4 |   |   | 1 |   |
| Subtotal                    |   |   | 8      |                                                          |   | 7                                           |   |                                   | 4      |                               |   | 4 |   |   | 1 |   |
|                        |   |   |   |                                                          |   |                                        |   |                                   |   |                               |   |   |   |   |   |   |
| GCG      Partnerships       |   |   |   |                                                          |   |                                        |   |                                   |   |                               |   |   |   |
| Lease-Up                    |   |   | 2      |                                                          |   | 2                                           |   |                                   | 1      |                               |   | -- |   |   | -- |   |
| Subtotal                    |   |   | 2      |                                                          |   | 2                                           |   |                                   | 1      |                               |   | -- |   |   | -- |   |
|                        |   |   |   |                                                          |   |                                        |   |                                   |   |                               |   |   |   |   |   |   |
| ERC      Partnerships       |   |   |   |                                                          |   |                                        |   |                                   |   |                               |   |   |   |
| Lease-Up                    |   |   | 15     |                                                          |   | 15                                          |   |                                   | 13     |                               |   | 14 |   |   | -- |   |
| Stabilized                  |   |   | 3      |                                                          |   | 3                                           |   |                                   | 1      |                               |   | 3 |   |   | -- |   |
| Subtotal                    |   |   | 18     |                                                          |   | 18                                          |   |                                   | 14     |                               |   | 17 |   |   | -- |   |
|  Total                 |   |   | 40     |                                                          |   | 33                                          |   |                                   | 22     |                               |   | 27 |   |   | 7 |   |

|   | Cash required to bring      the properties to break-even operation – As of September 30, 2008,      advances outstanding totaled $37.9 million, net of      reserves.  These advances, and additional loans, are assessed      periodically for collectability.  In 2008, we recorded reserves      (net of recoveries) of $0.3 million, all recorded during the first half of      the year, related to theseadvances. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Potential cost to      provide specified yields – As noted in the table above, 22 of the      partnerships are included in credit intermediated 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. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | through  the      construction and lease-up phases of the  properties; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | for      the period from the completion of the construction and lease-up phases      through the operating phase of the properties;  or |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | covering      both periods. |
|--------------------|-----------------------------|

----

----

| ·   | On      January 18, 2008, Kramer v. Ross, et al., Index. No. 100861-08, was filed      against us and our board of trustees, in New York County Supreme      Court; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      January 25, 2008, Carfagno v. Schnitzer, et al., No. 08 CV 00912, was      filed against us and our board of trustees in the United States District      Court for the Southern District of NewYork; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      January 30, 2008, Ciszerk v. Ross, et al., CA No. 3511, was filed against      us, our board of trustees and The Related Companies, L.P. in the Delaware      Court of Chancery; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      February 22, 2008, Kanter v. Ross, et al., 08 Civ. 01827, was filed      against us, our board of trustees and The Related Companies, L.P. in the      United States District Court for the Southern District of New      York; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      February 27, 2008, Broy v. Centerline Holding Company et al., No. 08 CV      01971, was filed against us and certain of our officers and trustees in      the United States District Court for the Southern District of New      York; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      April 10, 2008, Kastner v. Schnitzer et al, Index No. 601043-08, was filed      against us and our board of trustees, in New York Supreme Court;      and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      April 10, 2008, Kostecka v. Schnitzer et al, Index No. 601044-08, was      filed against us and our board of trustees, in New York Supreme      Court. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | breach      of fiduciary duty; |
|--------------------|--------------------------------|

| ·   | breach      of the implied covenant of good faith and fair  dealing; |
|--------------------|----------------------------------------------------------------------|

| ·   | intentional      misrepresentation, fraud anddeceit; |
|--------------------|------------------------------------------------------|

| ·   | negligent      misrepresentation; and |
|--------------------|---------------------------------------|

| ·   | tortious      interference with contracts. |
|--------------------|--------------------------------------------|

----

----

| ·   | CRESS      recorded aggregate impairment charges of $63.9 million, of which our      proportionate share is $3.2million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | CUC      recorded an impairment charge of $18.0 million of which our proportionate      share is $0.5 million. |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | AMAC      recorded aggregate impairment charges of $47.4 million, which is one of      the factors in determining the estimated recovery amount for the revolving      credit facility we had extended (see Note21). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Significant      components of the MD&A section include:                                                                                                                                                                                                                                                                                                                                                                                                               |   | Page   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| SECTION 1 – OverviewThe      overview section provides a summary of Centerline and our reportable      business groups (as more fully discussed in Note 1 to the condensed      consolidated financial statements).  We also include a      discussion of factors affecting our consolidated results of operations as      well as items specific to each business group.                                                                                  |   | 51     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| SECTION 2 – Consolidated Results of      OperationsThe      consolidated results of operations section provides an analysis of our      results on a consolidated basis for the current quarter and the nine      months ended September 30, 2008, against the comparable prior year      periods.  Significant subsections within this section are as      follows:                                                                                       |   | 53     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| Adjusted      Net Income                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 53     |
| Summary      Consolidated Results                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 54     |
| Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 55     |
| Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 56     |
| Other      Items                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 59     |
| Income      Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 61     |
| Inflation                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 62     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| SECTION 3 – Results by      SegmentThe      results by segment section provides an analysis of our results on a      reportable group basis for the current quarter and the nine months ended      September 30, 2008, against the comparable prior year      periods.  We provide certain statistical information by segment      and discuss known trends and uncertainties.  Significant      subsections within this section are as follows: |   | 62     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| Affordable      Housing                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 64     |
| Commercial      Real Estate                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 68     |
| Portfolio      Management                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 71     |
| Credit      Risk Products                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 73     |
| Corporate                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 74     |
| Consolidated      Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 75     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 77     |
| SECTION 4 – Liquidity and Capital      ResourcesThe      liquidity and capital resources section provides discussion of our ability      to generate adequate amounts of cash to meet our current and future      needs.  Significant subsections within this section are as      follows:                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 77     |
| Liquidity      – Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 78     |
| Liquidity      Requirements after September 30, 2008                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| Liquidity      – Fair Value Disclosures                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 79     |
| Capital      Resources – Financing Obligations                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 82     |
| Capital      Resources – Equity                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 83     |
| Commitments      and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 84     |

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| ·   | The      investor base for our Affordable Housing Group has changed such that      traditional investors (e.g., Fannie Mae, Freddie Mac, commercial banks)      have reduced their demand for tax credits, which has resulted in fewer      LIHTC fund originations during 2008 as compared to prior      periods.  Although the raising of LIHTC funds is traditionally      weighted to the fourth quarter, given the current demand in the market for      LIHTC credits, our current expectations are that total gross equity raised      with respect to LIHTC funds will be significantly less than      2007.  To date, during 2008 we have raised $150.5 million of      gross equity in seven LIHTC Funds, as compared to $549.5 million of gross      equity raised in 11 LIHTC funds in the comparable 2007    period. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | With      respect to mortgage revenue bonds, funding costs have increased      significantly and liquidity declined resulting in a reduction in our      ability to acquire new mortgage revenue bonds.  We funded no      mortgage revenue bonds in the third quarter and funded $26.1million for      year-to-date 2008, compared to $101.2 million of acquisitions and fundings      in the third quarter of 2007 and $173.2 million for the comparative nine      months of 2007.  Given the current uncertainty in market      conditions and lack of liquidity, we expect this trend of lower funding      and acquisitions as compared to prior periods to continue for the      foreseeable future. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      overall bond portfolio has significantly declined as compared to prior      periods as a result of the re-securitization of $2.8 billion of bonds with      Freddie Mac in December 2007 as more fully discussed in our 2007 Form      10-K.  We believe this materially improved our risk profile by      reducing the funding and interest rate risk inherent in our liability      structure. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | The      declining performance of AMAC (resulting from the disruption in mortgage      and credit markets) has impacted our earnings during the nine months ended      September 30, 2008 through a reduction in revenues, as a result of AMAC      suspending most of its activity beginning in late 2007, and through an      increase in equity losses recognized by us, directly attributable to the      sale of certain assets at a loss and impairment charges recognized by      AMAC.  During the fourth quarter of 2008, we determined that      AMAC would be unable to refinance its repurchase lines, causing it to      dispose of a significant amount of its remaining assets.  As      such, we re-evaluated amounts carried on our balance sheet associated with      our investment in AMAC as of September 30, 2008.  This      evaluation resulted in the following impairment  charges: |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pre-tax      impairment charge of $2.9 million to write off the remaining balance of an      intangible asset associated with the management of AMAC (recorded in      “write-off of goodwill and intangibleassets”); |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pre-tax      impairment charge of $74.8 million included in “equity and other (loss)      income” consisting of $4.5 million to write off the remaining balance of      our investment in AMAC preferred shares and a $70.3 million reserve      related to the collectability of the loan we provided to    AMAC. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      CMBS investments, whether held by our funds or for our own account, have      experienced a significant decline in value.  We continue to      believe that such declines are due to market dislocation and are not      necessarily reflective of the credit quality of the underlying assets (see      Fair Value      Disclosures discussion in SECTION 4 – Liquidity and Capital      Resources beginning on page 77).  In addition, our      strategy with CMBS investments is long-term in nature and we have the      intent and ability to hold these assets until market conditions improve      allowing time for the asset values torecover. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Events      impacting comparability of results for our Commercial Real Estate group      when evaluating the nine months ended September 30, 2008 to the prior      period include the launch of our third high-yield CMBS Fund in August 2007      with committed capital of $585.3 million as of September 30, 2008; and      increased capital commitments of $178.6 million in December 2007 in our      High-Yield Debt Fund Partnership. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For      the nine months ended September 30, 2008, our proportionate share of      impairment charges recognized at two of the CMBS Fund Partnerships and the      High-Yield Debt Fund Partnership was $7.9 million ($4.4 million in the      third quarter).  There was no comparable amount in the 2007      period. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      have originated no commercial mortgage loans for AMAC or CRESS in the      current year and have seen a significant decline in originations for      conduit originations.  We continue to believe in the long-term      viability of commercial loan originations and recently greatly      strengthened our capabilities in this area by hiring a 14 member team      formerly of Nomura.  As part of an agreement with Nomura, we      began to act as collateral manager for two commercial real estate CDOs      previously managed by Nomura and are managing a portfolio of assets that      Nomura holds for its own account. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      primary loan servicing portfolio decreased to $22.8 billion, as compared      to $27.3 billion at September 30, 2007, due principally to declining      pre-securitization servicing that has been affected by the disruption in      credit markets. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Centerline      Financial, part of our Credit Risk Products Group, received a      AAA-counterparty rating as a credit-derivative products company from      S&P at the end of 2007.  A counterparty rating should allow      us to provide credit default swaps directly to third parties without      paying fronting fees. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Beginning      in the fourth quarter of 2007, we began purchasing syndicated debt in      anticipation of a future collateralized loan obligation      transaction.  Principally as a result of current market      conditions, we did not purchase any additional syndicated corporate debt      during the first nine months of 2008 and instead began liquidating our      positions.  Most of the assets were sold by October      2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                        |   | Three      Months EndedSeptember      30, |     | Nine      Months EndedSeptember      30, |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|----------|------------------------------------------|--------|--------|
| (in      thousands, except EPS amounts)                                                                                                                                                                                                                                                                                                                                     |   | 2008                                      |     | 2007                                     |   | 2008   |   | 2007 |   |   |
|  Net      (loss) income                                                                                                                                                                                                                                                                                                                                                |   | $                                         | (150,725 | )                                        | $      | 10,642 |   | $ | (174,693 | ) | $ | 877 |   |   |
| Amortization      or write off of acquired intangible assets, net of minority      interests                                                                                                                                                                                                                                                                                |   |                                      | 85,173   |                                     |   | 2,653  |   |   | 90,141 |   |   | 8,002 |   |   |
| Amortization      of acquisition-related share-based compensation, net of minority      interests                                                                                                                                                                                                                                                                           |   |                                      | 906      |                                     |   | 2,434  |   |   | 2,680 |   |   | 9,118 |   |   |
| Adjusted      net (loss) income                                                                                                                                                                                                                                                                                                                                             |   | $                                         | (64,646  | )                                        | $      | 15,729 |   | $ | (81,872 | ) | $ | 17,997 |   |   |
|  Adjusted      EPS (1)                                                                                                                                                                                                                                                                                                                                                 |   | $                                         | (1.37    | )                                        | $      | 0.25   |   | $ | (2.18 | ) | $ | 0.24 |   |   |
|  (1)        Adjusted EPS in 2008 includes a higher level of preferred dividends      following our issuance of 11.0% Preferred Shares in January 2008, as well      as adjustments associated with converting certain of our outstanding      shares to redeemable securities (see Notes 14 and 18 to the condensed      consolidated financial statements). |

| ·   | The      December 2007 re-securitization of our mortgage revenue bonds (as more      fully discussed in our 2007 Form 10-K) substantially reduced our mortgage      revenue bond interest income when compared with the period ended September      30, 2007.  This reduction in mortgage revenue bond interest      income was partially offset by interest earned on Freddie Mac      Certificates, interest income from a stabilization escrow account      established at the time of the transaction and lower levels of interest      expense. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      impact of credit value adjustments as a result of applying the provisions      of SFAS 157 which resulted in a decrease in the fair value of our      liabilities of $6.3 million for the nine months ended September 30, 2008,      which we reflected as a reduction in interest expense in the Condensed      Consolidated Statement ofOperations. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Third      quarter 2008 estimated goodwill impairment of $60.0    million; |
|--------------------|----------------------------------------------------------------------------|

| ·   | Third      quarter 2008 intangible asset impairment charge of $55.2 million related      to our transactional relationships with Freddie Mac and Fannie      Mae; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Third      quarter 2008 impairment charges totaling $77.7 million with respect to      intangible assets, preferred interests and our loan associated with      AMAC; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Impairment      charges on mortgage revenue bonds of $10.9 million for the six months      ended June 30, 2008, compared to $19.9 million for the nine months ended      September 30, 2007 ($0.5 million for the quarter ended September 30,      2007).  Additionally there was a $4.4 million charge to reserve      against associated receivables in the 2007 year-to-date      period; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A      reduction in the value of the Series B Freddie Mac Certificates we      retained as part of the 2007 re-securitization of our mortgage revenue      bond portfolio.  The reduction was a result of revised estimates      as to the timing of payments from the residual cash flows with respect to      assumed defaults.  While the revised estimates did not reduce      the gross expected losses, in accordance with GAAP, we reflected the      reduction in fair value as an impairment charge of $7.9 million for the      nine months ended September 30,2008; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Impairment      charges of $1.5 million in 2008 ($0.2 million for the third quarter),      related to syndicated corporate debt and other investments for which there      was no comparable amount in 2007;and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General      economic conditions which resulted in decreased year-to-date mortgage      origination volume and overall reduced margins due to spread compression      in the markets related to LIHTC fund origination fees and mortgage banking      fees.  Mortgage originations were $269.4 million for the three      months ended September 30, 2008 and $836.9 for the nine months ended      September 30, 2008, as compared to $248.7 million for the three months      ended September 30, 2007 and $1.4 billion for the nine months ended      September 30, 2007. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Summary      Consolidated Results |
|-----------------------------------|

| (dollars      in thousands)               |   | 2008   |     | %      of Revenues |   | 2007   |   | %      of Revenues |   | %      Change |   |
|-------------------------------------------|--------|--------|----------|--------------------|--------|--------|--------|--------------------|--------|---------------|--------|
|  Revenues                            |   | $      | 128,188  |               | 100.0  | %      | $      | 158,351            |   | 100.0         | %      | (19.0 | )% |
| Expenses                                  |   |   | (343,592 | )                  | 268.0  |   |   | (155,963           | )      | 98.5          |   | 120.3 |   |
| Other      items                          |   |   | 65,694   |               | 51.2   |   |   | 6,693              |   | 4.2           |   | 881.5 |   |
| (Loss)      income before income taxes    |   |   | (149,710 | )                  | (116.8 | )      |   | 9,081              |   | 5.7           |   | N/M |   |
|  Income      tax (provision) benefit |   |   | (1,015   | )                  | (0.8   | )      |   | 1,561              |   | 1.0           |   | (165.0 | ) |
| Net      (loss) income                    |   | $      | (150,725 | )                  | (117.6 | )%     | $      | 10,642             |   | 6.7           | %      | N/M |   |

----

| (dollars      in thousands)               |   | 2008   |     | %      of Revenues |   | 2007   |   | %      of Revenues |   | %      Change |   |
|-------------------------------------------|--------|--------|----------|--------------------|--------|--------|--------|--------------------|--------|---------------|--------|
|  Revenues                            |   | $      | 392,149  |               | 100.0  | %      | $      | 410,580            |   | 100.0         | %      | (4.5 | )% |
| Expenses                                  |   |   | (680,686 | )                  | 173.6  |   |   | (464,272           | )      | 113.1         |   | 46.6 |   |
| Other      items                          |   |   | 115,863  |               | 29.5   |   |   | 49,749             |   | 12.1          |   | 132.9 |   |
| Loss      before income taxes             |   |   | (172,674 | )                  | (44.0  | )      |   | (3,943             | )      | (1.0          | )      | N/M |   |
|  Income      tax (provision) benefit |   |   | (2,019   | )                  | (0.5   | )      |   | 4,820              |   | 1.2           |   | (141.9 | ) |
| Net      (loss) income                    |   | $      | (174,693 | )                  | (44.5  | )%     | $      | 877                |   | 0.2           | %      | N/M |   |

| Revenues |
|----------|

|                                                                                      |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
|  (dollars      in thousands)                                                         |   | 2008                                  |    | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|  Operating      GroupsInterest      income                                           |   | $                                     | 22,562  |                                 | $      | 55,039 |   | (59.0 | )% | $ | 75,854 |   | $ | 157,899 |   |   | (52.0 | )% |
| Fee      income                                                                           |   |                                  | 16,405  |                                 |   | 24,005 |   | (31.7 | ) |   | 48,439 |   |   | 58,614 |   |   | (17.4 | ) |
| Other                                                                                     |   |                                  | 3,357   |                                 |   | 2,201 |   | 52.5 |   |   | 9,164 |   |   | 7,456 |   |   | 22.9 |   |
| Subtotal                                                                                  |   |                                  | 42,324  |                                 |   | 81,245 |   | (47.9 | ) |   | 133,457 |   |   | 223,969 |   |   | (40.4 | ) |
|  Consolidated      PartnershipsRevenues      of LIHTC Fund and Property Partnerships |   |                                  | 21,586  |                                 |   | 20,935 |   | 3.1 |   |   | 65,585 |   |   | 57,055 |   |   | 15.0 |   |
| Revenues      of CMBS and High-Yield Debt Fund Partnerships                               |   |                                  | 64,278  |                                 |   | 56,171 |   | 14.4 |   |   | 193,107 |   |   | 129,556 |   |   | 49.1 |   |
| Subtotal                                                                                  |   |                                  | 85,864  |                                 |   | 77,106 |   | 11.4 |   |   | 258,692 |   |   | 186,611 |   |   | 38.6 |   |
|  Total      revenues                                                                 |   | $                                     | 128,188 |                                 | $      | 158,351 |   | (19.0 | )% | $ | 392,149 |   | $ | 410,580 |   |   | (4.5 | )% |

----

|                                             |   | Three      Months Ended September 30, |    |   | Nine      Months Ended September 30, |          |
|--------------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                      |   | 2008                                  |    | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|                                             |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Groups                            |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative:                 |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries      and benefits                       |   | $                                     | 21,706  |   | $                                    | 27,572        |   | (21.3 | )% |   | $ | 72,507 |   | $ | 91,460 |   |   | (20.7 | )% |
| Other                                            |   |                                  | 19,224  |   |                                 | 16,035        |   | 19.9 |   |   |   | 55,550 |   |   | 50,708 |   |   | 9.5 |   |
| Total      G&A                               |   |                                  | 40,930  |   |                                 | 43,607        |   | (6.1 | ) |   |   | 128,057 |   |   | 142,168 |   |   | (9.9 | ) |
|                                             |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                           |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and financings                   |   |                                  | 23,119  |   |                                 | 41,980        |   | (44.9 | )% |   |   | 56,473 |   |   | 99,723 |   |   | (43.4 | )% |
| Preferred      shares of subsidiary              |   |                                  | 4,724   |   |                                 | 4,724         |   | -- |   |   |   | 14,173 |   |   | 14,173 |   |   | -- |   |
|  Depreciation      and amortization         |   |                                  | 11,003  |   |                                 | 11,841        |   | (7.1 | ) |   |   | 34,350 |   |   | 33,533 |   |   | 2.4 |   |
| Loss      on impairment of assets                |   |                                  | 615     |   |                                 | 548           |   | 12.2 |   |   |   | 22,055 |   |   | 19,933 |   |   | 10.6 |   |
| Write-off      of goodwill and intangible assets |   |                                  | 118,069 |   |                                 | --            |   | 100.0 |   |   |   | 118,069 |   |   | -- |   |   | 100.0 |   |
| Expenses      – operating groups           |   |                                  | 198,460 |   |                                 | 102,700       |   | 93.2 |   |   |   | 373,177 |   |   | 309,530 |   |   | 20.6 |   |
|                                             |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      Partnerships                   |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                           |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIHTC      Fund and Property Partnerships        |   |                                  | 3,524   |   |                                 | 3,501         |   | 0.7 |   |   |   | 11,942 |   |   | 15,949 |   |   | (25.1 | ) |
| CMBS      and High-Yield Debt Fund Partnerships  |   |                                  | 26,452  |   |                                 | 22,199        |   | 19.2 |   |   |   | 85,839 |   |   | 56,065 |   |   | 53.1 |   |
|                                             |   |                                  | 29,976  |   |                                 | 25,700        |   | 16.6 |   |   |   | 97,781 |   |   | 72,014 |   |   | 35.8 |   |
| Other      expenses                              |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIHTC      Fund and Property Partnerships        |   |                                  | 30,172  |   |                                 | 25,735        |   | 17.2 |   |   |   | 94,404 |   |   | 78,669 |   |   | 20.0 |   |
| CMBS      and High-Yield Debt Fund Partnerships  |   |                                  | 84,984  |   |                                 | 1,828         |   | N/M |   |   |   | 115,324 |   |   | 4,059 |   |   | N/M |   |
|                                             |   |                                  | 115,156 |   |                                 | 27,563        |   | 317.8 |   |   |   | 209,728 |   |   | 82,728 |   |   | 153.5 |   |
| Expenses      – consolidated partnerships  |   |                                  | 145,132 |   |                                 | 53,263        |   | 172.5 |   |   |   | 307,509 |   |   | 154,742 |   |   | 98.7 |   |
|  Total      expenses                        |   | $                                     | 343,592 |   | $                                    | 155,963       |   | 120.3 | % |   | $ | 680,686 |   | $ | 464,272 |   |   | 46.6 | % |

| ·   | reduced      expense associated with the reduction in bonus    expectations; |
|--------------------|------------------------------------------------------------------------------|

| ·   | lower      share-based compensation expense for shares issued in connection with our      acquisition of Centerline Investors I LLC in August 2006 (the 2007      year-to-date period included $12.7 million relating to amortization of      these shares compared to amortization of $3.7 million in the 2008 period);      and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $2.9      million of severance charges in 2007 year to date compared to $1.2 million      in 2008 (no significant variance in third quarter  periods). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | An      increase of $5.0 million in rent expense related to our new office      headquarters ($3.1 million of which was recorded in the third      quarter); |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | An      increase of $2.5 million year to date related to increased professional      fees, particularly audit and consultingcosts; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.6      million in reserves against certain AMAC receivables recorded in the third      quarter; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | Increase      in general legal costs of $0.5 million associated with litigation (see      Note 23 to the condensed consolidated financial statements);      and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $0.4      million of additional structuring fees paid to Natixis by CFH following      the achievement of its counterparty rating to pursue its business      expansion. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                 |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|--------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
|  (dollars      in thousands)                                                    |   | 2008                                  |    | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|  Average      borrowing rate (1)                                                |   |                                  | 6.39    | %                                    |   | 5.48 | % |   |   |   | 6.46 | % |   | 5.29 | % |   |   |   |
| Average      borrowings                                                              |   | $                                     | 892,935 |                                 | $      | 2,572,302 |   | (67.7 | )% | $ | 971,210 |   | $ | 2,455,535 |   |   | (60.4 | )% |
| Average      LIBOR rate                                                              |   |                                  | 2.62    | %                                    |   | 4.79 | % |   |   |   | 2.83 | % |   | 4.80 | % |   |   |   |
| Average      SIFMA rate                                                              |   |                                  | 2.41    | %                                    |   | 3.70 | % |   |   |   | 2.29 | % |   | 3.69 | % |   |   |   |
| Swap      agreements – notional amount at September 30                         |   | $                                     | 275,000 |                                 | $      | 725,000 |   | (62.1 | ) |   |   |   |   |   |   |   |   |   |
|  (1)        Includes impact of interest rate swaps, as    applicable. |

----

| ·   | $10.9      million (recorded in the first and second quarters) related to two      mortgage revenue bonds we sold and another property experiencing      substandard performance; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $7.9      million related to our Series B Freddie Mac  Certificates; |
|--------------------|----------------------------------------------------------------------|

| ·   | $1.5      million related to other-than-temporary impairments on syndicated      corporate debt investments ($0.2 million recorded in the third quarter);      and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.2      million related to retained CMBS certificates ($0.1 million recorded in      the third quarter). |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | $55.2      million reduction in transactional relationships associated with Freddie      Mac and Fannie Mae; and |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | $2.9      million reduction in partnership service contracts associated with      managing AMAC. |
|--------------------|--------------------------------------------------------------------------------------------------|

----

|                                                    |   | Three      Months Ended September 30, |    |   | Nine      Months Ended September 30, |          |
|---------------------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                             |   | 2008                                  |    | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Equity      and other income (loss):              |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated      partnerships                          |   | $                                     | 2,219   |   | $                                    | 10,003        |   | (77.8 | )% |   | $ | 12,959 |   | $ | 20,284 |   |   | (36.1 | )% |
| AMAC                                                    |   |                                  | (75,775 | )      |                                 | 647           |   | N/M |   |   |   | (78,057 | ) |   | 662 |   |   | N/M |   |
| Other                                                   |   |                                  | (646    | )      |                                 | (320          | ) | (101.9 | ) |   |   | (743 | ) |   | (739 | ) |   | (0.5 | ) |
| Total      equity and other income (loss)               |   |                                  | (74,202 | )      |                                 | 10,330        |   | (818.3 | ) |   |   | (65,841 | ) |   | 20,207 |   |   | (425.8 | ) |
| Eliminations(1)                                         |   |                                  | (2,219  | )      |                                 | (10,003       | ) | 77.8 |   |   |   | (12,959 | ) |   | (20,284 | ) |   | 36.1 |   |
| Equity      and other income (loss) – as reported |   | $                                     | (76,421 | )      | $                                    | 327           |   | N/M |   |   | $ | (78,800 | ) | $ | (77 | ) |   | N/M |   |

| (1) | Given      the minority economic interest we have in consolidated partnerships, for      internal purposes we treat consolidated partnerships, particularly the      CMBS Fund Partnerships, as equity interests in evaluating our      results. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |          |
|---------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)           |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Mortgage      loans             |   | $                                     | 3,064  |   | $                                    | 3,066         |   | (0.1 | )% |   | $ | 7,477 |   | $ | 5,768 |   |   | 29.6 | % |
| Mortgage      revenue bonds and other |   |                                  | (2,546 | )      |                                 | 342           |   | (844.4 | ) |   |   | (6,164 | ) |   | 1,228 |   |   | (602.0 | ) |
|  Net      Gain                   |   | $                                     | 518    |   | $                                    | 3,408         |   | (84.8 | )% |   | $ | 1,313 |   | $ | 6,996 |   |   | (81.2 | )% |

| ·   | incremental      losses in 2008 (primarily recorded in the first quarter) associated with      the re-securitization of our mortgage revenue bond portfolio in December      2007.  These losses primarily resulted from valuation      adjustments for the stabilization escrow maintained for certain bonds (see      Note 5 to the condensed consolidated financial      statements).  Upon the final deposit of funds to the escrow, the      difference between the cash deposit and its present value was recognized      as a loss.  Similar to previous losses recognized with respect      to the net present value adjustments to the escrow and the retained      residual interests, offsets will be recognized over the lives of the      instruments through accretion of the net present value      adjustments; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | a      $2.3 million loss recorded in third quarter relating to two mortgage      revenue bonds we sold; |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | the      write off of certain receivable balances associated with mortgage revenue      bonds that we deem uncollectible;and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      loss of $0.7 million ($0.2 million in the third quarter) related to the      sale of ten syndicated corporate debt investments (see Note 3 to the      condensed consolidated financialstatements). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                     |   | Three      Months Ended September 30, |    |   | Nine      Months Ended September 30, |          |
|----------------------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                              |   | 2008                                  |    | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Preferred      shares of subsidiary                |   | $                                     | (1,556  | )      | $                                    | (1,556        | ) | -- |   |   | $ | (4,669 | ) | $ | (4,669 | ) |   | -- |   |
|  SCUs                                               |   | $                                     | 59,141  |   | $                                    | (4,398        | ) | N/M |   |   | $ | 71,757 |   | $ | (371 | ) |   | N/M |   |
| SCIs                                                     |   |                                  | 805     |   |                                 | (57           | ) | N/M |   |   |   | 976 |   |   | (6 | ) |   | N/M |   |
| SMUs                                                     |   |                                  | --      |   |                                 | (60           | ) | 100.0 | % |   |   | -- |   |   | (7 | ) |   | 100.0 | % |
| Other      minority interests                            |   |                                  | (106    | )      |                                 | (792          | ) | 86.6 |   |   |   | 277 |   |   | (514 | ) |   | 153.9 |   |
| Minority      interests in subsidiaries, net             |   | $                                     | 59,840  |   | $                                    | (5,307        | ) | N/M |   |   | $ | 73,010 |   | $ | (898 | ) |   | N/M |   |
|  Limited      partners of consolidated partnerships |   | $                                     | 152,981 |   | $                                    | 82,003        |   | 86.6 | % |   | $ | 340,666 |   | $ | 260,890 |   |   | 30.6 | % |
|                                                     |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| N/M      – Not meaningful.                         |   |                                  |    |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                    |   | Three      Months Ended September 30, |     |
|-------------------------------------------------------------------------|--------|---------------------------------------|----------|
| (dollars      in thousands)                                             |   | 2008                                  |     | %      of Revenues |   |   | 2007 |   | %      of Revenues |   | %      Change |   |
|  Taxable      (loss) income                                        |   | $                                     | (75,487  | ) |   | (58.9 | )% |   | $ | (9,711 | ) |   | (6.1 | )% |   | (677.3 | )% |
| Income      (loss) not subject to tax                                   |   | $                                     | (74,223  | ) |   | (57.9 | )% |   | $ | 18,792 |   |   | 11.9 | % |   | (495.0 | )% |
|  (Loss)      income before income taxes                            |   | $                                     | (149,710 | ) |   | (116.8 | )% |   | $ | 9,081 |   |   | 5.7 | % |   | N/M |   |
|  Income      tax (provision) benefit                               |   | $                                     | (1,015   | ) |   | (0.8 | )% |   | $ | 1,561 |   |   | 1.0 | % |   | 165.0 | % |
|  Effective      tax rate – consolidated basis                |   |                                  | 0.68     | % |   |   |   |   |   | 17.2 | % |   |   |   |   |   |   |
|  Effective      tax rate for corporate subsidiaries subject to tax |   |                                  | 1.34     | % |   |   |   |   |   | (16.1 | )% |   |   |   |   |   |   |

|                                                                    |   | Nine      Months Ended September 30, |     |
|-------------------------------------------------------------------------|--------|--------------------------------------|----------|
| (dollars      in thousands)                                             |   | 2008                                 |     | %      of Revenues |   |   | 2007 |   | %      of Revenues |   | %      Change |   |
|  Taxable      (loss) income                                        |   | $                                    | (109,109 | ) |   | (27.8 | )% |   | $ | (36,151 | ) |   | (8.8 | )% |   | (201.8 | )% |
| Income      not subject to tax                                          |   | $                                    | (63,565  | ) |   | (16.2 | )% |   | $ | 32,208 |   |   | 7.8 | % |   | 297.4 | % |
|  (Loss)      income before income taxes                            |   | $                                    | (172,674 | ) |   | (44.0 | )% |   | $ | (3,943 | ) |   | (1.0 | )% |   | N/M |   |
|  Income      tax (provision) benefit                               |   | $                                    | (2,019   | ) |   | (0.5 | ) |   | $ | 4,820 |   |   | 1.2 | % |   | (141.9 | )% |
|  Effective      tax rate – consolidated basis                |   |                                 | 1.17     | % |   |   |   |   |   | (122.2 | )% |   |   |   |   |   |   |
|  Effective      tax rate for corporate subsidiaries subject to tax |   |                                 | 1.85     | % |   |   |   |   |   | (13.3 | )% |   |   |   |   |   |   |

----

----

|                                                  |   | Three      Months Ended September 30, |     |   | Nine      Months Ended September 30, |          |
|-------------------------------------------------------|--------|---------------------------------------|----------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                           |   | 2008                                  |     | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Revenues:                                       |   |                                  |     |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                               |   | $                                     | 40,984   |   | $                                    | 73,739        |   | (44.4 | )% |   | $ | 125,087 |   | $ | 204,191 |   | (38.7 | )% |
| Commercial      Real Estate                           |   |                                  | 17,630   |   |                                 | 21,128        |   | (16.6 | ) |   |   | 48,007 |   |   | 52,507 |   | (8.6 | ) |
| Portfolio      Management                             |   |                                  | 11,065   |   |                                 | 17,202        |   | (35.7 | ) |   |   | 34,145 |   |   | 46,488 |   | (26.6 | ) |
| Credit      Risk Products                             |   |                                  | 2,212    |   |                                 | 4,054         |   | (45.4 | ) |   |   | 6,757 |   |   | 11,633 |   | (41.9 | ) |
|  Corporate                                       |   |                                  | 8,540    |   |                                 | 5,057         |   | 68.9 |   |   |   | 20,442 |   |   | 17,225 |   | 18.7 |   |
| Consolidated      Partnerships                        |   |                                  | 85,864   |   |                                 | 77,106        |   | 11.4 |   |   |   | 258,692 |   |   | 186,611 |   | 38.6 |   |
| Eliminations                                          |   |                                  | (38,107  | )      |                                 | (39,935       | ) | 4.6 |   |   |   | (100,981 | ) |   | (108,075 | ) | 6.6 |   |
| Total      revenues                                   |   | $                                     | 128,188  |   | $                                    | 158,351       |   | (19.0 | )% |   | $ | 392,149 |   | $ | 410,580 |   | (4.5 | )% |
|  Expenses:                                       |   |                                  |     |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                               |   | $                                     | 24,298   |   | $                                    | 53,831        |   | (54.9 | )% |   | $ | 102,707 |   | $ | 170,353 |   | (39.7 | )% |
| Commercial      Real Estate                           |   |                                  | 25,172   |   |                                 | 28,320        |   | (11.1 | ) |   |   | 57,413 |   |   | 78,715 |   | (27.1 | ) |
| Portfolio      Management                             |   |                                  | 8,782    |   |                                 | 9,218         |   | (4.7 | ) |   |   | 26,438 |   |   | 29,204 |   | (9.5 | ) |
| Credit      Risk Products                             |   |                                  | 2,481    |   |                                 | (3,762        | ) | 165.9 |   |   |   | 11,477 |   |   | 6,855 |   | 67.4 |   |
| Corporate                                             |   |                                  | 152,539  |   |                                 | 30,777        |   | 395.6 |   |   |   | 212,917 |   |   | 90,109 |   | 136.3 |   |
| Consolidated      Partnerships                        |   |                                  | 166,958  |   |                                 | 76,924        |   | 117.0 |   |   |   | 370,742 |   |   | 214,724 |   | 72.7 |   |
| Eliminations                                          |   |                                  | (36,638  | )      |                                 | (39,345       | ) | 6.9 |   |   |   | (101,008 | ) |   | (125,688 | ) | 19.6 |   |
| Total      expenses                                   |   | $                                     | 343,592  |   | $                                    | 155,963       |   | 120.3 | % |   | $ | 680,686 |   | $ | 464,272 |   | 46.6 | % |
|  Other      income (loss) (1):                   |   |                                  |     |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                               |   | $                                     | (2,444   | )      | $                                    | 30            |   | N/M |   |   | $ | (5,470 | ) | $ | 279 |   | N/M |   |
| Commercial      Real Estate (2)                       |   |                                  | (70,411  | )      |                                 | 13,279        |   | (630.2 | ) |   |   | (58,363 | ) |   | 25,837 |   | (325.9 | ) |
| Portfolio      Management                             |   |                                  | --       |   |                                 | 1,664         |   | (100.0 | ) |   |   | -- |   |   | 1,664 |   | (100.0 | ) |
| Credit      Risk Products                             |   |                                  | (208     | )      |                                 | --            |   | -- |   |   |   | (735 | ) |   | -- |   | -- |   |
| Corporate                                             |   |                                  | (49      | )      |                                 | --            |   | -- |   |   |   | (138 | ) |   | -- |   | -- |   |
| Consolidated      Partnerships (1)                    |   |                                  | 83,313   |   |                                 | 9,821         |   | 748.3 |   |   |   | 125,009 |   |   | 48,397 |   | 158.3 |   |
| Eliminations                                          |   |                                  | (2,791   | )      |                                 | (11,238       | ) | 75.2 |   |   |   | (12,781 | ) |   | (20,861 | ) | 38.7 |   |
| Total      other income (loss)                        |   | $                                     | 7,410    |   | $                                    | 13,556        |   | (45.3 | )% |   | $ | 47,522 |   | $ | 55,316 |   | (14.1 | )% |
|  Income      (loss) before other allocations(1): |   |                                  |     |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                               |   | $                                     | 14,242   |   | $                                    | 19,938        |   | (28.6 | )% |   | $ | 16,910 |   | $ | 34,117 |   | (50.4 | ) |
| Commercial      Real Estate                           |   |                                  | (77,953  | )      |                                 | 6,087         |   | N/M |   |   |   | (67,769 | ) |   | (371 | ) | N/M |   |
| Portfolio      Management                             |   |                                  | 2,283    |   |                                 | 9,648         |   | (76.3 | ) |   |   | 7,707 |   |   | 18,948 |   | (59.3 | ) |
| Credit      Risk Products                             |   |                                  | (477     | )      |                                 | 7,816         |   | (106.1 | ) |   |   | (5,455 | ) |   | 4,778 |   | (214.2 | ) |
| Corporate                                             |   |                                  | (144,048 | )      |                                 | (25,720       | ) | (460.1 | ) |   |   | (192,613 | ) |   | (72,884 | ) | (164.3 | ) |
| Consolidated      Partnerships                        |   |                                  | 2,219    |   |                                 | 10,003        |   | (77.8 | ) |   |   | 12,959 |   |   | 20,284 |   | (36.1 | ) |
| Eliminations                                          |   |                                  | (4,260   | )      |                                 | (11,828       | ) | 64.0 |   |   |   | (12,754 | ) |   | (3,248 | ) | (292.7 | ) |
| Total      (loss) income before other allocations     |   | $                                     | (207,994 | )      | $                                    | 15,944        |   | N/M |   |   | $ | (241,015 | ) | $ | 1,624 |   | N/M |   |
|  Adjusted      Net Income (Loss):                |   |                                  |     |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Affordable      Housing                               |   | $                                     | 12,834   |   | $                                    | 18,382        |   | (30.2 | )% |   | $ | 12,241 |   | $ | 29,448 |   | (58.4 | )% |
| Commercial      Real Estate                           |   |                                  | (77,859  | )      |                                 | 7,113         |   | N/M |   |   |   | (67,794 | ) |   | 4,466 |   | N/M |   |
| Portfolio      Management                             |   |                                  | 2,929    |   |                                 | 10,350        |   | (71.7 | ) |   |   | 9,645 |   |   | 21,486 |   | (55.1 | ) |
| Credit      Risk Products                             |   |                                  | (504     | )      |                                 | 7,025         |   | (107.2 | ) |   |   | (5,275 | ) |   | 4,264 |   | (223.7 | ) |
| Corporate                                             |   |                                  | (5       | )      |                                 | (25,316       | ) | 100.0 |   |   |   | (30,894 | ) |   | (58,703 | ) | 47.4 |   |
| Consolidated      Partnerships                        |   |                                  | 2,219    |   |                                 | 10,003        |   | (77.8 | ) |   |   | 12,959 |   |   | 20,284 |   | (36.1 | ) |
| Eliminations                                          |   |                                  | (4,260   | )      |                                 | (11,828       | ) | 64.0 |   |   |   | (12,754 | ) |   | (3,248 | ) | (292.7 | ) |
| Total                                                 |   | $                                     | (64,646  | )      | $                                    | 15,729        |   | (511.0 | )% |   | $ | (81,872 | ) | $ | 17,997 |   | (554.9 | )% |

| (1) | Includes      losses allocated to partners of consolidated  partnerships. |
|-----|---------------------------------------------------------------------------|

| (2) | Includes      equity income of CMBS Fund and High-Yield Debt Fund Partnerships as more      fully described below. |
|-----|--------------------------------------------------------------------------------------------------------------------|

----

|                                   |   | Three      Months Ended September 30, |   |   | Nine      Months ended September 30, |          |
|----------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)            |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|                                   |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income:                  |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      revenue bonds            |   | $                                     | 10,092 |   | $                                    | 43,297        |   | (76.7 | )% |   | $ | 35,069 |   | $ | 130,716 |   | (73.2 | )% |
| Other      interest income             |   |                                  | 12,040 |   |                                 | 1,657         |   | 626.6 |   |   |   | 35,046 |   |   | 3,116 |   | N/M |   |
| Fee      income:                       |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Fund      sponsorship                  |   |                                  | 17,410 |   |                                 | 26,712        |   | (34.8 | ) |   |   | 50,468 |   |   | 63,530 |   | (20.6 | ) |
| Other:                                 |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Expense      reimbursements            |   |                                  | 1,094  |   |                                 | 1,481         |   | (26.1 | ) |   |   | 2,948 |   |   | 5,159 |   | (42.9 | ) |
| Miscellaneous                          |   |                                  | 348    |   |                                 | 592           |   | (41.2 | ) |   |   | 1,556 |   |   | 1,670 |   | (6.8 | ) |
|  Total      revenues              |   | $                                     | 40,984 |   | $                                    | 73,739        |   | (44.4 | )% |   | $ | 125,087 |   | $ | 204,191 |   | (38.7 | )% |
|  N/M      – Not meaningful. |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                     |   | Three      Months Ended September 30, |    |   | Nine      Months Ended September 30, |          |
|--------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                                              |   | 2008                                  |    | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Acquisition      and funding activity                              |   | $                                     | --      |   | $                                    | 101,160       |   | (100.0 | )% |   | $ | 26,096 |   | $ | 173,233 |   | (84.9 | )% |
| Mortgage      revenue bonds repaid or sold                               |   |                                  | 32,231  |   |                                 | 8,099         |   | 298.0 |   |   |   | 57,084 |   |   | 10,721 |   | 432.5 |   |
| Re-securitized      mortgage revenue bonds recognized as sold, net       |   |                                  | --      |   |                                 | --            |   | -- |   |   |   | 178,265 |   |   | -- |   | 100.0 |   |
| Average      portfolio balance (fair value)                              |   |                                  | 604,202 |   |                                 | 2,920,596     |   | (79.3 | ) |   |   | 721,899 |   |   | 2,870,954 |   | (74.9 | ) |
| Weighted      average permanent interest rate of bonds acquired orfunded |   |                                  | --      | %      |                                 | 5.70          | % |   |   |   |   | 5.75 | % |   | 5.83 | % |   |   |
| Weighted      average yield of portfolio                                 |   |                                  | 5.75    | %      |                                 | 5.98          | % |   |   |   |   | 6.19 | % |   | 6.11 | % |   |   |

----

|                                                                                                             |   | Three      Months Ended September 30, |      |   | Nine      Months Ended September 30, |          |
|------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                                                                                      |   | 2008                                  |      | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Fees based on equity      raised                                                                           |   |                                  |      |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Partnership      management fees                                                                                 |   | $                                     | 2,831     |   | $                                    | 2,318         |   | 22.1 | % |   | $ | 8,336 |   | $ | 6,758 |   | 23.4 | % |
|  Fees based on equity      invested                                                                         |   |                                  |      |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Property      acquisition fees                                                                                   |   |                                  | 1,899     |   |                                 | 9,929         |   | (80.9 | ) |   |   | 11,546 |   |   | 18,280 |   | (36.8 | ) |
| Organization,      offering and acquisition allowance fees                                                       |   |                                  | 1,012     |   |                                 | 4,103         |   | (75.3 | ) |   |   | 5,709 |   |   | 8,802 |   | (35.1 | ) |
|  Fees based on      management of sponsored funds                                                           |   |                                  |      |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset      management fees                                                                                       |   |                                  | 9,455     |   |                                 | 7,697         |   | 22.8 |   |   |   | 20,642 |   |   | 20,423 |   | 1.1 |   |
|  Other      fee income                                                                                      |   |                                  | 2,213     |   |                                 | 2,665         |   | (17.0 | ) |   |   | 4,235 |   |   | 9,267 |   | (54.3) |   |
|  Total      fee income                                                                                      |   | $                                     | 17,410    |   | $                                    | 26,712        |   | (34.8 | )% |   | $ | 50,468 |   | $ | 63,530 |   | (20.6 | )% |
|  Assets      under management – LIHTC Funds (balance at September 30)                                 |   | $                                     | 9,844,968 |   | $                                    | 9,026,445     |   | 9.1 | % |   |   |   |   |   |   |   |   |   |
|  Equity      raised by LIHTC funds                                                                          |   | $                                     | 28,594    |   | $                                    | 132,912       |   | (78.5 | )% |   | $ | 150,539 |   | $ | 549,499 |   | (72.6 | )% |
| Equity      invested by LIHTC funds (1)                                                                          |   | $                                     | 71,397    |   | $                                    | 323,005       |   | (77.9 | )% |   | $ | 455,239 |   | $ | 610,873 |   | (25.5 | )% |
|  (1)        Excludes warehoused properties that have not yet closed into an      investment fund. |

----

|                                                 |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |          |
|------------------------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                          |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|                                                 |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative                      |   | $                                     | 9,212  |   | $                                    | 15,296        |   | (39.8 | )% |   | $ | 34,145 |   | $ | 38,954 |   | (12.3 | )% |
| Interest      expense:                               |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings      and Financings                       |   |                                  | 9,831  |   |                                 | 33,042        |   | (70.2 | ) |   |   | 34,043 |   |   | 96,595 |   | (64.8 | ) |
| Preferred      shares of subsidiary                  |   |                                  | 4,724  |   |                                 | 4,724         |   | -- |   |   |   | 14,173 |   |   | 14,173 |   | -- |   |
| Depreciation      and amortization                   |   |                                  | 214    |   |                                 | 221           |   | (3.2 | ) |   |   | 934 |   |   | 698 |   | 33.8 |   |   |
| Impairment      of assets                            |   |                                  | 317    |   |                                 | 548           |   | (42.2 | ) |   |   | 19,412 |   |   | 19,933 |   | (2.6 | ) |
|  Total      expenses                            |   | $                                     | 24,298 |   | $                                    | 53,831        |   | (54.9 | )% |   | $ | 102,707 |   | $ | 170,353 |   | (39.7 | ) |
|  Average      borrowing rate (1)                |   |                                  | 6.00   | %      |                                 | 4.79          | % |   |   |   |   | 6.27 | % |   | 4.80 | % |   |   |
| Average      SIFMA rate                              |   |                                  | 2.41   | %      |                                 | 3.70          | % |   |   |   |   | 2.29 | % |   | 3.69 | % |   |   |
|  (1)        Includes effect of swaps. |

| ·   | $4.4      million of reserves primarily recorded in the first half of 2007 against      advances made to our sponsored funds as compared to $0.1 million in the      2008 year-to-date period; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.7      million reduction of bonus accruals year over year ($1.2 million reduction      for the third quarter periods); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.5      million decrease in LIHTC acquisition costs year over year ($2.3 million      decrease for the third quarter periods), which is consistent with the      decreases in associated revenue as discussed above;  and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $1.1      million decrease in asset management and loan servicing fees year over      year ($0.4 million for the third quarter periods) to our Portfolio      Management Group in connection with the lower Affordable Housing mortgage      revenue bond portfolio following the December 2007 re-securitization      transaction with Freddie Mac. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |          |
|-------------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)               |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Equity      and other (loss) income |   | $                                     | (157   | )      | $                                    | (271          | ) | 42.1 | % |   | $ | (151 | ) | $ | (675 | ) | 77.6 | % |
| Repayment      or sale of investments     |   |                                  | (2,287 | )      |                                 | 301           |   | (859.8 | ) |   |   | (5,319 | ) |   | 954 |   | (657.5 | )% |
|  Total      other income (loss)      |   | $                                     | (2,444 | )      | $                                    | 30            |   | N/M |   |   | $ | (5,470 | ) | $ | 279 |   | N/M |   |

|                                              |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|---------------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)                       |   | 2008                                  |   | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|  Income      (loss) before other allocations |   | $                                     | 14,242 |                                 | $      | 19,938 |   | (28.6 | )% | $ | 16,910 |   | $ | 34,117 |   | (50.4 | )% |
| Adjusted      Net Income (Loss)                   |   |                                  | 12,834 |                                 |   | 18,382 |   | (30.2 | ) |   | 12,241 |   |   | 29,448 |   | (58.4 | ) |

----

|                           |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |          |
|--------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)    |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Interest      income     |   | $                                     | 7,227  |   | $                                    | 9,581         |   | (24.6 | )% |   | $ | 18,676 |   | $ | 20,717 |   | (9.9 | )% |
| Fee      income:               |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      origination fees |   |                                  | 1,385  |   |                                 | 1,436         |   | (3.6 | ) |   |   | 4,188 |   |   | 5,403 |   | (22.5 | ) |
| Mortgage      servicing fees   |   |                                  | 4,892  |   |                                 | 4,004         |   | 22.2 |   |   |   | 14,810 |   |   | 13,672 |   | 8.3 |   |
| Other      fee income          |   |                                  | 1,527  |   |                                 | 3,453         |   | (55.8 | ) |   |   | 4,186 |   |   | 5,155 |   | (18.8 | ) |
| Other:                         |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepayment      penalties      |   |                                  | 132    |   |                                 | 851           |   | (84.5 | ) |   |   | 1,116 |   |   | 2,893 |   | (61.4 | ) |
| Miscellaneous                  |   |                                  | 2,467  |   |                                 | 1,803         |   | 36.8 |   |   |   | 5,031 |   |   | 4,667 |   | 7.8 |   |
|  Total      revenues      |   | $                                     | 17,630 |   | $                                    | 21,128        |   | (16.6 | )% |   | $ | 48,007 |   | $ | 52,507 |   | (8.6 | )% |

|                        |   |   | 2008    |   | 2007            |   |   |    |
|-----------------------------|--------|--------|---------|--------|-----------------|--------|--------|---------|
| (dollars      in thousands) |   |   |    |   | %      of Total |   |   |    |   | %      of Total |   | %      Change |   |
|  Fannie      Mae       |   | $      | 215,629 |   | 80.0            | %      | $      | 116,275 |   | 46.8 | % | 85.4 | % |
| Freddie      Mac            |   |   | 53,740  |   | 20.0            |   |   | 87,331  |   | 35.1 |   | (38.5 | ) |
| Centerline      Direct      |   |   | --      |   | --              |   |   | 25,339  |   | 10.2 |   | (100.0 | ) |
| Conduit      and other      |   |   | --      |   | --              |   |   | 19,736  |   | 7.9 |   | (100.0 | ) |
| Total                       |   | $      | 269,369 |   | 100.0           | %      | $      | 248,681 |   | 100.0 | % | 8.3 | % |

|                        |   |   | 2008    |   | 2007            |   |   |      |
|-----------------------------|--------|--------|---------|--------|-----------------|--------|--------|-----------|
| (dollars      in thousands) |   |   |    |   | %      of Total |   |   |      |   | %      of Total |   | %      Change |   |
|  Fannie      Mae       |   | $      | 567,217 |   | 67.8            | %      | $      | 372,548   |   | 27.1 | % | 52.3 | % |
| Freddie      Mac            |   |   | 258,659 |   | 30.9            |   |   | 265,110   |   | 19.3 |   | (2.4 | ) |
| Centerline      Direct      |   |   | --      |   | --              |   |   | 657,611   |   | 47.8 |   | (100.0 | ) |
| Conduit      and other      |   |   | 11,000  |   | 1.3             |   |   | 80,306    |   | 5.8 |   | (86.3 | ) |
| Total                       |   | $      | 836,876 |   | 100.0           | %      | $      | 1,375,575 |   | 100.0 | % | (39.2 | )% |

----

|                                            |   | As      of September 30, |      |   |   |
|-------------------------------------------------|--------|--------------------------|-----------|--------|--------|
| (dollars      in thousands)                     |   | 2008                     |      | 2007   |   | %      Change |   |
|  Primary      servicing mortgage portfolio |   | $                        | 8,715,428 |   | $      | 8,387,257 |   | 3.9 | % |
| Carrying      value of MSRs                     |   | $                        | 49,756    |   | $      | 48,796 |   | (4.2 | )% |

|                                                                        |   | September      30, |      |   |   |
|-----------------------------------------------------------------------------|--------|--------------------|-----------|--------|--------|
| (dollars      in thousands)                                                 |   | 2008               |      | 2007   |   | %      Change |   |
|  CMBS      funds (1)                                                   |   | $                  | 1,475,397 |   | $      | 1,475,397 |   | -- | % |
| High-yield      debt investment entities (1)                                |   |               | 535,665   |   |   | 437,359 |   | 22.5 |   |
| Joint      venture equity funds (1)                                         |   |               | 221,641   |   |   | 220,000 |   | 0.7 |   |
| CDO      collateral management                                              |   |               | 1,435,920 |   |   | -- |   | 100.0 |   |
| Third-Party      commercial loan portfolio                                  |   |               | 723,970   |   |   | -- |   | 100.0 |   |
|  Total                                                                 |   | $                  | 4,392,593 |   | $      | 2,132,756 |   | 106.0 | % |
|  (1)        Figures represent equity of the managed entities |   |

----

|                               |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)        |   | 2008                                  |   | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|                               |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative    |   | $                                     | 13,738 |                                 | $      | 12,390 |   | 10.9 | % | $ | 34,441 |   | $ | 51,564 |   | (33.2 | )% |
| Interest      expense              |   |                                  | 8,224  |                                 |   | 11,734 |   | (29.9 | ) |   | 12,520 |   |   | 14,504 |   | (13.7 | ) |
| Depreciation      and amortization |   |                                  | 3,105  |                                 |   | 4,196 |   | (26.0 | ) |   | 9,270 |   |   | 12,647 |   | (26.7 | ) |
| Impairment      of assets          |   |                                  | 105    |                                 |   | -- |   | 100.0 |   |   | 1,182 |   |   | -- |   | 100.0 |   |
| Total      expenses                |   | $                                     | 25,172 |                                 | $      | 28,320 |   | (11.1 | )% | $ | 57,413 |   | $ | 78,715 |   | (27.1 | )% |

|                                      |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|-------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)               |   | 2008                                  |    | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|  Equity      and other (loss) income |   | $                                     | (73,475 | )                                    | $      | 11,834 |   | (720.9 | )% | $ | (65,840 | ) | $ | 21,459 |   | (406.8 | )% |
| Gain      on sale or repayment of loans   |   |                                  | 3,064   |                                 |   | 1,445 |   | 112.0 |   |   | 7,477 |   |   | 4,378 |   | 70.8 |   |
| Total      other income                   |   | $                                     | (70,411 | )                                    | $      | 13,279 |   | (630.2 | )% | $ | (58,363 | ) | $ | 25,837 |   | (325.9 | )% |

----

|                                              |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|---------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                       |   | 2008                                  |    | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|  Income      (loss) before other allocations |   | $                                     | (77,953 | )                                    | $      | 6,087 |   | N/M |   | $ | (67,769 | ) | $ | (371 | ) | N/M |   |
| Adjusted      net income (loss)                   |   |                                  | (77,859 | )                                    |   | 7,113 |   | N/M |   |   | (67,794 | ) |   | 4,466 |   | N/M |   |
|  N/M      – Not meaningful.            |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                         |   | Three      Months Ended September 30, |     | Nine      Months Ended September 30, |   |
|----------------------------------------------|--------|---------------------------------------|----------|--------------------------------------|--------|
| (dollars      in thousands)                  |   | 2008                                  |     | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|  Interest      income                   |   | $                                     | 1,661    |                                 | $      | 6,805 |   | (75.6 | )% | $ | 5,675 |   | $ | 18,612 |   | (69.5 | )% |
| Fee      income:                             |   |                                  |     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset      management/servicing              |   |                                  | 6,290    |                                 |   | 7,119 |   | (11.6 | ) |   | 19,983 |   |   | 20,237 |   | (1.3 | ) |
| Other      fee income                        |   |                                  | 2,782    |                                 |   | 3,066 |   | (9.3 | ) |   | 7,612 |   |   | 7,011 |   | 8.6 |   |
| Other                                        |   |                                  | 332      |                                 |   | 212 |   | 56.6 |   |   | 875 |   |   | 628 |   | 39.3 |   |
| Total      revenues                          |   | $                                     | 11,065   |                                 | $      | 17,202 |   | (35.7 | )% | $ | 34,145 |   | $ | 46,488 |   | (26.6 | )% |
|                                         |   |                                  |     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                         |   | At      September 30,                 |     |                                 |   |   |   |   |   |   |   |   |   |
| Statistical      information                 |   | 2008                                  |     | 2007                                 |   |   |   |   |   |   |   |   |   |   |   |
|  Primary      Servicing Portfolio(1)(2) |   | $                                     | 22,822.9 |                                 | $      | 27,351.4 |   | (17.1 | )% |   |   |   |   |   |   |   |   |
| Special      Servicing Portfolio(1)          |   |                                  | 1,544.0  |                                 |   | 198.2 |   | 679.2 |   |   |   |   |   |   |   |   |   |
|                                         |   |                                  |     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Carrying      value of MSRs                  |   |                                  | 4,013    |                                 |   | 9,105 |   | (55.9 | ) |   |   |   |   |   |   |   |   |

| (1)         Dollars      in millions(2)        Includes      sub-servicing of the Commercial Real Estate Servicing      Portfolio |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                  |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |          |
|---------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)           |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  General      and administrative |   | $                                     | 7,606  |   | $                                    | 7,441         |   | 2.2 | % |   | $ | 22,898 |   | $ | 24,325 |   | (5.9 | )% |
| Interest      expense                 |   |                                  | 214    |   |                                 | --            |   | 100.0 |   |   |   | 343 |   |   | -- |   | 100.0 |   |
| Depreciation      and amortization    |   |                                  | 962    |   |                                 | 1,777         |   | (45.9 | ) |   |   | 3,197 |   |   | 4,879 |   | (34.5 | ) |
|  Total      expenses             |   | $                                     | 8,782  |   | $                                    | 9,218         |   | (4.7 | )% |   | $ | 26,438 |   | $ | 29,204 |   | (9.5 | )% |

|                                       |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |          |
|--------------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  Income      before other allocations |   | $                                     | 2,283  |   | $                                    | 9,648         |   | (76.3 | )% |   | $ | 7,707 |   | $ | 18,948 |   | (59.3 | )% |
| Adjusted      net income                   |   |                                  | 2,929  |   |                                 | 10,350        |   | (71.7 | ) |   |   | 9,645 |   |   | 21,486 |   | (55.1 | ) |

----

|                            |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |          |
|---------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)     |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|                            |   |                                  |   |   |                                 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income            |   | $                                     | 883    |   | $                                    | 854           |   | 3.4 | % |   | $ | 2,750 |   | $ | 2,912 |   | (5.6 | )% |
| Credit      intermediation fees |   |                                  | 1,176  |   |                                 | 3,114         |   | (62.2 | ) |   |   | 3,541 |   |   | 8,498 |   | (58.3 | ) |
| Other      revenues             |   |                                  | 153    |   |                                 | 86            |   | 77.9 |   |   |   | 466 |   |   | 223 |   | 109.0 |   |
|  Total      revenues       |   | $                                     | 2,212  |   | $                                    | 4,054         |   | (45.4 | )% |   | $ | 6,757 |   | $ | 11,633 |   | (41.9 | )% |

|                                       |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|--------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)                |   | 2008                                  |   | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|                                       |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative            |   | $                                     | 1,669  |                                 | $      | 2,592 |   | (35.6 | )% | $ | 8,439 |   | $ | 7,686 |   | 9.8 | % |
| Interest      expense:                     |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings                                 |   |                                  | 561    |                                 |   | 40 |   | N/M |   |   | 1,440 |   |   | 876 |   | 64.4 |   |
| Derivatives      – fair value change |   |                                  | --     |                                 |   | (6,411 | ) | (100.0 | ) |   | -- |   |   | (1,762 | ) | (100.0 | ) |
| Depreciation      and amortization         |   |                                  | 40     |                                 |   | 17 |   | 135.3 |   |   | 119 |   |   | 55 |   | 116.4 |   |
| Impairment      of assets                  |   |                                  | 211    |                                 |   | -- |   | 100.0 |   |   | 1,479 |   |   | -- |   | 100.0 |   |
|  Total      expenses                  |   | $                                     | 2,481  |                                 | $      | (3,762 | ) | 165.9 | % | $ | 11,477 |   | $ | 6,855 |   | 67.4 | % |

----

|                              |   | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|-----------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
| (dollars      in thousands)       |   | 2008                                  |   | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|  Loss      on sale of assets |   | $                                     | (208   | )                                    | $      | -- |   | (100.0 | )% | $ | (735 | ) | $ | -- |   | (100.0 | )% |

|                                              |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |          |
|---------------------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|---------------|
| (dollars      in thousands)                       |   | 2008                                  |   | 2007   |                                 | %      Change |   |   | 2008 |   | 2007 |   | %      Change |   |
|  (Loss)      income before other allocations |   | $                                     | (477   | )      | $                                    | 7,816         |   | (106.1 | )% |   | $ | (5,455 | ) | $ | 4,778 |   | (214.2 | )% |
| Adjusted      net loss                            |   |                                  | (504   | )      |                                 | 7,025         |   | (107.2 | ) |   |   | (5,275 | ) |   | 4,264 |   | (223.7 | ) |

|                                             |   | Three      Months Ended September 30, |    | Nine      Months Ended September 30, |   |
|--------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (dollars      in thousands)                      |   | 2008                                  |    | 2007                                 |   | %      Change |   | 2008 |   | 2007 |   | %      Change |   |
|                                             |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative                  |   | $                                     | 16,663  |                                 | $      | 12,921 |   | 29.0 | % | $ | 48,953 |   | $ | 41,254 |   | 18.7 | % |
| Interest      expense                            |   |                                  | 11,125  |                                 |   | 12,226 |   | (9.0 | ) |   | 25,065 |   |   | 33,601 |   | (25.4 | ) |
| Depreciation      and amortization               |   |                                  | 6,682   |                                 |   | 5,630 |   | 18.7 |   |   | 20,830 |   |   | 15,254 |   | 36.6 |   |
| Write-off      of goodwill and intangible assets |   |                                  | 118,069 |                                 |   | -- |   | 100.0 |   |   | 118,069 |   |   | -- |   | 100.0 |   |
|  Total      expenses                        |   | $                                     | 152,539 |                                 | $      | 30,777 |   | 395.6 | % | $ | 212,917 |   | $ | 90,109 |   | 136.3 | % |

| ·   | An      increase of $5.0 million in rent expense for office space planned as our      new headquarters ($3.1 million of which was recorded in the third      quarter); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | An      increase of $2.5 million year to date related to increased professional      fees, particularly audit and consulting costs;  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increase      in general legal costs of $0.5 million associated with litigation (see      Note 23 to the condensed consolidated financial    statements). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $55.2      million reduction in transactional relationships associated with Freddie      Mac and Fannie Mae; and |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | $2.9      million reduction in transactional relationships associated with managing      AMAC. |
|--------------------|------------------------------------------------------------------------------------------------|

----

|                                                  |   | Three      Months Ended September 30,         |    |
|-------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                  |   |  2008                                    |    | 2007 |   |
| (in      thousands)                                   |   | LIHTC      Fundand      Property Partnerships |    |  CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | LIHTC      Fundand      PropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Revenues                                        |   | $                                             | 21,586  |   | $ | 64,278 |   | $ | 85,864 |   | $ | 20,935 |   | $ | 56,171 |   | $ | 77,106 |   |
| Interest      expense                                 |   |                                          | (3,524  | ) |   | (26,452 | ) |   | (29,976 | ) |   | (3,501 | ) |   | (22,199 | ) |   | (25,700 | ) |
| Other      expenses                                   |   |                                          | (30,172 | ) |   | (84,984 | ) |   | (115,156 | ) |   | (25,735 | ) |   | (1,828 | ) |   | (27,563 | ) |
| Partnership      expenses eliminated in consolidation |   |                                          | (20,652 | ) |   | (1,174 | ) |   | (21,826 | ) |   | (23,518 | ) |   | (143 | ) |   | (23,661 | ) |
| Gain      (loss) on investments                       |   |                                          | (69,668 | ) |   | -- |   |   | (69,668 | ) |   | (65,407 | ) |   | (6,775 | ) |   | (72,182 | ) |
| Allocations      to limited partners                  |   |                                          | 102,408 |   |   | 50,573 |   |   | 152,981 |   |   | 95,994 |   |   | (13,991 | ) |   | 82,003 |   |
|  Net      impact                                 |   | $                                             | (22     | ) | $ | 2,241 |   | $ | 2,219 |   | $ | (1,232 | ) | $ | 11,235 |   | $ | 10,003 |   |

|                                                  |   | Nine      Months Ended September 30,          |     |
|-------------------------------------------------------|--------|-----------------------------------------------|----------|
|                                                  |   |  2008                                    |     | 2007 |   |
| (in      thousands)                                   |   | LIHTC      Fundand      Property Partnerships |     |  CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   | LIHTC      Fundand      PropertyPartnerships |   | CMBS      andHigh-YieldDebt      FundPartnerships |   | Total |   |
|  Revenues                                        |   | $                                             | 65,585   |   | $ | 193,107 |   | $ | 258,692 |   | $ | 57,055 |   | $ | 129,556 |   | $ | 186,611 |   |
| Interest      expense                                 |   |                                          | (11,942  | ) |   | (85,839 | ) |   | (97,781 | ) |   | (15,949 | ) |   | (56,065 | ) |   | (72,014 | ) |
| Other      expenses                                   |   |                                          | (94,404  | ) |   | (115,324 | ) |   | (209,728 | ) |   | (78,669 | ) |   | (4,059 | ) |   | (82,728 | ) |
| Partnership      expenses eliminated in consolidation |   |                                          | (60,584  | ) |   | (2,649 | ) |   | (63,233 | ) |   | (59,839 | ) |   | (143 | ) |   | (59,982 | ) |
| Gain      (loss) on investments                       |   |                                          | (211,311 | ) |   | (4,346 | ) |   | (215,657 | ) |   | (214,319 | ) |   | 1,826 |   |   | (212,493 | ) |
| Allocations      to limited partners                  |   |                                          | 312,646  |   |   | 28,020 |   |   | 340,666 |   |   | 311,145 |   |   | (50,255 | ) |   | 260,890 |   |
|  Net      impact                                 |   | $                                             | (10      | ) | $ | 12,969 |   | $ | 12,959 |   | $ | (576 | ) | $ | 20,860 |   | $ | 20,284 |   |

|                                  |   | 2008   |   | 2007   |   |
|---------------------------------------|--------|--------|--------|--------|--------|
|  LIHTC      Fund Partnerships    |   |   | 134    |   |   | 125 |   |
| LIHTC      Property Partnerships      |   |   | 55     |   |   | 53 |   |
| CMBS      Fund Partnerships           |   |   | 3      |   |   | 3 |   |
| High-Yield      Debt Fund Partnership |   |   | 1      |   |   | 1 |   |

----

| ·   | for      our new corporate credit facility and 11.0% Preferred Shares (see Notes 9      and 14 to the condensed consolidated financial statements), the terms      include a higher rate of interest or dividends, a more rapid amortization      of principal and more stringent covenants than had been the norm in prior      periods; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for      asset based financing (such as we use to fund mortgage originations in our      Commercial Real Estate Group), the availability of credit has been limited      and the costs of such borrowings haveincreased; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for      subscription financing (whereby funds we establish borrow to invest, with      such borrowings secured by the equity commitments of their investors), the      availability of credit is virtually non-existent, hampering our ability to      close new funds; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | with      respect to short term repurchase financing, which we have used to      accumulate investments in our Commercial Real Estate Group and CMBS Fund      Partnerships within the Consolidated Partnerships segment, advance rates      for such agreements have declined and costs have increased, compounding      the effect on borrowing capacity as market values of the collateral assets      have declined.  We have terminated many of these facilities and      one remaining line will be terminated no later than November      2008.  Additionally, the market for issuing CDO financing has      deteriorated substantially, impeding our ability to replace the repurchase      financing with more cost effective permanent financing;  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      share price and the general environment for equity offerings have made      obtaining equity capital extremelydifficult. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ·   | Obtaining      financing for investments that are not pledged as security for asset-based      borrowings; |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | Instituting      measures to reduce general and administrative expenses, including salaries      and other costs; |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

----

| ·   | Recommending      to our Board of Trustees that common and preferred dividends be suspended      or deferred until economic conditions improve;  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selling      investments that do not meet our long term investment      criteria. |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | amend      the amortization schedule of or repay the Term  Loan; |
|--------------------|------------------------------------------------------------------|

| ·   | extend      the maturity of both the Term Loan and Revolving Credit Facility;      and |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | refinance      or retire our Commercial Real Estate repurchase  line. |
|--------------------|-----------------------------------------------------------------------|

|                                                |   | Nine      Months EndedSeptember      30, |    |
|-----------------------------------------------------|--------|------------------------------------------|---------|
| (in      thousands)                                 |   | 2008                                     |    | 2007 |   |
|  Cash      flow from operating activities      |   | $                                        | 3,009   |   | $ | 222,873 |   |
| Cash      flow from investing activities            |   |                                     | (7,470  | ) |   | (276,339 | ) |
| Cash      flow from financing  activities |   |                                     | (15,692 | ) |   | 3,198 |   |
| Net      change in cash                             |   | $                                        | (20,153 | ) | $ | (50,268 | ) |

----

|                                  |   | (in      thousands) |   |
|---------------------------------------|--------|---------------------|--------|
|  4.4      % CRA Preferred shares |   | $                   | 1,404  |   |
| Equity      Issuer Preferred shares   |   |                | 6,282  |   |
| 11.0%      Preferred shares           |   |                | 3,610  |   |
|  Total                           |   | $                   | 11,296 |   |

| ·   | uncertainty      resulting from a drastic decline in market activity for certain of our      mortgage backed products, includingCMBS; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | significant      increase in dependence on model-related assumptions and/or unobservable      inputs; |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | doubts      about the quality of the market information utilized as inputs;      and, |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | in      limited cases, the downgrades of certain trusts in which we may hold      certificates. |
|--------------------|-------------------------------------------------------------------------------------------------|

----

| (in      thousands)                                                                 |   | September      30,2008 |      | December      31,2007 |   |
|-------------------------------------------------------------------------------------|--------|------------------------|-----------|-----------------------|--------|
|  Level      3 assets held for our own account:                                 |   |                   |      |                  |   |   |   |
| Series      A-1 Freddie Mac Certificates                                            |   | $                      | 315,480   |                  | $      | 288,672 |   |
| Series      B Freddie Mac Certificates                                              |   |                   | 152,815   |                  |   | 153,468 |   |
| Mortgage      revenue bonds                                                         |   |                   | 174,226   |                  |   | 376,432 |   |
| Retained      CMBS certificates                                                     |   |                   | 24,872    |                  |   | 75,328 |   |
| CMBS                                                                                |   |                   | 7,508     |                  |   | 13,361 |   |
| Mortgage      servicing rights (1)                                                  |   |                   | 53,769    |                  |   | 58,529 |   |
| Level      3 assets held by Consolidated Partnerships:                              |   |                   |      |                  |   |   |   |
| CMBS                                                                                |   |                   | 579,463   |                  |   | 1,235,059 |   |
| Retained      CMBS certificates                                                     |   |                   | 313,299   |                  |   | 482,424 |   |
| CDO      equity                                                                     |   |                   | 67,817    |                  |   | 65,060 |   |
| Total      Level 3 assets                                                           |   | $                      | 1,689,249 |                  | $      | 2,748,333 |   |
|  Level      3 assets as a percentage of total fair value assets                |   |                   | 95.8      | %                     |   | 94.0 | % |
|  (1)        Financial asset fair valued on a non-recurring    basis. |   |

----

|                                                                      |   | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|---------------------------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|
| (in      thousands)                                                       |   | 2008                                      |   | 2007                                     |   | 2008 |   | 2007 |   |
|  Series      B Freddie Mac Certificates                              |   | $                                         | 300    |                                     | $      | -- |   | $ | 7,968 |   | $ | -- |   |
|  Mortgage      revenue bonds                                         |   |                                      | --     |                                     |   | 548 |   |   | 10,928 |   |   | 19,933 |   |
|  Retained      CMBS certificates                                     |   |                                      | 105    |                                     |   | -- |   |   | 1,182 |   |   | -- |   |
|  Subtotal      (excluding Consolidated Partnerships)                 |   |                                      | 405    |                                     |   | 548 |   |   | 20,078 |   |   | 19,933 |   |
|  CMBS      (held by Consolidated Partnerships)                       |   |                                      | 4,421  |                                     |   | -- |   |   | 12,406 |   |   | -- |   |
|  Retained      CMBS certificates (held by Consolidated Partnerships) |   |                                      | 2,826  |                                     |   | -- |   |   | 20,520 |   |   | -- |   |
|  Total                                                               |   | $                                         | 7,652  |                                     | $      | 548 |   | $ | 53,004 |   | $ | 19,933 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         |      |                  |   | September      30, 2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|-----------------------|--------|-------------------------|--------|
| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  September      30,2008 |      | December      31,2007 |   | Available      toBorrow |   | MaximumCommitment |   |
|  Credit      Facilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                         |      |                  |   |                    |   |   |   |   |   |   |   |
| Term      loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                            | 75,000    |                  | $      | 140,000                 |   | $ | -- |   | $ | 75,000 |   |
| Revolving      credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                         | 233,000   |                  |   | 210,000                 |   |   | -- | (1) |   | 245,000 |   |
|    Other      Notes Payable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                         |      |                  |   |                    |   |   |   |   |   |   |   |
| CMC      warehouse line                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                         | 32,460    |                  |   | 32,302                  |   |   | 117,540 | (2) |   | 150,000 |   |
| Multifamily      ASAP plus facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                         | 14,127    |                  |   | 58,413                  |   |   | N/A | (2) |   | N/A |   |
| Commercial      real estate repurchase lines                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                         | 19,818    |                  |   | 56,912                  |   |   | 185,182 | (3) |   | 205,000 | (3) |
| Centerline      Financial facilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         | --        |                  |   | --                      |   |   | 150,000 |   |   | 150,000 |   |
| Syndicated      corporate debt warehouse line                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                         | 7,717     |                  |   | 5,423                   |   |   | -- | (4) |   | -- |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                         | 233       |                  |   | 2,838                   |   |   | N/A |   |   | N/A |   |
|  Financing      Arrangements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         |      |                  |   |                    |   |   |   |   |   |   |   |
| Bond      securitizations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                         | 62,572    |                  |   | 14,275                  |   |   | N/A |   |   | N/A |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                         | 444,927   |                  |   | 520,163                 |   |   | 457,722 |   |   | 825,000 |   |
|  Freddie      Mac Secured Financing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                         | 426,637   |                  |   | 548,227                 |   |   | N/A | (5) |   | N/A |   |
|  Capital      Structure (excluding Consolidated Partnerships)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                         | 871,564   |                  |   | 1,068,390               |   |   | 457,722 |   |   | 825,000 |   |
|  Consolidated      Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         | 1,887,952 |                  |   | 1,997,332               |   |   | N/A |   |   | N/A |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                            | 2,759,516 |                  | $      | 3,065,722               |   | $ | 457,722 |   | $ | 825,000 |   |
|  (1)        Availability reduced by outstanding letters of credit.(2)        Borrowings under these facilities are limited to available assets      to serve as collateral.(3)        Borrowings under these facilities are limited to available assets      to serve as collateral.  In May 2008, we received notice from      one lender that the $80.0 million repurchase agreement would not be      extended and a termination date of November 27, 2008 was established on      this facility.  There are no borrowings outstanding under the      other facilities as of September 30, 2008.(4)        Borrowings under these facilities are limited to available assets      to serve as collateral.  Subsequent to September 30, 2008, we      contracted to sell assets for proceeds sufficient to repay the      balance.(5)        As more fully discussed in our 2007 Form 10-K and note 10 to the      condensed consolidated financial statements, the secured financing      liability relates to mortgage revenue bonds that we re-securitized but for      which the transaction was not recognized as a sale. |   |

|   | · | a      minimum level of consolidated net worth (as defined in the credit      agreement); |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | a      minimum ratio of consolidated EBITDA to fixed charges (both as defined in      the credit agreement); |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | a      minimum ratio of funded debt to consolidated EBITDA;  and |
|--------|--------|------------------------------------------------------------------|

|   | · | certain      limitations on distributions (including distributions to minority interest      holders). |
|--------|--------|--------------------------------------------------------------------------------------------------------|

----

|   | · | three      CDO financing arrangements of the CMBS Fund  Partnerships; |
|--------|--------|-----------------------------------------------------------------------|

|   | · | notes      payable by the LIHTC Fund Partnerships collateralized either by the funds’      limited partners’ equity subscriptions or by the underlying investments of      the funds; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | repurchase      agreements for the CMBS Fund Partnerships and the High-Yield Debt Fund      Partnership; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | bridge      loans extended to a CMBS Fund Partnership by its investors (including      us). |
|--------|--------|---------------------------------------------------------------------------------------------|

| (in      thousands)                                                       |   | September      30,2008 |    | December      31,2007 |   |
|---------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|  Mezzanine      equity:                                              |   |                   |    |                  |   |   |   |
| Minority      interests in subsidiaries                                   |   | $                      | 99,475  |                  | $      | 176,616 |   |
| Preferred      shares of subsidiary (not subject to mandatory repurchase) |   |                   | 104,000 |                  |   | 104,000 |   |
| Redeemable      CRA shares                                                |   |                   | 196,742 |                  |   | 69,888 |   |
| 11.0%      Preferred shares                                               |   |                   | 129,405 |                  |   | -- |   |
|  Shareholders’      equity:                                    |   |                   |    |                  |   |   |   |
| Convertible      CRA shares                                               |   |                   | 3,802   |                  |   | 118,160 |   |

----

| (in      thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | MaximumExposure |      | CarryingAmount |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------|----------------|--------|
|  LIHTC      credit intermediation (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $               | 1,587,685 |           | $      | 32,924 |   |
| Mortgage      banking loss sharing agreements (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |            | 883,268   |           |   | 13,116 |   |
| Credit      support to developers (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |            | 199,231   |           |   | 279 |   |
| Centerline      Financial credit default swaps (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |            | 44,015    |           |   | 1,133 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $               | 2,714,199 |           | $      | 47,452 |   |
|  (1)       We see these transactions as opportunities to expand our Affordable      Housing 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.(2)        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 carrying value disclosed above represents the      reserve we have recorded as a reduction of mortgage servicing rights,      which we recognize as the fair value of the agreements.  In      addition to the carrying amount above, we recorded a $1.3 million charge      in the second quarter of 2008 for specific expected losses under our      mortgage loan loss sharing agreement with Fannie Mae.(3)       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.  The      carrying values disclosed above relate to the fees we earn for the      transactions, which we recognize as their fair values.(4)       We see these transactions as opportunities to expand our Credit      Risk Products 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. |   |

| ·   | adverse      changes in real estate and credit markets, general economic and business      conditions; |
|--------------------|--------------------------------------------------------------------------------------------------------|

----

| ·   | adverse      changes in credit markets and risks related to the form and structure of      our financing arrangements; |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | our      ability to generate new income sources, raise capital for investment funds      and maintain business relationships with providers and users of      capital; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes      in applicable laws and regulations; |
|--------------------|--------------------------------------------------|

| ·   | our      tax treatment, the tax treatment of our subsidiaries and the tax treatment      of our investments; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | competition      with other companies; |
|--------------------|----------------------------------------|

| ·   | risk      of loss from direct and indirect investments in CMBS and    CDOs; |
|--------------------|-----------------------------------------------------------------------------|

| ·   | risk      of loss under mortgage banking loss sharing  agreements; |
|--------------------|--------------------------------------------------------------------|

| ·   | risks      associated with providing credit intermediation;  and |
|--------------------|------------------------------------------------------------------|

| ·   | risk      that our shares may be delisted. |
|--------------------|--------------------------------------------|

----

----

| a) | Evaluation      of Disclosure Controls andProcedures |
|----|------------------------------------------------------|

| b) | Internal      Control over Financial Reporting |
|----|------------------------------------------------|

----

| ·   | On      January 18, 2008, Kramer v. Ross, et al., Index. No. 100861-08, was filed      against us and our board of trustees, in New York County Supreme      Court; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      January 25, 2008, Carfagno v. Schnitzer, et al., No. 08 CV 00912, was      filed against us and our board of trustees in the United States District      Court for the Southern District of NewYork; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      January 30, 2008, Ciszerk v. Ross, et al., CA No. 3511, was filed against      us, our board of trustees and The Related Companies, L.P. in the Delaware      Court of Chancery; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      February 22, 2008, Kanter v. Ross, et al., 08 Civ. 01827, was filed      against us, our board of trustees and The Related Companies, L.P. in the      United States District Court for the Southern District of New      York; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      February 27, 2008, Broy v. Centerline Holding Company et al., No. 08 CV      01971, was filed against us and certain of our officers and trustees in      the United States District Court for the Southern District of New      York; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      April 10, 2008, Kastner v. Schnitzer et al, Index No. 601043-08, was filed      against us and our board of trustees, in New York Supreme Court;      and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      April 10, 2008, Kostecka v. Schnitzer et al, Index No. 601044-08, was      filed against us and our board of trustees, in New York Supreme      Court. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | breach      of fiduciary duty; |
|--------------------|--------------------------------|

| ·   | breach      of the implied covenant of good faith and fair  dealing; |
|--------------------|----------------------------------------------------------------------|

| ·   | intentional      misrepresentation, fraud anddeceit; |
|--------------------|------------------------------------------------------|

| ·   | negligent      misrepresentation; and |
|--------------------|---------------------------------------|

| ·   | tortious      interference with contracts. |
|--------------------|--------------------------------------------|

----

----

| Period                                                                                                                                                                                                                   |   | Totalnumber      ofsharespurchased |   | Weightedaverageprice      paidper      share |   | Total      numberof      sharespurchased      aspart      of publiclyannounced      plansor      programs |   | Maximum      numberof      shares that mayyet      be purchasedunder      theplans      or programs |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|----------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|---------|
|  Common      shares (1):                                                                                                                                                                                            |   |                               |   |                                         |   |                                                                                                      |   |                                                                                                |    |   |
| July      1-31, 2008                                                                                                                                                                                                     |   | 863                                |   | $                                            | 1.68   |                                                                                                      | --     |                                                                                                |    |   |
| August      1-31, 2008                                                                                                                                                                                                   |   | 101,741                            |   |                                         | 2.86   |                                                                                                      | --     |                                                                                                |    |   |
| September      1-30, 2008                                                                                                                                                                                                |   | 1,282                              |   |                                         | 2.63   |                                                                                                      | --     |                                                                                                |    |   |
| Total      common shares                                                                                                                                                                                                 |   | 103,886                            |   | $                                            | 2.85   |                                                                                                      | --     |                                                                                                | 303,854 |   |
|  (1)        All of the share 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                                                                      |   | Certification      by the Chief Executive Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002.* |
|               |   |                                                                      |   |   |
|               |   | 31.2                                                                      |   | Certification      by the Chief Financial Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002.* |
|               |   |                                                                      |   |   |
|               |   | 32.1                                                                      |   | Certification      by the Chief Executive Officer and Chief Financial Officer pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002.* |
|               |   |                                                                      |   |   |
|               |   | *                                                                         |   | Filed      herewith. |

----

| Date:      November 14, 2008                   | By:    | /s/      Marc D. Schnitzer                                                                                                 |
|------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|
|                                           |   | Marc      D. SchnitzerManaging      Trustee, Chief Executive Officer and President(Principal      Executive Officer)  |
|    Date:      November 14, 2008 | By:    | /s/      Robert L. Levy                                                                                                    |
|                                           |   | Robert      L. LevyChief      Financial Officer(Principal      Financial Officer and Principal Accounting  Officer)        |

----