UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 _____________
  FORM
10-K/A
 (Amendment
No. 1)
 _____________
  (Mark
One)
 
 þ
                ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the fiscal year ended December 31, 2008
  OR
 
 o
                TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 Commission
File Number 1-13237
 ______________
  CENTERLINE
HOLDING COMPANY
 (Exact
name of registrant as specified in its charter)
 ______________
  
 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)
 
 (212)
317-5700
 Registrant’s
telephone number, including area code
 
 Securities
      registered pursuant to Section 12(b) of the Act:None
 
 Securities
registered pursuant to Section 12(g) of the Act:
 
 Shares
of Beneficial Interest
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes  o  No  þ
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes  o  No  þ
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes  þ 
No  o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Date File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes  þ 
No  o
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large
      accelerated filer  o
                    Accelerated
      filer  þNon-accelerated
      filer  o  (Do
      not check if a smaller reporting company)
                    Smaller
      reporting companyo
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes  o  No  þ
 
 The
aggregate market value of common equity held by non-affiliates of the registrant
as of June 30, 2008 was approximately $81.7 million (based on the closing price
of $1.67 per share as reported by the New York Stock Exchange on that
date).
 
 As of
February 27, 2009, there were 53.0 million outstanding shares of the
registrant’s shares of beneficial interest.
 
 DOCUMENTS
INCORPORATED BY REFERENCE
  None.
 FORM
10-K/A
  Index
    PagePART
      IIIItem
      10.
                  Directors,
      Executive Officers and Corporate Governance
                  
                  3Item
      11.
                  Executive
      Compensation
                  
                  7Item
      12.
                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                  
                  32Item
      13.
                  Certain
      Relationships and Related Transactions, and Director
      Independence
                  
                  36Item
      14.
                  Principal
      Accounting Fees and Services
                  
                  42PART
      IVItem
      15.
                  Exhibits,
      Financial Statement Schedules
                  
                  43SIGNATURESEX-31.1EX-31.2
    
 - i
-
 
 EXPLANATORY NOTE
  Centerline
Holding Company (OTC: CLNH) is filing this Amendment No. 1 on Form 10-K/A (the
“Amendment”) to amend its Annual Report on Form 10-K for the fiscal year ended
December 31, 2008 (the “Form 10-K”), as filed with the Securities and Exchange
Commission (“SEC”) on March 10, 2009, for the purpose of including the
information that was to be incorporated by reference in the Form 10-K via its
inclusion in its definitive proxy statement relating to its 2009 Annual Meeting
of Shareholders.  This Amendment hereby amends Part III, Items 10
through 14. We are also including as exhibits the certifications required under
Section 302 of the Sarbanes-Oxley Act of 2002.
 Except as otherwise expressly stated herein, this Amendment does not reflect events occurring after the date of the Form 10-K, nor does it modify or update the disclosure contained in the
Form 10-K in any way other than as required to reflect the amendments discussed
above and reflected below. Accordingly, this Amendment should be read in
conjunction with the Form 10-K and the Company’s other filings made with the SEC
on or subsequent to March 10, 2009.
  Unless
the context requires otherwise, the terms “we”, “us”, “our” or “the Company” as
used throughout this document may mean the business as a whole or a subsidiary,
while the term “parent trust” refers only to Centerline Holding Company as a
stand-alone entity.
     - 2
-
 
 PART
III
  Item
10.  Directors, Executive Officers and Corporate
Governance.
  As of the
date of this Amendment, our trustees and executive officers are as
follows:
 
 Name
                  Age
                  Offices
      Held
                  Independence
                  Year
      First Became Officer/Trustee
                  Term
      ExpiresRobert
      J. Dolan
                  60
                  Managing
      Trustee
                  Independent
                  2007
                  2010Jerome
      Y. Halperin
                  79
                  Managing
      Trustee
                  Independent
                  2003
                  2009Robert
      L. Loverd
                  67
                  Managing
      Trustee
                  Independent
                  2003
                  2011Robert
      A. Meister
                  68
                  Managing
      Trustee
                  Independent
                  2003
                  2010Thomas
      W. White
                  71
                  Managing
      Trustee
                  Independent
                  2000
                  2011Jeff
      T. Blau
                  41
                  Managing
      Trustee
                  Non-Independent
                  2003
                  2010Stephen
      M. Ross
                  68
                  Managing
      Trustee
                    Non-Executive
      Chairman of the Board
                  Non-Independent
                  1999
                  2009Marc
      D. Schnitzer
                  48
                  Managing
      Trustee
                    Chief
      Executive Officer and President
                  Non-Independent
                  2003
                  2011Robert
      L. Levy
                  43
                  Chief
      Financial Officer
                  Not
      applicable
                  2006
                  Not
      applicableDonald
      J. Meyer
                  58
                  Executive
      Managing Director
                  Not
      applicable
                  2007
                  Not
      applicablePaul
      G. Smyth
                  46
                  Executive
      Managing Director
                  Not
      applicable
                  2008
                  Not
      applicableAndrew
      J. Weil
                  38
                  Executive
      Managing Director
                  Not
      applicable
                  2007
                  Not
      applicable
   Jeff T. Blau is a managing
trustee of our Company.  Mr. Blau is also a Managing Trustee and the
President of The Related Companies LP (“TRCLP”).  Over the past 15
years, Mr. Blau has been responsible for directing and overseeing new
developments worth over $15 billion in virtually every sector of the real estate
industry. In his position as President of TRCLP, Mr. Blau is responsible for new
development origination and for strategic oversight of the firm’s affiliated
group of companies. Mr. Blau completed his undergraduate studies at the
University of Michigan and received his Master’s Degree in Business
Administration from the Wharton School of the University of Pennsylvania. Mr.
Blau is an active member of numerous professional and charitable organizations
and currently sits on the board of directors of the Doe Fund, the 14th Street
Local Development Corporation/Business Improvement District, ABO, Equinox
Holdings, Inc. (an affiliate of TRCLP) and the YMCA of Greater New
York.  Mr. Blau is also a member of our finance
committee.
  Robert J. Dolan is a managing
trustee (independent trustee) of our Company.  Mr. Dolan is the Dean
of the Stephen M. Ross School of Business at the University of Michigan, a post
he has held since 2001.  During his tenure at the University of
Michigan, Mr. Dolan served as the Gilbert and Ruth Whitaker Professor of
Business Administration.  Currently, he serves as the Stephen M. Ross
Professor of Business, the President of the William Davidson Institute, the
Chair of the University Development Subcommittee and an Executive Committee
member of the Institute for Social Research.  Prior to joining the
University of Michigan, Mr. Dolan spent 21 years as a Professor at the Harvard
University Graduate School of Business and four years as an Assistant Professor
at the University of Chicago Graduate School of Business.  Mr. Dolan
has published eight text books on marketing management and has authored numerous
journal articles for marketing and business publications.  Mr. Dolan
received a Bachelor of Arts degree from Boston College, a Master of Science
degree from the Graduate School of Management at the University of Rochester and
his PhD from the Graduate School of Management at the University of
Rochester.  Mr. Dolan is a member of our audit committee and our
compensation committee.
  Jerome Y. Halperin is a
managing trustee (independent trustee) of our Company.  Mr. Halperin
is a retired partner of PricewaterhouseCoopers, LLP (“PricewaterhouseCoopers”),
the international accounting firm, where he spent 39 years in varied positions.
Mr. Halperin’s final position at PricewaterhouseCoopers was Chairman of the
international actuarial, benefits and compensation services group. After his
retirement from PricewaterhouseCoopers, Mr. Halperin was the president of the
Detroit Investment Fund, a private investment fund established to stimulate
economic growth in the city of Detroit. Currently, Mr. Halperin is a consultant
on various real estate projects. He serves on the board of directors of several
charitable organizations and was the Chairman of the Michigan Tax Forms
Revisions Committee, a position he was appointed to by the Governor of the State
of Michigan. Mr. Halperin is the co-author of “Tax Planning for Real Estate
Transactions”. Mr. Halperin received a Bachelor of Business Administration from
the University of Michigan and a Juris Doctor from Harvard Law School. Mr.
Halperin is the chairman of our audit committee and is a member of our finance
committee.
  Robert L. Loverd is a managing
trustee (independent trustee) of our Company.  Mr. Loverd is the
former Group Chief Financial Officer and a Founding Partner of MC European
Capital (Holdings), a London investment banking and securities firm, which was
established in 1995 and substantially sold in 2000.  From 1979-1994,
Mr. Loverd held various positions in New York and London in the Investment
Banking Department of Credit Suisse First Boston. Prior to that, Mr. Loverd was
a shareholder in the International Investment Banking Department of Kidder,
Peabody & Co. Incorporated. Mr. Loverd is a member of the Board of Directors
of Harbus Investors. Mr. Loverd received a Bachelor of Arts degree from
Princeton University and a Master’s in Business Administration from Harvard
Business School. Mr. Loverd is the independent lead trustee of the board of
trustees (the “Board”), the chairman of our compensation committee and a member
of our nominating and governance committee and our audit committee.
     - 3
-
  Robert A. Meister is a
managing trustee (independent trustee) of our Company.  Mr. Meister is
the Vice Chairman of Aon Risk Services Companies, Inc. (“Aon”), an insurance
brokerage, risk consulting, reinsurance and employee benefits company and a
subsidiary of Aon Corporation, and has served in this position since 1991. Prior
to Aon, Mr. Meister was the Vice Chairman and a Director of Sedgwick James from
1985–1991 and the Vice Chairman of Alexander & Alexander from 1975–1985. Mr.
Meister is a member of the board of directors of Ramco-Gershenson Properties
(NYSE: RPT) and Universal Health Services (NYSE: UHS) and serves on each
company’s compensation committee. Mr. Meister has served on the board of
directors of several charitable organizations. Mr. Meister received a Bachelor
of Science degree in Business Administration from Pennsylvania State University.
Mr. Meister is the chairman of our nominating and governance committee and is a
member of our compensation committee.
  Stephen M. Ross is a managing
trustee and the Non-Executive Chairman of the Board of our
Company.  Mr. Ross is the founder, Chairman, Chief Executive Officer
and Managing General Partner of TRCLP. Mr. Ross began his career working for the
accounting firm of Coopers & Lybrand in Detroit as a tax attorney. Later, he
moved to New York, where he worked for two large Wall Street investment banking
firms in their real estate and corporate finance departments before founding
TRCLP in 1972. Mr. Ross graduated from The University of Michigan School of
Business with a Bachelor’s degree in Business Administration and from Wayne
State School of Law with a Juris Doctor degree. He then received a Master of Law
degree in Taxation from the New York University School of Law. Mr. Ross endowed
the “Stephen M. Ross School of Business” at The University of Michigan. Mr. Ross
is a member of the Executive Committee of the Board of Directors of the Real
Estate Board of New York and is a trustee of the National Building Museum. Mr.
Ross also serves on the Board of Directors of Kerzner International Ltd.,
Equinox Holdings, Inc. (an affiliate of TRCLP), the Juvenile Diabetes Research
Foundation, the Jackie Robinson Foundation and the Guggenheim
Museum.
  Marc D. Schnitzer is a
managing trustee, Chief Executive Officer and President of our
Company.  Mr. Schnitzer directs the day-to-day operations of the
Company and is responsible for corporate development and strategic
planning.  Mr. Schnitzer isa member of the
Executive Committee of the Board of Directors of the National Multihousing
Council, a board member of the Affordable Housing Tax Credit Coalition and a
member of the Real Estate Roundtable. From 1983 to 1986, Mr. Schnitzer was a
Financial Analyst with First Boston Corporation, an international investment
bank. Mr. Schnitzer joined Centerline’s predecessor company in 1988, after
earning the Master of Business Administration from The Wharton School of The
University of Pennsylvania. He earned the Bachelor of Science in Business
Administration, summa cum
laude, from the Boston University School of Management.
  Thomas W. White is a managing
trustee (independent trustee) of our Company. Mr. White retired as a Senior Vice
President of Fannie Mae in the multifamily activities department, where he was
responsible for the development and implementation of policies and procedures
for all Fannie Mae multifamily programs, including the delegated underwriting
and servicing program, prior approval program and negotiated swap and negotiated
cash purchases product lines. He was also responsible for asset management of
multifamily loans in a portfolio of mortgage-backed securities. Prior to joining
Fannie Mae in November 1987, Mr. White served as an investment banker with Bear
Stearns, Inc. He was also the executive vice president of the National Council
of State Housing Agencies and chief underwriter for the Michigan State Housing
Development Authority.  Mr. White also served as a state legislator in
the state of Michigan. From 2001-2008 we hired Mr. White as a
consultant.  Mr. White serves on the Board of Directors of Enterprise
Community Investment, Inc.  Mr. White is the chairman of our finance
committee and a member of our nominating and governance committee.
  Robert L. Levy is the Chief
Financial Officer of our Company. Mr. Levy is responsible for overseeing the
Company’s corporate finance and accounting functions.  Mr. Levy joined
the Company in November of 2001 as the Director of Capital
Markets.  From 1998 through 2001, Mr. Levy was a Vice President in the
Real Estate Equity Research and Investment Banking Departments at Robertson
Stephens, an investment banking firm in San Francisco.  Prior to 1998,
Mr. Levy was employed by Prudential Securities in the Real Estate Equity
Research Group and at the Prudential Realty Group, the real estate investment
arm of the Prudential Insurance Company. He received his Master’s in Business
Administration from the Leonard N. Stern School of Business at New York
University and his Bachelor of Arts from
  Donald J. Meyer is an
Executive Managing Director of a subsidiary of our Company and the CEO of
Centerline Real Estate Solutions, an affiliate of Centerline Servicing Inc., a
wholly-owned subsidiary of our Company.  Mr. Meyer was previously the
Chief Investment Officer for Centerline Capital Group Inc. (“CCG”), a subsidiary
of Centerline Holding Company.  Mr. Meyer is also Chief Executive
Officer and Chief Investment Officer of American Mortgage Acceptance Company, a
commercial mortgage REIT managed by an affiliate of our Company.  Mr.
Meyer has 33 years of real estate investment experience. Prior to joining
Centerline’s predecessor company, Mr. Meyer was the Chief Investment Officer of
Capri Capital Advisors, LLC, a pension fund advisory firm with over $2 billion
in assets under management.  Mr. Meyer’s experience includes serving
as Managing Director and head of the Capital Markets unit of Cohen Financial, a
nationwide mortgage banking firm, Managing Director and Chief Investment Officer
of Capital Trust, a NYSE-listed mezzanine lender and 18 years at First National
Bank of Chicago. During his tenure at First National Bank of Chicago, Mr. Meyer
served as Senior Credit Officer for the bank’s $7-billion real estate loan
portfolio, head of the real estate loan workout group and head of the Corporate
Investments unit responsible for high yielding real estate assets. Mr. Meyer
earned the Bachelor of Science in Finance, with Honors, from the University of
Illinois.
    - 4
-
  Paul G. Smyth is an Executive
Managing Director of our Company and the Head of the Portfolio Management Group.
Mr. Smyth oversees the Primary Servicing, Special Servicing, Affordable Asset
Management, Construction Monitoring and Portfolio Oversight functions. Mr. Smyth
was previously President and Chief Operating Officer of Centerline
REIT.  Mr. Smyth also serves as Chief Executive Officer of Centerline
Servicing, Inc., a highly-rated commercial real estate mortgage loan servicing
subsidiary that includes primary and special loan servicing, and surveillance
services for a portfolio comprising over $100 billion commercial mortgage-backed
securities (CMBS), government sponsored entities (GSE) or agency loans, and
loans for private investors. Mr. Smyth was previously President and Chief
Operating Officer of ARCap REIT, a full-service real estate finance and
servicing company acquired by Centerline’s predecessor company in
2006.  Prior to joining ARCap in 2002, Mr. Smyth served as Managing
Director-Servicing for Banc One Mortgage Capital Markets, LLC (formerly ORIX
Capital Markets, LLC) and oversaw its $50 billion master, primary and special
servicing platform, including 40 sub-servicers and 180 servicing employees,
along with an FDIC national warehouse for loans from failed
institutions.  During his long tenure at Banc One, he also served as a
Senior Portfolio Manager-Special Servicing (1996 – 2002), where he managed
numerous contracts and assets in conjunction with FDIC oversight. From 1992
through 1995 at Banc One New Hampshire Asset Management he managed a team
handling an over $450 million problem loan portfolio comprising over 2,000
commercial, franchise and real estate loans located throughout New England and
along the east coast. From 1989-1992, Mr. Smyth was in the Real Estate Division
of Bonnet Resources Corporation, where he managed a team handling a $250 million
problem loan/REO portfolio located in Texas and the Southeast. He began his
career in 1986 as a credit analyst and Vice President in the Real Estate Lending
Division of Bank One Texas. Mr. Smyth earned the Bachelor of Business
Administration in Finance and Real Estate from Baylor University.
  Andrew J. Weil is an Executive
Managing Director of our Company, the Head of the Affordable Housing Group and
the Chief Executive Officer of Centerline Financial, the Company’s Credit Risk
Products Group. Mr. Weil is responsible for overseeing the day-to-day operations
of the Affordable Housing Group, including the acquisition of properties with
Low-Income Housing Tax Credits and the origination and structuring of
institutional funds. Prior to joining the Company’s predecessor in January 1994,
Mr. Weil was a Financial Analyst for The Heights Management Company, where he
specialized in the analysis of potential investments and property management.
Mr. Weil received a Bachelor of Science degree in Economics with a concentration
in Finance from The Wharton School of The University of
Pennsylvania.
  Centerline
Affordable Housing Advisors LLC
  Our Board
directs the management of the business of our Company but retains Centerline
Affordable Housing Advisors LLC (“CAHA”) to manage our day-to-day
affairs.
  We and
our subsidiaries operate our day-to-day activities utilizing the services and
advice provided by our subsidiary, CAHA, subject to the supervision and review
of our Board and our subsidiaries’ board of trustees (or directors), as
applicable.
  Executive
Officers
  As of the
date of this Amendment, the sole executive officers of CAHA were:
  Name
                    
                    Age
                    
                    OfficeMarc
      D. Schnitzer
                    
                    48
                    
                    Chief
      Executive OfficerAndrew
      J. Weil
                    
                    38
                    
                    Executive
      Managing Director
 
  Biographical
information with respect to Messrs. Schnitzer and Weil may be found
above.
  Section 16(a) Beneficial Ownership
Reporting Compliance
  Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers and trustees, and persons who own more than ten percent of a registered
class of our equity securities, to file reports of ownership and changes in
ownership with the SEC. These persons are required by regulation of the SEC to
furnish us with copies of all Section 16(a) forms they file.
  During
the fiscal year ended December 31, 2008, our trustees, executive officers and
greater than ten percent beneficial owners complied with all applicable Section
16(a) filing requirements, except that each of the following executive officers
inadvertently filed (a) one Form 4 with one late transaction:  Mr.
Meyer, (b) one Form 4 with two late transactions: Messrs. Meister, Loverd,
Halperin, Dolan and Weil, (c) one Form 4 with four late transactions: Mr.
Schnitzer, and (d) one Form 4 with seven late transactions Mr.
Levy.
     - 5
-
  Code
of Conduct and Code of Ethics
  We have
adopted a Code of Business Conduct and Ethics as defined under the rules of the
SEC that applies to our executive officers and all professionals in finance and
finance-related departments, as well as our trustees and officers and employees
of our subsidiaries.
  We
regularly monitor developments in the area of corporate governance and continue
to enhance our corporate governance structure based upon a review of new
developments and recommended best practices. Our corporate governance materials,
including our Corporate Governance Guidelines, Code of Business Conduct and
Ethics, Whistle Blower Policy (which is incorporated in our Code of Business
Conduct and Ethics) and charters for the audit, compensation, and nominating and
governance committees may be found on our website at http://www.centerline.com in
the “Investor Relations” section (under “Corporate Governance”). Copies of these
materials are also available to shareholders upon written request to our
Secretary, Centerline Holding Company, 625 Madison Avenue, New York, New York
10022. Material amendments to and waivers from either, if any, will be disclosed
in the Investor Relations section.
  Nominations
for trustees
  There
have been no material changes to the procedures by which security holders may
recommend nominees to our Board since those procedures were described in the
Proxy Statement for our 2008 annual meeting of the shareholders.
  Audit
Committee
  We have a
separately designated standing audit committee established in accordance with
section 3(a)(58)(A) of the Exchange Act.  The audit committee’s duties
include the periodic review of our financial statements and meetings with our
independent registered public accounting firm. The ongoing administration of the
Corporate Governance Guidelines and the Code of Business Conduct and Ethics for
our Company is overseen by the audit committee. The audit committee must have at
least three members and be comprised solely of independent trustees. The audit
committee is currently comprised of Mr. Halperin (chair), Mr. Dolan and Mr.
Loverd.  Our Board has determined that all three committee members are
independent within the meaning of the SEC rules and regulations.  In
addition, our Board has determined that Mr. Halperin is qualified as an audit
committee financial expert within the meaning of the SEC rules and
regulations.
  
  
 - 6
-
 
 Item 11.  Executive
Compensation.
  EXECUTIVE
COMPENSATION
 Compensation
Discussion and Analysis
  Overview
of Compensation Program
  The
compensation committee of the Board has furnished the following report on
compensation for fiscal 2008 for the executive officers named in the Summary
Compensation Table in this report.  Throughout this report, such
executives are referred to as the “named executive officers.”
  Fiscal
2008 was a difficult year for Centerline.  Unprecedented conditions,
both for the global economy and the U.S. financial services and commercial real
estate industries, buffeted every aspect of the Company.  As a result,
our financial performance suffered and our share price
plummeted.  This report discusses our overall compensation philosophy
and practices, as well as fiscal 2008 results in this challenging
time.
 
 Roles
and Responsibilities
  The
primary purpose of the compensation committee is to conduct reviews of the
Company’s general executive compensation policies and strategies and to oversee
and evaluate the Company’s overall compensation structure and programs. Direct
responsibilities include, but are not limited to:
  ·
                evaluating
      and approving goals and objectives relevant to the compensation of the
      Chief Executive Officer and other executive officers and evaluating the
      performance of the executives in light of those goals and
      objectives;
  ·
                determining
      and approving the compensation level for the Chief Executive
      Officer;
  ·
                evaluating
      and approving compensation levels of other executive
    officers;
  ·
                evaluating
      and approving all grants of equity-based compensation to executive
      officers; and
  ·
                reviewing
      performance-based and equity-based incentive plans for the Chief Executive
      Officer and other executive officers and reviewing other benefit programs
      presented to the compensation committee by the Chief Executive
      Officer.
  The role
of the Chief Executive Officer is to provide reviews and recommendations for the
compensation committee’s consideration and to manage the Company’s executive
compensation programs, policies and governance.  The Chief Executive
Officer’s direct responsibilities include reviewing the effectiveness of the
Company’s compensation programs, including competitiveness and alignment with
the Company’s objectives, and recommending compensation awards for named
executive officers other than the Chief Executive Officer.
  From time
to time, the compensation committee may delegate decision making to the Chief
Executive Officer and other executives if compensation determinations are within
specified thresholds established by the compensation committee.  In
addition, under the compensation programs approved by the compensation
committee, certain awards may be made by the Chief Executive Officer (see
“Executive Compensation Philosophy and Process-Compensation Programs Under the
2007 Plan” below).
 From time
to time, the compensation committee has retained SMG Advisory Group LLC (the
“Outside Consultant”) as its compensation consultant to assist in the
development and evaluation of compensation policies and the compensation
committee’s determination of compensation for executive
officers.  However, the compensation committee did not retain the
Outside Consultant to determine fiscal 2008 compensation in part because (a)
base salaries of the executive officers are determined by employment agreements
and (b) the Company’s flexibility regarding executive compensation issues with
respect to which the Outside Consultant might have been consulted was, and is,
limited by (i) the deteriorating economic environment, (ii) the limitations
placed on the Company by its bank financing and (iii) the limited share capacity
available under the 2007 Plan.
  Executive
Compensation Philosophy and Process
  Overall
Program Objectives
  Our
success depends on developing, motivating and retaining individuals who have the
skills and expertise to lead our Company. The compensation committee evaluates
both performance and compensation to ensure that the Company maintains its
ability to attract and retain superior employees in key positions and that
compensation provided to key employees remains competitive relative to the
compensation paid to similarly situated executives of our peer
companies.  The Company designs its compensation programs
to:
     - 7
-
 
 ·
                  Encourage
      long-term focus on the ultimate objective of improving shareholder
      value.  Employees at a higher level have an increasing
      proportion of their compensation based on equity incentives tied to the
      long-term performance of the Company because they are in a position to
      have greater influence on long-term
results.
  ·
                  Align
      executives’ interests with those of shareholders.  To that end,
      the compensation committee believes executive compensation packages
      provided by the Company to its executives, including the named executive
      officers, should include both cash and share-based
      compensation.
  ·
                  Retain
      and recruit executive talent.  To attract and retain highly
      skilled executives, we must remain competitive with the pay of other
      employers who compete with us for
talent.
  ·
                  Reward
      performance.  Each year, we assess performance based on a
      variety of factors, including growth in earnings per share and other
      business results, leadership, management skills and technical
      expertise.  Our compensation program should reward exemplary
      performance and deliver less when performance
  lags.
  ·
                    Focus
      all employees on company-wide results.  Our compensation
      programs should encourage employees to improve the performance of the
      whole company, not only their particular groups, including earnings per
      share.  To further this goal, the compensation committee
      typically approves compensation programs that focus on company-wide
      results (see “-Compensation Programs Under the 2007 Plan” and “Fiscal Year
      2009 Changes” below).
  The
Company seeks to achieve these objectives through three key compensation
elements:
  ·
                  base
      salary;
  ·
                  annual
      bonus, which often consists of a combination of cash and equity awards
      (restricted common shares or share options), which typically are subject
      to time-based vesting requirements;
and
  ·
                  grants
      of long-term, equity-based compensation (i.e., longer-term compensation,
      such as restricted common shares or share options) pursuant to the Annual
      Incentive Bonus Programs, which are based on meeting performance
      objectives and are subject to time-based vesting
    requirements.
  The
Company also maintains incentive compensation plans in which designated
employees participate in a pool comprised of shares of cash flow of certain
investment funds managed by Centerline REIT, which are received by one of our
subsidiaries after investors have received a specified return under the fund
agreements.  In this report, we refer to these shares of cash flow as
“promotes.”  The compensation plans are described below under the
heading “Centerline REIT Incentive Compensation Plans.”
  In June
2007, the shareholders of the Company approved the 2007 Plan (see “-2007
Incentive Share Plan” below), which is intended to provide the Company with
sufficient flexibility to implement new compensation programs intended to
achieve two principal objectives:
  ·
                    strengthen
      the link between compensation and performance, measured at the
      Company-wide level; and
  ·
                    support
      the Company’s business strategy and business plan by clearly communicating
      what is expected of executives with respect to goals and results by
      rewarding achievement.
  The
Compensation Committee’s Process
  The
compensation committee has established a number of processes to assist it in
ensuring that the Company’s executive compensation program is achieving its
objectives.  Among those are:
  ·
                    Assessment of Company
      Performance and General Economic Factors.  The
      compensation committee evaluates the Chief Executive Officer’s
      performance, and the performance of other named executive officers, in
      light of the Company’s goals and objectives, and its overall performance
      in meeting those goals and objectives.  In establishing the
      compensation of the Chief Executive Officer and other named executive
      officers, the compensation committee considers various measures of Company
      and industry performance and general economic factors but focuses
      primarily on growth in earnings per share and individual contributions to
      Company-wide performance.
  ·
                    Consideration of the Company’s
      Actual 2008 Results and Implications for Reduction in Budgeted Executive
      Compensation.  The Company’s actual results for 2008 were
      significantly less than management’s budgeted 2008 earnings.  In
      addition, the Company’s principal lenders imposed restraints on the
      Company’s ability to use its cash for executive bonus compensation for
      fiscal 2008.  These two factors resulted in significant
      reductions to the bonus pool available for executive officer
      bonuses.  As a result, bonuses paid to the Chief Executive
      Officer and the other named executive officers decreased by approximately
      70% year-to-year compared to 2007.  See“Principal
      Components of Executive Compensation for 2008-Annual
    Bonuses.”
   - 8
-
   ·
                  Total Compensation
      Review. During 2006, the compensation committee reviewed the total
      compensation of the Chief Executive Officer, the Chief Financial Officer
      and other executive officers, including reviews of base pay, bonus and
      equity incentives as well as perquisites and payments that would be
      required under various severance and change-in-control scenarios. In
      furtherance of this review, the compensation committee engaged the Outside
      Consultant to conduct a review of its total compensation program for the
      Chief Executive Officer and the Chief Financial Officer, as well as for
      other executive officers.  The compensation committee does not
      engage in benchmarking of total compensation or elements thereof, but the
      Outside Consultant provided the compensation committee with relevant
      market data and alternatives to consider when making compensation
      decisions for the Chief Executive Officer and the Chief Financial
      Officer.  The compensation committee considered the
      recommendations being made by the Company’s management for executives
      other than the Chief Executive Officer and the Chief Financial
      Officer.  Following the 2006 review, the compensation committee
      approved employment agreements for the Chief Executive Officer, the Chief
      Financial Officer and the Chief Operating Officer during 2006, and for the
      remaining executive officers during 2007, after determining that these
      elements of compensation were reasonable in the aggregate. In 2008, the
      Company entered into amendments to the employment agreements of each of
      the executive officers of the Company providing for a reduction in their
      respective base salaries effective April 21, 2008.  The salary
      reductions were implemented as part of the Company’s overall cost
      reduction initiative and terminated on December 31, 2008, at which time
      the base salaries increased to their pre-reduction levels.  Mr.
      Levy’s base salary subsequently was increased by an amendment to his
      employment agreement approved by the compensation committee (see
      “Principal Components of Executive Compensation for 2008-Base
      Salary-Fiscal Year 2008
Decisions”).
  ·
                  Assessment of Individual
      Performance. Individual performance has a strong impact on the
      compensation of all employees, including the Chief Executive
      Officer.  With respect to the Chief Executive Officer, the
      compensation committee reviews the Chief Executive Officer’s performance
      based on his achievement of Company goals and other leadership
      accomplishments.  The primary economic goal upon which the Chief
      Executive Officer’s performance is measured is growth in earnings per
      share.  The Chief Executive Officer’s 2008 bonus was reduced by
      approximately 70% compared to his 2007 bonus due to the Company’s
      financial and share price performance in 2008 and as a result of cash flow
      constraints imposed by the Company’s lenders.  See“Annual
      Bonuses-Fiscal Year 2008
Decisions.”
  ·
                    Competitive
      Considerations.  In making compensation decisions with
      respect to each element of compensation, the compensation committee
      considers the competitive market for executives and compensation levels
      provided by comparable companies.  The compensation committee
      does not attempt to set each compensation element for each executive
      within a particular range related to levels provided by industry
      peers.
  A
significant percentage of total compensation is allocated to incentives as a
result of the philosophy mentioned above.  There is no pre-established
policy or target for the allocation between either cash and non-cash or
short-term and long-term incentive compensation. Rather, the compensation
committee reviewed information provided by management to determine the
appropriate level and mix of incentive compensation.
  Timing
of Decisions
  The
compensation committee makes its decisions regarding the base salary of each
named executive officer when it approves the employment agreement of such
executive, which employment agreement may also provide for a long-term equity
grant that vests over time.  The compensation committee’s procedure
for timing of annual bonus equity grants (restricted Common Share awards and
share options) is as follows:  the annual bonus equity grant date for
all eligible employees, including named executive officers is in early
March.  This date will be established by the Company and the
compensation committee in advance-typically at the compensation committee’s
February meeting.  In February 2009, the compensation committee met
and approved the dollar amounts of the executive officers’ cash bonuses, and
incentive compensation grants, with the number of shares of and incentive
compensation grants, to be determined at the close of business of March 10,
2009.  In the event of grants to new hires, the grants are effective
on the first day of employment.  The Company does not time, or plan to
time, its release of material non-public information for the purpose of
affecting the value of executive compensation.
  2007
Incentive Share Plan
  The
shareholders approved the 2007 Plan at the annual meeting of shareholders held
on June 13, 2007.  The 2007 Plan is designed to attract, retain and
motivate employees and to provide incentives and rewards for superior
performance. The 2007 Plan authorizes the granting of share options, share
appreciation rights, restricted shares, restricted share units, unrestricted
shares, deferred share units and performance awards (collectively, the “Awards”)
to employees, non-employee trustees, non-employees to whom an offer of
employment has been extended and consultants and includes the authority to grant
Awards that qualify as “performance-based compensation” under Section 162(m) of
the Internal Revenue Code, if applicable.  Subject to earlier
termination by the Board, the 2007 Plan will terminate on June 13,
2017.
  The 2007
Plan provides that, subject to capital adjustments, the maximum number of the
Company’s common shares that may be issued under the 2007 Plan for future Awards
is equal to ten percent (10%) of the Total Shares (as defined below) outstanding
as of the December 31st preceding any issuance of shares pursuant to an Award.
“Total Shares” means (i) shares of beneficial interest (common and preferred)
and (ii) other securities issued by the Company and its affiliates that have
economic attributes similar to common shares, including, without limitation, the
special common units and special common interests issued by the Company’s
subsidiaries. Shares that are subject to any Award that expires or is forfeited,
cancelled or becomes unexercisable under the 2007 Plan (as well as under the
1997 Plan, along with any shares that are not paid or delivered under either
plan) will again be available for subsequent Awards, except as prohibited by
law. Based on the foregoing formula (except for the reissuance of forfeited
grants), the total number of Awards that could be granted for the life of the
plan is 8,621,460 shares, based on 10% of Total Shares of 86,214,602 as of
December 31, 2008.
     - 9
-
  The Board
has delegated general administrative authority for the 2007 Plan to the
compensation committee. Subject to the terms of the 2007 Plan, the compensation
committee has express authority to determine who will receive awards, the number
of shares, units or dollars to be covered by each Award and the terms and
conditions of Awards. The compensation committee has broad discretion to
prescribe, amend and rescind rules relating to the 2007 Plan and its
administration, to interpret and construe the 2007 Plan and the terms of all
Award agreements and to take all actions necessary or advisable to administer
the 2007 Plan. Within the limits of the 2007 Plan, the compensation committee
may accelerate the vesting of any Award, allow the exercise of unvested Awards
and modify, replace, cancel or renew Awards. The compensation committee has
delegated authority to the Chief Executive Officer to approve Awards to
employees (other than executive officers designated by the compensation
committee) under the compensation programs described below.
  The
foregoing description of the 2007 Plan does not purport to be complete and is
qualified in its entirety by reference to the more detailed description of the
2007 Plan contained in the Company’s definitive proxy statement on Schedule 14A
filed with the SEC on April 23, 2007 in connection with the Company’s 2007
Annual Meeting of Shareholders, as well as the full text of the 2007 Plan
(attached as Appendix A to the 2007 Proxy Statement).
  Compensation
Programs under the 2007 Plan
  For
fiscal 2008, the compensation committee approved the award of bonuses under two
Annual Incentive Bonus Programs (denominated as “A” and “B”).  The
members of the “B” bonus pool included the ten members of the Company’s
executive committee (which includes all of the named executive officers) plus
six additional senior executives.  The aggregate amount of the “B”
bonus pool was $2,337,500, which equated to a decrease of approximately 82% of
the total “B” cash bonus pool for 2007 and a decrease of approximately 70% of
the aggregate cash bonuses received by the currently employed executive officer
group for fiscal 2007 (fewer officers participated in the reduced pool for
fiscal 2008 versus fiscal 2007).
  The
Annual Incentive Bonus Programs (each, an “Incentive Program”) establish cash
bonus pools for the payment of annual bonuses of cash and restricted common
shares to the Company’s employees. The Chief Executive Officer is responsible
for making allocations of cash-based and/or share-based participation
percentages under the Incentive Programs to employees who are not reporting
persons for Securities and Exchange Commission Rule 16 purposes. Restricted
Common Share grants are subject to accelerated vesting under certain conditions
set forth in the 2007 Plan and the Incentive Program plan documents. The
participants under Incentive Program “B” are members of the Company’s senior
management team, and participants under Incentive Program “A” are staff members.
The determination of who will participate in which incentive plan may vary from
year to year and will be determined by the compensation committee and/or the
Chief Executive Officer. The compensation committee is responsible under
Incentive Program “B” for making allocations of participation percentages to SEC
Rule 16 reporting persons.
  The
foregoing description of the 2007 Plan does not purport to be complete and is
qualified in its entirety by reference to the more detailed description of such
plans contained in the Company’s definitive proxy statement on Schedule 14A
filed with the SEC on April 23, 2007 in connection with the Company’s 2007
Annual Meeting of Shareholders.  In 2008, the aggregate amount of “B”
cash bonus pool was set as a fixed amount rather than calculated based on the
formulaic provisions of the “B” bonus plan, due to financial conditions referred
to below (See “-Fiscal
Year 2008 Decisions”.)
  Principal
Components of Executive Compensation for 2008
  The
compensation committee evaluated and set 2008 executive compensation in the
context of the company’s performance, the current global economic and real
estate industry recession and constraints on bonus payments imposed as a result
of the Company’s discussions with its principal lenders.
  For 2008,
the principal components of compensation for named executive officers
were:
  ·
                base
      salary; and
  ·
                  annual
      bonus, consisting of a combination of cash and equity awards (restricted
      common shares), which typically are subject to time based vesting
      requirements and which are issued in accordance with Incentive
      Compensation Program B.
 In prior
years, the components of executive compensation included grants of long-term
equity-based compensation.  Last year, that program was known as the
2007 Outperformance Program.  For fiscal 2008, management did not ask
the compensation committee to approve another annual installment of the
Outperformance Program.
     - 10
-
  The
compensation committee believes that the program described above balances both
the mix of cash and equity compensation, and the mix of currently paid and
longer-term compensation in a way that furthers the compensation objectives
discussed above. Following is a discussion of the committee’s considerations in
establishing each of the components for the named executive
officer.
  Base
Salary
  Purpose.  The
Company provides named executive officers and other employees with a base salary
to compensate them for services rendered during the fiscal year.  The
objective of base salary is to reflect job responsibilities, value to the
Company and individual performance with respect to market
competitiveness.
  Considerations.  The
base salaries of the named executive officers are designated in employment
agreements with those officers.  The base salaries and the amounts of
any increases to base salaries are determined by the compensation committee
based on a variety of factors, including:
  ·
                the
      nature and responsibilities of the position and, to the extent available,
      salary norms for persons in comparable positions at comparable
      companies;
  ·
                the
      expertise of the individual
executive;
  ·
                the
      competitiveness of the market for the executive’s services;
      and
  ·
                the
      recommendations of the Chief Executive Officer (except in the case of his
      own compensation).
  Fiscal Year 2008
Decisions.  The named executive officers are employed pursuant
to employment agreements approved by the compensation committee which provide
for annual base salaries.  These employment agreements are described
under “Employment Agreements of Named Executives Officers” below.
  Effective
January 1, 2007, Mr. Schnitzer, our Chief Executive Officer, entered into an
employment agreement with a subsidiary of the Company pursuant to which Mr.
Schnitzer was to receive an annual base salary of $675,000 for 2008 and $725,000
for 2009.  Mr. Schnitzer subsequently entered into an amendment to his
employment agreement whereby he voluntarily reduced his base salary for the
period of 2008 to $562,500 effective April 21, 2008 as part of an
across-the-board expense reduction effort.  This voluntary salary
reduction provision terminated on December 31, 2008, and Mr. Schnitzer’s base
salary for 2009 returned to $725,000 pursuant to his employment
agreement.
  During
November 2006, Mr. Levy entered into an employment agreement with a subsidiary
of the Company pursuant to which Mr. Levy serves as our Chief Financial Officer
and was to receive a base salary of $325,000.  Mr. Levy subsequently
entered into an amendment to his employment agreement whereby he voluntarily
reduced his base salary for the period of 2008 to $315,000 effective April 21,
2008 as part of an across-the-board expense reduction effort.  This
voluntary salary reduction provision terminated on December 31, 2008, and, in
March 2009 Mr. Levy and the Company entered into a further amendment to his
employment agreement increasing his base salary from $325,000 to $400,000
effective January 1, 2009, based upon a review of the compensation of other
comparable chief financial officers.
  Effective
January 1, 2007, Mr. Meyer, our former Chief Investment Officer, entered into an
employment agreement with a subsidiary of the Company pursuant to which Mr.
Meyer was to receive an annual base salary of $400,000 for 2008.  Mr.
Meyer subsequently entered into an amendment to his employment agreement whereby
he voluntarily reduced his base salary for the period of 2008 to $360,000
effective April 21, 2008 as part of an across-the-board expense reduction
effort.  This voluntary salary reduction provision terminated on
December 31, 2008, but Mr. Meyer subsequently entered into further amendments to
his employment agreement (a) reducing his base salary to $325,000 effective
January 1, 2009 and (b) relinquishing his Chief Investment Officer
title.  Mr. Meyer retained the title of Executive Managing
Director.
  Effective
January 1, 2007, Mr. Smyth, an Executive Managing Director and the Group Head of
the Portfolio Management Group, entered into an employment agreement with a
subsidiary of the Company pursuant to which Mr. Smyth was to receive an annual
base salary of $300,000 for 2008.  Mr. Smyth subsequently entered into
an amendment to his employment agreement whereby he voluntarily reduced his base
salary for the period of 2008 to $279,000 effective April 21, 2008 as part of an
across-the-board expense reduction effort.  This voluntary salary
reduction provision terminated on December 31, 2008, but Mr. Smyth subsequently
entered into a further amendment to his employment agreement increasing his base
salary to $350,000 effective March 9, 2009 based on his promotion as Executive
Managing Director and his increased responsibilities.
 Effective
January 1, 2007, Mr. Weil, an Executive Managing Director and the Group Head of
the Affordable Housing Group, entered into an employment agreement with a
subsidiary of the Company pursuant to which Mr. Weil was to receive an annual
base salary of $400,000 for 2008.  Mr. Weil subsequently entered into
an amendment to his employment agreement whereby he voluntarily reduced his base
salary for the period of 2008 to $360,000 effective April 21, 2008 as part of an
across-the-board expense reduction effort.  This voluntary salary
reduction provision terminated on December 31, 2008, returning Mr. Weil’s base
salary to $400,000 effective January 1, 2009.
  - 11
-
  Any
future merit-based or market-based increases to salaries of named executive
officers will be based on the compensation committee’s assessment of the
individual’s performance, the Company’s performance, competitive positioning
(comparing the Company’s salary structure with salaries paid by comparable
companies) and general economic factors.  Specific considerations are
expected to include growth in earning per share, increased total return to
shareholders and contributions to Company-wide achievement.  The base
salaries of the named executive officers cannot be modified without approval of
the compensation committee and amendments to their respective employment
agreement.
  Annual
Bonuses
  Purpose.  The
Company provides annual bonuses paid part in cash and part in equity awards that
typically vest over a period of time.  The objective of the program is
to compensate individuals for performance and contributions to the performance
of the Company.  The annual bonus of the Company’s executive officers
is issued pursuant to Incentive Program “B”, which is more fully described above
(see “Executive Compensation Philosophy and Process—Compensation Programs Under
the 2007 Plan”).
  Considerations.  The
bonuses our executives receive in large part depend on the executives’
individual performance and level of responsibility.  Consistent with
our executive compensation philosophy, we allocate a significant percentage of
annual bonus compensation to equity awards that vest over several years to align
the compensation of named executive officers with the long term performance of
the Company and return to shareholders.  In determining bonuses, the
compensation committee assesses the performance of the Chief Executive Officer
and other key executives, taking into account the recommendations of the Chief
Executive Officer (other than with respect to the Chief Executive Officer’s
bonus) and reviews comparable market data compiled by the Outside Consultant if
one is utilized.
  Fiscal Year 2008
Decisions.  For fiscal 2008, the compensation committee
determined the aggregate amount of the annual bonus for the named executive
officers based on the Company’s financial performance and the compensation
committee’s judgment of their individual performance during 2008.  The
Company was also subject to constraints on its use of cash flow for compensation
as required by the Company’s lenders.  The compensation committee
required management to reduce the bonuses of the named executive officers and
other key executives by approximately 70% year-to-year compared to 2007 due to
the year-to-year decline in earnings.
  In
February 2009, the compensation committee approved the annual bonuses of the
Chief Executive Officer, the Chief Financial Officer and the other named
executive officers, each of whom received a combination of cash bonuses and
restricted Common Shares as set forth in the table below.
  Executive
      Officer
                  
                  Cash
      Bonus(1)
                  
                  Value
      of Restricted Common Shares(2)
                  
                  Number
      of Restricted Common SharesMarc
      D. Schnitzer
                  
                  $330,000
                  
                  $71,996
                  
                  479,976Robert
      L. Levy
                  
                  $258,000
                  
                  $40,094
                  
                  267,292Donald
      J. Meyer
                  
                  $177,000
                  
                  $36,607
                  
                  244,050Paul
      G. Smyth
                  
                  $200,000
                  
                  $36,607
                  
                  244,050Andrew
      J. Weil
                  
                  $225,000
                  
                  $54,222
                  
                  361,478
  (1)
                  Each
      executive officer will receive one-fourth of the above-stated cash bonus
      on March 11, 2009, and one-forth on each of the following dates if such
      executive officer is employed by the Registrant on such dates: June 1,
      2009, August 1, 2009 and October 1,
2009.
   (2)
                  The
      restricted common share grants were granted on the same date as the cash
      bonus amounts were approved.  Grants for Mr. Schnitzer and Mr.
      Weil were made in connection with the cancellation of share options
      granted in prior years.  All common shares granted to the
      executives will vest over a two-year period, with 50% vesting on January
      1, 2010 and 50% vesting on January 1, 2011.  The number of
      common shares issued to each executive officer was determined using a
      grant price of $0.15 per share, which was the closing price of the
      Company’s common shares on the trading date prior to the grant
      date.
   - 12
-
  This year
the compensation committee did not include restricted share grants as part of
the 2008 bonuses due to significant reductions in the overall bonus amounts of
the named executive officers versus 2007, but the committee approved long-term
incentive compensation in the form of restricted share grants to encourage
retention and economically align the interests of the executives with the
long-term interests and goals of the Company.  See “-Long-Term
Incentive Compensation”.
 Long-Term
Incentive Compensation
  Purpose.  The
Company issues equity awards to the named executive officers for the purpose of
aligning compensation for named executive officers over a multi-year period
directly with the interests of shareholders of the Company.  These
equity awards are also issued to motivate and reward the creation and
preservation of long-term shareholder value.  For fiscal 2008, the
Company issued part of the annual bonuses paid to certain named executive
officers in the form of restricted common shares (see “Annual Bonuses - Fiscal
Year 2008 Decisions” above).
  Restricted Common
Shares.  The number of restricted common shares or options
granted to executive officers, including the Chief Executive Officer, is based
on individual performance and level of responsibility. For this purpose, the
compensation committee measures performance the same way as described above for
cash bonuses. The compensation committee’s view is that long-term incentive
awards should be sufficient in size to provide a strong incentive for executives
to work for long-term business interests. Restricted common shares granted as
long-term incentive compensation to named executive officers generally vest over
the course of two or three years, with equal pro-rated portions of the grant
vesting on each anniversary.  In the event of grants to new hires, the
grants are effective on the first day of employment.
  Share
Options.  Share options align employee incentives with
shareholders because options have value only if the share price increases over
time. The Company’s 10-year options, granted at the market price on the date of
grant, help focus employees on long-term growth. In addition, options are
intended to help retain key employees because they typically vest ratably over
the course of three years and, if not exercised, are forfeited if the employee
leaves the Company before retirement.  The compensation committee will
not grant share options with exercise prices below the market price of the
Company’s common shares on the date of the grant, which under the 2007 Plan will
be the closing price of common shares on the issuance date.  The
Company will not reduce the price of options (except in connection with
adjustments to reflect recapitalizations, share or extraordinary dividends,
share splits, mergers, spin-offs and similar events permitted by the 2007
Plan).  Likewise, if the Common Share price declines after the grant
date, we do not replace options.  The Company did not issue any
options to named executive officers in 2008 and cancelled all options previously
issued to them.
  Mix of Restricted Common Shares and
Share Options.  Although the Company has the discretion to
issue share options to executive officers, and may do so in the future, the
Company did not issue any share options to the named executive officers as part
of their fiscal 2008 annual bonuses and instead issued only
long-term awards in the form of restricted common shares pursuant to Incentive
Plan “B”.
  Fiscal Year 2008
Decisions.  The Company issued one type of long-term grants to the
named executive officers:  the grants of restricted Common Shares granted
to the executive officers in March 2008.  The annual grants are described
above (see “Annual Bonuses—Fiscal Year 2008 Decisions” above).
 Fiscal
Year 2009 Changes
  As
described above, certain of the named executive officers entered into voluntary
reduction amendments to their employment agreements that modified base salaries
(see “Base Salary – Fiscal Year 2008 Decisions” above).
  Perquisites
  The
Company does not provide significant perquisites or personal benefits to the
named executive officers, except as follows:
  ·
                  The
      Company provides an automobile allowance to (i) Mr. Schnitzer of $25,000
      per year, payable in monthly installments, and (ii) Mr. Levy of $1,500 per
      month.
  ·
                  The
      Company provides life insurance coverage to (i) Mr. Schnitzer in the
      amount of $3,000,000 and (ii) Mr. Levy in the amount of
      $500,000.
  ·
                  Mr.
      Schnitzer and Mr. Levy receive reimbursement for the preparation of income
      tax returns.
  ·
                  The
      Company provides supplemental long-term disability insurance coverage
      providing benefits to age 65 to each of the named executive officers in
      the amount of $15,000 per month.
     - 13
-
   ·
                  During
      2008, the Company paid the named executive officers distributions with
      respect to non-vested share grants as follows: $128,175 for Mr. Schnitzer;
      $50,834 for Mr. Levy; $43,246 for Mr. Meyer; $95,974 for Mr. Smyth; and
      $40,392 for Mr. Weil.
  ·
                  During
      2008, Mr. Weil received a referral bonus of $47,500 in connection with
      loans originated by a subsidiary of the
Company.
  Severance
Benefits
  The
Company has entered into employment agreements with the named executive officers
that provide for severance payments and other benefits if their employment is
terminated under certain circumstances, including in connection with a change in
control of the Company.  These severance provisions are designed to
promote stability and continuity of senior management, and the compensation
committee considers them to be fair and appropriate.  Information
regarding applicable payments under such agreements for the named executive
officers is provided below under the heading “Potential Payments Upon
Termination or Change in Control.”
  Centerline
REIT Incentive Compensation Plans
  Centerline
REIT and its subsidiaries sponsor and manage funds that invest in high-yield
real estate instruments.  These subsidiaries earn promotes (shares of
cash flow) from equity investments in the sponsored funds.  Centerline
REIT has established incentive compensation plans that pool a portion of the
promotes earned by our subsidiaries from the funds. Under the incentive
compensation plans, participants are eligible to earn units over the life of the
respective funds. A participant is eligible for payments under the plans based
on the participant’s proportionate number of units owned at the time Centerline
REIT receives payment of the promotes.  A participant who voluntarily
terminates, or is terminated with cause, will forfeit participation in the plans
with forfeited units being available for reallocation.  A participant
who dies, becomes disabled, terminates for good reason or upon normal retirement
or is terminated without cause will be entitled to retain units allocated to
him/her and participate in the future receipt of promotes under the
plans.  In the event of a participant’s death, payments will be made
to his/her designated beneficiary or the participant’s estate if the participant
fails to designate a beneficiary.  A designated beneficiary or heirs,
as the case may be, will be treated as a participant under the
plans.  Future awards, or lack thereof, may potentially alter the
proportionate share of units owned by a participant.  The amount of
future payments, if any, under the incentive compensation plans is entirely
dependent on both the participant’s proportionate share of the number of units
in the plans and on the promotes received by Centerline REIT.  There
is no guarantee as to the amount that may be received by Centerline
REIT.
  Other
Matters
  Share
Retention Guidelines; Hedging Prohibition
  Share
retention guidelines help to foster a focus on long-term growth. We expect our
executive officers to retain all net shares received from share options and
performance awards, net of taxes, for at least one year. Consistent with this
objective, equity awards generally are issued in the form of restricted common
shares that are subject to vesting schedules and to forfeiture if the executive
leaves the Company prior to vesting, except by reason of termination without
cause, death, disability or retirement. Employees are not permitted to hedge
their economic exposure to the common shares that they own.
  Deductibility
Cap on Executive Compensation
  Our
policy is to qualify our incentive compensation programs for full corporate
deductibility to the extent feasible and consistent with our overall
compensation goals as reflected in the summary compensation table
below.  We may be prohibited under U.S. federal income tax law, if
applicable; from taking a tax deduction for certain compensation paid in excess
of $1,000,000 to the named executive officers listed in the summary compensation
table below. However, performance-based compensation, as defined in the tax law,
is fully deductible if the programs are approved by shareholders and meet other
requirements.
  Executive
Compensation Recovery Policy
  The
compensation committee has adopted as part of the 2007 Plan an executive
compensation recovery policy applicable to executive officers. Under this
policy, the Company may recover incentive compensation (cash or equity) that was
based on achievement of financial results that were subsequently the subject of
a restatement if an executive officer engaged in intentional misconduct that
caused or partially caused the need for the restatement and if the effect of the
wrongdoing was to increase the amount of bonus or incentive compensation. This
policy covers income related to cash bonuses and performance
awards.
     - 14
-
   Compensation
Committee Interlocks and Insider Participation
  During
the fiscal year ended December 31, 2008, the compensation committee consisted of
Messrs. Loverd, Meister, Dolan and Gantcher, who resigned as a member of the
Board, effective October 31, 2008.  No compensation committee member
had any interlocking relationships requiring disclosure under applicable rules
and regulations.  No compensation committee member was employed by the
Company as an officer or employee during 2008.  No executive officer
of the Company serves as a member of the board of directors or compensation
committee of any other company that has one or more executive officers serving
as a member of our Board or the compensation committee.  The Company’s
executive officers routinely provide the compensation committee with
recommendations regarding incentives, including the 2007 Plan and the
compensatory programs described above.  They may participate in
discussions of proposed plans and arrangements but have no vote with respect to
their individual awards or compensation.
  Compensation
Committee Report
  The
compensation committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of Regulation S-K with management and,
based on such review and discussions, the compensation committee recommended to
the Board that the Compensation Discussion and Analysis be included in this
report.
  THE
COMPENSATION COMMITTEE
  Robert L.
Loverd, Chairman
 Robert A.
Meister
 Robert J.
Dolan
  Notwithstanding
anything to the contrary set forth in any of the Company’s previous or future
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate by reference this report or
future filings made by the Company under those statutes, the Compensation
Committee Report is not deemed filed with the SEC and shall not be deemed
incorporated by reference into any of those prior filings or into any future
filings made by the Company under those statutes.
  
 - 15
-
 
  SUMMARY
COMPENSATION TABLE
  The table
below summarizes the total compensation paid or earned by each of the named
executive officers for the fiscal years ended December 31, 2008, 2007 and 2006
(but only for 2008 for Messrs. Meyer, Smyth and Weil because they were not named
executive officers in 2007 or 2006).
  (a)
                      
                      (b)
                      
                      (c)
                      
                      (d)
                      
                      (e)
                      
                      (f)
                      
                      (g)
                      
                      (h)
                      
                      (i)
                      
                      (j)Name
      and Principal Position
                      
                      Year
                      
                      Salary
      ($)
                      
                      Bonus
      ($)(1)
                      
                      Stock
      Awards
                        ($)(2)
                      
                      Option
      Awards ($)(2)
                      
                      Non-Equity
                        Incentive
                        Plan
                        Compensation
                        ($)
                      
                      Change
      in
                        Pension
      Value
                        and
      Nonqualified
                        Deferred
                        Compensation
                        Earnings
      ($)
                      
                      All
      Other Compensation
                        ($)(3)
                      
                      Total
      ($)Marc
      D. Schnitzer
                      
                      2008
                      
                      $
                      599,327
                      
                      $
                      359,639
                      
                      $
                      1,388,578
                      
                      $
                      44,430
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      237,881
                      
                      $
                      2,629,854Chief
      Executive Officer and President
                      
                      2007
                      
                      $
                      622,769
                      
                      $
                      1,100,000
                      
                      $
                      2,257,344
                      
                      $
                      156,900
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      368,178
                      
                      $
                      4,505,1912006
                      
                      $
                      544,123
                      
                      $
                      750,000
                      
                      $
                      384,299
                      
                      $
                      355,361
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      112,003
                      
                      $
                      2,145,786Robert
      L. Levy
                      
                      2008
                      
                      $
                      303,750
                      
                      $
                      274,352
                      
                      $
                      519,272
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      81,050
                      
                      $
                      1,178,424Chief
      Financial Officer
                      
                      2007
                      
                      $
                      336,058
                      
                      $
                      670,000
                      
                      $
                      812,699
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      172,028
                      
                      $
                      1,990,7852006
                      
                      $
                      200,000
                      
                      $
                      650,000
                      
                      $
                      257,352
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      47,408
                      
                      $
                      1,154,760Donald
      J. Meyer
                      
                      2008
                      
                      $
                      373,846
                      
                      $
                      193,352
                      
                      $
                      466,885
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      55,062
                      
                      $
                      1,089,146Executive
      Managing DirectorPaul
      G. Smyth
                      
                      2008
                      
                      $
                      295,385
                      
                      $
                      442,793
                      
                      $
                      875,750
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      107,790
                      
                      $
                      1,721,717Executive
      Managing DirectorAndrew
      J. Weil
                      
                      2008
                      
                      $
                      373,846
                      
                      $
                      241,352
                      
                      $
                      432,723
                      
                      $
                      217,225
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      99,708
                      
                      $
                      1,364,854Executive
      Managing Director
  (1)
                The
      amounts in column (d) in 2008 and 2007 include the payments to the named
      executive officer under a plan by which certain employees participate in
      the profits we realize from investment funds we sponsor (see “Centerline
      REIT Incentive Compensation Plans”
above.)
  (2)
                The
      amounts in columns (e) and (f) reflect the dollar amount recognized for
      financial statement reporting purposes, in accordance with Statement of
      Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment,
      (“FAS 123 (R)”) of awards pursuant to the Company’s 1997 Amended and
      Restated Incentive Share Plan (the “1997 Plan”) and the Company’s 2007
      Incentive Share Plan (the “2007 Plan”) (collectively, the “Incentive Share
      Plans” and thus may include amounts from awards granted in and prior to
      2006.
  (3)
                The
      amount shown in column (i) reflects for each named executive
      officer:
   Name
                
                Year
                
                401(k)
      Matching Contributions
                
                Long-term
      Disability and Other Insurance Benefits
                
                Distributions
      with Respect to Non-vested Share Grants
                
                Tax
      Preparation and Financial Planning
                
                Automobile
      or Transportation Allowances
                
                Referral
      Bonus
                
                TotalMarc
      D. Schnitzer
                
                2008
                
                $
                11,500
                
                $
                4,706
                
                $
                128,175
                
                $
                68,500
                
                $
                25,000
                
                $
                --
                
                $
                237,8812007
                
                $
                11,250
                
                $
                1,677
                
                $
                265,750
                
                $
                64,500
                
                $
                25,000
                
                $
                --
                
                $
                368,1782006
                
                $
                6,000
                
                $
                --
                
                $
                46,360
                
                $
                39,000
                
                $
                20,643
                
                $
                --
                
                $
                112,003Robert
      L. Levy
                
                2008
                
                $
                11,500
                
                $
                316
                
                $
                50,834
                
                $
                400
                
                $
                18,000
                
                $
                --
                
                $
                81,0502007
                
                $
                11,250
                
                $
                214
                
                $
                142,564
                
                $
                --
                
                $
                18,000
                
                $
                --
                
                $
                172,0282006
                
                $
                6,000
                
                $
                --
                
                $
                39,908
                
                $
                --
                
                $
                1,500
                
                $
                --
                
                $
                47,408Donald
      J. Meyer
                
                2008
                
                $
                11,500
                
                $
                316
                
                $
                43,246
                
                $
                --
                
                $
                --
                
                $
                --
                
                $
                55,062Paul
      G. Smyth
                
                2008
                
                $
                11,500
                
                $
                316
                
                $
                95,974
                
                $
                --
                
                $
                --
                
                $
                --
                
                $
                107,790Andrew
      J. Weil
                
                2008
                
                $
                11,500
                
                $
                316
                
                $
                40,392
                
                $
                --
                
                $
                --
                
                $
                47,500
                
                $
                99,708
    
 - 16
-
 
 GRANTS
OF PLAN-BASED AWARDS
 
 The
following table sets forth summary information concerning all grants of
plan-based awards made to the named executive officers during the fiscal year
ended December 31, 2008.
 
 Estimated
      Future Payouts Under
                  Non-Equity
      Incentive Plan
                  Awards
                
                Estimated
      Future Payouts
                  Under
      Equity Incentive
                  Plan
      Awards(a)
                
                (b)
                
                (c)
                
                (d)
                
                (e)
                
                (f)
                
                (g)
                
                (h)
                
                (i)
                
                (j)
                
                (k)
                
                (l)Name
                
                Grant
      Date
                
                Threshold
      ($)
                
                Target
      ($)
                
                Maximum
      ($)
                
                Threshold
      (#)
                
                Target
      (#)
                
                Maximum
      (#)
                
                All
      Other Stock Awards: Number of Shares of Stock or Units (#)
    (1)
                
                All
      Other Option Awards: Number of Securities Underlying Options
      (#)
                
                Exercise
      or Base Price of Option Awards ($/share)
                
                Grant
      Date Fair Value of Stock and Option Awards
                  ($)
      (2)Marc
      D. Schnitzer
                
                3/10/2008
                
                --
                
                --
                
                --
                
                --
                
                --
                
                --
                
                67,721
                
                --
                
                --
                
                $
                282,397Robert
      L. Levy
                
                3/10/2008
                
                --
                
                --
                
                —
                
                --
                
                --
                
                --
                
                38,375
                
                --
                
                --
                
                $
                160,024Donald
      J. Meyer
                
                3/10/2008
                
                --
                
                --
                
                —
                
                --
                
                --
                
                --
                
                24,831
                
                --
                
                --
                
                $
                103,545Paul
      G. Smyth
                
                3/10/2008
                
                --
                
                --
                
                —
                
                --
                
                --
                
                --
                
                47,405
                
                --
                
                --
                
                $
                197,679Andrew
      J. Weil
                
                3/10/2008
                
                --
                
                --
                
                —
                
                --
                
                --
                
                --
                
                45,147
                
                --
                
                --
                
                $
                188,263
 
  (1)
                The
      amounts shown in column (i) reflect the number of shares granted to each
      named executive officer pursuant to the Incentive Share
    Plans.
  (2)
                The
      amounts shown in column (l) reflect the grant date fair value of share and
      option awards as determined in accordance with FAS
  123(R).
       
 - 17
-
 
 OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
  The
following table sets forth summary information concerning outstanding equity
awards held by each of the named executive officers as of December 31,
2008.
  (a)
                
                (b)
                
                (c)
                
                (d)
                
                (e)
                
                (f)
                
                (g)
                
                (h)
                
                (i)
                
                (j)Name
                
                Number
      of Securities Underlying Unexercised Options (#) Exercisable
                  (1)(2)
                
                Number
      of Securities Underlying Unexercised Options (#) Unexercisable (1)(2)
                
                Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options (#)
                
                Option
      Exercise Price ($)
                
                Option
      Expiration Date
                
                Number
      of Shares or Units of Stock That Have Not Vested
                
                Market
      Value of Shares or Units of Stock That Have Not Vested
                
                Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      That Have Not Vested
                
                Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
      Other Rights That Have Not VestedMarc
      D. Schnitzer
                
                220,765
                
                --
                
                --
                
                $
                24.44
                
                1/3/2015
                (1)
                195,460
                
                $
                29,319
                
                --
                
                --128,164
                
                64,081
                
                --
                
                $
                22.03
                
                1/3/2016
                
                --
                
                
                --
                
                --
                
                --Robert
      L. Levy
                
                --
                
                --
                
                --
                
                
                
                
                
                
                85,854
                
                $
                12,878
                
                --
                
                --Donald
      J. Meyer
                
                --
                
                --
                
                --
                
                
                
                
                
                
                66,872
                
                $
                10,031
                
                --
                
                --Paul
      G. Smyth
                
                --
                
                --
                
                --
                
                
                
                
                
                
                135,578
                
                $
                20,337
                
                --
                
                --Andrew
      J. Weil
                
                53,507
                
                53,507
                
                --
                
                $
                19.06
                
                3/1/2017
                (2)
                80,508
                
                $
                12,076
                
                --
                
                --
 
  (1)
                The
      options granted to Mr. Schnitzer vested at a rate of 33 1/3% per year over
      the first three years of the ten-year option term. The options were
      terminated in March 2009.
  (2)
                The
      options granted to Mr. Weil vested at a rate of 50% per year over the
      first two years of the ten-year option term. The options were terminated
      in March 2009.
    
 - 18
-
 
  OPTION
EXERCISES AND STOCK VESTED
  The
following table sets forth summary information concerning option exercises and
vesting of stock awards for each of the named executive officers during the year
ended December 31, 2008.  None of the Company’s named executive
officers exercised any share options during the fiscal year ended December 31,
2008.
  (a)
                  
                  (b)
                  
                  (c)
                  
                  (d)
                  
                  (e)Name
                  
                  Number
      of Shares Acquired on Exercise (#)
                  
                  Value
      Realized on Exercise ($)
                  
                  Number
      of Shares Acquired on Vesting (#)
                  
                  Value
      Realized on Vesting ($)Marc
      D. Schnitzer
                  
                  --
                  
                  --
                  
                  67,721
                  
                  $
                  282,397Robert
      L. Levy
                  
                  --
                  
                  --
                  
                  38,375
                  
                  $
                  160,024Donald
      J. Meyer
                  
                  --
                  
                  --
                  
                  24,831
                  
                  $
                  103,545Paul
      G. Smyth
                  
                  --
                  
                  --
                  
                  47,405
                  
                  $
                  197,679Andrew
      J. Weil
                  
                  --
                  
                  --
                  
                  45,147
                  
                  $
                  188,263
 
     
 - 19
-
  
 POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
  Each
named executive officer has an employment agreement that provides for severance
payments and other benefits, including automatic vesting of unvested equity
awards, if the executive’s employment is terminated on specified
grounds.  The table below reflects the amount of compensation payable
to each of the named executive officers of the Company in the event of
termination of such executive’s employment. The amounts shown assume that such
termination was effective as of December 31, 2008, and thus includes amounts
earned through such time and are estimates of the amounts which would be paid
out to the executives upon their termination. The actual amounts to be paid out
can only be determined at the time of such executive’s separation from the
Company.
  Potential
Payments upon Termination of Employment (As Per Employment
Agreements)
 
 Cash
      Severance Payment
                                                                                      
                                                                                      Continuation
      of Medical/
                                                                                        Welfare
      Benefits
                                                                                        (actual
      value)
                                                                                      
                                                                                      Acceleration
      and Continuation of Equity Awards*
                                                                                      
                                                                                      Excise
      Tax Gross-Up
                                                                                      
                                                                                      Total
      Termination BenefitsMarc
      D. Schnitzer
                                                                                      
                                                                                      Termination
      Upon Death
                                                                                      
                                                                                      $
                                                                                      2,075,000
                                                                                      
                                                                                      $
                                                                                      -
                                                                                      
                                                                                      $
                                                                                      19,161
                                                                                      
                                                                                      $
                                                                                      -
                                                                                      
                                                                                      $
                                                                                      2,094,161Termination
      Upon Disability
                                                                                      
                                                                                      
                                                                                      2,075,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      19,161
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      2,102,625Termination
      With Cause or Without Good Reason
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -Termination
      Without Cause or For Good Reason
                                                                                      
                                                                                      
                                                                                      2,075,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      19,161
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      2,102,625Termination
      in Connection With a Change of Control (COC)
                                                                                      
                                                                                      
                                                                                      4,150,000
                                                                                      
                                                                                      
                                                                                      16,929
                                                                                      
                                                                                      
                                                                                      19,161
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      4,186,090Robert
      L. Levy
                                                                                      
                                                                                      Termination
      Upon Death
                                                                                      
                                                                                      
                                                                                      1,190,000
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      12,878
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,202,878Termination
      Upon Disability
                                                                                      
                                                                                      
                                                                                      1,190,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      12,878
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,211,342Termination
      With Cause or Without Good Reason
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -Termination
      Without Cause or For Good Reason
                                                                                      
                                                                                      
                                                                                      1,190,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      12,878
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,211,342Termination
      in Connection With a Change of Control (COC)
                                                                                      
                                                                                      
                                                                                      1,960,000
                                                                                      
                                                                                      
                                                                                      16,928
                                                                                      
                                                                                      
                                                                                      12,878
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,989,806Donald
      J. Meyer
                                                                                      
                                                                                      Termination
      Upon Death
                                                                                      
                                                                                      
                                                                                      950,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      10,031
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      968,495Termination
      Upon Disability
                                                                                      
                                                                                      
                                                                                      950,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      10,031
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      968,495Termination
      With Cause or Without Good Reason
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -Termination
      Without Cause or For Good Reason
                                                                                      
                                                                                      
                                                                                      950,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      10,031
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      968,495Termination
      in Connection With a Change of Control (COC)
                                                                                      
                                                                                      
                                                                                      1,625,000
                                                                                      
                                                                                      
                                                                                      16,928
                                                                                      
                                                                                      
                                                                                      10,031
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,651,958Paul
      Smyth
                                                                                      
                                                                                      Termination
      Upon Death
                                                                                      
                                                                                      
                                                                                      1,180,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      20,337
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,208,800Termination
      Upon Disability
                                                                                      
                                                                                      
                                                                                      1,180,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      20,337
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,208,800Termination
      With Cause or Without Good Reason
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -Termination
      Without Cause or For Good Reason
                                                                                      
                                                                                      
                                                                                      1,180,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      20,337
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,208,800Termination
      in Connection With a Change of Control (COC)
                                                                                      
                                                                                      
                                                                                      1,920,000
                                                                                      
                                                                                      
                                                                                      16,928
                                                                                      
                                                                                      
                                                                                      20,337
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,957,264Andrew
      J. Weil
                                                                                      
                                                                                      Termination
      Upon Death
                                                                                      
                                                                                      
                                                                                      1,360,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      12,076
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,380,540Termination
      Upon Disability
                                                                                      
                                                                                      
                                                                                      1,360,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      12,076
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,380,540Termination
      With Cause or Without Good Reason
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      -Termination
      Without Cause or For Good Reason
                                                                                      
                                                                                      
                                                                                      1,360,000
                                                                                      
                                                                                      
                                                                                      8,464
                                                                                      
                                                                                      
                                                                                      12,076
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      1,380,540Termination
      in Connection With a Change of Control (COC)
                                                                                      
                                                                                      
                                                                                      2,240,000
                                                                                      
                                                                                      
                                                                                      16,928
                                                                                      
                                                                                      
                                                                                      12,076
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      2,269,004
   *
                  Executives
      are entitled to participate in an incentive compensation plan through a
      fund promote structure (see “Centerline REIT Incentive Compensation Plans”
      above.) Participants are entitled to receive a proportionate share of
      promotes received by the Company based upon the provisions of the Plan and
      their respective percentage interest in the Plan as the Company receives
      promotes from the Fund. A Participant whose employment is terminated other
      than (i) in connection with his death, disability or normal retirement,
      (ii) termination without cause or (iii) for good reason forfeits all Units
      previously awarded to him.  A Participant who dies, terminates
      employment by reason of disability, elects normal retirement, is
      terminated without cause or terminates his employment for good reason
      continues to share in the Promote Shares, but is not be entitled to any
      additional awards subsequent to the close of the fiscal year in which the
      date of his termination of employment occurs. Units held by the executives
      are as follows: Mr. Schnitzer: Fund I: 0 Units, Fund II: 725 Units, Mr.
      Levy: Fund I: 0 Units, Fund II: 800 Units, Mr. Meyer: Fund I: 0 Units,
      Fund II: 900 Units, Mr. Smyth: Fund I: 5,950 Units, Fund II: 4,750 Units
      and Mr. Weil: Fund I: 0 Units, Fund II: 800 Units. As of 12/31/08, Fund I
      shares were valued at $0/share, Fund II shares were valued at
      $0/share.
  
 - 20
-
 
 Notes
to Table of Potential Payments upon Termination of Employment (As Per Employment
Agreements)
  (1)  Marc
D. Schnitzer
  Type
      of Termination
                          
                          Cash
      Severance Payment
                          
                          Continuation
      of Medical/Welfare Benefits
                            (present
      value)
                          
                          Acceleration
      and Continuation of Equity Awards
                          
                          Excise
      Tax Gross-UpUpon
      Death
                          
                          ·12
      months of the Executive's then current salary
                            ·100%
      of the amount of the Executive's most recently declared and paid
      Discretionary Bonus
                          
                          ·Nothing
                          
                          ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                          
                          ·NoUpon
      Disability
                          
                          ·12
      months of the Executive's then current salary
                            ·100%
      of the amount of the Executive's most recently declared and paid
      Discretionary Bonus
                          
                          ·12
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                          
                          ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                          
                          ·NoWith
      Cause or Without Good Reason
                          
                          ·Nothing
                          
                          ·Nothing
                          
                          ·Nothing
                          
                          ·NoWithout
      Cause or For Good Reason
                          
                          ·12
      months of the Executive's then current salary
                            ·100%
      of the amount of the Executive's most recently declared and paid
      Discretionary Bonus
                          
                          ·12
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                          
                          ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                          
                          ·NoIn
      Connection With a Change of Control (COC)
                          
                          ·24
      months of the Executive's then current salary
                            ·200%
      of the amount of the Executive's most recently declared and paid
      Discretionary Bonus
                          
                          ·24
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                          
                          ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                          
                          ·Yes
  - 21
-
 
 
 (2)
Robert L. Levy
 
 Type
      of Termination
                          
                          Cash
      Severance Payment
                          
                          Continuation
      of Medical/Welfare Benefits
                            (present
      value)
                          
                          Acceleration
      and Continuation of Equity Awards
                          
                          Excise
      Tax Gross-UpUpon
      Death
                          
                          ·12
      months of the Executive's then current salary
                            ·100%
      of the amount of the Executive's most recently declared and paid
      Discretionary Bonus
                          
                          ·Nothing
                          
                          ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                          
                          ·NoUpon
      Disability
                          
                          ·12
      months of the Executive's then current salary
                            ·100%
      of the amount of the Executive's most recently declared and paid
      Discretionary Bonus
                          
                          ·12
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                          
                          ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                          
                          ·NoWith
      Cause or Without Good Reason
                          
                          ·Nothing
                          
                          ·Nothing
                          
                          ·Nothing
                          
                          ·NoWithout
      Cause or For Good Reason
                          
                          ·12
      months of the Executive's then current salary
                            ·100%
      of the amount of the Executive's most recently declared and paid
      Discretionary Bonus
                          
                          ·12
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                          
                          ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                          
                          ·NoIn
      Connection With a Change of Control (COC)
                          
                          ·24
      months of the Executive's then current salary
                            ·150%
      of the amount of the Executive's most recently declared and paid
      Discretionary Bonus
                          
                          ·24
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                          
                          ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                          
                          ·No
 - 22
-
 
 
 (3)
Donald J. Meyer
 
 Type
      of Termination
                        
                        Cash
      Severance Payment
                        
                        Continuation
      of
                          Medical/Welfare
      Benefits
                          (present
      value)
                        
                        Acceleration
      and Continuation of Equity Awards
                        
                        Excise
      Tax Gross-UpUpon
      Death
                        
                        ·12
      months of the Executive's then current salary
                          ·100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoUpon
      Disability
                        
                        ·12
      months of the Executive's then current salary
                          ·100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoWith
      Cause or Without Good Reason
                        
                        ·Nothing
                        
                        ·Nothing
                        
                        ·Nothing
                        
                        ·NoWithout
      Cause or For Good Reason
                        
                        ·12
      months of the Executive's then current salary
                          ·100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoIn
      Connection With a Change of Control (COC)
                        
                        ·24
      months of the Executive's then current salary
                          ·150%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·24
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·No
  
    - 23
-
 
 
 (4)
Paul Smyth
 
 Type
      of Termination
                        
                        Cash
      Severance Payment
                        
                        Continuation
      of
                          Medical/Welfare
      Benefits
                          (present
      value)
                        
                        Acceleration
      and Continuation of Equity Awards
                        
                        Excise
      Tax Gross-UpUpon
      Death
                        
                        ·12
      months of the Executive's then current salary
                          ·100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoUpon
      Disability
                        
                        ·12
      months of the Executive's then current salary
                          ·100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoWith
      Cause or Without Good Reason
                        
                        ·Nothing
                        
                        ·Nothing
                        
                        ·Nothing
                        
                        ·NoWithout
      Cause or For Good Reason
                        
                        ·12
      months of the Executive's then current salary
                          ·100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoIn
      Connection With a Change of Control (COC)
                        
                        ·24
      months of the Executive's then current salary
                          ·150%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·24
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·No
     
 - 24
-
 
 
 (5)
Andrew J. Weil
 
 Type
      of Termination
                        
                        Cash
      Severance Payment
                        
                        Continuation
      of
                          Medical/Welfare
      Benefits
                          (present
      value)
                        
                        Acceleration
      and Continuation of Equity Awards
                        
                        Excise
      Tax Gross-UpUpon
      Death
                        
                        ·12
      months of the Executive's then current salary100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoUpon
      Disability
                        
                        ·12
      months of the Executive's then current salary
                          ·100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoWith
      Cause or Without Good Reason
                        
                        ·Nothing
                        
                        ·Nothing
                        
                        ·Nothing
                        
                        ·NoWithout
      Cause or For Good Reason
                        
                        ·12
      months of the Executive's then current salary
                          ·100%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·12
      months
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·NoIn
      Connection With a Change of Control (COC)
                        
                        ·24
      months of the Executive's then current salary
                          ·150%
      of the amount of the Executive's most recently declared and paid Annual
      Bonus
                        
                        ·24
      months or at the discretion of the Company, a cash payment can be made in
      lieu of such benefits
                        
                        ·Any
      unvested restricted stock, promote units or options shall fully and
      immediately vest
                        
                        ·No
 
  Payments
Made upon Termination
  Regardless
of the manner in which a named executive officer’s employment terminates, he is
entitled to receive amounts earned during his term of employment. Such amounts
include:
  ·
                accrued
      but unpaid base salary;
  ·
                unreimbursed
      expenses that are eligible for reimbursement under Company
      policy;
  ·
                any
      accrued but unpaid annual bonus;
  ·
                any
      unpaid transportation allowance for the year in question (Mr. Schnitzer
      only) or any accrued automobile allowance (Mr. Levy
  only);
  ·
                any
      rights to which the executive is entitled under employee benefit or
      similar plans; and
  ·
                unused
      vacation pay.
  Payments
Made upon Death or Disability
  In the
event of the death or disability of a named executive officer, in addition to
the benefits listed under the heading “Potential Payments Made upon Termination”
above, each of the named executive officers is entitled to receive a payment
equal to one year’s annual base salary plus 100% of his most recently paid
annual bonus. In addition, the employment agreements of each of Mr. Schnitzer
and Mr. Levy provide that the Company will continue his medical, dental,
disability and life insurance for twelve months following his disability or, at
the Company’s discretion, make a payment in lieu of continuing such
benefits.
     - 25
-
  Payments
Made upon Termination without Cause or for Good Reason
  The named
executive officers will receive severance payments if they are terminated by us
without cause or by them for “good reason”.  Each of the named
executive officers will receive a payment equal to one year’s annual base salary
plus 100% of his most recently paid annual bonus upon such
termination.  In addition, the Company will pay COBRA payments for the
named executive officers for the lesser of one year or until they are ineligible
for COBRA benefits.  In addition, the employment agreements of each of
the named executive officers provide that the Company will continue his medical,
dental, disability and life insurance for twelve months following his disability
or, at the Company’s discretion, make a payment in lieu of continuing such
benefits.
  Payments
Made upon a Change of Control
  The named
executive officers’ employment agreements provide for severance payments if an
executive’s employment is terminated in connection with a change of control
(other than termination by the Company for cause or by reason of death or
disability).  Each of the named executive officers will receive a
payment equal to two years’ annual base salary plus 150% (in the case of Mr.
Schnitzer, 200%) of his most recently paid annual bonus upon a termination that
occurs three months prior to (in the case of Mr. Schnitzer, sixth months prior
to, and in the case of Mr. Levy, “in anticipation of”) or one year after a
change of control.  In addition, the employment agreements of each of
the named executive officers provide that the Company will continue his medical,
dental, disability and life insurance for twenty-four months following
termination in connection with a change of control or, at the Company’s
discretion, make a payment in lieu of continuing such benefits.
  Generally,
pursuant to the agreements, a change of control is deemed to occur:
  (i)
                      if
      any person acquires 50% or more of the Company’s voting securities (other
      than securities acquired directly from the Company or its
      affiliates);
  (ii)
                  if
      a majority of the trustees as of the date of the agreement are replaced
      other than in specific
circumstances;
  (iii)
                  upon
      the consummation of a merger of the Company in which shareholders of the
      Company prior to such merger own less than 50% of the Company’s voting
      power immediately after such transaction;
or
  (iv)
                  upon
      the liquidation or sale of substantially all of the Company’s
      assets.
  provided
that no change of control will be deemed to occur with respect to any of the
above-referenced events if after such event the executive continues to be an
employee of a company that is affiliated with the Company and continues to have
duties and functions and compensation consistent with such executive’s
employment agreement (unless such executive terminates his employment without
good reason).
 Equity
Awards
  The
employment agreements of the named executive officers provide for the immediate
vesting of restricted common shares and share options issued under the Incentive
Share Plans and any promote shares under a co-investment program following
termination in specified circumstances.  Such awards granted to the
named executive officers will fully vest upon death, disability or termination
without cause or for “good reason” (as defined in the employment
agreements).  Under the 2007 Outperformance Program and the Incentive
Programs A and B, a participant may receive awards of unrestricted common shares
in satisfaction of the participant’s rights under the 2007 Outperformance Plan
in the event of a change of control or upon termination of employment without
cause, by the participant for good reason or by reason of the participant’s
retirement, death or disability.
    
 - 26
-
 
 
 Employment
Agreements of the Named Executive Officers
 
 Marc
D. Schnitzer
  On
February 1, 2007, Mr. Schnitzer entered into an employment agreement with a
subsidiary of the Company pursuant to which he will continue to serve as, and
have the title of, Chief Executive Officer and President of the Company and will
have the title of Executive Managing Director of CAHA.  During his
employment, Mr. Schnitzer will report to the Board for the term of approximately
three years until December 31, 2009 (the “Initial Period”).  At the
end of such three years, the term will automatically extend annually for one
year (the “Additional Period”) unless the Company delivers a notice of
termination at least sixty days prior to the end of the employment
period.
  Pursuant
to this agreement, Mr. Schnitzer would receive an annual base salary of $625,000
during the first year of the Initial Period, $675,000 during the second year of
the Initial Period, and $725,000 during the third year of the Initial Period,
subject to increases in the sole and absolute discretion of the compensation
committee.  Mr. Schnitzer’s salary for any Additional Periods will be
subject to negotiation between the parties, but in no event will the salary for
any Additional Period be less than the salary for the final year of the Initial
Period. Mr. Schnitzer will also be eligible for an annual bonus subject to the
compensation committee’s discretion. Mr. Schnitzer subsequently entered into an
amendment to his employment agreement whereby he voluntarily reduced his base
salary for the period of 2008 to $562,500 effective April 21, 2008 as part of an
across-the-board expense reduction effort.  This voluntary salary
reduction provision terminated on December 31, 2008, and Mr. Schnitzer’s base
salary for 2009 returned to $725,000 pursuant to his employment
agreement.
 The
discretionary bonus target will be 200%–400% of Mr. Schnitzer’s base salary,
with any portion below 200% paid out in cash and any portion above 200% paid out
50% in cash and 50% in restricted common shares, which will vest ratably over
three years in three equal cumulative installments of one-third on each of the
three anniversaries of the grant date.  In addition, his employment
agreement provides that Mr. Schnitzer is entitled to receive, among other
benefits, an automobile allowance of $25,000 per year, a term life insurance
policy in the amount of not less than $3,000,000 (of which Mr. Schnitzer or his
designee will be the owner) and supplemental, long-term disability insurance
which will provide Mr. Schnitzer with full disability benefits to age 65 of
$15,000 per month after an exclusion period of 90 days.  In addition,
Mr. Schnitzer will receive directors’ and officers’ insurance coverage for six
years after the termination of his employment and reimbursement for tax
preparation expenses.
  Pursuant
to the employment agreement, Mr. Schnitzer was granted on February 1, 2007 an
award of approximately $3,000,000 worth of restricted common shares, which will
vest over three years in three equal cumulative installments of one-third on
each of the first three anniversaries of the grant date. In the case of a
“Change of Control”, termination without “Cause” or if Mr. Schnitzer leaves for
“Good Reason”, as defined in the employment agreement, any unvested restricted
common shares awarded or other unvested equity or options will become fully
vested.  If Mr. Schnitzer is terminated without “Cause” or he leaves
for “Good Reason”, he will be entitled to a year’s base salary plus 100% of the
amount of his most recently declared and paid bonus and continuous coverage
under his medical, dental and life insurance plans for twelve months. If Mr.
Schnitzer is terminated within six months prior to, or within one year after, a
“Change of Control”, he will be entitled to two year’s base salary plus 200% of
the amount of his most recently declared and paid bonus and continuous coverage
under medical, dental and life insurance plans for twenty-four months. Upon
death or “Disability”, as defined in his agreement, Mr. Schnitzer will be
entitled to receive the same severance as if he were terminated without “Cause”.
A delivery of a mutual release by Mr. Schnitzer and CAHA is a condition for
payment of severance if he is terminated without “Cause” or pursuant to a
“Change of Control”. If Mr. Schnitzer is terminated for “Cause” or resigns
without “Good Reason”, he will not receive severance payments, and his unvested
securities will be forfeited.
  The
employment agreement also contains provisions for the protection of the Company
and its affiliates relating to non-competition, protection of confidential
information and non-solicitation of employees. These provisions will extend for
up to twelve months following termination of his employment in certain
circumstances.
  If any
amount or benefit paid with respect to Mr. Schnitzer as a result of any change
in ownership of the Company covered by Internal Revenue Code Section 280G(b)(2)
(collectively, the “Covered Payments”) is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code and any comparable excise tax imposed
under state, local or foreign law, and/or any interest or penalties with respect
to any such excise tax (such excise tax is hereinafter referred to as the
“Excise Tax”), the Company will pay to Mr. Schnitzer an additional payment (the
“Tax Reimbursement Payment”) in an amount such that after payment by Mr.
Schnitzer of all taxes (including, without limitation, income taxes and any
Excise Tax) imposed upon the Tax Reimbursement Payment, Mr. Schnitzer retains an
amount of the Tax Reimbursement Payment equal to the Excise Tax imposed upon the
Covered Payments.
  Upon
request of the Company, Mr. Schnitzer has acquired and hereafter will acquire
and hold interests in various entities on terms reasonably acceptable to the
Company and Mr. Schnitzer. Prior to transferring any such interest, Mr.
Schnitzer will afford the Company the right to acquire such interests, and the
Company will, within 30 days of written notice from Mr. Schnitzer, inform Mr.
Schnitzer whether the Company or its designee will acquire such interests (in
which case such interests will be acquired within 30 days thereafter). The
amount payable by the Company or its designee for any such interest will be the
fair market value as determined in accordance with the employment agreement. The
employment agreement provides that Mr. Schnitzer will be entitled to a tax
gross-up payment from the Company to cover any tax liability he may incur as a
result of the acquisition, ownership or disposition of such
interests.
     - 27
-
 Robert
L. Levy
  During
November 2006, Mr. Levy entered into an employment agreement with a subsidiary
of the Company pursuant to which Mr. Levy serves as our Chief Financial Officer,
for a term of five years, and was to receive a base salary of
$325,000.  At the end of five years, the term will automatically
extend annually for one year unless the Company delivers a notice of termination
at least sixty days prior to the end of the employment period.
  Mr. Levy
subsequently entered into an amendment to his employment agreement whereby he
voluntarily reduced his base salary for the period of 2008 to $315,000 effective
April 21, 2008 as part of an across-the-board expense reduction
effort.  This voluntary salary reduction provision terminated on
December 31, 2008, and, in March 2009 Mr. Levy and the Company entered into a
further amendment to his employment agreement increasing his base salary from
$325,000 to $400,000 effective January 1, 2009, based upon a review of the
compensation of other comparable chief financial officers.  Mr. Levy
will also be eligible for an annual bonus subject to the Chief Executive
Officer’s discretion.  The discretionary bonus target will be 300% of
his base salary, with any portion below 200% paid out in cash and any portion
above 200% paid out 50% in cash and 50% in restricted common shares, which will
vest over three years in three equal cumulative installments of one-third on
each of the three anniversaries of the grant date. In addition, Mr. Levy’s
employment agreement provides that he is entitled to receive, among other
benefits, an automobile allowance of $1,500 per month, a term life insurance
policy in the amount of not less than $500,000, directors’ and officers’
insurance coverage for six years after the termination of his employment and
reimbursement for tax preparation expenses.  On July 25, 2007, Mr.
Levy’s employment agreement was amended to add supplemental, long-term
disability insurance coverage which will provide him with full disability
benefits to age 65 of $15,000 per month after an exclusion period of 90
days.
  Pursuant
to his employment agreement, Mr. Levy was granted on November 28, 2006 an award
of approximately $1,250,000 worth of restricted common shares, which will vest
over five years in five equal cumulative installments of 20% on each of the five
anniversaries of the grant date. In the case of a “Change of Control”,
termination without “Cause” or if Mr. Levy leaves for “Good Reason”, as defined
in his employment agreement, any unvested options and common shares will become
fully vested. Furthermore, if Mr. Levy is terminated without “Cause” or he
leaves for “Good Reason”, Mr. Levy will be entitled to a year’s base salary plus
100% of the amount of his most recently declared and paid bonus and continuous
coverage under his medical, dental and life insurance plans for twelve months.
If Mr. Levy is terminated in anticipation of, or within one year after, a
“Change of Control”, Mr. Levy will be entitled to two years’ base salary plus
150% of the amount of his most recently declared and paid bonus and continuous
coverage under medical, dental and life insurance plans for twenty-four months.
Upon death or “Disability,” as defined in his employment agreement, Mr. Levy
will be entitled to receive the same severance as if he were terminated without
“Cause”. A delivery of a mutual release by Mr. Levy and the Company is a
condition for payment of severance if he is terminated without “Cause” or
pursuant to a “Change of Control”. If Mr. Levy is terminated for “Cause” or
resigns without “Good Reason”, he will not receive severance payments and his
unvested securities will be forfeited.
  Mr.
Levy’s employment agreement also contains provisions for the protection of the
Company and its affiliates relating to non-competition, protection of
confidential information and non-solicitation of employees. These provisions
will extend for up to one year following termination of this employment in
certain circumstances.
  Donald
J. Meyer
  Effective
January 1, 2007, Mr. Meyer, our former Chief Investment Officer, entered into an
employment agreement with a subsidiary of the Company pursuant to which Mr.
Meyer was to receive an annual base salary of $400,000 for 2008.  Mr.
Meyer subsequently entered into an amendment to his employment agreement whereby
he voluntarily reduced his base salary for the period of 2008 to $360,000
effective April 21, 2008 as part of an across-the-board expense reduction
effort.  This voluntary salary reduction provision terminated on
December 31, 2008, but Mr. Meyer subsequently entered into further amendments to
his employment agreement (a) reducing his base salary to $325,000 effective
January 1, 2009 and (b) relinquishing his Chief Investment Officer
title.  Mr. Meyer retained the title of Executive Managing
Director.
  In
addition, Mr. Meyer will be eligible to participate in long-term deferred
compensation programs established by the Company and may be offered an
opportunity to co-invest with the Company or its subsidiaries in funds sponsored
by the Company.  In addition, Mr. Meyer’s employment agreement
provides that he is entitled to receive supplemental, long-term disability
insurance in the amount of $15,000 per month and reimbursement of expenses
incurred by him in connection with the performance of his duties.
  If Mr.
Meyer is terminated without “Cause” or he leaves for “Good Reason”, he will be
entitled to a year’s base salary plus 100% of the amount of his most recently
declared and paid bonus and continuous coverage under his medical, dental and
life insurance plans for twelve months. If Mr. Meyer is terminated in
anticipation of, or within one year after, a “Change of Control”, Mr. Meyer will
be entitled to two years’ base salary plus 150% of the amount of his most
recently declared and paid bonus and continuous coverage under medical, dental
and life insurance plans for twenty-four months. Upon death or “Disability,” as
defined in his employment agreement, Mr. Meyer will be entitled to receive the
same severance as if he were terminated without “Cause”. A delivery of a mutual
release by Mr. Meyer and the Company is a condition for payment of severance if
he is terminated without “Cause” or pursuant to a “Change of Control”. If Mr.
Meyer is terminated for “Cause” or resigns without “Good Reason”, he will not
receive severance payments and his unvested securities will be
forfeited.  In the case of a termination due to death or “Disability”
or without “Cause” or if Mr. Meyer leaves for “Good Reason”, as defined in his
employment agreement, any unvested options, common shares and promote shares
under a co-investment will become fully vested.
     - 28
-
  Mr.
Meyer’s employment agreement contains provisions relating to non-competition,
protection of the Company’s confidential information and intellectual property,
and non solicitation of employees, which provisions extend for up to one year
following termination in certain circumstances.
  Paul
G. Smyth
  Effective
January 1, 2007, Mr. Smyth, an Executive Managing Director and the Group Head of
the Portfolio Management Group, entered into an employment agreement with a
subsidiary of the Company pursuant to which Mr. Smyth was to receive an annual
base salary of $300,000 for 2008.  Mr. Smyth subsequently entered into
an amendment to his employment agreement whereby he voluntarily reduced his base
salary for the period of 2008 to $279,000 effective April 21, 2008 as part of an
across-the-board expense reduction effort.  This voluntary salary
reduction provision terminated on December 31, 2008, but Mr. Smyth subsequently
entered into a further amendment to his employment agreement increasing his base
salary to $350,000 effective March 9, 2009 based on his promotion as Executive
Managing Director and his increased responsibilities.
  In
addition, Mr. Smyth will be eligible to participate in long-term deferred
compensation programs established by the Company and may be offered an
opportunity to co-invest with the Company or its subsidiaries in funds sponsored
by the Company.  In addition, Mr. Smyth’s employment agreement
provides that he is entitled to receive supplemental, long-term disability
insurance in the amount of $15,000 per month and reimbursement of expenses
incurred by him in connection with the performance of his duties.
  If Mr.
Smyth is terminated without “Cause” or he leaves for “Good Reason”, he will be
entitled to a year’s base salary plus 100% of the amount of his most recently
declared and paid bonus and continuous coverage under his medical, dental and
life insurance plans for twelve months. If Mr. Smyth is terminated in
anticipation of, or within one year after, a “Change of Control”, Mr. Smyth will
be entitled to two years’ base salary plus 150% of the amount of his most
recently declared and paid bonus and continuous coverage under medical, dental
and life insurance plans for twenty-four months. Upon death or “Disability,” as
defined in his employment agreement, Mr. Smyth will be entitled to receive the
same severance as if he were terminated without “Cause”. A delivery of a mutual
release by Mr. Smyth and the Company is a condition for payment of severance if
he is terminated without “Cause” or pursuant to a “Change of Control”. If Mr.
Smyth is terminated for “Cause” or resigns without “Good Reason”, he will not
receive severance payments and his unvested securities will be
forfeited.  In the case of a termination due to death or “Disability”
or without “Cause” or if Mr. Smyth leaves for “Good Reason”, as defined in his
employment agreement, any unvested options, common shares and promote shares
under a co-investment will become fully vested.
  Mr.
Smyth’s employment agreement contains provisions relating to non-competition,
protection of the Company’s confidential information and intellectual property,
and non solicitation of employees, which provisions extend for up to one year
following termination in certain circumstances.
  Andrew
J. Weil
  Effective
January 1, 2007, Mr. Weil, an Executive Managing Director and the Group Head of
the Affordable Housing Group, entered into an employment agreement with a
subsidiary of the Company pursuant to which Mr. Weil was to receive an annual
base salary of $400,000 for 2008.  Mr. Weil subsequently entered into
an amendment to his employment agreement whereby he voluntarily reduced his base
salary for the period of 2008 to $360,000 effective April 21, 2008 as part of an
across-the-board expense reduction effort.  This
voluntary  salary reduction provision terminated on December 31, 2008,
returning Mr. Weil’s base salary to $400,000 effective January 1,
2009.
  In
addition, Mr. Weil will be eligible to participate in long-term deferred
compensation programs established by the Company and may be offered an
opportunity to co-invest with the Company or its subsidiaries in funds sponsored
by the Company.  In addition, Mr. Weil employment agreement provides
that he is entitled to receive supplemental long-term disability insurance in
the amount of $15,000 per month, and reimbursement of expenses incurred by him
in connection with the performance of his duties.
  If Mr.
Weil is terminated without “Cause” or he leaves for “Good Reason”, he will be
entitled to a year’s base salary plus 100% of the amount of his most recently
declared and paid bonus and continuous coverage under his medical, dental and
life insurance plans for twelve months. If Mr. Weil is terminated in
anticipation of, or within one year after, a “Change of Control”, Mr. Weil will
be entitled to two years’ base salary plus 150% of the amount of his most
recently declared and paid bonus and continuous coverage under medical, dental
and life insurance plans for twenty-four months. Upon death or “Disability,” as
defined in his employment agreement, Mr. Weil will be entitled to receive the
same severance as if he were terminated without “Cause”. A delivery of a mutual
release by Mr. Weil and the Company is a condition for payment of severance if
he is terminated without “Cause” or pursuant to a “Change of Control”. If Mr.
Weil is terminated for “Cause” or resigns without “Good Reason”, he will not
receive severance payments and his unvested securities will be
forfeited.  In the case of a termination due to death or “Disability”
or without “Cause” or if Mr. Weil leaves for “Good Reason”, as defined in his
employment agreement, any unvested options, common shares and promote shares
under a co-investment will become fully vested.
     - 29
-
  Mr.
Weil’s employment agreement contains provisions relating to non-competition,
protection of the Company’s confidential information and intellectual property,
and non solicitation of employees, which provisions extend for up to one year
following termination in certain circumstances.
 
 TRUSTEE COMPENSATION
  The
Company uses a combination of cash and share-based incentive compensation to
attract and retain qualified candidates to serve on the Board. In setting
trustee compensation, the Company considers the significant amount of time that
trustees expend in fulfilling their duties to the Company as well as the skill
level required by the Company of members of the Board.
  Compensation
Paid to Board Members
  During
2008, each of our independent trustees received annual compensation at the rate
of $80,000. Mr. Loverd was paid an additional annual fee of $40,000 in
consideration for his service as Lead Trustee of the Board. In addition, the
independent trustees received annual compensation for service on committees of
the Board as set forth in the chart below.
  Committee
                
                Chair
                
                MemberAudit
                
                $
                25,000
                
                $
                15,000Compensation
                
                $
                20,000
                
                $
                12,000Nominating
      and Governance
                
                $
                15,000
                
                $
                10,000Investment
                
                $
                10,000
                
                $
                7,000Capital
      Markets
                
                $
                10,000
                
                $
                7,000
 
  Trustee
compensation is currently payable in cash and common shares having an aggregate
value, based on the fair market value at the date of issuance, of not less than
20% of such compensation.  Trustees have the option of receiving up to
100% of their compensation payable in common shares provided that a trustee must
elect to receive any Common Share compensation above the 20% minimum in 5%
increments.
  Trustee
Summary Compensation Table
  The table
below summarizes the compensation paid by the Company to trustees for the fiscal
year ended December 31, 2008.
  (a)
            
            (b)
            
            (c)
            
            (d)
            
            (e)
            
            (f)
            
            (g)
            
            (h)Name
      (1)
            
            Fees
      Earned or Paid in Cash ($)
            
            Shares
      Awards ($)(2)
            
            Option
      Awards ($)
            
            Non-Equity
      Incentive Plan Compensation ($)
            
            Change
      in Pension Value and Deferred Compensation Earnings ($)
            
            All
      Other Compensation ($)
            
            Total
      ($)Robert
      J. Dolan
            
            $
            61,525
            (3)
            $
            45,475
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            107,000Nathan
      Gantcher (4)
            
            $
            45,000
            
            $
            45,000
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            90,000Jerome
      Y. Halperin
            
            $
            64,400
            
            $
            47,600
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            112,000Robert
      L. Loverd
            
            $
            85,962
            (5)
            $
            63,538
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            149,500Robert
      A. Meister
            
            $
            58,650
            
            $
            43,350
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            102,000Janice
      Cook Roberts(6)
            
            $
            25,500
            (6)
            $
            25,500
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            51,000Thomas
      W. White (7)
            
            $
            31,525
            
            $
            16,975
            
            $
            --
            
            $
            --
            
            $
            --
            
            $
            54,167
            
            $
            102,667
 
  (1)
              Mr.
      Ross, the Company’s Chairman of the Board, Mr. Schnitzer and Mr. Blau are
      not included in this table as they are or were non-independent trustees
      and thus receive no compensation for their services as trustees. The
      compensation received by Mr. Schnitzer as an employee of the Company is
      shown in the Summary Compensation Table
above.
 (2)
              Reflects
      the dollar amount recognized for financial statement reporting purposes
      for the fiscal year ended December 31, 2008 in accordance with FAS 123(R).
      These share units for each trustee are included in the Security Ownership
      Table below.
 (3)
              Mr.
      Dolan elected to receive $8,025 of the cash portion of fees due to him as
      additional share awards with the same
value.
     - 30
-
 (4)
              Mr.
      Gantcher resigned from the Board on October 31,
  2008.
 (5)
              Mr.
      Loverd elected to receive $13,637 of the cash portion of fees due to him
      as additional share awards with the same
value.
 (6)
              Ms.
      Roberts resigned from the Board on June 12, 2008. She also elected to
      receive $25,500 of the cash portion of fees due to her as additional share
      awards with the same value.
 (7)
              Mr.
      White earned consulting fees pursuant to an agreement dated January 1,
      2003, as amended.  After the agreement was terminated in 2008 he
      receives fees in his capacity as a
trustee.
 
 - 31
-
 
 
 Item
12.  Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.
  [T
 Securities
authorized for issuance under equity compensation plans
  The
following table provides information related to our incentive share plans as of
December 31, 2008:
  (a)
                
                (b)
                
                (c)Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
                
                Weighted-average
                  exercise
      price of outstanding options, warrants and rights
                
                Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column a)(1)Equity
      compensation plans approved by security holders
                
                2,386,888
                
                $
                20.51
                
                4,608,632Equity
      compensation plans not approved by security holders
                
                --
                
                
                --
                
                --Totals
                
                2,386,888
                
                $
                20.51
                
                4,608,632(1)Our 2007 Incentive Share Plan authorizes us to issue options or
      other share-based compensation equal to 10% of the total shares
      outstanding (as defined in the plan) as of December 31 of the year
      preceding the issuance of new grants or
options.
 
 Securities
ownership of certain beneficial owners and management and related
shareholders
  In each
of the next two tables, the amounts and percentages of shares beneficially owned
are reported on the basis of SEC regulations governing the determination of
beneficial ownership of securities. Under SEC rules, a person is deemed to be a
“beneficial owner” of a security if that person has or shares voting power or
investment power, which includes the power to dispose of or to direct the
disposition of such security. A person is also deemed to be a beneficial owner
of any securities with respect to which that person has a right to acquire
beneficial ownership within 60 days. Securities that can be so acquired are
deemed to be outstanding for purposes of computing such person’s ownership
percentage but not for purposes of computing any other person’s percentage.
Under these rules, more than one person may be deemed to be a beneficial owner
of the same securities, and a person may be deemed to be a beneficial owner of
securities as to which such person has no economic interest.  Except
as otherwise indicated in the footnotes to the tables, each of the beneficial
owners listed has, to our knowledge, sole voting and investment power with
respect to the indicated shares.
  The
amounts and percentages reported in the “Number of Voting Shares” and the
“Voting Ownership Percentage” columns in each of the following two tables
represent common shares and the Special Preferred Voting Shares beneficially
owned by each person.  The Special Preferred Voting Shares are
entitled to vote, on a one-for-one basis, on all matters subject to a vote of
the holders of our common shares, but the Special Preferred Voting Shares are
not convertible into our common shares.  Each owner of Special
Preferred Voting Shares also owns a like number of Special Common Units (“SCUs”)
issued by Centerline Capital Company LLC, one of our affiliates. Each holder of
SCUs has the right to exchange all or a portion of their SCUs for cash and to
receive cash for any accrued but unpaid distributions for the quarterly period
in which the exchange occurs.  We may exchange SCUs for common shares
on a one-for-one basis.  However, a holder of SCUs is not deemed to
beneficially own any common shares relating to their SCUs because SCUs may be
exchanged for common shares only at our discretion.  Likewise, the
numbers in the table below do not reflect 267,755 Special Common Interests
(“SCIs”) outstanding as of April 1, 2009.  SCIs, like the SCUs, may be
exchanged by the holder for cash, but may only be exchanged for common shares at
our discretion. Unlike SCUs, SCIs are not associated with a voting
security.
  For the
purposes of the following two tables, except as noted otherwise in the footnotes
to the tables, the terms below are defined as follows:
  ·
            “Total
      Common Shares” consist of 62,260,829 shares outstanding as of April
      1, 2009, including (i) 53,368,106 common shares and (ii) 8,922,723
      restricted common shares but exclude the following CRA Preferred Shares,
      some of which are convertible into common
  shares:
 
 a.
            998,336
      outstanding Convertible CRA Shares, which are convertible into 933,567
      common shares;
     - 32
-
  b.
            5,473,391
      outstanding Series A CRA Shares, of which 5,202,829 are convertible into
      the same number of common shares;
and
   c.
            2,160,000
      outstanding 4.4% Convertible CRA Shares, of which 1,060,000 are
      convertible into 1,916,124 common
shares
   ·
            “11%
      Preferred Shares”consist of the
      11,213,963 shares of our 11.0% Cumulative Convertible Preferred Shares,
      Series A-1, outstanding as of April 1, 2009, which are convertible into
      12,205,277 common shares
 
 ·
            “Special
      Preferred Voting Shares”consist of
      13,131,465 shares of our Special Preferred Voting Shares outstanding as of
      April 1, 2009
 
 The
following table provides information as of April 1, 2009 with respect to the
persons who beneficially own more than 5% of our outstanding common shares or
more than 5% of the aggregate of our common shares and our Special Preferred
Voting Shares.
  Name
      and Address
            
            Amount
      and
              Nature
      of
              Beneficial
      Ownership of Common Shares
            
            Percent
      of
              Common
      Shares Beneficially Owned
            
            Amount
      and
              Nature
      of
              Beneficial
      Ownership of Special Preferred Voting Shares
            
            Number
      of Voting Shares
            
            Voting
      Ownership Percentage(1)Related
      General II, L.P.(2)
              60
      Columbus Circle
              New
      York, NY 10023
            
            685
            
            *
            (3)
            10,194,400
            
            10,195,085
            
            11.6
            %Related
      Special Assets LLC(4)
              60
      Columbus Circle
              New
      York, NY 10023
            
            11,802,057
            
            15.9
            %(5)
            —
            
            11,802,057
            
            13.5
            %Weiss
      Multi-Strategy Advisers LLC
              One
      State Street
              Hartford,
      CT 06103
            
            4,069,689
            
            6.5
            %(3)
            —
            
            4,069,689
            
            4.6
            %
 
 _________________
  *
            Less
      than 1% of the outstanding common shares.(1)Based
      on Total common shares plus (i) Special Preferred Voting Shares and (ii)
      11% Preferred Shares.
              (2)Related
      General II, L.P. is owned by TRCLP. Mr. Ross owns approximately 62% of
      TRCLP and Mr. Blau owns approximately 18% of TRCLP.
              (3)Based
      on Total Common Shares; excludes 11% Preferred Shares.
              (4)Related
      Special Assets, LLC owns 10,843,492 of the 11% Preferred Shares, which are
      convertible into 11,802,057 common shares.  Mr. Ross shares
      voting and dispositive power with respect to such shares with Mr. Blau and
      Bruce A. Beal, as the terms of Related Special Assets’ operating agreement
      require that its investment and voting decisions must be unanimously
      approved by a committee of three persons, currently consisting of Messrs.
      Ross, Blau and Beal.
              (5)Based
      on Total Common Shares plus the 11% Preferred Shares held by Related
      Special Assets, LLC (see footnote 4
above).
 
    
 - 33
-
 
 
 The
following table provides information as of April 1, 2009 with respect to the
beneficial ownership of our common shares and Special Preferred Voting Shares by
our trustees, our named executive officers and our executive officers and
trustees as a group.
  Name
      and Title
            
            Amount
      and
              Nature
      of
              Beneficial
      Ownership of Common Shares
            
            Percent
      of
              Common
      Shares Beneficially Owned
            
            Amount
      and
              Nature
      of
              Beneficial
      Ownership of Special Preferred Voting Shares
            
            Number
      of Voting Shares
            
            Voting
      Ownership PercentageStephen
      M. Ross
              Chairman
            
            13,480,387
            (1)
            18.0
            %
            10,194,400
            
            23,674,787
            
            26.8
            %Marc
      D. Schnitzer
              Managing
      Trustee, Chief Executive Officer and President
            
            741,463
            (2)
            1.2
            %
            864,229
            
            1,605,692
            
            2.1
            %Robert
      L. Levy
              Chief
      Financial Officer
            
            391,369
            (3)
            *
            
            --
            
            391,369
            
            *Jeff
      T. Blau
              Managing
      Trustee
            
            12,062,742
            (4)
            19.4
            %
            10,234,400
            
            22,297,142
            
            29.6
            %Robert
      J. Dolan
              Managing
      Trustee (independent trustee)
            
            44,919
            
            *
            
            --
            
            44,919
            
            *Jerome
      Y. Halperin
              Managing
      Trustee (independent trustee)
            
            52,616
            
            *
            
            --
            
            52,616
            
            *Robert
      L. Loverd
              Managing
      Trustee (independent trustee)
            
            75,587
            
            *
            
            --
            
            75,587
            
            *Robert
      A. Meister
              Managing
      Trustee (independent trustee)
            
            81,535
            (5)
            *
            
            --
            
            81,535
            
            *Thomas
      W. White
              Managing
      Trustee (independent trustee)
            
            21,372
            
            *
            
            --
            
            21,372
            
            *Donald.
      J. Meyer
              Executive
      Managing Director
            
            330,509
            (6)
            *
            
            --
            
            330,509
            
            *Paul
      G. Smyth
              Executive
      Managing Director
            
            405,467
            (7)
            *
            
            --
            
            405,467
            
            *Andrew
      J. Weil
              Executive
      Managing Director
            
            437,546
            (8)
            *
            
            73,136
            
            510,682
            
            *All
      Executive Officers and
              Trustees
      of the Company as
              a
      group (12 persons)
            
            16,322,770
            (9)
            21.6
            %(10)
            11,171,765
            
            27,494,535
            
            30.9
            %(11)
  
 *
              Less
      than 1% of the outstanding common shares.(1)
              Includes
      (i) 877,645 common shares owned directly by Mr. Ross; (ii) 685 common
      shares owned by Related General II, L.P. (see footnote (2) to preceding
      table); (iii) 10,843,492 11% Preferred Shares (which are convertible into
      11,802,057 common shares) owned by Related Special Assets, LLC (see
      footnote (4) to preceding table) and (iv) 800,000 options exercisable for
      common shares on a one-for-one basis (which are exercisable within 60 days
      of April 1, 2009).  This total does not include 10,194,400 SCUs
      (which SCUs are pledged as security for a line of credit) owned by Related
      General II, L.P.
     
 - 34
-
  
 (2)
            Includes
      (i) 155,876 common shares owned directly by Mr. Schnitzer; (ii) 47,348
      restricted common shares which vest on February 1, 2010; (iii) 13,116
      restricted common shares which vest on March 1, 2010; (iv) 45,147
      restricted common shares, of which 22,573 vest on March 10, 2010 and
      22,574 vest on March 10, 2011 and (v) 479,976 restricted common shares, of
      which 239,988 vest on January 1, 2010 and 239,988 vest on January 1, 2011.
      This total does not include 864,229 SCUs owned by Marc Associates, LP, of
      which Mr. Schnitzer owns 100%.(3)
            Includes
      (i) 58,408 common shares owned directly by Mr. Levy; (ii) 35,714
      restricted common shares, of which 11,904 vest on November 28, 2009,
      11,905 vest on November 28, 2010, and 11,905 vest on November 28, 2011;
      (iii) 4,372 restricted common shares which vest on March 1, 2010; (iv)
      25,583 restricted common shares, of which 12,791 vest on March 10, 2010
      and 12,792 vest on March 10, 2011 and (v) 267,292 restricted common
      shares, of which 133,646 vest on January 1, 2010 and 133,646 vest on
      January 1, 2011.(4)
            Includes
      (i) 260,000 common shares owned directly by Mr. Blau; (ii) 685 common
      shares owned by Related General II, L.P. (see footnote (2) to preceding
      table) and (iii) 10,843,492 11%  Preferred Shares (which are
      convertible into 11,802,057 common shares) owned by Related Special
      Assets, LLC (see footnote (4) to preceding table).  This total
      does not include 40,000 SCUs owned directly by Mr. Blau and 10,194,400
      SCUs (which SCUs are pledged as security for a line of credit) owned by
      Related General II, L.P.(5)
            Includes
      (i) 70,755 common shares owned directly by Mr. Meister; (ii) 1,734
      restricted common shares, which vest on June 30, 2009; (iii) 1,514
      restricted common shares, which vest on January 3, 2010; (iv) 2,642
      restricted common shares, which vest on June 15, 2010 and (v) 4,890
      restricted common shares, which vest on December 18, 2010.(6)
            Includes
      (i) 49,640 common shares owned directly by Mr. Meyer; (ii) 20,265
      restricted common shares, which vest on March 1, 2010; (iii) 16,554
      restricted common shares, of which 8,277 vest on March 10, 2010, and 8,277
      vest on March 10, 2011 and (iv) 244,050 restricted common shares, of which
      122,025 vest on January 1, 2010, and 122,025 vest on January 1,
      2011.(7)
            Includes
      (i) 41,641 common shares owned directly by Mr. Smyth; (ii) 88,173
      restricted common shares, of which 44,086 vest on August 15, 2009 and
      44,087 vest on August 15, 2010; (iii) 31,603 restricted common shares, of
      which 15,801 vest on March 10, 2010, and 15,802 vest on March 10, 2011 and
      (iv) 244,050 restricted common shares, of which 122,025 vest on January 1,
      2010, and 122,025 vest on January 1, 2011.(8)
            Includes
      (i) 28,290 common shares owned directly by Mr. Weil; (ii) 17,680
      restricted common shares, which vest on March 1, 2010; (iii) 30,098
      restricted common shares, of which 15,049 vest on March 10, 2010, and
      15,049 vest on March 10, 2011 and (iv) 361,478 restricted common shares,
      of which 180,739 vest on January 1, 2010, and 180,739 vest on January 1,
      2011. This total does not include 73,136 SCUs owned directly by Mr.
      Weil.(9)
            Includes
      (i) 685 common shares owned by Related General II, L.P.; (ii) 800,000
      options exercisable for common shares on a one-for-one basis (which are
      exercisable within 60 days of April 1, 2009); (iii) 10,843,492 11%
      Preferred Shares owned by Related Special Assets, LLC that are convertible
      into 11,802,057 common shares and (iv) 1,983,279 restricted common
      shares.(10)
            Based
      on the Total Common Shares plus (i) 1,397,995 common shares issuable upon
      the exercise of all options to purchase common shares that are exercisable
      within 60 days of April 1, 2009 and (ii) 10,843,492 11% Preferred Shares
      held by Related Special Assets, LLC that are convertible into 11,802,057
      common shares.(11)
            Based
      on Total Common Shares plus (i) 1,397,995 common shares issuable upon the
      exercise of all options to purchase common shares which are exercisable
      within 60 days of April 1, 2009; (ii) 13,131,465 Special Preferred Voting
      Shares and (iii) 11,213,963 11% Preferred Shares outstanding that are
      convertible into 12,205,277 common shares.
 
    
 - 35
-
 
  
 Item
13.  Certain Relationships and Related Transactions, and Director
Independence.
  Review and Approval of Related Person
Transactions
  The
nominating and governance committee of our board of trustees (and from time to
time subcommittees created by the independent trustees) reviews, monitors and
approves any transactions by us in which a trustee or officer of us, CAHA, or
any of CAHA’s affiliates has a direct or indirect personal interest, oversees
compliance with the Future Relations Agreement between us and TRCLP, which,
together with its affiliates, is our only shareholder owning more than 5% of our
outstanding voting shares, and reviews disputes that may arise from any of the
agreements related to our acquisition of our manager.  The charter of
our nominating and governance committee contains the written policy requiring
the committee’s review of the related person transactions.  Our legal
staff is primarily responsible for the development and implementation of
processes and controls to obtain information from the trustees and executive
officers with respect to related person transactions and for then determining,
based on the facts and circumstances, whether we or a related person has a
direct or indirect material interest in the transaction.
  During
the year ended December 31, 2008 we had certain relationships with our manager
and our other affiliates as detailed below, and we expect we will continue to
have such or similar relationships in the future.
  Management
and Servicing Agreements
  We and
our subsidiaries operate our day-to-day activities utilizing the services and
advice provided by our subsidiaries, CAHA and CCG, subject to the supervision
and review of our board of trustees and our subsidiaries’ board of trustees, or
directors, as applicable. Although our board of trustees and each board of
trustees, or directors, of our subsidiaries has continuing exclusive authority
over the respective entity’s management, affairs and disposition of assets, our
board of trustees, and the board of trustees or directors of our subsidiaries,
as applicable, has delegated to CAHA and CCG the power and duty to perform some
or all of the following management services pursuant to management agreements
and servicing agreements:
  (i)
                manage
      the day-to-day operations of us and our
  subsidiaries;
  (ii)
                acquire,
      retain or sell our and our subsidiaries’
assets;
  (iii)
              seek
      out, present and recommend investment opportunities consistent with our
      and our subsidiaries’ investments or the dispositions
    thereof;
  (iv)
                when
      appropriate, cause an affiliate to serve as the mortgagee of record for
      mortgage investments of us and our subsidiaries and in that capacity hold
      escrow on behalf of mortgagors in connection with the servicing of
      mortgages;
  (v)
                obtain
      for us and our subsidiaries such services as may be required in acquiring
      and disposing of investments, disbursing and collecting the funds of such
      entity, paying the debts and fulfilling the obligations of such entity and
      handling, prosecuting and settling any claims of such entity, including
      foreclosing and otherwise enforcing mortgages and other liens securing
      investments;
  (vi)
                obtain
      for us and our subsidiaries such services as may be required for property
      management, mortgage brokerage and servicing and other activities relating
      to our investment
portfolio;
  (vii)
              evaluate,
      structure and negotiate prepayments or sales of our and our subsidiaries’
      investments;
  (viii)
              monitor
      operations and expenses; and
  (ix)
                perform
      the foregoing services.
  The term
of our management agreement with CAHA ended on November 17, 2008 (although we
have not terminated the agreement). The term of each of our subsidiaries’
management and servicing agreements with CAHA and CCG, respectively, ended on
November 17, 2008 (although we have not terminated the agreements), provided,
however, that if our management agreement with CAHA is terminated or not
renewed, we may terminate each of the management agreements with such
subsidiaries. We are continuing to operate under the terms of the management
agreements. The management agreements and servicing agreements may be renewed,
subject to evaluation and approval by the relevant entity’s board of trustees or
directors, as applicable. Each management agreement may be
terminated:
  (i)
            with
      or without cause by CAHA, or
  (ii)
            for
      cause by a majority of the applicable entity’s independent trustees, in
      each case without penalty and each upon 60 days’ prior written notice to
      the non-terminating party.
  Each
servicing agreement may be terminated:
     - 36
-
 (i)
            with
      or without cause by either party upon 30 days’ prior written notice to the
      non-terminating party, or
  (ii)
            upon
      the occurrence of a servicer default upon five days’ prior written notice
      to CCG.
  Each
management and servicing agreement provides that each entity will indemnify the
manager and its affiliates under certain circumstances.
  Management
and Servicing Fees
  Under our
management agreement with CAHA, or its designees, is entitled to receive
reimbursement of all costs incurred by CAHA and its designees in performing
services for us under the management agreement plus an amount equal to a
market-based percentage, as jointly determined from time to time by us and
CAHA.
  Under the
management agreements with our subsidiaries, CAHA is entitled to receive a
management fee equal to 0.10% of the aggregate original amount invested from
time to time in investments plus reimbursement for its reasonable, actual
out-of-pocket expenses incurred in connection with its duties under the
management agreements; provided, however, that the amounts paid under the
management agreements will be credited against the amounts owed by us to CAHA
pursuant to our management agreement with CAHA. Under our and our subsidiaries’
servicing agreements with CCG, CCG is entitled to receive a revenue bond
servicing fee equal to 0.15% per annum of the outstanding principal amount of
revenue bonds held by such subsidiary. CCG is also permitted to earn
miscellaneous compensation which may include, without limitation, construction
fees, escrow interest, property management fees, leasing commissions and
insurance brokerage fees. The payment of any such compensation is generally
limited to the competitive rate for the services being performed.
  Other
Affiliated Transactions
  Private
Offering of 11% Preferred Shares to Related
  On
December 19, 2007, the board of trustees (other than Messrs. Ross and Blau),
including all members of the nominating and governance committee approved the
entry into an equity commitment letter with TRCLP. Subsequently, in light of
shareholder concerns conveyed in our December 28, 2007 investor conference call,
we commenced work on a rights offering with respect to the preferred convertible
shares and, to this end, on January 17, 2008 our board of trustees, other than
Messrs. Ross and Blau, approved the rights offering and established a rights
offering committee composed of certain independent members of our board of
trustees to review and approve the final terms of the rights offering and the
final documents governing the private offering to TRCLP, including the
securities purchase agreement and registration rights agreement discussed below.
The final terms of the rights offering and the final documents governing the
private offering to TRCLP were approved by the rights offering committee on
January 25, 2008.
 On
January 25, 2008, we and Related Special Assets LLC, which we refer to as TRCLP,
entered into a securities purchase agreement for the issuance and sale in a
private offering of $131,234,548 in aggregate principal amount of our 11%
Preferred Shares at a purchase price of $11.70 per share.
 Pursuant
to the securities purchase agreement, we consummated the rights offering to
holders of our eligible securities, in each case other than TRCLP, Messrs. Ross
and Blau and Related General II, L.P. or any of their affiliates.
  In
accordance with the securities purchase agreement and the certificate of
designation for the 11% Preferred Shares, we redeemed from TRCLP, together with
its affiliates and successors in interest, 373,126 11% Preferred Shares (which
is equal to the number of 11% Preferred Shares subscribed for in the rights
offering) at a redemption price of $4,471,074, which is equal to 100% of the
liquidation amount (i.e. $11.70), plus accrued and unpaid distributions to, but
excluding, the redemption date, and TRCLP and its affiliates and successors in
interest retained the balance of the 11% Preferred Shares that we did not
redeem.
  In
addition, the securities purchase agreement provides that, so long as TRCLP,
together with its affiliates and successors in interest, collectively owns at
least 50% of such convertible shares, we agreed, subject to and in accordance
with the provisions of our trust agreement, Delaware law acting through our
board of trustees, consistent with and subject to their duties under Delaware
law and our trust agreement, to take all actions necessary to cause the
nomination by the board of trustees of one representative, designated by TRCLP
for election by the holders of our common shares and any other shares entitled
to vote with our common shares in the election of trustees to the board;
provided, that, such designee qualifies as “independent” and that in addition
the board of trustees has affirmatively determined that such designee had no
material relationship with us or our affiliates or any member of our senior
management or their affiliates. In addition, the holders of a majority of the
outstanding 11% Preferred Shares also have the right, upon certain defaults by
us, together with holders of other securities having similar rights, to appoint
two trustees to our board of trustees for so long as such default is continuing.
Upon the cure of such defaults, the two additional trustees will immediately
cease to be trustees and the size of our board of trustees will be reduced by
two members.
     - 37
-
  We have
agreed to indemnify Related and its affiliates, and their respective directors,
officers, shareholders and other equity holders, partners, members, attorneys,
accountants, agents, advisors, representatives and employees and, as applicable,
their respective heirs, successors and permitted assigns for certain liabilities
incurred by them in connection with breaches of our representations, warranties
and covenants under the securities purchase agreement, as well as with respect
to any losses to which they may become subject, arising out of or in connection
with the transactions contemplated by the securities purchase agreement, or any
proceedings, including, without limitation, any shareholder derivative claim or
any “phantom income” to our shareholders as a result of the provisions of the
securities purchase agreement. In addition, we have agreed to reimburse TRCLP
for its reasonable legal fees and disbursements incurred in connection with the
negotiation and documentation of the purchase of the 11% Preferred Shares
purchased under the securities purchase agreement and have agreed to bear all
transfer, stamp and other similar taxes.
  Registration
Rights
 In
connection with the private offering to TRCLP on January 25, 2008, we and TRCLP
entered into a registration rights agreement. Pursuant to the registration
rights agreement, we agreed, subject to certain exceptions, to file not later
than 90 days after January 25, 2008, a shelf registration statement registering
the 11% Preferred Shares sold to TRCLP and the common shares into which the 11%
Preferred Shares convert under the Securities Act, which we refer to
collectively as the registrable securities. We also agreed to use commercially
reasonable efforts to keep the shelf registration statement continuously
effective under the Securities Act for a period expiring on the date on which
all of the registrable securities covered by the shelf registration statement
have been sold pursuant to the shelf registration statement or the holders of
the registrable securities are eligible to sell such registrable securities
pursuant to Rule 144(k) promulgated under the Securities Act.  The
Company has not filed the shelf registration statement pending resolution of the
outstanding class action and derivative litigation.
  In
addition, if we propose to file certain registration statements under the
Securities Act in connection with an underwritten offering solely by selling
shareholders of common shares for cash, the holders of registrable securities
are entitled to notice of the proposed registration and, subject to certain
exceptions, to include their registrable securities in the registration
statement.
  We are
generally required to pay all of the expenses in connection with the
registration of registrable securities, other than underwriting discounts and
commissions and taxes of any kind.
  Relationships
with AMAC
  We manage
and hold an investment in American Mortgage Acceptance Company (“AMAC”), a
publicly-traded REIT, for which one of our affiliates acts as the outside
advisor, and one of our executives, Mr. Meyer, is a member of AMAC’s board of
trustees. Mr. Meyer also serves as chairman, chief executive officer and chief
investment officer of AMAC and Robert L. Levy, our chief financial officer,
performs the same role for AMAC. In the past, AMAC has engaged in lending
transactions with certain affiliates of Mr. Ross. A subsidiary of ours advises
AMAC, and in consideration for its services collects asset management, incentive
management and expense reimbursement from AMAC pursuant to an advisory
agreement. These fees, which are included in our fee income, totaled
approximately $1.2 million in 2007. Effective March 2007, we entered into a new
advisory agreement whereby the basis of certain of the fees we earn has
changed.
  In
addition, in March 2007, we entered into a share purchase plan under Rule 10b5-1
under the Securities Exchange Act, whereby we may purchase up to 9.8% of the
outstanding common shares of AMAC in open-market purchases based on
pre-determined parameters. Through December 31, 2008, we purchased approximately
600 thousand common shares (for $5.3 million) under this plan, or 6.9% of the
outstanding common shares of beneficial interests. Furthermore, in July 2007, we
purchased approximately 300 thousand shares of 7.25% Series A Cumulative
Convertible Preferred Shares (41.2% of the class) issued by AMAC for $7.0
million in connection with AMAC’s public offering of such shares.
  In April
2007, we increased the capacity of the revolving credit facility to AMAC from
$50.0 million to $80.0 million and extended the term to June 2008 with a
one-year optional extension. This facility, bearing interest at LIBOR plus 3.0%,
is used by AMAC to purchase new investments and for general corporate
purposes.  In the opinion of management, the terms of this facility
are consistent with similar transactions with independent third
parties.  During July 2008, the revolving credit facility was amended
to extend the maturity date to June 2009.  A forbearance agreement was
also entered into whereby the Company agreed to forbear any remedies under the
loan agreement and not call the outstanding balance of the loan provided
interest payments remain current and provided that no lenders of debt on any
other facility demand repayment due to default.  As a result of this
agreement, AMAC has agreed to be charged a default interest rate of LIBOR plus
7.0%.  An additional 4.0% of interest over the contract rate of LIBOR
plus 3.0% is compounded monthly retroactively to January 1, 2008, the initial
event of default, and payable upon demand.
  During
2007, AMAC suspended investment activity due to volatility in credit markets
that led to significant margin calls on its debt facilities and interest rate
swaps.  As a result, it sold certain assets, recorded impairment
charges on others and recorded a substantial net loss.  In addition,
AMAC has recorded unrealized losses on some of its remaining assets and interest
rate derivatives.  In October 2008, AMAC was unable to refinance its
repurchase financing arrangements and sold assets to repay the
debt.  As a result of AMAC’s inability to obtain financing other than
our loan, its board began the process of determining a plan of liquidation. As
we are one of two creditors likely to recover any of AMAC’s assets, we recorded
an impairment charge of $70.3 million, reducing our carrying value to our
current estimate of $9.6 million in repayment.  Additionally, we
recorded a charge to reduce our investment in AMAC shares to zero, ceased
accruing asset management fees receivable and wrote off the remaining balance of
the intangible asset associated with the management agreement.  AMAC’s
financial position and share price steadily deteriorated and its common shares
and 7.25% Series A Cumulative Convertible Preferred Shares were delisted from
the NYSE Alternext US LLC (formerly the American Stock Exchange).  Now
trades on the pink quotes under the symbol “AMOA”.
    - 38
-
  We serve
as the collateral manager for AMAC’s $400.0 million CDO and service all of the
loans in AMAC’s investment portfolio, performing all primary and special
servicing functions. Pursuant to the servicing agreement, we receive fees from
AMAC based on the dollar amount of loans we service.
  During
December 2007, Centerline Real Estate Special Situations Mortgage Fund LLC
(“CRESS”), purchased investments from AMAC for $7.9 million. In January and
February 2008, CRESS purchased additional investments from AMAC for $55.0
million. During 2008, CRESS also purchased investments with a principal amount
of $33.4 million from AMAC for a purchase price of $31.7 million, in a manner
consistent with transactions with independent third parties.
  During
2008, we purchased mortgage revenue bond investments with a principal amount of
$4.5 million from AMAC for a purchase price of $2.0 million.
  Co-investment
in Centerline Urban Capital I LLC
  Centerline
Urban Capital I LLC  (“CUC”), is an investment fund with the
California Public Employees’ Retirement System (“Calpers”), as majority
investor, focusing on investments in multifamily properties in major urban
markets. Our membership interest includes a co-investment obligation amounting
to 2.5% of capital invested. Remaining funding commitments under this obligation
are insignificant.
  Unconsolidated
Partnerships
  We loaned
monies to certain tax credit fund partnerships to allow them to provide
financial support to property partnerships in which they invest.  We
expect the tax credit fund partnerships will repay those loans from the release
of reserves, proceeds from asset sales and other operating
sources.  Loans we made (net of recoveries) were $31.6 million in
2008, $45.1 million in 2007 and $57.6 million in 2006. A portion of these
advances relates to the financial difficulties of three developers and our
subsequent actions to protect our investments in the properties that were under
development and for which we assumed the general partner interest.
  Other
Agreements with Affiliates of TRCLP
 Messrs.
Ross and Blau are managing trustees of our company. In addition, each of Messrs.
Ross and Blau are affiliates of TRCLP, which, through its affiliates, is a
significant shareholder of ours.  The beneficial ownership of our
voting shares by Messrs. Ross and Blau is set forth in the beneficial ownership
table included in this Amendment.  See “Security Ownership of Certain
Beneficial Owners and Management and Related Shareholders” above.
  Furthermore,
on the record date for the rights offering, the Related Group owned 24,220,152
common shares and common share equivalents and controlled approximately 30.4% of
our voting power. Prior to the private offering of 11% Preferred Shares, the
Related Group owned 12,011,974 common shares and common share equivalents and
controlled approximately 17.8% of our voting power.
  In
addition, a subsidiary of TRCLP earned fees for performing property management
services for various properties held in tax credit fund partnerships we
manage.
  During
the year ended December 31, 2008, tax credit fund partnerships that we
consolidate provided equity financing to properties developed by a subsidiary of
TRCLP.  CRESS funded an additional $8.3 million on two loans secured
by properties developed by TRCLP, with no additional future funding
obligations.
  During
2008, CRESS, AMAC and CUC recorded impairment charges pertaining to properties
developed by TRCLP.  In November 2008, TRCLP informed us that two of
its developments (Snowmass Village and CityNorth) were being significantly
impacted by current economic conditions such that both projects would likely
require significant financial restructuring.  This means that the
mezzanine loans held by AMAC and CRESS are compromised in
value.  CRESS holds aggregate mezzanine loans in the amount of $23.6
million secured by interests in the entity which owns the CityNorth project and
aggregate mezzanine loans in the amount of $43.5 million secured by the
interests in the entity which owns the Snowmass project.  AMAC also
holds mezzanine loans related to these properties (aggregating of $50.7 million)
and CUC has an equity investment in the CityNorth development in the amount of
$18.0 million.  Based on our discussions with TRCLP, we have
determined that the investments related to CityNorth have no residual value and
that the likelihood of recoveries related to Snowmass is limited.  As
a result, the following events took place in 2008:
     - 39
-
  ·
            CRESS
      recorded aggregate impairment charges of $63.9 million, of which our
      proportionate share is $3.2
million;
  ·
            CUC
      recorded an impairment charge of $18.0 million, of which our proportionate
      share is $0.5 million; and
  ·
            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
above).
  During
2008, an affiliate of TRCLP provided over 14.0% of the tax credit properties for
which we arranged equity financing.
  Arrangements
with Executive Officers
  The
employment agreement of Mr. Schnitzer, our chief executive officer and president
and a managing trustee of our board, requires him to acquire and hold the equity
interests in certain entities with respect to which we will serve and may in the
future serve, as the non-equity manager and be entitled to receive economic
benefits related to such equity ownership.  These entities are
entitled to fee income sufficient to pay reasonable taxes and other maintenance
expenses.  Three other executives, including Messrs. Levy and Weil
also hold such equity interests.
  Certain
employees, including the named executive officers, participate in a pool of
profits, or promotes, earned by Centerline REIT, Inc., which we refer to,
together with its parent Centerline Investors I, LLC and its subsidiaries, as
Centerline REIT, and certain of its subsidiaries that sponsor and manage funds
that invest in high-yield real estate investments.  During 2008, Mr.
Schnitzer received $29,639, Mr. Levy received $16,352, Mr. Meyer received
$16,352, Mr. Smyth received $242,793, and Mr. Weil received $16,352 in
connection with their promote participation in Centerline REIT.
  Other
  Substantially
all fund origination revenues in the affordable housing segment are received
from LIHTC fund partnerships we have originated and manage, many of which
comprise the partnerships that we consolidate. While our affiliates hold equity
interests in the investment funds’ general partner and/or managing
member/advisor, we have no direct investments in these entities, and we do not
guarantee their obligations. We have agreements with these entities to provide
ongoing services on behalf of the general partners and/or managing
members/advisors, and we receive all fee income to which these entities are
entitled.
  In
connection with the 2002 refinancing of a property partly owned by Mr. Ross, we
entered into an agreement which allows a revenue bond to be put to us should the
owner of the underlying property default on the bond.  We, in turn,
entered into agreements which allow us to put the bond to the general partners
of the owner who are our affiliates controlled by Mr. Ross.  This
right is secured by collateral assignments of the general partners’ partnership
interests in the limited partnership that owns the underlying
property
  Trustee
Independence
  Our Board
has adopted a formal set of Categorical Standards for Determining Trustee
Independence (the “Categorical Standards”) with respect to the determination of
trustee independence.  In accordance with these Categorical Standards,
a trustee must be determined to have no material relationship with our Company
other than as a trustee. The Categorical Standards specify the criteria by which
the independence of our trustees will be determined, including strict guidelines
for trustees and their immediate families with respect to past employment or
affiliation with the Company or its independent registered public accounting
firm. The Categorical Standards also limit commercial relationships of all
trustees with the Company. All trustees are required to deal at arm’s length
with the Company and its subsidiaries and to disclose any circumstance that
might be perceived as a conflict of interest.  These Categorical
Standards were adopted when our common shares were listed on the NYSE, and they
meet the listing standards of the NYSE.
  In
accordance with these Categorical Standards, the Board undertook its annual
review of trustee independence. During this review, the Board considered
transactions and relationships between each trustee or any member of his or her
immediate family and the Company and its subsidiaries and affiliates. The Board
also considered whether there were any transactions or relationships between
trustees or any member of their immediate family (or any entity of which a
trustee or an immediate family member is an executive officer, general partner
or significant equity holder). As provided in the Categorical Standards, the
purpose of this review was to determine whether any such relationships or
transactions existed that were inconsistent with a determination that the
trustee is independent.
  As a
result of this review, the Board affirmatively determined that Messrs. Dolan,
Halperin, Loverd, Meister and White are independent of the Company and its
management under the criteria set forth in the Categorical
Standards.  In making these determinations, the Board considered that,
in the ordinary course of business, transactions may occur between the Company
and its subsidiaries and the trustees, or companies or institutions at which
some of our trustees are or have been officers. In each case, the amount of
transactions from these companies in each of the last three years did not exceed
the thresholds set forth in the Categorical Standards.
    - 40
-
    Item
14.  Principal Accounting Fees and Services.
  Fees
Paid to Independent Registered Public Accounting Firm
  The
following table presents fees for professional audit services rendered by
Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and
their respective affiliates (collectively, “Deloitte”) for the audit of our
financial statements for the years ended December 31, 2008 and December 31,
2007, and fees for other services rendered by Deloitte during those
periods.
  2008
              
              2007Audit
      Fees (a)
              
              $
              4,492,733
              
              $
              4,769,183Audit-Related
      Fees
              
              
              --Tax
      Fees
              
              
              --All
      Other Fees (b)
              
              
              60,000
              
              
              1,399,593Total
              
              $
              4,552,733
              
              $
              6,168,776(a)Fees
      for audit services billed for 2008 and 2007 consisted of the audit of our
      annual financial statements and internal controls, reviews of our
      quarterly financial statements, comfort letters, consents and other
      services related to SEC matters.
                
                (b)Other
      fees in 2008 are related to agreed upon procedures associated with the
      operations of Centerline Financial LLC, a subsidiary in our Credit Risk
      Products Group, and CUC. Other fees in 2007 principally represent advisory
      fees related to our financial reengineering initiatives and also include
      $15,000 related to agreed upon procedures associated with the operations
      of Centerline Financial, LLC.
 
  All
audit-related services, tax services and other services were pre-approved by the
audit committee, which concluded that the provision of those services by
Deloitte was compatible with the maintenance of Deloitte’s independence in the
conduct of its auditing functions.
  Policy
on Pre-Approval of Independent Registered Public Accounting Firm
Services
  The audit
committee is responsible for appointing, setting compensation and overseeing the
work of the independent registered public accounting firm.  The audit
committee has established a policy regarding pre-approval of all audit and
non-audit services provided by our independent registered public accounting
firm.
  On an
on-going basis, management communicates specific projects and categories of
service for which the advance approval of the audit committee is
requested.  The audit committee reviews these requests and advises
management if the audit committee approves the engagement of the independent
registered public accounting firm.  The audit committee may also
delegate the ability to pre-approve audit and permitted non-audit services to
one or more of its members, provided that any pre-approvals are reported to the
audit committee at its next regularly scheduled meeting.
     
 -
41-
 
   PART
      IVItem
      15.
            Exhibits,
      Financial Statement Schedules.(a)(3)
            Exhibit Index:Exhibit
      Number
            Description
      of Document31.1
            Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
            Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
            Certification pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
 
   
 
 
 
 -
42-
 
 
  SIGNATURES
  Pursuant
to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
  CENTERLINE
HOLDING COMPANY
  (Registrant)
  Date:
            
            April
      30, 2009
            
            By:
            
            /s/
      Marc D. SchnitzerMarc
      D. Schnitzer
              Managing
      Trustee, Chief Executive Officer and
              President
              (Principal
      Executive Officer)
 
  Date:
            
            April
      30, 2009
            
            By:
            
            /s/
      Robert L. LevyRobert
      L. Levy
              Chief
      Financial Officer
              (Principal
      Financial Officer and Principal Accounting
  Officer)
 
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
  CENTERLINE
HOLDING COMPANY
  (Registrant)
  Date:
            
            April
      30, 2009
            
            By:
            
            /s/
      Marc D. SchnitzerMarc
      D. Schnitzer
              Managing
      Trustee, Chief Executive Officer and
              President
              (Principal
      Executive Officer)
 
  Date:
            
            April
      30, 2009
            
            By:
            
            /s/
      Robert L. LevyRobert
      L. Levy
              Chief
      Financial Officer
              (Principal
      Financial Officer and Principal Accounting
  Officer)
 
   - 43
-
   Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
report has been signed by the following persons on behalf of us and in the
capacities and on the dates indicated:
  Signature
                
                Title
                
                Date*Stephen
      M. Ross
                
                Managing
      Trustee and Chairman of the Board
                
                April
      30, 2009/s/
      Marc D. SchnitzerMarc
      D. Schnitzer
                
                Managing
      Trustee, Chief Executive Officer and President
                
                April
      30, 2009*Jeff
      T. Blau
                
                Managing
      Trustee
                
                April
      30, 2009*Robert
      J. Dolan
                
                Managing
      Trustee
                
                April
      30, 2009*Jerome
      Y. Halperin
                
                Managing
      Trustee
                
                April
      30, 2009*Robert
      L. Loverd
                
                Managing
      Trustee
                
                April
      30, 2009*Robert
      A. Meister
                
                Managing
      Trustee
                
                April
      30, 2009*Thomas
      W. White
                
                Managing
      Trustee
                
                April
      30, 2009
 
 
 
 *
                /s/ Marc D.
      Schnitzer
 Marc
      D. Schnitzer
 Attorney-in-fact
   - 44
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