SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.  20549

                         FORM 10-Q

     (Mark one)
     X    Quarterly Report Pursuant to Section 13 or 15 (d) of
          the Securities Exchange Act of 1934

          For the quarterly period ended March 31, 1998

                              or

     __   Transitional Report Pursuant to Section 13 or 15(d) of
          the Securities Exchange Act of 1934

     For the transition period from        to         

                   Commission file number 0-23911

               Wilshire Real Estate Investment Trust Inc.
      (Exact name of registrant as specified in its charter)

          Maryland                           91-1851535
(State or other jurisdiction            (I.R.S. Employer
  of incorporation or organization)     Identification No.)

     1776 SW Madison Street,                 97205
     Portland, OR                  
(Address of principal executive offices)     (Zip Code)

                         (503) 952-7300
       (Registrant's telephone number, including area code)

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

               APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.

          Class               Outstanding at April 30, 1998
Common Stock, par value            11,500,000 Shares
 $.0001 per share








<PAGE>

            WILSHIRE REAL ESTATE INVESTMENT TRUST INC.

                              INDEX


PART I.   FINANCIAL INFORMATION

                                                       Page No.

Item 1.   Financial Statements                              3

Item 2.   Management's Discussion and Analysis
            of Financial Condition and Results
            of Operations                                   3

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                 4

Item 2.   Changes in Securities                             4

Item 3.   Defaults Upon Senior Securities                   4

Item 4.   Submission of Matters to a Vote of
            Security-Holders                                4

Item 5.   Other Information                                 4

Item 6.   Exhibits and Reports on Form 8-K                  4




























                              2
<PAGE>

            WILSHIRE REAL ESTATE INVESTMENT TRUST INC.


PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements.

          The audited balance sheet and the notes thereto, set
forth on pages F-1 through F-6 of the Prospectus dated April 1,
1998 contained in the registrant's Registration Statement, Form
S-11, as amended (Registration No. 333-39035), originally filed
October 30, 1997 (the "Registration Statement"), are incorporated
herein by reference and made a part hereof.

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations.

          The information set forth on page 74 of the
Registration Statement beneath the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" is incorporated herein by reference and made a part
hereof.



































                              3
<PAGE>

          WILSHIRE REAL ESTATE INVESTMENT TRUST INC.

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.

          The registrant is not a party to any material legal
proceedings.

Item 2.   Changes in Securities and Use of Proceeds.

          Not applicable.  The information set forth on page 114
of the Registration Statement beneath the caption "Use of
Proceeds" is incorporated herein by reference and made a part
hereof.

Item 3.   Defaults Upon Senior Securities.

          Not applicable.

Item 4.   Submission of Matters to a Vote of Security Holders.

          Not applicable.

Item 5.   Other Information.

          On April 6, 1998, the registrant consummated an initial
public offering of its common stock pursuant to a Registration
Statement on Form S-11, as amended, File No. 333-39035.  The
order of the Securities and Exchange Commission declaring the
Registration Statement effective was dated approximately 5:00
p.m. EDT on March 31, 1998, the last day of the quarterly period
covered by this Quarterly Report on Form 10-Q.

Item 6.   Exhibits and Reports on Form 8-K.

(a)       Exhibits

          27        Financial Data Schedule

          99.1      Pages F-1 - F-6 from registrant's
                    Registration Statement Amendment No. 3 to
                    Form S-11, File No. 333-39035, containing the
                    audited balance sheet and the notes thereto.

          99.2      Page 74 from registrant's Registration
                    Statement Amendment No. 3 to Form S-11, File
                    No. 333-39035, containing the discussion set
                    forth under the caption "Management's
                    Discussion and Analysis of Financial
                    Condition and Results of Operations."

          99.3      Page 114 from registrant's Registration 
                    Statement Amendment No. 3 to Form S-11, File
                    No. 333-39035, containing the discussion set
                    forth under the caption "Use of Proceeds."

                              4
<PAGE>

                         SIGNATURES


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

                         WILSHIRE REAL ESTATE INVESTMENT 
                           TRUST INC.


Date:  May 15, 1998      By:  /s/ Lawrence A. Mendelsohn
                              -----------------------------------
                              Lawrence A. Mendelsohn
                              President


                         By:  /s/ Chris Tassos
                              -----------------------------------
                              Chris Tassos
                              Chief Financial Officer




































                              5


[TYPE]        EX-27
[ARTICLE]     9
[LEGEND]
This schedule contains summary financial information extracted
from the Company's Balance Sheet as of February 28, 1998 and is
qualified in its entirety by reference to such financial
statement.

<TABLE>
<S>                                     <C>
[PERIOD-TYPE]                           3-MOS
[FISCAL-YEAR-END]                       DEC-31-1998
[PERIOD-START]                          JAN-01-1998
[PERIOD-END]                            FEB-28-1998
[CASH]                                   2,000
[INT-BEARING-DEPOSITS]                       0
[FED-FUNDS-SOLD]                             0
[TRADING-ASSETS]                             0
[INVESTMENTS-HELD-FOR-SALE]                  0
[INVESTMENTS-CARRYING]                       0
[INVESTMENTS-MARKET]                         0
[LOANS]                                      0
[ALLOWANCE]                                  0
[TOTAL-ASSETS]                           2,000
[DEPOSITS]                                   0
[SHORT-TERM]                                 0
[LIABILITIES-OTHER]                          0
[LONG-TERM]                                  0
[PREFERRED-MANDATORY]                        0
[PREFERRED]                                  0
[COMMON]                                 2,000
[OTHER-SE]                                   0
[TOTAL-LIABILITIES-AND-EQUITY]           2,000
[INTEREST-LOAN]                              0
[INTEREST-INVEST]                            0
[INTEREST-OTHER]                             0
[INTEREST-TOTAL]                             0
[INTEREST-DEPOSIT]                           0
[INTEREST-EXPENSE]                           0
[INTEREST-INCOME-NET]                        0
[LOAN-LOSSES]                                0
[SECURITIES-GAINS]                           0
[EXPENSE-OTHER]                              0
[INCOME-PRETAX]                              0
[INCOME-PRE-EXTRAORDINARY]                   0
[EXTRAORDINARY]                              0
[CHANGES]                                    0
[NET-INCOME]                                 0
[EPS-PRIMARY]                                0
[EPS-DILUTED]                                0
[YIELD-ACTUAL]                               0
[LOANS-NON]                                  0
[LOANS-PAST]                                 0
[LOANS-TROUBLED]                             0
[LOANS-PROBLEM]                              0
[ALLOWANCE-OPEN]                             0
[CHARGE-OFFS]                                0
[RECOVERIES]                                 0
[ALLOWANCE-CLOSE]                            0
[ALLOWANCE-DOMESTIC]                         0
[ALLOWANCE-FOREIGN]                          0
[ALLOWANCE-UNALLOCATED]                      0
</TABLE>
























































<PAGE>

                                                  Exhibit 99.1

             REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
   Wilshire Real Estate Investment Trust Inc.

     We have audited the accompanying balance sheet of Wilshire
Real Estate Investment Trust Inc. (the "Company") as of February
28, 1998.  This financial statement is the responsibility of the
Company's management.  Our responsibility is to express an
opinion on this financial statement based on our audit.

     We conducted our audit in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the balance sheet is free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the balance sheet.  An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.

     In our opinion, the balance sheet referred to above presents
fairly, in all material respects, the financial position of
Wilshire Real Estate Investment Trust Inc. as of February 28,
1998, in conformity with generally accepted accounting
principles.



                                                                  
                                          /s/ ARTHUR ANDERSEN LLP
                                              ARTHUR ANDERSEN LLP
Los Angeles, California
March 27, 1998
















                               F-1

<PAGE>

            WILSHIRE REAL ESTATE INVESTMENT TRUST INC.

                          BALANCE SHEET

                     As of February 28, 1998


Assets
Cash                                                   $2,000
Liabilities and Stockholder's Equity         
Stockholder's Equity          
     Common Stock, par value $0.01 per share; 
     1,000 shares authorized;
         100 shares issued and outstanding             $    1
     Additional paid-in-capital                         1,999
          Total Stockholder's Equity                    2,000

































          See accompanying notes to this balance sheet.

                               F-2



<PAGE>

            WILSHIRE REAL ESTATE INVESTMENT TRUST INC.
                      NOTES TO BALANCE SHEET
                        February 28, 1998

1.  The Company

     Wilshire Real Estate Investment Trust Inc. (the "Company" or
"WREIT"), a Maryland corporation organized on October 24, 1997 by
Wilshire Financial Services Group Inc ("WFSG"), will elect to be
taxed as a Real Estate Investment Trust ("REIT") under the
Internal Revenue Code of 1986, as amended.  The Company will be
managed by Wilshire Realty Services Corporation (the "Manager" or
"WRSC"), a wholly-owned subsidiary of WFSG.  The Company intends
to invest primarily in the following:  (i) commercial and
multi-family mortgage loans that are delinquent in payments and
commercial and multifamily real properties in the United States
("U.S. Commercial Investments"); (ii) subordinated interests in
mortgage-backed securities ("Mortgage Backed Securities"),
primarily non-investment grade residential Mortgage-Backed
Securities (other than Mortgage-Backed Securities backed by
mortgage loans and/or real properties previously owned by WFSG or
its affiliates); and (iii) international mortgage loans and real
properties ("International Investments," and together with U.S.
Commercial Investments and Mortgage-Backed Securities, the
"Primary Investments").

     The Company's sole activity through February 28, 1998,
consisted of the organization and start-up of the Company. 
Accordingly, no statement of operation is presented.

2.  Organization

     The Company will file a Registration Statement on Form S-11
with the Securities and Exchange Commission with respect to a
proposed public offering (the "Offering").

     In connection with the proposed public offering, the Company
will engage in the following transactions:

     (1)  WREIT, a Maryland corporation taxable as a REIT, will
issue certain of its common stock to WFSG and the remaining
shares of its common stock to public investors.

     (2)  WREIT will contribute, as a general partner and as a
limited partner, all of the net proceeds of the Offering to the
Operating Partnership.  The Operating Partnership will issue GP
Units and LP Units to WREIT for the contribution of such net
proceeds.  Small Cap Investors LLC, an Oregon limited liability
company ("Small Cap") will purchase LP Units.  The Company,
through the Operating Partnership, will acquire all of the
Initial Investments from WFSG, Wilshire Properties 1 Inc.
("Wilshire Properties 1") and Wilshire Properties 2 Inc.
("Wilshire Properties 2") and will originate or acquire any
future Primary Investments or Other Real Estate Related Assets. 
In the future, the Operating Partnership may seek to acquire
additional assets and issue Units in payment of some or all of
the purchase price therefor.

     (3)  The Operating Partnership will assign to Wilshire
Credit Corporation ("WCC") any special servicing rights and
obligations (other than the right to direct foreclosure) received
in connection with the acquisition of Mortgage-Backed Securities
covering U.S. assets.  WCC is currently owned by the principal
shareholders of WFSG.  WCC and the European Service will provide
loan servicing and real property management services to the
Company.

     (4)  WFSG incorporated and capitalized WRSC.

     (5)  WRSC will enter into a Management Agreement with WREIT
and the Operating Partnership, pursuant to which WRSC will
formulate operating strategies and provide certain managerial and
administrative functions for WREIT and the Operating Partnership,
subject to the supervision of WREIT's Board of Directors.  WRSC,
WFSG and WREIT will also enter into a Services Agreement where
WFSG will provide to WRSC assistance performing certain
managerial and administrative services for WREIT.

                               F-3































<PAGE>

            WILSHIRE REAL ESTATE INVESTMENT TRUST INC.
                NOTES TO BALANCE SHEET--(Continued)


     (6)  Messrs. Wiederhorn and Mendelsohn are the sole
stockholders of Wilshire Properties 1, Wilshire Properties 2, and
WCC, the controlling stockholders of WFSG and control trusts and
a partnership which are sole members of Small Cap.  WFSG is the
sole stockholder of WRSC and Messrs. Wiederhorn and Mendelsohn
are officers and directors of WFSG and WRSC.

3.  Management Agreement

     Pursuant to the Management Agreement, WRSC, subject to the
supervision of WREIT's Board of Directors, will formulate
operating strategies for the Company, arrange for the acquisition
of assets by the Company, arrange for various types of financing
for the Company, including repurchase agreements, secured term
loans, warehouse lines of credit, mortgage loans and the issuance
of mortgage-backed securities, monitor the performance of the
Company's assets and provide certain administrative and
managerial services in connection with the operation of the
Company.  For performing these services, WRSC will receive
compensation, fees and other benefits (including reimbursement of
reasonable out-of-pocket expenses).

4.  Initial Investments

     At the Closing of this Offering (the "Closing"), the
Company, using a portion of the cash from the Offering, through
the Operating Partnership, will acquire from WFSG or its
affiliates (i) U.S. Commercial Investments, (ii) Mortgage-Backed
Securities, and (iii) International Investments in the United
Kingdom.  

     Certain of the U.S. Commercial Investments will be acquired
from Wilshire Properties 1 and Wilshire Properties 2.  Wilshire
Properties 1, organized on January 26, 1993, and Wilshire
Properties 2, organized on November 7, 1994, were established to
hold certain real estate investments of the principal
shareholders of WFSG, who also own all of the outstanding shares
of both entities.

     WFSG has granted the Company an option to purchase for up to
approximately $110.0 million all or a portion of WFSG's 50%
interest in two portfolios of International Investments in
France.  The Company is currently evaluating the suitability of
such investments under U.S. tax and French law.  In the future,
the Company may purchase assets from WFSG and its affiliates,
subject to the approval of Independent Directors of WREIT.

5.  Federal Income Taxes

     The Company intends to make an election to be taxed as a
REIT under Section 856 through 860 of the Internal Revenue Code
for its first taxable year ending after the Offering.  As a REIT,
the Company generally will not be subject to federal income tax
if it distributes at least 95% of its taxable income for each tax
year to its stockholders.  REITs are subject to a number of
organizational and operational requirements.  If the Company
fails to qualify as a REIT in any taxable year, the Company will
be subject to federal income tax (including any applicable
alternative minimum tax) on its taxable income at regular
corporate tax rates.  Even if the Company qualifies for taxation
as a REIT, the Company may be subject to state and local income
taxes and to federal income tax and excise tax on its
undistributed income.

6.  Offering Costs

     In connection with the Offering, affiliates have or will
incur legal, accounting and related costs which will be
reimbursed by the Company only upon the consummation of the
Offering.  These costs would then be deducted from the gross
proceeds of the Offering.

                               F-4









































<PAGE>

            WILSHIRE REAL ESTATE INVESTMENT TRUST INC.
                NOTES TO BALANCE SHEET--(Continued)


7.  Conflicts of Interest

     The Company will be subject to various conflicts of interest
arising from its relationship with WFSG and its affiliates.  WFSG
will own certain of the outstanding shares of Common Stock of
WREIT after the Closing.  All of the officers of the Company are
also officers of both the Manager and WFSG.  Messrs. Wiederhorn
and Mendelsohn are principal stockholders and directors of WFSG,
and directors of the Manager.  Messrs. Wiederhorn and Mendelsohn
control trusts and a partnership which are the sole members of
Small Cap which will purchase certain Units of the Operating
Partnership.  Neither the Company nor the Manager will have any
employees and will rely on WFSG for all of their staffing needs. 
With a view toward protecting the interests of the Company's
stockholders, the Charter of the Company provides that a majority
of the Board of Directors must be unaffiliated with WFSG.

     The Company will contract with WFSG and its subsidiaries to
purchase the Initial Investments at the Closing.  WFSG will
realize a gain as a result of the purchase of such assets. 
However, since WFSG will retain an economic interest in the
Company, WFSG will not recognize the total amount of this gain
for financial reporting purposes.  The Operating Partnership also
will acquire from two affiliates of WFSG, Wilshire Properties 1
and Wilshire Properties 2, all of the outstanding shares of which
are owned by Messrs. Wiederhorn and Mendelsohn, certain U.S.
commercial real property.  The Independent Directors approved the
purchase of the Initial Investments.  Their decision was based
solely on information provided by WFSG and without the benefit of
independent financial advisors.  Approximately 22.1% of the
Initial Investments are Mortgage-Backed Securities issued by
affiliates of WFSG and backed by loans that were previously held
in the portfolio of an affiliate of WFSG.  The assets being
purchased from WFSG, Wilshire Properties 1 and Wilshire
Properties 2 are being acquired at their estimated fair market
value.

     The Manager, a wholly owned subsidiary of WFSG, will manage
the Company and provide extensive advice on the Company's
operating policies and strategies.  The Manager is responsible
for monitoring the performance of the Services, while the Manager
and the Services are under the common control of Messrs.
Wiederhorn and Mendelsohn.  The Manager may also cause the
Company to engage in future transactions with WFSG and its
affiliates, subject to the approval of the Independent Directors. 
The Independent Directors, however, will rely primarily on
information supplied by the Manager in reaching their
determinations.  In addition, the Company, the Manager and WFSG
have common officers and directors.  Accordingly, WFSG and the
Manager will have a significant amount of influence over the
affairs of the Company.

     The Management Agreement does not limit or restrict the
right of WFSG or any of its officers, directors, employees or
affiliates from engaging in any business, subject to the Right of
First Refusal with respect to the Primary Investments granted to
the Company, or rendering services of any kind to any other
person, including the purchase of or rendering advice to others
purchasing real property assets that meet the Company's policies
and criteria.  In addition, the Manager will be entitled to
receive incentive compensation for its services which could
result in the Manager recommending riskier or more speculative
investments.

     Pursuant to the Management Agreement and the Services
Agreement, WFSG and its subsidiaries have granted the Company
Right of First Refusal with respect to the Primary Investments. 
WFSG expects to continue to purchase real property assets in the
future, and has no obligation to make investment opportunities
available to the Company except with respect to Primary
Investments.  Moreover, pursuant to the Management Agreement and
the Services Agreement, WFSG and its subsidiaries have no
obligation to offer mortgage-backed securities to the Company if
the mortgage loans collateralizing such mortgage-backed
securities were owned by WFSG or one of its affiliates.  As a
consequence, the opportunity for the Company to invest in Other
Real Estate 

                               F-5



































<PAGE>

            WILSHIRE REAL ESTATE INVESTMENT TRUST INC.
                NOTES TO BALANCE SHEET--(Continued)


Related Assets will be limited if such investment opportunities
would be attractive to WFSG or one of its subsidiaries.  WFSG and
its subsidiaries will not invest in any Primary Investments
unless a majority of the Independent Directors have decided that
the Company should not invest in such asset.  In deciding whether
to invest in such an asset, the Independent Directors may
consider, among other factors, whether the asset is well-suited
for the Company and whether the Company is financially able to
take advantage of the investment opportunity based primarily on
information provided by the Manager.

     From time to time, mortgage lenders offer for sale large
pools of real property assets containing assets which WFSG has
granted a Right of First Refusal to the Company pursuant to a
competitive bidding process.  In such a case, WFSG may choose an
unaffiliated entity with which to submit a joint bid for the
pool, as long as WFSG takes title only to the real property
assets as to which a right of first refusal has not been granted. 
In the alternative WFSG may, but is not required to, invite the
Company to submit a joint bid for such a pool.  If the Company
and WFSG are successful bidders on such a pool, in general the
Company would take title to the real property assets as to which
a right of first refusal has been granted.  The Company may, but
does not currently intend to, participate in mortgage loans as a
co-participant with WFSG or its affiliates.

8.  Stock Options

     The Company intends to adopt a non-qualified stock option
plan (the "Option Plan"), which provides for options to purchase
shares of Common Stock.

     Before closing, the Company intends to grant to WRSC, the
Independent Directors and other members of the Board of Directors
who are not employees of the Company or identified as Independent
Directors the options under the Option Plan, representing the
right to acquire shares of Common Stock, at an exercise price per
share equal to the initial offering price of the Common Stock.
















<PAGE>

                                                  Exhibit 99.2


               MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF LIQUIDITY AND CAPITAL RESOURCES

     WREIT has no operating history.  WREIT's opening audited
balance sheet as of December 31, 1997, and related footnotes are
presented elsewhere herein.  The Management's Discussion and
Analysis of Liquidity and Capital Resources should be read in
conjunction with such opening balance sheet and related notes. 
WREIT has been organized and will elect to qualify as a REIT
under the Code and, as such, anticipates distributing annually at
least 95% of its taxable income (other than net capital loan),
subject to certain adjustments.  Cash for such distributions is
expected to be generated from the Company's operations, although
the Company also may borrow funds to make distributions.  The
Company's revenues will be derived from (i) ownership of U.S.
Commercial Properties; (ii) ownership of Mortgage-Backed
Securities; (iii) International Investments; (iv) ownership of
Other Real Estate Related Assets; and (v) interest and revenues
from other (generally short-term) investments.  See "Distribution
Policy" and "Federal Income Tax Consequences."

     The principal sources of the Company's funds in the near
term will be the proceeds of this Offering.  At Closing, the
Company, through the Operating Partnership, will acquire
approximately $139.2 million in assets.  The proceeds of the
Offering will fund the purchase of approximately $133.6 million
of the Initial Investments with the remainder (approximately
$13.2 million) to be used to fund the operations of the Company
and the Operating Partnership and to acquire new assets.  The
remainder of the Initial Investments will be purchased through
the assumption of certain indebtedness of approximately $5.6
million.  In this regard, WFSG has granted the Company an option
to purchase, for approximately $110.0 million, all or at portion
of up to WFSG's 50% interest in two portfolios of International
Investments in France.  The Company is currently evaluating the
suitability of such investment under U.S. tax and French law. 
The Company plans to raise additional operating funds by
leveraging its assets, primarily through repurchase agreements,
secured term loans warehouse lines of credit, mortgage loans,
issuance of mortgage-backed securities and other borrowing
arrangements, which management believes will he sufficient to
enable the Company to meet its anticipated liquidity and capital
requirements in the long term.  See "Operating Policies and
Objectives" and "Use of Proceeds."

                               74









<PAGE>

                                                  Exhibit 99.3


                         USE OF PROCEEDS

     The net proceeds to the Company from its sale of the
10,000,000 shares of Common Stock offered hereby, after deducting
the estimated underwriting discounts and offering expenses, are
estimated to be approximately $146.8 million ($169.1 million if
the Underwriters exercise their over-allotment option in full). 
The Company, through the Operating Partnership, will contract
with WFSG and its affiliates, including Wilshire Properties 1 and
Wilshire Properties 2, to purchase the Initial Investments upon
completion of this Offering for a purchase price of approximately
$133.6 million in cash and the assumption of certain debt
(approximately $5.6 million) resulting in a total purchase price
of $139.2 million.  Of this purchase price, $40.8 million shall
be used to acquire U.S. Commercial Investments, $95.0 million
shall be used to acquire Mortgage-Backed Securities (including
$30.8 million of securities issued by affiliates of WFSG which
are backed by the Retained Securities) and $3.4 million shall be
used to acquire International Investments.  All of the expected
net proceeds of this Offering will be used to purchase Units in
the Operating Partnership.  The purchase price for the Initial
Investments was based on certain assumptions made with respect to
the potential net cash flows to be generated by the Initial
Investments.  See "Initial Investments," "Yield Considerations
Related to the Company's Investments" and "Risk Factor--Conflicts
of Interest--Conflicts of Interest in the Business of the
Company."  Pending investment, the balance of the net proceeds
(approximately $13.2 million) will be invested in
investment-grade, interest-bearing securities and held by the
Operating Partnership until used to originate or acquire
International Investments, Commercial Real Property including
U.S. Commercial Properties, Distressed U.S. Commercial Loans and
Other Real Estate Related Assets as provided herein.  See
"Operating Policies and Objectives."

     The Company intends to leverage its portfolio through
borrowings, generally through the use of mortgage-backed
securities and other borrowing arrangements.


                               114