RAIT Financial Trust Announces Third Quarter 2009 Financial Results

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PHILADELPHIA--(Business Wire)--
RAIT Financial Trust ("RAIT") (NYSE: RAS) today announced results for the third
quarter ended September 30, 2009.

Summary

* Net loss allocable to common sharesof $24.7 million, or $0.38 total loss per
share - diluted for the three months endedSeptember 30, 2009 and $456.8 million,
or $7.03 total loss per share - diluted for the nine months ended September 30,
2009
* Estimated REIT taxable income, a non-GAAP financial measure of $44.8 million,
or $0.69 per share - diluted for the three months ended September 30, 2009 and
estimated REIT taxable loss of $26.2 million, or $0.40 per share - diluted for
the nine months ended September 30, 2009
* Debt to equity ratio improved to 3.3 times at September 30, 2009 as compared
to 5.4 times at December 31, 2008
* Launched fixed income securities and commercial real estate advisory
businesses
* Book value was $8.57 per common share at September 30, 2009

Third Quarter 2009 Results

RAIT reported net loss allocable to common shares for the three-month period
ended September 30, 2009 of $24.7 million, or $0.38 total loss per share -
diluted based on 65.0 million weighted-average shares outstanding - diluted, as
compared to net loss allocable to common shares for the three-month period ended
September 30, 2008 of $181.8 million, or total loss per share - diluted of $2.82
based on 64.5 million weighted-average shares outstanding - diluted. RAIT
reported net loss allocable to common shares for the nine-month period ended
September 30, 2009 of $456.8 million, or $7.03 total loss per share - diluted
based on 65.0 million weighted-average shares outstanding - diluted, as compared
to net income allocable to common shares for the nine-month period ended
September 30, 2008 of $62.6 million, or $1.00 total earnings per share - diluted
based on 62.9 million weighted-average shares outstanding - diluted.

RAIT`s net losses for the three-month and nine-month periods ended September 30,
2009 were primarily caused by the following:

Gains (losses) on sales of assets. During the nine-month period ended September
30, 2009, we sold all of our equity and a portion of our non-investment grade
notes in the Taberna III, Taberna IV, Taberna VI and Taberna VII securitizations
to a non-affiliated party and all of our interests in our six residential
mortgage securitizations. Upon completion of these sales, we deconsolidated
these securitizations and removed the associated assets and liabilities from our
consolidated balance sheet. The deconsolidation of the Taberna securitizations
on June 25, 2009 resulted in a loss of $313.8 million and the deconsolidation of
the residential mortgage securitizations on July 16, 2009 resulted in a loss of
$61.8 million.

Provision for losses. The provision for losses recorded during the three-month
and nine-month periods ended September 30, 2009 was $18.5 million and $204.1
million, respectively, and resulted from increased delinquencies in our
residential mortgage loans and additional non-performing loans in our commercial
real estate portfolios.

Asset impairments. We recorded asset impairments of $46.0 million during the
nine-month period ended September 30, 2009. These asset impairments were
comprised of investments in securities, primarily our equity investments in our
Taberna Europe I and Taberna Europe II securitizations, whose market values were
reduced due to credit conditions or because of increased delinquencies of the
underlying collateral. No asset impairment expense was recorded during the
three-month period ended September 30, 2009.

Balance Sheet

The balance sheet at September 30, 2009 reflected substantial changes from our
balance sheet at December 31, 2008 due to the sales of our interests in the
Taberna securitizations and residential mortgage securitizations described
above. Assets of $4.5 billion and liabilities of $4.0 billion were removed from
our balance sheet as a result of the deconsolidation of these securitizations
due to these sales, representing a reduction of 54.9% of our assets and 57.4% of
our liabilities since December 31, 2008. Our shareholders` equity was reduced
$351.2 million or 32.5% from December 31, 2008 to September 30, 2009 in
connection with these transactions.

Assets Under Management and Gross Cash Flow Summary

RAIT`s gross cash flow is comprised of net investment income, net rental income
and asset management fees we received from $10.4 billion of assets under
management as of September 30, 2009. Our net investment income represents the
positive difference between the income we earn on our investment portfolio and
the cost of financing our investment portfolio.

The following chart summarizes RAIT`s total assets under management at September
30, 2009 and September 30, 2008 and the gross cash flows generated by our
investment portfolios for the three-month and nine-month periods ended September
30, 2009 and 2008 (dollars in thousands):

Investment Portfolio Description Assets Under Gross Cash Gross Cash
Management Flow for the Flow for the
As of September 30, Three-Month Nine-Month
2009 Period Ended Period Ended
September 30, September 30,
2009 (1) 2009 (1)
Commercial real estate portfolio (2) $ 2,103,792 $ 16,322 $ 55,778
Residential mortgage portfolio (3) - 1,433 10,406
European portfolio 1,862,785 876 3,472
U.S. TruPS portfolio (4) 6,407,137 2,699 9,250
Other investments 777 144 479
Total $ 10,374,491 $ 21,474 $ 79,385

Investment Portfolio Description Assets Under Gross Cash Gross Cash
Management Flow for the Flow for the
As of Three-Month Nine-Month
September Period Ended Period Ended
30, 2008 September 30, September
2008 (1) 30, 2008 (1)
Commercial real estate portfolio (2) $ 2,104,833 $ 23,137 $ 76,034
Residential mortgage portfolio (3) 3,694,875 4,778 14,840
European portfolio 1,945,487 4,264 11,331
U.S. TruPS portfolio (4) 6,512,275 11,952 32,975
Other investments 720 210 811
Total $ 14,258,190 $ 44,341 $ 135,991

(1) Gross cash flows for the three-month and nine-month periods ended September
30, 2009 and 2008 may not be indicative of cash flows for subsequent periods.
See "Forward-looking Statements" and "Risk Factors" sections included in our
Annual Report on Form 10-K for the year ended December 31, 2008 for the risks
and uncertainties that could cause our gross cash flow for subsequent annual
periods to differ materially from these amounts.

(2) As of September 30, 2009 and 2008, our commercial real estate portfolio was
comprised of $1.3 billion and $1.6 billion, respectively, of assets
collateralizing RAIT CRE CDO I and RAIT Preferred Funding II securitizations,
$645.5 million and $270.6 million, respectively, of investments in real estate
interests and $118.8 million and $248.8 million, respectively, of commercial
mortgages, mezzanine loans and preferred equity interests that were not
securitized.

(3) On July 16, 2009, we sold our retained interests in the securitizations
collateralized by our residential mortgage portfolio and these assets are not
included in our assets under management after that date.

(4) Our U.S. TruPS portfolio is comprised of assets collateralizing Taberna I
through Taberna IX securitizations and includes TruPS and subordinated
debentures, unsecured REIT note receivables, CMBS receivables, other securities,
commercial mortgages and mezzanine loans. We continue to serve as the collateral
manager for these securitizations and so continue to include these assets in our
assets under management regardless of whether we consolidate these
securitizations.

Liquidity

As of September 30, 2009, RAIT had $39.9 million of cash and cash equivalents
and $36.6 million of unused capacity in our two CRE securitizations to invest in
commercial real estate assets. At September 30, 2009 RAIT had carrying amounts
of $416.2 million of recourse indebtedness and $1.7 billion of non-recourse
indebtedness as compared to $494.9 million and $5.6 billion at December 31,
2008.

We maintain various forms of short-term and long-term financing arrangements.
Generally, these financing agreements are collateralized by assets within CDOs
or mortgage securitizations. The following table summarizes our total recourse
and non-recourse indebtedness as of September 30, 2009 (dollars in thousands):

Description Unpaid Carrying Weighted- Contractual
Principal Amount Average Maturity
Balance Interest Rate
Recourse indebtedness:
Convertible senior notes (1) $ 280,363 $ 279,638 6.9 % 2027
Secured credit facilities 51,494 51,494 3.9 % Dec. 2009 to Feb. 2011
Senior secured notes 43,000 43,000 12.5 % Apr. 2014
Junior subordinated notes, at fair value (2) 38,052 17,004 8.7 % Mar. 2015 to Mar. 2035
Junior subordinated notes, at amortized cost 25,100 25,100 7.7 % Apr. 2037

Total recourse indebtedness 438,009 416,236 7.3 %
Non-recourse indebtedness:
CDO notes payable-amortized cost (3)(4) 1,399,250 1,399,250 0.7 % 2036 to 2045
CDO notes payable-fair value (2)(3)(5) 1,186,887 143,054 1.1 % 2035 to 2038
Loans payable on real estate interests 84,446 84,446 5.4 % Aug. 2010 to Aug. 2016
Trust preferred obligations, at fair value (2) 70,621 70,621 1.9 % 2036
Other indebtedness 55 55 5.4 % Nov. 2009

Total non-recourse indebtedness 2,741,259 1,697,426 1.0 %

Total indebtedness $ 3,179,268 $ 2,113,662 1.9 %

(1) Our convertible senior notes are redeemable, at the option of the holder, in
April 2012.

(2) Relates to liabilities which we elected to record at fair value under FASB
ASC Topic 825, "Financial Instruments" (formerly referenced as SFAS No. 159).

(3) Excludes CDO notes payable purchased by us which are eliminated in
consolidation.

(4) Collateralized by $1,775,929 principal amount of commercial mortgages,
mezzanine loans, other loans and preferred equity interests. These obligations
were issued by separate legal entities and consequently the assets of the
special purpose entities that collateralize these obligations are not available
to our creditors.

(5) Collateralized by $1,443,661 principal amount of investments in securities
and security-related receivables and loans, before fair value adjustments. The
fair value of these investments as of September 30, 2009 was $821,791. These
obligations were issued by separate legal entities and consequently the assets
of the special purpose entities that collateralize these obligations are not
available to our creditors.

Investment Portfolio Summary

The following table summarizes RAIT`s consolidated investment portfolio at
September 30, 2009 (dollars in thousands):

Carrying Amount(1) Percentage Weighted-
of Total Average
Portfolio Coupon(2)
Commercial mortgages, mezzanine loans, other loans and preferred equity interests $ 1,577,371 54.2 % 8.0 %
Investments in real estate interests 645,484 22.2 % N/A
Investments in securities
TruPS and subordinated debentures 541,701 18.7 % 4.7 %
Unsecured REIT note receivables 82,311 2.8 % 6.9 %
CMBS receivables 59,034 2.0 % 2.3 %
Other securities 1,790 0.1 % 3.0 %
Total investments in securities 684,836 23.6 % 4.7 %
Total $ 2,907,691 100.0 % 7.0 %

(1) Reflects the carrying amount of the respective assets classes, as they
appear in our consolidated financial statements as of September 30, 2009.

(2) Weighted-average coupon is calculated on the unpaid principal amount of the
underlying instruments which does not necessarily correspond to the carrying
amount.

Credit Summary

The following table summarizes RAIT`s carrying value of investments, non-accrual
status investments and allowance for losses at September 30, 2009 (dollars in
thousands):

Carrying Amount (1) Number of Carrying Percentage Allowance
Non- Amount of of Asset for Losses
Accrual Non-Accrual Class(es)
Investments Investments
Commercial mortgages, mezzanine loans, other loans and preferred equity interests $ 1,577,371 35 $ 246,029 15.6 % $ 85,620
Investments in securities and security-related receivables (2) 684,836 15 17,691 2.6 % N/A(3)
Total $ 2,262,207 50 $ 263,720 11.7 % $ 85,620

(1) Reflects the carrying amount of the respective assets classes, as they
appear in our consolidated financial statements as of September 30, 2009.

(2) Investments in securities and security-related receivables are recorded at
fair value in our consolidated balance sheet in accordance with GAAP. The unpaid
principal value of these investments as of September 30, 2009 is $1.4 billion.
The unpaid principal balance of the non-accrual investments in this category is
$117.6 million, or 8.5% of the total unpaid principal balance.

(3) An allowance for losses is not applicable for investments in securities and
security-related receivables, including our investments in U.S. TruPS and other
securities, as these items are carried at fair value in our consolidated
financial statements. The estimated fair value adjustment for our U.S. TruPS
portfolio is recorded as a component of GAAP net income. While we believe the
estimated fair values of these asset classes are affected by any related credit
quality issues, under GAAP, no separate allowance for losses is established.

Portfolio Statistics

Commercial Mortgages, Mezzanine Loans, Other Loans and Preferred Equity
Interests

The following table summarizes RAIT`s commercial mortgages, mezzanine loans,
other loans and preferred equity interests at September 30, 2009 (dollars in
thousands):

Carrying Weighted-Average Number of % of Total Loan
Amount (1) Coupon (2) Loans Portfolio
Commercial mortgages $ 926,722 7.2 % 61 58.8 %
Mezzanine loans 425,086 9.9 % 130 26.9 %
Other loans 125,116 5.2 % 9 7.9 %
Preferred equity interests 100,447 11.0 % 26 6.4 %
Total $ 1,577,371 8.0 % 226 100.0 %

(1) Reflects the carrying amount of the respective assets classes, as they
appear in our consolidated financial statements as of September 30, 2009.

(2) Weighted-average coupon is calculated on the unpaid principal amount of the
underlying instruments which does not necessarily correspond to the carrying
amount.

Investments in Real Estate Interests

The following table summarizes RAIT`s investments in real estate interests at
September 30, 2009 and December 31, 2008 (dollars in thousands):

As of As of
September 30, December 31,
2009 2008
(As revised)
Multi-family real estate properties $ 467,612 $ 225,054
Office real estate properties 139,345 131,285
Retail real estate property 36,402 -
Parcels of land 22,208 614

Subtotal 665,567 356,953
Plus: Escrows and reserves 535 4,091
Less: Accumulated depreciation and amortization (20,618 ) (10,557 )

Investments in real estate interests $ 645,484 $ 350,487

As of September 30, 2009, RAIT had investments in real estate interests of
$645.5 million. During the third quarter of 2009, RAIT took title to 4
properties that served as collateral on its loans, resulting in $5.3 million of
charge-offs against RAIT`s allowance for losses. Our allowance for losses
decreased to $85.6 million as of September 30, 2009 from $172.0 million as of
December 31, 2008 primarily as a result of our taking ownership of properties
underlying loans in restructuring transactions which required us to apply any
allowance for losses relating to those loans.

The following table summarizes the property types and geographic breakdown for
commercial mortgages, mezzanine loans, other loans and preferred equity
interests at September 30, 2009 (based on amortized cost):

Property Type Percent U.S. Geographic Region Percent
Multi-family 49.1 % Central 34.1 %
Office 29.7 % West 25.7 %
Retail 16.0 % Southeast 17.9 %
Other 5.2 % Mid-Atlantic 14.1 %
Northeast 8.2 %

Total 100.0 % Total 100.0 %

TruPS and Subordinated Debentures

As of September 30, 2009, through its investments in Taberna VIII and Taberna IX
securitizations, RAIT maintained investments of $541.7 million (at estimated
fair value) in TruPS and subordinated debentures. RAIT`s portfolio had a
weighted-average coupon of 4.7%. The issuers of these investments had a
weighted-average debt to total capitalization ratio of 76.7% and a
weighted-average interest coverage ratio of 1.3 times based on the most recent
information available to management as provided by our TruPS issuers or through
public filings.

The following table summarizes our investments by industry sector in TruPS and
subordinated debentures as of September 30, 2009 (dollars in thousands):

TruPS and Subordinated Debt Industry Sector Estimated Fair Value (1) Percent
Commercial Mortgage $ 158,277 29.2 %
Office 131,435 24.3 %
Residential Mortgage 72,351 13.4 %
Specialty Finance 53,758 9.9 %
Homebuilders 44,039 8.1 %
Retail 37,149 6.8 %
Hospitality 24,888 4.6 %
Storage 19,804 3.7 %
Total $ 541,701 100.0 %

(1) Reflects the estimated fair value of the respective assets classes, as they
appear in our consolidated financial statements as of September 30, 2009.

Dividends

On May 5, 2009, RAIT's Board of Trustees (the "Board") decided that its review
and determination of dividends on RAIT`s common shares for 2009 will be made
when a full year of REIT taxable income is available. The Board will continue to
monitor RAIT's estimated REIT taxable income during 2009 and intends to declare
a dividend, if any, in at least the amount necessary to meet REIT distribution
requirements. In making this decision, the Board considered the difficulty in
predicting annual results on a quarterly basis in an uncertain market with
unprecedented macro-economic trends and conditions, and the Board`s desire to
provide management with flexibility to navigate through these market conditions.
The Board`s review will include analyzing whether RAIT should use IRS Revenue
Procedure 2009-15which permits publicly-traded REITs to distribute stock to
satisfy their REIT distribution requirements if stated conditions are met,
including that at least 10% of the aggregate declared distribution be paid in
cash and that shareholders be permitted to elect whether to receive cash or
stock subject to the limit set by the REIT on the cash to be distributed in the
aggregate to all shareholders. The Board expects to continue to review and
determine the dividends on RAIT`s preferred shares on a quarterly basis.

To qualify as a REIT, RAIT is required to make distributions to shareholders,
first to preferred shareholders and then to common shareholders, in an amount at
least equal to 90% of RAIT`s annual REIT taxable income. RAIT`s REIT taxable
income for any period may vary materially from RAIT`s reported GAAP earnings for
that period.

On October 27, 2009, the Board declared a fourth quarter cash dividend of
$0.484375 per share on RAIT`s 7.75% Series A Cumulative Redeemable Preferred
Shares, $0.5234375 per share on RAIT`s 8.375% Series B Cumulative Redeemable
Preferred Shares and $0.5546875 per share on RAIT's 8.875% Series C Cumulative
Redeemable Preferred Shares to be paid on December 31, 2009 to holders of record
on December 1, 2009.

On September 30, 2009, RAIT paid a third quarter cash dividend of $0.484375 per
share on RAIT`s 7.75% Series A Cumulative Redeemable Preferred Shares,
$0.5234375 per share on RAIT`s 8.375% Series B Cumulative Redeemable Preferred
Shares and $0.5546875 per share on RAIT's 8.875% Series C Cumulative Redeemable
Preferred Shares to holders of record on September 1, 2009 totaling $3.4
million.

On June 30, 2009, RAIT paid a second quarter cash dividend of $0.484375 per
share on RAIT`s 7.75% Series A Cumulative Redeemable Preferred Shares,
$0.5234375 per share on RAIT`s 8.375% Series B Cumulative Redeemable Preferred
Shares and $0.5546875 per share on RAIT's 8.875% Series C Cumulative Redeemable
Preferred Shares to holders of record on June 1, 2009 totaling $3.4 million.

On March 31, 2009, RAIT paid a first quarter cash dividend of $0.484375 per
share on RAIT`s 7.75% Series A Cumulative Redeemable Preferred Shares,
$0.5234375 per share on RAIT`s 8.375% Series B Cumulative Redeemable Preferred
Shares and $0.5546875 per share on RAIT's 8.875% Series C Cumulative Redeemable
Preferred Shares to holders of record on March 2, 2009 totaling $3.4 million.

A reconciliation of RAIT`s reported net income (loss) available to common shares
and earnings per share to estimated REIT taxable income and estimated REIT
taxable income per share, including management`s rationale for the usefulness of
these non-GAAP financial measures, is included as Schedule I to this release.

Recent Accounting Pronouncements

On January 1, 2009, RAIT adopted Statement of Financial Accounting Standards No.
160, "Noncontrolling Interests in Consolidated Financial Statements - an
amendment of Accounting Research Bulletin No. 51", FASB Staff Position, or FSP,
Accounting Principles Board 14-1, "Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)"
and FSP EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based
Payments Transactions are Participating Securities". The adoption of these
standards required the retrospective application of the requirements to all
prior periods presented. As a result, these columns are now labeled "as
revised". Further information and disclosures will be presented in RAIT's Form
10-Q for the quarterly period ended September 30, 2009.

Conference Call

Interested parties can listen to the LIVE audio webcast of RAIT`s earnings
conference call at 10:00 AM EST on Wednesday, November 4, 2009 by clicking on
the Webcast link on RAIT`s homepage at www.raitft.com. The conference call may
also be listened to by dialing 866.783.2144 Domestic or 857.350.1603
International, using passcode 88554240. For those who are unable to listen to
the live broadcast, a replay of the webcast will be available following the live
call on RAIT`s investor relations website and telephonically until Wednesday,
November 11, 2009 by dialing 888.286.8010, access code 52282533.

About RAIT Financial Trust

RAIT Financial Trust manages a portfolio of real estate related assets, provides
a comprehensive set of debt financing options to the real estate industry and
invests in real estate related assets. RAIT`s management uses their experience,
knowledge and relationship network to seek to generate and manage real estate
related investment opportunities for RAIT and for outside investors. Our
objective is to provide our shareholders with total returns over time while
managing the risks associated with our investment strategy. For more
information, please visit www.raitft.com or call Investor Relations at
215.243.9000.

References to "RAIT", "we", "us", and "our" refer to RAIT Financial Trust and
its subsidiaries, unless the context otherwise requires.

Forward-Looking Statements

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:

Statements in this press release regarding RAIT's business which are not
historical facts are "forward-looking statements" that involve risks and
uncertainties. These risks and uncertainties, which could cause actual results
to differ materially from those contained in the forward looking statement,
include those discussed in RAIT's filings with the Securities and Exchange
Commission, including its annual report on Form 10-K for the year ended December
31, 2008.

These risks and uncertainties also include the following factors: global
recessionary economic conditions and adverse developments in the credit markets
have had, and we expect will continue to have, an adverse effect on our
investments and our operating results, including causing significant reduction
in the availability of financing to us and for refinancing to our borrowers,
increases in payment defaults and other credit risks in our investments,
decreases in the fair value of our assets and decreases in the cash flow we
receive from our investments ; adverse governmental or regulatory policies may
be enacted; our current liquidity and our access to additional liquidity have
been, and may continue to be, reduced by the reduced availability of short-term
and long-term financing, including a significant curtailment in the market for
securities issued in securitizations and in the market for our securities and a
significant reduction of the availability of repurchase agreements, warehouse
facilities and bank financing; payment delinquencies or failures to meet other
collateral performance criteria in collateral underlying our securitizations
have restricted, and may continue to restrict our ability to receive cash
distributions from our securitizations which reduces our liquidity; our ability
to originate and finance investments has been, and may continue to be, decreased
by our reduced access to liquidity; the fair value of our assets that we record
at their fair value on our financial statements has declined, and may continue
to decline, substantially, which has had a material adverse effect on our
financial performance, and the fair value of our liabilities that we record at
their fair value on our financial statements may increase, which may have a
material adverse effect on our financial performance; payment defaults and other
credit risks in our investment portfolio have substantially increased, and may
continue to increase, in all categories of our investment portfolio, which has
reduced, and may continue to reduce, our cash flow, net income and ability to
make distributions: our investment portfolio may have material geographic,
sector, property-type and sponsor concentrations which could be adversely
affected by economic factors unique to such concentrations; our borrowing costs
may increase relative to the interest received on our investments, thereby
reducing our net investment income; our increased use of different methods of
financing our investments from our historical methods may reduce our rate of
return on our investments from historical levels; our financing arrangements
contain covenants that restrict our operations, and any default under these
arrangements would inhibit our ability to grow our business, increase revenue
and pay distributions to our shareholders; we and our subsidiary, Taberna Realty
Finance Trust, or Taberna, may fail to maintain qualification as real estate
investment trusts, or REITs; we and Taberna may fail to maintain exemptions
under the Investment Company Act of 1940; management and other key personnel may
be lost; our hedging transactions may not completely insulate us from interest
rate risk, which could cause volatility in our earnings; and competition from
other REITs and other specialty finance companies may increase.

RAIT does not undertake to update forward-looking statements in this press
release or with respect to matters described herein, except as may be required
by law.

RAIT Financial Trust

Consolidated Statements of Operations

(Dollars in thousands, except share and per share information)

(unaudited)

For the Three-Month For the Nine-Month
Periods Ended Periods Ended
September 30 September 30
2009 2008 2009 2008
Revenue: (As revised) (As revised)
Investment interest income $ 56,370 $ 168,387 $ 337,851 $ 530,995
Investment interest expense (35,326 ) (116,096 ) (230,206 ) (369,123 )
Net interest margin 21,044 52,291 107,645 161,872
Rental income 13,780 4,139 37,664 10,745
Fee and other income 8,741 5,128 20,240 17,131
Total revenue 43,565 61,558 165,549 189,748
Expenses:
Compensation expense 7,809 7,085 19,469 23,690
Real estate operating expense 11,685 3,166 32,558 8,769
General and administrative expense 5,365 4,733 14,894 16,456
Provision for losses 18,467 14,992 204,067 50,575
Depreciation expense 5,899 1,449 15,538 3,799
Amortization of intangible assets 371 2,883 1,038 16,048
Total expenses 49,596 34,308 287,564 119,337
Income (loss) before other income (expense), taxes and discontinued operations (6,031 ) 27,250 (122,015 ) 70,411
Interest and other income 1,316 (87 ) 3,603 1,085
Gains (losses) on sale of assets (61,846 ) 912 (375,604 ) 770
Gains on extinguishment of debt 47,858 - 95,414 8,662
Change in fair value of free-standing derivatives - - - (37,203 )
Change in fair value of financial instruments (3,808 ) (302,245 ) (12,256 ) 50,661
Unrealized gains (losses) on interest rate hedges 15 (290 ) (471 ) (275 )
Equity in income (loss) of equity method investments (3 ) (9 ) (11 ) 935
Asset impairments - (18,038 ) (46,015 ) (38,361 )
Income (loss) before taxes and discontinued operations (22,499 ) (292,507 ) (457,355 ) 56,685
Income tax benefit (provision) 216 (173 ) (441 ) 2,261
Income (loss) from continuing operations (22,283 ) (292,680 ) (457,796 ) 58,946
Income (loss) from discontinued operations 494 (532 ) (1,668 ) (1,603 )
Net income (loss) (21,789 ) (293,212 ) (459,464 ) 57,343
(Income) loss allocated to preferred shares (3,406 ) (3,406 ) (10,227 ) (10,227 )
(Income) loss allocated to noncontrolling interests 503 114,837 12,900 15,490
Net income (loss) allocable to common shares $ (24,692 ) $ (181,781 ) $ (456,791 ) $ 62,606
Earnings (loss) per share-Basic:
Continuing operations $ (0.39 ) $ (2.81 ) $ (7.00 ) $ 1.03
Discontinued operations 0.01 (0.01 ) (0.03 ) (0.03 )
Total earnings (loss) per share-Basic $ (0.38 ) $ (2.82 ) $ (7.03 ) $ 1.00
Weighted-average shares outstanding-Basic 65,025,946 64,523,681 64,990,708 62,845,850
Earnings (loss) per share-Diluted:
Continuing operations $ (0.39 ) $ (2.81 ) $ (7.00 ) $ 1.03
Discontinued operations 0.01 (0.01 ) (0.03 ) (0.03 )
Total earnings (loss) per share-Diluted $ (0.38 ) $ (2.82 ) $ (7.03 ) $ 1.00
Weighted-average shares outstanding-Diluted 65,025,946 64,523,681 64,990,708 62,878,007
Distributions declared per common share $ - $ - $ - $ 0.92

RAIT Financial Trust

Consolidated Balance Sheets

(Dollars in thousands, except share and per share information)

(unaudited)

As of As of
September 30, December 31,
2009 2008
Assets (As revised)
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests $ 1,574,631 $ 2,041,112
Residential mortgages and mortgage-related receivables - 3,598,925
Allowance for losses (85,620 ) (171,973 )
Total investments in mortgages and loans 1,489,011 5,468,064
Investments in securities and security-related receivables, at fair value 684,836 1,920,883
Investments in real estate interests 645,484 350,487
Cash and cash equivalents 39,906 27,463
Restricted cash 163,250 197,366
Accrued interest receivable 38,853 99,609
Other assets 32,579 46,716
Deferred financing costs, net of accumulated amortization of $6,603 and $5,781, respectively 25,181 30,875
Intangible assets, net of accumulated amortization of $82,560 and $81,522, respectively 10,547 9,987
Total assets $ 3,129,647 $ 8,151,450

Liabilities and Equity
Indebtedness ($230,679 and $755,021 at fair value, respectively) $ 2,113,662 $ 6,102,890
Accrued interest payable 22,010 80,035
Accounts payable and accrued expenses 22,656 19,446
Derivative liabilities 223,140 613,852
Deferred taxes, borrowers` escrows and other liabilities 22,638 65,886
Total liabilities 2,404,106 6,882,109
Equity:
Shareholders` equity:
Preferred shares, $0.01 par value per share, 25,000,000 shares authorized; 28 28
7.75% Series A cumulative redeemable preferred shares, liquidation preference $25.00 per share, 2,760,000 shares issued and outstanding
8.375% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share, 2,258,300 shares issued and outstanding 23 23
8.875% Series C cumulative redeemable preferred shares, liquidation preference $25.00 per share, 1,600,000 shares issued and outstanding 16 16
Common shares, $0.01 par value per share, 200,000,000 shares authorized, 64,963,850 and 64,842,571 issued and outstanding, including 27,731 and 76,690 unvested restricted share awards, respectively 650 648
Additional paid in capital 1,616,757 1,613,853
Accumulated other comprehensive income (loss) (134,521 ) (231,425 )
Retained earnings (deficit) (760,850 ) (304,059 )
Total shareholders` equity 722,103 1,079,084
Noncontrolling interests 3,438 190,257
Total equity 725,541 1,269,341
Total liabilities and equity $ 3,129,647 $ 8,151,450

RAIT Financial Trust

Reconciliation of Net Income (Loss) Allocable to Common Shares and Total Taxable Income (Loss) and

Estimated REIT Taxable Income (Loss) (1)

(Dollars in thousands, except share and per share amounts)

(unaudited)

For the Three-Month For the Nine-Month
Periods Ended September 30 Periods Ended September 30
2009 2008 2009 2008
Net income (loss) allocable to common shares, as reported $ (24,692 ) $ (181,781 ) $ (456,791 ) $ 62,606
Add (deduct):
Provision for losses 18,467 14,992 204,067 50,575
Charge-offs on allowance for losses (2,757 ) (4,701 ) (122,013 ) (10,862 )
Domestic TRS book-to-total taxable income differences:
Income tax (benefit) provision (216 ) 173 441 (2,261 )
Fees received and deferred in consolidation - - - 307
Stock compensation and other temporary tax differences 1,107 953 173 1,820
Capital losses not offsetting capital gains and other temporary tax differences - - - 32,059
Asset impairments - 18,038 46,015 38,361
Capital losses not offsetting capital gains 61,841 - 375,649 -
Change in fair value of financial instruments, net of allocation to noncontrolling interests (2) 3,808 183,942 (10,002 ) (78,409 )
Amortization of intangible assets 371 2,883 1,038 16,048
CDO investments aggregate book-to-taxable income differences (3) (12,705 ) (17,509 ) (62,657 ) (52,012 )
Accretion of (premiums) discounts - 972 (211 ) 3,243
Other book to tax differences 85 307 142 6

Total taxable income (loss) 45,309 18,269 (24,149 ) 61,481
Less: Taxable income attributable to domestic TRS entities (473 ) (3,143 ) (7,114 ) (907 )
Plus: Dividends paid by domestic TRS entities 13 - 5,038 12,000

Estimated REIT taxable income (loss), prior to deduction for dividends paid $ 44,849 $ 15,126 $ (26,225 ) $ 72,574
Estimated REIT taxable income (loss) per diluted share $ 0.69 $ 0.23 $ (0.40 ) $ 1.15
Weighted-average shares outstanding-Diluted 65,025,946 64,523,681 64,990,708 62,878,007

(1) Total taxable income (loss) and REIT taxable income (loss) are non-GAAP
financial measurements, and do not purport to be an alternative to reported net
income determined in accordance with GAAP as a measure of operating performance
or to cash flows from operating activities determined in accordance with GAAP as
a measure of liquidity. Our total taxable income (loss) represents the aggregate
amount of taxable income (loss) generated by us and by our domestic and foreign
TRSs. REIT taxable income (loss) is calculated under U.S. federal tax laws in a
manner that, in certain respects, differs from the calculation of net income
pursuant to GAAP. REIT taxable income (loss) excludes the undistributed taxable
income of our domestic TRSs, which is not included in REIT taxable income (loss)
until distributed to us. Subject to TRS value limitations, there is no
requirement that our domestic TRSs distribute their earnings to us. REIT taxable
income (loss), however, generally includes the taxable income of our foreign
TRSs because we will generally be required to recognize and report our taxable
income on a current basis. Since we are structured as a REIT and the Internal
Revenue Code requires that we distribute substantially all of our net taxable
income in the form of distributions to our shareholders, we believe that
presenting the information management uses to calculate our REIT taxable income
(loss) is useful to investors in understanding the amount of the minimum
distributions that we must make to our shareholders so as to comply with the
rules set forth in the Internal Revenue Code. Because not all companies use
identical calculations, this presentation of total taxable income (loss) and
REIT taxable income (loss) may not be comparable to other similarly titled
measures as determined and reported by other companies.

(2) Change in fair value of financial instruments is reported net of allocation
to noncontrolling interests of $0 and $(118,303) for the three-month periods
ended September 30, 2009 and 2008 and $(22,258) and $(27,748) for the nine-month
periods ended September 30, 2009 and 2008, respectively.

(3) Amounts reflect the aggregate book-to-taxable income differences and are
primarily comprised of (a) unrealized gains on interest rate hedges within CDO
entities that Taberna consolidated, (b) amortization of original issue discounts
and debt issuance costs and (c) differences in tax year-ends between Taberna and
its CDO investments.

RAIT Financial Trust Contact
Andres Viroslav, 215-243-9000
aviroslav@raitft.com

Copyright Business Wire 2009