<SUBMISSION>
<ACCESSION-NUMBER>0000950123-03-012643
<TYPE>S-11
<PUBLIC-DOCUMENT-COUNT>23
<FILING-DATE>20031113
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ARBOR REALTY TRUST INC
<CIK>0001253986
<IRS-NUMBER>200057959
<STATE-OF-INCORPORATION>MD
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-11
<ACT>33
<FILE-NUMBER>333-110472
<FILM-NUMBER>03999056
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>333 EARLE OVINGTON BOULEVARD
<STREET2>SUITE 900
<CITY>UNIONDALA
<STATE>NY
<ZIP>11553
<PHONE>5168328003
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>333 EARLE OVINGTON BLVD STE.900
<CITY>UNIONDALE
<STATE>NY
<ZIP>11553
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-11
<SEQUENCE>1
<FILENAME>y90410sv11.htm
<DESCRIPTION>FORM S-11
<TEXT>
<HTML>
<HEAD>
<TITLE>FORM S-11</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>As filed with the Securities and
Exchange Commission on November&nbsp;13, 2003</B>
</FONT>

<DIV align="right"><FONT size="2"><B>Registration No.&nbsp;333-</B></FONT></DIV>

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<HR size="1" noshade color="#000000" style="margin-top: -10px">




<P align="center"><FONT size="4"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</FONT>

<DIV align="center"><FONT size="3"><B>Washington, D.C. 20549</B>
</FONT></DIV>
<P>
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<P>


<P align="center"><FONT size="5"><B>FORM S-11</B>
</FONT>

<DIV align="center"><FONT size="3"><B>REGISTRATION STATEMENT<BR>
UNDER<BR>
THE SECURITIES ACT OF 1933</B>
</FONT></DIV>
<P>
<HR width="26%" align="center" size="1" noshade>
<P>


<P align="center"><FONT size="6"><B>ARBOR REALTY TRUST, INC.</B>
</FONT>

<DIV align="center"><FONT size="2"><I>(Exact Name of Registrant as Specified in its Governing Instruments)</I>
</FONT></DIV>
<P>
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<P>


<P align="center"><FONT size="2"><B>333 Earle Ovington Boulevard<BR>
Suite&nbsp;900<BR>
Uniondale, New York 11553<BR>
(516)&nbsp;832-8002</B><BR>
<I>(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant&#146;s Principal Executive Offices)</I>
</FONT>

<P>
<HR width="26%" align="center" size="1" noshade>
<P>


<P align="center"><FONT size="2"><B>Frederick C. Herbst<BR>
Chief Financial Officer and Treasurer<BR>
Arbor Realty Trust, Inc.<BR>
333 Earle Ovington Boulevard<BR>
Suite&nbsp;900<BR>
Uniondale, New York 11553<BR>
(516)&nbsp;832-7408</B><BR>
<I>(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)</I>
</FONT>

<P>
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<P>


<P align="center"><FONT size="2"><I>Copies to:</I><BR>
<B>David J. Goldschmidt<BR>
Skadden, Arps, Slate, Meagher &#038; Flom LLP<BR>
Four Times Square<BR>
New York, New York 10036-6522<BR>
(212)&nbsp;735-3000</B>
</FONT>

<P>
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<P>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Approximate date of commencement of proposed sale to the public</B>: As soon
as practicable after this registration statement becomes effective.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is filed to register additional securities for an offering
pursuant to Rule&nbsp;462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. <FONT face="Wingdings">&#111;</FONT>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. <FONT face="Wingdings">&#111;</FONT>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. <FONT face="Wingdings">&#111;</FONT>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If delivery of the prospectus is expected to be made pursuant to Rule&nbsp;434,
check the following box. <FONT face="Wingdings">&#111;</FONT>
</FONT>
<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>CALCULATION OF REGISTRATION FEE</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="68%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Proposed</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Maximum</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Proposed Maximum</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Being</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offering</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Aggregate</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Title of Securities Being Registered</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Registered</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Price(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offering Price</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Registration Fee</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Units, each consisting of five shares of
Common Stock, par value $.01 per share,
and one Warrant to purchase one share of
Common Stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">1,602,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <td align="right"><FONT size="2">$</FONT></TD>
    <td align="right"><FONT size="2">75.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <td align="right"><FONT size="2">120,212,475</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">9,725.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Common Stock, par value $.01 per share,
comprising a portion of the Units</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">8,014,165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Warrants, comprising a portion of the Units</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">1,602,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Common Stock, $.01 par value per share,
issuable upon exercise of the Warrants</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">1,602,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD nowrap align="right"><FONT size="2">15.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD nowrap align="right"><FONT size="2">24,042,495</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD nowrap align="right"><FONT size="2">1,945.04</FONT></TD>

</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
</TR>


<TR>

<TD align=left><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><HR size="1" noshade width="20%"></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>







<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2"></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2"></FONT></TD>
    <TD nowrap align="right"><FONT size="2"></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD nowrap align="right"><FONT size="2">144,254,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD nowrap align="right"><FONT size="2">11,670.23</FONT></TD>

</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Estimated based on a bona fide estimate of the maximum aggregate offering
price solely for the purposes of calculating the registration fee pursuant
to Rule&nbsp;457(a) of the Securities Act of 1933.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Such securities will be offered at no additional cost. As a result, no
additional registration fee is required with respect therein.</FONT></TD>
</TR>
</TABLE>
<P>
<HR width="26%" align="center" size="1" noshade>
<P>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section&nbsp;8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission acting,
pursuant to said Section&nbsp;8(a), may determine.</B>
</FONT>
<P>
<HR size="1" noshade color="#000000" style="margin-top: -2px">
<HR size="4" noshade color="#000000" style="margin-top: -10px">




<P align="center"><FONT size="2">&nbsp;</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="1" cellpadding="5">
<TR>
    <TD><FONT size="2" color="#FF0000">The information in this prospectus is not complete and may be changed or
supplemented. The securities described in this prospectus cannot be sold until
the registration statement that we have filed to cover the securities has
become effective under the rules of the Securities and Exchange Commission.
This prospectus is not an offer to sell the securities, nor is it a
solicitation of an offer to buy the securities in any jurisdiction where an
offer or sale is not permitted.

</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2"><B>SUBJECT TO COMPLETION, DATED
NOVEMBER&nbsp;13, 2003</B>
</FONT>

<P align="left"><FONT size="2"><B>PROSPECTUS</B>
</FONT>

<TABLE align="center" cellspacing="0" cellpadding="0" border="0" width="100%">
 <TR>
    <TD width="15%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
 </TR>
<TR>
    <TD align="left"><FONT size="2"><B>&#091;ARBOR LOGO&#093;</B></FONT></TD>
    <TD align="center"><FONT size="6"><B>Arbor Realty Trust, Inc.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="4"><B>1,602,833 Units</B>
</FONT>

<DIV align="center"><FONT size="4"><B>8,014,165 Shares of Common Stock Comprising the Units<BR>
1,602,833 Warrants Comprising the Units<BR>
1,602,833 Shares of Common Stock Underlying the Warrants</B>
</FONT></DIV>

<P>
<HR width="26%" align="center" size="1" noshade>
<P>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty Trust, Inc. invests in a diversified portfolio of
multi-family and commercial real estate related bridge and mezzanine loans,
preferred equity investments and other real estate related assets. Arbor
Commercial Mortgage, LLC manages our operations. We will elect to be taxed as a
real estate investment trust, or REIT, under the Internal Revenue Code, and
generally will not be subject to federal taxes on our income to the extent that
we distribute our income to stockholders and maintain our qualification as a
REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus relates to the resale of up to 1,602,833 of our units,
each consisting of five shares of our common stock, $.01 par value per share,
and one warrant to purchase an additional share of common stock, 8,014,165
shares of common stock comprising the units, 1,602,833 warrants comprising
the units, and 1,602,833 shares of common stock underlying the warrants,
collectively the offered securities. The warrants have an initial exercise
price of $15 and are exercisable until 5:00 p.m. New York City time on July&nbsp;1,
2005. The warrants comprising the units do not become exercisable, detachable
and freely tradable until after the shares of the common stock comprising the
units are registered under the Securities Act and either listed on a national
securities exchange or The Nasdaq Stock Market, Inc. The shares of common
stock and the warrants comprising the units may not be traded separately until
such listing.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We issued and sold 1,610,000 units in the original offering on July&nbsp;1,
2003. 1,327,989 of these units were sold to JMP Securities LLC, as
initial purchaser, and were
simultaneously resold by JMP in transactions exempt from the registration
requirements of the Securities Act of 1933, as amended, to persons reasonably
believed by JMP Securities to be &#147;qualified institutional buyers&#148; (as defined
in Rule&nbsp;144A under the Securities Act) and to a limited number of institutional
&#147;accredited investors&#148; (as defined in Rule&nbsp;501 under the Securities Act). The
remaining 282,011 units were sold directly by us to individual accredited
investors. Certain investors in the original offering included institutions and persons affiliated with us and JMP.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders from time to time may offer and sell the offered
securities, held by them directly or through agents or broker-dealers on terms
to be determined at the time of sale. These sales may be made on any exchange
or interdealer quotation system on which the offered securities are then
traded, in the over-the-counter market, in negotiated transactions or otherwise
at prices and at terms then prevailing or at prices related to the then current
market prices or at prices otherwise negotiated. To the extent required, the
names of any agent or broker-dealer and applicable commissions or discounts and
any other required information with respect to any particular offer will be set
forth in a prospectus supplement that will accompany this prospectus. A
prospectus supplement may also add, update or change information contained in
this prospectus.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As soon
as practicable after the registration statement of which this
prospectus is a part is declared effective, we
intend to apply to list the offered securities on the New York Stock Exchange
or The Nasdaq Stock Market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investing in our securities involves risks. See &#147;Risk Factors&#148; beginning
on page 15 for a discussion of these risks.</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We have a limited operating history and may not operate
successfully.</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our historical consolidated financial information is not
likely to be indicative of our future performance or financial
condition as a separate company.</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We are dependent on our manager with whom we have conflicts
of interest.</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our directors have approved very broad investment guidelines
for our manager and do not approve each investment decision made by
our manager.</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We depend on key personnel with long standing business
relationships, the loss of whom could threaten our ability to
operate our business successfully.</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We may be unable to generate sufficient revenue from
operations to pay our operating expenses and to pay dividends to our
stockholders.</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If ACM ceases to be our manager, the financial institutions
providing our credit facilities may not provide future financing to
us.</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If we do not qualify as a REIT or fail to remain qualified as
a REIT, we will be subject to tax as a regular corporation and could
face substantial tax liability.</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">There is no public market for the offered securities, and
there may be no market for the offered securities after the
completion of this offering.</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our charter generally does not permit ownership in excess of
9.6% of our common or capital stock, and attempts to acquire our
capital stock in excess of these limits are ineffective without
prior approval from our board of directors.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.</B>
</FONT>

<P>
<HR width="26%" align="center" size="1" noshade>
<P>

<P align="center"><FONT size="2">The date of this prospectus is <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 200<U>&nbsp;&nbsp;</U>
</FONT>



<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>



<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">PROSPECTUS SUMMARY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">RISK FACTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">FORWARD LOOKING STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">USE OF PROCEEDS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">DISTRIBUTION POLICY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">PRICE RANGE OF UNITS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">SELECTED UNAUDITED CONSOLIDATED FINANCIAL INFORMATION<BR>
OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE STRUCTURED FINANCE BUSINESS<BR>
OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE STRUCTURED FINANCE BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">ARBOR REALTY TRUST, INC.</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">OUR MANAGER AND THE MANAGEMENT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">MANAGEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#016">DESCRIPTION OF STOCK</A></TD></TR>
<TR><TD colspan="9"><A HREF="#017">SECURITIES ELIGIBLE FOR FUTURE SALE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">BOOK ENTRY ISSUANCE; THE DEPOSITORY TRUST COMPANY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#019">IMPORTANT PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">OUR OPERATING PARTNERSHIP AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">FEDERAL INCOME TAX CONSIDERATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">ERISA CONSIDERATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#023">SELLING STOCKHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#024">PLAN OF DISTRIBUTION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#025">LEGAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#026">EXPERTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#027">WHERE YOU CAN FIND MORE INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#028">INDEX TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#029">INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE STRUCTURED FINANCE BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#030">INDEX TO FINANCIAL STATEMENTS OF MEZZOBRIDGE FUNDING LLC</A></TD></TR>
<TR><TD colspan="9"><A HREF="#031">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#032">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv2w1.txt">CONTRIBUTION AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv2w2.txt">GUARANTY</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv2w3.txt">INDEMNITY AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv3w1.txt">ARTICLES OF INCORPORATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv3w2.txt">ARTICLES SUPPLEMENTARY</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv3w3.txt">BYLAWS</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv4w4.txt">WARRANT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv4w5.txt">REGISTRATION RIGHTS AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w1.txt">MANAGEMENT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w2.txt">SERVICES AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w3.txt">NON-COMPETITION AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w4.txt">AMENDED/RESTATED AGREEMENT OF LIMITED PARTNERSHIP</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w5.txt">WARRANT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w6.txt">REGISTRATION RIGHTS AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w7.txt">PAIRING AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w8.txt">2003 OMNIBUS STOCK INCENTIVE PLAN</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w9.txt">FORM OF RESTRICTED STOCK AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w10.txt">BENEFITS PARTICIPATION AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv10w11.txt">FORM OF INDEMNIFICATION AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv21w1.txt">SUBSIDIARIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="y90410exv23w1.txt">CONSENT OF GRANT THORNTON LLP</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with different or additional information.
This prospectus does not constitute an offer to sell, or a solicitation of an
offer to purchase, the securities offered by this prospectus in any
jurisdiction to or from any person to whom or from whom it is unlawful to make
such offer or solicitation of an offer in such jurisdiction. You should not
assume that the information contained in this prospectus is accurate as of any
date other than the date on the front cover of this prospectus. Neither the
delivery of this prospectus nor any distribution of securities pursuant to this
prospectus shall, under any circumstances, create any implication that there
has been no change in the information set forth in this prospectus or in our
affairs since the date of this prospectus.</B>
</FONT>




<P align="center"><FONT size="2"><B>TABLE OF CONTENTS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="94%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Page</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PROSPECTUS SUMMARY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RISK FACTORS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">FORWARD LOOKING STATEMENTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">USE OF PROCEEDS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DISTRIBUTION POLICY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PRICE
RANGE OF UNITS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SELECTED
UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF ARBOR REALTY TRUST,
INC. AND SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE
STRUCTURED FINANCE BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND
SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE STRUCTURED FINANCE
BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES </FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARBOR REALTY TRUST, INC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">OUR MANAGER AND THE MANAGEMENT AGREEMENT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MANAGEMENT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DESCRIPTION OF STOCK</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SECURITIES ELIGIBLE FOR FUTURE SALE</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BOOK ENTRY ISSUANCE; THE DEPOSITORY TRUST COMPANY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">IMPORTANT PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">OUR OPERATING PARTNERSHIP AGREEMENT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">FEDERAL INCOME TAX CONSIDERATIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ERISA CONSIDERATIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SELLING STOCKHOLDERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PLAN OF DISTRIBUTION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LEGAL MATTERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EXPERTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INDEX
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INDEX
TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE STRUCTURED FINANCE BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INDEX TO FINANCIAL STATEMENTS OF MEZZOBRIDGE FUNDING LLC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">i</FONT>
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<!-- link1 "PROSPECTUS SUMMARY" -->
<DIV align="left"><A NAME="000"></A></DIV>
<P align="center"><FONT size="2"><B>PROSPECTUS SUMMARY</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>This summary highlights information more fully described elsewhere in this
prospectus. This summary is not complete and does not contain all the
information you should consider before buying our securities. You should read
this entire prospectus carefully before deciding to invest in our securities,
including &#147;Risk Factors&#148;, &#147;Selected Consolidated Financial Information of Arbor
Realty Trust, Inc. and Subsidiaries,&#148; &#147;Selected Consolidated Financial
Information of the Structured Finance Business of Arbor Commercial Mortgage,
LLC and Subsidiaries,&#148; &#147;Management&#146;s Discussion &#038; Analysis of Financial
Condition and Results of Operations of Arbor Realty Trust, Inc. and
Subsidiaries,&#148; &#147;Management&#146;s Discussion &#038; Analysis of Financial Condition and
Results of Operations of the Structured Finance Business of Arbor Commercial
Mortgage, LLC and Subsidiaries,&#148; the historical consolidated financial
statements of Arbor Realty Trust, Inc. and subsidiaries, including related
notes and the historical consolidated financial statements of the structured
finance business of Arbor Commercial Mortgage, LLC and subsidiaries, including
related notes, each included elsewhere in this prospectus. Unless otherwise
mentioned or unless the context otherwise requires, all references in this
prospectus to (a) &#147;we, &#147; &#147;us, &#147; &#147;our, &#147; or similar references mean Arbor Realty
Trust, Inc. and Arbor Realty Limited Partnership, our operating partnership,
and (b) &#147;Arbor Commercial Mortgage, &#147;ACM&#148;, or &#147;our manager&#148; mean Arbor
Commercial Mortgage, LLC.</I>
</FONT>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a Maryland corporation that commenced operations in July 2003. We
invest in real estate related bridge and mezzanine loans, preferred equity and,
in limited cases, discounted mortgage notes and other real estate related
assets, which we collectively refer to as structured finance investments. We
conduct substantially all of our operations through our operating partnership,
Arbor Realty Limited Partnership. We intend to elect to be taxed as a real
estate investment trust, or REIT, under the Internal Revenue Code and generally
will not be subject to federal taxes on our income to the extent we distribute
our income to our stockholders and maintain our qualification as a REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, Arbor Commercial Mortgage, LLC, or ACM, contributed the
majority of its structured finance portfolio to our operating partnership.
These initial assets, consisting of 12 bridge loans, five mezzanine loans, five
preferred equity investments and two other real estate related investments,
were transferred at book value, which approximates fair value, that, at June&nbsp;30, 2003, represented $213.1
million in assets financed by $169.2&nbsp;million borrowed under ACM&#146;s credit
facilities and supported by $43.9&nbsp;million in equity. Simultaneously with the
ACM&#146;s contribution of assets, we issued and sold 1,610,000 of our units in a
private offering, or the original offering.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are externally managed and advised by ACM. Our manager is a national
commercial real estate finance company operating through 15 regional offices in
the United States, specializing in debt and equity financing for multi-family
and commercial real estate. We believe ACM&#146;s experience and reputation
positions it to originate attractive investment opportunities for us. Our
management agreement with ACM was developed to capitalize on synergies with
ACM&#146;s origination infrastructure, existing business relationships and
management expertise.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe the financing of multi-family and commercial real estate offers
significant growth opportunities as the inflexibility of traditional lenders
has created increased demand for customized financing solutions. Since its
inception in 1996, ACM&#146;s structured finance group has originated over $1.2
billion in structured finance transactions for investment by ACM and certain
joint venture partners. ACM has not realized any loss of principal on these
investments, and, to date, approximately $1&nbsp;billion of these investments have
been fully realized. ACM has granted us a right of first refusal to pursue all
structured finance investment opportunities identified by ACM. ACM will
continue to provide and service multi-family and commercial mortgage loans
under Fannie Mae, Federal Housing Administration and conduit commercial lending
programs, which we believe will offer customer relationship synergies to our
business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a strong senior management team with significant industry
experience. Mr.&nbsp;Ivan Kaufman, the chief executive officer of ACM, and Mr.
Frederick Herbst, the chief financial officer of ACM, also serve as our chief
executive officer and chief financial officer, respectively. Mr.&nbsp;Fred Weber,
the head of the structured finance group at ACM since 1999, is our executive
vice president of structured finance. Mr.&nbsp;Daniel M. Palmier, the head of ACM&#146;s
asset management group since 1997, is our executive vice president of asset
management, and the eight
</FONT>
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<P align="left"><FONT size="2">additional employees who comprised the asset management group of ACM have
also joined us. In October 2003, we hired Mr.&nbsp;John C. Kovarik as our chief
credit officer. Messrs.&nbsp;Kaufman, Weber, Palmier and Kovarik serve as members
of our credit committee, which has the authority to decide whether we will
invest in an individual loan or security originated by ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe the asset management group&#146;s involvement in our credit
underwriting process helps to mitigate investment risk after the closing of a
transaction. The asset management group is integrated into the underwriting
and structuring process for all transactions in order to enhance the credit
quality of our originations before a transaction closes. After the closing of
transactions, the asset management group&#146;s experience in managing complex
restructurings, refinancings and asset dispositions is used to improve the
credit quality and yield on managed investments.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with ACM&#146;s contribution of the initial assets, ACM arranged
for us to have substantially similar credit facilities as those used by ACM to
finance these assets. In exchange for ACM&#146;s asset contribution, we issued to
ACM approximately 3.1&nbsp;million operating partnership units, each of which ACM
may redeem for one share of our common stock or an equivalent amount in cash,
at our election, and approximately 629,000 warrants, each of which entitles ACM
to purchase one additional operating partnership unit. The operating
partnership units and warrants for additional operating partnership units
issued to ACM were valued at approximately $43.9&nbsp;million at July&nbsp;1, 2003, based
on the price offered to investors in our units in the original offering,
adjusted for the initial purchaser&#146;s discount. Each of the approximately 3.1
million operating partnership units received by ACM is paired with one share of
our special voting preferred stock that entitles the holder to one vote on all
matters submitted to a vote of our stockholders. As operating partnership
units are redeemed for shares of our common stock or cash, an equivalent number
of shares of special voting preferred stock will be redeemed and cancelled.
See &#147;Description of Stock &#151; Special Voting Preferred Stock.&#148; As a result of
ACM&#146;s asset contribution and the related formation transactions, ACM owns
approximately a 28% limited partnership interest in our operating partnership
and the remaining 72% interest in our operating partnership is owned by us. In
addition, ACM has approximately 28% of the voting power of our capital stock
(without giving effect to the exercise of ACM&#146;s warrants for additional
operating partnership units).
</FONT>
<P align="left"><FONT size="2"><B>Our Business Strategy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe there is strong growth potential in customized financing of
multi-family and commercial real estate. In the past decade, the commercial
mortgage industry has experienced significant change, due in part to
increasingly standardized underwriting requirements, more demanding borrowers
and lenders and the growth of a market for securitized commercial real estate
pools.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many existing lending firms lack the capital or financial flexibility to
compete effectively in today&#146;s rapidly changing market. As a result, the
commercial mortgage industry is moving toward greater consolidation. Banks and
life insurance companies, which have traditionally been the primary source for
commercial real estate financing, are increasingly constraining borrowers by
their relatively inflexible underwriting standards, including lower loan to
value ratios, thereby creating significant demand for bridge, mezzanine and
other forms of innovative financing.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We capitalize on this demand by investing in a diversified portfolio of
structured finance assets in the multi-family and commercial real estate
market. Our principal business objectives are to invest in bridge and
mezzanine loans, preferred equity and other real estate related assets and
actively manage this portfolio in order to generate cash available for
distribution, facilitate capital appreciation and maximize total return to our
stockholders. We believe we can achieve these objectives through the following
business and growth strategies:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Provide Customized Financing. </I>We provide financing customized to the
needs of our borrowers. We target borrowers with reputations for enhancing
value, but whose options may be limited by conventional bank financing and who
may benefit from the sophisticated structured finance products we offer.
Historically, ACM has attempted to provide customized loan structures and other
financing alternatives to fit the characteristics and purpose of each
individual borrower and its financing requirements, and we employ a similar
strategy.
</FONT>
<P align="center"><FONT size="2">2</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Use ACM&#146;s Relationships with Existing Borrowers. </I>We capitalize on ACM&#146;s
reputation in the commercial real estate finance industry. ACM has
relationships with over 125 distinct borrowers nationwide. Since ACM&#146;s
originators offer ACM&#146;s senior mortgage loans as well as our structured finance
products, we are able to benefit from ACM&#146;s existing customer base and use its
senior lending business as a potential way to refinance our structured finance
assets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Offer Broader Products and Expand Customer Base. </I>We have the ability to
offer a larger number of financing alternatives than ACM has been able to offer
to its customers in the past. Our potential borrowers are able to choose from
products offering longer maturities and larger principal amounts than ACM could
previously offer.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Leverage Our Experience and the Experience of ACM. </I>Our executive officers
and employees, and those of ACM, have extensive experience originating and
managing structured commercial real estate investments. Our senior management
team has on average over 20&nbsp;years experience in the financial services
industry. Additionally, our executive officers have prior experience in
managing and operating a public company, the predecessor company to ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Manage and Maintain Credit Quality. </I>A critical component of our success
in the real estate finance sector is our ability to manage the real estate risk
that is underwritten by our manager and us. We actively manage and maintain
the credit quality of our portfolio by using the expertise of our asset
management group, which has a proven track record of structuring and
repositioning structured finance investments to improve the credit quality and
yield on managed investments.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Focus on a Niche Market in Smaller Loan Balances. </I>We focus on loans with
principal amounts under $20&nbsp;million, which many larger lending firms do not
target. We can afford to invest the time and effort required to close loans
with smaller principal amounts because of our relatively efficient cost
structure.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Execute Transactions Rapidly. </I>We act quickly and decisively on proposals,
provide commitments and close transactions within a few weeks and sometimes
days, if required. We believe that rapid execution attracts opportunities from
both borrowers and other lenders that would not otherwise be available. We
believe our ability to structure flexible terms and close loans in a timely
manner gives us a competitive advantage over lending firms that also serve the
market for loans with principal amounts under $20&nbsp;million.
</FONT>
<P align="left"><FONT size="2"><B>Our Investment Strategy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We actively pursue lending and investment opportunities with property
owners and developers who need interim financing until permanent financing can
be obtained. Our structured finance investments generally have maturities of
two to five years, depending on the type, have extension options when
appropriate, and generally require a balloon payment of principal at maturity.
Borrowers in the market for these types of loans include owners or developers
who seek either to acquire or refurbish real estate or pay down debt and
reposition a property for permanent financing.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our investment program emphasizes the following general categories of real
estate related activities:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Bridge Financing. </I>We offer bridge financing products to borrowers who are
typically seeking short term capital to be used in an acquisition of property.
The borrower has usually identified an undervalued asset that has been
under-managed or is located in a recovering market. From the borrower&#146;s
perspective, shorter term bridge financing is advantageous because it allows
time to improve the property value through repositioning the property without
encumbering it with restrictive long term debt. The bridge loans we make are
secured by first lien mortgages on the property. Borrowers usually use the
proceeds of a conventional mortgage loan to repay a bridge loan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mezzanine Financing. </I>We offer mezzanine loans, which are loans
subordinate to a conventional first mortgage loan and senior to the borrower&#146;s
equity in a transaction. We believe this product allows our clients to fund
their projects in a more efficient and strategic manner than financing methods
offered by conventional lenders. Our mezzanine financing may take the form of
pledges of ownership interests in entities that directly or indirectly
</FONT>
<P align="center"><FONT size="2">3</FONT>
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<P align="left"><FONT size="2">control the real property or subordinated loans secured by second
mortgages. We may also require additional collateral such as personal
guarantees, letters of credit and/or additional collateral unrelated to the
property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Preferred Equity Investments. </I>We provide financing by making preferred
equity investments in entities that directly or indirectly own real property.
In cases where the terms of a first mortgage prohibit additional liens on the
ownership entity, investments structured as preferred equity interests in the
entity owning the property serve as viable financing substitutes. With
preferred equity investments, we typically become a special limited partner or
member in the ownership entity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Investments. </I>We may engage in other investment activities,
including the purchase of discounted first lien mortgage notes from other
lenders and opportunistic investments including the acquisition of properties.
Typically, these transactions, which may be conducted through taxable
subsidiaries, are analyzed with the expectation that, upon property
repositioning or renovation, they will be sold to achieve a significant return
on invested capital.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We borrow against or leverage our investments to the extent consistent
with our investment guidelines in order to increase the size of our portfolio
and potential returns to our stockholders. We have a $250.0&nbsp;million warehouse
credit agreement with a financial institution, with a term of three years. We
also have a $100.0&nbsp;million master repurchase agreement with another financial
institution, with a one-year term, renewable annually and a $50.0&nbsp;million
master repurchase agreement with a third financial institution with a term of
three years. We may also sell participating interests in our investments.
</FONT>
<P align="center"><FONT size="2"><B>Our Manager</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM is a national commercial real estate finance company, which was
founded in 1993 as a subsidiary of Arbor National Holdings, Inc., or ANH, an
originator and servicer of residential mortgage loans. Our chief executive
officer, Mr.&nbsp;Ivan Kaufman, also ACM&#146;s chief executive officer and controlling
equity owner, was the co-founder, chairman and majority shareholder of ANH.
Under Mr.&nbsp;Kaufman&#146;s direction, ANH grew to 25 branches in 11 states and funded
more than $4&nbsp;billion in loans in its last full year of operations. ANH became
a public company in 1992 and was sold to BankAmerica in 1995. As chairman and
chief executive officer of ANH, Mr.&nbsp;Kaufman developed significant experience
operating and managing a publicly traded company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the sale of ANH, Mr.&nbsp;Kaufman purchased its commercial
mortgage lending operations and the rights to the &#147;Arbor&#148; name and retained a
significant portion of ANH&#146;s senior management team. This senior management
team has guided ACM&#146;s growth from a company originally capitalized with
approximately $8&nbsp;million to its current equity value of approximately $69
million as of September&nbsp;30, 2003. ACM is now a full service provider of
financial services to owners and developers of multi-family and commercial real
estate properties. ACM, which has been profitable every year since 1995,
originated over $600&nbsp;million in new loans in 2002 and is currently servicing a
portfolio with a principal balance of $2.7&nbsp;billion.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM&#146;s executive officers and employees have extensive experience in
originating and managing structured commercial real estate investments. The
senior management team has an average of over 20&nbsp;years experience in the
financial services industry. ACM currently has 130 employees spread among its
corporate headquarters in Uniondale, New York, 14 other sales offices located
throughout the United States and the servicing administration office in
Buffalo, NY.

</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and our operating partnership have entered into a management agreement
with ACM pursuant to which ACM has agreed to provide us with structured finance
investment opportunities and loan servicing as well as other services necessary
to operate our business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We pay our manager an annual base management fee, payable monthly in cash
as a percentage of ARLP&#146;s equity and equal to 0.75% per annum of the equity up
to $400&nbsp;million, 0.625% per annum of the equity from $400&nbsp;million to $800
million and 0.5% per annum of the equity in excess of $800&nbsp;million. For
purposes of calculating the base management fee, equity equals the month end
value computed in accordance with generally accepted
</FONT>
<P align="center"><FONT size="2">4</FONT>
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<P align="left"><FONT size="2">accounting principles of (1)&nbsp;total partners&#146; equity in ARLP, plus or minus
(2)&nbsp;any unrealized gains, losses or other items that do not affect realized net
income.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also pay ACM incentive compensation each fiscal quarter, calculated as
(1)&nbsp;25% of the amount by which (a)&nbsp;ARLP&#146;s funds from operations per operating
partnership unit, adjusted for certain gains and losses, exceeds (b)&nbsp;the
product of (x)&nbsp;9.5% per annum or the 10&nbsp;year Treasury Rate plus 3.5%, whichever
is greater, and (y)&nbsp;the weighted average of book value of the net assets
contributed by ACM to ARLP per operating partnership unit, the offering price
per share of our common equity in the original offering and subsequent
offerings and the issue price per operating partnership unit for subsequent
contributions to ARLP, multiplied by (2)&nbsp;the weighted average of ARLP&#146;s
outstanding operating partnership units. At least 25% of this incentive
compensation is paid to ACM in shares of our common stock, subject to ownership
limitations in our charter. We have also agreed to share with ACM a portion of
the origination fees that we receive on loans we originate with ACM. See &#147;Our
Manager and the Management Agreement.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We pay or reimburse ACM for certain third party expenses, compensation of
our independent directors and certain other expenses. Third party expenses
include certain legal, accounting, due diligence tasks and other services that
outside professionals perform for us.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The management agreement has an initial term of two years and is renewable
automatically for an additional one year period every year thereafter, unless
terminated with six months&#146; prior written notice. If we terminate or elect not
to renew the management agreement in order to manage our portfolio internally,
we are required to pay a termination fee equal to the base management fee and
incentive compensation for the 12-month period preceding the termination. If,
without cause, we terminate or elect not to renew the management agreement for
any other reason, including a change of control of us, we are required to pay a
termination fee equal to two times the base management fee and incentive
compensation paid for the 12-month period preceding the termination.
</FONT>
<P align="center"><FONT size="2"><B>Our Structure</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart shows our structure following completion of the
original offering and the transactions in connection with our formation:
</FONT>
<P align="center"><FONT size="2">5</FONT>
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<P align="center"><FONT size="2"><IMG src="y90410y9041000.gif" alt="(MANAGEMENT AGREEMENT STRUCTURE CHART)">
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Mr.&nbsp;Kaufman, the Ivan and Lisa Kaufman Family Trust, the Ivan Kaufman
Grantor Retained Annuity Trust and Arbor Management, LLC, the managing
member of ACM and an entity wholly owned by Mr.&nbsp;Kaufman and his spouse,
which we collectively refer to in this prospectus as the Kaufman entities,
collectively hold this 88% membership interest in ACM. See &#147;Security
Ownership of Beneficial Owners and Management.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Messrs.&nbsp;Herbst, Weber, Palmier and Messrs.&nbsp;Joseph Martello and Walter
Horn, two of our directors, collectively hold 5% of the membership
interests in ACM. In addition, Mr.&nbsp;Martello also serves as (a)&nbsp;trustee of
the Ivan and Lisa Kaufman Family Trust, a trust created by Mr.&nbsp;Kaufman for
the benefit of Mr.&nbsp;Kaufman&#146;s family, and (b)&nbsp;co-trustee, along with Mr.
Kaufman, of the Ivan Kaufman Grantor Retained Annuity Trust.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We hold our partnership interests in our operating partnership through
two wholly owned subsidiaries, Arbor Realty GPOP, Inc., the general
partner, holding a 0.1% general partner interest, and Arbor Realty LPOP,
Inc., a limited partner, holding a 71.9% limited partner interest.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2"><B>Risk Factors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An investment in our securities involves a number of risks. You should
consider carefully the risks discussed below and under &#147;Risk Factors&#148; beginning
on page 15 before purchasing our securities.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We have a limited operating history and may not operate
successfully.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">6</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our historical consolidated financial information is not likely to
be indicative of our future performance or financial condition as a
separate company.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We are dependent on our manager with whom we have conflicts of
interest.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our directors have approved very broad investment guidelines for
our manager and do not approve each investment decision made by our
manager.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our manager has broad discretion to invest funds and may acquire
structured finance assets where the investment returns are
substantially below expectations or that result in net operating
losses.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We depend on key personnel with long standing business
relationships, the loss of whom could threaten our ability to operate
our business successfully.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We may be unable to invest excess equity capital on acceptable
terms or at all, which would adversely affect our operating results.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We invest in multi-family and commercial real estate loans, which
involve a greater risk of loss than single family loans.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Volatility of values of multi-family and commercial properties may
adversely affect our loans and investments.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">We may be unable to generate sufficient revenue from operations to
pay our operating expenses and to pay dividends to our stockholders.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If ACM ceases to be our manager pursuant to the management
agreement, the financial institutions providing our credit facilities
may not provide future financing to us.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If we do not qualify as a REIT or fail to remain qualified as a
REIT, we will be subject to tax as a regular corporation and could face
substantial tax liability.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">There is no public market for the offered securities, and there may
be no market for the offered securities after the completion of this
offering.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our charter generally does not permit ownership in excess of 9.6%
of our common or capital stock, and attempts to acquire our capital
stock in excess of these limits are ineffective without prior approval
from our board of directors.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2"><B>Restrictions on Ownership of Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order for us to maintain our qualification as a REIT under the Code,
not more than 50% (by value) of our outstanding shares of capital stock may be
owned, directly or indirectly, by five or fewer individuals (as defined in the
Internal Revenue Code to include certain entities). For the purpose of
preserving our REIT qualification, our charter generally prohibits direct or
indirect ownership of more than 9.6% of the outstanding shares of capital
stock. Our board of directors may, however, in its discretion, exempt a person
from this ownership limitation, and, as a condition to such exemption, may
require a satisfactory ruling from the Internal Revenue Service, or IRS, an
opinion of counsel (as to our continued REIT status) and/or certain
representations and undertakings from such person.
</FONT>
<P align="center"><FONT size="2"><B>Distribution Policy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To maintain our qualification as a REIT, we intend to make regular
quarterly distributions to our stockholders of at least 90% of our taxable
income, which does not necessarily equal net income as calculated in accordance
with generally accepted accounting principles. Distributions are authorized by
our board of directors
</FONT>
<P align="center"><FONT size="2">7</FONT>
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<P align="left"><FONT size="2">and declared by us based upon a variety of factors deemed relevant by our
directors, and our distribution policy may change in the future. Our ability
to make distributions to our stockholders depends, in part, upon our receipt of
distributions from our operating partnership, Arbor Realty Limited Partnership,
which may depend, in part, upon the performance of our investment portfolio,
and, in turn, upon ACM&#146;s management of our business. Distributions to our
stockholders are generally taxable to our stockholders as ordinary income,
although a portion of these distributions may be designated by us as long term
capital gain or may constitute a return of capital.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter allows us to issue preferred stock with a preference on
distributions. We currently have no intention to issue any such preferred
stock with a preference on distributions but if we do, the dividend preference
on the preferred stock could limit our ability to make a dividend distribution
to our common stockholders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;5, 2003, we declared a dividend of $.25 per share of common
stock, payable with respect to the quarter ending September&nbsp;30, 2003, to our
common stockholders of record at the close of business on November&nbsp;5, 2003. We
plan to distribute this dividend on November&nbsp;18, 2003.
</FONT>
<P align="center"><FONT size="2"><B>Preferred Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to a pairing agreement that we entered into with our operating
partnership and our manager, each operating partnership unit issued to ACM and
its affiliates in connection with the contribution of the initial assets
(including operating partnership units issuable upon the exercise of ACM&#146;s
warrants) is paired with one share of our special voting preferred stock. No
operating partnership unit that is paired with a share of special voting
preferred stock may be transferred unless accompanied by such special voting
share. A holder of special voting preferred stock is not entitled to any
regular or special dividend payments or other distributions, other than a $.01
per share liquidation preference.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each share of special voting preferred stock entitles the holder to one
vote on all matters submitted to a vote of our stockholders. Therefore,
through its ownership of the &#147;paired&#148; special voting preferred stock, ACM is
currently entitled to a number of votes representing approximately 28% of the
voting power of all shares entitled to vote on matters submitted to a vote of
our stockholders (without giving effect to the exercise of ACM&#146;s warrants).
The holders of special voting preferred stock have no separate class voting
rights except as provided by our charter.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon any redemption of an operating partnership unit that is paired with a
share of special voting preferred stock, the share of special voting preferred
stock will be redeemed and cancelled by us.
</FONT>
<P align="center"><FONT size="2"><B>Tax Status</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to elect to be treated as a REIT for federal income tax
purposes. To qualify as a REIT, we must meet various tax law requirements,
including, among others, requirements relating to the nature of our assets, the
sources of our income, the timing and amount of distributions that we make and
the composition of our stockholders. As a REIT, we generally are not subject
to federal income tax on income that we distribute to our stockholders. If we
fail to qualify as a REIT in any taxable year, we will be subject to federal
income tax at regular corporate rates, and we may be precluded from qualifying
as a REIT for the subsequent four taxable years following the year during which
we lost our qualification. Further, even to the extent that we qualify as a
REIT, we will be subject to tax at normal corporate rates on net income or
capital gains not distributed to our stockholders, and we may be subject to
other taxes, including payroll taxes, and state and local income,
franchise, property, sales and other taxes. Moreover, we may have subsidiary
entities that are subject to federal income taxation and to various other
taxes. Any dividends received from us will generally, with limited exceptions,
not be eligible for taxation at the preferred capital gain rates that currently
apply, pursuant to recently enacted legislation, to dividends received by
individuals from taxable corporations. See &#147;Federal Income Tax
Considerations.&#148;
</FONT>
<P align="center"><FONT size="2"><B>Conflicts of Interest</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We, our executive officers and ACM face conflicts of interest because of
our relationships with each other. Mr.&nbsp;Ivan Kaufman is our chief executive
officer and the chief executive officer of ACM. The Kaufman entities own
approximately 88% of the beneficial equity interest of ACM. Mr.&nbsp;Frederick C.
Herbst is our chief financial officer
</FONT>
<P align="center"><FONT size="2">8</FONT>
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<P align="left"><FONT size="2">and the chief financial officer of ACM. Mr.&nbsp;Herbst, two of our executive
vice presidents, Messrs.&nbsp;Dan Palmier and Fred Weber, and two of our directors,
Mr.&nbsp;Joseph Martello and Mr.&nbsp;Walter Horn, collectively, have a minority
ownership interest in ACM. In addition, Mr.&nbsp;Martello serves as trustee of
one of the Kaufman entities that owns a majority ownership interest in ACM and
co-trustee of another Kaufman entity that owns an equity interest in ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM will continue, among other activities, to originate, acquire and
service multi-family and commercial mortgage loans that meet the underwriting
and approval guidelines of Fannie Mae, the Federal Housing Administration and
conduit commercial lending programs secured by first liens on real property.
Accordingly, Messrs.&nbsp;Kaufman and Herbst will devote substantial amounts of
their time to operating portions of ACM&#146;s business that do not involve managing
us. Further conflicts of interest may arise because ACM may also provide
permanent mortgage financing to real estate concerns to which we have made
temporary loans, or because ACM may have equity interests in real estate
concerns that borrow money from us. In addition, Messrs.&nbsp;Palmier and Weber
will continue to provide services to ACM as members of ACM&#146;s executive
committee, and may receive fees for originating loans on behalf of ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM holds a 28% limited partnership interest in our operating partnership
as a result of the contribution of the initial assets. ACM also owns
approximately 3.1&nbsp;million shares of our special voting preferred stock that
entitle it to 28% of the voting power of our stock (without giving effect to
the exercise of ACM&#146;s warrants).
</FONT>
<P align="left"><FONT size="2">We were formed by ACM and the terms of our management agreement, and the
contribution of the initial assets were not negotiated at arm&#146;s length. To
address some of these conflicts of interest, our charter requires that a
majority of our board of directors be independent directors and that a majority
of our independent directors make any determinations on our behalf with respect
to the relationships or transactions that present a conflict of interest for
our directors or officers. Our board of directors has adopted a specific
policy that decisions concerning our management agreement, including
termination, renewal and enforcement of the management agreement, or concerning
any acquisition of assets from ACM or its affiliates or other participation in
any transactions with ACM or its affiliates outside of the management agreement
must be reviewed and approved by a majority of our independent directors.
Finally, our independent directors will periodically review the general
investment standards established for the manager under the management
agreement.
</FONT>
<P align="center"><FONT size="2">9</FONT>
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<P align="center"><FONT size="2"><B>Original Offering</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, we issued and sold 1,610,000 of our units, each
consisting of five shares of our common stock, $.01 par value per share, and
one warrant to purchase an additional share of common stock. 1,327,989 of
these units were sold to JMP, as initial purchaser, and were simultaneously resold by
JMP in transactions exempt from the registration requirements of the Securities
Act of 1933, as amended, to persons reasonably believed by JMP Securities to be
&#147;qualified institutional buyers&#148; (as defined in Rule&nbsp;144A under the Securities
Act) and to a limited number of institutional &#147;accredited investors&#148; (as
defined in Rule&nbsp;501 under the Securities Act). The remaining 282,011 units were
sold directly by us to individual accredited investors. Certain
investors in the original offering included institutions and individuals affiliated with us and JMP.
</FONT>
<P align="left"><FONT size="2"><B>Registration Rights</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the original offering we entered into a registration
rights agreement with JMP. Pursuant to that agreement, we have filed a shelf
registration statement of which this prospectus is a part, covering the resale
of the offered securities. The shelf registration statement includes the
offered securities listed under &#147;&#151; The Offering.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time of the original offering we also entered into a registration
rights agreement with ACM whereby we granted ACM certain demand and other
registration rights with respect to shares of common stock that may be issued
to ACM upon redemption of the 3.1&nbsp;million operating partnership units issued to
ACM and issuable to ACM upon exercise of the 629,000 warrants for additional
operating partnership units.
</FONT>
<P align="left"><FONT size="2"><B>Lock-Up Agreements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the original offering, ACM, members of our senior
management and board of directors and certain members of the senior management
of ACM agreed not to offer, pledge, sell contract to sell, sell any option or
contract to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of our common stock, or any securities convertible into
or exercisable for any of our common stock or any right to acquire our common
stock, until the earlier of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">180&nbsp;days from the effective date of the shelf registration statement; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">two years from the consummation of the original offering, subject to certain exceptions.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also agreed not to offer to sell, contract to sell, or otherwise
dispose of, loan, pledge or grant any rights with respect to any shares of our
common stock, any options or warrants to purchase any shares of our common
stock or any securities convertible into or exercisable for any of our common
stock, including our units, for a period of 180&nbsp;days following the completion
of the original offering, subject to certain exceptions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JMP, at any time, and without notice, may release all or any portion of
the common stock subject to the foregoing lock-up agreements.
</FONT>
<P align="center"><FONT size="2">10</FONT>
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<P align="center"><FONT size="2"><B>The Offering</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Securities Offered</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The selling stockholders may, from time to time,
sell the offered securities which include:<br>1,602,833&nbsp;units sold in the original offering;<BR>
8,014,165&nbsp;shares of common stock comprising the
units;<BR>
1,602,833&nbsp;warrants comprising the units; and<BR>
1,602,833&nbsp;shares of common stock underlying the
warrants.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The warrants have an initial exercise price of $15 and
are exercisable until 5:00 p.m. New York City time on
July&nbsp;1, 2005. The warrants comprising the units do not
become exercisable, detachable and freely tradable
until after the shares of the common stock comprising
the units are registered under the Securities Act and
either listed on a national securities exchange or The
Nasdaq Stock Market, Inc. The shares of common stock
and the warrants comprising the units may not be traded
separately until such listing.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Offering Price</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The selling stockholders are offering, from time to time,
the securities being offered by this prospectus at the
then current market price.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Use of Proceeds</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The selling stockholders will receive all of the proceeds
from the sale of the securities. We will not receive any
proceeds from the sale of the securities.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><B>Listing</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
We have agreed to use our best efforts to list or include
the offered securities on The Nasdaq Stock Market,
including The Nasdaq SmallCap Market, or the New York
Stock Exchange, in our discretion, as soon as practicable
after we are able to satisfy the applicable listing
requirements for the offered securities, which will not
occur for an indefinite period of time, if at all, after
the registration statement of which this prospectus is a part is
declared effective. If and when
we apply for listing of the offered securities under the
applicable listing requirements, we cannot guarantee that
we will have the minimum number of holders required in
order to list or include the offered securities on either
The Nasdaq Stock Market, including The Nasdaq SmallCap
Market, or the New York Stock Exchange.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">11</FONT>
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<P align="center"><FONT size="2"><B>Summary Selected Unaudited Consolidated Financial Information<BR>
of Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables present selected historical consolidated financial
information for the three months ended September&nbsp;30, 2003. The selected
historical consolidated financial information presented below under the
captions &#147;Consolidated Statement of Operations Data&#148; and &#147;Consolidated Balance
Sheet Data&#148; have been derived from our unaudited, interim consolidated
financial statements and include all adjustments, consisting only of normal
recurring accruals, which management considers necessary for a fair
presentation of the historical consolidated financial statements for such
period. The information presented under the caption &#147;Statement of Operations
Data&#148; for the three months ended September&nbsp;30, 2003 is not necessarily
indicative of any other interim period or of the year ended December&nbsp;31, 2003.
In addition, since the information presented below is only a summary and does
not provide all of the information contained in our historical consolidated
financial statements, including the related notes, you should read it in
conjunction with &#147;Management&#146;s Discussion and Analysis of Financial Condition
and Results of Operations of Arbor Realty Trust, Inc. and Subsidiaries&#148; and our
historical consolidated financial statements, including the related notes,
included elsewhere in this prospectus.
</FONT>


<Center>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="78%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Three Months Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30, 2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom">

    <TD><FONT size="2"><B>Consolidated Statement of Operations Data:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B><HR size="1" noshade></B></FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest Income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,664,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,670,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,183,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Earnings
per share, basic and diluted <SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dividends declared per common share <SUP>(2)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<p>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="78%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>At September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2"><b>Consolidated Balance Sheet Data:</b></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">214,237,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">255,389,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes
payable and <BR>repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,913,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">97,831,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,309,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total stockholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">113,248,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

 <TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
 </TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Three Months Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30, 2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2"><b>Other Data:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total
originations&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">39,014,922</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%" align="right" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="91%" align="left"><FONT size="2">The warrants underlying the units issued in the original
offering at $75.00 per unit have an exercise price of $15.00 per
share and expire on July&nbsp;1, 2005. This exercise price is equal
to the price per share of common stock in the original offering
and approximates the market value of our common stock at
September&nbsp;30, 2003. Therefore, the assumed exercise of the
warrants were not considered to be dilutive for purposes of
calculating diluted earnings per share.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="6%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(2)</FONT></TD>
    <TD width="91%"><FONT size="2">On November&nbsp;5, 2003, we declared a dividend of $.25 per
share of common stock, payable with respect to the quarter
ending September&nbsp;30, 2003, to common stockholders of record at
the close of business on November&nbsp;5, 2003.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">12</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>Summary Selected Consolidated Financial Information<BR>
of the Structured Finance Business of Arbor Commercial Mortgage, LLC and Subsidiaries</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, ACM contributed a portfolio of structured finance
investments and related liabilities to our operating partnership. In addition,
certain employees of ACM became our employees. These assets, liabilities and
employees represented a substantial portion of ACM&#146;s structured finance
business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
tables on the following page present selected historical consolidated financial
information of the structured finance business of ACM at the dates and for the
periods indicated. The structured finance business did not operate as a
separate legal entity or business division or segment of ACM, but as an
integrated part of ACM&#146;s consolidated business. Accordingly, the statements of
revenue and direct operating expenses do not include charges from ACM for
corporate general and administrative expense because ACM considered such items
to be corporate expenses and did not allocate them to individual business
units. These expenses included costs for ACM&#146;s executive management, corporate
facilities and overhead costs, corporate accounting and treasury functions,
corporate legal matters and other similar costs. The selected consolidated
financial information presented under the caption &#147;Consolidated Statement
of Revenue and Direct Operating Expenses Data&#148; for the years ended December&nbsp;31,
2002, 2001 and 2000 and under the caption &#147;Consolidated Statement of Assets and
Liabilities Data&#148; as of December&nbsp;31, 2002 and 2001 have been derived from the
audited consolidated financial statements of the structured finance business of
ACM included elsewhere in this prospectus. The selected consolidated financial
information presented under the caption &#147;Consolidated Statement of
Revenue and Direct Operating Expenses Data&#148; for the years ended December&nbsp;31,
1999 and 1998 and the caption &#147;Consolidated Statement of Assets and Liabilities
Data&#148; as of December&nbsp;31, 2000, 1999 and 1998 have been derived from the
unaudited consolidated financial statements of the structured finance business
of ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selected consolidated financial information presented under the
caption &#147;Consolidated Statement of Revenue and Direct Operating Expenses Data&#148;
for the six months ended June&nbsp;30, 2003 and 2002 and the nine months ended
September&nbsp;30, 2002 and under the caption &#147;Consolidated Statement of Assets and
Liabilities Data&#148; at June&nbsp;30, 2003 have been derived from the unaudited interim
consolidated financial statements of ACM&#146;s structured finance business and
include all adjustments, consisting only of normal recurring accruals, which
management considers necessary for a fair presentation of the historical
consolidated financial information for such periods. The selected historical
consolidated financial information presented under the caption &#147;Consolidated
Statement of Revenue and Direct Operating Expenses Data&#148; for the six month
period ended June&nbsp;30, 2003 is not necessarily indicative of the results of any
other interim period or the year ended December&nbsp;31, 2003. The selected
historical consolidated financial information presented under the caption
&#147;Consolidated Statement of Revenue and Direct Operating Expenses Data&#148; for the
six month period ended June&nbsp;30, 2002 and the nine month period ended September
30, 2002 are not necessarily indicative of the results of any other interim
period or the year ended December&nbsp;31, 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of ACM&#146;s structured finance business
included in this prospectus represent the consolidated financial position and
results of operations of ACM&#146;s structured finance business during certain
periods and at certain dates when ACM previously held our initial assets, as
well as several other structured finance investments that we did not acquire in
connection with our formation transactions. See &#147;Arbor Realty Trust, Inc.&#148;
Accordingly, the historical financial results of ACM&#146;s structured finance
business are not indicative of our future performance. In addition, since the
information presented is only a summary and does not provide all of the
information contained in the consolidated financial statements of ACM&#146;s
structured finance business, including related notes, you should read it in
conjunction with &#147;Management&#146;s Discussion and Analysis of Financial Condition
and Results of Operations of the Structured Finance Business of Arbor
Commercial Mortgage, LLC and Subsidiaries&#148; and the consolidated financial
statements of ACM&#146;s structured finance business, including related notes,
contained elsewhere in this prospectus.
</FONT>

<P align="center"><FONT size="2">13</FONT>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Consolidated Statement of Revenue<BR>
and Direct Operating Expenses Data:</B>
</FONT>


<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Six Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Nine Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>&nbsp;</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>&nbsp;</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year
Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998<SUP>(1)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD colspan="4"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Interest Income</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">7,688,465</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">7,482,750</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">10,798,414</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">14,532,504</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">14,667,916</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">10,707,551</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">6,964,873</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">6,807,617</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Gain
on sale of loans<BR>and real estate</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,024,268</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,006,432</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,006,432</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,470,999</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,226,648</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,880,825</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,818,299</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,898,558</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Income from equity affiliates</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">601,100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">632,350</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">632,350</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,403,014</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,028,835</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,592,398</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">567,006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Income
from real estate<BR>held for sale, net of
operating expenses</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">925,999</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,608,172</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Other income</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,552,414</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">553,625</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">572,161</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,090,106</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,668,215</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">652,970</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,838,639</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,064,294</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total revenue</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,265,147</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,643,907</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">19,009,357</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,725,959</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,965,793</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18,270,181</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">16,140,208</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">17,945,647</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total
direct operating<BR>expenses</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,737,688</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,344,302</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,775,555</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">13,639,755</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,997,800</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,227,274</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,145,469</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6,589,274</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Revenue
in excess of<BR>direct operating expenses</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,527,459</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,299,605</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,233,802</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,086,204</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,967,993</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,042,907</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,994,739</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11,356,373</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>


<P align="left"><FONT size="2"><B>Consolidated Statement of Assets and Liabilities Data:</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>At June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>At December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">204,561,578</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">172,142,511</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">160,183,066</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">85,547,323</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">50,156,022</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">75,604,351</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,277,041</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,952,078</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,880,207</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Investment in equity affiliates</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,654,573</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,586,026</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,957,072</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,506,417</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,459,586</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,092,793</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total assets</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">241,667,960</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">200,563,236</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">183,713,747</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">119,110,446</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">84,751,032</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">96,537,674</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Notes payable and repurchase
agreements</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">171,045,404</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">141,836,477</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">132,409,735</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">70,473,501</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">47,154,530</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">58,678,062</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">172,686,366</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">144,280,806</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">134,086,301</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">72,266,700</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">48,025,934</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">59,193,306</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Net assets</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">68,981,594</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">56,282,430</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">49,627,446</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">46,843,746</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">36,725,098</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">37,344,368</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><B>Other Data:</B>
</FONT>


<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Six Months Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Nine Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total originations</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">117,965,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">30,660,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">49,510,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">130,043,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">86,700,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">108,378,000</FONT></TD>
    <TD nowrap><FONT size="1"><SUP><B>(2)</B></SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">120,378,900</FONT></TD>
    <TD nowrap><FONT size="1"><SUP><B>(2)</B></SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">230,718,353</FONT></TD>
    <TD nowrap><FONT size="1"><SUP><B>(2)</B></SUP></FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In June 1998, ACM entered into a joint venture with SFG I, an affiliate
of Nomura Asset Capital Corp., for the purpose of acquiring up to $250
million of structured finance investments. ACM and SFG I each made 50% of
the capital contributions to the joint venture and shared profits equally.
Nomura Asset Capital Corp. provided financing to the joint venture in the
form of a repurchase agreement. On July&nbsp;31, 2001, ACM purchased SFG I&#146;s
interest in this venture. This buyout was accounted for by the purchase
accounting method. Prior to the purchase, net income from this venture
was recorded in income from equity affiliates. The activities of the
former joint venture have been included in the statements of revenue and
direct operating expenses from the date of acquisition, August 2001. See
the consolidated financial statements of ACM&#146;s structured finance business
and the related notes to the consolidated financial statements included
elsewhere in this prospectus for further information.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Total originations for 1998, 1999 and 2000 include originations from
ACM&#146;s joint venture with SFG I discussed in footnote 1.</FONT></TD>
</TR>
</TABLE>

<P>
<HR width="26%" align="center" size="1" noshade>
<P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty Trust, Inc. was incorporated in the State of Maryland in June
2003. Our principal executive offices are located at 333 Earle Ovington
Boulevard, Suite&nbsp;900, Uniondale, New York 11553. Our telephone number is (516)
832-8002.
</FONT>
<P align="center"><FONT size="2">14</FONT>
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<!-- link1 "RISK FACTORS" -->
<DIV align="left"><A NAME="001"></A></DIV>
<P align="center"><FONT size="2"><B>RISK FACTORS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An investment in our securities involves a number of risks. Before making
an investment decision, you should carefully consider all of the risks
described below and the other information contained in this prospectus. If any
of the risks discussed in this prospectus actually occur, our business,
financial condition and results of operations could be materially adversely
affected. If this were to occur, the value of our securities could decline and
you may lose all or part of your investment.
</FONT>
<P align="left"><FONT size="2"><B>Risks Related to Our Business</B>
</FONT>

<P align="left"><FONT size="2"><B><I>We have a limited operating history and may not operate successfully.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were organized in June 2003 and have a limited operating history. The
results of our operations depend on many factors, including the performance of
the initial assets, the availability of opportunities for the acquisition of
additional assets, the level and volatility of interest rates, readily
accessible short and long term financing, conditions in the financial markets
and economic conditions, and we may not operate successfully. We face
substantial competition in acquiring suitable investments, which could
adversely impact our yields.
</FONT>
<P align="left"><FONT size="2"><B><I>Our historical consolidated financial information is not likely to be
indicative of our future performance or financial condition as a separate
company.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The historical consolidated financial information included in this
prospectus for the three years ending December&nbsp;31, 2002 and at December&nbsp;31,
2002 and 2001, for the six months ending June&nbsp;30, 2003 and at June&nbsp;30, 2003 and
2002 may not reflect what our results of operations, financial condition and
cash flows would have been had we been a separate, stand-alone entity during
the periods presented. We prepared our historical consolidated financial
statements from ACM&#146;s historical accounting records. The revenues, expenses,
assets, liabilities and cash flows during each respective period that pertained
to ACM&#146;s structured finance business were allocated to us. All of these
allocations are based on assumptions that management believes are reasonable
under the circumstances. However, these allocations may not be indicative of
the revenues, expenses, assets, liabilities and cash flows that would have
existed or resulted if we had operated as a separate entity.
</FONT>
<P align="left"><FONT size="2"><B><I>We may be unable to invest excess equity capital on acceptable terms or at all,
which would adversely affect our operating results.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not be able to identify investments that meet our investment
criteria and we may not be successful in closing the investments that we
identify. Unless and until we identify structured finance investments
consistent with our investment criteria, any excess equity capital may be used
to repay borrowings under our warehouse credit facility and repurchase
agreements, which would not produce a return on capital. In addition, the
investments that we acquire with our equity capital may not produce a return on
capital. There can be no assurance that we will be able to identify attractive
opportunities to invest our equity capital which would adversely affect our
results of operations.
</FONT>
<P align="left"><FONT size="2"><B><I>We may change our investment strategy without stockholder consent, which may
result in riskier investments than our current investments.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may change our investment strategy and guidelines at any time without
the consent of our stockholders, which could result in our making investments
that are different from, and possibly riskier than, the investments described
in this prospectus. A change in our investment strategy or guidelines may
increase our exposure to interest rate and real estate market fluctuations.
</FONT>
<P align="left"><FONT size="2"><B><I>We depend on key personnel with long standing business relationships, the loss
of whom could threaten our ability to operate our business successfully.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future success depends, to a significant extent, upon the continued
services of our manager and our employees. In particular, the mortgage lending
experience of Mr.&nbsp;Ivan Kaufman and Mr.&nbsp;Fred Weber and the extent
</FONT>
<P align="center"><FONT size="2">15</FONT>
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<P align="left"><FONT size="2">and nature of the relationships they have developed with developers of
multi-family and commercial properties and other financial institutions are
critical to the success of our business. We cannot assure you of their
continued employment with ACM or us. The loss of services of one or more
members of our manager&#146;s officers or our officers could harm our business and
our prospects.
</FONT>
<P align="left"><FONT size="2"><B><I>If we cannot obtain additional financing substantially similar to the credit
facilities we currently have, our growth will be limited.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are generally required to distribute to our stockholders at least 90%
of our taxable income each year to continue to qualify as a REIT, and we must
distribute all of our taxable income in order to avert any corporate income
taxes on retained income. As a result, our retained earnings available to fund
origination of new loans are nominal, and we rely upon the availability of
additional debt or equity capital to fund these activities. Our long term
ability to grow through investment in structured finance assets will be limited
if we cannot obtain additional financing substantially similar to the credit
facilities we currently have, including interest rates and advance rates.
Market conditions may make it difficult to obtain financing on favorable terms
or at all.
</FONT>
<P align="left"><FONT size="2"><B><I>If ACM ceases to be our manager pursuant to the management agreement, the
financial institutions providing our credit facilities may not provide future
financing to us.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM must be our external manager pursuant to the management agreement in
order to receive advances under each of our existing credit facilities.
Additionally, if ACM ceases to be our manager, each of the financial
institutions under our current credit facilities has the right to terminate
their facility and their obligation to advance funds to us in order to finance
our future investments. If ACM ceases to be our manger for any reason and we
are not able to obtain financing under our existing credit facilities, our
growth may be limited.
</FONT>
<P align="left"><FONT size="2"><B><I>The repurchase agreements and credit facilities that we use to finance our
investments may require us to provide additional collateral and may leave us
without funding should our funding sources file for bankruptcy.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit facilities, including repurchase agreements, involve the risk that
the market value of the loans pledged or sold by us to the funding source may
decline in value, in which case the lending institution may require us to
provide additional collateral to pay down a portion of the funds advanced. In
addition, in the event that the funding source files for bankruptcy or becomes
insolvent, our loans may become subject to the bankruptcy or insolvency
proceedings, thus depriving us, at least temporarily, of the benefit of these
assets. Such an event could materially adversely affect our results of
operations.
</FONT>
<P align="left"><FONT size="2"><B><I>Mezzanine loans involve greater risks of loss than senior loans secured by
income producing properties.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We invest in mezzanine loans. These types of investments are considered
to involve a higher degree of risk than long term senior mortgage lending
secured by income producing real property due to a variety of factors,
including the investment becoming unsecured as a result of foreclosure by the
senior lender. As a result, we may not recover some or all of our investment.
In addition, mezzanine loans may have higher loan to value ratios than
conventional mortgage loans, resulting in less equity in the property and
increasing the risk of loss of principal.
</FONT>
<P align="left"><FONT size="2"><B><I>Preferred equity investments involve a greater risk of loss than traditional
debt financing.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We invest in preferred equity investments, which involve a higher degree
of risk than traditional debt financing due to a variety of factors, including
that such investments are subordinate to other loans and are not secured by
property underlying the investment. Furthermore, should the issuer default on
our investment, we would only be able to proceed against the partnership in
which we have an interest, and not the property underlying our investment. As
a result, we may not recover some or all of our investment.
</FONT>
<P align="center"><FONT size="2">16</FONT>
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<P align="left"><FONT size="2"><B><I>Mortgage investments that are not United States government insured and
non-investment grade mortgage assets involve risk of loss.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We originate and acquire uninsured and non-investment grade mortgage loans
and mortgage assets as part of our investment strategy. Such loans and assets
include mezzanine loans and bridge loans. While holding such interests, we are
subject to risks of borrower defaults, bankruptcies, fraud, losses and special
hazard losses that are not covered by standard hazard insurance. In the event
of any default under mortgage loans held by us, we bear the risk of loss of
principal and non-payment of interest and fees to the extent of any deficiency
between the value of the mortgage collateral and the principal amount of the
mortgage loan. To the extent we suffer such losses with respect to our
investments in mortgage loans, the value of our company and the price of our
common stock may be adversely affected.
</FONT>
<P align="left"><FONT size="2"><B><I>We invest in multi-family and commercial real estate loans, which involve a
greater risk of loss than single family loans.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our investments include multi-family and commercial real estate loans that
are considered to involve a higher degree of risk than single family
residential lending because of a variety of factors, including generally larger
loan balances, dependency for repayment on successful operation of the
mortgaged property and tenant businesses operating therein, and loan terms that
include amortization schedules longer than the stated maturity and provide for
balloon payments at stated maturity rather than periodic principal payments.
In addition, the value of commercial real estate can be affected significantly
by the supply and demand in the market for that type of property.
</FONT>
<P align="left"><FONT size="2"><B><I>We may invest in direct ownership of real estate, the value of which may
fluctuate.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may make investments in the direct ownership of real property. In
addition, our loans held for investment are generally directly or indirectly
secured by a lien on real property that, upon the occurrence of a default on
the loan, could result in our acquiring ownership of the property. Investments
in real property or real property related assets are subject to varying degrees
of risk. The value of each property is affected significantly by its ability
to generate cash flow and net income, which in turn depends on the amount of
rental income that can be generated net of expenses required to be incurred
with respect to the property. The rental income from these properties may be
adversely affected by a number of factors, including general economic climate
and local real estate conditions, an oversupply of (or a reduction in demand
for) space in properties in the areas where particular properties are located
and the attractiveness of particular properties to prospective tenants. Net
income from properties also is affected by such factors as the cost of
compliance with government regulations, including zoning and tax laws, and the
potential for liability under applicable laws. Many expenditures associated
with properties (such as operating expenses and capital expenditures) cannot be
reduced when there is a reduction in income from the properties. Adverse
changes in these factors may have a material adverse effect on the ability of
our borrowers to pay their loans, as well as on the value that we can realize
from properties we own or acquire.
</FONT>
<P align="left"><FONT size="2"><B><I>Risks of cost overruns and noncompletion of renovation of the properties
underlying rehabilitation loans may materially adversely affect our investment.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The renovation, refurbishment or expansion by a borrower under a mortgaged
property involves risks of cost overruns and noncompletion. Estimates of the
costs of improvements to bring an acquired property up to standards established
for the market position intended for that property may prove inaccurate. Other
risks may include rehabilitation costs exceeding original estimates, possibly
making a project uneconomical, environmental risks and rehabilitation and
subsequent leasing of the property not being completed on schedule. If such
renovation is not completed in a timely manner, or if it costs more than
expected, the borrower may experience a prolonged impairment of net operating
income and may not be able to make payments on our investment.
</FONT>
<P align="left"><FONT size="2"><B><I>Participating interests may not be available and, even if obtained, may not be
realized.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the acquisition and origination of certain structured
finance assets, we may obtain participating interests, or equity &#147;kickers,&#148; in
the owner of the property that entitle us to payments based upon a
development&#146;s cash flow, profits or any increase in the value of the
development that would be realized upon a
</FONT>
<P align="center"><FONT size="2">17</FONT>
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<P align="left"><FONT size="2">refinancing or sale of the development. Competition for participating
interests is dependent to a large degree upon market conditions. Participating
interests are more difficult to obtain when multi-family and commercial real
estate financing is available at relatively low interest rates. In the current
interest rate environment, we may have greater difficulty obtaining
participating interests. Participating interests are not government insured or
guaranteed and are therefore subject to the general risks inherent in real
estate investments. Therefore, even if we are successful in originating
mortgage loans that provide for participating interests, there can be no
assurance that such interests will result in additional payments to us.
</FONT>
<P align="left"><FONT size="2"><B><I>Competition in acquiring desirable investments may limit their availability,
which could, in turn, negatively affect our ability to maintain our dividend
distribution.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in investing in structured finance assets with numerous public
and private real estate investment vehicles, such as other REITs, mortgage
banks, pension funds, institutional investors and individuals. Structured
finance assets are often obtained through a competitive bidding process. Many
of our competitors are larger than us, have access to greater capital and other
resources, have management personnel with more experience than our officers or
our manager and have other advantages over us and our manager in conducting
certain business and providing certain services. Competition may result in
higher prices for structured finance assets, lower yields and a narrower spread
of yields over our borrowing costs. In addition, competition for desirable
investments could delay the investment of our equity capital in desirable
assets, which may, in turn, reduce earnings per share and may negatively affect
our ability to maintain our dividend distribution. There can be no assurance
that we will achieve investment results that will allow any specified level of
cash distribution.
</FONT>
<P align="left"><FONT size="2"><B><I>Interest rate fluctuations may adversely affect the value of our assets, net
income and common stock.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest rates are highly sensitive to many factors, including
governmental monetary and tax policies, domestic and international economic and
political considerations and other factors beyond our control. Interest rate
fluctuations present a variety of risks including the risk of a mismatch
between asset yields and borrowing rates, variances in the yield curve and
fluctuating prepayment rates and may adversely affect our income and value of
our common stock.
</FONT>
<P align="left"><FONT size="2"><B><I>Prepayment rates can increase, thus adversely affecting yields.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The value of our assets may be affected by prepayment rates on mortgage
loans. Prepayment rates on loans are influenced by changes in current interest
rates and a variety of economic, geographic and other factors beyond our
control, and consequently, such prepayment rates cannot be predicted with
certainty. In periods of declining interest rates, prepayments on loans
generally increase. If general interest rates decline as well, the proceeds of
such prepayments received during such periods are likely to be reinvested by us
in assets yielding less than the yields on the assets that were prepaid. In
addition, the market value of the structured finance assets may, because of the
risk of prepayment, benefit less than other fixed income securities from
declining interest rates. Under certain interest rate and prepayment scenarios
we may fail to recoup fully our cost of acquisition of certain investments. A
portion of our investments require payments of deferred interest upon
prepayment or maturity of the investment. This deferred interest will
generally discourage a borrower from repaying an investment ahead of its
scheduled maturity. We may not be able to structure future investments that
contain similar deferred interest payments.
</FONT>
<P align="left"><FONT size="2"><B><I>Refinancing our credit facilities may materially adversely affect our results
of operations.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our loans held for investment may have maturities that are different from
the maturities for the funds we borrow to finance them. If the funds we borrow
mature before the loans we make, we would have to seek new financing that may
not be on as favorable terms and our net income would be adversely affected.
</FONT>
<P align="left"><FONT size="2"><B><I>Changes in market conditions may adversely affect our credit facilities and
repurchase agreements.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit facilities, including repurchase agreements, involve the risk that
the market value of the loans pledged or sold to the funding source by us may
decline, in which case the lending institution may require us to provide
additional collateral or pay down a portion of the funds advanced. In
addition, in the event the funding
</FONT>
<P align="center"><FONT size="2">18</FONT>
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<P align="left"><FONT size="2">source files for bankruptcy or becomes insolvent, our loans may become
subject to the bankruptcy or insolvency proceedings, thus depriving us, at
least temporarily, of the benefit of these assets. Such an event could
materially adversely affect our business.
</FONT>
<P align="left"><FONT size="2"><B><I>The geographic concentration of the properties underlying our investments may
increase our risk of loss.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not established any limit upon the geographic concentration of
properties underlying our investments. As a result, properties underlying our
investments may be overly concentrated in certain geographic areas, and we may
experience losses as a result. As of September&nbsp;30, 2003, 22%, 20%, 16%, 10%
and 10% of the outstanding balance of the structured finance investments we
hold had underlying properties in Florida, New York, Maryland, Nevada and New
Jersey, respectively. A worsening of economic conditions in these states could
have an adverse effect on our business, including reducing the demand for new
financings, limiting the ability of customers to pay financed amounts and
impairing the value of our collateral.
</FONT>
<P align="left"><FONT size="2"><B><I>Volatility of values of multi-family and commercial properties may adversely
affect our loans and investments.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Multi-family and commercial property values and net operating income
derived from such properties are subject to volatility and may be affected
adversely by a number of factors, including, but not limited to, national,
regional and local economic conditions (which may be adversely affected by
industry slowdowns and other factors); local real estate conditions (such as an
oversupply of housing, retail, industrial, office or other commercial space);
changes or continued weakness in specific industry segments; construction
quality, age and design; demographic factors; retroactive changes to building
or similar codes; and increases in operating expenses (such as energy costs).
In the event a property&#146;s net operating income decreases, a borrower may have
difficulty paying our loan, which could result in losses to us. In addition,
decreases in property values reduce the value of the collateral and the
potential proceeds available to a borrower to repay our loans, which could also
cause us to suffer losses.
</FONT>
<P align="left"><FONT size="2"><B><I>We may be unable to generate sufficient revenue from operations to pay our
operating expenses and to pay dividends to our stockholders.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a REIT, we are generally required to distribute at least 90% of our
taxable income each year to our stockholders. We intend to distribute to our
stockholders all or substantially all of our taxable income each year so as to
qualify for the tax benefits accorded to REITs, but our ability to make
distributions may be adversely affected by the risk factors described in this
prospectus. We may not be able to make distributions in the future. In the
event of continued or future downturns in our operating results and financial
performance or unanticipated declines in the value of our mortgage portfolio,
we may be unable to declare or pay distributions to our stockholders. The
timing and amount of distributions are in the sole discretion of our board of
directors, which considers, among other factors, our financial performance,
debt service obligations and applicable debt covenants (if any), REIT
qualification requirements and other tax considerations and capital expenditure
requirements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Among the factors that could adversely affect our results of operations
and impair our ability to make distributions to our stockholders are:
</FONT>
<P>
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    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the investment of the proceeds of the original offering;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our ability to make profitable structured finance investments;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">defaults in our investment portfolio or decreases in the value of our portfolio;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the fact that anticipated operating expense levels may not
prove accurate, as actual results may vary from estimates; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">increased debt service requirements, including those
resulting from higher interest rates on variable rate indebtedness.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of these factors are beyond our control and a change in any one of
these factors could affect our ability to make distributions. The level of our
distributions may not increase over time.
</FONT>
<P align="center"><FONT size="2">19</FONT>
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<P align="left"><FONT size="2"><B><I>Failure to maintain an exemption from the Investment Company Act would
adversely affect our results of operations.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we conduct our business in a manner that allows us to
avoid being regulated as an investment company under the Investment Company Act
of 1940, as amended, or the Investment Company Act. Under Section&nbsp;3(c) (5)
(C), the Investment Company Act exempts entities that are primarily engaged in
the business of purchasing or otherwise acquiring &#147;mortgages and other liens on
and interests in real estate.&#148; The staff of the SEC has provided guidance on
the availability of this exemption. Specifically, the staff&#146;s position
generally requires us to maintain at least 55% of our assets directly in
qualifying real estate interests. To constitute a qualifying real estate
interest under this 55% requirement, a real estate interest must meet various
criteria. Loans that are secured by equity interests in the owners of real
property rather than the property itself, direct equity interests in entities
that own real property and certain mortgage backed securities may not qualify
for purposes of the 55% requirement depending upon the type of entity. Our
ownership of these equity interests, therefore, is limited by the provisions of
the Investment Company Act.
</FONT>
<P align="left"><FONT size="2"><B><I>We are subject to various risks related to our use of, and dependence on, debt.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount we have to pay on variable rate debt increases as interest
rates increase, which may decrease cash available for distribution to
stockholders. We cannot assure you that we will be able to meet our debt
service obligations. If we do not meet our debt service obligations, we risk
the loss of some or all of our assets. Changes in economic conditions or our
financial results or prospects could (1)&nbsp;result in higher interest rates on
variable rate debt, (2)&nbsp;reduce the availability of debt financing generally or
debt financing at favorable rates, (3)&nbsp;reduce cash available for distribution
to stockholders and (4)&nbsp;increase the risk that we could be forced to liquidate
assets to repay debt, any of which could have a material adverse affect on us.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we violate covenants in any of our debt agreements, we could be
required to repay all or a portion of our indebtedness before maturity at a
time when we might be unable to arrange financing for such repayment on
attractive terms, if at all. Violations of certain debt covenants may result
in our being unable to borrow unused amounts under a line of credit, even if
repayment of some or all borrowings is not required.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In any event, financial covenants under our current or future debt
obligations could impair our business strategies by limiting our ability to
borrow beyond certain amounts or for certain purposes.
</FONT>
<P align="left"><FONT size="2"><B><I>A general economic slowdown could have a material effect on our business.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Periods of economic slowdown or recession may be accompanied by declines
in real estate values. Delinquencies, foreclosures and losses generally
increase during economic slowdowns or recessions. Because a portion of the
investments we make are subordinate to other creditors, the rate of
delinquencies, foreclosures and losses on our mortgage loans could be higher
than those generally experienced in the mortgage lending industry. If our
loans go into and remain in default, we may have to foreclose and may incur
substantial losses. Because real estate investments are relatively illiquid,
our ability to promptly sell one or more investments or properties underlying
foreclosed investments in our portfolio may be limited. In addition, any
material decline in real estate values would increase the loan to value ratio
of loans that we have previously extended, weaken our collateral coverage and
increase the possibility of a loss in the event of a borrower default. Any
sustained period of increased delinquencies, foreclosures or losses is likely
to materially and adversely affect our ability to finance loans in the future.
Furthermore, certain international events have caused significant uncertainty
in the global financial markets. While the long term effects of these events
and their potential consequences are uncertain, they could have a material
adverse effect on general economic conditions, consumer confidence and market
liquidity.
</FONT>
<P align="left"><FONT size="2"><B><I>Liability relating to environmental matters may impact the value of the
underlying properties.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under various federal, state and local laws, an owner or operator of real
property may become liable for the costs of removal of certain hazardous
substances released on its property. Such laws often impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
release of such hazardous substances. The presence of hazardous substances may
adversely affect an owner&#146;s ability to sell real estate or borrow using real
</FONT>
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<P align="left"><FONT size="2">estate as collateral. To the extent that an owner of an underlying
property becomes liable for removal costs, the ability of the owner to make
debt payments may be reduced, which in turn may adversely affect the value of
the relevant mortgage asset held by us.
</FONT>
<P align="left"><FONT size="2"><B><I>We are substantially controlled by one of our principal stockholders.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ivan Kaufman is our chairman and chief executive officer and the
president and chief executive officer of our manager. Further, the Kaufman
entities beneficially own an 88% membership interest in ACM. ACM owns
approximately 3.1&nbsp;million operating partnership units, representing a 28%
limited partnership interest in our operating partnership. The operating
partnership units are redeemable for approximately 3.1&nbsp;million shares of our
common stock. Each of the operating partnership units ACM owns is paired with
one share of our special voting preferred stock, each of which entitle ACM to
one vote on all matters submitted to a vote of our stockholders. Therefore,
ACM is currently entitled to approximately 3.1&nbsp;million votes, or 28% of the
voting power of our outstanding stock. Because of his position with us and our
manager and his ability to effectively vote a substantial minority of our
outstanding voting stock, Mr.&nbsp;Kaufman has significant influence over our
policies and strategy.
</FONT>
<P align="left"><FONT size="2"><B>Risks Related to Conflicts of Interest</B>
</FONT>

<P align="left"><FONT size="2"><B><I>We are dependent on our manager with whom we have conflicts of interest.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have only eleven employees, including Mr.&nbsp;Fred Weber, Mr.&nbsp;Daniel M.
Palmier, Mr.&nbsp;John C. Kovarik and an eight-person asset management group, and
are dependent upon our manager, ACM, to provide services to us that are vital
to our operations. Our chairman, chief executive officer and president, Mr.
Ivan Kaufman, is also the chief executive officer and president of our manager.
Our chief financial officer, Mr.&nbsp;Frederick Herbst, is the chief financial
officer of our manager and our secretary and general counsel, Mr.&nbsp;Walter Horn,
is the general counsel of our manager. In addition, the Kaufman entities own
an approximate 88% membership interest in ACM and Messrs.&nbsp;Herbst, Weber,
Palmier, Martello and Horn, collectively hold a 5% ownership interest in ACM.
Mr.&nbsp;Martello also serves as the trustee of one of the Kaufman entities that
holds a majority ownership interest in our manager and co-trustee of another
Kaufman entity that owns an equity interest in ACM. Our manager holds a 28%
limited partnership interest in our operating partnership and 28% of the voting
power of our stock (without giving effect to the exercise of ACM&#146;s warrants).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may enter into transactions in the future with ACM with the approval of
the independent members of our board of directors. ACM may from time to time
provide permanent mortgage loan financing to clients of ours, which will be
used to refinance bridge financing provided by us. We and ACM may also make
loans to the same borrower or to borrowers that are under common control.
Additionally, our policies and those of ACM may require us to enter into
intercreditor agreements in situations where loans are made by us and ACM to
the same borrower.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into a management agreement with our manager under which
our manager provides us with all of the services vital to our operations other
than asset management services. However, the management agreement was not
negotiated at arm&#146;s length and its terms, including fees payable, may not be as
favorable to us as if it had been negotiated with an unaffiliated third party.
Certain matters relating to our organization also were not approved at arm&#146;s
length and the terms of the contribution of assets to us may not be as
favorable to us as if the contribution was with an unaffiliated third party.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The results of our operations is dependent upon the availability of, and
our manager&#146;s ability to identify and capitalize on, investment opportunities.
Our manager&#146;s officers and employees are also responsible for providing the
same services for ACM&#146;s portfolio of investments. As a result, they may not be
able to devote sufficient time to the management of our business operations.
</FONT>
<P align="left"><FONT size="2"><B><I>Conflicts of interest could arise in transactions where we lend to borrowers in
which ACM holds an equity interest.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM has contributed loans to us that are secured by properties in which
ACM owns equity interests in the borrower. Every transaction that we enter
into with an entity in which ACM holds equity interests raises a potential
</FONT>
<P align="center"><FONT size="2">21</FONT>
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<P align="left"><FONT size="2">conflict of interest. Conflicts of interest with respect to these
mortgage loans include, among others, decisions regarding (1)&nbsp;whether to waive
defaults of such borrower, (2)&nbsp;whether to foreclose on a loan, and (3)&nbsp;whether
to permit additional financing on the properties securing our investments other
than financing provided by us.
</FONT>
<P align="left"><FONT size="2"><B><I>Termination of our management agreement may be costly.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination of the management agreement with our manager is difficult and
costly. Our management agreement may be terminated by us (1)&nbsp;without cause,
after the initial two year period, on six months&#146; prior written notice and (2)
with cause in the event of our manager&#146;s uncured breach of the management
agreement, if approved by a majority of our independent directors. If we
terminate the management agreement without cause or elect not to renew the
management agreement in connection with the decision to manage our portfolio
internally, we are required to pay our manager a termination fee equal to the
base management fee and the incentive fee earned during the twelve month period
preceding the termination. If we terminate the management agreement without
cause (except in a case where we become internally managed) or elect not to
renew the management agreement for any other reason, including a change of
control of us, we are required to pay our manager a termination fee equal to
two times the base management fee and the incentive fee earned during the
twelve-month period preceding the termination. If we terminate without cause
and become internally managed, we are required to pay our manager a termination
fee equal to the base management fee and the incentive fee earned during the
12-month period preceding the termination. These provisions may increase the
effective cost to us of terminating the management agreement, thereby adversely
affecting our ability to terminate our manager without cause.
</FONT>
<P align="left"><FONT size="2"><B><I>If our manager terminates the management agreement, we may not be able to find
an adequate replacement manager.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At any time after the initial two-year term of the management agreement,
our manager may terminate the management agreement without cause or elect not
to renew the agreement, without penalty (except in certain cases of a change in
control of the manager during the first three years of the management
agreement), on six months&#146; prior written notice to us. In the event of our
uncured breach of the management agreement, our manager may also terminate the
agreement for cause without penalty. If our manager terminates our agreement,
we may not be able to find an adequate replacement manager.
</FONT>
<P align="left"><FONT size="2"><B><I>Our directors have approved very broad investment guidelines for our manager
and do not approve each investment decision made by our manager.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manager is authorized to follow very broad investment guidelines. Our
directors will periodically review our investment guidelines and our investment
portfolio. However, our board does not review each proposed investment. In
addition, in conducting periodic reviews, the directors rely primarily on
information provided to them by our manager. Furthermore, transactions entered
into by our manager may be difficult or impossible to unwind by the time they
are reviewed by the directors. Our manager has great latitude within the broad
investment guidelines in determining the types of assets it may decide are
proper investments for us.
</FONT>
<P align="left"><FONT size="2"><B><I>Our manager has broad discretion to invest funds and may acquire structured
finance assets where the investment returns are substantially below
expectations or that result in net operating losses.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manager has broad discretion, within the general investment criteria
established by our board of directors, to allocate the proceeds of the original
offering and to determine the timing of investment of such proceeds. Such
discretion could result in allocation of proceeds to assets where the
investment returns are substantially below expectations or that result in net
operating losses, which would materially and adversely affect our business,
operations and results.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The management compensation structure that we have agreed to with our
manager may cause our manager to invest in high risk investments. In addition
to its base management fee, our manager is entitled to receive incentive
compensation based in part upon our achievement of targeted levels of funds
from operations. In evaluating investments and other management strategies,
the opportunity to earn incentive compensation based on funds from operations
may lead our manager to place undue emphasis on the maximization of funds from
operations
</FONT>
<P align="center"><FONT size="2">22</FONT>
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<P align="left"><FONT size="2">at the expense of other criteria, such as preservation of capital, in
order to achieve higher incentive compensation. Investments with higher yield
potential are generally riskier or more speculative. This could result in
increased risk to the value of our invested portfolio.
</FONT>
<P align="left"><FONT size="2"><B>Risks Related to Our Status as a REIT</B>
</FONT>
<P align="left"><FONT size="2"><B><I>If we do not qualify as a REIT or fail to remain qualified as a REIT, we will
be subject to tax as a regular corporation and could face substantial tax
liability.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to operate so as to qualify as a REIT under the Internal Revenue
Code. However, qualification as a REIT involves the application of highly
technical and complex Internal Revenue Code provisions for which only limited
judicial and administrative interpretations exist. Even a technical or
inadvertent mistake could jeopardize our REIT status. Our continued
qualification as a REIT will depend on our satisfaction of certain asset,
income, organizational, distribution, stockholder ownership and other
requirements on a continuing basis. In particular, our ability to qualify as a
REIT depends in part on the relative values of our common and special voting
preferred stock, which have not been determined by independent appraisal, are
susceptible to fluctuation, and could, if successfully challenged by the IRS,
cause us to fail to meet the ownership requirements. In addition, our ability
to satisfy the requirements to qualify as a REIT depends in part on the actions
of third parties over which we have no control or only limited influence,
including in cases where we own a preferred equity interest in an entity that
is classified as a partnership for U.S. federal income tax purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, new tax legislation, administrative guidance or court
decisions, in each instance potentially with retroactive effect, could make it
more difficult or impossible for us to qualify as a REIT. If we fail to
qualify as a REIT in any tax year, then:
</FONT>
<P>
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    <TD width="93%"><FONT size="2">we would be taxed as a regular domestic corporation, which,
among other things, means we would be unable to deduct distributions
to stockholders in computing taxable income and would be subject to
federal income tax on our taxable income at regular corporate rates;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any resulting tax liability could be substantial and would
reduce the amount of cash available for distribution to
stockholders; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">unless we were entitled to relief under applicable statutory
provisions, we would be disqualified from treatment as a REIT for
the subsequent four taxable years following the year during which we
lost our qualification, and thus, our cash available for
distribution to stockholders would be reduced for each of the years
during which we did not qualify as a REIT.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B><I>Even if we remain qualified as a REIT, we may face other tax liabilities that
reduce our cash flow.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if we remain qualified for taxation as a REIT, we may be subject to
certain federal, state and local taxes on our income and assets. Any of these
taxes would decrease cash available for distribution to our stockholders. In
addition, in order to meet the REIT qualification requirements, or to avert the
imposition of a 100% tax that applies to certain gains derived by a REIT from
dealer property or inventory, we may hold some of our assets through taxable
subsidiary corporations. See &#147;Federal Income Tax Considerations-Taxation of
Arbor Realty.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>Complying with REIT requirements may cause us to forego otherwise attractive
opportunities.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To qualify as a REIT for federal income tax purposes we must continually
satisfy tests concerning, among other things, the sources of our income, the
nature and diversification of our assets, the amounts we distribute to our
stockholders and the ownership of our stock. We may be required to make
distributions to stockholders at disadvantageous times or when we do not have
funds readily available for distribution. Thus, compliance with the REIT
requirements may hinder our ability to operate solely on the basis of
maximizing profits.
</FONT>
<P align="left"><FONT size="2"><B><I>Complying with REIT requirements may force us to liquidate otherwise attractive
investments.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To qualify as a REIT we must ensure that at the end of each calendar
quarter at least 75% of the value of our assets consists of cash, cash items,
government securities and qualified REIT real estate assets. The remainder
</FONT>
<P align="center"><FONT size="2">23</FONT>
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<P align="left"><FONT size="2">of our investment in securities (other than government securities and
qualified real estate assets) generally cannot include more than 10% of the
outstanding voting securities of any one issuer or more than 10% of the total
value of the outstanding securities of any one issuer. In addition, in
general, no more than 5% of the value of our assets (other than government
securities and qualified real estate assets) can consist of the securities of
any one issuer, and no more than 20% of the value of our total securities can
be represented by securities of one or more taxable REIT subsidiaries. If we
fail to comply with these requirements at the end of any calendar quarter, we
must correct such failure within 30&nbsp;days after the end of the calendar quarter
to avoid losing our REIT status and suffering adverse tax consequences. As a
result, we may be required to liquidate otherwise attractive investments.
</FONT>
<P align="left"><FONT size="2"><B><I>Liquidation of collateral may jeopardize our REIT status.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To continue to qualify as a REIT, we must comply with requirements
regarding our assets and our sources of income. If we are compelled to
liquidate our mortgage and preferred equity investments to satisfy our
obligations to our lenders, we may be unable to comply with these requirements,
ultimately jeopardizing our status as a REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Complying with REIT requirements may force us to borrow to make
distributions to stockholders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a REIT, we must generally distribute at least 90% of our annual taxable
income, subject to certain adjustments, to our stockholders. To the extent
that we satisfy the distribution requirement, but distribute less than 100% of
our taxable income, we will be subject to federal corporate income tax on our
undistributed taxable income. In addition, we will be subject to a 4%
nondeductible excise tax if the actual amount that we pay out to our
stockholders in a calendar year is less than a minimum amount specified under
federal tax laws.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we may generate taxable income greater than our net
income for financial reporting purposes due to, among other things,
amortization of capitalized purchase premiums, or our taxable income may be
greater than our cash flow available for distribution to stockholders (for
example, where a borrower defers the payment of interest in cash pursuant to a
contractual right or otherwise). If we do not have other funds available in
these situations we could be required to borrow funds, sell investments at
disadvantageous prices or find another alternative source of funds to make
distributions sufficient to enable us to pay out enough of our taxable income
to satisfy the REIT distribution requirement and to avoid corporate income tax
and the 4% excise tax in a particular year. These alternatives could increase
our costs or reduce our equity.
</FONT>
<P align="left"><FONT size="2"><B><I>We may be subject to adverse legislative or regulatory tax changes that could
reduce the market price of our common stock.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At any time, the federal income tax laws governing REITs or the
administrative interpretations of those laws may be amended. Any of those new
laws or interpretations may take effect retroactively and could adversely
affect us or you as a stockholder. On May&nbsp;28, 2003, The Jobs and Growth Tax
Relief Reconciliation Act of 2003 was enacted, which decreases the tax rate on
most dividends paid by corporations to individual investors to a maximum of 15%
from current rates, and such rates are retroactive to the beginning of January
2003. REIT dividends, with limited exceptions, will not benefit from the rate
reduction, because a REIT&#146;s income generally is not subject to corporate level
tax. As such, this legislation could cause shares in non-REIT corporations to
be a more attractive investment to individual investors than shares in REITs
and could have an adverse effect on the value of our common stock.
</FONT>
<P align="left"><FONT size="2"><B><I>Your investment in our securities has various federal, state and local income
tax risks that could affect the value of your investment.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the provisions of the Internal Revenue Code relevant to your
investment in our securities are generally described in &#147;Federal Income Tax
Considerations,&#148; we strongly urge you to consult your own tax advisor
concerning the effects of federal, state and local income tax law on an
investment in our securities because of the complex nature of the tax rules
applicable to REITs and their stockholders.
</FONT>
<P align="center"><FONT size="2">24</FONT>
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<P align="left"><FONT size="2"><B><I>Restrictions on share accumulation in REITs could discourage a change of
control of our company.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order for us to qualify as a REIT, not more than 50% of the number or
value of our outstanding shares of capital stock may be owned, directly or
indirectly, by five or fewer individuals during the last half of a taxable
year.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to prevent five or fewer individuals from acquiring more than 50%
of our outstanding shares and a resulting failure to qualify as a REIT, our
charter provides that, subject to certain exceptions, no person may own, or be
deemed to own by virtue of the attribution provisions of the Internal Revenue
Code, more than 9.6% of the aggregate value or number (whichever is more
restrictive) of shares of our outstanding common stock or 9.6% by value of our
outstanding capital stock. For purposes of this calculation, warrants held by
such person will be deemed to have been exercised. The shares most recently
acquired by a person that are in excess of these limits will not have any
voting rights exerciseable by such person. Any attempt to own or
transfer shares of our common or preferred stock in excess of the
ownership limit without the consent of the board of directors will
result in the shares being automatically transferred to a charitable
trust (or otherwise be void) and be deemed to have been offered for sale to us for a period
subsequent to the acquisition. Any person who acquires shares in excess of
these limits is obliged to immediately give written notice to us and provide us
with any information we may request in order to determine the effect of the
acquisition on our status as a REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While these restrictions are designed to prevent any five individuals from
owning more than 50% of our shares, they could also discourage a change in
control of our company. These restrictions may also deter tender offers that
may be attractive to stockholders or limit the opportunity for stockholders to
receive a premium for their shares if an investor makes purchases of shares to
acquire a block of shares.
</FONT>
<P align="left"><FONT size="2"><B><I>Complying with REIT requirements may limit our ability to hedge effectively.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The REIT provisions of the Internal Revenue Code may limit our ability to
hedge our operations by requiring us to limit our income in each year from
qualified hedges, together with any other income not generated from qualified
real estate assets, to no more than 25% of our gross income. In addition, we
must limit our aggregate income from nonqualified hedging transactions, from
our provision of services and from other non-qualifying sources to no more than
5% of our annual gross income. As a result, we may have to limit our use of
advantageous hedging techniques. This could result in greater risks associated
with changes in interest rates than we would otherwise want to incur. If we
were to violate the 25% or 5% limitations, we would possibly have to pay a
penalty tax equal to the amount of income in excess of those limitations,
multiplied by a fraction intended to reflect our profitability. If we fail to
satisfy the REIT gross income tests, unless our failure was due to reasonable
cause and not due to willful neglect, we could lose our REIT status for federal
income tax purposes.
</FONT>
<P align="left"><FONT size="2"><B>Risk Factors Related to the Offering</B>
</FONT>

<P align="left"><FONT size="2"><B><I>There is no public market for the offered securities, and there may be no
market for the offered securities after the completion of this offering.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There has been no public market for the offered securities. We have agreed
to use our best efforts to list or include the offered securities on The Nasdaq
Stock Market, including The Nasdaq SmallCap Market, or the New York Stock
Exchange, in our discretion, as soon as practicable after we are able to
satisfy the applicable listing requirements for the offered securities, which
will not occur for an indefinite period of time, if at all, after the
registration statement of which this prospectus is a part is declared effective. If and when we apply for listing of
the offered securities under the applicable listing requirements, we cannot
guarantee that we will have the minimum number of holders required in order to
list or include the offered securities on either The Nasdaq Stock Market,
including The Nasdaq SmallCap Market, or the New York Stock Exchange.
Consequently, because the warrants underlying the units do not become
exercisable, detachable and fully tradable until after the registration of the
common stock underlying the units under the Securities Act and listing on a
national securities exchange or The Nasdaq Stock Market, including The Nasdaq
SmallCap Market, the shares of common stock and the warrants may not be
separately tradable for an indefinite period of time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, quotation through The Nasdaq Stock Market, including The
Nasdaq SmallCap Market, or the New York Stock Exchange does not ensure that an
actual market will develop for the offered securities. Accordingly, no
assurance can be given as to (i)&nbsp;the likelihood that an actual market for the
offered securities will develop, (ii)&nbsp;the
</FONT>
<P align="center"><FONT size="2">25</FONT>
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<P align="left"><FONT size="2">liquidity of any such market, (iii)&nbsp;the ability of any holder to sell the
offered securities, or (iv)&nbsp;the prices that may be obtained for the offered
securities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although JMP has advised us that they intend to make a market in the
units, they are only obligated to make a market in the units and use
reasonable efforts to engage
additional market makers in connection with our listing on The Nasdaq Stock
Market, including The Nasdaq SmallCap Market, or the New York Stock Exchange,
as provided in the registration rights agreement with JMP. Except as provided
in the registration rights agreement, JMP may discontinue market making at any
time without notice. Their market-making activity will be subject to the
limitations imposed by the securities laws. We cannot guarantee that the market
for the units will be maintained. The trading price of the units will likely
decline if there ceases to be an active trading market for them.
</FONT>
<P align="left"><FONT size="2"><B><I>We may not be able to make distributions in the future.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We pay, and intend to continue to pay, quarterly dividends and to make
distributions to our stockholders in amounts such that all or substantially all
of our taxable income in each year, subject to certain adjustments, is
distributed. Such distributions, together with our expected compliance with
other requirements, should enable us to qualify for the tax benefits accorded
to a REIT under the Internal Revenue Code. However, our ability to pay
dividends may be adversely affected by various factors, including the risk
factors described in this prospectus. All distributions are made at the
discretion of our board of directors and depend upon our earnings, our
financial condition, maintenance of our REIT status and other tax
considerations and such other factors as our board of directors may deem
relevant from time to time. There are no assurances of our ability to pay
dividends in the future. In addition, some of our distributions may include a
return of capital.
</FONT>
<P align="left"><FONT size="2"><B><I>Our charter generally does not permit ownership in excess of 9.6% of our common
or capital stock, and attempts to acquire our capital stock in excess of these
limits are ineffective without prior approval from our board of directors.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the purpose of preserving our REIT qualification, our charter
generally prohibits direct or constructive ownership by any person of more than
9.6% (by value or by number of shares, whichever is more restrictive) of the
outstanding shares of our common stock or 9.6% (by value) of our outstanding
shares of capital stock. For purposes of this calculation, warrants held by
such person will be deemed to have been exercised if such exercise would result
in a violation. Our charter&#146;s constructive ownership rules are complex and may
cause the outstanding stock owned by a group of related individuals or entities
to be deemed to be constructively owned by one individual or entity. As a
result, the acquisition of less than these percentages of the outstanding stock
by an individual or entity could cause that individual or entity to own
constructively in excess of these percentages of the outstanding stock and thus
be subject to our charter&#146;s ownership limit. Any attempt to own or transfer
shares of our common or preferred stock in excess of the ownership limit
without the consent of the board of directors will result in the shares being
automatically transferred to a charitable trust or otherwise be void.
</FONT>
<P align="left"><FONT size="2"><B><I>Maryland takeover statutes may prevent a change of our control. This could
depress our stock price.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Maryland law, &#147;business combinations&#148; between a Maryland corporation
and an interested stockholder or an affiliate of an interested stockholder are
prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, share exchange or, in circumstances specified
in the statute, an asset transfer or issuance or reclassification of equity
securities. The statute permits various exceptions, including business
combinations that are exempted by the board of directors before the time that
an interested stockholder becomes an interested stockholder. An interested
stockholder is defined as:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any person who beneficially owns 10% or more of the voting
power of the corporation&#146;s shares; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an affiliate or associate of the corporation who, at any time
within the two year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then
outstanding voting stock of the corporation.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">26</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A person is not an interested stockholder under the statute if the board
of directors approved in advance the transaction by which he otherwise would
have become an interested stockholder.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After the five year prohibition, any business combination between the
Maryland corporation and an interested stockholder generally must be
recommended by the board of directors of the corporation and approved by the
affirmative vote of at least:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">80% of the votes entitled to be cast by holders of
outstanding shares of voting stock of the corporation; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">two-thirds of the votes entitled to be cast by holders of
voting stock of the corporation other than shares held by the
interested stockholder with whom or with whose affiliate the
business combination is to be effected or held by an affiliate or
associate of the interested stockholder.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The business combination statute may prevent or discourage others from
trying to acquire control of us and increase the difficulty of consummating any
offer, including potential acquisitions that might involve a premium price for
our common stock or otherwise be in the best interest of our stockholders. See
&#147;Important Provisions of Maryland Law and of Our Charter and Bylaws&#151;Business
Combinations&#148; and &#147;&#151;Control Share Acquisitions.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>Our staggered board and other provisions of our charter and bylaws may prevent
a change in our control.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors is divided into three classes of directors. The
current terms of the Class&nbsp;I, Class&nbsp;II and Class&nbsp;III directors will expire in
2004, 2005 and 2006, respectively. Directors of each class are chosen for
three year terms upon the expiration of their current terms, and each year one
class of directors is elected by the stockholders. The staggered terms of our
directors may reduce the possibility of a tender offer or an attempt at a
change in control, even though a tender offer or change in control might be in
the best interest of our stockholders. In addition, our charter and bylaws
also contain other provisions that may delay or prevent a transaction or a
change in control that might involve a premium price for our common stock or
otherwise be in the best interest of our stockholders. See &#147;Important
Provisions of Maryland Law and of Our Charter and Bylaws.&#148;
</FONT>
<P align="left"><FONT size="2"><B><I>Future offerings of debt securities, which would be senior to our common stock
upon liquidation, or equity securities, which would dilute the holdings of our
existing stockholders and may be senior to our common stock for the purposes of
dividend distributions or distributions upon liquidation, may adversely affect
the market price of our common stock.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the future we may attempt to increase our capital resources by making
additional offerings of debt or equity securities, including commercial paper,
medium term notes, senior or subordinated notes and classes of preferred stock
or common stock. Upon liquidation, holders of our debt securities and shares
of preferred stock and lenders with respect to other borrowings will receive a
distribution of our available assets prior to the holders of our common stock.
Additional equity offerings may dilute the holdings of our existing
stockholders or reduce the market price of our common stock, or both. If we
decide to issue preferred stock in addition to our special voting preferred
stock already issued, it could have a preference on liquidating distributions
or a preference on dividend payments that could limit our ability to make a
dividend distribution to the holders of our common stock. Because our decision
to issue securities in any future offering will depend on market conditions and
other factors beyond our control, we cannot predict or estimate the amount,
timing or nature of our future offerings. Thus, our stockholders bear the risk
of our future offerings reducing the market price of our common stock and
diluting their stock holdings in us.
</FONT>
<P align="left"><FONT size="2"><B><I>Securities eligible for future sale may have adverse effects on our share
price.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effect of future sales of our common stock or the availability of our
common stock for future sales may affect the market price of our common stock.
As of the date of this prospectus, we have 9,809,567 shares of our common stock
outstanding (or authorized for issuance upon exercise of the warrants
underlying our units for shares of common stock) and 3,776,069 shares of our
common stock authorized for issuance upon redemption of operating partnership
units (including 629,345 operating partnership units issuable upon exercise of
629,345 warrants for additional operating partnership units). Furthermore, we
satisfy our obligation to pay up to 25% of the incentive
</FONT>
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<P align="left"><FONT size="2">compensation payable to our manager under the management agreement with
shares of our common stock. The issuance of common stock could cause dilution
of our existing common stock and a decrease in the market price.
</FONT>
<P align="left"><FONT size="2"><B><I>You should not rely on lock-up agreements in connection with the original
offering to limit the number of units sold into the market.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the original offering, we agreed with JMP not to offer
to sell, contract to sell, or otherwise dispose of, loan, pledge or grant any
rights with respect to any shares of our common stock, any options or warrants
to purchase any shares of our common stock or any securities convertible into
or exercisable for any of our common stock, including our units, for a period
of 180&nbsp;days following the completion of the original offering, subject to
certain exceptions. ACM and each of the persons serving as our directors and
executive officers at the consummation of the original offering also entered
into lock-up agreements with respect to their units, common stock, warrants and
the shares of common stock issuable upon redemption of operating partnership units restricting the sale of such
securities without the consent of JMP until the earlier of 180&nbsp;days after the
date of effectiveness of the registration statement of which this prospectus is
a part or two years from the consummation of original offering, subject to
certain exceptions. JMP may, at any time, release all or a portion of the
securities subject to the foregoing lock-up provisions. If the restrictions
under the lock-up agreements with members of our senior management and
directors are waived or terminated,
approximately 260,750 units will be available for sale into the market, subject only to applicable securities rules
and regulations, which could reduce the market price for the offered
securities.
</FONT>
<P align="left"><FONT size="2"><B><I>An increase in market interest rates may have an adverse effect on the market
price of our securities.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One of the factors that investors may consider in deciding whether to buy
or sell our securities is our dividend rate as a percentage of our share or
unit price relative to market interest rates. If the market price of our
securities is based primarily on the earnings and return that we derive from
our investments and income with respect to our properties and our related
distributions to stockholders, and not from the market value or underlying
appraised value of the properties or investments themselves, then interest rate
fluctuations and capital market conditions will likely affect the market price
of our securities. For instance, if market rates rise without an increase in
our dividend rate, the market price of our securities could decrease as
potential investors may require a higher dividend yield on our common stock or
seek other securities paying higher dividends or interest. In addition, rising
interest rates would result in increased interest expense on our variable rate
debt, thereby adversely affecting cash flow and our ability to service our
indebtedness and pay dividends.
</FONT>
<P align="left"><FONT size="2"><B><I>Broad market fluctuations could negatively impact the market price of our
common stock.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stock market has experienced extreme price and volume fluctuations
that have affected the market price of many companies in industries similar or
related to ours and that have been unrelated to these companies&#146; operating
performances. These broad market fluctuations could reduce the market price of
our common stock. Furthermore, our operating results and prospects may be below
the expectations of public market analysts and investors or may be lower than
those of companies with comparable market capitalizations, which could lead to
a material decline in the market price of our common stock.
</FONT>
<P align="center"><FONT size="2">28</FONT>
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<P align="center"><FONT size="2"><B>FORWARD LOOKING STATEMENTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We make forward looking statements in this prospectus that are subject to
risks and uncertainties. These forward looking statements include information
about possible or assumed future results of our business and our financial
condition, liquidity, results of operations, plans, and objectives. They also
include, among other things, statements concerning anticipated revenues, income
or loss, capital expenditures, dividends, capital structure, or other financial
terms, as well as statements regarding the subjects that are forward looking by
their nature, such as:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
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    <TD width="93%"><FONT size="2">our business strategy;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">completion of any pending transactions;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our ability to obtain future financing arrangements;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our understanding of our competition;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our projected operating results;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the operating results presented in the historical
consolidated financial statements included in this prospectus;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">market trends;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">estimates relating to our future dividends;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">projected capital expenditures; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the impact of technology on our operations and business.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The forward looking statements are based on our beliefs, assumptions, and
expectations of our future performance, taking into account the information
currently available to us. We do not intend to update our forward looking
statements. These beliefs, assumptions, and expectations can change as a
result of many possible events or factors, not all of which are known to us.
If a change occurs, our business, financial condition, liquidity, and results
of operations may vary materially from those expressed in our forward looking
statements. You should carefully consider this risk when you make a decision
concerning an investment in our securities, along with the following factors,
among others, that could cause actual results to vary from our forward looking
statements:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the factors referenced in this prospectus, including those
set forth under the sections captioned &#147;Risk Factors&#148; and &#147;Arbor
Realty Trust, Inc.;&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">general volatility of the capital markets and the market price of our common stock;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changes in our business or investment strategy;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">availability, terms and deployment of capital;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">availability of qualified personnel;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changes in our industry and the market in which we operate,
interest rates or the general economy; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the degree and nature of our competition.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When we use words such as &#147;will likely result,&#148; &#147;may,&#148; &#147;shall,&#148; &#147;will,&#148;
&#147;believe,&#148; &#147;expect,&#148; &#147;anticipate,&#148; &#147;project,&#148; &#147;intend,&#148; &#147;estimate,&#148; &#147;goal,&#148;
&#147;objective,&#148; or similar expressions, we intend to identify forward looking
statements. You should not place undue reliance on these forward looking
statements. We are not obligated to publicly update or revise any forward
looking statements, whether as a result of new information, future events, or
otherwise.
</FONT>
<P align="center"><FONT size="2">29</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "USE OF PROCEEDS" -->
<DIV align="left"><A NAME="003"></A></DIV>
<P align="center"><FONT size="2"><B>USE OF PROCEEDS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders will receive all of the proceeds from the sale of
the securities. We will not receive any proceeds from the sale of the
securities.
</FONT>
<!-- link1 "DISTRIBUTION POLICY" -->
<DIV align="left"><A NAME="004"></A></DIV>
<P align="center"><FONT size="2"><B>DISTRIBUTION POLICY</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have made and intend to make, regular quarterly distributions to our
stockholders. To qualify as a REIT we must distribute to our stockholders an
amount at least equal to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">90% of our REIT taxable income, determined before the
deduction for dividends paid and excluding any net capital gain
(which does not necessarily equal net income as calculated in
accordance with generally accepted accounting principals); plus</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">90% of the excess of our net income from foreclosure property
(as defined in Section&nbsp;856 of the Internal Revenue Code) over the
tax imposed on such income by the Internal Revenue Code; less</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any excess non-cash income (as determined under the Internal
Revenue Code). See &#147;Federal Income Tax Considerations.&#148;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to income tax on income that is not distributed and to an
excise tax to the extent that certain percentages of our income are not
distributed by specified dates. See &#147;Federal Income Tax Considerations.&#148;
Income as computed for purposes of the foregoing tax rules will not necessarily
correspond to our income as determined for financial reporting purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions are authorized by our board of directors and declared by us
based upon a number of factors, including actual results of operations,
restrictions under Maryland law, the timing of the investment of our equity
capital, the amount of funds from operations, our financial condition, debt
service requirements, capital expenditure requirements, our taxable income, the
annual distribution requirements under the REIT provisions of the Internal
Revenue Code, our operating expenses and other factors our directors deem
relevant. Our ability to make distributions to our stockholders depends upon
our receipt of distributions from our operating partnership, Arbor Realty
Limited Partnership, which may depend, in part, upon the performance of our
investment portfolio, and, in turn, from ACM&#146;s management of our business.
Distributions are made in cash to the extent that cash is available for
distribution.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions to stockholders are generally taxable to our stockholders as
ordinary income, although a portion of such distributions may be designated by
us as long term capital gain or may constitute a return of capital. We will
furnish annually to each of our stockholders a statement setting forth
distributions paid during the preceding year and their federal income tax
status. For a discussion of the federal income tax treatment of our
distributions, see &#147;Federal Income Tax Considerations&#151;Taxation of Arbor Realty&#148;
and &#147;Federal Income Tax Considerations&#151;Taxation of Stockholders.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not be able to generate sufficient revenue from operations to pay
distributions to our stockholders. In addition, our directors may change our
distribution policy in the future. See &#147;Risk Factors.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter allows us to issue preferred stock that could have a
preference on distributions. We currently have no intention to issue any such
preferred stock, but if we do, the dividend preference on the preferred stock
could limit our ability to make a dividend distribution to the holders of our
common stock. We have previously issued approximately 3.1&nbsp;million shares of
our special voting preferred stock to ACM which does not have any preferential
dividend, except a $.01 per share liquidation preference upon a liquidation or
redemption.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;5, 2003, we declared a dividend of $.25 per share of common
stock, payable with respect to the quarter ending September&nbsp;30, 2003, to
stockholders of record at the close of business on November&nbsp;5, 2003. We plan
to distribute this dividend on November&nbsp;18, 2003.
</FONT>
<P align="center"><FONT size="2">30</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PRICE RANGE OF UNITS" -->
<DIV align="left"><A NAME="005"></A></DIV>
<P align="center"><FONT size="2"><B>PRICE RANGE OF UNITS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no established market for the units, which are not listed on any
securities exchange, and trading in the units has not been quoted on any
interdealer or over-the-counter bulletin board since the original offering.
The units are eligible for trading in the Private Offering, Resales and Trading
through Automated Linkages Market of the National Association of Securities
Dealers, Inc., the PORTAL Market. As of November&nbsp;3, 2003, there were
approximately 140 beneficial owners of our units. This
figure does not reflect the beneficial ownership of shares held in nominee
name. The table below reflects the high and low prices for trades of
our units as reported
in PORTAL for each of the months indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Month</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Dividend</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">July 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">75.250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">69.750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"><SUP>(1</SUP></FONT></TD>
    <TD nowrap><FONT size="2"><SUP>)</SUP></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">August 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"><SUP>(1</SUP></FONT></TD>
    <TD nowrap><FONT size="2"><SUP>)</SUP></FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">September 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"><SUP>(1</SUP></FONT></TD>
    <TD nowrap><FONT size="2"><SUP>)</SUP></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">October 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">75.250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">75.125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">On November&nbsp;5, 2003 we declared a
dividend of $.25 per share of common stock,
payable with respect to the quarter ended
September&nbsp;30, 2003, to our common stockholders of
record as of the close of business on November&nbsp;5,
2003. We plan to distribute this dividend on
November&nbsp;18, 2003.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">31</FONT>




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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "SELECTED UNAUDITED CONSOLIDATED FINANCIAL INFORMATION<BR>
OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="center"><FONT size="2"><B>SELECTED UNAUDITED CONSOLIDATED FINANCIAL INFORMATION<BR>
OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables present selected historical consolidated financial
information for the three months ended September&nbsp;30, 2003 and at September&nbsp;30,
2003. The selected historical consolidated financial information presented
below under the captions &#147;Consolidated Statement of Operations Data&#148; and
&#147;Balance Sheet Data&#148; have been derived from our unaudited, interim consolidated
financial statements and include all adjustments, consisting only of normal
recurring accruals, which management considers necessary for a fair
presentation of the historical consolidated financial statements for such
period. The information presented under the caption &#147;Consolidated Statement of
Operations Data&#148; for the three months ended September&nbsp;30, 2003 is not
necessarily indicative of any other interim period or of the year ended
December&nbsp;31, 2003. In addition, since the information presented below is only
a summary and does not provide all of the information contained in our
historical consolidated financial statements, including the related notes, you
should read it in conjunction with &#147;Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations of Arbor Realty Trust, Inc. and
Subsidiaries&#148; and our historical consolidated financial statements, including
the related notes, included elsewhere in this prospectus.
</FONT>
<P align="left"><FONT size="2"><B></B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="78%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Three Months Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30, 2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom">

    <TD><FONT size="1"><B>Statement of Operations Data:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B><HR size="1" noshade></B></FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest Income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,664,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,670,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,183,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Earnings
per share, basic and diluted<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Dividends declared per common share <SUP>(2)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>At September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1"><B>Balance Sheet Data:</B></FONT></TD>

    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">214,237,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">255,389,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable and repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,913,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">97,831,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,309,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total stockholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">113,248,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<CENTER>


<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="78%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Three Months Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30, 2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1"><B>Other Data:</B></FONT></TD>

    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B><HR size="1" noshade></B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total originations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">39,014,922</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="91%"><FONT size="2">The warrants underlying the units issued in the
original offering at $75.00 per unit have an exercise
price of $15.00 per share and expire on July&nbsp;1, 2005.
This exercise price is equal to the price per share of
common stock in the original offering and approximates
the market value of our common stock at September&nbsp;30,
2003. Therefore, the assumed exercise of the warrants
were not considered to be dilutive for purposes of
calculating diluted earnings per share.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="6%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="91%"><FONT size="2">On November&nbsp;5, 2003, we declared a dividend of
$.25 per share of common stock, payable with respect
to the quarter ending September&nbsp;30, 2003, to
stockholders of record at the close of business on
November&nbsp;5, 2003.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">32</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE STRUCTURED FINANCE BUSINESS<BR>
OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center"><FONT size="2"><B>SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE STRUCTURED FINANCE BUSINESS<BR>
OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, ACM contributed a portfolio of structured finance
investments and related liabilities to our operating partnership. In addition,
certain employees of ACM became our employees. These assets, liabilities and
employees represented a substantial portion of ACM&#146;s structured finance
business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
tables on the following page present selected historical consolidated financial
information of the structured finance business of ACM at the dates and for the
periods indicated. The structured finance business did not operate as a
separate legal entity or business division or segment of ACM but as an
integrated part of ACM&#146;s consolidated business. Accordingly, the statements of
revenue and direct operating expenses do not include charges from ACM for
corporate general and administrative expense because ACM considered such items
to be corporate expenses and did not allocate them to individual business
units. These expenses included costs for ACM&#146;s executive management, corporate
facilities and overhead costs, corporate accounting and treasury functions,
corporate legal matters and other similar costs. The selected consolidated
financial information presented under the caption &#147;Consolidated Statement
of Revenue and Direct Operating Expenses Data&#148; for the years ended December&nbsp;31,
2002, 2001 and 2000 and under the caption &#147;Consolidated Statement of Assets and
Liabilities Data&#148; as of December&nbsp;31, 2002 and 2001 have been derived from the
audited consolidated financial statements of the structured finance business of
ACM included elsewhere in this prospectus. The selected consolidated financial
information presented under the caption &#147;Consolidated Statement of
Revenue and Direct Operating Expenses Data&#148; for the years ended December&nbsp;31,
1999 and 1998 and the caption &#147;Consolidated Statement of Assets and Liabilities
Data&#148; as of December&nbsp;31, 2000, 1999 and 1998 have been derived from the
unaudited consolidated financial statements of the structured finance business
of ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selected consolidated financial information presented under the
caption &#147;Consolidated Statement of Revenue and Direct Operating Expenses Data&#148;
for the six months ended June&nbsp;30, 2003 and 2002 and the nine months ended
September&nbsp;30, 2002 and under the caption &#147;Consolidated Statement of Assets and
Liabilities Data&#148; at June&nbsp;30, 2003 have been derived from the unaudited interim
consolidated financial statements of ACM&#146;s structured finance business and
include all adjustments, consisting only of normal recurring accruals, which
management considers necessary for a fair presentation of the historical
consolidated financial information for such periods. The selected historical
consolidated financial information presented under the caption &#147;Consolidated
Statement of Revenue and Direct Operating Expenses Data&#148; for the six month
period ended June&nbsp;30, 2003 is not necessarily indicative of the results of any
other interim period or the year ended December&nbsp;31, 2003. The selected
historical consolidated financial information presented under the caption
&#147;Consolidated Statement of Revenue and Direct Operating Expenses Data&#148; for the
six month period ended June&nbsp;30, 2002 and the nine month period ended September
30, 2002 are not necessarily indicative of the results of any other interim
period or the year ended December&nbsp;31, 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of ACM&#146;s structured finance business
included in this prospectus represent the consolidated financial position and
results of operations of ACM&#146;s structured finance business during certain
periods and at certain dates when ACM previously held our initial assets, as
well as several other structured finance investments that we did not acquire in
connection with our formation transactions. See &#147;Arbor Realty Trust, Inc.&#148;
Accordingly, the historical financial results of ACM&#146;s structured finance
business are not indicative of our future performance. In addition, since the
information presented is only a summary and does not provide all of the
information contained in the consolidated financial statements of ACM&#146;s
structured finance business, including related notes, you should read it in
conjunction with &#147;Management&#146;s Discussion and Analysis of Financial Condition
and Results of Operations of the Structured Finance Business of Arbor
Commercial Mortgage, LLC and Subsidiaries&#148; and the consolidated financial
statements of ACM&#146;s structured finance business, including related notes,
contained elsewhere in this prospectus.
</FONT>
<P align="center"><FONT size="2">33</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Consolidated Statement of Revenue<BR>
and Direct Operating Expenses Data:</B>
</FONT>


<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Six Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Nine Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>&nbsp;</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>&nbsp;</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year
Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998<SUP>(1)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD colspan="4"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Interest Income</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">7,688,465</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">7,482,750</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">10,798,414</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">14,532,504</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">14,667,916</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">10,707,551</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">6,964,873</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">6,807,617</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Gain
on sale of loans<BR>and real estate</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,024,268</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,006,432</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,006,432</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,470,999</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,226,648</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,880,825</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,818,299</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,898,558</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Income from equity affiliates</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">601,100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">632,350</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">632,350</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,403,014</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,028,835</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,592,398</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">567,006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Income
from real estate<BR>held for sale, net of
operating expenses</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">925,999</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,608,172</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Other income</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,552,414</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">553,625</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">572,161</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,090,106</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,668,215</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">652,970</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,838,639</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,064,294</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total revenue</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,265,147</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,643,907</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">19,009,357</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,725,959</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,965,793</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18,270,181</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">16,140,208</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">17,945,647</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total
direct operating<BR>expenses</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,737,688</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,344,302</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,775,555</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">13,639,755</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,997,800</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,227,274</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,145,469</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6,589,274</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Revenue
in excess of<BR>direct operating expenses</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,527,459</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,299,605</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,233,802</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,086,204</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,967,993</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,042,907</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,994,739</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11,356,373</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>


<P align="left"><FONT size="2"><B>Consolidated Statement of Assets and Liabilities Data:</B>
</FONT>


<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>At June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>At December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">204,561,578</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">172,142,511</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">160,183,066</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">85,547,323</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">50,156,022</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">75,604,351</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,277,041</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,952,078</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,880,207</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Investment in equity affiliates</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,654,573</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,586,026</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,957,072</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,506,417</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">23,459,586</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">20,092,793</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total assets</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">241,667,960</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">200,563,236</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">183,713,747</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">119,110,446</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">84,751,032</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">96,537,674</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Notes payable and repurchase
agreements</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">171,045,404</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">141,836,477</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">132,409,735</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">70,473,501</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">47,154,530</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">58,678,062</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">172,686,366</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">144,280,806</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">134,086,301</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">72,266,700</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">48,025,934</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">59,193,306</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Net assets</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">68,981,594</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">56,282,430</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">49,627,446</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">46,843,746</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">36,725,098</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">37,344,368</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2"><B>Other Data:</B>
</FONT>

<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Six Months Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Nine Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total originations</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">117,965,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">30,660,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">49,510,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">130,043,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">86,700,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">108,378,000</FONT></TD>
    <TD nowrap><FONT size="1"><SUP><B>(2)</B></SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">120,378,900</FONT></TD>
    <TD nowrap><FONT size="1"><SUP><B>(2)</B></SUP></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">230,718,353</FONT></TD>
    <TD nowrap><FONT size="1"><SUP><B>(2)</B></SUP></FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In June 1998, ACM entered into a joint venture with SFG I, an affiliate
of Nomura Asset Capital Corp., for the purpose of acquiring up to $250
million of structured finance investments. ACM and SFG I each made 50% of
the capital contributions to the joint venture and shared profits equally.
Nomura Asset Capital Corp. provided financing to the joint venture in the
form of a repurchase agreement. On July&nbsp;31, 2001, ACM purchased SFG I&#146;s
interest in this venture. This buyout was accounted for by the purchase
accounting method. Prior to the purchase, net income from this venture
was recorded in income from equity affiliates. The activities of the
former joint venture have been included in the statements of revenue and
direct operating expenses from the date of acquisition, August 2001. See
the consolidated financial statements of ACM&#146;s structured finance business
and the related notes to the consolidated financial statements included
elsewhere in this prospectus for further information.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Total originations for 1998, 1999 and 2000 include originations from
ACM&#146;s joint venture with SFG I discussed in footnote 1.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">34</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES" -->
<DIV align="left"><A NAME="008"></A></DIV>
<P align="center"><FONT size="2"><B>MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION<BR>
AND RESULTS OF OPERATIONS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You should read the following discussion in conjunction with the sections
of this prospectus entitled &#147;Risk Factors&#148;, &#147;Forward-Looking Statements&#148; and
&#147;Selected Consolidated Financial Information of Arbor Realty Trust, Inc. and
Subsidiaries&#148; and our historical consolidated financial statements, including
related notes, included elsewhere in this prospectus.</I>
</FONT>
<P align="left"><FONT size="2"><B>Overview</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a Maryland corporation that was formed in June 2003 to invest in
real estate related bridge and mezzanine loans, preferred equity and, in
limited cases, discounted mortgage notes and other real estate related assets.
We conduct substantially all of our operations through our operating
partnership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, ACM contributed $213.1&nbsp;million of structured finance
assets and $169.2&nbsp;million of borrowings supported by $43.9&nbsp;million of equity in
exchange for a commensurate equity ownership in our operating partnership. In
addition, certain employees of ACM were transferred to our operating
partnership. These assets, liabilities and employees represent a substantial
portion of ACM&#146;s structured finance business. We are externally managed and
advised by ACM and pay ACM a management fee in accordance with a management
agreement. ACM will also originate, underwrite and service all structured
finance assets on behalf of our operating partnership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Concurrently with ACM&#146;s asset contribution, we consummated a private
equity offering of units, each consisting of five shares of common stock and
one warrant to purchase one share of common stock. Gross proceeds from the
private financing totaled $120.2&nbsp;million. Gross proceeds from the private
financing combined with the concurrent equity contribution by ACM totaled
approximately $164.1&nbsp;million in equity capital. We paid offering expenses of
$9.6&nbsp;million resulting in stockholders&#146; equity and minority interest of $154.5
million at our inception.
</FONT>
<P align="left"><FONT size="2"><B>Sources of Operating Revenues</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We derive our operating revenues primarily through the interest and other
income received from making real estate related bridge and mezzanine loans and
preferred equity investments. We provide bridge loans secured by first lien
mortgages on the property to borrowers who are typically seeking short term
capital to be used in an acquisition of property. The bridge loans we make
typically range in size from $1&nbsp;million to $25&nbsp;million and have terms of up to
seven years. We provide real property owners with mezzanine loans that are
secured by pledges of ownership interests in entities that directly or
indirectly control the real property or second mortgages. These loans
typically range in size from $2&nbsp;million to $15&nbsp;million and have terms of up to
seven years. We also make preferred equity investments in entities that
directly or indirectly own real property.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we may derive operating revenue from income from equity
affiliates relating to joint ventures that were formed with equity partners to acquire, develop and/or sell real estate assets.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may also derive operating revenue from the gain on sale of loans and
real estate. We may acquire (1)&nbsp;real estate for our own investment and, upon
stabilization, disposition at an anticipated return and (2)&nbsp;real
estate notes generally at a discount from lenders in situations where the
borrower wishes to restructure and reposition its short term debt and the
lender wishes to divest certain assets from its portfolio.
</FONT>
<P align="center"><FONT size="2">35</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Critical Accounting Policies</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set forth below is a summary of the accounting policies that management
believes are critical to the preparation of the consolidated financial
statements included in this prospectus. Certain of the accounting policies
used in the preparation of these consolidated financial statements are
particularly important for an understanding of the financial position and
results of operations presented in the historical consolidated financial
statements included in this prospectus and require the application of
significant judgment by management and, as a result, are subject to a degree of
uncertainty.
</FONT>
<P align="left"><FONT size="2"><I>Loans and Investments</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans held for investment are intended to be held to maturity and,
accordingly, are carried at cost, net of unamortized loan origination costs and
fees, unless such loan or investment is deemed to be impaired. We invest in
preferred equity interests that allow us to participate in a percentage of the
underlying property&#146;s cash flows from operations and proceeds from a sale or
refinancing. At the inception of each such investment, management must
determine whether such investment should be accounted for as a loan, joint
venture or as real estate. To date, management has determined that all such
investments are properly accounted for and reported as loans.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specific valuation allowances are established for impaired loans based on
the fair value of collateral on an individual loan basis. The fair value of
the collateral is determined by an evaluation of operating cash flow from the
property during the projected holding period, and estimated sales value
computed by applying an expected capitalization rate to the stabilized net
operating income of the specific property, less selling costs, discounted at
market discount rates.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If upon completion of the valuation, the fair value of the underlying
collateral securing the impaired loan is less than the net carrying value of
the loan, an allowance is created with a corresponding charge to the provision
for loan losses. The allowance for each loan is maintained at a level believed
adequate by management to absorb probable losses.
</FONT>

<P align="left"><FONT size="2"><I>Revenue Recognition</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Income</I>. Interest income is recognized on the accrual basis as it
is earned. In most instances, the borrower pays an additional amount of
interest at the time the loan is closed, an origination fee, and deferred
interest upon maturity. This additional income, as well as any direct loan
origination costs incurred, is deferred and recognized over the life of the
related loan as a yield adjustment. Income recognition is suspended for loans
when in the opinion of management a full recovery of income and principal
becomes doubtful. Income recognition is resumed when the loan becomes
contractually current and performance is demonstrated to be resumed. Several
of the loans provide for accrual of interest at specified rates, which differ
from current payment terms. Interest is recognized on such loans at the
accrual rate subject to management&#146;s determination that accrued interest and
outstanding principal are ultimately collectible, based on the underlying
collateral and operations of the borrower. If management cannot make this
determination regarding collectibility, interest income is recognized only upon

actual receipt.
</FONT>
<P align="left"><FONT size="2"><B>Recently Issued Accounting Pronouncements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2003, the FASB issued FASB Interpretation No.&nbsp;46,
&#147;Consolidation of Variable Interest Entities&#148; (&#147;FIN 46&#148;). FIN 46 provides
guidance on identifying entities for which control is achieved through means
other than through voting rights (a &#147;variable interest entities&#148; or &#147;VIE&#148;), and
how to determine when and which business enterprise should consolidate a VIE.
In addition, FIN 46 requires that both the primary beneficiary and all other
enterprises with a significant variable interest in VIE make additional
disclosures. The transitional disclosure requirements are effective for the
interim or the annual period ending after December&nbsp;31, 2003. Management is in
the process of evaluating all of its mezzanine loans and preferred equity
investments, which may be deemed variable interest entities under the provision
of FIN 46. A definitive conclusion can not be reached until the evaluation has
been completed.
</FONT>
<P align="center"><FONT size="2">36</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Results of Operations</B>
</FONT>

<P align="left"><FONT size="2"><B>Three Months Ended September&nbsp;30, 2003</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our results of operations for the three
months ended September&nbsp;30, 2003:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Three Months</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30, 2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenue:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,664,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,670,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Expenses:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">721,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee compensation
and benefits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">446,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Stock based compensation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,587,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling and administrative</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133,304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Management fee</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">293,734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,183,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income before minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,487,079</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income allocated to minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">412,492</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>Revenues</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income was $4.7&nbsp;million. The average balance of the loan and
investment portfolio was $243.8&nbsp;million during the quarter. The average yield
on these assets was 7.59%.
</FONT>
<P align="left"><FONT size="2"><I>Expenses</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense was $722,000. The average balance of debt financing was
$81.0&nbsp;million during the quarter. The average cost of these borrowings was
3.56%. Our average leverage for the quarter was 33%, resulting in our
interest margin on a levered basis being 9.61%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee compensation and benefits expense was $447,000, which represents
salaries, benefits and incentive compensation for the ten employees employed by
us during the quarter.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense was $1.6&nbsp;million. This expense
represents the cost of restricted stock granted to certain of our employees,
executive officers and directors and certain executive officers and employees
of our manager. Of the total shares granted, two-thirds of the shares granted
vested immediately and the remaining one-third will vest over three years. The
amount of compensation expense recorded in the quarter represents the full
expense of the vested shares and a ratable portion of the expense of the
unvested shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and administrative expense was $133,000. This amount is comprised
primarily of professional fees, including legal and accounting services.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management fees were $294,000. This amount represents the base management
fee as provided for in the management agreement with our manager. The
management agreement also provides for incentive compensation fees; however,
the requirements for incentive compensation were not satisfied and no incentive
compensation was recorded in the period.
</FONT>
<P align="center"><FONT size="2">37</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income allocated to minority interest was $412,000. This amount
represents the portion of our income allocated to our manager, which owns a 28%
limited partnership interest in our operating partnership and is allocated 28%
of our income.
</FONT>
<P align="left"><FONT size="2"><B>Liquidity and Capital Resources</B>
</FONT>

<P align="left"><FONT size="2"><I>Sources of Liquidity</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liquidity is a measurement of the ability to meet potential cash
requirements, including ongoing commitments to repay borrowings, fund and
maintain loans and investments and other general business needs. Our primary
sources of funds for liquidity consist of funds raised from our private equity
offering in July 2003, borrowings under credit agreements, net cash provided by
operating activities, repayments of outstanding loans and investments and the
issuance of common, convertible and/or preferred equity securities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To maintain our status as a REIT under the Internal Revenue Code, we must
distribute annually at least 90% of our taxable income. These distribution
requirements limit our ability to retain earnings and thereby replenish or
increase capital for operations. However, we believe that our significant
capital resources and access to financing will provide us with financial
flexibility and market responsiveness at levels sufficient to meet current and
anticipated capital requirements, including expected new lending and investment
opportunities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross proceeds from the original offering on July&nbsp;1, 2003 totaled $120.2
million, which combined with ACM&#146;s equity contribution of $43.9&nbsp;million,
resulted in total contributed capital of $164.1&nbsp;million. We paid or accrued
offering expenses of $9.6&nbsp;million, resulting in stockholders equity and
minority interest of $154.5&nbsp;million at our inception.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also maintain liquidity through one warehouse credit facility and two
master repurchase agreements with three different financial institutions.
Prior to July&nbsp;1, 2003, ACM had similar financing facilities with these
financial institutions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a $250.0&nbsp;million warehouse credit agreement with a financial
institution, dated as of July&nbsp;1, 2003, with a term of three years. In the
event this facility is not renewed, we have nine months to repay all
outstanding advances. This warehouse credit facility includes a profit
sharing agreement, whereby the institution shares in the net interest spread of
the assets financed. The profit sharing component represents the percentage of
the net profits earned over the life of a loan that are payable to the lender
upon repayment of the underlying investment. Net profits are based on interest
income, interest expense and deferred interest payable at repayment of an
investment. On September&nbsp;30, 2003 the outstanding balance under this facility
was $28.4&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a $100.0&nbsp;million master repurchase agreement with a second
financial institution, dated as of November&nbsp;18, 2002, with a one-year term,
renewable annually. This repurchase agreement was assigned from ACM to us on
July&nbsp;1, 2003. In the event this facility is not renewed, we have twelve months
to repay all outstanding advances. On September&nbsp;30, 2003, the outstanding
balance under this facility was $63.5&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a $50.0&nbsp;million master repurchase agreement with a third financial
institution, dated as of July&nbsp;1, 2003 with a term of three years. This
facility has not yet been utilized.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The warehouse credit agreement and the two master repurchase agreements
require that we pay down borrowings under these facilities pro-rata as
principal payments on our loans and investments are received. In addition, if
upon maturity of a loan or investment we decide to grant the borrower an
extension option, the financial institutions have the option to extend the
borrowings or request payment in full on the outstanding borrowings of the loan
or investment extended. The financial institutions also have the right to
request immediate payment of any outstanding borrowings on any loan or
investment that is at least 60&nbsp;days delinquent.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe our existing sources of funds will be adequate for purposes of
meeting our short-term liquidity within one year and long-term liquidity needs. Our
loans and investments, the majority of which have been contributed to us, are
financed under existing credit facilities and their credit status is
continuously monitored; therefore, these
</FONT>
<P align="center"><FONT size="2">38</FONT>
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<P align="left"><FONT size="2">loans and investments are expected to generate a generally stable return.
Our ability to meet our long-term liquidity and capital resource requirements
is subject to obtaining additional debt and equity financing. If we are unable to renew our sources of financing on substantially similar terms or at all it would have an adverse effect on our business
and results of operations. Any decision by our lenders and investors to enter
into such transactions with us will depend upon a number of factors, such as
our financial performance, compliance with the terms of our existing credit
arrangements, industry or market trends, the general availability of and rates
applicable to financing transactions, such lenders&#146; and investors&#146; resources
and policies concerning the terms under which they make such capital
commitments and the relative attractiveness of alternative investment or
lending opportunities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The maximum borrowing capacities, advance rates and other principal terms
of our credit facilities are listed below:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Warehouse</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Repurchase</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Repurchase</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Facility</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Agreement</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Agreement</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>

    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Facility Amount</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">250,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">100,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">50,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sublimits based on Investment Type</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Bridge Loan Sublimit Amount</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">125,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">75,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">50,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Maximum Advance Rate <sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85</FONT></TD>
    <TD nowrap><FONT size="2">%<sup>(2)</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pricing over LIBOR</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.00</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.00</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.25</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit Share <sup>(3)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mezzanine Loans/Preferred Equity
Sublimit Amount</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">175,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">25,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">50,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Maximum Advance Rate <sup>(1)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80</FONT></TD>
    <TD nowrap><FONT size="2">%<sup>(4)</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pricing over LIBOR</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.75</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.75</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.50</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit Share <sup>(3)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Note Acquisitions Sublimit Amount</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">125,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Maximum Advance Rate <sup>(4)</sup></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80</FONT></TD>
    <TD nowrap><FONT size="2">%<sup>(5)</sup></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pricing over LIBOR</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.50</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property Acquisitions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Line</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">125,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Maximum Advance Rate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pricing over LIBOR</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.50</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Advance rates for certain investments funded under the credit facilities
are negotiated on an individual basis and may differ from the maximum
advance rate listed.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Maximum loan amount advanced per bridge loan equal to $20.0&nbsp;million.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Certain investments included in contribution of the initial assets are
financed under prior profit sharing agreements between the financial
institution and ACM with profit sharing percentages ranging from 20% to
45% of net interest income of the loans and investments financed.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Maximum loan amount advanced per mezzanine loan equal to $20.0&nbsp;million.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Maximum loan amount advanced per acquisition equal to $20.0&nbsp;million.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to these credit facilities, we have a participation agreement
with a financial institution to finance a portion of a $16.4&nbsp;million apartment
bridge loan. The interest payable on the participation agreement is LIBOR plus
3.00% with a floor of 4.75% and the outstanding balance as of September&nbsp;30,
2003 was approximately $12.9&nbsp;million.
</FONT>
<P align="center"><FONT size="2">39</FONT>
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<P align="left"><FONT size="2"><I>Contractual Commitments</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to our management agreement with ACM, we pay ACM an annual base
management fee, payable monthly in cash as a percentage of ARLP&#146;s equity and
equal to 0.75% per annum of the equity up to $400&nbsp;million, 0.625% per annum of
the equity from $400&nbsp;million to $800&nbsp;million and 0.5% per annum of the equity
in excess of $800&nbsp;million. For purposes of calculating the base management
fee, equity equals the month end value computed in accordance with generally
accepted accounting principles of (1)&nbsp;total partners&#146; equity in ARLP, plus or
minus (2)&nbsp;any unrealized gains, losses or other items that do not affect
realized net income.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also pay ACM incentive compensation each fiscal quarter, calculated as
(1)&nbsp;25% of the amount by which (a)&nbsp;ARLP&#146;s funds from operations per operating
partnership unit, adjusted for certain gains and losses, exceeds (b)&nbsp;the
product of (x)&nbsp;9.5% per annum or the 10&nbsp;year Treasury Rate plus 3.5%, whichever
is greater, and (y)&nbsp;the weighted average of book value of the net assets
contributed by ACM to ARLP per operating partnership unit, the offering price
per share of our common equity in the original offering and subsequent
offerings and the issue price per operating partnership unit for subsequent
contributions to ARLP, multiplied by (2)&nbsp;the weighted average of ARLP&#146;s
outstanding operating partnership units. At least 25% of this incentive
compensation is paid to ACM in shares of our common stock, subject to ownership
limitations in our charter. We have also agreed to share with ACM a portion of
the origination fees that we receive on loans we originate with ACM.
</FONT>
<P align="left"><FONT size="2"><B>Related Party Transactions</B>
</FONT>

<P align="left"><FONT size="2"><B><I>Related Party Loans</I></B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM has a 50% non-controlling interest in a joint venture, which was
formed to acquire, develop and/or sell real estate assets. At September&nbsp;30,
2003, ACM&#146;s investments in this joint venture were approximately $2.6&nbsp;million.
At September&nbsp;30, 2003, we had a $16.0&nbsp;million bridge loan outstanding to the
joint venture, which is collateralized by a first lien position on a commercial
real estate property. There is a limited guarantee on the loan of 50% by our
chief executive officer and 50% by the key principal of the joint venture. The
loan requires monthly interest payments based on LIBOR and matures in October
2004. We have agreed to provide the borrower with additional mezzanine
financing in the amount of up to $8.0&nbsp;million. The mezzanine financing requires
interest payments based on LIBOR and matures in May 2006. The loan will be
funded in two equal installments of $4.0&nbsp;million. The funding will be drawn
down as construction progresses. The interest on the first component, which
was funded by ACM in June 2003 and purchased by us in July 2003, will be earned
on the full $4.0&nbsp;million, while the interest on the second component, which has
yet to be funded by us, will be earned as the $4.0&nbsp;million is drawn down. This
additional financing is secured by a second mortgage lien on the property.
Interest income recorded from these loans was approximately $240,000, for the
period ended September&nbsp;30, 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our $16.0&nbsp;million bridge loan to the joint venture was contributed by ACM
as one of the structured finance assets contributed to the Company on July&nbsp;1,
2003. At the time of contribution, ACM also agreed to provide a limited
guarantee of the loan&#146;s principal amount based any profits realized on its
retained 50% interest in the joint venture with the borrower and ACM&#146;s
participating interests in borrowers under three other contributed structured
finance assets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2003, ACM invested approximately $818,000 in exchange for a 12.5%
non-controlling interest in a joint venture, which was formed to acquire,
develop and/or sell real estate assets. This investment was purchased by us
from ACM in August 2003. In addition, as of September&nbsp;30, 2003, we had two
mezzanine loans, secured by a second lien position in the ownership interests
of the borrower and the property, to this joint venture totaling $6.0&nbsp;million
outstanding. The loans require monthly interest payments based on LIBOR and
mature in May 2006. Interest income recorded from these loans was
approximately $97,000 for the period ended September&nbsp;30, 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time of ACM&#146;s origination of three of the structured finance assets
that it contributed to us on July&nbsp;1, 2003, each of the property owners
related to these contributed assets granted ACM participating interests that
share in a percentage of the cash flows of the underlying properties. Upon
contribution of the structured finance assets, ACM retained these participating
interests and its 50% non-controlling interest in the joint venture to which it
had made the $16.0&nbsp;million bridge loan. ACM agreed that if any portion of the
outstanding amount of any of these four contributed assets is not paid at the
its maturity or repurchase date, ACM will pay us, subject to the limitation
</FONT>
<P align="center"><FONT size="2">40</FONT>
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<P align="left"><FONT size="2">described below, the portion of the unpaid amount of the contributed asset
up to the total amount then received by ACM due to the realization of any
profits on its retained interests associated with any other of the four
contributed assets. However, ACM will no longer be obligated to make such
payments to us when the remaining accumulated principal amount of the four
contributed assets, collectively, falls below $5&nbsp;million and none of the four
contributed assets is in default.
</FONT>
<P align="left"><FONT size="2"><I>Related Party Formation Transactions</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM contributed the majority of its structured finance portfolio to our
operating partnership pursuant to a contribution agreement. The contribution
agreement contains representations and warranties concerning the ownership and
terms of the structured finance assets it contributed and other customary
matters. ACM has agreed to indemnify us and our operating partnership against
breaches of those representations and warranties. In connection with its asset
contribution ACM has also agreed to guaranty a portion of the principal amount
of four contributed assets in which ACM has retained a participating interest
or a joint venture interest in the borrower.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In exchange for ACM&#146;s asset contribution, we issued to ACM approximately
3.1&nbsp;million operating partnership units, each of which ACM may redeem for one
share of our common stock or an equivalent amount in cash, at our election, and
approximately 629,000 warrants, each of which entitles ACM to purchase one
additional operating partnership unit. The operating partnership units and
warrants for additional operating partnership units issued to ACM were valued
at approximately $43.9&nbsp;million at July&nbsp;1, 2003, based on the price offered to
investors in our units in the original offering, adjusted for the initial
purchaser&#146;s discount. We also granted ACM certain demand and other
registration rights with respect to the shares of common stock issuable upon
redemption of its operating partnership units.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of the approximately 3.1&nbsp;million operating partnership units received
by ACM is paired with one share of our special voting preferred stock that
entitles the holder to one vote on all matters submitted to a vote of our
stockholders. As operating partnership units are redeemed for shares of our
common stock or cash an equivalent number of shares of special voting preferred
stock will be redeemed and cancelled. As a result of ACM&#146;s asset contribution
and the related formation transactions, ACM owns approximately a 28% limited
partnership interest in our operating partnership and the remaining 72%
interest in our operating partnership is owned by us. In addition, ACM has
approximately 28% of the voting power of our capital stock (without giving
effect to the exercise of ACM&#146;s warrants for additional operating partnership
units).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and our operating partnership have entered into a management agreement
with ACM pursuant to which ACM has agreed to provide us with structured finance
investment opportunities and loan servicing as well as other services necessary
to operate our business. As discussed above in &#147;&#151; Contractual Commitments,&#148; we
have agreed to pay our manager an annual base management fee and incentive
compensation each fiscal quarter and share with ACM a portion of the
origination fees that we receive on loans we originate with ACM pursuant to
this agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the management agreement, ACM is also required to
provide us with a right of first refusal with respect to all structured finance
identified by ACM or its affiliates. We have agreed not to pursue, and to
allow ACM to pursue, any real estate opportunities other than structured
finance transactions. In addition, Mr.&nbsp;Kaufman has entered into a
non-competition agreement with us pursuant to which he has agreed not to pursue
structured finance investment opportunities, except as approved by our board of
directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and our operating partnership have also entered into a services
agreement with ACM pursuant to which our asset management group provides asset
management services to ACM. In the event the services provided by our asset
management group pursuant to the agreement exceed by more than 15% per quarter
the level of activity anticipated by our board of directors, we will negotiate
in good faith with our manager an adjustment to our manager&#146;s base management
fee under the management agreement, to reflect the scope of the services, the
quantity of serviced assets or the time required to be devoted to the services
by our asset management group.
</FONT>
<P align="center"><FONT size="2">41</FONT>
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<P align="left"><FONT size="2"><B>Recent Developments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We made
three new loans and investments, totalling $41.8&nbsp;million, during
October&nbsp;2003. As discussed under &#147;Arbor Realty Trust,
Inc.&nbsp;&#151;&nbsp;Our Assets&#148;, we made a $4.8&nbsp;million
bridge loan in connection with a refinancing of the $2.5&nbsp;million
80&nbsp;Evergreen million mezzanine loan and a $27&nbsp;million
24-month bridge loan in connection with the refinancing of the
$4.0&nbsp;million Carlton Arms Apartments mezzanine loan. In
addition, we originated a $10.0&nbsp;million equity investment in an entity that is purchasing a commercial office
building in Manhattan. This investment bears a 12% return.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
October, five of our investments contributed by ACM, totaling
$33.9&nbsp;million, were repaid in full, including all current and
deferred interest: the Holiday Inn Convention Center bridge loan
($4.7&nbsp;million), the Park Place Apartments preferred equity
investment ($3.9&nbsp;million), the Vermillion Apartments bridge loan
($18.8&nbsp;million), Carlton Arms Apartments mezzanine loan
($4.0&nbsp;million) and the Devonshire Apartments preferred equity
investment ($2.5&nbsp;million). The assets contributed by ACM
generally did not include prepayment protection which may result in
prepayments on these loans occurring prior to their scheduled
maturity date. We intend to structure loans that we originate in the
future to provide for prepayment protection. If successful, we will
be able to retain assets in our portfolio on a longer term basis.
</FONT>

<P align="left"><FONT size="2"><B>Quantitative and Qualitative Disclosures about Market Risk</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market risk is the exposure to loss resulting from changes in interest
rates, foreign currency exchange rates, commodity prices, equity prices and
real estate values. The primary market risks that we are exposed to are real
estate risk and interest rate risk.
</FONT>

<P align="left"><FONT size="2"><I>Real Estate Risk</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial mortgage assets may be viewed as exposing an investor to
greater risk of loss that residential mortgage assets since such assets are
typically secured by larger loans to fewer obligors than residential mortgage
assets. Multi-family and commercial property values and net operating income
derived from such properties are subject to volatility and may be affected
adversely by a number of factors, including, but not limited to, national,
regional and local economic conditions (which may be adversely affected by
industry slowdowns and other factors), local real estate conditions (such as an
oversupply of housing, retail, industrial, office or other commercial space);
changes or continued weakness in specific industry segments; construction
quality, age and design; demographic factors; retroactive changes to building
or similar codes; and increases in operating expenses (such and energy costs).
In the event net operating income decreases, a borrower may have difficulty
repaying our loans, which could result in losses to us. In addition, decreases
in property values reduce the value of the collateral and the potential
proceeds available to a borrower to repay our loans, which could also cause us
to suffer losses. Even when the net operating income is sufficient to cover
the related property&#146;s debt service, there can be no assurance that this will
continue to be the case in the future.
</FONT>
<P align="left"><FONT size="2"><I>Interest Rate Risk</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest rate risk is highly sensitive to many factors, including
governmental monetary and tax policies, domestic and international economic and
political considerations and other factors beyond our control.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating results will depend in large part on differences between the
income from our assets and our borrowing costs. Most of our assets and
borrowings are variable-rate instruments, based on LIBOR. The objective of
this strategy is to minimize the impact of interest rate changes on our net
interest income. Many of our loans and borrowings are subject to various
interest rate floors. As a result, the impact of a change in interest rates
may be different on our interest income than it is on our interest expense.
Based on the assets and liabilities as of September&nbsp;30, 2003, and assuming the
balances of these assets and liabilities remain unchanged for the subsequent
months, a 1% increase in LIBOR would increase our annual net income and cash
flows because the principal amount of assets that would be subject to an
interest rate adjustment under this scenario exceeds the amount of liabilities
that would subject to an interest rate adjustment. A 1% decrease in LIBOR
would also increase our annual net income and cash flows because the principal
amount of assets currently subject to interest rate floors (and, therefore,
would not be subject to a downward interest rate adjustment) exceeds the amount
of liabilities currently subject to interest rate floors. As the size of the
portfolio increases and the percentage of borrowings as a percent of assets
increases, a change in interest rates may have a negative impact on our net
income.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a significant rising interest rate environment and/or
economic downturn, defaults could increase and result in credit losses to us,
which could adversely affect our liquidity and operating results. Further,
such delinquencies or defaults could have an adverse effect on the spreads
between interest-earning assets and interest-bearing liabilities.
</FONT>
<P align="center"><FONT size="2">42</FONT>
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<!-- link1 "MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE STRUCTURED FINANCE BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES" -->
<DIV align="left"><A NAME="009"></A></DIV>
<P align="center"><FONT size="2"><B>MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF<BR>
OPERATIONS OF THE STRUCTURED FINANCE BUSINESS OF<BR>
ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You should read the following discussion in conjunction with the sections
of this prospectus entitled &#147;Risk Factors&#148;, &#147;Forward-Looking Statements&#148; and
&#147;Selected Consolidated Financial Information of the Structured Finance Business
of Arbor Commercial Mortgage, LLC and Subsidiaries&#148; and the historical
consolidated financial statements of the structured finance business of ACM,
including related notes, included elsewhere in this prospectus.</I>
</FONT>
<P align="left"><FONT size="2"><B>Overview and Basis of Presentation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a Maryland corporation that was formed in June 2003 to invest in
real estate related bridge and mezzanine loans, preferred equity and, in
limited cases, discounted mortgage notes and other real estate related assets.
We conduct substantially all of our operations through our operating
partnership, Arbor Realty Limited Partnership. We intend to elect to be
treated as a REIT for federal income tax purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003 ACM contributed a portfolio of structured finance
investments and related liabilities to our operating partnership. In addition,
certain employees of ACM related to its structured finance business became our
employees. These assets, liabilities and employees represented a substantial
portion of ACM&#146;s structured finance business, which historically invested in
real estate related bridge and mezzanine loans, preferred equity and other real
estate related assets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The structured finance business of ACM is not a separate legal entity and
the assets and liabilities associated with ACM&#146;s structured finance business
are components of a larger business. We obtained the information in the
consolidated financial statements included elsewhere in this prospectus from
ACM&#146;s consolidated historical accounting records.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The structured finance business of ACM never operated as a separate
business segment or division of ACM, but as an integrated part of ACM&#146;s
consolidated business. Accordingly, the statements of revenue and direct
operating expenses do not include charges from ACM for corporate general and
administrative expense because ACM considered such items to be corporate
expenses and did not allocate them to individual business units. These
expenses included costs for ACM&#146;s executive management, corporate facilities
and overhead costs, corporate accounting and treasury functions, corporate
legal matters and other similar costs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information in the statements of revenue and direct operating expenses
include the revenue and direct operating expenses that relate to the structured
finance business. Direct operating expenses include interest expense
applicable to the funding costs of the structured finance business loans and
investments, salaries and related fringe benefit costs, provision for loan
losses and other expenses directly associated with revenue-generating
activities. Direct operating expenses also include allocations of certain
expenses, such as telephone, office equipment rental and maintenance, office
supplies and marketing, which were directly associated with the structured
finance business and were allocated based on headcount of the structured
finance business in relation to the total headcount of ACM. All of these
allocations are based on assumptions that management believes are reasonable
under the circumstances.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements in this prospectus do not include a
statement of cash flows because the structured finance business did not
maintain a separate cash balance. Other than the debt required to fund the
loans and investments of the structured finance business, operating activities
of the structured finance business were funded by ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the structured finance business never operated as a separate
business division or segment of ACM, the consolidated financial statements
included in this prospectus are not intended to be a complete presentation of
the historical financial position, results of operations and cash flows of the
structured finance business. These consolidated financial statements were
prepared for inclusion in the registration statement of which this prospectus
is part and do not purport to reflect the financial position or results of
operations that would have resulted if the structured finance business had
operated as a separate company. The historical consolidated financial
information included in this prospectus is not likely to be indicative of our
financial position, results of operations or cash flows
</FONT>
<P align="center"><FONT size="2">43</FONT>
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<P align="left"><FONT size="2">for any future period. See &#147;Risk
Factors &#151; Our historical consolidated
financial information is not likely to be indicative of our future performance
or financial position as a separate company.&#148;
</FONT>
<P align="left"><FONT size="2"><B>Sources of Operating Revenues</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We derive our operating revenues primarily through the interest and other
income received from making real estate related bridge and mezzanine loans and
preferred equity investments. We provide bridge loans secured by first lien
mortgages on the property to borrowers who are typically seeking short term
capital to be used in an acquisition of property. The bridge loans we make
typically range in size from $1&nbsp;million to $25&nbsp;million and have terms of up to
seven years. We provide real property owners with mezzanine loans that are
secured by pledges of ownership interests in entities that directly or
indirectly control the real property or second mortgages. These loans
typically range in size from $2&nbsp;million to $15&nbsp;million and have terms of up to
seven years. We also make preferred equity investments in entities that
directly or indirectly own real property.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may also derive operating revenue from the gain on sale of loans and
real estate. We acquire (1)&nbsp;real estate for our own investment and, upon
stabilization, disposition at an anticipated return and (2)&nbsp;real
estate notes generally at a discount from lenders in situations where the
borrower wishes to restructure and reposition its short term debt and the
lender wishes to divest certain assets from its portfolio.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we derive operating revenue from income from equity
affiliates relating to joint ventures that ACM&#146;s structured finance business
formed with equity partners to lend to, acquire, develop and/or sell real
estate assets.
</FONT>
<P align="left"><FONT size="2"><B>Significant Accounting Estimates and Critical Accounting Policies</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set forth below is a summary of the accounting policies that management
believes are critical to the preparation of the consolidated financial
statements included in this prospectus. Certain of the accounting policies
used in the preparation of these consolidated financial statements are
particularly important for an understanding of the financial position and
results of operations presented in the historical consolidated financial
statements included in this prospectus and require the application of
significant judgment by management and, as a result, are subject to a degree of
uncertainty.
</FONT>
<P align="left"><FONT size="2"><I>Real Estate Owned</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate owned represents commercial real estate property that the
structured finance business of ACM owns and operates. Such assets are not depreciated
and are carried at the lower of cost or fair value less cost to sell.
Management reviews its real estate assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.
</FONT>
<P align="left"><FONT size="2"><I>Loans and Investments</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans held for investment are intended to be held to maturity and,
accordingly, are carried at cost, net of unamortized loan origination costs and
fees, unless such loan or investment is deemed to be impaired.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM&#146;s structured finance business historically invested in preferred
equity interests that allowed ACM to participate in a percentage of the
underlying property&#146;s cash flows from operations and proceeds from a sale or
refinancing. At the inception of each such investment, management must
determine whether such investment should be accounted for as a loan, joint
venture or as real estate. To date, management has determined that all such
investments are properly accounted for and reported as loans.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specific valuation allowances are established for impaired loans based on
the fair value of collateral on an individual loan basis. The fair value of
the collateral is determined by an evaluation of operating cash flow from the
property during the projected holding period, and estimated sales value
computed by applying an expected capitalization rate to the stabilized net
operating income of the specific property, less selling costs, discounted at
market discount rates. If upon completion of the valuation, the fair value of
the underlying collateral securing the
</FONT>
<P align="center"><FONT size="2">44</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">impaired loan is less than the net carrying value of the loan, an
allowance is created with a corresponding charge to the provision for loan
losses. The allowance for each loan is maintained at a level believed adequate
by management to absorb probable losses.
</FONT>
<P align="left"><FONT size="2"><I>Revenue Recognition</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The revenue recognition policies for ACM&#146;s structured finance business are
as follows:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Income</I>. Interest income is recognized on the accrual basis as it
is earned. In most instances, the borrower pays an additional amount of
interest at the time the loan is closed, an origination fee, and deferred
interest upon maturity of the loan. This additional income as well as any
direct loan origination costs incurred, is deferred and recognized over the
life of the related loan as a yield adjustment. Income recognition is
suspended for loans when in the opinion of management a full recovery of income
and principal becomes doubtful. Income recognition is resumed when the loan
becomes contractually current and performance is demonstrated to be resumed
Several of the loans provide for accrual of interest at specified rates, which
differ from current payment terms. Interest is recognized on such loans at the
accrual rate subject to management&#146;s determination that accrued interest and
outstanding principal are ultimately collectible, based on the underlying
collateral and operations of the borrower. If management cannot make this
determination regarding collectibility, interest income is recognized only upon
actual receipt.
</FONT>
<P align="left"><FONT size="2"><B>Results of Operations</B>
</FONT>

<P align="left"><FONT size="2"><B>Six Months Ended June&nbsp;30, 2003 and 2002</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenue</I>. The following table sets forth the components of revenue:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Six Months Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Increase/</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(Decrease)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,688,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,482,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">205,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on sale of loans and real estate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,024,268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,006,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,982,164</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(85</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income from equity affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">601,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(601,100</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,552,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">553,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">998,789</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">180</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,265,147</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">15,643,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(5,378,760</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(34</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income increased $206,000, or 3%, to $7.7&nbsp;million for the six
months ended June&nbsp;30, 2003 from $7.5&nbsp;million for the six months ended June&nbsp;30,
2002. This increase was primarily due to a 21% increase in the weighted average
balance of loans and investment partially offset by a 15% decrease in the
weighted average effective interest rate of loans and investments primarily due
to a decline in market interest rates. Most of our loans and investments are
variable rate instruments based on LIBOR. The negative impact to interest
income as a result of the decrease in market interest rates was partially
offset by interest rate floors that were in effect on many of our loans and
investments.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of loans and real estate decreased $6.0&nbsp;million, or 85%, to
$1.0&nbsp;million for the six months ended June&nbsp;30, 2003 from $7.0&nbsp;million for the
six months ended June&nbsp;30, 2002. This decrease was primarily attributable to a
$6.8&nbsp;million gain on the sale of a joint venture interest in March 2002
partially offset by a $900,000 gain on the partial liquidation of a joint
venture interest in 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from equity affiliates for the six months ended June&nbsp;30, 2002
consist of net income from a joint venture interest recognized prior to the
sale of that joint venture interest in March 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income increased $1.0&nbsp;million, or 180%, to $1.6&nbsp;million for the six
months ended June&nbsp;30, 2003 from $554,000 for the six months ended June&nbsp;30,
2002. This increase was primarily attributable to (a)&nbsp;the partial satisfaction
of an impaired loan for an amount $350,000 in excess of the loan&#146;s carrying
value resulting in the
</FONT>
<P align="center"><FONT size="2">45</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">recognition of other income for this amount (b)&nbsp;increased funds received
on paid off loans of $337,000 and (c)&nbsp;increased accelerated amortization of
revenue of $390,000 on loans with early payoffs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expenses</I>. The following table sets forth the components of direct
operating expenses:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Six Months Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Increase/</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(Decrease)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,468,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,370,777</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">97,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee compensation and
benefits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,751,147</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,410,272</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">340,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling and administrative</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">458,266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">368,253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90,013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,195,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,135,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(98</FONT></TD>
    <TD nowrap><FONT size="2">%)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total direct operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">5,737,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">8,344,302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(2,606,614</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(31</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense increased $100,000, or 3%, to $3.5&nbsp;million for the six
months ended June&nbsp;30, 2003 from $3.4&nbsp;million for the six months ended June&nbsp;30,
2002. This increase is primarily attributable to a 26% increase in the weighted
average borrowings partially offset by a 19% decrease in the weighted average
effective financing rate primarily due to a decline in market interest rates.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee compensation and benefits increased $341,000, or 24%, to $1.8
million for the six months ended June&nbsp;30, 2003 from $1.4&nbsp;million for the six
months ended June&nbsp;30, 2002. This increase reflects increased staffing levels
associated with the increased loan and investments opportunities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and administrative expenses increased $90,000, or 24%, to $458,000
for the six months ended June&nbsp;30, 2003 from $368,000 for the six months ended
June&nbsp;30, 2002. This increase was primarily attributable to operating expenses
incurred in 2003 for a real estate owned asset, and increased marketing
expenses associated with the growth of the lending and investment activities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loan losses decreased $3.1&nbsp;million, or 98%, to $60,000 for
the six months ended June&nbsp;30, 2003 from $3.2&nbsp;million for the six months ended
June&nbsp;30, 2002. This decrease was directly attributable to a $3.1&nbsp;million
provision for loan losses recorded in 2002 prior to this loan being foreclosed
and reclassified to real estate owned. This provision was recorded to reflect
this asset at its estimated fair value.
</FONT>
<P align="left"><FONT size="2"><B>Nine Months Ended September&nbsp;30, 2002</B>
</FONT>

<P align="left"><FONT size="2"><I>Revenues. </I>The following table sets forth the components of revenue:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Nine Months</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,798,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on sale of loans and real estate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,006,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income from equity affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">632,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">572,161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">19,009,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income was $10.8&nbsp;million. The average balance of the loan and
investment portfolio was $174.7&nbsp;million during the period. The average yield
on these assets was 8.24%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of loans and real estate was $7.0&nbsp;million. This amount
consists primarily of a $6.8&nbsp;million gain on the sale of a joint venture
interest in March 2002.
</FONT>
<P align="center"><FONT size="2">46</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from equity affiliates was $632,000. This amount consists
primarily of net income from a joint venture interest recognized prior to the
sale of that joint venture interest in March 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income was $572,000. This amount represents funds received on loans
and investments which generate additional payments to us based on the
borrower&#146;s operating cash flow.
</FONT>
<P align="left"><FONT size="2"><I>Expenses. </I>The following table sets forth the components of direct operating
expenses:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="74%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Nine Months</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,832,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee compensation and benefits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,105,445</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling and administrative</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">582,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,255,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total direct operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,775,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense was $4.8&nbsp;million. The average balance of debt financing
was $118.9&nbsp;million during the quarter. The average cost of these borrowings
was 5.42%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee compensation and benefits expense was $2.1&nbsp;million, which
represents salaries, benefits and incentive compensation for all employees who
work directly in ACM&#146;s structured finance business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and administrative expense was $583,000. This amount is comprised
primarily of professional fees directly associated with ACM structured finance
business, operating expenses incurred for a real estate owned assets, and
marketing expenses incurred directly for ACM&#146;s structured finance business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provision for loan losses was $3.3&nbsp;million. Of this amount $3.1
million was directly attributable to a specific loan at was being foreclosed
upon and reclassified to real estate owned. This provision was recorded to
reflect this asset at its estimated fair value. The remaining provision of
$200,000 was established to properly reflect the book value of an impaired
loan.
</FONT>
<P align="left"><FONT size="2"><B>Years Ended December&nbsp;31, 2002 and 2001</B>
</FONT>

<P align="left"><FONT size="2"><I>Revenue</I>. The following table sets forth the components of revenue:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Increase/</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(Decrease)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">14,532,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">14,667,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(135,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on sale of loans and real estate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,470,999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,226,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,244,351</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income from equity affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">632,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,403,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(770,664</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,090,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,668,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(578,109</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(35</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">23,725,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">20,965,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,760,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income decreased $135,000, or 1%, to $14.5&nbsp;million for 2002 from
$14.7&nbsp;million for 2001. This decrease was primarily due to a 16% decrease in
the weighted average effective interest rate of loans and investments primarily
due to a decline in market interest rates partially offset by a 17% increase in
the weighted average balance of loans and investment. Most of our loans and
investments are variable rates instruments based on LIBOR. The negative impact
to interest income as a result of the decrease in market interest rates was
partially offset by interest rate floors that were in effect on many of our
loans and investments.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of loans and real estate increased $4.2&nbsp;million, or 132%, to
$7.5&nbsp;million for 2002 from $3.2&nbsp;million for 2001. This increase was primarily
attributable to a $6.8&nbsp;million gain on the sale of a joint venture interest
</FONT>
<P align="center"><FONT size="2">47</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">in March 2002 partially offset by a $2.2&nbsp;million gain from the sale of
property from a joint venture interest and a $276,000 decrease in income from
the sale of foreclosed loans.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from equity affiliates decreased $770,000, or 55%, to $632,000 for
2002 from $1.4&nbsp;million for 2001. This decrease was primarily attributable to a
$868,000 decrease in net income from joint venture interests due to
dissolutions of joint ventures in 2001 and 2002, partially offset by a $97,000
increase in net income from other joint venture interest.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income decreased $578,000, or 35%, to $1.1&nbsp;million for 2002 from
$1.7&nbsp;million for 2001. This decrease was primarily attributable to decreased
extension fees earned of $215,000 and decreased funds received on paid off
loans of $361,000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expenses</I>. The following table sets forth the components of direct
operating expenses:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Increase/</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(Decrease)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6,586,640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,029,374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(442,734</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(6</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee compensation and
benefits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,827,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,888,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(61,412</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling and administrative</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">910,924</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">839,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">71,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,315,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,075,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,281</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total direct operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">13,639,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,997,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,641,955</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense decreased $443,000, or 6%, to $6.6&nbsp;million for 2002 from
$7.0&nbsp;million for 2001. This decrease is primarily attributable to a 20%
decrease in the weighted average effective financing rate due to a decline in
market interest rates partially offset by a 17% increase in the weighted
average borrowings.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee compensation and benefits remained relatively stable from 2001 to
2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and administrative expenses increased $71,000, or 8%, to $911,000
for 2002 from $840,000 for 2001. This increase was primarily attributable to
increased legal expenses associated with the asset management and restructuring
of our loans and investments portfolio.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loan losses increased $3.1&nbsp;million, or 1,281%, to $3.3
million for 2002 from $240,000 for 2001. This increase was directly
attributable to a $3.1&nbsp;million provision for possible loan losses recorded in
2002 prior to this loan being foreclosed on and reclassified as real estate
owned. This provision was recorded to reflect this asset at its estimated fair
value.
</FONT>
<P align="left"><FONT size="2"><B>Years Ended December&nbsp;31, 2001 and 2000</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenue</I>. The following table sets forth the components of revenue:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Increase/</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(Decrease)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">14,667,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,707,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,960,365</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on sale of loans and real estate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,226,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,880,825</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,345,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">72</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income from equity affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,403,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,028,835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,625,821</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(72</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,668,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">652,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,015,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">155</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">20,965,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">18,270,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">2,695,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income increased $4.0&nbsp;million, or 37%, to $14.7&nbsp;million for 2001
from $10.7&nbsp;million for 2000. This increase was primarily due to a 81% increase
in the weighted average balance of loans and investment partially offset by a
24% decrease in the weighted average effective interest rate of loans and
investments primarily due to a decline in market interest rates.
</FONT>
<P align="center"><FONT size="2">48</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of loans and real estate increased $1.3&nbsp;million, or 72%, to
$3.2&nbsp;million for 2001 from $1.9&nbsp;million for 2000. This increase was primarily
attributable to a $2.2&nbsp;million gain from the sale of property from a joint
venture interest partially offset by reduced gains on sales of foreclosed loans
of $800,000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from equity affiliates decreased $3.6&nbsp;million, or 72%, to $1.4
million for 2001 from $5.0&nbsp;million for 2000. This decrease was due to (a)&nbsp;a
$3.3&nbsp;million decrease in net income from a joint venture interest due to the
dissolution of the joint venture interest in 2001 and (b)&nbsp;a $353,000 decrease
in net income from other joint venture interest.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income increased $1.0&nbsp;million, or 155%, to $1.7&nbsp;million for 2001
from $653,000 for 2000. This increase was primarily attributable to increased
funds received on paid off loans of $900,000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expenses</I>. The following table sets forth the components of direct
operating expenses:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Year Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Increase/</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>(Decrease)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,029,374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">5,518,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,510,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee compensation and
benefits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,888,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,026,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(137,721</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5</FONT></TD>
    <TD nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling and administrative</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">839,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">442,487</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total direct operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,997,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">9,227,274</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,770,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense increased $1.5&nbsp;million, or 27%, to $7.0&nbsp;million for 2001
from $5.5&nbsp;million for 2000. This increase was primarily attributable to a 73%
increase in the weighted average borrowings partially offset by a 26% decrease
in the weighted average effective financing rate primarily due to a decline in
market interest rates.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee compensation and benefits decreased $138,000, or 5%, to $2.9
million for 2001 from $3.0&nbsp;million for 2000. This decrease was primarily
attributable to the streamlining of certain levels of management of ACM&#146;s
structured finance business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and administrative expenses increased $397,000, or 90%, to
$840,000 in 2001 from $442,000 for 2000. This increase was primarily
attributable to increased legal expenses associated with the asset management
and restructuring of our loans and investments portfolio.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loan losses was stable from 2000 to 2001.
</FONT>
<P align="left"><FONT size="2"><B>Pro Forma Effect of ACM&#146;s Asset Contribution on Results of Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were formed in June 2003 to operate as a real estate investment trust
and to expand the structured finance business of ACM. On July&nbsp;1, 2003, we
completed a private placement of our units, each consisting of five shares of
our common stock and one warrant to purchase one share of our common stock.
Gross proceeds from the private financing totaled $120.2&nbsp;million. In exchange
for a commensurate equity ownership in our operating subsidiary, ACM
contributed $213.1&nbsp;million of structured finance assets subject to $169.2
million of borrowings supported by $43.9&nbsp;million of equity. These assets and
liabilities were contributed at book value, which approximates fair value, and
represent 88% of the assets and 98% of the liabilities of ACM&#146;s structured
finance business as of June&nbsp;30, 2003. In addition, certain employees of ACM
were transferred to us.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are externally managed and advised by ACM and pay ACM a management fee
in accordance with the terms of the management agreement. ACM also sources
originations, provides underwriting services and services all structured
finance assets on our behalf. As a result, the operating expenses as presented
in the historical consolidated financial statements of ACM&#146;s structured finance
business would have been affected had we been formed at an earlier time.
Employee compensation and benefits expense would have decreased by $895,811 and
$1,518,890 for the six months ended June&nbsp;30, 2003 and year ended December&nbsp;31,
2002, respectively, because these costs would have been borne by ACM under
terms of the management agreement. Similarly, selling and
</FONT>
<P align="center"><FONT size="2">49</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">administrative expense would have decreased by $65,752 and $127,753 for
the six months ended June&nbsp;30, 2003 and year ended December&nbsp;31, 2002,
respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the management agreement, we will pay ACM a management
fee, composed of a base management fee and incentive compensation. The base
management fee is 0.75% per annum of the first $400&nbsp;million of equity. The
incentive compensation is equal to 25% of the amount that our funds from
operations, adjusted for certain gains and losses, divided by contributed
capital, exceeds 9.5% per annum or the 10-year Treasury Rate plus 3.5%,
whichever is greater.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This pro forma information does not reflect the results of the private
financing. However, gross proceeds from the private financing totaled $120.2
million, which combined with ACM&#146;s equity contribution of $43.9&nbsp;million,
resulted in total contributed capital of $164.1&nbsp;million. Offering expenses of
$9.6&nbsp;million were paid by us, resulting in stockholders equity and minority
interest of $154.5&nbsp;million at our inception.
</FONT>
<P align="left"><FONT size="2"><B>Liquidity and Capital Resources</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liquidity is a measurement of the ability to meet potential cash
requirements, including ongoing commitments to repay borrowings, fund and
maintain loans and investments and other general business needs. On July&nbsp;1,
2003, ACM contributed a portfolio of structured finance investments and related
liabilities to our operating partnership. In addition, certain employees of
ACM became our employees. These assets, liabilities and employees represented
a substantial portion of the structured finance business of ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July&nbsp;1, 2003 we completed the original offering, resulting in
gross proceeds of $120.2&nbsp;million. Gross proceeds from the original
offering combined with the concurrent equity contribution by ACM totaled
approximately $164.1 in equity capital.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsequent to and as a result of the original offering, substantially all
of the operations of the structured finance business of ACM have been conducted
by us. Therefore, a description of the liquidity and capital resources of the
structured finance business of ACM is not presented. A description of our
liquidity and capital resources is presented in the section of this prospectus
entitled &#147;Management&#146;s Discussion &#038; Analysis of Financial Condition and Results
of Operations of Arbor Realty Trust, Inc. and Subsidiaries &#151; Liquidity and
Capital Resources.&#148;
</FONT>
<P align="left"><FONT size="2"><B>Related Party Transactions</B>
</FONT>

<P align="left"><FONT size="2"><I>Related Party Loans</I></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM has a 50% non-controlling interest in a joint venture, which was
formed to acquire, develop and/or sell real estate assets. At June&nbsp;30, 2003,
December&nbsp;31, 2002 and 2001, ACM&#146;s structured finance business&#146; investments in
this joint venture were approximately $2.6&nbsp;million, $2.3&nbsp;million and $1.8
million, respectively. This investment is accounted for under the equity
method. At June&nbsp;30, 2003 and December&nbsp;31, 2002, ACM had a $16.0&nbsp;million bridge
loan outstanding to the joint venture, which is collateralized by a first lien
position on a commercial real estate property. There is a limited guarantee on
the loan of 50% by the chief executive officer of ACM and 50% by the key
principal of the joint venture. The loan requires monthly interest payments
based on LIBOR and matures in October 2004. ACM agreed to provide the borrower
with additional mezzanine financing in the amount of up to $8.0&nbsp;million. The
mezzanine financing requires interest payments based on LIBOR and matures in
May 2006. The loan will be funded in two equal installments of $4.0&nbsp;million.
The funding will be drawn down as construction progresses. The interest on the
first component, which was funded by ACM in June 2003, will be earned on the
full $4.0&nbsp;million, while the interest on the second component, which has yet to
be funded, will be earned as the $4.0&nbsp;million is drawn down. This additional
financing is secured by a second mortgage lien on the property. In addition, an
interest and renovation reserve totaling $2.5&nbsp;million is in place to cover both
the bridge and mezzanine loans. Interest income recorded from these loans was
approximately $217,000, $449,000 and $148,000 for the periods ended June&nbsp;30,
2003, December&nbsp;31, 2002 and 2001, respectively.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2003, ACM invested approximately $818,000 in exchange for a 12.5%
non-controlling interest in a joint venture, which was formed to acquire,
develop and/or sell real estate assets. This investment is accounted for
</FONT>
<P align="center"><FONT size="2">50</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">under the equity method. In June, 2003, ACM made two mezzanine loans
secured by a second lien position in the ownership interests of the borrower
and the property to this joint venture totaling $6.0&nbsp;million outstanding. The
loans require monthly interest payments based on LIBOR and mature in May 2006.
Interest income recorded from these loans was approximately $8,000 for the
period ended June&nbsp;30, 2003.
</FONT>
<P align="left"><FONT size="2"><I>Related Party Formation Transactions</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM contributed the majority of its structured finance portfolio to our
operating partnership pursuant to a contribution agreement. The contribution
agreement contains representations and warranties concerning the ownership and
terms of the structured finance assets it contributed and other customary
matters. ACM has agreed to indemnify us and our operating partnership against
breaches of those representations and warranties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In exchange for ACM&#146;s asset contribution, we issued to ACM approximately
3.1&nbsp;million operating partnership units, each of which ACM may redeem for one
share of our common stock or an equivalent amount in cash, at our election, and
approximately 629,000 warrants, each of which entitles ACM to purchase one
additional operating partnership unit. The operating partnership units and
warrants for additional operating partnership units issued to ACM were valued
at approximately $43.9&nbsp;million at July&nbsp;1, 2003, based on the price offered to
investors in our units in the original offering, adjusted for the initial
purchaser&#146;s discount. We have also granted ACM certain demand and other
registration rights with respect to the shares of common stock issuable upon
redemption of its operating partnership units.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of the approximately 3.1&nbsp;million operating partnership units received
by ACM is paired with one share of our special voting preferred stock that
entitles the holder to one vote on all matters submitted to a vote of our
stockholders. As operating partnership units are redeemed for shares of our
common stock or cash an equivalent number of shares of special voting preferred
stock will be redeemed and cancelled. As a result of ACM&#146;s asset contribution
and the related formation transactions, ACM owns approximately a 28% limited
partnership interest in our operating partnership and the remaining 72%
interest in our operating partnership is owned by us. In addition, ACM has
approximately 28% of the voting power of our capital stock (without giving
effect to the exercise of ACM&#146;s warrants for additional operating partnership
units).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and our operating partnership have entered into a management agreement
with ACM pursuant to which ACM has agreed to provide us with structured finance
investment opportunities and loan servicing as well as other services necessary
to operate our business. ACM is also required to provide us with a right of
first refusal with respect to all structured finance identified by ACM or its
affiliates. We have agreed not to pursue, and to allow ACM to pursue, any real
estate opportunities other than structured finance transactions. As discussed
above in &#147;&#151; Contractual Commitments,&#148; we have agreed to pay our manager an
annual base management fee and incentive compensation each fiscal quarter and
share with ACM a portion of the origination fees that we receive on loans we
originate with ACM pursuant to this agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and our operating partnership have also entered into a services
agreement with ACM pursuant to which our asset management group provides asset
management services to ACM. In the event the services provided by our asset
management group pursuant to the agreement exceed by more than 15% per quarter
the level of activity anticipated by our board of directors, we will negotiate
in good faith with our manager an adjustment to our manager&#146;s base management
fee under the management agreement, to reflect the scope of the services, the
quantity of serviced assets or the time required to be devoted to the services
by our asset management group.
</FONT>



<P align="left"><FONT size="2"><B>Quantitative and Qualitative Disclosures about Market Risk</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the consummation of
the original offering and the related formation
transactions, substantially all of the operations of the structured finance
business of ACM have been conducted by us. Therefore, quantitative and
qualitative disclosures about market risk relating to the structured finance
business of ACM is not presented. A description of market risks relating to
our business is presented in the section of this prospectus entitled
&#147;Management&#146;s Discussion &#038; Analysis of Financial Condition and Results of
Operations of Arbor Realty Trust, Inc. and Subsidiaries &#151; Quantitative and
Qualitative Disclosures about Market Risk&#148;
</FONT>
<P align="center"><FONT size="2">51</FONT>

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<!-- link1 "ARBOR REALTY TRUST, INC." -->
<DIV align="left"><A NAME="010"></A></DIV>
<P align="center"><FONT size="2"><B>ARBOR REALTY TRUST, INC.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a Maryland corporation that was formed in June 2003 to invest in
real estate related bridge and mezzanine loans, preferred equity and, in
limited cases, discounted mortgage notes and other real estate related assets.
We conduct substantially all of our operations through our operating
partnership. We will elect to be taxed as a REIT under the Internal Revenue
Code and generally will not be subject to federal taxes on our income to the
extent we distribute our income to our stockholders and maintain our
qualification as a REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, ACM contributed the majority of its structured finance
portfolio to our operating partnership. These initial assets, consisting of 12
bridge loans, five mezzanine loans, five preferred equity investments and two
other real estate related investments, were transferred at book value, which,
at June&nbsp;30, 2003, represented $213.1&nbsp;million in assets financed by $169.2
million borrowed under ACM&#146;s credit facilities, giving effect to notes payable
equal to the financing amount available for each contributed investment under
ACM&#146;s credit facilities, and supported by $43.9&nbsp;million in equity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are externally managed and advised by ACM. Our manager is a national
commercial real estate finance company operating through 15 regional offices in
the United States, specializing in debt and equity financing for multi-family
and commercial real estate. We believe ACM&#146;s experience and reputation
positions it to originate attractive investment opportunities for us. Our
management agreement with ACM was developed to capitalize on synergies with
ACM&#146;s origination infrastructure, existing business relationships and
management expertise.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe the financing of multi-family and commercial real estate offers
significant growth opportunities as the inflexibility of traditional lenders
has created increased demand for customized financing solutions. Since its
inception in 1996, ACM&#146;s structured finance group has originated over $1.2
billion in structured finance transactions for investment by ACM and certain
joint venture partners. ACM has not realized any loss of principal on these
investments, and, to date, approximately $1&nbsp;billion of these investments have
been fully realized. ACM has granted us a right of first refusal to pursue all
structured finance investment opportunities identified by ACM. ACM will
continue to provide and service multi-family and commercial mortgage loans
under Fannie Mae, Federal Housing Administration and conduit commercial lending
programs, which we believe will offer customer relationship synergies to our
business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a strong senior management team with significant industry
experience. Mr.&nbsp;Ivan Kaufman, the chief executive officer of ACM, and Mr.
Frederick Herbst, the chief financial officer of ACM, also serve as our chief
executive officer and chief financial officer, respectively. Mr.&nbsp;Fred Weber,
the head of the structured finance group at ACM since 1999, is our executive
vice president of structured finance. Mr.&nbsp;Daniel M. Palmier, the head of ACM&#146;s
asset management group since 1997, is our executive vice president of asset
management, and the eight additional employees who comprised the asset
management group of ACM have also joined us. In October 2003, we hired Mr.
John C. Kovarik as our chief credit officer. Messrs.&nbsp;Kaufman, Weber, Palmier
and Kovarik serve as members of our credit committee, which has the authority
to decide whether we will invest in an individual loan or security originated
by ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe the asset management group&#146;s involvement in our credit
underwriting process helps to mitigate investment risk after the closing of a
transaction. The asset management group is integrated into the underwriting
and structuring process for all transactions in order to enhance the credit
quality of our originations before a transaction closes. After the closing of
structured finance transactions, the asset management group&#146;s experience in
managing complex restructurings, refinancings and asset dispositions is used to
improve the credit quality and yield on managed investments.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with ACM&#146;s contribution of the initial assets, ACM arranged
for us to have substantially similar credit facilities as those used by ACM to
finance these assets. In exchange for ACM&#146;s asset contribution, we issued to
ACM approximately 3.1&nbsp;million operating partnership units, each of which ACM
may redeem for one share of our common stock or an equivalent amount in cash,
at our election, and approximately 629,000 warrants, each of which entitles ACM
to purchase one additional operating partnership unit. The operating
partnership units and warrants for additional operating partnership units
issued to ACM were valued at approximately $43.9&nbsp;million at July&nbsp;1, 2003, based
on the price offered to investors in our units in the original offering,
adjusted for the initial
</FONT>
<P align="center"><FONT size="2">52</FONT>
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<P align="left"><FONT size="2">purchaser&#146;s discount. Each of the approximately 3.1&nbsp;million operating
partnership units received by ACM is paired with one share of our special
voting preferred stock that entitles the holder to one vote on all matters
submitted to a vote of our stockholders. As operating partnership units are
redeemed for shares of our common stock or cash an equivalent number of shares
of special voting preferred stock will be redeemed and cancelled. See
&#147;Description of Stock &#151; Special Voting Preferred Stock.&#148; As a result of ACM&#146;s
asset contribution and the related formation transactions, ACM owns
approximately a 28% limited partnership interest in our operating partnership
and the remaining 72% interest in our operating partnership is owned by us. In
addition, ACM has approximately 28% of the voting power of our capital stock
(without giving effect to the exercise of ACM&#146;s warrants for additional
operating partnership units).
</FONT>
<P align="left"><FONT size="2"><B>Industry Overview</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Multi-family and commercial real estate encompasses a wide spectrum of
assets including multi-family, office, industrial, retail and hospitality
properties. We believe there is strong growth potential in customized
financing of multi-family and commercial real estate. Commercial mortgage
banks have arranged a significant portion of the debt financing for commercial
real estate. In the past decade, the commercial mortgage industry has
experienced significant change, due in part to increasingly standardized
underwriting requirements, more demanding borrowers and lenders and the growth
of a market for securitized commercial real estate pools. Many existing
lending firms lack the capital or financial flexibility to compete effectively
in today&#146;s rapidly changing market and the commercial mortgage industry is
moving toward greater consolidation. Banks and life insurance companies, which
have traditionally been the primary source for commercial real estate
financing, are increasingly constraining borrowers by their relatively
inflexible underwriting standards, including lower loan to value ratios,
thereby creating significant demand for bridge, mezzanine and other forms of
innovative financing.
</FONT>
<P align="left"><FONT size="2"><B>Our Business Strategy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We capitalize on this demand by investing in a diversified portfolio of
structured finance assets in the multi-family and commercial real estate
market. Our principal business objectives are to invest in bridge and
mezzanine loans, preferred equity and other real estate related assets and
actively manage this portfolio in order to generate cash available for
distribution, facilitate capital appreciation and maximize total return to our
stockholders. We believe we can achieve these objectives through the following
business and growth strategies:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Provide Customized Financing</I>. We provide financing customized to the
needs of our borrowers. We target borrowers with reputations for enhancing
value, but whose options may be limited by conventional bank financing and who
may benefit from the sophisticated structured finance products we offer.
Historically, ACM has attempted to provide customized loan structures and other
financing alternatives to fit the characteristics and purpose of each
individual borrower and its financing requirements and we employ a similar
strategy.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Use ACM&#146;s Relationships with Existing Borrowers</I>. We capitalize on ACM&#146;s
reputation in the commercial real estate finance industry. ACM has
relationships with over 125 distinct borrowers nationwide. Since ACM&#146;s
originators offer ACM&#146;s senior mortgage loans as well as our structured finance
products, we are able to benefit from ACM&#146;s existing customer base and use its
senior lending business as a potential refinance vehicle for our structured
finance assets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Offer Broader Products and Expand Customer Base</I>. We have the ability to
offer a larger number of financing alternatives than ACM has been able to offer
to its customers in the past. Our potential borrowers are able to choose from
products offering longer maturities and larger principal amounts than ACM could
previously offer.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Leverage Our Experience and the Experience of ACM</I>. Our executive officers
and employees, and those of ACM, have extensive experience originating and
managing structured commercial real estate investments. Our senior management
team has on average over 20&nbsp;years experience in the financial services
industry. Additionally, our executive officers have prior experience in
managing and operating a public company, the predecessor company to ACM.
</FONT>
<P align="center"><FONT size="2">53</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Manage and Maintain Credit Quality</I>. A critical component of our success
in the real estate finance sector is our ability to manage the real estate risk
that is underwritten by our manager and us. We actively manage and maintain
the credit quality of our portfolio by using the expertise of our asset
management group, which has a proven track record of structuring and
repositioning structured finance investments to improve the credit quality and
yield on managed investments.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Focus on a Niche Market in Smaller Loan Balances</I>. We focus on loans with
principal amounts under $20&nbsp;million, which many larger lending firms do not
target. We can afford to invest the time and effort required to close loans
with smaller principal amounts because of our relatively efficient cost
structure.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Execute Transactions Rapidly</I>. We act quickly and decisively on proposals,
provide commitments and close transactions within a few weeks and sometimes
days, if required. We believe that rapid execution attracts opportunities from
both borrowers and other lenders that would not otherwise be available. We
believe our ability to structure flexible terms and close loans in a timely
manner gives us a competitive advantage over lending firms that also serve the
market for loans with principal amounts under $20&nbsp;million.
</FONT>
<P align="left"><FONT size="2"><B>Our Investment Guidelines</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have adopted general guidelines for our investments and borrowings to the effect that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">no investment will be made that would cause us to fail to qualify as a REIT;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">no investment will be made that would cause us to be
regulated as an investment company under the Investment Company Act;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">no more than 25% of our equity, determined as of the date of
such investment, will be invested in any single asset;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our leverage will generally not exceed 80% of the value of
our assets, in the aggregate; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">we will not co-invest with our manager or any of its
affiliates unless (i)&nbsp;our co-investment is otherwise in accordance
with these guidelines and (ii)&nbsp;the terms of such co-investment are
at least as favorable to us as to our manager or such affiliate (as
applicable) making such co-investment.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manager is required to seek the approval of a majority of the
independent members of our board of directors before we engage in a material
transaction with another entity managed by our manager. These investment
guidelines may be changed by our board of directors without the approval of our
stockholders.
</FONT>
<P align="left"><FONT size="2"><B>Our Investment Strategy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We actively pursue lending and investment opportunities with property
owners and developers who need interim financing until permanent financing can
be obtained. We will initially target transactions under $20&nbsp;million where we
believe we have competitive advantages, particularly our lower cost structure
and in house capabilities. Our structured finance investments generally have
maturities of two to five years, depending on type, have extension options when
appropriate, and generally require a balloon payment of principal at maturity.
Borrowers in the market for these types of loans include, but are not limited
to, owners or developers seeking either to acquire or refurbish real estate or
to pay down debt and reposition a property for permanent financing.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We target borrowers with reputations for enhancing value, but whose
options are limited by conventional bank financing and can benefit from the
sophisticated financing products we offer. Loan structures vary as they are
customized to fit the characteristics and purpose of the financing. Our
structured finance assets are underwritten in accordance with guidelines
designed to evaluate the borrower and its ability to satisfy the repayment
conditions of the loan, including an analysis of the various repayment
strategies available to the investment. In certain instances, especially in
our mezzanine and preferred equity investments, we may underwrite investments
based on a stabilized value of the underlying property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our investment program emphasizes the following general categories of real
estate related activities:
</FONT>
<P align="center"><FONT size="2">54</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Bridge Financing</I>. We offer bridge financing products to borrowers who are
typically seeking short term capital to be used in an acquisition of property.
The borrower has usually identified an undervalued asset that has been under
managed or is located in a recovering market. From the borrower&#146;s perspective,
shorter term bridge financing is advantageous because it allows time to improve
the property value through repositioning the property without encumbering it
with restrictive long term debt.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The bridge loans we make typically range in size from $1&nbsp;million to $25
million and are secured by first lien mortgages on the property. The term of
the loan typically is up to five years. Historically, ACM&#146;s spreads have
ranged from 3.00% to 5.00% over 30-day LIBOR. Additional yield enhancements
may include origination fees, deferred interest and participating interests,
which are equity interests in the borrower that share in a percentage of the
underlying cash flows of the property. Borrowers usually use the proceeds of a
conventional mortgage to repay a bridge loan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mezzanine Financing</I>. We offer mezzanine loans. Mezzanine loans are
subordinate to a conventional first mortgage loan and senior to the borrower&#146;s
equity in a transaction. We believe this product allows our clients to fund
their projects in a more efficient and strategic manner than financing methods
offered by conventional lenders. Our mezzanine financing may take the form of
pledges of ownership interests in entities that directly or indirectly control
the real property or subordinated loans secured by second mortgages. We may
also require additional collateral such as personal guarantees, letters of
credit and/or additional collateral unrelated to the property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our mezzanine loans typically range in size from $2&nbsp;million to $15&nbsp;million
and have terms of up to seven years. Historically, ACM&#146;s spreads have ranged
from 4.00% to 7.00% over 30-day LIBOR, occasionally with an interest rate
floor. As in the case with our bridge loans, the yield on these investments
may be enhanced by prepaid and deferred interest payments, yield look-backs and
participating interests.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Preferred Equity Investments</I>. We provide financing by making preferred
equity investments in entities that directly or indirectly own real property.
In cases where the terms of a first mortgage prohibit additional liens on the
ownership entity, investments structured as preferred equity in the entity
owning the property serve as viable financing substitutes. With preferred
equity investments, we typically become a special limited partner or member in
the ownership entity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Real Property Acquisitions</I>. We may purchase existing real estate for
repositioning and/or renovation and then disposition at an anticipated
significant return. From time to time, we may identify real estate investment
opportunities. In these situations, we may act solely on our own behalf or in
partnership with other investors. Typically, these transactions are analyzed
with the expectation that we will have the ability to sell the property within
a one to two year time period, achieving a significant return on invested
capital. In connection with these transactions, speed of execution is often
the most critical component to success. We may seek to finance a portion of
the acquisition price through short term financing. Repayment of the short
term financing will either come from the sale of the property or conventional
permanent debt.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Note Acquisitions</I>. We may acquire real estate notes from lenders in
situations where the borrower wishes to restructure and reposition its short
term debt and the lender wishes, for a variety of reasons (such as risk
mitigation, portfolio diversification or other strategic reasons), to divest
certain assets from its portfolio. These notes will generally be acquired at a
discount. In such cases, we intend to use our management resources to resolve
any dispute concerning the note or the property securing it and to identify and
resolve any existing operational or any other problems at the property. We
will then either restructure the debt obligation for immediate resale or sale
at a later date or reposition it for permanent financing. In some instances,
we may take title to the property underlying the real estate note.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We borrow against or leverage our investments to the extent consistent
with our investment guidelines in order to increase the size of our portfolio
and potential returns to our stockholders. We have substantially similar
credit facilities as used by ACM to finance the initial assets. We are
currently in negotiations with the providers of the credit facilities to
provide similar credit facilities and to increase the amounts available under
these credit facilities, but there can be no assurance that we will be able to
obtain additional financing. We may also sell participating interests in our
investments.
</FONT>
<P align="center"><FONT size="2">55</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to meet the REIT qualification requirements, or to avert the
imposition of a 100% tax that applies to certain gains derived by a REIT from
dealer property or inventory, we may hold some of our assets through taxable
subsidiary corporations. See &#147;Federal Income Tax Considerations
&#151; Taxation of
Arbor Realty.&#148;
</FONT>
<P align="left"><FONT size="2"><B>Our Assets</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We own a diversified portfolio of structured finance investments
consisting principally of bridge and mezzanine loans as well as preferred
equity investments. As of September&nbsp;30, 2003, the majority of our portfolio
consisted of initial assets contributed by ACM that have not yet matured.
Since the commencement of our operations in July 2003, we have originated
structured finance investments and purchased additional loans and investments
from ACM.</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
September&nbsp;30, we had 30 loans and investments in our portfolio,
totaling $241&nbsp;million. These loans and investments were
for 23&nbsp;multi-family properties, four hotels, two commercial
properties and one co-op.
There are
no loans that are non-performing within the portfolio. We continue to
actively manage every single loan in the portfolio and believe that
our strict underwriting and active asset management enable us to
maintain the credit quality of our portfolio.</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
yield for the first quarter of operations ended September&nbsp;30,
2003 was 7.65% on average assets of $244&nbsp;million. Our average
cost of funds was 3.56% on average borrowings of $81&nbsp;million.
Our average leverage for the quarter was 33%, resulting in our
interest margin on a levered basis being 9.61%. As we add more loans
and investments to our portfolio, we anticipate our leverage ratio,
levered return and level of earnings will increase over time. Our
business plan contemplates an increase of our leverage ratio to 65% to 70% over time.</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table on the following page lists the principal terms of each of
our investments and the financing relating to each individual investment, each
as of September&nbsp;30, 2003.
</FONT>
<P align="center"><FONT size="2">56</FONT>


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<P align="center"><FONT size="2"><B>OUR ASSETS<BR>
As of September&nbsp;30, 2003</B>
</FONT>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0">
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    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
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    <TD width="2%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="center" colspan="5"><FONT size="1"><B>Property Information</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="17"><FONT size="1"><B>Investment Information</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Funding Information</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left" colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="17"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Origination</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Maturity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Interest Pay</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Profit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Advance</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Type</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Location</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate(2)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Share(2)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Bridge Loans:</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">130 West 30th</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">New York, NY</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">16,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9/2001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.36</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">15,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 1.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2.62</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">93.75</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">1025 5th Avenue</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Co-op</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">New York, NY</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,100,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10/2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">18.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&#151;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 5.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Concord and Henry</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family/office</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Massachusetts</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 7.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.12</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">80.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 5.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Dylan Hotel</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Hotel</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">New York, NY</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">14,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 6.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,800,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.12</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">70.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">50% of net spread less</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Less: Participation</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(2,100,000</FONT></TD>
    <TD nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">0.50% asset mgmt fee</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(3.00</FONT></TD>
    <TD nowrap><FONT size="1">%)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">(1.56</FONT></TD>
    <TD nowrap><FONT size="1">%)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1.56</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Emerald Bay</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Winter Park, FL</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 5.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12,946,300</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 4.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4.25</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">84.07</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Grand Plaza</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Las Vegas, NV</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">25,232,102</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11/2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 5.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.25</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18,723,511</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.12</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">74.21</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 6.65%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Holiday Inn-Deland</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Hotel</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Deland, FL</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,700,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 12.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Indiana Portfolio</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Indiana</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">14,624,845</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.37</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">500,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.37</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.42</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Palmetto Villas Apts</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Ontario, CA</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,130,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 5.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,304,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.12</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">80.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Partners Portfolio</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Baltimore, MD</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">14,200,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 5.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Tropical Gardens</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Lauderdale Lakes, FL</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8,800,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 5.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,040,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.12</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">80.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Vermillion Apts</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Miami Lakes, FL</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18,850,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9/2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 5.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor Floor 2.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.500%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Walbridge Terrace</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">San Francisco, CA</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6,200,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 6.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Bridge Loans &#151; Total</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">151,136,947</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.38</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">75,313,811</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.01</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>
</DIV>


<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Interest rate excludes deferred interest component. See asset
descriptions for terms.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Interest rate does not include deferred interest component due to profit
sharing arrangements pursuant to our warehouse facility. See
&#147;Management&#146;s Discussion &#038; Analysis of Financial Condition and Results of
Operations of Arbor Realty Trust, Inc. and Subsidiaries &#151; Liquidity and
Capital Resources&#148; for a description of these profit sharing
arrangements.</FONT></TD>
</TR>
</TABLE>



<P align="center"><FONT size="2">57
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

 <P align="center"><FONT size="2"><B>OUR ASSETS (continued)<BR>
As of September&nbsp;30, 2003</B>
</FONT>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0">
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="center" colspan="9"><FONT size="1"><B>Property Information</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="17"><FONT size="1"><B>Investment Information</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Funding Information</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left" colspan="9"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="17"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Origination</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Maturity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Interest Pay</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Profit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Advance</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left" colspan="5"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Type</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Location</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate(2)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Share(2)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left" colspan="5"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Mezzanine Loans:</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Pay Libor &#043; 3.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">80 Evergreen Avenue</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Commercial</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Brooklyn, NY</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">2,500,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor Pay 5.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&#151;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 7.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">130 West 30th Street</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Condo</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">New York, NY</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 10.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 1.75%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Pay: Libor &#043; 3.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">333 E. 34th Street</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">New York, NY</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1/2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor Pay: 8.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor Floor 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Pay Libor &#043; 3.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">930 Flushing Avenue</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Commercial</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Brooklyn, NY</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,500,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor Pay 5.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&#151;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 6.75%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Carltons Arms</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Tampa, FL</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11/2001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 12.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 7.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">The Crossings</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Glassboro, NJ</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 10.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 7.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 9.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">James Hotel</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Hotel</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Arizona</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,220,491</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Cap 10.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&#151;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.50% (Year 1);</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 6.50% (Year 2);</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 7.50% (Year 3)</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Partners Portfolio</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Baltimore, MD</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,725,569</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor Floor 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 5.25</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Schron B</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">New Jersey</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 6.75%%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6.75</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor Floor 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 5.50% (Year 1);</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 6.50% (Year 2);</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 7.50% (Year 3)</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">SMC Portfolio</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multifamily</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Baltimore, MD</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11,520,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor Floor 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 1.75%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Mezzanine
Loans &#151; Total</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">47,466,060</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7.91</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Interest rate excludes deferred interest component. See asset
descriptions for terms.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Interest rate does not include deferred interest component due to profit
sharing arrangements pursuant to our warehouse facility. See
&#147;Management&#146;s Discussion &#038; Analysis of Financial Condition and Results of
Operations of Arbor Realty Trust, Inc. and Subsidiaries &#151; Liquidity and
Capital Resources&#148; for a description of these profit sharing
arrangements.</FONT></TD>

</TR>
</TABLE>
</DIV>








<P align="center"><FONT size="2">58
</FONT>


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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>OUR ASSETS (continued)</b></FONT>
<div align="center"><FONT size="2"><B>As of September&nbsp;30,
2003</B></FONT></div>

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<TR  valign="bottom">
    <TD nowrap align="center" colspan="9"><FONT size="1"><B>Property Information</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="17"><FONT size="1"><B>Investment Information</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Funding Information</B></FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Origination</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Maturity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Interest Pay</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Profit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Advance</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left" colspan="5"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Type</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Location</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Balance</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate(2)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Share(2)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate</B></FONT></TD>
</TR>
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</TR>



<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Preferred Equity:</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">CDS Portfolio</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Texas</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">4,991,001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/1998</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 9.56%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9.56</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.75%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.50%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Devonshire Apts</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Holyoke, MA</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,500,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1/2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 10.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">13.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 4.50% (Year 1);</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 6.50% (Year 2);</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 7.50% (Year 3)</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 3.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Dutch Village</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Baltimore, MD</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7,074,431</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor Floor 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6.50</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor Floor 2.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 5.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Park Place</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Santa Ana, CA</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3,860,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1/2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 12.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 5.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Schron A</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">New Jersey</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">19,300,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 6.75%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6.75</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">16,600,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.75%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.87</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">86.01</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 6.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Villages at Gateway</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Denver, CO</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2,800,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">2/2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Floor 10.00%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10.00</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Libor &#043; 2.25%</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Yes</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Preferred
Equity &#151; Total</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">40,525,432</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8.19</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">16,600,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.87</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="7"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Other Investments</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>


<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Albion</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Hotel</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Miami, FL</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">1,977,245</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">8/2023</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">7.39% Fixed</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7.39</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&#151;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">No</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Total Assets</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">241,105,684</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">6.34</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">91,913,811</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3.17</FONT></TD>
    <TD nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
</TABLE>
</DIV>




<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Interest rate excludes deferred interest component. See asset
descriptions for terms.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Interest rate does not include deferred interest component due to profit
sharing arrangements pursuant to our warehouse facility. See
&#147;Management&#146;s Discussion &#038; Analysis of Financial Condition and Results of
Operations of Arbor Realty Trust, Inc. and Subsidiaries &#151; Liquidity and
Capital Resources&#148; for a description of these profit sharing
arrangements.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">59</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A description of the terms and characteristics of each of the investments
listed in the table above follows.
</FONT>
<P align="left"><FONT size="2"><B>Bridge Loans</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>130
West 30th Street.</I></B> ACM originated this $16.0&nbsp;million bridge loan to
130 West 30th, LLC in September 2001 and contributed it to us upon the
consummation of the original offering. The borrower used the proceeds to
acquire an 18 story office building in New York, New York. It is currently
undergoing construction to convert the building from office to residential
condominiums using the ACM mezzanine loan proceeds purchased by us on July&nbsp;1,
2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 2.25%. In
connection with ACM providing the borrower with additional mezzanine financing
in June 2003, the maturity date of this bridge loan was extended to May&nbsp;31,
2006. Interest payments are due monthly, and the principal balance is due in
full upon maturity. The loan is secured by a first mortgage lien on the
property. There is a limited guarantee on the loan of 50% by Mr.&nbsp;Ivan Kaufman
and 50% by the key principal of the borrower.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for one 12
month period at no fee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM holds a 50% membership interest in 130 West 30th, LLC which it did not
contribute to us in connection with the asset contribution. This interest is
used to partially fund a loan loss guarantee by ACM. See &#147; &#151;Participating
Interests in Our Investments Retained by ACM&#148; below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>1025 5th Avenue.</I></B> ACM originated this $1.1&nbsp;million bridge loan in October
2002 and contributed it to us upon the consummation of the original offering.
The borrowers used the loan proceeds to renovate an apartment in a cooperative
building in New York, New York.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of September&nbsp;30, 2003, the loan bore interest at a fixed rate of 18.00%
per annum and was scheduled to mature in October 2003. In October 2003, the
maturity date of the loan was extended to October 2004 and the interest rate
was reduced to 10.00%. Interest payments are due monthly and the principal
balance is due in full upon maturity. The loan is secured by a pledge of 225
cooperative shares owned by the lessee of the apartment and the apartment
lease.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Concord Street &#038; Henry Terrace.</I></B> ACM originated this $5.0&nbsp;million bridge
loan to Henry Terrace, LLC and 100 Concord St., LLC in April 2003 and
contributed it to us upon the consummation of the original offering. The
borrowers used the proceeds to refinance an existing loan on a 74 unit
multi-family residential property in Worcester, Massachusetts and a commercial
property in Framingham, Massachusetts.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 5.50%, with a
7.00% floor, and matures in April 2004. Interest payments are due monthly, and
the principal balance is due in full upon maturity. In addition, upon maturity
or prepayment of the loan, the borrower must pay deferred interest equal to the
greater of 2.00% on the original principal balance or the amount necessary to
generate an aggregate annual internal rate of return of 14.00%. The loan is secured by a
first mortgage lien on the properties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for one 6&nbsp;month
period at no fee if the loan has an outstanding principal balance of not more
than $1.5&nbsp;million at the time the extension is requested.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Dylan Hotel. </I></B>ACM refinanced a discounted loan between Debis Financial
Services Inc. and Grand Palace Hotel at the Park LLC with a $14.0&nbsp;million
bridge loan to Grand Palace Hotel at the Park LLC in March 2003. ACM
contributed this bridge loan to us upon the consummation of the original
offering. The borrower is the owner of a 107 room hotel in New York, New York.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of one month LIBOR plus 5.00%
with a floor of 6.50%, and matures in March 2005. Interest payments are due
monthly, and the principal balance is due in full upon maturity.
</FONT>
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<P align="left"><FONT size="2">In addition, upon maturity of the loan, the borrower must pay deferred
interest of 1.00% on the principal repaid. The loan is secured by a first
mortgage lien on the property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for one 12
month period for additional interest of 1.00% on the outstanding principal
balance upon such extension, but only if the borrower is in compliance with certain financial
covenants.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM entered into a participation agreement with BD Hotels, LLC pursuant to
which BD Hotels funded $2.1&nbsp;million of the equity in the loan and is entitled
to receive 50% of the net interest received by ACM, less a 0.50% management fee
payable to ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Emerald
Bay Apartments.</I></B> ACM originated this $16.4&nbsp;million bridge loan to
Empirian Bay LLC in May 2003 and contributed it to us upon the consummation of
the original offering. The borrower used the loan proceeds to acquire and
renovate a 432 unit multi family property in Winter Park, Florida. Of the
total loan amount, $15.4&nbsp;million has been disbursed and the remaining $1.0
million will be released as the renovations to the property are completed.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest on the outstanding balance at a variable rate of
LIBOR plus 3.50%, with a floor of 5.50% and matures in December 2004. Interest
payments are due monthly, and the borrower must make monthly principal payments
of $21,000 until June 2004 and $30,000 from July 2004 through November 2004,
with the balance due upon maturity. In addition, if the loan is repaid within
the first 14&nbsp;months after its origination, the borrower must pay deferred
interest of .50%, and if the loan is repaid after this time, the borrower must
pay deferred interest of 1.00%. The loan is secured by a first mortgage lien
on the property and has been unconditionally guaranteed by certain affiliates
of the borrower.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has an option to extend the term of the loan for one 6-month
period for additional interest of 1.00% on the outstanding principal
balance upon such extension and, if the first option is exercised,
an option to extend for an additional 12-month period for additional interest
of 1.00% on the outstanding principal balance upon such extension. If the initial term is extended, the borrower must pay interest
monthly and make monthly principal payments of $30,000 from December 2004 to
June 2005 and $75,000 from July 2005 through May 2006.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan is financed with a $16.2&nbsp;million participation agreement with one
of our lending partners pursuant to which we have a first loss position of $1.0
million. Of this participation amount, $12.9&nbsp;million is currently outstanding.
The participant is paid interest at a variable rate of LIBOR plus 3.00%, with
a floor of 4.25%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Grand
Plaza.</I></B> ACM originated a $25.5&nbsp;million bridge loan to Grand Plaza
Limited Partnership in November 2002 and contributed it to us upon the
consummation of the original offering. The borrower used the loan proceeds to
refinance outstanding debt on a 676 unit multifamily residential property
located in Las Vegas, Nevada. The current outstanding balance on the loan is
approximately $25.2&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 3.00%, with a
floor of 5.25%, and matures in December 2004. Interest and principal payments
are due monthly. The loan is secured by a first mortgage lien on the property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for one
12-month period at no fee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Holiday
Inn Convention Center.</I></B> ACM originated this $5.7&nbsp;million bridge
loan to Hospitality Associates of DeLand Florida, Ltd. in March 2000 and
contributed it to us upon the consummation of the original offering. The
borrower used the loan proceeds to acquire and renovate the Holiday Inn
Convention Center, a 148 room hotel in DeLand, Florida, as well as fund a $1.1
million capital improvements program. In connection with the extension of the
maturity date, the borrower repaid $1.0&nbsp;million of the outstanding principal
balance, to $4.7&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 6.65% with a
floor of 12.50%, and matures in April 2004. Interest payments are due monthly,
and the principal balance is due in full upon maturity. In addition, upon
maturity or prepayment of the loan, the borrower must pay deferred interest of
3.00% on the principal repaid. The
</FONT>
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<P align="left"><FONT size="2">loan is secured by a first mortgage lien on the property, a pledge of the
partnership interests of the borrower and a pledge of the membership interests
of certain of the borrower&#146;s affiliates.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the loan was not paid off by July&nbsp;1, 2003, the borrower was required
to pay additional interest of 0.50% on the outstanding principal balance. In
October 2003, this bridge loan, together with all interest due, was repaid in
full
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Indiana Portfolio.</I></B> ACM originated a $13.75&nbsp;million bridge loan to NSH
Affordable Housing of Indiana, Inc. in March 2003 and contributed it to us upon
the consummation of the original offering. The borrower used the loan proceeds
to acquire four affordable housing multi family properties located in
Evansville, Indianapolis and Marion, Indiana.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of one month LIBOR plus 4.25%
and matures in March 2004. Interest payments are due monthly, and the
principal balance is due in full upon maturity. The loan is secured by a first
mortgage lien on the properties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM also originated a separate $1.2&nbsp;million bridge loan to the same
borrower to fund renovations on the four properties described above. This loan
also bears interest at a variable rate of one month LIBOR plus 4.25% and
matures in March 2004. Interest payments on amounts drawn on the loan are due
monthly, and the principal balance is due in full upon maturity. As of
September&nbsp;30, 2003, the outstanding principal balance was approximately
$875,000. This loan is also secured by a first mortgage lien on the
properties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Palmetto
Villas Apartments.</I></B> ACM originated this $9.1&nbsp;million bridge loan
to Palmetto Villas Investors, LLC in May 2003 and contributed it to us upon the
consummation of the original offering. The borrower used the loan proceeds to
acquire and renovate a 134 unit multi family residential property in Ontario,
California.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of one month LIBOR plus 4.00%,
with a floor of 5.50%, and matures in April 2005. Interest payments are due
monthly, and the principal balance is due in full upon maturity. In addition,
upon maturity or prepayment of the loan, the borrower must pay deferred
interest of 1.00% on the principal repaid. The loan is secured by a first
mortgage lien on the property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for two 6&nbsp;month
periods. If the loan is extended the interest rate will increase to one month
LIBOR plus 4.50%, with a floor of 6.00%. Additionally, the borrower must pay
additional interest of .50% on the outstanding principal balance upon each such
extension.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Partners
Portfolio Bridge Loan.</I></B> ACM originated this $14.2&nbsp;million bridge
loan to SRH/LA Chesapeake Apartments L.P., SRH/LA Nottingham, LLC, SRH/LA
Hunter, LLC and SRH/LA Melvin, LLC in April 2003. ACM contributed this bridge
loan to us upon the consummation of the original offering. The borrowers used
the loan proceeds to acquire this 391 unit multi family residential portfolio,
consisting of three properties in Baltimore, Maryland and fund a $1.6&nbsp;million
capital improvement program.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 3.50% with a
floor of 5.00%, and matures in April 2006. Interest payments are due monthly,
and the principal balance is due in full upon maturity. In addition, upon
maturity or prepayment of the loan, the borrowers must pay deferred interest of
1.00% on the principal repaid. The loan is secured by a first mortgage lien on
each of the properties and partnership interests in certain affiliates of the
borrower and a pledge of the cash flow of certain other properties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tropical
Gardens Apartments.</I></B> ACM originated this $8.8&nbsp;million bridge loan
to NHP Tropical Gardens Limited Partnership in December 2002 and contributed it
to us upon the consummation of the original offering. The borrower used the
loan proceeds to acquire and renovate a 245 unit multi family residential
property located in Lauderdale Lakes, Florida.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 3.50%, with a
floor of 5.50%, and matures in December 2004. Interest payments are due
monthly, and the principal balance is due in full upon maturity. In
</FONT>
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<P align="left"><FONT size="2">addition, upon maturity or prepayment of the loan, the borrower must pay
deferred interest of 1.00% on the principal repaid. The loan is secured by a
first mortgage lien on the property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Vermillion
Apartments.</I></B> ACM originated this $18.9&nbsp;million bridge loan to
SRH Vermillion Limited Partnership in September 2002 and contributed it to us
upon the consummation of the original offering. The borrower used the loan
proceeds to acquire a 330 unit multi family residential property located in
Miami Lakes, Florida and fund a $1.3&nbsp;million capital improvement program.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 3.00%, with a
floor of 5.00%, and matures in September 2004. Interest payments are due
monthly and the principal balance is due in full upon maturity. The borrower
must pay 0.50% of additional interest in September 2003, and 1.00% of deferred
interest upon the prepayment or maturity of the loan unless the loan is
refinanced with permanent financing from ACM in which case, the deferred
interest will be waived, and ACM will reduce the management fee payable by us
to ACM by an amount equal to 50% of the deferred interest waived. The loan is
secured by a first mortgage lien on the property. An affiliate of the borrower
has also provided a $1.5&nbsp;million guarantee contingent upon the financial
performance of the property. In October 2003, this bridge loan, together with
interest due, was repaid in full.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Walbridge
Terrace.</I></B> We originated this $6.2&nbsp;million bridge loan to Silver
Lake Apartments, LLC in July 2003. The borrower used the loan proceeds to
repay the existing construction loan and complete construction of this 40-unit
senior housing property with 6,500 square feet of ground floor retail space in
San Francisco, California.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears a variable rate of interest of LIBOR plus 4.50%, with a
6.00% floor, and matures in July 2004. The borrower paid a 2.00% origination
fee on the date the loan closed. In accordance with our management agreement
with ACM, the first 1.00% was paid to ACM and we retained the remaining 1.00%.
The borrower must pay 1.00% of deferred interest upon the prepayment or
maturity of the loan unless the loan is refinanced with permanent financing
from ACM in which case, the deferred interest will be waived, and ACM will
reduce the management fee payable by us to ACM by an amount equal to 50% of the
deferred interest waived. The loan is secured by a first mortgage lien on the
property and has been unconditionally guaranteed by key principals of the
borrower.
</FONT>
<P align="left"><FONT size="2"><B>Mezzanine Loans</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>80
Evergreen.</I></B> ACM originated this $2.5&nbsp;million mezzanine loan in June
2003. We purchased this loan from ACM effective August&nbsp;1, 2003. The borrower
used the loan proceeds to acquire and make repairs to a 77,680 square foot
warehouse/industrial space located in Brooklyn, New York.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears a variable rate of interest of one-month LIBOR plus 8.00%
with a floor of 9.50% and matures in May 2006. The borrower has the option to
remit interest at a rate of LIBOR plus 3.50% with a 5.00% floor and to accrue
the differential interest owed. Interest payments are due monthly, and the
principal balance is due in full upon maturity. The loan is secured by a
junior lien on the property. The loan is subordinate to a $1.6&nbsp;million first
mortgage lien held by a third party lender.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with our refinancing of this mezzanine loan and the first
mortgage lien in October 2003, this loan was repaid in full and replaced with a
$4.8&nbsp;million bridge loan made by us. The new bridge loan bears a variable rate
of interest on one-month LIBOR plus 4.75% and will mature in May 2006.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for two
12-month periods at no fee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>130
West 30th Street.</I></B> In connection with ACM&#146;s refinancing of the $16.0
million bridge loan to 130 West 30th, LLC on June&nbsp;19, 2003, ACM agreed to
provide the borrower with additional mezzanine financing in the amount of up to
$8.0&nbsp;million. This mezzanine loan matures in May 2006. We purchased this
mezzanine loan from ACM on July&nbsp;1, 2003 with a portion of the net proceeds from
the original offering.
</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The additional financing will allow for the
renovation/conversion of the office building to residential condominiums. The
estimated cost of the construction project is $14.0&nbsp;million, and it is
estimated that the project will be completed by the end of the first quarter of
2004. Additional funds to complete construction are anticipated to come from
the sales of the condominium units, cash flow from the operations and partner
equity contributions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The mezzanine financing bears interest at a variable rate of one-month
LIBOR plus 7.00%, with a floor of 10.00%, and will be funded in two equal
installments of $4.0&nbsp;million. The two key principals will each contribute $1.0
million before either component is funded. The funding will be drawn down as
construction progresses. The interest on the first component, which has been
funded, will be earned on the full $4.0&nbsp;million, while the interest on the
second component, which has yet to be funded, will be earned as the $4.0
million is drawn down. The second component will remain unfunded unless a
specified number of condominiums have been sold. The additional financing is
secured by a second mortgage lien on the property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>333
East 34th Street.</I></B> ACM originated this $10.0&nbsp;million mezzanine loan to
333 East 34th, LLC in January 2002 and contributed it to us upon consummation
of the original offering. The borrower used the loan proceeds to acquire and
renovate a multi family residential building located in New York. The borrower
is converting the New York rental property into condominiums.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears a variable rate of interest of one month LIBOR plus 5.00%,
with a 12.50% floor, and matures in February 2004. The borrower has the option
to remit interest at a rate of LIBOR plus 3.00% with an 8.00% floor and to
accrue the differential interest owed, which compounds at an annual rate of
12.50%. Interest payments are due monthly, and the principal balance is due in
full upon maturity. The loan is secured by a pledge of the membership
interests in the borrower, and two affiliates of the borrower have personally
guaranteed the loan for up to $1.0&nbsp;million. The loan is subordinate to a $31.0
million first mortgage lien held by a third party lender.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for three,
12-month periods, the second of which requires a payment of additional interest
of $300,000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM holds a 15% interest in the property which it did not contribute to us
in connection with the asset contribution. This interest is used to partially
fund a loan loss guarantee by ACM. See &#147;&#151;Participating Interests in Our
Investments Retained by ACM&#148; below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>930
Flushing Avenue.</I></B> ACM originated this $3.5&nbsp;million mezzanine loan in
June 2003. We purchased this loan from ACM effective August&nbsp;1, 2003. The
borrower used the loan proceeds to acquire the 300,000 square foot
warehouse/industrial space located in Brooklyn, New York.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears a variable rate of interest of one-month LIBOR plus 8.00%
with a floor of 9.50% and matures in May 2006. The borrower has the option to
remit interest at a rate of LIBOR plus 3.50% with a 5.00% floor and to accrue
the differential interest owed. Interest payments are due monthly, and the
principal balance is due in full upon maturity. The loan is secured by a
junior lien on the property. The loan is subordinate to a $7.7&nbsp;million first
mortgage lien held by a third party lender.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for two
12-month periods for addition interest of 3.00% of the outstanding principal
balance upon exercise of each extension.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Carlton
Arms Apartments.</I></B> ACM originated this $4.0&nbsp;million mezzanine loan
to HRA Egypt Lake, Inc. and Carlton Arms, LLC in November 2001 and contributed
it to us upon consummation of the original offering. The borrowers used the
loan proceeds to refinance the existing debt on a 650 unit apartment complex
located in Tampa, Florida.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of one month LIBOR plus 6.75%,
with a floor of 12.00%, and matures in December 2003. Interest payments are
due monthly and since January 2002, the borrower has made principal payments
from excess cash flow, with the unpaid principal balance due in full upon
maturity. In addition, upon maturity or prepayment of the loan, the borrowers
must pay deferred interest of $840,000 on the principal repaid. This deferred
interest has not been accrued. Upon the maturity of this loan, we will
allocate a portion of the
</FONT>
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<P align="left"><FONT size="2">amount received to our manager pro-rata based on the time frame this loan
was held by our manager prior to the ACM&#146;s asset contribution. The loan is
secured by a pledge of the membership interests in the borrower. The loan is
subordinate to an approximately $21.4&nbsp;million first mortgage lien held by a
third party lender. The borrowers have the option to extend the term of the
loan for up to six months with no additional interest due.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with our refinancing of this $4.0&nbsp;million mezzanine loan and
the first mortgage lien in October 2003, this loan was repaid in full,
including all deferred interest due, a portion of which we allocated to ACM pro
rata for the timeframe it held the loan. We replaced the loan with a $27
million bridge loan made by us, which has an initial term of 24&nbsp;months with one
12-month extension. The borrower must pay additional interest of 1.00% on the
outstanding principal balance upon such extension. The borrower paid a 1.50%
origination fee on the date the loan closed. In accordance with our management
agreement with ACM, the first 1.00% was paid to ACM and we retained the
remaining 0.50%. In addition, upon maturity or prepayment of the loan, the
borrower must pay deferred interest of 1.50% of the principal repaid.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The new bridge loan is bifurcated into two notes. Note A, for $21.5
million, bears a variable rate of interest of LIBOR plus 3.50% with a 5.00%
floor. Note B, for $5.5&nbsp;million, bears a variable rate of interest of LIBOR
plus 6.50% with an 8.50% floor. Note A must be repaid before Note B may be
repaid. Note B contains a first loss guaranty by the key principal for the $5.5
million loan amount.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Crossings Apartments.</I></B> ACM originated this $2.0&nbsp;million mezzanine loan
to Audubon-Glassboro, LLC in June 2003. We purchased this loan from ACM on
July&nbsp;1, 2003 with a portion of the net proceeds from the original offering.
The borrowers used the loan proceeds to acquire and renovate a 328-unit
multi-family apartment complex located in Glassboro, Gloucester County, New
Jersey.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 7.00%, with a
10.00% floor, and matures in June 2006. Interest payments are due monthly, and
the unpaid principal balance is due in full upon maturity. In addition, upon
maturity or prepayment of the loan, the borrower must pay deferred interest

equal to the amount necessary to provide an aggregate annual internal rate of return of
13.00%. The loan is secured by a pledge of membership interest in the
borrowing entity. The loan is subordinate to a $11.0&nbsp;million first mortgage
loan on the property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for two
12-month periods upon payment of additional interest of $30,000, for the first
extension, and $50,000, for the second extension, if the borrower is in
compliance with certain financial covenants.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>James
Hotel.</I></B> We originated this $6.6&nbsp;million mezzanine loan to James
Hotel Scottsdale, LLC in August 2003. The borrower is currently using the loan
proceeds to renovate this recently acquired 206-room independent hotel located
in Scottsdale, Arizona.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears a variable rate of interest of LIBOR plus 7.00%, with a
9.00% floor and a 10.00% cap. The loan matures in July 2006. The borrower
paid a 2.00% origination fee on the date the loan closed. In accordance with
our management agreement with ACM, the first 1.00% was paid to ACM and we
retained the remaining 1.00%. Interest payments are due monthly, and the
principal balance is due in full upon maturity. In addition, upon maturity of
the loan, the borrower must pay deferred interest in an amount necessary to
generate an aggregate annual internal rate of return of 18.00%. The loan is secured by a
pledge of the membership interests in the borrower. The loan is subordinate to
a $5.0&nbsp;million first mortgage lien and a $5.0&nbsp;million second mortgage lien held
by a third party lender.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of the $6.6&nbsp;million loan, $2.2&nbsp;million has been funded and we have
retained the remaining $4.4&nbsp;million in a renovation reserve account. These
funds will be disbursed as required for the renovation. For the first ninety
days, interest will be earned on only the disbursed proceeds; thereafter,
interest will be earned on $6.6&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrower has the option to extend the term of the loan for one
additional 12-month period for additional interest payment of 1.00% on the
outstanding principal balance upon such extension.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Partners
Portfolio.</I></B> ACM originated this $4.7&nbsp;million mezzanine loan to
SRH/ LA Chesapeake Apartments L.P., SRH/LA Nottingham, LLC, SRH/LA Hunter, LLC
and SRH/LA Melvin, LLC in April 2003. ACM
</FONT>
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<P align="left"><FONT size="2">contributed this loan to us upon consummation of the original offering.
The borrowers used the loan proceeds to acquire this 443 unit multi family
residential portfolio consisting of two properties in Baltimore, Maryland.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of (1)&nbsp;in the first year, LIBOR
plus 4.50%, with a floor of 6.50% (2)&nbsp;in the second year, LIBOR plus 6.50%,
with a floor of 8.50% and (3)&nbsp;in the third year, LIBOR plus 7.50%, with a floor
of 9.50%. The loan matures in May 2006. Interest payments are due monthly,
and the principal balance is due in full upon maturity. In addition, upon
maturity or prepayment of the loan, the borrowers must pay deferred interest of
1.0% on the principal repaid. The loan is secured by a pledge of partnership
interests of the above entities and a pledge of the cash flows of certain
affiliates of the borrower.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Schron
Portfolio B.</I></B> ACM originated this $8.5&nbsp;million mezzanine loan to
Central Jersey Sub VII LLC in August 2000 and contributed it to us upon
consummation of the original offering. The borrower used the loan proceeds to
acquire and renovate two multi family properties in New Jersey. The loan has
been modified twice, first in October 2002 in connection with the repayment of
$5.5&nbsp;million of outstanding principal, and in May 2003 to extend the term.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of LIBOR plus 5.25%, with a
floor of 6.75%, and matures in April 2005. Interest payments are due monthly,
and the principal balance is due in full upon maturity. The loan is secured by
the ownership interests of certain affiliates of the borrower. The loan is
subordinate to a first mortgage lien with a current unpaid principal balance of
approximately $14.0&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
borrower has the option to extend the term of the loan for three
one-year periods at no fee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM holds an 18% interest in the properties which it did not contribute to
us in connection with the asset contribution. This interest is used to
partially fund a loan loss guarantee by ACM. See &#147;&#151;Participating Interests in
Our Investments Retained by ACM&#148; below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>SMC
Portfolio.</I></B> We originated this $11.5&nbsp;million mezzanine loan to various
entities owned by Sawyer Realty Holdings, LLC in September 2003. The borrowers
used the loan proceeds to refinance the existing first mortgage and make
certain renovations to this 1,951-unit multi-family residential portfolio
consisting of five properties in Baltimore, Maryland.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan bears interest at a variable rate of (1)&nbsp;in the first year, LIBOR
plus 5.50%, with a floor of 7.50% (2)&nbsp;in the second year, LIBOR plus 6.50%,
with a floor of 8.50% and (3)&nbsp;in the third year, if it is extended, LIBOR plus
7.50%, with a floor of 9.50%. The loan matures in September 2005. Interest
payments are due monthly, and the principal balance is due in full upon
maturity. In addition, upon maturity or prepayment of the loan, the borrower
must pay deferred interest of 1.0% on the principal repaid. The loan is
secured by a pledge of the membership interests in the borrowers as well as
cash flow from another eight properties with first mortgage financing through
ACM&#146;s Fannie Mae DUS lending program. The loan is subordinate to $59.2
million of first mortgage liens held by third party lenders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The borrowers have the option to extend the term of the loan for three
12-month periods, the first of which requires a payment of additional interest
of 1% of the outstanding principal balance upon such extension.
</FONT>
<P align="left"><FONT size="2"><B>Preferred Equity Investments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>CDS
Texas Portfolio.</I></B> ACM made this preferred equity investment in
December 1998 and contributed it to us upon consummation of the original
offering. This investment facilitated the acquisition and renovation of a nine
property portfolio (Sea Breeze, Autumn Manor, Malibu, Lake Crest, Santa Fe, La
Mesa, Trevino, Apache Arms and Harvard) containing 1,347 units located in
Austin and El Paso, Texas. The investment was originally funded in the amount
of $11.3&nbsp;million. Subsequently, the property owner refinanced Lake Crest,
Trevino, and Apache Arms and sold Harvard to reduce the principal balance. The
current outstanding equity balance is $5.0&nbsp;million. The properties are also
security to debt amounting to $12.8&nbsp;million held by third party lenders.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment bears a preferred return at a variable rate of six month
LIBOR plus 4.50%, with a floor of 9.56%. The investment is required to be
repurchased in January 2004 and upon such repurchase, the holder of the
preferred interest is entitled to receive an additional preferred return of
2.00%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Devonshire
Apartments.</I></B> ACM made this $2.5&nbsp;million preferred equity
investment in January 2002 in Merchant Devonshire Limited Partnership, the
owner of a 180-unit multi family residential property in Holyoke,
Massachusetts. ACM contributed this investment to us upon consummation of the
original offering. The investment proceeds were used in connection with the
acquisition of an office building in Hartford, Connecticut for approximately
$23.3&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment bears a preferred return at a variable rate of LIBOR plus
7.50%, with a floor of 13.50%. The borrower has the option of remitting the
preferred return at a pay rate of LIBOR plus 4.50% with a 10.00% floor and to
accrue the differential owed. The preferred interest is required to be
repurchased in January 2005, although such date may be extended for one,
12-month period without payment of a fee. The property secures a first
mortgage lien with a current unpaid principal balance of approximately $5.4
million. In October 2003, this investment, together with all preferred return
then due, was repaid in full.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Dutch
Village Preferred Equity.</I></B> ACM made this $7.1&nbsp;million preferred
equity investment in SRH/LA Chesapeake Apartments, L.P., and Partners of Dutch,
Inc. We purchased this investment from ACM on July&nbsp;1, 2003 with a portion of
the net proceeds from the original offering.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment proceeds will be used to acquire a 544-unit multi-family
apartment complex located in Baltimore, Maryland. The investment provides a
variable rate return of (1)&nbsp;LIBOR plus 4.50%, with a floor of 6.50%, in the
first year, (2)&nbsp;LIBOR plus 6.50%, with a floor of 8.50%, in the second year and
(3)&nbsp;LIBOR plus 7.50%, with a floor of 9.50%, in the third year. Although the
company is required to redeem the preferred equity investment in November 2006,
this date may be extended by the company upon the exercise of three one-year
extension periods. Upon the redemption, either on the redemption date or prior
to such date, of the preferred equity investment, the company is required to
pay an additional return of 1.00% on the original investment amount. The
property is subject to a first mortgage lien with a current unpaid principal
balance of $11.7&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Park
Place Apartments.</I></B> ACM made this $3.9&nbsp;million preferred equity
investment in January 2002 in Santa Ana Park Place Associates LLC, the owner of
a 196 unit multi family residential building in Santa Ana, California, that
also contains 7 retail units. ACM contributed this investment to us upon
consummation of the original offering.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment proceeds were used to acquire and renovate the property.
The owner has completed its improvements and currently has the property on the
market. The investment bears a preferred return at a fixed rate of 16.00%,
compounded monthly, although the owner has the option of remitting the
preferred return at a pay rate of LIBOR plus 5.00%, with a 12.00% per annum
floor and to accrue the differential owed, which compounds at an
aggregate annual rate of
16.00%. The owner is required to repurchase the preferred interest in January
2005, although such date may be extended for one, 12-month period for a fee of
$50,000. The property is subject to a first mortgage lien with a current
unpaid principal balance of $10.7&nbsp;million. As security for the investment,
Santa Ana Park Place Corp. and K W Properties executed a guarantee in favor of
Park Place LLC. In October 2003, this investment, together with all preferred
return then due, was repaid in full.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Schron
Portfolio A.</I></B> ACM made a $19.3&nbsp;million preferred equity investment
in Central Jersey Prime Holdings LLC in May 2003 and contributed it to us upon
consummation of the original offering. ACM had originally invested in May 2000
and also had an investment with a related party which was combined with this
investment in May 2003. The investment proceeds were originally used to
acquire 13 multi-family properties located throughout the state of New Jersey.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment bears a preferred return at a variable rate of LIBOR plus
5.25%, with a floor of 6.75%. The investment must be repurchased in April
2005, although the owner has the option to extend this obligation for three one
year periods with no additional return. The properties are subject to a first
mortgage lien with a current unpaid principal balance of approximately $189.3
million.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM holds an 18% interest in the properties which it did not transfer to
us in connection with the asset contribution. This interest is used to
partially fund a loan loss guarantee by ACM. See &#147;&#151;Participating Interests in
Our Investments Retained by ACM&#148; below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Villages at Gatewa</I></B><B>y.</B> ACM made this $4.3&nbsp;million preferred equity
investment in February 2002 in BP C04 Property Associates, LLC, the owner of a
764 unit multi family residential property in Denver, Colorado. ACM
contributed this investment to us upon consummation of the original offering.
The owner used the proceeds to acquire and renovate the property. The
investment was originally made in two components of $1.5&nbsp;million and $2.8
million, one of which was repurchased by the owner leaving $2.8&nbsp;million
outstanding.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment bears a preferred return at a variable rate of LIBOR plus
6.00%, with a floor of 10.00%. The equity interest must be repurchased by the
owner in March 2004, although the owner has the option to extend the repurchase
date for one 12-month period at no additional return, followed by two six-month
extensions subject to an additional return of $126,000 for the first and
$140,000 for the second extension. The property secures a first mortgage lien
with a current unpaid principal balance of approximately $23.4&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon repurchase of the interests, the owner must make an additional
distribution, depending upon the year of repurchase: $100,240 during the first
year, $300,160 during the second year and $529,760 during the third year and
beyond. This additional distribution has not been accrued. Upon receipt of
this additional distribution, we will allocate a portion of the amount received
to our manager pro rata based on the time frame this investment was held by our
manager prior to ACM&#146;s asset contribution.
</FONT>
<P align="left"><FONT size="2"><B>Other Investments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Albion.</I></B> ACM originated a $12.5&nbsp;million bridge loan to Albion Associates,
LTD in August 1998. The borrower used the loan proceeds to acquire and
renovate a 96 room hotel in Miami Beach, Florida.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;14, 2001, ACM bifurcated the loan, which at that time had an
unpaid principal balance of approximately $2.1&nbsp;million. The A note, totaling
$10.0&nbsp;million, was sold to a third party and was subsequently securitized in
the private market. ACM retained the B note, which currently has an unpaid
balance of approximately $2.0&nbsp;million, bears interest at a fixed rate of 7.39%
is amortized over 30&nbsp;years, and matures in September 2023. However, if the
loan is not repaid by September 2008, the interest rate is increased by 5.00%
and additional provisions regarding the allocations of the borrower&#146;s cash flow
become effective. Pursuant to an agreement between ACM and the holder of the A
note, the B note is subordinate to the A note with respect to the right to
receive payments of interest and principal. In addition, following an event of
default, the B note holder is subject to a standstill whereby the B note holder
cannot exercise its remedies to realize upon the collateral until such time
that all interest, principal, fees and costs are fully repaid to the A note
holder.
</FONT>
<P align="left"><FONT size="2"><B>ACM&#146;s Retained Interests in Our Investments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time of ACM&#146;s origination of three of the assets contributed to us
upon consummation of the original offering, the 333 East 34th Street and Schron
B mezzanine loans and the Schron A preferred equity investment, each of the
property owners related to these investments granted ACM participating
interests that share in a percentage of the cash flows of the underlying
properties. At the time ACM made the 130 West 30<SUP>th</SUP> Street bridge loan also
contributed to us, ACM and the borrower also entered into a joint venture in
which each partner contributed 50% of the capital and is equally entitled to
share in the profits and losses of the venture. Upon contribution of these
four investments to us, ACM retained its participating interests in the three
investment and its interest in the joint venture with the borrower under the
130 West 30<SUP>th</SUP> Street bridge loan, which we refer to collectively as ACM&#146;s
retained interests. After each of the related investments is repaid or
repurchased, ACM may realize value from the associated retained interests. ACM
has agreed that if any portion of the outstanding amount of any of these four
investments is not paid at the investment&#146;s maturity or repurchase date, ACM
will pay to us, subject to the limitation described below, the portion of the
unpaid amount of the investments up to the total amount then received by ACM
due to the realization of any retained interests associated with any other of
the four investments. However, ACM will no longer be obligated to make such
payments to us when the remaining accumulated principal amount of the four
investments, collectively, falls below $5&nbsp;million and none of the four
investments is in default.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal amount for each contributed investment protected by this
payment obligation is equal to the principal balance of the investment at the
time of contribution, plus the investment&#146;s interest expense paid by us in cash
since contribution, less the investment income and deferred interest or
preferred return received by us in cash since contribution.
</FONT>
<P align="left"><FONT size="2"><B>Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Our Manager&#146;s Investment Services</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the management agreement, ACM is responsible for sourcing
originations, providing underwriting services and processing approvals for all
loans and other investments in our portfolio. ACM also provides certain
administrative loan servicing functions with respect to our loans and
investments. We are able to capitalize on ACM&#146;s well established operations
and services in each of these areas as described below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Origination</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most of our investments originate from ACM. ACM serves its markets
directly through its network of 14 sales offices located in Atlanta, Georgia;
Bethesda, Maryland; Bloomfield Hills, Michigan; Boca Raton, Florida; Boston,
Massachusetts; Chicago, Illinois; Dallas, Texas; Denver, Colorado; Los Angeles,
California; Rochester, New York; San Clement, California; New York, New York;
San Francisco, California; and Uniondale, New York. These offices are staffed
by approximately 20 loan originators who solicit property owners, developers
and mortgage loan brokers. In some instances the originators accept loan
applications meeting our underwriting criteria from a select group of mortgage
loan brokers. While a large portion of ACM&#146;s marketing effort occurs at the
branch level, ACM also markets its products in industry publications and
targeted direct mailings. Our manager markets structured finance products as
our product offerings using the same methods.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Once potential borrowers have been identified, ACM determines which
financing products best meet the borrower&#146;s needs. Loan originators in every
branch office are able to offer borrowers the full array of ACM&#146;s financing
products and our structured finance products. After identifying a suitable
product, ACM works with the borrower to prepare a loan application. Upon
completion by the borrower, the application is forwarded to ACM&#146;s underwriters
for due diligence. See &#147;&#151;Underwriting.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Underwriting</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manager&#146;s loan originators work in conjunction with its underwriters
who have the responsibility to perform due diligence on all proposed
transactions prior to loan approval and commitment. Upon receipt of each new
loan application, the underwriter analyzes it in accordance with the guidelines
set forth below in order to determine the loan&#146;s conformance and suitability
with respect to those guidelines. In general, ACM&#146;s underwriting guidelines
require it to evaluate the following:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the historic and in place property revenues and expenses;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the potential for near term revenue growth and opportunity
for expense reduction and increased operating efficiencies; the
property&#146;s location, its attributes and competitive position within
its market;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the proposed ownership structure, financial strength and real
estate experience of the borrower and property management; third
party appraisal, environmental and engineering studies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">market assessment, including property inspection, review of
tenant lease files, surveys of property comparables and an analysis
of area economic and demographic trends; review of an acceptable
mortgagee&#146;s title policy and an &#147;as built&#148; survey;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">construction quality of the property to determine future
maintenance and capital expenditure requirements; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the requirements for any reserves, including those for
immediate repairs or rehabilitation, replacement reserves, tenant
improvement and leasing commission costs, real estate taxes and
property casualty and liability insurance.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">69</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Key factors considered in credit decisions include, but are not limited
to, debt service coverage, loan to value ratios and property, financial and
operating performance. Consideration is also given to other factors, such as
additional forms of collateral and identifying likely strategies to effect
repayment. ACM will refine its underwriting criteria based upon actual loan
portfolio experience and as market conditions and investor requirements evolve.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investment Approval Process</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM applies its established investment approval process to all loans and
other investments proposed for our portfolio before submitting each proposal to
us for final approval. A written report is generated for every loan or other
investment that is submitted to ACM&#146;s seven member credit committee for
approval. The presentation includes a description of the prospective borrower
and any guarantors, the collateral and the proposed use of investment proceeds,
as well as borrower and property consolidated financial statements and
analysis. In addition, the presentation summarizes an analysis of borrower
liquidity, net worth, cash investment, income, credit history and operating
experience. If the transaction is approved by a majority of ACM&#146;s credit
committee, it is presented for approval to our credit committee, which consists
of our chief executive officer, our chief credit officer, our executive vice
president of structured finance and our executive vice president of asset
management. All transactions require the approval of a majority of the members
of our credit committee, including the vote of our executive vice president of
structured finance.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following the approval of any such transaction, ACM&#146;s underwriting and
servicing departments, together with our asset management group, assure that
all loan approval terms have been satisfied and that they conform with lending
requirements established for that particular transaction. If our credit
committee and independent directors reject the loan and the independent
directors allow ACM or one of its affiliates to pursue it, ACM will have the
opportunity to execute the transaction. See &#147;Our Manager and the Management
Agreement&#151;Rights of First Refusal.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Servicing</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM services our loans through its internal servicing operations. Our
manager currently services an expanding portfolio, consisting of approximately
500 loans with outstanding balances of $2.7&nbsp;billion through its loan
administration department in Buffalo, New York. ACM&#146;s loan servicing
operations are designed to provide prompt customer service and accurate and
timely information for account follow up, financial reporting and management
review. Following the funding of an approved loan, all pertinent loan data is
entered into ACM&#146;s data processing system, which provides monthly billing
statements, tracks payment performance and processes contractual interest rate
adjustments on variable rate loans. Our manager utilizes the operations of its
loan administration department to service our portfolio with the same
efficiency, accuracy and promptness. ACM also works closely with our asset
management group to ensure the appropriate level of customer service and
monitoring of these loans.
</FONT>
<P align="left"><FONT size="2"><B>Our Asset Management Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our asset management group is comprised of nine employees that comprised
the asset management group at ACM. The experience and depth of services of the
asset management group enabled ACM to improve the credit quality and yield of
its structured finance investments. The asset management group, while at ACM,
was responsible for managing over $2.5&nbsp;billion in assets consisting of more
than 500 real estate related investments for ACM. The asset management group
has successfully managed numerous transactions, including complex
restructurings, refinancings and asset dispositions. Through active
participation in the financing and structuring strategies of transactions, many
of these transactions have directly created value by generating excess cash
flow or by enhancing asset values. Other transactions have dramatically
reduced ACM&#146;s financial exposure.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The professionals that are part of this group are experienced in managing
and servicing many types and classes of assets. Because each property and loan
is unique, the asset management group, at the point of origination, customizes
an asset management plan with the origination and underwriting teams to track
the asset from origination through disposition. The asset management group is
committed to effectively communicating to senior management the status of
transactions against a pre-established plan, enhancing and preserving capital,
as well as avoiding litigation and potential exposure. The asset management
group also performs frequent site inspections, conducts
</FONT>
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<P align="left"><FONT size="2">meetings with borrowers and evaluates and participates in the budgeting
process, financial review of operations and the asset&#146;s renovation plans.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective asset and portfolio management is essential to maximizing the
performance and value of a real estate/mortgage investment. The asset
management group monitors each investment&#146;s operating history and assesses
potential financial performance to accurately evaluate and ultimately improve
operations and financial viability. As an asset and portfolio manager, the
asset management group focuses on increasing the productivity of on site
property managers and leasing brokers as well. The asset management group also
monitors local economic trends, rental and occupancy rates and property
competitiveness within its market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accurate identification of an investment&#146;s current issues and each
stockholder&#146;s objectives is important in the loan workout and restructuring
process. Since existing management may not have the requisite expertise to
effectively implement and manage the workout process, the asset management
group determines current operating and financial status of an asset or
portfolio and performs liquidity analysis of properties and ownership entities
and then identifies and evaluates alternatives in order to maximize the value
of an investment.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our asset management group continues to provide its services to ACM on a
limited basis pursuant to an asset management services agreement between ACM
and us. The asset management services agreement will be effective throughout
the term of our management agreement and during the origination period
described in the management agreement. In the event the services provided by
our asset management group pursuant to this agreement exceed by more than 15%
per quarter the level anticipated by our board of directors, we will negotiate
in good faith with our manager an adjustment to our manager&#146;s base management
fee under the management agreement, to reduce the scope of the services, the
quantity of serviced assets or the time required to be devoted to the services
by our asset management group.
</FONT>
<P align="left"><FONT size="2"><B>Operating Policies and Strategies</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capital and Leverage Policies. </I>Currently, we are financing our
acquisition of mortgage assets through the proceeds of the original offering
and through borrowings under our credit facility. In the future, we will
finance our acquisition of mortgage assets primarily by borrowing against or
&#147;leveraging&#148; our existing portfolio and using the proceeds to acquire
additional mortgage assets. We expect to incur debt such that we will maintain
an equity to assets ratio of up to 20%, although the actual ratio may be lower
from time to time depending on market conditions and other factors deemed
relevant by our manager. Our charter and bylaws do not limit the amount of
indebtedness we can incur, and the board of directors has discretion to deviate
from or change our indebtedness policy at any time. However, we intend to
maintain an adequate capital base to protect against various business
environments in which our financing and hedging costs might exceed interest
income (net of credit losses) from our investments. These conditions could
occur, for example, due to credit losses or when, due to interest rate
fluctuations, interest income on our investments lags behind interest rate
increases in our borrowings, which are expected to be predominantly variable
rate. See &#147;Risk Factors&#151;Risks Related to our Business.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Liabilities</I>. Our investments are financed primarily at short term
borrowing rates through warehouse lines of credit, repurchase agreements, loan
agreements, commercial paper borrowings and other credit facilities with
institutional lenders. Although we expect that commercial warehouse lines of
credit and repurchase agreements will be the principal means of leveraging our
investments, we may issue preferred stock or secured or unsecured notes of any
maturity if it appears advantageous to do so. We have substantially similar
credit facilities as those used by ACM to finance the initial assets. These
credit facilities are further described under &#147;Liquidity and Capital
Resources&#151;Sources of Liquidity.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Credit Risk Management</I>. We are exposed to various levels of credit and
special hazard risk depending on the nature of our underlying assets and the
nature and level of credit enhancements supporting our assets. We originate or
purchase mortgage loans that meet minimum debt service coverage standards
established by us. ACM, as our manager, and our chief credit officer review
and monitor credit risk and other risks of loss associated with each
investment. In addition, ACM seeks to diversify our portfolio of assets to
avoid undue geographic, issuer, industry and certain other types of
concentrations. Our board of directors monitors the overall portfolio risk and
reviews levels of provision for loss.
</FONT>
<P align="center"><FONT size="2">71</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Asset/Liability Management</I>. To the extent consistent with our election to
qualify as a REIT, we follow an interest rate risk management policy intended
to mitigate the negative effects of major interest rate changes. We minimize
our interest rate risk from borrowings by attempting to structure the key terms
of our borrowings to generally correspond to the interest rate term of our
assets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Hedging Activities</I>. Although ACM has not found it advantageous to enter
into hedging transactions in the past, we may enter into such transactions in
the future to protect our investment portfolio from interest rate fluctuations
and other changes in market conditions. These transactions may include
interest rate swaps, the purchase or sale of interest rate collars, caps or
floors, options, mortgage derivatives and other hedging instruments. These
instruments may be used to hedge as much of the interest rate risk as ACM
determines is in the best interest of our stockholders, given the cost of such
hedges and the need to maintain our status as a REIT. ACM may elect to have us
bear a level of interest rate risk that could otherwise be hedged when it
believes, based on all relevant facts, that bearing such risk is advisable.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disposition Policies</I>. Although there are no current plans to dispose of
properties or other assets within our portfolio, ACM evaluates our asset
portfolio on a regular basis to determine if it continues to satisfy our
investment criteria. Subject to certain restrictions applicable to REITs, ACM
may cause us to sell our investments opportunistically and use the proceeds of
any such sale for debt reduction, additional acquisitions or working capital
purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Equity Capital Policies</I>. Subject to applicable law, our board of
directors has the authority, without further stockholder approval, to issue
additional authorized common stock and preferred stock or otherwise raise
capital, including through the issuance of senior securities, in any manner and
on the terms and for the consideration it deems appropriate, including in
exchange for property. Our existing stockholders, including stockholders
purchasing in this offering, will have no preemptive right to additional shares
issued in any offering, and any offering might cause a dilution of investment.
See &#147;Description of Stock.&#148; We may in the future issue common stock in
connection with acquisitions. We also may issue units of partnership interest
in our operating partnership in connection with acquisitions of property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may, under certain circumstances, repurchase our common stock in
private transactions with our stockholders, if those purchases are approved by
our board of directors. Our board of directors has no present intention of
causing us to repurchase any shares, and any action would only be taken in
conformity with applicable federal and state laws and the applicable
requirements for qualifying as a REIT, for so long as the board of directors
concludes that we should remain a REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conflicts of Interest Policies</I>. We, our executive officers and ACM face
conflicts of interests because of our relationships with each other. Mr.&nbsp;Ivan
Kaufman is our chief executive officer and the chief executive officer of ACM
and serves on our credit committee and the Kaufman entities own approximately
88% of the beneficial equity interest of ACM. Mr.&nbsp;Frederick C. Herbst is our
chief financial officer and the chief financial officer of ACM. In addition,
Mr.&nbsp;Herbst, two of our executive vice presidents, Mr.&nbsp;Fred Weber and Mr.&nbsp;Daniel
M. Palmier, and two of our directors, Mr.&nbsp;Joseph Martello and Mr.&nbsp;Walter Horn,
have minority ownership interests in ACM, and Mr.&nbsp;Martello serves as the
trustee of a trust through which Mr.&nbsp;Kaufman owns the majority of his ownership
interest in ACM and co-trustee of another Kaufman entity that owns an equity
interest in ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have implemented several policies, through board action and through the
terms of our constituent documents and of our agreements with ACM, to help
address these conflicts of interest:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our charter requires that a majority of our board of
directors be independent directors and that only our independent
directors make any determinations on our behalf with respect to the
relationships or transactions that present a conflict of interest
for our directors or officers.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our board of directors has adopted a policy that decisions
concerning our management agreement with ACM, including termination,
renewal and enforcement thereof, or concerning any acquisition of
assets from ACM or its affiliates or other participation in any
transactions with ACM or its affiliates outside of the management
agreement must be reviewed and approved by a majority of our
independent directors.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">72</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our management agreement provides that our determinations to
terminate the management agreement for cause or because the
management fees are unfair to us or because of a change in control
of our manager will be made by a majority vote of our independent
directors.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our independent directors will periodically review the
general investment standards established for ACM under the
management agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our management agreement with ACM provides that ACM may not
assign duties under the management agreement, except to certain
affiliates of ACM, without the approval of a majority of our
independent directors.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our management agreement provides that decisions to approve
or reject investment opportunities rejected by our credit committee
that ACM or Mr.&nbsp;Kaufman wish to pursue will be made by a majority of
our independent directors.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Policies</I>. We intend to operate in a manner that will not subject us
to regulation under the Investment Company Act. We may invest in the
securities of other issuers for the purpose of exercising control over such
issuers and underwrite securities of other issuers, particularly in the course
of disposing of their assets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Future Revisions in Policies and Strategies</I>. Our board of directors has
approved the investment guidelines and the operating policies and the
strategies set forth in this prospectus. The board of directors has the power
to modify or waive these policies and strategies, or amend our agreements with
ACM, without the consent of our stockholders to the extent that the board of
directors (including a majority of our independent directors) determines that
such modification or waiver is in our best interest or the best interest of our
stockholders. Among other factors, developments in the market that either
affect the policies and strategies mentioned herein or that change our
assessment of the market may cause our board of directors to revise its
policies and strategies. However, if such modification or waiver involves the
relationship of, or any transaction between, us and our manager or any
affiliate of our manager, the approval of a majority of our independent
directors is also required. We may not, however, amend our charter to change
the requirement that a majority of our board consist of independent directors
or the requirement that our independent directors approve related party
transactions without the approval of two thirds of the votes entitled to be
cast by our stockholders.
</FONT>
<P align="left"><FONT size="2"><B>Policies With Respect to Certain Other Activities</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reporting Policies</I>. Generally speaking, we intend to make available to
our stockholders certified annual consolidated financial statements and annual
reports. After this offering, we will become subject to the information
reporting requirements of the Securities Exchange Act of 1934, as amended,
referred to as the Exchange Act. Pursuant to these requirements, we will file
periodic reports, proxy statements and other information, including audited
consolidated financial statements, with the Securities and Exchange Commission.
</FONT>
<P align="left"><FONT size="2"><B>Our Operating Partnership</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have organized Arbor Realty Limited Partnership, our operating
partnership, as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act. We serve as the sole general partner of our operating
partnership, and own a 72% partnership interest in our operating partnership
represented by operating partnership units that we obtained in exchange for our
contribution of the net proceeds of the original offering to our operating
partnership. The remaining 28% partnership interest in our operating
partnership is owned by ACM. In exchange for the contribution of the initial
assets to our partnership, ACM received approximately 3.1&nbsp;million operating
partnership units and 629,000 warrants, each of which entitles ACM to purchase
one additional operating partnership unit for two years from the date of issue.
ACM&#146;s operating partnership units, including units issued upon exercise of the
warrants, each is paired to one share of our special voting preferred stock and
is redeemable, at the option of ACM, for cash, or at our election, our common
stock, generally on a one for one basis, at any time after the earlier of (1)
two years following the closing of the original offering and (2)&nbsp;six months
following the effectiveness of the registration statement of which this
prospectus is a part. However, ACM is limited at any given time to redeeming
(whether for cash or stock) a number of units such that, if we were to issue
shares of our common stock to satisfy the redemption right, ACM would not
exceed the REIT-related ownership limitations contained in our charter.
</FONT>
<P align="center"><FONT size="2">73</FONT>
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<P align="left"><FONT size="2"><B>Competition</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net income depends, in large part, on our manager&#146;s ability to
originate structured investments with spreads over our borrowing costs. In
originating these investments, our manager competes with other mortgage REITs,
specialty finance companies, savings and loan associations, banks, mortgage
bankers, insurance companies, mutual funds, institutional investors, investment
banking firms, other lenders, governmental bodies and other entities. In
addition, there are numerous mortgage REITs with asset acquisition objectives
similar to ours, and others may be organized in the future. The effect of the
existence of additional REITs may be to increase competition for the available
supply of mortgage assets suitable for purchase by us. Some of our anticipated
competitors are significantly larger than us, have access to greater capital
and other resources and may have other advantages over us.
</FONT>
<P align="left"><FONT size="2"><B>Employees</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently have eleven employees, including Mr.&nbsp;Kovarik, our chief
credit officer, Mr.&nbsp;Weber, our executive vice president of structured finance,
Mr.&nbsp;Palmier, our executive vice president of asset management, and a eight
person asset management group. Mr.&nbsp;Kaufman, who serves as our chief executive
officer and Mr.&nbsp;Herbst, who serves as our chief financial officer, each of whom
is a full time employee of our manager, perform the duties required pursuant to
the management agreement with our manager and our bylaws.
</FONT>
<P align="left"><FONT size="2"><B>Legal Proceedings</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not involved in any litigation nor, to our knowledge, is any
litigation threatened against us.
</FONT>
<P align="center"><FONT size="2">74</FONT>
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<!-- link1 "OUR MANAGER AND THE MANAGEMENT AGREEMENT" -->
<DIV align="left"><A NAME="011"></A></DIV>
<P align="center"><FONT size="2"><B>OUR MANAGER AND THE MANAGEMENT AGREEMENT</B>
</FONT>

<P align="left"><FONT size="2"><B>Manager</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have chosen to be externally managed by ACM to take advantage of the
existing business relationships, operational and risk management systems,
expertise and economies of scale associated with ACM&#146;s current business
operations. ACM is a national commercial real estate finance company, which
was founded in 1993 as a subsidiary of ANH, an originator and servicer of
residential mortgage loans. Our chief executive officer, Mr.&nbsp;Ivan Kaufman,
also ACM&#146;s chief executive officer and controlling equity owner, was the
co-founder, chairman and majority stockholder of ANH. Under Mr.&nbsp;Kaufman&#146;s
direction, ANH grew to 25 branches in 11 states and funded more than $4&nbsp;billion
in loans in its last full year of operations. ANH became a public company in
1992 and was sold to BankAmerica in 1995. As chairman and chief executive
officer of ANH, Mr.&nbsp;Kaufman developed significant experience operating and
managing a publicly traded company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the sale of ANH, Mr.&nbsp;Kaufman purchased its commercial
mortgage lending operations and the rights to the &#147;Arbor&#148; name and retained a
significant portion of ANH&#146;s senior management team. This senior management
team has guided ACM&#146;s growth from a company originally capitalized with
approximately $8.0&nbsp;million, to its current equity value of approximately $69
million as of September&nbsp;30, 2003. ACM is now a full service provider of
financial services to owners and developers of commercial and multi-family real
estate properties. ACM, which has been profitable every year since 1995,
originated over $600&nbsp;million in new loans in 2002 and is currently servicing a
portfolio with a principal balance of $2.7&nbsp;billion.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM&#146;s executive officers and employees have extensive experience in
originating and managing structured commercial real estate investments. The
senior management team has an average of over 20&nbsp;years experience in the
financial services industry. ACM currently has 130 employees spread among its
corporate headquarters in Uniondale, New York and 15 offices located throughout
the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At September&nbsp;30, 2003, the Kaufman entities beneficially owned
approximately 88% membership interest in ACM. Our chief financial officer, our
executive vice presidents of structured finance and asset management and our
secretary collectively own an approximately 3.5% membership interest in ACM.
One of our directors, Mr.&nbsp;Martello, owns an approximately 1.5% membership
interest in ACM and serves as the trustee of one of the Kaufman entities that
owns a majority of the equity interest in ACM and co-trustee of another Kaufman
entity that owns an equity interest in ACM. In exchange for ACM&#146;s contribution
of the initial assets and related liabilities to our operating partnership, our
operating partnership issued to ACM approximately 3.1&nbsp;million units of limited
partnership interest and 629,000 warrants for additional units of limited
partnership interest, each of which are redeemable, at our election, for cash
or one share of our common stock. Each of the approximately 3.1&nbsp;million
operating partnership units received by ACM, is paired with one share of our
special voting preferred stock that has one vote on all matters submitted to a
vote of the stockholders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have granted our non-employee executive officers and other employees of
our manager who provide services to us awards of 128,500 shares of restricted
stock, representing 1.6% of the number of shares of common stock currently
outstanding. Our manager and its employees have a total beneficial ownership
in our common stock of approximately 33%, taking into account (1)&nbsp;operating
partnership units that are held of record by ACM and that may be acquired by
ACM upon exercise of warrants for additional operating partnership units, (2)&nbsp;the restricted stock awards to certain executive officers and employees of
our manager who provide services to us and (3)&nbsp;units purchased
in the original offering by such individuals and others affiliated
with our manager. Our manager is entitled to receive an
annual base management fee from us and may receive incentive compensation based
on certain performance criteria and certain other fees.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The executive offices of our manager are located at 333 Earle Ovington
Boulevard, Suite&nbsp;900, Uniondale, New York 11553 and the telephone number of its
executive offices is (516)&nbsp;832-8002.
</FONT>
<P align="left"><FONT size="2"><B>Officers of Our Manager</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information with respect to the
executive officers of our manager.
</FONT>
<P align="center"><FONT size="2">75</FONT>
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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Age</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position with Our Manager</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ivan Kaufman<BR>
Frederick C. Herbst<BR>
Ronald D. Gaither<BR>
Walter K. Horn<BR>
John Caulfield</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
42
46
45
60
39</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Executive Officer and President<BR>
Chief Financial Officer<BR>
Chief Operating Officer<BR>
General Counsel<BR>
Senior Vice President&#151;Capital Markets</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Ivan
Kaufman.</I></B> Mr.&nbsp;Kaufman has served as our chairman of the board, chief
executive officer and president since June 2003. Mr.&nbsp;Kaufman has been chief
executive officer and president of ACM since its inception. In 1983, he
co-founded ANH and its residential lending subsidiary, Arbor National Mortgage
Inc. Under Mr.&nbsp;Kaufman&#146;s direction, ANH grew to 25 branches in 11 states and
funded more than $4&nbsp;billion in loans in its last full year of operations. ANH
became a public company in 1992 and was sold to BankAmerica in 1995. As
chairman and chief executive officer of ANH, Mr.&nbsp;Kaufman developed significant
experience operating and managing a publicly traded company. Mr.&nbsp;Kaufman was
named regional &#147;Entrepreneur of the Year&#148; by Inc. Magazine for outstanding
achievements in financial services in 1990. He was appointed to the National
Advisory Board of Fannie Mae in 1994. Mr.&nbsp;Kaufman has also served on Fannie
Mae&#146;s regional advisory and technology boards, as well as the board of
directors of the Empire State Mortgage Bankers Association.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Frederick
C. Herbst.</I></B> Mr.&nbsp;Herbst has served as our chief financial officer
since June 2003. Mr.&nbsp;Herbst has been chief financial officer of ACM since
joining the company in November 1999. He is a member of ACM&#146;s executive
committee and is responsible for all aspects of ACM&#146;s financial operations,
including financial reporting, tax planning, budgeting and the appropriate
utilization of ACM&#146;s capital. Before joining ACM in 1999, he was chief
financial officer with The Hurst Companies, Inc. Previously, Mr.&nbsp;Herbst was
controller with The Long Island Savings Bank, FSB, vice president finance with
Eastern States Bankcard Association and senior manager with Ernst &#038; Young. Mr.
Herbst became a certified public accountant in 1983.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Ronald
D. Gaither.</I></B> Mr.&nbsp;Gaither is a member of ACM&#146;s executive committee
and is the senior credit officer. Before joining ACM in March 1999, he was the
chief credit officer for PNC Mortgage Corporation in Chicago. During his
tenure, he served on the board of directors of PNC Mortgage Reinsurance
Corporation. Mr.&nbsp;Gaither also served on the Affordable Housing Advisory Board
with Freddie Mac. Mr.&nbsp;Gaither has held senior management positions with Amerin
Guaranty, Prudential Home Mortgage and First Union National Bank.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Walter
K. Horn.</I></B> Mr.&nbsp;Horn has served as our secretary, general counsel and
one of our directors since his appointment in November 2003. Mr.&nbsp;Horn is also a
member of ACM&#146;s executive committee and is responsible for providing all legal
services for ACM. Previously, Mr.&nbsp;Horn was general counsel with ANH from 1991
until its sale in 1995 and has continued in a similar capacity with ACM. His
experience also includes serving as general counsel with Resource One, Inc. and
Long Island Trust Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>John
Caulfield.</I></B> Mr.&nbsp;Caulfield is a member of ACM&#146;s executive committee
and is responsible for all capital markets activities, including interest rate,
risk management and secondary marketing activities for ACM. Mr.&nbsp;Caulfield&#146;s
responsibilities include the pricing arid selling of Fannie Mae MBS/DUS and
conduit loans and managing ACM&#146;s pipeline to ensure timely underwriting and
funding. Before joining ACM in 1995, Mr.&nbsp;Caulfield was vice president of
secondary marketing with ANH.
</FONT>
<P align="left"><FONT size="2"><B><I>The Management Agreement</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and our operating partnership entered into a management agreement with
ACM, pursuant to which ACM has agreed to provide us with structured finance
investment opportunities and loan servicing as well as other services necessary
to operate our business. We employ only three executive officers and eight
individuals who provide asset management services for our portfolio of
investments. Our chief executive officer, chief financial officer and our
secretary are not our employees. We rely to a significant extent on the
facilities and resources of our manager to conduct our operations.
</FONT>
<P align="center"><FONT size="2">76</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The management agreement requires our manager to manage our business
affairs in conformity with the policies and the general investment guidelines
that are approved and monitored by our board of directors. Our manager&#146;s
management is under the direction of our board of directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors will periodically review the investment guidelines and our
investment portfolio but do not review each proposed investment. In conducting
their periodic reviews, the directors rely on information provided to them by
our manager. Transactions entered into by our manager may be difficult or
impossible to unwind by the time they are reviewed by the directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Kaufman, our chairman and chief executive officer and Mr.&nbsp;Herbst, our
chief financial officer, also serve as chief executive officer and chief
financial officer, respectively, of our manager, and we were formed by our
manager. As a result, the management agreement was not negotiated at arm&#146;s
length and its terms, including fees payable, may not be as favorable to us as
if the agreement had been negotiated with an unaffiliated third party. In
addition, Walter Horn, who is the general counsel of our manager, became our
secretary after the original offering.
</FONT>
<P align="left"><FONT size="2"><B><I>Management Services</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the terms of the management agreement, our manager is required
to provide a dedicated management team, including a chief executive officer,
chief financial officer and secretary, Messrs.&nbsp;Kaufman, Herbst and Horn,
respectively, to provide the management services to us, the members of which
team will devote such of their time to the management of us as our independent
directors reasonably deem necessary and appropriate, commensurate with our
level of activity from time to time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manager is responsible for our day to day operations and performs (or
causes to be performed) such services and activities relating to our assets and
operations as may be appropriate, including, without limitation, the services
described below.
</FONT>
<P align="left"><FONT size="2"><I>Management Oversight</I>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Providing executive and administrative personnel, office
space and office services required in rendering services to us;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Administering our day to day operations and functions
necessary to our management as may be agreed upon by our manager and
the board of directors, including the collection of interest, fee
and other income, the payment of our debts and obligations, the
payment of dividends or distributions to our stockholders and
maintenance of appropriate back office infrastructure to perform
such administrative functions;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Serving as our consultant with respect to the periodic review
of the investment criteria and parameters for our investments,
borrowings and operations for the approval of our board of
directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Counseling us in connection with policy decisions to be made
by our board of directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Using commercially reasonable efforts to cause expenses
incurred by us or on our behalf to be reasonable and customary and
within any budgeted parameters or expense guidelines set by our
board of directors from time to time;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Advising us as to our capital structure and capital raising;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Coordinating and managing operations of any joint venture or
co-investment interests held by us and conducting all matters with
the joint venture or co investment partners;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Communicating on our behalf with the holders of any of our
equity or debt securities as required to satisfy the reporting and
other requirements of any governmental bodies or agencies or trading
markets and to maintain effective relations with such holders;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Handling and resolving all claims, disputes or controversies
(including all litigation, arbitration, settlement or other
proceedings or negotiations) in which we may be involved or to which
we may be subject arising out of our day to day operations, subject
to such limitations or parameters as may be imposed from time to
time by our board of directors; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Evaluating and recommending to our board of directors, and
engaging in potential hedging activities on our behalf, consistent
with our status as a REIT and with the investment guidelines.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">77</FONT>
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<P align="left"><FONT size="2"><I>Origination and Investment Expertise</I>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Building borrower relationships, originating investment
opportunities with those borrowers and analyzing and underwriting
possible investment opportunities for eventual submission to our
credit committee;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Assisting us in developing criteria for investment
commitments that are specifically tailored to our investment
objectives and making available to us its knowledge and experience
with respect to mortgage loans, real estate and other real estate
related assets; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Investing or reinvesting any money of ours, including
investing in short term investments pending investment in long term
asset investments.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><I>Regulatory Compliance</I>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Assisting us in complying with all regulatory requirements
applicable to us in respect of our business activities, including
preparing or causing to be prepared all consolidated financial
statements required under applicable regulations and contractual
undertakings and all reports and documents, if any, required under
the Securities Exchange Act;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Taking all necessary actions to enable us to make required
tax filings and reports, including soliciting stockholders for
required information to the extent provided by the REIT provisions
of the Code and the Treasury Regulations promulgated thereunder;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Counseling us regarding the maintenance of our status as a
REIT and monitoring compliance with the various REIT qualification
tests and other rules set out in the Code and the Treasury
Regulations promulgated thereunder;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Causing us to retain qualified accountants and legal counsel,
as applicable, to assist in developing appropriate accounting
procedures, compliance procedures and testing systems with respect
to financial reporting obligations and compliance with the REIT
provisions of the Code and the Treasury Regulations promulgated
thereunder and to conduct quarterly compliance reviews with respect
thereto;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Counseling us regarding the maintenance of our exemption from
the Investment Company Act and monitoring compliance with the
requirements for maintaining an exemption from that Act;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Causing us to qualify to do business in all applicable
jurisdictions and to obtain and maintain all appropriate licenses;
and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Using commercially reasonable efforts to cause us to comply
with all other applicable laws.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the management agreement, our manager does not assume any
responsibility other than to render the services called for thereunder and is
not responsible for any action of our board of directors in following or
declining to follow our managers&#146; advice or recommendations. Our manager, its
directors and its officers are not liable to us, any subsidiary of ours, our
directors, our stockholders or any subsidiary&#146;s stockholders for acts performed
in accordance with and pursuant to the management agreement, except by reason
of acts constituting bad faith, willful misconduct, gross negligence, or breach
of their duties under the management agreement and except for claims by
manager&#146;s employees relating to the terms and conditions of their employment.
Pursuant to the management agreement, we agree to indemnify our manager, its
directors and its officers with respect to all expenses, losses, damages,
liabilities, demands, charges and claims arising from acts of our manager not
constituting bad faith, willful misconduct, gross negligence, or breach of
duties, performed in good faith in accordance with and pursuant to the
management agreement but excluding claims by the manager&#146;s employees relating
to the terms and conditions of their employment. Our manager agrees to
indemnify us, our directors and officers with respect to all expenses, losses,
damages, liabilities, demands, charges and claims arising from acts of our
manager constituting bad faith, willful misconduct, gross negligence or breach
of its duties under the management agreement and any claims by the manager&#146;s
employees relating to the terms and conditions of their employment. Our
manager also carries errors and omissions and other customary insurance.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Term</I>. The management agreement has an initial term of two years and is
renewable automatically for an additional one year period every year
thereafter, unless terminated with six months&#146; prior written notice.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Our Termination Rights</I>. After the initial two-year term, we will be able
to terminate the management agreement without cause for any reason upon six
months&#146; prior written notice to ACM. If we terminate the
</FONT>
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<P align="left"><FONT size="2">management agreement without cause, or we give ACM notice of non-renewal,
in order to manage our operations internally, we will be required to pay our
manager a termination fee equal to the base management fee and the incentive
compensation earned during the 12-month period preceding the termination. If,
without cause, we terminate the management agreement or elect not to renew it
for any other reason, including a change of control of us but excluding a
change in control of our manager, we will be required to pay a termination fee
equal to two times the base management fee and the incentive fee earned during
the 12-month period preceding the termination.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the paragraph above, if we provide our six month notice of
termination without cause because our independent directors have determined
that the management fees are unfair, then ACM may agree to perform its
management services at the fees our independent directors determine to be fair
and the management agreement will not terminate. If ACM does not agree to
perform its management services for those fees, or if ACM so agrees but then
gives us notice that it wishes to renegotiate the fees, then we and ACM must
negotiate in good faith and if we cannot agree on a revised fee structure at
the end of our six-month notice period, the agreement will terminate and we
must pay the termination fees described above.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also have the right to terminate the management agreement for cause
upon prior written notice to ACM with the approval of our board of directors
including the consenting vote of a majority of our independent directors. In
such a case, we would not be required to pay a termination fee. &#147;Cause&#148; is
defined as fraud, misappropriation of funds, willful violation of the
management agreement, gross negligence, breach by our manager of a material
term of the management agreement that is not timely cured, the removal by us of
Mr.&nbsp;Ivan Kaufman as our chief executive officer for cause, or a change in
control of our manager (other than a change in control because of a public
offering of our manager).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>ACM&#146;s Termination Rights</I>. ACM has the right to terminate the management
agreement (effective upon expiration of the cure period) upon a breach of a
material term of the management agreement by us that is not timely cured. ACM
also has the right to terminate the management agreement after the initial
two-year term without cause on six months&#146; prior written notice to us. Except
in connection with a change in control of ACM within the first three years as
described below, ACM will not be obligated to pay us a termination fee if it
terminates or elects not to renew the management agreement.
</FONT>
<P align="left"><FONT size="2"><I>Change of Control of ACM</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within the initial two-year term and the first one-year renewal term of
the management agreement, if:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ACM or its successor elects not to renew or to terminate the
management agreement within two years after a change in control of
ACM or the execution of an agreement that will cause a change in
control of ACM, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ACM gives us a notice of non-renewal or termination, then
experiences a change of control or executes an agreement that will
cause a change in control of ACM in one year, then ACM or its
successor will have to pay us a fee in an amount equal to two times
the base management fee and the incentive compensation earned during
the 12-month period preceding the termination or non renewal notice.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are able to terminate the management agreement upon 30&nbsp;days&#146; prior
written notice to ACM, without payment of a fee, if:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Mr.&nbsp;Kaufman is no longer chief executive officer of ACM, but
not by reason of his death, disability or incapacity, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a change of control of ACM occurs.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As defined in the management agreement, change of control of ACM shall not
include any public offering of the capital stock of ACM.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Assignment</I>. Neither we nor ACM are able to assign its rights or
obligations under the management agreement without the consent of the other
party. However, ACM may, without our consent, assign the management agreement
to an &#147;affiliate&#148; (meaning any entity controlling, controlled by or under
common control
</FONT>
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<P align="left"><FONT size="2">with ACM, and &#147;control&#148; means the direct or indirect ownership of at least
51% of the beneficial equity interests and voting power of such entity) whose
day to day business and operations are managed and supervised by Mr.&nbsp;Kaufman,
provided that ACM shall be fully responsible to us for all errors or omissions
of such assignee. Our manager is also be permitted to subcontract or assign
certain of its duties under the management agreement to any affiliate of our
manager that meets the foregoing qualification.
</FONT>
<P align="left"><FONT size="2"><B><I>Management Fees and Incentive Compensation</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since we employ only three executive officers and eight other employees,
we rely to a significant extent on the facilities and resources of our manager
to conduct our operations. For performing services under the management
agreement, ACM receives a base management fee and incentive compensation
calculated as described below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Base Management Fee</I>. Our manager receives an annual base management fee,
payable monthly in arrears in cash, calculated monthly as a percentage of our
equity and equal to 0.75% per annum of the equity up to $400&nbsp;million, 0.625%
per annum of the equity between $400&nbsp;million and $800&nbsp;million and 0.50% per
annum of the equity in excess of $800&nbsp;million. For purposes of calculating the
base management fee, the term &#147;equity&#148; means the month end value computed in
accordance with generally accepted accounting principles of (1)&nbsp;total partners&#146;
equity in our operating partnership, plus or minus (2)&nbsp;any unrealized gains,
losses or other items that do not affect realized net income.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Incentive
Compensation.</I> Our manager is entitled to receive incentive
compensation in installments each fiscal quarter. In addition, our manager is
entitled to receive incentive compensation each fiscal quarter in an annual
amount equal to the product of:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp; 25% of the dollar amount by which:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the sum of: (i)&nbsp;our operating partnership&#146;s &#147;Funds From
Operations&#148; (before the incentive compensation) per operating
partnership unit (based on the weighted average number of operating
partnership units outstanding, including operating partnership units
issued to us equal to the number of shares of our common stock
issued by us) for such quarter and (ii)&nbsp;gains (or losses) from debt
restructuring and sales of property per operating partnership unit
(based on the weighted average number of units outstanding,
including operating partnership units issued to us equal to the
number of shares of our common stock issued by us) for such quarter;
exceeds</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the product of (i)&nbsp;the weighted average (based on shares of
our common stock and operating partnership units) of (a)&nbsp;the per
operating partnership unit book value of the net assets to be
contributed by ACM, (b) $15, (c)&nbsp;the offering price per share of any
subsequent offerings by us of our common stock and (d)&nbsp;the issue
price per operating partnership unit for subsequent contributions to
our operating partnership (including shares of common stock issued
upon exercise of warrants or options and adjusted for any prior
stock dividends or distributions), and (ii)&nbsp;the greater of (x)&nbsp;9.50%
per annum and (y)&nbsp;the ten year U.S. Treasury rate plus 3.50% per
annum; multiplied by</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="97%" colspan="2"><FONT size="2">(2)&nbsp;the weighted average number of operating partnership units
outstanding, including operating partnership units issued to us equal to
the number of shares of our common stock issued by us.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The incentive compensation will be measured in fiscal quarters for the
remainder of 2003. Beginning on January&nbsp;1, 2004, the incentive management fee
will be measured over a full fiscal year, subject to recalculation and
potential reconciliation at the end of each fiscal year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Funds From Operations&#148; as defined by National Association of Real Estate
Investment Trusts means net income, computed in accordance with generally
accepted accounting principals, excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization on real
estate assets, and after adjustments for unconsolidated partnerships and joint
ventures. Funds from operations does not represent cash generated from
operating activities in accordance with GAAP and should not be considered as an
alternative to net income as an indication of our performance or to cash flows
as a measure of liquidity or ability to make distributions.
</FONT>
<P align="center"><FONT size="2">80</FONT>
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<P align="left"><FONT size="2">As used in calculating the manager&#146;s compensation, the term &#147;Ten Year U.S.
Treasury Rate&#148; means the arithmetic average of the weekly average yield to
maturity for actively traded current coupon U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of 10&nbsp;years) published by the
Federal Reserve Board during a quarter, or, if such rate is not published by
the Federal Reserve Board, any Federal Reserve Bank or agency or department of
the federal government selected by us. If we determine in good faith that the
Ten Year U.S. Treasury Rate cannot be calculated as provided above, then the
rate shall be the arithmetic average of the per annum average yields to
maturities, based upon closing asked prices on each business day during a
quarter, for each actively traded marketable U.S. Treasury fixed interest rate
security with a final maturity date not less than eight nor more than 12&nbsp;years
from the date of the closing asked prices as chosen and quoted for each
business day in each such quarter in New York City by at least three recognized
dealers in U.S. government securities selected by us.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The management agreement provides that at least 25% of our manager&#146;s
incentive compensation is to be paid in shares of our common stock (subject to
the ownership limitations contained in our charter) and the balance in cash.
However, our manager is able to elect to receive a greater percentage of its
incentive compensation in the form of our common stock. We may provide for
registration rights for shares of common stock used to pay our manager&#146;s
incentive compensation. Under our management agreement, ACM agrees that it may
not elect to receive shares of our common stock as payment of its incentive
compensation, except in accordance with all applicable securities exchange
rules and securities laws (including prohibitions on insider trading). In
addition, ACM is not able to receive our stock in payment of fees, whether
automatically or by ACM&#146;s election, if it would cause ACM or Mr.&nbsp;Kaufman to
beneficially own an amount of our common stock in violation of the ownership
limitations in our charter.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manager uses the proceeds from its base management fee in part to pay
compensation to its officers and employees who, notwithstanding that some of
them are also our officers, receive no direct compensation from us, other than
restricted stock that may be granted pursuant to our stock incentive plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of determining the number of shares to be delivered in
satisfaction of the incentive compensation to be paid with our common stock, we
will value our shares at the average per share closing price based on the
period of 20&nbsp;days ending on and including the last day of the applicable fiscal
quarter.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In evaluating investments and other management strategies, the opportunity
to earn incentive return based on Funds From Operations may lead our manager to
place undue emphasis on the maximization of Funds From Operations at the
expense of other criteria, such as preservation of capital, in order to achieve
a higher incentive return. Investments with higher yield potential are
generally riskier or more speculative. This could result in increased risk to
the value of our invested portfolio.
</FONT>
<P align="left"><FONT size="2"><I>Reimbursement of Expenses</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manager is responsible for all costs incident to the performance of
its duties under the management agreement, including compensation of our
manager&#146;s employees, rent for facilities and other &#147;overhead&#148; expenses.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The expenses required to be paid by us or for which we reimburse our
manager include, but are not limited to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">legal, accounting and auditing fees and expenses of third
parties for services rendered for us that are paid by the manager;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the compensation, benefits and expenses of our independent
directors and employees;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">travel and other out of pocket expenses of our employees in
connection with the purchase, financing or sale of our investments;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the costs of printing and mailing proxies and reports to
stockholders;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">costs to obtain liability insurance to indemnify our
directors and officers, the manager and its employees and directors
and the underwriters;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">key man life insurance costs for our chief executive officer; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the compensation and expenses of our custodian and transfer agent, if any.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">81</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also required to pay or reimburse our manager for all expenses
incurred on behalf of us in connection with:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">raising of capital or the incurrence of debt,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">interest expenses,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">taxes and license fees,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">litigation and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">extraordinary or non recurring expenses.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expense reimbursements to our manager are be made quarterly.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted Stock Awards</I>. We have granted to certain executive officers and
employees of our manager who provide services to us 127,500 shares of
restricted stock pursuant to our stock incentive plan. We have also reserved
up to 35,500 shares for future grants to directors, officers and certain of our
employees and certain employees of our managers. Two-thirds of the shares
granted vested immediately and the remaining one-third will vest ratably over
three years. These restricted shares provide a means of performance based
compensation in order to provide an additional incentive for our manager&#146;s
employees to enhance the value of our common stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Origination Fees</I>. With respect to each bridge loan and mezzanine loan
originated during the term of the management agreement, we agreed with ACM that
we will (1)&nbsp;pay ACM an amount equal to 100% of the origination fees paid by the
borrower to us, up to 1% of the loan&#146;s principal amount, and (2)&nbsp;retain 100% of
the origination fees paid by the borrower in excess of 1% of the loan&#146;s
principal amount.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Additional Interest</I>. Under the management agreement, we receive any
additional interest and other payments due upon maturity of any loan and fees
paid by borrowers under bridge and mezzanine loans originated during the term
of the management agreement, except that origination fees are allocated
according the agreement described in the paragraph above. We have agreed with
ACM that we are entitled to deduct from the applicable monthly installment of
the base management fee due to ACM an amount equal to 50% of any otherwise
payable additional interest due upon maturity of any of our loans if such
interest is waived in accordance with the provision of the applicable loan
agreement because the borrower refinances one of our structured finance
investments with a Fannie Mae, FHA or conduit commercial loan originated by
ACM.
</FONT>
<P align="left"><FONT size="2"><B><I>Rights of First Refusal</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM and Mr.&nbsp;Kaufman, through his non-competition agreement with us, have
granted us a right of first refusal to pursue all opportunities identified by
them or their affiliates related to structured finance investments in or with
respect to commercial or multi-family real estate properties that are
consistent with our investment objectives and guidelines and would not
adversely affect our status as a REIT. If such investment opportunities are
identified, ACM or Mr.&nbsp;Kaufman, as the case may be, will give our credit
committee written notice and description of the investment opportunity. Our
credit committee, which will consist of Mr.&nbsp;Kaufman, our chief executive
officer, Mr.&nbsp;Weber, our executive vice president of structured finance, Mr.
Palmier, our executive vice president of asset management and our chief credit
officer, may either accept or reject the investment opportunity by a majority
vote. If the committee rejects the opportunity, then ACM or Mr.&nbsp;Kaufman, as
the case may be, will be able to present the opportunity to our independent
directors. If our independent directors, by majority vote, reject the
opportunity and allow ACM or one of its affiliates to pursue it, then ACM or
the affiliate, as the case may be, will be able to do so on the same terms
offered to us. If the terms of the investment opportunity materially change so
that the benefits thereof are materially beneficial to ACM than such terms to
us would have been under the transaction described in the original offer, then
ACM must offer the revised investment opportunity to our credit committee and,
if rejected, to our independent directors, who may again accept or reject the
opportunity on our behalf. ACM will be able to pursue the revised opportunity
on the terms offered to us if our independent directors reject the revised
opportunity and approve ACM&#146;s pursuit of such opportunity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the term of the management agreement, we have agreed not to pursue,
and to allow ACM to pursue, among other transactions and investment
opportunities, opportunities related to multi-family and commercial
</FONT>
<P align="center"><FONT size="2">82</FONT>
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<P align="left"><FONT size="2">mortgage loans that meet the underwriting and approval guidelines of
Fannie Mae, FHA and conduit commercial lending programs secured by first liens
on real property.
</FONT>
<P align="left"><FONT size="2"><B>Mr.&nbsp;Kaufman&#146;s Non-Competition Agreement</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to his non-competition agreement with us, Mr.&nbsp;Kaufman has also
agreed that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">as long as he is serving as our chief executive officer or,
during the term of the management agreement and the origination
period described below, an affiliate of ACM, he will not pursue
structured finance lending opportunities (and will refer those
opportunities to us), unless our independent board members
affirmatively approve the pursuit by ACM or one of its affiliates of
structured finance lending opportunities that they have rejected on
our behalf, See &#147;&#151;Rights of First Refusal&#148;;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if he is no longer an affiliate of ACM and, within the first
five years of the term of the management agreement, he is no longer
our chief executive officer other than by reason of (1)&nbsp;his
termination of his position for good reason, (2)&nbsp;our termination of
him without cause, or (3)&nbsp;a change of control of ACM (which shall
not be deemed to include any public offering of stock by ACM), he
will not engage in the structured finance lending business for a
period of one year after the earlier of his departure from us or the
regular expiration of the one year origination period described
below; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if there is a change of control of ACM within the first three
years of the term of the management agreement, and he is no longer
an affiliate of ACM and leaves us without good reason in that three
year period, he will not engage in the structured finance lending
business for one year after the date of his departure from us.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Kaufman&#146;s non-competition agreement also prohibits Mr.&nbsp;Kaufman from
soliciting our customers or employees during its term.
</FONT>
<P align="left"><FONT size="2"><B>Origination Period</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a period of one year following the expiration or termination of the
management agreement due to our notice of non-renewal or termination without
cause or our manager&#146;s termination for cause:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our manager and Mr.&nbsp;Kaufman agree to originate structured finance transactions for us, and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">we have granted them the exclusive right to provide these origination services to us.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we terminate the management agreement for cause (including because of a
change in control of the manager), or if the manager terminates or elects not
to renew the management agreement without cause, we will be able to accept
origination services from others during the origination period.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to each bridge loan and mezzanine loan originated during the
origination period, we have agreed with ACM that we will (1)&nbsp;pay ACM an amount
equal to 100% of the origination fees paid by the borrower to us, up to 1% of
the loan&#146;s principal amount, and (2)&nbsp;retain 100% of the origination fees paid
by the borrower in excess of 1% of the loan&#146;s principal amount.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We, ACM and, through his non-competition agreement, Mr.&nbsp;Kaufman have also
agreed that (1)&nbsp;our right of first refusal to pursue all structured finance
investment opportunities regarding commercial or multi-family real estate
properties that are identified by ACM, Mr.&nbsp;Kaufman (so long as he is an
affiliate of ACM) or their affiliates and (2)&nbsp;ACM&#146;s right of exclusivity
regarding Fannie Mae, FHA and conduit commercial lending programs will each
continue to apply during the origination period.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If such structured finance investment opportunities are identified during
the origination period, ACM and, so long as he is an affiliate of ACM, Mr.
Kaufman will give our credit committee written notice and description of the
investment opportunity. Our credit committee will be able to either accept or
reject the investment opportunity. If the committee rejects the opportunity,
then ACM or Mr.&nbsp;Kaufman, as the case may be, will be able to present the
</FONT>
<P align="center"><FONT size="2">83</FONT>
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<P align="left"><FONT size="2">opportunity to our independent directors. If our independent directors,
by majority vote, reject the opportunity on behalf of us and approve ACM&#146;s
pursuit of that opportunity, then ACM may pursue the opportunity on the same
terms offered to us. If the terms of the investment opportunity materially
change, then ACM will be able to offer the revised investment opportunity to
our credit committee and, if rejected, to our independent directors, who will
be able to again be able to accept or reject the opportunity on behalf of us.
ACM will be able to pursue the opportunity on the terms offered to us, if our
independent directors reject the revised opportunity and approve ACM&#146;s pursuit
of such opportunity.
</FONT>

<P align="center"><FONT size="2">84</FONT>



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<!-- link1 "MANAGEMENT" -->
<DIV align="left"><A NAME="012"></A></DIV>
<P align="center"><FONT size="2"><B>MANAGEMENT</B>
</FONT>

<P align="left"><FONT size="2"><B>Our Directors and Executive Officers</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors consists of seven directors, four of whom are
independent directors. See &#147;&#151;Corporate Governance&#151; Board of Directors and
Committees.&#148; Pursuant to our charter, the board of directors is divided into
three classes of directors. The current terms of the Class&nbsp;I, Class&nbsp;II and
Class&nbsp;III directors will expire in 2004, 2005 and 2006, respectively. Upon the
expiration of their current terms, directors of each class will be elected to
serve a term of three years and until their successors are elected and qualify
each year and one class of directors will be elected by the stockholders. The
following table sets forth certain information about our directors and
executive officers.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Age</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position with Us</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Class</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ivan Kaufman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
42</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chairman of the Board of Directors, Chief
Executive Officer and President
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Class&nbsp;II</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Frederick C. Herbst</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
46</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Financial Officer and Treasurer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">John
C. Kovarik</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
44</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Credit Officer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Daniel M. Palmier</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
42</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Executive Vice President&#151;Asset Management</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Fred Weber</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
42</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Executive Vice President&#151;Structured Finance</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jonathan A. Bernstein</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
57</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Independent Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Class&nbsp;I</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">William Helmreich</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
58</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Independent Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Class&nbsp;III</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">C. Michael Kojaian</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
41</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Independent Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Class&nbsp;II</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Melvin F. Lazar</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
64</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Independent Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Class&nbsp;II</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Walter K. Horn</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
60</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">General Counsel, Secretary and Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Class&nbsp;III</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Joseph Martello</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
48</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Class&nbsp;I</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information for each of our executive officers and directors is set forth
below. For information regarding Messrs.&nbsp;Kaufman, Herbst and Horn, see &#147;Our
Manager and the Management Agreement&#151; Officers of Our Manager.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>John C. Kovarik</I></B>. Mr.&nbsp;Kovarik was hired to serve as our chief credit
officer in October 2003. From 1997 until October 2003, Mr.&nbsp;Kovarik was Senior
Vice President and Chief Credit Officer of RER Resources, a commercial real
estate consulting, underwriting and asset management services provider based in
Virginia. Mr.&nbsp;Kovarik has over twenty years of experience in credit, financial
analysis and commercial real estate underwriting for various types of
commercial properties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Daniel M. Palmier</I></B>. Mr.&nbsp;Palmier has served as our executive vice president
of asset management since June 2003. He also continues to provide services to
ACM in his capacity as a continuing member of ACM&#146;s executive committee. Since
1997, he has been a member of ACM&#146;s executive committee. From 1997 until the
consummation of the original offering he directed ACM&#146;s asset management group.
Before joining ACM in 1997, Mr.&nbsp;Palmier was a vice president with Lehman
Brothers Holdings Inc., where he was involved with asset management,
restructuring, refinancing, development, leasing and disposition of commercial,
retail and residential properties and mortgages. Mr.&nbsp;Palmier, a certified
public accountant, has more than 18&nbsp;years experience in various aspects of real
estate management and practice.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Fred Weber</I></B>. Mr.&nbsp;Weber has served as our executive vice president of
structured finance since June 2003. He also continues to provide services to
ACM in his capacity as a continuing member of ACM&#146;s executive committee. Mr.
Weber was employed by ACM from May 1999 until the consummation of the original
offering. At ACM, Mr.&nbsp;Weber had been responsible for overseeing ACM&#146;s
structured finance and principal transaction groups.
</FONT>
<P align="center"><FONT size="2">85</FONT>
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<P align="left"><FONT size="2">He has been involved in the mortgage banking industry for more than 16
years and has extensive real estate finance and acquisition experience. Mr.
Weber is a member of the real estate finance committee of the real estate board
of New York. Prior to joining ACM, Mr.&nbsp;Weber was a partner and co-head of the
real estate department with Kronish, Lieb, Weiner &#038; Hellman. Previously, Mr.
Weber was a partner with the law firm of Weil, Gotschal &#038; Manges.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Jonathan A. Bernstein</I></B>. Mr.&nbsp;Bernstein has served as one of our directors
since June 2003. Mr.&nbsp;Bernstein is of counsel at Pryor, Cashman, Sherman &#038;
Flynn, where he is head of the real estate department, specializing in finance
and focusing on real estate investment trusts and structured financing
involving real estate. Mr.&nbsp;Bernstein joined Pryor Cashman in
1993. He serves as an advisor to REITs and investment banks
in the real estate area. Mr.&nbsp;Bernstein is also the vice chairman of
TractManager LLC, an internet based software company, with offices in Saddle
Brook, New Jersey and Chattanooga, Tennessee, specializing in contract
management in the health care area.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>William Helmreich</I></B>. Dr.&nbsp;Helmreich has served as one of our directors since
June 2003. Dr.&nbsp;Helmreich is the founder, and since 1980, owner and president
of Byron Research and Consulting, a market research firm specializing in
financial research, political polling, legal consulting, and issues relating to
food products and real estate. He is chairman for Academic Affairs for North
Shore Hebrew Academy, a member of the Board of Transaction Inc., as well as
other not for profit boards, and was, for many years, a senior vice president
of Good Earth Teas.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>C.&nbsp;Michael Kojaian</I></B>. Mr.&nbsp;Kojaian has served as one of our directors since
June 2003. Mr.&nbsp;Kojaian is the chief operating officer of the Kojaian group of
companies, a national multi-faceted real estate development investment and
asset management organization. Before joining Kojaian in 1998, Mr.&nbsp;Kojaian was
chairman of the Board of Grubb &#038; Ellis. Prior to that, Mr.&nbsp;Kojaian was
Chairman of Dott Industries, a specialized automotive manufacturer. Mr.
Kojaian is a member if the board of directors of Flagstar Bank, Grubb &#038; Ellis
and the United States President&#146;s Export Council.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Melvin F. Lazar</I></B>. Mr.&nbsp;Lazar has served as one of our directors since his
appointment in November 2003. Mr.&nbsp;Lazar is the founder of Lazar Levine &#038; Felix
LLP, certified public accountants. Mr.&nbsp;Lazar specialized in business
valuations and merger and acquisition activities. Mr.&nbsp;Lazar serves on the
Board of Directors of Enzo Biochem, Inc., a publicly-held biotechnology
company, Active Media Services, Inc., a privately-held corporate barter
company, and CECO Environmental Corp., a publicly-held provider of innovative
solutions to industrial ventilation and air quality problems.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Joseph Martello</I></B>. Mr.&nbsp;Martello has served as one of our directors since
June 2003. Mr.&nbsp;Martello is currently chief operating officer of Arbor
Management, LLC, the managing member of ACM. From 1995 to 1999, Mr.&nbsp;Martello
was chief financial officer of ACM. From 1990 to 1995, Mr.&nbsp;Martello was the
chief financial officer of Arbor National Holdings, Inc. Prior to that, he was
a senior manager with the international accounting and consulting firm of Ernst
&#038; Young for eleven years. Mr.&nbsp;Martello is a member of the American Institute
of Certified Public Accountants and the New York State Society of Certified
Public Accountants where he is a former executive member of the Board of
Directors of the Suffolk County Chapter.
</FONT>
<P align="left"><FONT size="2"><B>Corporate Governance&#151;Board of Directors and Committees</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business is ultimately managed through the oversight and direction of
our board of directors, which has established investment guidelines for ACM to
follow in its day to day management of our business. At least a majority of
our board of directors are &#147;independent,&#148; with independence being defined in
our charter, and are nominated by our nominating/corporate governance
committee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board consists of seven directors, three of whom are affiliated with
ACM, Messrs.&nbsp;Kaufman, Martello and Horn, and four of whom are &#147;independent&#148;
directors, Messrs.&nbsp;Bernstein, Kojaian and Lazar and Dr.&nbsp;Helmreich. The
directors keep informed about our business at meetings of the board and its
committees and through supplemental reports and communications. Our
independent directors expect to meet regularly in executive sessions without
the presence of our corporate officers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board has established four committees, the principal functions of
which are briefly described below.
</FONT>
<P align="center"><FONT size="2">86</FONT>
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<P align="left"><FONT size="2"><B>Audit Committee</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has established an audit committee, which is
composed of three of our independent directors, Messrs.&nbsp;Bernstein, Lazar and
Dr.&nbsp;Helmreich. Mr.&nbsp;Lazar serves as chairman of the audit committee. The audit
committee assists the board in overseeing (1)&nbsp;our accounting and financial
reporting processes; (2)&nbsp;the integrity and audits of our consolidated financial
statements; (3)&nbsp;our compliance with legal and regulatory requirements; (4)&nbsp;the
qualifications and independence of our independent auditors; and (5)&nbsp;the
performance of our internal and independent auditors.
</FONT>
<P align="left"><FONT size="2"><B>Compensation Committee</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has established a compensation committee, which is
composed of Dr.&nbsp;Helmreich and Mr.&nbsp;Bernstein. Dr.&nbsp;Helmreich serves as chairman
of the compensation committee. The principal functions of the compensation
committee will be to (1)&nbsp;evaluate the performance of our officers, (2)&nbsp;review the
compensation payable to our officers, (3)&nbsp;evaluate the performance of ACM, (4)
review the compensation and fees payable to ACM under our management agreement
and (5)&nbsp;administer the issuance of any stock issued to our employees or, the
employees of ACM who provide services to us.
</FONT>
<P align="left"><FONT size="2"><B>Nominating/Corporate Governance Committee</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has established a nominating/corporate governance
committee, which is composed of Dr.&nbsp;Helmreich and Mr.&nbsp;Bernstein. Dr.&nbsp;Helmreich
serves as chairman of the nominating/corporate governance committee. The
nominating/corporate governance committee will be responsible for seeking,
considering and recommending to the board qualified candidates for election as
directors and recommending a slate of nominees for election as directors at the
annual meeting. It will also periodically prepare and submit to the board for
adoption the committee&#146;s selection criteria for director
nominees. It will review
and make recommendations on matters involving general operation of the board
and our corporate governance, and annually will recommend to the board nominees
for each committee of the board. In addition, the committee annually
facilitates the assessment of the board of directors&#146; performance as a whole
and of the individual directors and reports thereon to the board.
</FONT>
<P align="left"><FONT size="2"><B>Independent Director Committee</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has established an independent director committee,
which is composed of all of our independent directors, Messrs.&nbsp;Bernstein,
Kojaian and Lazar and Dr.&nbsp;Helmreich. The independent director committee is
responsible for considering and voting upon matters as to which the board of
directors determines ACM or its affiliates (other than us or our subsidiaries)
or any of our directors (other than an independent director) or officers has a
conflict of interest, including the approval of transactions between us and
ACM.
</FONT>
<P align="left"><FONT size="2"><B>Director Compensation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of our independent directors are paid a director&#146;s fee of $25,000 per
year. Each director who serves as a committee chairman of the audit,
compensation or nominating/corporate governance committee is paid an additional
fee of $3,000. Each director is also paid a fee of $2,000 for each board or
committee meeting that he or she attends. Each director is also paid a fee of
$1,000 for each telephone board or committee meeting that he attends. In
addition, we reimburse all directors for reasonable out of pocket expenses
incurred in connection with their services on the board of directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our stock incentive plan provides for grants of restricted stock and other
equity based awards with respect to our common stock. On July&nbsp;1, 2003, Messrs.
Bernstein, Kojaian, Martello and Dr.&nbsp;Helmreich each received 1,000 shares of
our restricted common stock. Upon their appointment to the board, Messrs.&nbsp;Horn
and Lazar each received 1,000 shares of our restricted common stock. Two-thirds
of the restricted stock granted to these directors vested immediately upon the
date of grant and the remaining one-third will vest ratably over three years
from the date of grant.
</FONT>
<P align="center"><FONT size="2">87</FONT>
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<P align="left"><FONT size="2"><B>Executive Compensation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because our management agreement provides that our manager assumes
principal responsibility for managing our affairs, certain of our executive
officers, who are employees of our manager, do not receive compensation from us
for serving as our executive officers. However, in their capacities as
officers or employees of our manager, or its affiliates, they devote such
portion of their time to our affairs as is required for the performance of the
duties of our manager under the management agreement. Mr.&nbsp;Ivan Kaufman, our
chairman of the board of directors, president and chief executive officer
serves as the chairman and chief executive officer of ACM. Mr.&nbsp;Frederick C.
Herbst, our chief financial officer, also serves as chief financial officer of
our manager. Walter Horn, our secretary and general counsel also serves as
secretary and general counsel of ACM. Each of Messrs.&nbsp;Kaufman, Herbst and Horn
receive their compensation from our manager.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, we granted Mr.&nbsp;Kaufman and Mr.&nbsp;Herbst, 120,000 shares and
4,000 shares, respectively, of restricted stock pursuant to our stock incentive
plan, two-thirds of which vested immediately and the remaining one-third of
which will vest ratably over three years. On November&nbsp;5, 2003, we granted Mr.
Horn 1,000 shares of restricted stock pursuant to our stock incentive plan with
the same vesting schedule. Our manager has informed us that, because the
services to be performed by its officers or employees in their capacities as
such is not performed exclusively for us, it cannot segregate and identify that
portion of the compensation awarded to, earned by or paid to our executive
officers by the manager that relates solely to their services to us.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Three of our officers, Mr.&nbsp;Fred Weber, our executive vice president of
structured finance, Mr.&nbsp;Daniel M. Palmier, our executive vice president of
asset management and Mr.&nbsp;John C. Kovarik, our chief credit officer, are
employed and paid directly by us. Each of Mr.&nbsp;Weber and Mr.&nbsp;Palmier receive
annual compensation of $360,000, plus a bonus to be determined at the
discretion of our board of directors, which will not exceed $140,000 per year.
On July&nbsp;1, 2003, we granted each of Messrs.&nbsp;Palmier and Weber 7,000 shares of
restricted stock pursuant to our stock incentive plan, two-thirds of which
vested immediately and the remaining one-third of which will vest ratably over
three years. Mr.&nbsp;Kovarik receives annual compensation of $150,000 plus a bonus
to be determined at the discretion of our board of directors, which will not
exceed $75,000 per year. We began compensating our employee executive officers
at the annual rates set forth above upon the commencement of our operations on
July&nbsp;1, 2003.
</FONT>
<P align="left"><FONT size="2"><B>Mr.&nbsp;Kaufman&#146;s Non-Competition Agreement</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to his non-competition agreement with us, Mr.&nbsp;Kaufman has also
agreed:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">not to pursue any structured finance investment
opportunities, except if our independent board members affirmatively
approve the pursuit by ACM or one of its affiliates of structured
finance opportunities that they have rejected on our behalf;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if he is no longer an affiliate of ACM and, within the first
five years of the term of the management agreement, he is no longer
our chief executive officer other than by certain reasons, he will
not engage in the structured finance lending business for a period
of one year after the earlier of his departure from us or the
regular expiration of the one year origination period; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if there is a change of control of ACM within the first three
years of the term of the management agreement, and he is no longer
an affiliate of ACM and leaves us without good reason in that three
year period, he will not engage in the structured finance lending
business for one year after the date of his departure from us.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Kaufman&#146;s non-competition agreement also prohibits Mr.&nbsp;Kaufman from
soliciting our customers or employees during its term. See &#147;Our Manager and the
Management Agreement&#151;Mr.&nbsp;Kaufman&#146;s Non Competition Agreement.&#148;
</FONT>
<P align="center"><FONT size="2">88</FONT>
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<P align="left"><FONT size="2"><B>Stock Incentive Plan</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have adopted the Arbor Realty Trust, Inc. 2003 Omnibus Stock Incentive
Plan, referred to in this prospectus as the stock incentive plan, to provide
incentives to attract and retain the highest qualified directors, officers,
employees, advisors, consultants and other personnel, including our manager and
employees of our manager. The stock incentive plan is administered by our full
board of directors or a committee appointed by our board of directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stock incentive plan permits the granting of restricted stock awards.
Under the stock incentive plan, 185,000 shares of common stock are reserved for
issuance pursuant to restricted stock awards, subject to adjustment upon
certain corporate transactions, and 147,500 restricted shares were issued upon
consummation of the original offering. The initial awards were made to each of
our initial directors, our chief executive officer, our chief financial
officer, certain of our employees and certain employees of our manager who
provide services to us. The remaining shares were reserved for issuance of
restricted stock awards in the future. In addition, 1,000 restricted shares
were issued to each of Messrs.&nbsp;Horn and Lazar upon their
appointment to the board
of directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A restricted stock award is an award of shares of common stock that is
subject to restrictions on transferability and such other restrictions, if any,
as our board of directors or committee may impose at the date of grant. Of the
shares subject to the initial awards, two-thirds vested immediately and
one-third will vest ratably over three years. Future grants of restricted
stock will be subject to vesting schedules as determined by our board of
directors or the committee. The restrictions may lapse separately or in
combination at such times, under such circumstances, including, without
limitation, a specified period of employment or the satisfaction of
pre-established criteria, in such installments or otherwise, as our board of
directors or a committee of our board of directors may determine. Except to
the extent restricted under the award agreement relating to the restricted
stock, a participant granted restricted stock has all of the rights of a
stockholder, including, without limitation, the right to vote and the right to
receive dividends on the restricted shares. Although dividends are paid on all
restricted stock, whether or not vested, at the same rate and on the same date
as on shares of our common stock, holders of restricted stock are prohibited
from selling such shares until they vest.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors may amend, alter or discontinue the stock incentive
plan, but cannot take any action that would impair the rights of a participant
without such participant&#146;s consent. To the extent necessary and desirable, the
board of directors must obtain approval of the stockholders, for any amendment
that would:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other than through adjustment as provided in the stock
incentive plan, increase the total number of shares of our common
stock reserved for issuance under the stock incentive plan; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">change the class of officers, directors, employees,
consultants and advisors eligible to participate in the stock
incentive plan.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors (or a committee appointed by our board of directors
to act as administrator of the stock incentive plan) may amend the terms of any
award granted under the stock incentive plan, prospectively or retroactively,
but, generally may not impair the rights of any participant without his or her
consent.
</FONT>
<P align="center"><FONT size="2">89</FONT>
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<!-- link1 "REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS" -->
<DIV align="left"><A NAME="013"></A></DIV>
<P align="center"><FONT size="2"><B>REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with a registration rights agreement that we entered into
with JMP Securities in connection with the original offering, we have filed a
shelf registration statement, of which this prospectus is a part, covering the
resale from time to time of the offered securities by the selling stockholders.
The registration rights agreement is described below. The summary of the
registration rights agreement is not complete and is subject to and qualified
in its entirety by reference to the registration rights agreement, a copy of
which is filed as an exhibit to the registration statement of which this
prospectus is a part.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our registration rights agreement with JMP Securities, we agreed to
file with the SEC by December&nbsp;31, 2003, the shelf registration statement, of
which this prospectus forms a part, providing for resale of the offered
securities pursuant to Rule&nbsp;415 under the Securities Act from time to time by
the holders of the Offered Securities. We must use our best efforts to cause
the shelf registration statement to become effective by December&nbsp;31, 2003, but
in no case later than June&nbsp;30, 2004.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to maintain the effectiveness of the shelf registration
statement until the first to occur of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the disposition of all offered securities under a registration statement or pursuant to Rule&nbsp;144;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the date on which the offered securities are saleable under Rule&nbsp;144(k) under the Securities Act;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the date that is two years after the effective date of the shelf registration statement; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the date on which the offered securities are sold to us.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We would be obligated to pay additional dividends to the holders of
securities that are eligible to be registered under the registration rights
agreement if:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">we had not filed either a registration statement on the
appropriate form under the Securities Act providing for the initial
public offering of our common stock, referred to as an IPO
registration statement, or the shelf registration statement, with
the Securities and Exchange Commission by December&nbsp;31, 2003;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an IPO registration statement is filed with the Securities
and Exchange Commission but is not declared effective by June&nbsp;30,
2004;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">after the earlier of the withdrawal or abandonment of the
offering pursuant to the IPO registration statement, we have not
filed the shelf registration statement with the SEC prior to the
later of December&nbsp;31, 2002 and 30&nbsp;days after such withdrawal or
abandonment;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a sale of our common stock pursuant to an IPO registration
statement has not taken place and our shelf registration statement
has not been declared effective by June&nbsp;30, 2004;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a sale of our common stock pursuant to an IPO registration
statement takes place, after which we are still obligated to file
the shelf registration statement, and we do not file the shelf
registration statement within 180&nbsp;days after the completion of the
sale of common stock under the IPO registration statement or that
shelf registration is not declared effective within 80&nbsp;days of its
filing; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">after our IPO registration statement or our shelf
registration statement, as applicable, has been declared effective,
it ceases to be effective or usable in connection with resales
during a period in which it is required to be effective without
being immediately succeeded by an additional registration statement
or a post-effective amendment to our registration statement.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We refer to each of the events listed above as a registration failure.
During the first quarter immediately following a registration failure, we would
be obligated to pay additional dividends at a rate of $.0625 per share of
common stock representing or underlying any registrable security, escalating at
the end of such quarter and at the
</FONT>
<P align="center"><FONT size="2">90</FONT>
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<P align="left"><FONT size="2">end of each quarter thereafter by an additional $.0625 per share, up to a
maximum rate of $.25 per share per quarter, until the registration failure is
cured. The funds needed to pay the additional dividends are required to be
allocated and distributed by us by our operating partnership out of its income.
We will pay these additional dividends from additional allocations of income
and distributions from our operating partnership to which we will be entitled.
Pursuant to the operating partnership agreement, ACM, as a holder of operating
partnership units will not have a right to receive any additional dividend paid
as a result of a registration failure.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We agreed to use our best efforts to list the offered securities on The
Nasdaq Stock Market unless we qualify and choose to list the offered securities
on the New York Stock Exchange, in which case we agreed to use our best efforts
to list the offered securities on the New York Stock Exchange. In connection
with the listing of the offered securities, JMP Securities agreed to act as a
market maker and use its reasonable efforts to engage additional market makers
as may be required under the rules of The Nasdaq Stock Market or the New York
Stock Exchange, as applicable, until we complete a subsequent underwritten
public offering of our common stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon an underwritten offering pursuant to a registration statement filed
in accordance with the registration rights agreement, holders of our units
issued in the original offering agree to the extent requested by us, or an
underwriter of our securities, not to sell or otherwise transfer or dispose of
any remaining units, shares of common stock or any other securities
exchangeable or exercisable for our common stock (other than under such
registration statement) during a lock-up period (not to exceed 30&nbsp;days prior to
and 180&nbsp;days following that offering) to be negotiated between us and the
underwriters, subject to certain exceptions and limitations.
</FONT>
<P align="left"><FONT size="2"><B>Lock-Up Agreements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the original offering on July&nbsp;1, 2003, ACM, members of
our senior management and board of directors and certain members of the senior
management of ACM have agreed not to offer, pledge, sell contract to sell, sell
any option or contract to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of our common stock, or any securities
convertible into or exercisable for any of our common stock or any right to
acquire our common stock, until the earlier of:
</FONT>
<P>
<CENTER>
<TABLE width="98%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> 180&nbsp;days from the effective date of the shelf registration statement; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"> two years from the consummation of the original offering, subject to certain exceptions.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also agreed not to offer to sell, contract to sell, or otherwise
dispose of, loan, pledge or grant any rights with respect to any shares of our
common stock, any options or warrants to purchase any shares of our common
stock or any securities convertible into or exercisable for any of our common
stock, including our units, for a period of 180&nbsp;days following the completion
of the original offering, which was July&nbsp;1, 2003, subject to certain
exceptions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JMP Securities, at any time, and without notice, may release all or any
portion of the common stock subject to the foregoing lock-up agreements.
</FONT>
<P align="center"><FONT size="2">91</FONT>
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<P align="center"><FONT size="2"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</FONT>

<P align="left"><FONT size="2"><B>Conflicts of Interest with Our Manager</B>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the consummation of the original offering, ACM contributed the majority
of its structured finance portfolio and related liabilities to our operating
partnership in exchange for 3,146,724 operating partnership units and 629,345
warrants to purchase additional operating partnership units, representing a 28%
limited partnership interest in our operating partnership (without giving
effect to the exercise of the warrants).
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ivan Kaufman, our chairman and chief executive officer, is also the
chief executive officer of ACM. Mr.&nbsp;Kaufman and the Kaufman entities
collectively own 88% of the beneficial equity interest of ACM. Mr.&nbsp;Frederick
C. Herbst, our chief financial officer, is also the chief financial officer of
ACM. Mr.&nbsp;Herbst owns a 0.5% interest in ACM. Mr.&nbsp;Joseph Martello, one of our
directors, currently serves as the chief operating officer of ACM. Mr.
Martello owns a 1.3% interest in ACM and is also the sole trustee of the Ivan
and Lisa Kaufman Family Trust for the benefit of Mr.&nbsp;Kaufman&#146;s family, which
owns a 59% interest in ACM, and a co-trustee, along with Mr.&nbsp;Kaufman, of the
Ivan Kaufman Grantor Retained Annuity Trust which also owns an equity interest
in ACM. Mr.&nbsp;Walter Horn, our secretary and general counsel and one of our
directors, currently serves as the general counsel of ACM. Mr.&nbsp;Horn owns a 2.0%
interest in ACM.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Daniel M. Palmier, our executive vice president of asset management,
directed ACM&#146;s asset management group from 1997 until the consummation of the
original offering. Mr.&nbsp;Palmier owns a 0.2% interest in ACM. Mr.&nbsp;Fred Weber,
our executive vice president of structured finance, was responsible for
overseeing ACM&#146;s structured finance and principal transactions group from 1999
until the consummation of the original offering. Mr.&nbsp;Weber owns a 0.9%
interest in ACM.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the relationships described above, certain matters relating
to our organization, some of which are discussed below, were not negotiated at
arm&#146;s length, and their terms may not be as favorable to us as if they were
negotiated with an unaffiliated third party.
</FONT>


<P align="left"><FONT size="2"><B>Formation Transactions</B>
</FONT>


<P align="left"><FONT size="2"><I>Asset Contribution and Guaranty</I>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM contributed the majority of its structured finance portfolio to our
operating partnership pursuant to a contribution agreement. The contribution
agreement contains representations and warranties concerning the ownership and
terms of the structured finance assets it contributed and other customary
matters. ACM has agreed to indemnify us and our operating partnership against
breaches of those representations and warranties.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time of ACM&#146;s origination of three investments that it contributed
to us on July&nbsp;1, 2003, each of the property owners granted ACM participating
interests that share in a percentage of the cash flows of the underlying
properties. ACM also made one of the contributed bridge loans to a joint
venture in which it had a 50% non-controlling interest. Upon contribution of
the structured finance assets, ACM retained these participating and joint
venture interests. In connection with its asset contribution, ACM agreed that
if any portion of the outstanding amount of any of these four contributed
assets is not paid at the its maturity or repurchase date, ACM will pay us,
subject to the limitation described below, the portion of the unpaid amount of
the
</FONT>


<P align="center"><FONT size="2">92</FONT>
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<P align="left"><FONT size="2"> contributed asset up to the total amount then received by ACM due to the
realization of any profits on its retained interests associated with any other
of the four contributed assets. ACM will no longer be obligated to make such
payments to us when the remaining accumulated principal amount of the four
contributed assets, collectively, falls below $5&nbsp;million and none of the four
contributed assets is in default.
</FONT>


<P align="left"><FONT size="2"><I>ACM Registration Rights</I>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have granted ACM shelf registration rights, or, if such rights are not
available, demand registration rights with respect to shares of our common
stock that may be issued upon redemption of operating partnership units.
Holders of our operating partnership units are entitled to participate in
primary or secondary offerings of our common stock with respect to such shares.
We have also agreed to certain restrictions on the registration rights that
we may grant to any other holder or prospective holder of our securities
without the prior written consent of the holders of the majority of the shares
of common stock and common stock equivalents representing or underlying the
then outstanding securities that are registrable under the registration rights
agreements.
</FONT>


<P align="left"><FONT size="2"><I>Special Voting Preferred Stock</I>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of the approximately 3.1&nbsp;million operating partnership units received
by ACM, as well as each operating partnership unit that may be issued upon
exercise of any of the warrants, are, in each case, paired with one share of
our special voting preferred stock. Each share of our special voting preferred
stock entitles the holder to one vote on all matters submitted to a vote of our
stockholders. Therefore, ACM is entitled to a number of votes representing
approximately 28% of the voting power of all shares entitled to vote on matters
submitted to a vote of our stockholders.
</FONT>


<P align="left"><FONT size="2"><I>Management and Services Agreements</I>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and our operating partnership have entered into a management agreement
with ACM, pursuant to which ACM provides for the day to day management of our
operations. ACM is also required to provide us with a right of first refusal
with respect to all structured finance identified by ACM or its affiliates. We
have agreed not to pursue, and to allow ACM to pursue, any real estate
opportunities other than structured finance transactions. We are required to
pay ACM a base management fee and an incentive management fee as well as
reimburse ACM for certain of its expenses. See &#147;Our Manager and the Management
Agreement&#148; for more information regarding the services ACM provides to us and
the fees we pay to ACM.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and our operating partnership have also entered into a services
agreement with ACM pursuant to which our asset management group provides asset
management services to ACM. In the event the services provided by our asset
management group pursuant to the agreement exceed by more than 15% per quarter
the level of activity anticipated by our board of directors, we will negotiate
in good faith with our manager an adjustment to our manager&#146;s base management
fee under the management agreement, to reflect the scope of the services, the
quantity of serviced assets or the time required to be devoted to the services
by our asset management group. See &#147;Arbor Realty Trust, Inc.&#151;Operations&#148; and
&#147;Our Asset Management Operations.&#148;
</FONT>




<P align="center"><FONT size="2">93</FONT>

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<P align="left"><FONT size="2"><I>Non-Competition Agreement</I>
</FONT>



<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into a non-competition agreement with Mr.&nbsp;Kaufman pursuant
to which he has agreed not to pursue any structured finance opportunities,
unless our independent board members affirmatively approve the pursuit by ACM
or one of its affiliates of such opportunities that they have rejected on our
behalf. See &#147;Our Manager and the Management Agreement&#151;Mr.&nbsp;Kaufman&#146;s Non
Competition Agreement.&#148;
</FONT>


<P align="left"><FONT size="2"><I>Benefits Participation Agreement</I>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have also entered into a benefits participation agreement with ACM,
pursuant to which our employees are able to participate in any employee benefit
plans maintained by Arbor Management, LLC, ACM&#146;s managing member, for the
benefit of ACM employees. Arbor Management charges us an amount equal to its
cost of providing benefits to each of our employees.
</FONT>


<P align="left"><FONT size="2"><I>Restricted Stock Grants under Stock Incentive Plan</I>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We granted 147,500 restricted shares of common stock under our stock
incentive plan upon consummation of the original offering. The initial awards
were made to our directors, officers and certain of our employees and certain
employees of our manager who provide services to us. In addition, 1,000
restricted shares were issued to Messrs.&nbsp;Horn and Lazar upon their appointment
to the board of directors in November&nbsp;2003.
</FONT>


<P align="left"><FONT size="2"><B>Related Party Loans and Investments</B>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM has a 50% non-controlling interest in a joint venture, which was
formed to acquire, develop and/or sell real estate assets. We currently have a
$16.0&nbsp;million bridge loan outstanding to the joint venture. There is a limited
guarantee on the loan of 50% by our chief executive officer and 50% by the key
principal of the joint venture. We have agreed to provide the borrower with
additional mezzanine financing in the amount of up to $8.0&nbsp;million. ACM has
also agreed to provide a limited guarantee of the principal amount of this
bridge loan as described under &#147;# Asset Contribution and Guaranty.&#148;
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, we purchased two mezzanine loans, 130 West 30th Street
and The Crossings, and a preferred equity investment, Dutch Village, which
collectively represented $13.1&nbsp;million in assets, based on the assets&#146; June&nbsp;30,
2003 book value, from ACM. We used $6.7&nbsp;million of the net proceeds of the
original offering and assumed $6.4&nbsp;million under our credit facilities in order
to acquire these investments from ACM.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2003, ACM invested approximately $818,000 in exchange for a 12.5%
non-controlling interest in a joint venture, which was formed to acquire,
develop and/or sell real estate assets. This investment was purchased by us
from ACM in August&nbsp;2003. On August&nbsp;1, 2003, we purchased these two mezzanine
loans to this joint venture, 80 Evergreen and 930 Flushing Avenue, from ACM for
$6&nbsp;million in cash, which represented the assets combined book value at July
31, 2003. As of September&nbsp;30, 2003, we had two mezzanine loans totaling $6.0
million outstanding.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM contributed four investments to us that are secured by properties in
which ACM has a participating or joint venture interest in the borrower. Every
transaction entered into between us and an entity in which ACM holds equity
interests raises a potential conflict of interest. Conflicts of interest with
respect to these investments include, among others, decisions regarding (1)
whether to waive defaults of such borrower, (2)&nbsp;whether to foreclose on the
investment and (3)&nbsp;whether to permit additional financing on the
properties securing our investments other than financing provided by us.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM may from time to time provide permanent mortgage loan financing to
clients of ours, which will be used to refinance bridge financing provided by
us. We and ACM may also make loans to the same borrower or to borrowers that
are under common control. Additionally, our policies and those of ACM may
require us to enter into intercreditor agreements in situations where loans are
made by us and ACM to the same borrower. In addition, we may enter into future
transactions with ACM with the approval of our independent directors.
</FONT>


<P align="left"><FONT size="2"><B>Other Relationships and Related Transactions</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Two of our employees, Daniel M. Palmier, our executive vice president of
asset management, and Fred Weber, our executive vice president of structured
finance, continue to serve on ACM&#146;s executive committee and provide services to
ACM. Messrs.&nbsp;Palmier and Weber do not receive a salary from ACM, but may
receive production payments from ACM for originating loans.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Management, the managing member of ACM, loaned Mr.&nbsp;Herbst and Mr.
Palmier $225,000 and $800,000, respectively, for the purpose of financing a
portion of each of their investments in the original offering.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2000 and 2001, ACM paid $65,394 and $85,000, respectively, for legal
services rendered, to Pryor, Cashman, Sherman &#038; Flynn, where Mr.&nbsp;Jonathan A.
Bernstein, who serves as one of our directors, is of counsel.
</FONT>



<P align="center"><FONT size="2">94</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" -->
<DIV align="left"><A NAME="015"></A></DIV>
<P align="center"><FONT size="2"><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information regarding the ownership
of each class of capital stock by:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">each of our directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">each of our executive officers;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">each holder of five percent or more of each class of our capital stock; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">all of our directors and executive officers as a group.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise indicated, all shares are owned directly and the
indicated person has sole voting and investment power. Except as indicated in
the footnotes to the table below, the business address of the stockholders
listed below is the address of our principal executive office, 333 Earle
Ovington Boulevard, Suite&nbsp;900, Uniondale, New York 11553.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Owned(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Class (2)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Arbor Commercial Mortgage, LLC (3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
3,776,136</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">31.5</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ivan Kaufman (4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
3,898,136</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">32.6</FONT></TD>
    <TD nowrap valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Perry Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
650,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">7.9</FONT></TD>
    <TD valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Watershed Capital Institutional Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
513,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">6.3</FONT></TD>
    <TD valign="top"><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Joseph Martello (5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
6,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jonathan A. Bernstein (6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
1,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">William Helmreich (7)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
21,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">C. Michael Kojaian (8)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
1,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Frederick C. Herbst (9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
24,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Daniel M. Palmier (10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
73,750</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Fred Weber (11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
12,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Walter K. Horn (12)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
8,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Melvin F. Lazar (13)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
1,000</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">All directors and officers as a group (10 persons)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4,045,886</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">33.8</FONT></TD>
    <TD valign="top"><FONT size="2">%</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">* Less than 1%
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes securities over which a person has voting or
investment power and securities that a person has the right to acquire
within 60&nbsp;days of the date hereof. For purposes of the table above, we
have also assumed that all units of our operating partnership, Arbor
Realty Limited Partnership, held by such person or group of persons are
redeemed for common stock (regardless of when such units are redeemable).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">At the consummation of the original offering, ACM received 3,146,724
operating partnership units and warrants to purchase an additional
629,345 operating partnership units. Each of these operating partnership
units held by ACM is paired with one share of our special voting
preferred stock, which is entitled to one vote per share on all matters
submitted to our stockholders. Each share of special voting preferred
stock will be redeemed and cancelled by us upon the redemption of its
paired operating partnership unit for shares of our common stock or cash.
As this table assumes that all operating partnership units issued to
ACM, including those issuable upon exercise of the warrants issued to
ACM, have been redeemed for shares of our common stock, we have assumed
that the shares of special voting preferred stock to be held by ACM have
been redeemed and cancelled by us.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Shares of common stock subject to options or warrants exercisable within
60&nbsp;days of the date hereof are deemed to be outstanding for computing the
percentage of the person holding such options or warrants but are not
deemed outstanding for computing the percentage of any other person.
Shares of common stock</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">95</FONT>


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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">issuable upon the redemption of operating partnership units are deemed to
be outstanding for computing the percentage of the person holding such
operating partnership units but are not deemed outstanding for computing
the percentage of any other person.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes shares of our common stock issuable upon redemption of the
operating partnership units that are issuable upon exercise of warrants
held by ACM.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes shares of our common stock issuable upon redemption of the
operating partnership units held by ACM and subject to warrants held by
ACM. Mr.&nbsp;Kaufman and his wife are the sole members of Arbor Management,
LLC, the managing member of ACM. The Kaufman entities own an 88% Class&nbsp;A
membership interest in ACM. Also includes 2,000 shares of our common
stock held by Mr.&nbsp;Kaufman&#146;s wife.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 6,000 shares of our common stock, 5,000 of which Mr.&nbsp;Martello
purchased in the original offering, and 1,000 of which were granted to him
as restricted shares for his services as a director. Mr.&nbsp;Martello holds a
1.3% Class&nbsp;B membership interest in ACM. For purposes of the SEC
beneficial ownership rules, the operating partnership units held by ACM
are not deemed to be beneficially owned by Mr.&nbsp;Martello.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(6)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The address for Mr.&nbsp;Bernstein is 333 Earle Ovington Boulevard, Uniondale
NY 11553.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(7)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The address for Dr.&nbsp;Helmreich is 333 Earle Ovington Boulevard, Uniondale
NY 11553.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(8)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The address for Mr.&nbsp;Kojaian is 333 Earle Ovington Boulevard, Uniondale NY
11553.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(9)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 24,000 shares of our common stock, 20,000 of which Mr.&nbsp;Herbst
purchased in the original offering, and 4,000 of which were granted to him
as restricted shares for his services as an executive officer. Mr.&nbsp;Herbst
holds a 0.5% Class&nbsp;B membership interest in ACM. For purposes of the SEC
beneficial ownership rules, the operating partnership units held by ACM
are not deemed to be beneficially owned by Mr.&nbsp;Herbst.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(10)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 73,750 shares of our common stock, 66,750 of which Mr.&nbsp;Palmier
purchased in the original offering, and 7,000 of which were granted to him
as restricted shares for his services as an executive officer. Mr.&nbsp;Palmier
holds a 0.2% Class&nbsp;B membership interest in ACM. For purposes of the SEC
beneficial ownership rules, the operating partnership units held by ACM
are not deemed to be beneficially owned by Mr.&nbsp;Palmier.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(11)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 12,000 shares of our common stock, 5,000 of which Mr.&nbsp;Weber
purchased in the original offering, and 7,000 of which were granted to him
as restricted shares for his services as an executive officer. Mr.&nbsp;Weber
holds a 0.9% Class&nbsp;B membership interest in ACM. For purposes of the SEC
beneficial ownership rules, the operating partnership units held by ACM
are not deemed to be beneficially owned by Mr.&nbsp;Weber.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(12)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 8,000 shares of our common stock, 7,000 of which he purchased in
the original offering, and 1,000 of which were granted to him as
restricted shares for his services as a director. Mr.&nbsp;Horn holds a 2.0%
Class&nbsp;B membership interest in ACM. For purposes of the SEC beneficial
ownership rules, the operating partnership units held by ACM are not
deemed to be beneficially owned by Mr.&nbsp;Horn.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(13)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The address for Mr.&nbsp;Lazar is 333 Earle Ovington Boulevard, Uniondale NY
11553.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">96</FONT>
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<DIV align="left"><A NAME="016"></A></DIV>
<P align="center"><FONT size="2"><B>DESCRIPTION OF STOCK</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The following summary of the material provisions of our stock does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Maryland General Corporation Law, or MGCL and our charter and
bylaws, copies of which are available upon request. See &#147;Available
Information.&#148;</I>
</FONT>
<P align="left"><FONT size="2"><B>General</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were formed under the laws of the State of Maryland. Rights of our
stockholders are governed by the MGCL, our charter and our bylaws.
</FONT>
<P align="left"><FONT size="2"><B>Authorized Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter provides that we may issue up to 500&nbsp;million shares of common
stock, par value $.01 per share, and 100&nbsp;million shares of preferred stock, par
value $.01 per share. There are approximately 8.2&nbsp;million shares of common
stock issued and outstanding and approximately 3.1&nbsp;million shares of preferred
stock issued and outstanding.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Maryland law, our stockholders are generally not liable for our
debts or obligations.
</FONT>
<P align="left"><FONT size="2"><B>Common Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All shares of our common stock offered hereby are duly authorized and will
be validly issued, fully paid and nonassessable. Subject to the preferential
rights of any other class or series of stock and to the provisions of the
charter regarding the restrictions on transfer of stock, holders of shares of
our common stock are entitled to receive dividends on such stock when, as and
if authorized by our board of directors out of funds legally available therefor
and declared by us and to share ratably in the assets of our company legally
available for distribution to our stockholders in the event of our liquidation,
dissolution or winding up after payment of or adequate provision for all known
debts and liabilities of our company, including the preferential rights on
dissolution of any class or classes of preferred stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of our charter regarding the restrictions on
transfer of stock, each outstanding share of common stock entitles the holder
to one vote on all matters submitted to the vote of stockholders, including the
election of directors. There is no cumulative voting in the election of our
board of directors, which means that the holders of a majority of the
outstanding shares of our common stock can elect all of the directors then
standing for election and the holders of the remaining shares of our common
stock are not able to elect any directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of shares of our common stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any securities of our company. Subject to the
provisions of the charter regarding the restrictions on transfer of stock,
shares of our common stock have equal dividend, liquidation and other rights.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the MGCL, a Maryland corporation generally cannot dissolve, amend
its charter, merge, sell all or substantially all of its assets, engage in a
statutory share exchange or engage in similar transactions outside the ordinary
course of business unless declared advisable by the board of directors and
approved by the affirmative vote of stockholders entitled to cast at least
two-thirds of the votes entitled to be cast on the matter unless a lesser
percentage (but not less than a majority of all of the votes entitled to be
cast on the matter) is set forth in the corporation&#146;s charter. Our charter,
however, provides for approval of these matters, except with respect to certain
charter amendments, by an affirmative vote of stockholders entitled to cast at
least a majority of the votes entitled to be cast on the matter.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter authorizes our board of directors to increase the number of
shares of authorized common stock, to issue additional authorized but unissued
shares of our common stock, to reclassify any unissued shares of our common
stock into other classes or series of classes of stock and to establish the
number of shares in each class or series and to set the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends
</FONT>
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<P align="left"><FONT size="2">or other distributions, qualifications or terms or conditions of
redemption for each such class or series without stockholder approval.
</FONT>
<P align="left"><FONT size="2"><B>Preferred Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter authorizes our board of directors to increase the number of
authorized shares of preferred stock, to issue additional authorized but
unissued shares of our preferred stock, to classify or reclassify any unissued
shares of preferred stock and to reclassify any previously classified but
unissued shares of any series without stockholder approval. Prior to issuance
of shares of each series, our board of directors is required by the MGCL and
our charter to set the terms, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms or conditions of redemption for each such series.
Thus, our board of directors could authorize the issuance of shares of
preferred stock with terms and conditions that could have the effect of
delaying, deferring or preventing a transaction or a change of control of our
company that might involve a premium price for holders of our common stock or
otherwise be in their best interest.
</FONT>
<P align="left"><FONT size="2"><B>Special Voting Preferred Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We, our operating partnership and our manager have entered into a pairing
agreement. Pursuant to the pairing agreement, each operating partnership unit
issued to ACM in connection with the contribution of the initial assets
(including operating partnership units issuable upon the exercise of ACM&#146;s
warrants for additional operating partnership units) is paired with one share
of our special voting preferred stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder of special voting preferred stock is not entitled to any regular
or special dividend payments or other distributions, including any dividend or
other distributions declared or paid with respect to shares of our common stock
or any other shares of our stock. A holder of shares of special voting
preferred stock is only entitled to receive a $.01 distribution per share in
the event of our liquidation, dissolution or redemption of the special voting
preferred stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each share of special voting preferred stock entitles the holder to one
vote on all matters submitted to a vote of our stockholders. The holders of
special voting preferred stock have no separate class voting rights, except as
specifically provided by our charter. We may not issue any additional shares
of special voting preferred stock in the future unless such shares are paired
with operating partnership units.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon any redemption of an operating partnership unit that is paired with a
share of special voting preferred stock in accordance with the redemption
provisions of the operating partnership agreement, the share of special voting
preferred stock will be redeemed by us and cancelled.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we complete a merger transaction in connection with which the holders
of operating partnership units either continue to hold interests in our
operating partnership or receive partnership interests or other securities of
another operating partnership in an &#147;umbrella partnership&#148; REIT structure, then
the holders of special voting preferred stock are generally entitled to vote
separately as a class on such a merger transaction, unless they receive a
voting security comparable to the special voting preferred stock.
</FONT>
<P align="left"><FONT size="2"><B>Warrants</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The warrants comprising part of the units were issued pursuant to a
warrant agreement dated as of July&nbsp;1, 2003 between us and American Stock
Transfer &#038; Trust Company who acts as warrant agent. The following is a brief
summary of certain provisions of the warrant agreement and does not purport to
be complete and is qualified in its entirety by reference to the warrant
agreement including the definitions of certain terms used below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each unit consists of five shares of our common stock, par value $.01 per
share, and one warrant that has an initial exercise price of $15 and entitles
the holder to purchase one share of our common stock subject to certain
anti-dilution adjustments. The warrants are exercisable until 5:00 p.m. New
York City time on July&nbsp;1, 2005. The warrants comprising the units do not
become exerciseable, detachable and freely tradeable until after the shares of
the common stock comprising the units are registered under the Securities Act
and either listed on a national
</FONT>
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<P align="left"><FONT size="2">securities exchange or The Nasdaq Stock Market, Inc. The shares of common
stock and the warrants comprising the units may not be traded separately until
such listing.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The warrants, held in certificated form, may be exercised by surrendering
to the warrant agent the definitive warrant certificates evidencing such
warrants, with the accompanying form of election to purchase properly completed
and executed, together with payment of the exercise price. Payment of the
exercise price may be made (1)&nbsp;in the form of cash or by certified or official
bank check payable to the order of us, or (2)&nbsp;by surrendering additional
warrants or shares of common stock for cancellation to the extent we may
lawfully accept shares of common stock, with the value of such shares of common
stock for such purpose equal to the average trading price of the common stock
during the 20 trading days preceding the date surrendered and the value of the
warrants to equal the difference between such value of a share of common stock
and the exercise price.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No fractional shares of common stock will be issued upon exercise of the
warrants. In lieu of any fractional shares of our common stock that would
otherwise be issuable upon exercise of the warrants, we will pay the holders
the equivalent cash value of the fractional warrants. The holders of the
warrants have no right to vote on matters submitted to our stockholders and
have no right to receive dividends. The holders of the warrants not yet
exercised are not entitled to share in our assets in the event of our
liquidation or dissolution, or the winding up of our affairs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exercise price of the warrants will be appropriately adjusted if we
(1)&nbsp;pay a dividend or make a distribution on our common stock in shares of our
common stock or make certain other dividends or distributions on our common
stock (other than cash dividends out of funds legally available therefore), (2)
subdivide our outstanding shares of common stock into a greater number of
shares, (3)&nbsp;combine our outstanding shares of common stock into a smaller
number of shares or (4)&nbsp;issue by reclassification of our common stock any other
shares of our stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of our consolidation or merger in which we are not the
surviving entity, or our liquidation or the sale of all or substantially all of
our assets to another person or entity, each warrant will thereafter be deemed
exercised for the right to receive the kind and amount of shares of stock or
other securities or property to which such holder would have been entitled as a
result of such consolidation, merger, or sale had the warrants been exercised
immediately prior thereto, less the exercise price.
</FONT>
<P align="left"><FONT size="2"><B>Power to Increase Authorized Stock and Issue Additional Shares of our Common
Stock and Preferred Stock</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has the power to increase the number of authorized
shares of our preferred and common stock, issue additional authorized but
unissued shares of our common stock or preferred stock and to classify or
reclassify unissued shares of our common stock or preferred stock and
thereafter to cause us to issue such classified or reclassified shares of stock
without further action by our stockholders, unless stockholder consent is
required by applicable law or the rules of any stock exchange or automated
quotation system on which our securities may be listed or traded. We believe
that this power provides us with flexibility in structuring possible future
financings and acquisitions and in meeting other business needs that might
arise. Although our board of directors does not intend to do so, it could
authorize us to issue a class or series that could, depending upon the terms of
the particular class or series, delay, defer or prevent a transaction or a
change of control of our company that might involve a premium price for our
stockholders or otherwise be in their best interest.
</FONT>
<P align="left"><FONT size="2"><B>Restrictions on Transfer</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order for us to qualify as a REIT under the Internal Revenue Code, our
stock must be beneficially owned by 100 or more persons during at least 335
days of a taxable year of 12&nbsp;months (other than the first year for which an
election to be a REIT has been made) or during a proportionate part of a
shorter taxable year. Also, not more than 50% of the value of the outstanding
shares of stock may be owned, directly or indirectly, by five or fewer
individuals (as defined in the Internal Revenue Code to include certain
entities) during the last half of a taxable year (other than the first year for
which an election to be a REIT has been made).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter contains restrictions on the ownership and transfer of our
common stock that are intended to assist us in complying with these
requirements and continuing to qualify as a REIT as well as to assist us in
complying with ERISA (discussed below in &#147;ERISA Considerations&#148;). The relevant
sections of our charter provide
</FONT>
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<P align="left"><FONT size="2">that subject to the exceptions described below, no person or entity
may beneficially own, or be deemed to own by virtue of the applicable
constructive ownership provisions of the Internal Revenue Code, more than 9.6%
(by value or by number of shares, whichever is more restrictive) of the
outstanding shares of our common stock or 9.6% by value of our outstanding
capital stock. We refer to this restriction as the &#147;ownership
limit.&#148; Our charter provisions further prohibit any person from beneficially or constructively owning shares
of our stock that would result in us being &#147;closely held&#148; under
Section&nbsp;856(h) of the Internal Revenue Code or otherwise cause us to
fail to qualify as a REIT.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The constructive ownership rules under the Internal Revenue Code are
complex and may cause stock owned actually or constructively by a group of
related individuals and/or entities to be owned constructively by one
individual or entity. As a result, the acquisition of less than 9.6% of our
outstanding common or capital stock (or the acquisition of an interest in an
entity that owns, actually or constructively, less than 9.6% of our outstanding
common or capital stock) by an individual or entity, could, nevertheless cause
that individual or entity, or another individual or entity, to own
constructively in excess of these limits on our outstanding stock and thereby
subject the stock to the applicable ownership limit.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors may, in its sole discretion, waive the ownership
limit with respect to a particular stockholder if it:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">determines that any exemption from the ownership limit will
not jeopardize our status as a REIT under the Internal Revenue Code;
and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">determines that such stockholder does not and will not own,
actually or constructively, an interest in a tenant of ours (or a
tenant of any entity owned in whole or in part by us) that would
cause us to own, actually or constructively, more than a 9.9%
interest (as set forth in Section&nbsp;856 (d) (2) (B)&nbsp;of the Internal
Revenue Code) in such tenant or that any such ownership would not
cause us to fail to qualify as a REIT under the Internal Revenue
Code.</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a condition of our waiver, our board of directors may require an
opinion of counsel or an IRS ruling satisfactory to our board of directors,
and/or representations or undertakings from the applicant with respect to
preserving our REIT status. Additionally, the
new ownership limit may not allow five or fewer stockholders to beneficially
own more than 50% in value of our outstanding capital stock. Our
charter provisions further prohibit:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any person from beneficially or
constructively owning shares of our stock that would result in us
being closely held under Section&nbsp;856(h) of the Internal Revenue
Code or otherwise cause us to fail to qualify as a REIT; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any person from transferring
shares of our stock after January&nbsp;29, 2004 if such transfer
would result in shares of our stock being beneficially owned by fewer
than 100&nbsp;persons (determined without reference to any rules of
attribution).</FONT></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any person who acquires or attempts or intends to acquire beneficial or
constructive ownership of shares of our common stock that will or may violate
any of the foregoing restrictions on transferability and ownership will be
required to give notice immediately to us and provide us with such other
information as we may request in order to determine the effect of such transfer
on our status as a REIT. The foregoing provisions on transferability and
</FONT>

<P align="center"><FONT size="2">100</FONT>

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<P align="left"><FONT size="2">ownership will not apply if our board of directors determines that it is
no longer in our best interests to attempt to qualify, or to continue to
qualify, as a REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to our charter, if any purported transfer of our stock or any
other event would otherwise result in any person violating the ownership limits
or such other limit as permitted by our board of directors, then any such
purported transfer will be ineffective as to that number of shares in excess of
the applicable ownership limit (rounded up to the nearest whole). That number
of shares in excess of the ownership limit will be automatically transferred
to, and held by, a trust for the exclusive benefit of one or more charitable
organizations selected by us. A person or entity that becomes subject to the
ownership limit by virtue of a violative transfer that results in a transfer to
a trust, as set forth above, is referred to as a &#147;purported beneficial
transferee&#148; if, had the violative transfer been effective, the person or entity
would have been a record owner and beneficial owner or solely a beneficial
owner of our common stock, or is referred to as a &#147;purported record transferee&#148;
if, had the violative transfer been effective, the person or entity would have
been solely a record owner of our common stock. The automatic transfer will be
effective as of the close of business on the business day prior to the date of
the violative transfer or other event that results in a transfer to the trust.
Any dividend or other distribution paid to the purported record transferee,
prior to our discovery that the shares had been automatically transferred to a
trust as described above, must be repaid to the trustee upon demand for
distribution to the beneficiary of the trust. If the transfer to the trust as
described above is not automatically effective, for any reason, to prevent
violation of the applicable ownership limit or as otherwise permitted by our
board of directors, then our charter provides that the transfer of the excess
shares will be void.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares of our stock transferred to the trustee are deemed offered for sale
to us, or our designee, at a price per share equal to the lesser of (1)&nbsp;the
price paid by the purported record transferee for the shares (or, if the event
that resulted in the transfer to the trust did not involve a purchase of such
shares of our stock at market price, the last reported sales price reported on
a national securities exchange or the Nasdaq Stock Market on the trading day
immediately preceding the day of the event that resulted in the transfer of
such shares of our stock to the trust if the shares are then traded) and (2)
the market price on the date we, or our designee, accepts such offer. We have
the right to accept such offer until the trustee has sold the shares of our
common stock held in the trust pursuant to the clauses discussed below. Upon a
sale to us, the interest of the charitable beneficiary in the shares sold
terminates and the trustee must distribute the net proceeds of the sale to the
purported record transferee and any dividends or other distributions held by
the trustee with respect to such common stock will be paid to the charitable
beneficiary.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we do not buy the shares, the trustee must, within 20&nbsp;days of receiving
notice from us of the transfer of shares to the trust, sell the shares to a
person or entity designated by the trustee who could own the shares without
violating the ownership limits or as otherwise permitted by our board of
directors. After that, the trustee must distribute to the purported record
transferee an amount equal to the lesser of (1)&nbsp;the price paid by the purported
record transferee or owner for the shares (or, if the event that resulted in
the transfer to the trust did not involve a purchase of such shares at market
price, the last reported sales price reported on a national securities exchange
or the Nasdaq Stock Market on the trading day immediately preceding the
relevant date if the shares are then traded), and (2)&nbsp;the sales proceeds (net
of commissions and other expenses of sale) received by the trust for the
shares. The purported beneficial transferee or purported record transferee has
no rights in the shares held by the trustee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The trustee shall be designated by us and shall be unaffiliated with us
and with any purported record transferee or purported beneficial transferee.
Prior to the sale of any excess shares by the trust, the trustee will receive,
in trust for the beneficiary, all dividends and other distributions paid by us
with respect to the excess shares, and may also exercise all voting rights with
respect to the excess shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to Maryland law, effective as of the date that the shares have
been transferred to the trust, the trustee shall have the authority, at the
trustee&#146;s sole discretion, to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">rescind as void any vote cast by a purported record
transferee prior to our discovery that the shares have been
transferred to the trust; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">recast the vote in accordance with the desires of the trustee
acting for the benefit of the beneficiary of the trust.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">101</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, if we have already taken irreversible corporate action, then the
trustee may not rescind or recast the vote.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any beneficial owner or constructive owner of shares of our stock and any
person or entity (including the stockholder of record) who is holding shares of
our stock for a beneficial owner must, on request, provide us with a completed
questionnaire containing the information regarding their ownership of such
shares, as set forth in the applicable Treasury regulations. In addition, any
person or entity that is a beneficial owner or constructive owner of shares of
our stock and any person or entity (including the stockholder of record) who is
holding shares of our stock for a beneficial owner or constructive owner shall,
on request, be required to disclose to us in writing such information as we may
request in order to determine the effect, if any, of such stockholder&#146;s actual
and constructive ownership of shares of our common stock on our status as a
REIT and to ensure compliance with the ownership limit, or as otherwise
permitted by our board of directors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All certificates representing shares of our stock bear a legend referring
to the restrictions described above.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These ownership limits could delay, defer or prevent a transaction or a
change of control of our company that might involve a premium price for our
common stock or otherwise be in the best interest of our stockholders.
</FONT>
<P align="left"><FONT size="2"><B>Transfer Agent and Registrar</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The transfer agent and registrar for our units, common stock and warrants
is American Stock Transfer &#038; Trust Company.
</FONT>
<P align="center"><FONT size="2">102</FONT>
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<!-- link1 "SECURITIES ELIGIBLE FOR FUTURE SALE" -->
<DIV align="left"><A NAME="017"></A></DIV>
<P align="center"><FONT size="2"><B>SECURITIES ELIGIBLE FOR FUTURE SALE</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the date of this prospectus, we have 8,199,567 shares of our common
stock outstanding, 1,610,000 shares authorized for issuance upon exercise of
the warrants underlying our units for shares of common stock, and 3,776,069
shares of our common stock authorized for issuance upon redemption of
operating partnership units (including 629,345 operating partnership units
issuable upon exercise of 629,345 warrants for additional operating partnership
units).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, under Rule&nbsp;144 as currently in effect, if one year has elapsed
since the date of acquisition of restricted securities from us or any of our
affiliates, the holder of such restricted securities can sell such securities;
provided that the number of securities sold by such person within any three
month period cannot exceed the greater of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">1 % of the total number of securities then outstanding, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the average weekly trading volume of our securities during
the four calendar weeks preceding the date on which notice of the
sale is filed with the SEC.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales under Rule&nbsp;144 also are subject to certain manner of sale
provisions, notice requirements and the availability of current public
information about us. If two years have elapsed since the date of acquisition
of restricted securities from us or any of our affiliates and the holder is not
one of our affiliates at any time during the three months preceding the
proposed sale, such person can sell such securities in the public market under
Rule&nbsp;144(k) without regard to the volume limitations, manner of sale
provisions, public information requirements or notice requirements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed not to offer to sell, contract to sell, or otherwise
dispose of, loan, pledge or grant any rights with respect to any shares of our
common stock, any options or warrants to purchase any shares of our common
stock or any securities convertible into or exercisable for any of our common
stock, including our units, for a period of 180&nbsp;days following the completion
of the original offering on July&nbsp;1, 2003, subject to certain exceptions.
Members of our senior management and directors, ACM and certain members of the
senior management of ACM have agreed with us not to offer, pledge, sell
contract to sell, sell any option or contract to purchase or otherwise transfer
or dispose of, directly or indirectly, any shares of our common stock, or any
securities convertible into or exercisable for any of our common stock or any
right to acquire our common stock, until the earlier of:
</FONT>
<P>
<CENTER>
<TABLE width="98%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">180&nbsp;days from the effective date of the shelf registration statement; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">two years from the consummation of the original offering, subject to certain exceptions.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JMP Securities, at any time, and without notice, may release all or any
portion of the common stock subject to the foregoing lock-up agreements.
</FONT>
<P align="left"><FONT size="2"><B>Registration Rights</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our registration rights agreement with JMP Securities, we may
suspend sales under the shelf registration statement by the selling
stockholders holding offered securities sold under the original offering. For
a period not to exceed thirty days in any three month period or ninety days in
the aggregate in any twelve month period in the event of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an underwritten offering where we are advised by the
representative of the underwriters that the sale of securities
pursuant to the shelf registration statement would have a material
adverse effect on our underwritten offering; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pending negotiations relating to, or the consummation of, a
transaction or the occurrence of an event</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">103</FONT>

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<P>
<CENTER>
<TABLE width="95%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that would require additional disclosure of
material information by us in the shelf registration statement
and that has not been so disclosed;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">as to which we have a bona fide business purpose
for preserving confidentiality; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that renders us unable to comply with Securities
and Exchange Commission requirements, in each case under
circumstances that would make it unduly burdensome to cause
the shelf registration statement to become effective or to
promptly amend or supplement the shelf registration statement
on a post-effective basis, as applicable.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No assurance can be given as to (1)&nbsp;the likelihood that an active market
for our securities will develop, (2)&nbsp;the liquidity of any such market, (3)&nbsp;the
ability of the stockholders to sell the securities or (4)&nbsp;the prices that
stockholders may obtain for any of the securities. No prediction can be made
as to the effect, if any, that future sales of securities, or the availability
of securities for future sale, will have on the market price-prevailing from
time to time. Sales of substantial amounts of the securities, or the
perception that such sales could occur, may adversely affect prevailing market
prices of the common stock. See &#147;Risk Factors&#151;Risk Factors Related to the
Offering.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a description of certain restrictions on transfers of our securities
held by certain of our stockholders, &#147;Plan of Distribution.&#148;
</FONT>

<P align="center"><FONT size="2">104</FONT>




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<!-- link1 "BOOK ENTRY ISSUANCE; THE DEPOSITORY TRUST COMPANY" -->
<DIV align="left"><A NAME="018"></A></DIV>
<P align="center"><FONT size="2"><B>BOOK ENTRY ISSUANCE; THE DEPOSITORY TRUST COMPANY</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The description of book entry procedures in this prospectus includes
summaries of some of the rules and operating procedures of DTC that affect
transfers of interests in the global certificate or certificates issued in
connection with sales of our units to (a)&nbsp;qualified institutional buyers
pursuant to Rule&nbsp;144A under the Securities Act, (b)&nbsp;institutional &#147;accredited
investors&#148; (as defined in Rule&nbsp;501 (a) (1), (2), (3), (7), or (8)&nbsp;of the
Securities Act) and (c)&nbsp;individual &#147;accredited investors&#148; (as defined in Rule
501 (a) (4), (5), or (6)&nbsp;of the Securities Act). Except as described in the
next paragraph, our units were issued only as fully registered securities in
the name of Cede &#038; Co. (as nominee for DTC). One fully registered global
certificate was issued, representing, in the aggregate, our units sold in
reliance on Rule&nbsp;144A, and was deposited with DTC. One fully registered global
unit certificate was issued, representing, in the aggregate, our units sold in
reliance on Regulation&nbsp;D, and was deposited with DTC. Our units are
represented by the unit certificates, which bear an endorsement representing
beneficial ownership of the underlying shares of common stock and the related
warrants on deposit with the warrant agent as custodian for the registered
holders of our units. Transfer of our units constitute transfer of a holder&#146;s
beneficial interest in the shares of common stock and the related warrant.
Upon the detachment of the units, the shares of common stock and warrants
comprising the units will be represented by one or more fully registered global
certificates.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer or pledge beneficial interests in our units
as represented by a global certificate.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DTC, a subsidiary of Depository Trust &#038; Clearing Corporation, is a limited
purpose trust company organized under the New York Banking Law, a &#147;banking
organization&#148; within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a &#147;clearing corporation&#148; within the meaning of the New
York Uniform Commercial Code, and a &#147;clearing agency&#148; registered pursuant to
the provisions of Section&nbsp;17A of the Securities Exchange Act of 1934, as
amended, or the Exchange Act. DTC holds securities that its participants
deposit with DTC. DTC facilitates the clearance and settlement of securities
transactions between its participants through its electronic book entry system,
thereby eliminating the need for physical movement of securities certificates.
Direct participants include securities brokers and dealers, banks, trust
companies, clearing corporations and various other organizations. DTC is owned
by a number of its direct participants and by the New York Stock Exchange,
Inc., the American Stock Exchange LLC and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a custodial relationship with a direct
participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by or on behalf of DTC only through DTC&#146;s
participants and indirect participants. The rules applicable to DTC and its
participants are on file with the SEC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of our units under the DTC system must be made by or through
direct participants, which will receive a credit for our units on DTC&#146;s
records. The ownership interest of each actual purchaser of each unit,
otherwise known as a beneficial owner, is in turn to be recorded on the direct
and indirect participants&#146; records. Beneficial owners will not receive written
confirmation from DTC of their purchases, but beneficial owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the direct or indirect participants
through which the beneficial owners entered into the transaction. Transfers of
ownership interests in our units are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners. Beneficial owners
will not receive certificates representing their ownership interests in our
units, except as described in this prospectus or in the event that use of the
book entry system for our units is discontinued or in certain other limited
circumstances.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To facilitate subsequent transfers, all of our units deposited by
participants with DTC are registered in the name of DTC&#146;s nominee, Cede &#038; Co.
or such other name as may be requested by an authorized representative of DTC.
The deposit of our units with DTC and their registration in the name of Cede &#038;
Co. or such other nominee effect no change in beneficial ownership. DTC has no
knowledge of actual beneficial owners of our units. DTC&#146;s records reflect only
the identity of the direct participants to whose accounts our units are
credited, which may or may not be the beneficial owners. The direct and
indirect participants will remain responsible for keeping account of their
holdings on behalf of their customers.
</FONT>
<P align="center"><FONT size="2">105</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So long as DTC, or its nominee, is the registered owner or holder of a
global certificate, DTC or its nominee, as the case may be, will be considered
the sole owner or holder of the securities represented thereby for all
purposes. No beneficial owner of an interest in a global certificate will be
able to transfer that interest except in accordance with DTC&#146;s applicable
procedures.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transfers between participants in DTC will be effected in the ordinary way
under DTC rules and will be settled in same day funds. If a holder requires
physical delivery of a certificated unit for any reason, including to sell our
units to persons in states that require delivery of the units or to pledge our
units, the holder must transfer its interest in the global certificate in
accordance with the normal procedures of DTC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although voting with respect to our shares of common stock is limited to
the holders of record of our units, in those cases where a vote is required,
neither DTC nor Cede &#038; Co. nor such other DTC nominee will consent or vote with
respect to our shares of common stock. Under its usual procedures, DTC would
mail an omnibus proxy to us as soon as possible after the record date. The
omnibus proxy assigns the consenting or voting rights of Cede &#038; Co. to those
direct participants to whose accounts our units are credited on the record date
(identified in a listing attached to the omnibus proxy).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distribution payments on our shares of common stock held as part of a unit
or directly in book entry form will be made to Cede &#038; Co. or such other nominee
as may be requested by an authorized representative of DTC in immediately
available funds. DTC&#146;s practice is to credit direct participants&#146; accounts
upon DTC&#146;s receipt of funds and corresponding detail information from us on the
relevant payment date in accordance with their respective holdings shown on
DTC&#146;s records. Payments by participants to beneficial owners will be governed
by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
&#147;street name.&#148; The payments will be the responsibility of the participant and
not of DTC, us or JMP Securities, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment
of distributions to Cede &#038; Co. or such other nominee as may be requested by an
authorized representative of DTC is our responsibility, disbursement of the
payments to direct participants is the responsibility of DTC and disbursement
of the payments to the beneficial owners is the responsibility of direct and
indirect participants.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global certificates among direct participants of
DTC, DTC is under no obligation to perform or continue to perform the
procedures, and the procedures may be discontinued at any time. We will not
have any responsibility for the performance by DTC or its participants or
indirect participants under the rules and procedures governing DTC. DTC may
discontinue providing its services as securities depository with respect to our
units at any time by giving reasonable notice to us. Under those
circumstances, in the event that a successor securities depository is not
obtained, share certificates are required to be printed and delivered.
Additionally, we may decide to discontinue use of the system of book entry
transfers through DTC (or any successor depository) with respect to our units.
In that event, certificates for our units will be printed and delivered.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise described in this prospectus, a beneficial owner in a
global certificate will not be entitled to receive physical delivery of our
units. Accordingly, each beneficial owner must rely on the procedures of DTC
to exercise any rights under our units.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information in this section and elsewhere in this prospectus
concerning DTC and DTC&#146;s book entry system has been obtained from sources that
we believe to be reliable, but we take no responsibility for the accuracy of
this information.
</FONT>
<P align="center"><FONT size="2">106</FONT>
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<!-- link1 "IMPORTANT PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS" -->
<DIV align="left"><A NAME="019"></A></DIV>
<P align="center"><FONT size="2"><B>IMPORTANT PROVISIONS OF MARYLAND LAW AND<BR>
OF OUR CHARTER AND BYLAWS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following description of certain provisions of Maryland law and of our
charter and bylaws does not purport to be complete and is subject to and
qualified in its entirety by reference to the MGCL, our charter and our bylaws.
</FONT>
<P align="left"><FONT size="2"><B>The Board of Directors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws provide that the number of directors of our company may be
established by our board of directors but may not be fewer than the minimum
number permitted under the MGCL (currently, one) nor more than nine. Any
vacancy will be filled, at any regular meeting or at any special meeting called
for that purpose, by a majority of the remaining directors, except that a
vacancy resulting from an increase in the number of directors must be filled by
a majority of our entire board of directors. In addition, our charter provides
that a majority of our directors are required to be independent.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to our charter, the board of directors is divided into three
classes of directors. The current terms of the Class&nbsp;I, Class&nbsp;II and Class&nbsp;III
directors will expire in 2004, 2005 and 2006, respectively. Directors of each
class will be nominated for three year terms upon the expiration of each three
year term and each year one class of directors will be elected by the
stockholders. We believe that classification of the board of directors helps
to assure the continuity and stability of our business strategies and policies
as determined by the board of directors. Holders of shares of our common stock
have no right to cumulative voting in the election of directors. Consequently,
at each annual meeting of stockholders, the holders of a majority of the shares
of our common stock are able to elect all of the successors of the class of
directors whose terms expire at that meeting.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The classified board provision could have the effect of making the
replacement of incumbent directors more time consuming and difficult. At least
two annual meetings of stockholders, instead of one, is generally required to
effect a change in a majority of our board of directors. Thus, the classified
board provision could increase the likelihood that incumbent directors will
retain their positions. The staggered terms of directors may delay, defer or
prevent a tender offer or an attempt to change the control of us, even though
the tender offer or change in control might be in the best interest of our
stockholders.
</FONT>
<P align="left"><FONT size="2"><B>Removal of Directors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter provides that a director may be removed only for cause (as
defined in the charter) and only by the affirmative vote of at least two-thirds
of the votes entitled to be cast in the election of directors. This provision,
when coupled with the provision in our bylaws authorizing our board of
directors to fill vacant directorships, precludes stockholders from removing
incumbent directors except for cause and by a substantial affirmative vote and
filling the vacancies created by the removal with their own nominees.
</FONT>
<P align="left"><FONT size="2"><B>Liability and Indemnification of Officers and Directors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (1)&nbsp;actual receipt of an improper benefit or profit in money,
property or services or (2)&nbsp;active and deliberate dishonesty established by a
final judgment and that is material to the cause of action. Our charter
contains such a provision that eliminates directors&#146; and officers&#146; liability to
the maximum extent permitted by Maryland law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter authorizes us, to the maximum extent permitted by Maryland
law, to indemnify any present or former director or officer or any individual
who, while our director and at our request, serves or has served another
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or other enterprise as a director, officer, partner or
trustee, from and against any claim or liability to which that person may
become subject or which that person may incur by reason of his status as a
present or former director or officer of ours and to pay or reimburse their
reasonable expenses in advance of final disposition of a proceeding. Our
bylaws obligate us, to the maximum extent permitted by Maryland law, to
indemnify any present or former director or officer or any
</FONT>
<P align="center"><FONT size="2">107</FONT>
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<P align="left"><FONT size="2">individual who, while our director and at our request, serves or has
served another corporation, real estate investment trust, partnership, joint
venture, trust, employee benefit plan or other enterprise as a director,
officer, partner or trustee and who is made a party to the proceeding by reason
of his service in that capacity from and against any claim or liability to
which that person may become subject or which that person may incur by reason
of his or her status as a present or former director or officer of ours and to
pay or reimburse their reasonable expenses in advance of final disposition of a
proceeding. The charter and bylaws also permit us to indemnify and advance
expenses to any person who served a predecessor of ours in any of the
capacities described above and any employee or agent of ours or a predecessor
of ours.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maryland law requires a corporation (unless its charter provides
otherwise, which our charter does not) to indemnify a director or officer who
has been successful in the defense of any proceeding to which he is made a
party by reason of his service in that capacity. Maryland law permits a
corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by them in connection with any proceeding to which
they may be made a party by reason of their service in those or other
capacities unless it is established that (a)&nbsp;the act or omission of the
director or officer was material to the matter giving rise to the proceeding
and (i)&nbsp;was committed in bad faith or (ii)&nbsp;was the result of active and
deliberate dishonesty, (b)&nbsp;the director or officer actually received an
improper personal benefit in money, property or services or (c)&nbsp;in the case of
any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful. However, under Maryland law, a
Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis
that personal benefit was improperly received, unless in either case a court
orders indemnification and then only for expenses. In addition, Maryland law
permits a corporation to advance reasonable expenses to a director or officer
upon the corporation&#146;s receipt of (a)&nbsp;a written affirmation by the director or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by the corporation and (b)&nbsp;a written undertaking
by him or on his behalf to repay the amount paid or reimbursed by the
corporation if it is ultimately determined that the standard of conduct was not
met.
</FONT>
<P align="left"><FONT size="2"><B>Business Combinations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Maryland law, &#147;business combinations&#148; between a Maryland corporation
and an interested stockholder or an affiliate of an interested stockholder are
prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, share exchange, or, in circumstances specified
in the statute, an asset transfer or issuance or reclassification of equity
securities. An interested stockholder is defined as:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any person who beneficially owns 10% or more of the voting
power of the corporation&#146;s shares; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an affiliate or associate of the corporation who, at any time
within the two year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then
outstanding voting stock of the corporation.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A person is not an interested stockholder under the statute if the board
of directors approved in advance the transaction by which he otherwise would
have become an interested stockholder. However, in approving a transaction,
the board of directors may provide that its approval is subject to compliance,
at or after the time of approval, with any terms and conditions determined by
the board.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After the five year prohibition, any business combination between the
Maryland corporation and an interested stockholder generally must be
recommended by the board of directors of the corporation and approved by the
affirmative vote of at least:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">80% of the votes entitled to be cast by holders of
outstanding shares of voting stock of the corporation; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">two-thirds of the votes entitled to be cast by holders of
voting stock of the corporation other than shares held by the
interested stockholder with whom or with whose affiliate the
business combination is to be effected or held by an affiliate or
associate of the interested stockholder.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">108</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These super majority vote requirements do not apply if the corporation&#146;s
common stockholders receive a minimum price, as defined under Maryland law, for
their shares in the form of cash or other consideration in the same form as
previously paid by the interested stockholder for its shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The statute permits various exemptions from its provisions, including
business combinations that are exempted by the board of directors before the
time that the interested stockholder becomes an interested stockholder.
Pursuant to the statute, our board of directors has exempted any business
combinations (a)&nbsp;between us and ACM or any of its affiliates and (b)&nbsp;between us
and any interested stockholder, provided that any such business combination is
first approved by our board of directors (including a majority of our directors
who are not affiliates or associates of such interested stockholder).
Consequently, the five year prohibition and the super majority vote
requirements do not apply to business combinations between us and any of them.
As a result, such parties may be able to enter into business combinations with
us that may not be in the best interest of our stockholders, without compliance
with the supermajority vote requirements and the other provisions of the
statute.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The business combination statute may discourage others from trying to
acquire control of us and increase the difficulty of consummating any offer.
</FONT>
<P align="left"><FONT size="2"><B>Control Share Acquisitions</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maryland law provides that control shares of a Maryland corporation
acquired in a control share acquisition have no voting rights except to the
extent approved by a vote of two thirds of the votes entitled to be cast on the
matter. Shares owned by the acquiror, by officers or by directors who are
employees of the corporation are excluded from shares entitled to vote on the
matter. Control shares are voting shares of stock which, if aggregated with
all other shares of stock owned by the acquiror or in respect of which the
acquiror is able to exercise or direct the exercise of voting power (except
solely by virtue of a revocable proxy), would entitle the acquiror to exercise
voting power in electing directors within one of the following ranges of voting
power:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">one-tenth or more but less than one third,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">one-third or more but less than a majority, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a majority or more of all voting power.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control shares do not include shares the acquiring person is then entitled
to vote as a result of having previously obtained stockholder approval. A
control share acquisition means the acquisition of control shares, subject to
certain exceptions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A person who has made or proposes to make a control share acquisition may
compel the board of directors of the corporation to call a special meeting of
stockholders to be held within 50&nbsp;days of demand to consider the voting rights
of the shares. The right to compel the calling of a special meeting is subject
to the satisfaction of certain conditions, including an undertaking to pay the
expenses of the meeting. If no request for a meeting is made, the corporation
may itself present the question at any stockholders meeting.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
statute, then the corporation may redeem for fair value any or all of the
control shares, except those for which voting rights have previously been
approved. The right of the corporation to redeem control shares is subject to
certain conditions and limitations. Fair value is determined, without regard
to the absence of voting rights for the control shares, as of the date of the
last control share acquisition by the acquiror or of any meeting of
stockholders at which the voting rights of the shares are considered and not
approved.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The control share acquisition statute does not apply (a)&nbsp;to shares
acquired in a merger, consolidation or share exchange if the corporation is a
party to the transaction, or (b)&nbsp;to acquisitions approved or exempted by the
charter or bylaws of the corporation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws contain a provision exempting from the control share
acquisition statute any and all acquisitions by any person of shares of our
stock. This provision may be amended or eliminated at any time in the future.
</FONT>
<P align="center"><FONT size="2">109</FONT>
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<P align="left"><FONT size="2"><B>Amendment to Our Charter</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter generally may be amended only by the affirmative vote of the
holders of not less than a majority vote of all of the votes entitled to be
cast on the matter, with certain exceptions, including provisions regarding
classification of our board of directors and our independent directors, that
require the affirmative vote of stockholders entitled to cast not less than
two-thirds of all of the votes entitled to be cast on the matter.
</FONT>
<P align="left"><FONT size="2"><B>Advance Notice of Director Nominations and New Business</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws provide that with respect to an annual meeting of stockholders,
nominations of persons for election to our board of directors and the proposal
of business to be considered by stockholders may be made only (i)&nbsp;pursuant to
our notice of the meeting, (ii)&nbsp;by our board of directors or (iii)&nbsp;by a
stockholder of record who is entitled to vote at the meeting and who has
complied with the advance notice procedures of our bylaws. With respect to
special meetings of stockholders, only the business specified in our notice of
the meeting may be brought before the meeting. Nominations of persons for
election to our board of directors at a special meeting may be made only (i)
pursuant to our notice of the meeting, (ii)&nbsp;by the board of directors or (iii)
provided that the board of directors has determined that directors will be
elected at the meeting, by a stockholder who is entitled to vote at the meeting
and who has complied with the advance notice provisions of our bylaws.
</FONT>
<P align="left"><FONT size="2"><B>Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter
and Bylaws</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The business combination provisions and, if the applicable provision in
our bylaws is rescinded, the control share acquisition provisions of Maryland
law, the provisions of our charter on classification of our board of directors
and removal of directors and the advance notice provisions of our bylaws could
delay, defer or prevent a transaction or a change in the control of us that
might involve a premium price for holders of our common stock or otherwise be
in their best interest.
</FONT>
<P align="center"><FONT size="2">110</FONT>
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<!-- link1 "OUR OPERATING PARTNERSHIP AGREEMENT" -->
<DIV align="left"><A NAME="020"></A></DIV>
<P align="center"><FONT size="2"><B>OUR OPERATING PARTNERSHIP AGREEMENT</B>
</FONT>

<P align="left"><FONT size="2"><B>Management</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty Limited Partnership, our operating partnership, has been
organized as a Delaware limited partnership. We are the sole general partner
of our operating partnership, and we, along with ACM, are initially the sole
limited partners. We hold all of our interests in our operating partnership
through two wholly owned subsidiaries, Arbor Realty GPOP, Inc., the general
partner, and Arbor Realty LPOP, Inc., a limited partner. We own approximately
a 72% interest in our operating partnership, and ACM owns the remaining
interest of approximately 28%. In the future, additional operating partnership
units may be issued to us, to ACM or its affiliates, or to third parties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the partnership agreement of our operating partnership, we, as
the sole general partner, generally have full, exclusive and complete
responsibility and discretion in the management, operation and control of the
partnership, including the ability to cause the partnership to enter into
certain major transactions, including acquisitions and dispositions of loans
and other assets and refinancings of existing indebtedness. No limited
partners may take part in the operation, management or control of the business
of our operating partnership by virtue of being a holder of operating
partnership units. Pursuant to the management agreement between us and ACM,
and subject to the oversight of our board of directors, ACM manages our
business, including our management and operation of our operating partnership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not be removed as general partner of the partnership, except that
upon our bankruptcy or dissolution, the limited partners may appoint a
successor general partner to continue the partnership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not obligated to consider the interests of the limited partners
separately from the interests of our stockholders in deciding whether to cause
the operating partnership to take or decline to take any actions.
</FONT>
<P align="left"><FONT size="2"><B>Transferability of Interests</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General Partner</I>. The partnership agreement provides that we may not sell,
assign, transfer, pledge or otherwise dispose of our general partner interest
without the consent of the holders of a majority of the limited partnership
interests, except for transfers:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to a subsidiary of ours; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">in connection with our merger into another entity, if the
surviving entity contributes substantially all its assets to our
operating partnership.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Limited Partners</I>. The partnership agreement prohibits the sale,
assignment, transfer, pledge or disposition of all or any portion of the
limited partners&#146; operating partnership units without our consent, which we may
give or withhold in our sole discretion. However, an individual partner may
transfer his operating partnership units to his immediate family or a trust for
his immediate family, without our consent but subject to our right not to admit
the transferee as a limited partner in our operating partnership. In addition,
the partnership agreement contains other restrictions on transfer of operating
partnership units if, among other things, that transfer:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">would require registration of the partnership units under
federal or state securities laws or would require our operating
partnership to become a reporting company under the Exchange Act,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">would cause us to fail to comply with the REIT rules under the Internal Revenue Code, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">would cause us to become a publicly traded partnership under the Internal Revenue Code.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Capital Contributions and Borrowings</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
contributed to the partnership all the net proceeds of the original
offering of our units to the partnership as our initial capital contribution in exchange
for a 72% interest in our operating partnership, 0.1% of which is in the form
of a general partner interest, and the remaining 71.9% of which is held as a
limited partner interest. ACM contributed the initial assets to the
partnership in exchange for the remaining 28% interest in our operating
</FONT>
<P align="center"><FONT size="2">111</FONT>
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<P align="left"><FONT size="2">partnership, which is a limited partner interest. In connection with its
limited partner interest, ACM also received warrants to purchase additional
limited partnership interests for an exercise price of $15 per operating
partnership unit. Upon exercise of such warrants by ACM, and in the absence of
any additional issuances of operating partnership units or changes in the
ownership of our operating partnership, ACM would own approximately a
32% interest in our operating partnership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The partnership agreement provides that we may determine that the
partnership requires additional funds and that we may:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">on behalf of the partnership, accept additional capital
contributions from existing partners or other persons,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">cause the partnership to borrow funds from a financial
institution or other person,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">borrow such funds from a lending institution or other person
and subsequently lend such funds to the partnership, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">directly lend funds to the operating partnership.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the partnership agreement, we are obligated to contribute the
proceeds of any offering of stock as additional capital to the partnership.
Our operating partnership is authorized to issue partnership interests for less
than fair market value if we conclude in good faith that such issuance is in
both the partnership&#146;s and our best interests. Partnership interests may be
issued for less than their fair market value on the date of issuance in
connection with the exercise by ACM of its warrants to acquire operating
partnership units, or in connection with our contribution of proceeds that we
receive upon the issuance of our stock pursuant to the exercise of stock
options or warrants.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While the limited partners have no preemptive right to make additional
capital contributions, the partnership agreement provides that we, as general
partner, may make additional capital contributions to the partnership, in
exchange for additional operating partnership units or additional assets, as we
determine in good faith to be desirable to further the purposes or business of
the partnership. If we contribute additional capital to the partnership and
receive additional partnership interests for such capital contribution, our
percentage interests will be increased on a proportionate basis based on the
amount of such additional capital contributions and the value of the
partnership at the time of such contributions. Conversely, the percentage
interests of the other limited partners will be decreased on a proportionate
basis. In addition, if we contribute additional capital to the partnership and
receive additional partnership interests for such capital contribution, we may
revalue the assets of the partnership to their fair market value (as determined
by us) and the capital accounts of the partners will be adjusted to reflect the
manner in which the unrealized gain or loss inherent in such assets (that has
not been reflected in the capital accounts previously) would be allocated among
the partners under the terms of the partnership agreement if there were a
disposition of such assets for such fair market value on the date of the
revaluation. Our operating partnership could also issue operating partnership
units to ACM or its affiliates, or to third parties, in exchange for assets
contributed to or services provided for our operating partnership. Such
transactions may give rise to a revaluation of the partnership&#146;s assets and an
adjustment to partners&#146; capital accounts.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating partnership could also issue preferred partnership interests
in connection with acquisitions of assets or otherwise. Any such preferred
partnership interests would have priority over common partnership interests
with respect to distributions from the partnership, including the partnership
interests that we own directly or through subsidiaries.
</FONT>
<P align="left"><FONT size="2"><B>Redemption Rights</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the partnership agreement, each limited partner (other than us and
any of our subsidiaries that may hold limited partner interests) has the right
to redeem their operating partnership units. This right may be exercised at
the election of that limited partner by giving us written notice, subject to
some limitations. The purchase price for each of the operating partnership
units to be redeemed will equal the fair market value of one share of our
common stock, calculated as the average of the daily closing prices for the ten
consecutive trading days immediately preceding the date of determination, or,
if no closing price is available, the fair market value as determined in good
faith by the board of directors of the general partner. The purchase price for
the operating partnership units may be
</FONT>
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<P align="left"><FONT size="2">paid in cash, or, in our discretion, by the issuance by us of a number of
shares of our common stock equal to the number of operating partnership units
with respect to which the rights are being exercised.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No limited partner may exercise its redemption rights if we could not
issue stock to the redeeming partner in satisfaction of the redemption
(regardless of whether we would in fact do so instead of paying cash) because
of the ownership limitations contained in our charter, or if the redemption
would cause us to violate the REIT requirements. In addition, no limited
partner may exercise the redemption right:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">for fewer than 500 operating partnership units or, if a
limited partner holds fewer than 500 operating partnership units,
all of the operating partnership units held by such limited partner,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">unless permitted by us, more than once each fiscal quarter,
or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if the issuance of our common stock to satisfy the redemption
would be likely to cause the acquisition of common stock by such
redeeming limited partner to be &#147;integrated&#148; with any other
distribution of common stock or limited partnership interests for
purposes of complying with the Securities Act.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACM&#146;s right to cause a redemption of operating partnership units that it
holds will not be exercisable until the earlier of (1)&nbsp;two years following the
closing of the original offering, and (2)&nbsp;180&nbsp;days following the effectiveness
the registration statement of which this prospectus is a part.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate number of shares of common stock issuable upon exercise of
the redemption rights, including redemption rights with respect to operating
partnership units that may be issued upon exercise of warrants granted to ACM,
is approximately 3.7&nbsp;million. The number of shares of common stock issuable
and the cash amount payable upon exercise of the redemption rights will be
adjusted to account for share splits, mergers, consolidations or similar pro
rata share transactions.
</FONT>
<P align="left"><FONT size="2"><B>Operations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The agreement allows us to operate the operating partnership in a manner
that permits us to qualify as a REIT at all times and to cause the partnership
not to take any action that would cause us to incur additional federal income
or excise tax liability under the Internal Revenue Code. The partnership
agreement also provides that we may not conduct any business other than in
connection with the management of the operating partnership&#146;s business, our
operations as a REIT and related activities and generally obligates us to own
our assets through the operating partnership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The operating partnership must reimburse us for all amounts we spend in
connection with the partnership&#146;s business, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">expenses relating to our ownership and management of the
partnership;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the management fees owing to ACM, and the fees or
compensation owing to directors, officers and employees; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if we become a public company, the expense of our being a
public company.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Allocations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Profits and losses of our operating partnership (including depreciation
and amortization deductions) for each fiscal year generally are allocated to us
and the other limited partners in accordance with the respective percentage
interests of the partners in the partnership. In the event, however, that the
registration statement of which this prospectus forms a part is not declared
effective by June&nbsp;30, 2004, then the operating partnership will allocate to us,
for each quarter that the condition continues, income in the amount of $0.0625
per operating partnership unit that we hold, prior to any other allocations by
the partnership. Our operating partnership would have also been obligated to
make such an allocation to us had we not filed the registration statement of
which this prospectus forms a part by December&nbsp;31, 2003. The number of
operating partnership units that we hold generally corresponds to the number of
shares of our common stock outstanding. All of the foregoing allocations are
subject to compliance with the provisions of Internal Revenue Code sections
704(b) and 704(c) and Treasury regulations promulgated thereunder.
</FONT>
<P align="center"><FONT size="2">113</FONT>
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<P align="left"><FONT size="2"><B>Distributions</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The partnership agreement provides that our operating partnership makes
quarterly cash distributions in amounts determined by us in our sole
discretion, to us and other limited partners, generally in accordance with the
respective percentage interests of the partners in the partnership. To the
extent, however, that the registration statement of which this prospectus forms
a part is not declared effective by June&nbsp;30, 2004, and, as a result, income is
specially allocated to us by the operating partnership in the manner and
amounts referenced above, then an amount equal to such special allocations will
be distributed to us, and available for distribution by us to our stockholders,
prior to other distributions by the operating partnership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon liquidation of the partnership, after payment of, or adequate
provisions for, debts and obligations of the partnership, including any partner
loans, any remaining assets of the partnership will be distributed to us and
the other limited partners with positive capital accounts in accordance with
the respective positive capital account balances of the partners.
</FONT>
<P align="left"><FONT size="2"><B>Amendments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, we, as the general partner of our operating partnership, may
not amend the partnership agreement without the consent of the holders of the
majority of the limited partnership interest, except that without the consent
of any limited partner we may amend the agreement to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">add to our obligations or surrender our rights, as general
partner, under the agreement for the benefit of the limited
partners,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">reflect the issuance of additional partnership units or the
admission, substitution, termination or withdrawal of partners in
accordance with the partnership agreement,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">reflect inconsequential changes, cure any ambiguity, correct
or supplement any provision not inconsistent with law or another
provision of the partnership agreement, or make other changes
concerning matters under the agreement not otherwise inconsistent
with the law or the agreement,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">satisfy requirements or guidelines under federal or state
law,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">reflect changes that are reasonably necessary for us, as
general partner, to satisfy the REIT requirements or reflect the
transfer of partnership interests from us, as general partner, to a
subsidiary of ours,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">modify the manner in which capital accounts are computed but
only to the extent set forth in the operating partnership agreement
in order to comply with the requirements of the Internal Revenue
Code and the Treasury Regulations promulgated thereunder, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">issue additional partnership interests in the operating
partnership.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not, without the consent of each limited partner adversely
affected, make any amendment to the operating partnership agreement that would
(1)&nbsp;convert a limited partnership interest into a general partner interest or
modify the limited liability of a limited partner, (2)&nbsp;alter the distribution
rights or the allocations described in the agreement, or (3)&nbsp;modify the
redemption rights.
</FONT>
<P align="left"><FONT size="2"><B>Exculpation and Indemnification of the General Partner</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The partnership agreement of our operating partnership provides that
neither we, as general partner, nor any of our directors and officers are
liable to the partnership or to any of its partners as a result of errors in
judgment or mistakes of fact or law or of any act or omission, if we, our
director or our officer acted in good faith.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the partnership agreement requires our operating partnership
to indemnify and hold us, as general partner, and our directors, officers and
any other person we designate, from and against any and all claims arising from
operations of the operating partnership in which any such indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it
is established that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the act or omission of the indemnitee was material to the
matter giving rise to the proceeding and was committed in bad faith
or was the result of active and deliberate dishonesty,</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">114</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the indemnitee actually received an improper personal benefit
in money, property or services, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">in the case of any criminal proceeding, the indemnitee has
reasonable cause to believe that the act or omission was unlawful.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No indemnitee may subject any partner of our operating partnership to
personal liability with respect to this indemnification obligation.
</FONT>
<P align="left"><FONT size="2"><B>Term</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The partnership will continue until dissolved upon:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the general partner&#146;s bankruptcy or dissolution or withdrawal
(unless the limited partners elect to continue the partnership) or a
decree of judicial dissolution under Delaware law;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the sale or other disposition of all or substantially all the assets of the partnership;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the redemption of all partnership units (other than those held by us or our subsidiaries); or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an election by us, in our sole discretion, in our capacity as the general partner.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Tax Matters</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are the tax matters partner of our operating partnership, and we have
the authority to make tax elections under the Internal Revenue Code on behalf
of the partnership.
</FONT>
<P align="center"><FONT size="2">115</FONT>
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<!-- link1 "FEDERAL INCOME TAX CONSIDERATIONS" -->
<DIV align="left"><A NAME="021"></A></DIV>
<P align="center"><FONT size="2"><B>FEDERAL INCOME TAX CONSIDERATIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the material federal income tax consequences
relating to the acquisition, holding and disposition of common stock and
warrants of Arbor Realty. For purposes of this section under the heading
&#147;Federal Income Tax Considerations,&#148; references to &#147;Arbor Realty,&#148; &#147;we,&#148; &#147;our&#148;
and &#147;us&#148; mean only Arbor Realty Trust, Inc. and not its subsidiaries or other
lower-tier entities, except as otherwise indicated. This summary is based upon
the Internal Revenue Code, the regulations promulgated by the U.S. Treasury
Department, rulings and other administrative pronouncements issued by the IRS
and judicial decisions, all as currently in effect, and all of which are
subject to differing interpretations or to change, possibly with retroactive
effect. No assurance can be given that the IRS would not assert, or that a
court would not sustain, a position contrary to any of the tax consequences
described below. No advance ruling has been or will be sought from the IRS
regarding any matter discussed in this prospectus. The summary is also based
upon the assumption that the operation of Arbor Realty, and of its subsidiaries
and other lower-tier and affiliated entities, will in each case be in
accordance with its applicable organizational documents or partnership
agreement. This summary is for general information only, and does not purport
to discuss all aspects of federal income taxation that may be important to a
particular investor in light of its investment or tax circumstances, or to
investors subject to special tax rules, such as:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">financial institutions;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">insurance companies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">broker-dealers;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">regulated investment companies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">holders who receive Arbor Realty common stock through the
exercise of employee stock options or otherwise as compensation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">persons holding Arbor Realty common stock as part of a
&#147;straddle,&#148; &#147;hedge,&#148; &#147;conversion transaction,&#148; &#147;synthetic security&#148;
or other integrated investment;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">and, except to the extent discussed below:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tax-exempt organizations; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">foreign investors.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary assumes that investors will hold our common stock and
warrants as capital assets, which generally means as property held for
investment.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THE FEDERAL INCOME TAX TREATMENT OF HOLDERS OF ARBOR REALTY COMMON STOCK
AND WARRANTS DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND
INTERPRETATIONS OF COMPLEX PROVISIONS OF FEDERAL INCOME TAX LAW FOR WHICH NO
CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. IN ADDITION, THE TAX
CONSEQUENCES OF HOLDING ARBOR REALTY COMMON STOCK AND WARRANTS TO ANY
PARTICULAR INVESTOR WILL DEPEND ON THE INVESTOR&#146;S PARTICULAR TAX CIRCUMSTANCES.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL
AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES TO YOU, IN LIGHT OF YOUR
PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES, OF ACQUIRING, HOLDING, EXCHANGING
OR OTHERWISE DISPOSING OF ARBOR REALTY COMMON STOCK AND WARRANTS.
</FONT>
<P align="left"><FONT size="2"><B>Taxation of Arbor Realty</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty intends to elect to be taxed as a REIT, commencing with its
initial taxable year ending December&nbsp;31, 2003, upon the filing of its federal
income tax return for that year. We believe that we were organized and have
operated in such a manner as to qualify for taxation as a REIT, and intend to
continue to operate in such a manner.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The law firm of Skadden, Arps, Slate, Meagher &#038; Flom LLP has acted as our
tax counsel in connection with our formation. We expect to receive the opinion of
Skadden, Arps, Slate, Meagher &#038; Flom LLP to the effect that Arbor Realty is
organized in conformity with the requirements for qualification as a REIT under
the Internal
</FONT>
<P align="center"><FONT size="2">116</FONT>
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<P align="left"><FONT size="2">Revenue Code, and that its proposed method of operation will enable it to
meet the requirements for qualification and taxation as a REIT. It must be
emphasized that an opinion of counsel is based on various assumptions relating
to the organization and operation of Arbor Realty, and is conditioned upon
representations and covenants made by the management of Arbor Realty and
affiliated entities regarding its organization, assets and the past, present
and future conduct of its business operations. While Arbor Realty intends to
operate so that it will qualify as a REIT, given the highly complex nature of
the rules governing REITs, the ongoing importance of factual determinations and
the possibility of future changes in the circumstances of Arbor Realty, no
assurance can be given by Skadden, Arps, Slate, Meagher &#038; Flom LLP or Arbor
Realty that Arbor Realty will so qualify for any particular year. Counsel will
have no obligation to advise Arbor Realty or the holders of Arbor Realty common
stock or warrants of any subsequent change in the matters stated, represented
or assumed, or of any subsequent change in the applicable law. You should be
aware that opinions of counsel are not binding on the IRS, and no assurance can
be given that the IRS will not challenge the conclusions set forth in such
opinions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Qualification and taxation as a REIT depends on the ability of Arbor
Realty to meet, on a continuing basis, through actual operating results,
distribution levels, and diversity of stock ownership, various qualification
requirements imposed upon REITs by the Internal Revenue Code, the compliance
with which will not be reviewed by Skadden, Arps, Slate, Meagher &#038; Flom LLP.
Arbor Realty&#146;s ability to qualify as a REIT also requires that it satisfies
certain asset tests, some of which depend upon the fair market values of assets
directly or indirectly owned by Arbor Realty. Such values may not be
susceptible to a precise determination. Accordingly, no assurance can be given
that the actual results of Arbor Realty&#146;s operations for any taxable year
satisfy such requirements for qualification and taxation as a REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation of REITs in General</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As indicated above, qualification and taxation as a REIT depends upon the
ability of Arbor Realty to meet, on a continuing basis, various qualification
requirements imposed upon REITs by the Internal Revenue Code. The material
qualification requirements are summarized below under &#147;Requirements for
Qualification&#151;General.&#148; While Arbor Realty intends to operate so that it
qualifies as a REIT, no assurance can be given that the IRS will not challenge
its qualification, or that it will be able to operate in accordance with the
REIT requirements in the future. See &#147;&#151;Failure to Qualify&#148; below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provided that Arbor Realty qualifies as a REIT, it will generally be
entitled to a deduction for dividends that it pays and therefore will not be
subject to federal corporate income tax on its net income that is currently
distributed to its stockholders. This treatment substantially eliminates the
&#147;double taxation&#148; at the corporate and stockholder levels that historically has
resulted from investment in a corporation. Rather, income generated by a REIT
generally is taxed only at the stockholder level upon a distribution of
dividends by the REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Jobs and Growth Tax Relief Reconciliation Act of 2003 (the &#147;Jobs and
Growth Act&#148;) was enacted in 2003. Among other provisions, the Jobs and Growth
Act generally lowers the rate at which stockholders who are individuals are
taxed on corporate dividends, from a maximum of 38.6% (as ordinary income) to a
maximum of 15% (the same as long-term capital gains), for the 2003 through 2008
tax years, thereby substantially reducing, though not completely eliminating,
the double taxation that has historically applied to corporate dividends. With
limited exceptions, however, dividends received by stockholders from Arbor
Realty or from other entities that are taxed as REITs will continue to be taxed
at rates applicable to ordinary income, which, pursuant to the Jobs and Growth
Act, will be as high as 35% through 2010. See &#147;Taxation of Stockholders &#150;
Taxation of Taxable U.S. Stockholders &#150; Distributions.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net operating losses, foreign tax credits and other tax attributes of a
REIT generally do not pass through to the stockholders of the REIT, subject to
special rules for certain items such as capital gains recognized by REITs. See
&#147;Taxation of Stockholders.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Arbor Realty qualifies as a REIT, it will nonetheless be subject to
federal tax in the following circumstances:
</FONT>
<P align="center"><FONT size="2">117</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Arbor Realty will be taxed at regular corporate rates on any
undistributed income, including undistributed net capital gains.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Arbor Realty may be subject to the &#147;alternative minimum tax&#148;
on its items of tax preference, including any deductions of net
operating losses.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If Arbor Realty has net income from prohibited transactions,
which are, in general, sales or other dispositions of property held
primarily for sale to customers in the ordinary course of business,
other than foreclosure property, such income will be subject to a
100% tax. See &#147;&#151;Prohibited Transactions,&#148; and &#147;&#151;Foreclosure
Property,&#148; below.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If Arbor Realty elects to treat property that it acquires in
connection with a foreclosure of a mortgage loan or certain
leasehold terminations as &#147;foreclosure property,&#148; it may thereby
avoid the 100% tax on gain from a resale of that property (if the
sale would otherwise constitute a prohibited transaction), but the
income from the sale or operation of the property may be subject to
corporate income tax at the highest applicable rate (currently 35%).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If Arbor Realty fails to satisfy the 75% gross income test or
the 95% gross income test, as discussed below, but nonetheless
maintains its qualification as a REIT because other requirements are
met, it will be subject to a 100% tax on an amount based upon the
magnitude of the failure, adjusted to reflect the profit margin
associated with Arbor Realty&#146;s gross income.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If Arbor Realty fails to distribute during each calendar year
at least the sum of (a)&nbsp;85% of its REIT ordinary income for such
year, (b)&nbsp;95% of its REIT capital gain net income for such year and
(c)&nbsp;any undistributed taxable income from prior periods, Arbor
Realty will be subject to a 4% excise tax on the excess of the
required distribution over the sum of (i)&nbsp;the amounts actually
distributed, plus (ii)&nbsp;retained amounts on which income tax is paid
at the corporate level.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Arbor Realty may be required to pay monetary penalties to the
IRS in certain circumstances, including if it fails to meet
record-keeping requirements intended to monitor its compliance with
rules relating to the composition of a REIT&#146;s stockholders, as
described below in &#147;Requirements for Qualification&#151;General.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">A 100% tax may be imposed on some items of income and expense
that are directly or constructively paid between a REIT and a
taxable REIT subsidiary (as described below) if and to the extent
that the IRS successfully adjusts the reported amounts of these
items.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If Arbor Realty acquires appreciated assets from a
corporation that is not a REIT (i.e., a corporation taxable under
subchapter C of the Internal Revenue Code) in a transaction in which
the adjusted tax basis of the assets in the hands of Arbor Realty is
determined by reference to the adjusted tax basis of the assets in
the hands of the subchapter C corporation, Arbor Realty may be
subject to tax on such appreciation at the highest corporate income
tax rate then applicable if it subsequently recognizes gain on a
disposition of any such assets during the ten-year period following
their acquisition from the subchapter C corporation.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The earnings of Arbor Realty&#146;s subsidiaries could be subject
to federal corporate income tax to the extent that such subsidiaries
are subchapter C corporations.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Arbor Realty and its subsidiaries may be subject to a variety
of taxes, including payroll taxes and state, local and foreign income, property
and other taxes on their assets and operations. Arbor Realty could also be
subject to tax in situations and on transactions not presently contemplated.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Requirements for Qualification&#151;General</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Internal Revenue Code defines a REIT as a corporation, trust or
association:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that is managed by one or more trustees or directors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the beneficial ownership of which is evidenced by
transferable shares, or by transferable certificates of beneficial
interest;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that would be taxable as a domestic corporation but for the
special Internal Revenue Code provisions applicable to REITs;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">118</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that is neither a financial institution nor an insurance
company subject to specific provisions of the Internal Revenue Code;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the beneficial ownership of which is held by 100 or more
persons;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(6)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">in which, during the last half of each taxable year, not more
than 50% in value of the outstanding stock is owned, directly or
indirectly, by five or fewer &#147;individuals&#148; (as defined in the
Internal Revenue Code to include specified tax-exempt entities); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(7)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">which meets other tests described below, including with
respect to the nature of its income and assets.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Internal Revenue Code provides that conditions (1)&nbsp;through (4)&nbsp;must be
met during the entire taxable year, and that condition (5)&nbsp;must be met during
at least 335&nbsp;days of a taxable year of 12&nbsp;months, or during a proportionate
part of a shorter taxable year. Arbor Realty&#146;s charter provides restrictions
regarding the ownership and transfer of its shares, which are intended to
assist in satisfying the share ownership requirements described in conditions
(5)&nbsp;and (6)&nbsp;above. For purposes of condition (6), an &#147;individual&#148; generally
includes a supplemental unemployment compensation benefit plan, a private
foundation, or a portion of a trust permanently set aside or used exclusively
for charitable purposes, but does not include a qualified pension plan or
profit sharing trust. Arbor Realty is not required to satisfy conditions (5)
and (6)&nbsp;for its initial taxable year ending December&nbsp;31, 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To monitor compliance with the share ownership requirements, Arbor Realty
is generally required to maintain records regarding the actual ownership of its
shares. To do so, Arbor Realty must demand written statements each year from
the record holders of specified percentages of its stock in which the record
holders are to disclose the actual owners of the shares&#151;i.e., the persons
required to include in gross income the dividends paid by Arbor Realty. A list
of those persons failing or refusing to comply with this demand must be
maintained as part of the records of Arbor Realty. Failure by Arbor Realty to
comply with these record-keeping requirements could subject it to monetary
penalties. If Arbor Realty satisfies these requirements and has no reason to
know that condition (6)&nbsp;is not satisfied, it will be deemed to have satisfied
such condition. A stockholder that fails or refuses to comply with the demand
is required by Treasury regulations to submit a statement with its tax return
disclosing the actual ownership of the shares and other information.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty&#146;s ability to satisfy the share ownership requirements depends
in part on the relative values of our common stock, special voting preferred
stock, and any other classes of stock that might be issued in the future.
Although Arbor Realty believes that the stockholder ownership limitations
contained in its charter will enable it to meet such requirements, the relative
values of its classes of stock have not been determined by independent
appraisal, and no assurance can be given that despite compliance with the
charter limitations, the relative values of the classes of stock would not be
successfully challenged by the IRS so as to cause Arbor Realty to fail such
REIT ownership requirements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, a corporation generally may not elect to become a REIT unless
its taxable year is the calendar year. Arbor Realty satisfies this
requirement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Effect of Subsidiary Entities</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ownership of Partnership Interests</I>. In the case of a REIT that is a
partner in a partnership, Treasury regulations provide that the REIT is deemed
to own its proportionate share of the partnership&#146;s assets, and to earn its
proportionate share of the partnership&#146;s income, for purposes of the asset and
gross income tests applicable to REITs as described below. In addition, the
assets and gross income of the partnership are deemed to retain the same
character in the hands of the REIT. Thus, Arbor Realty&#146;s proportionate share,
based upon its percentage capital interest, of the assets and items of income
of partnerships in which it owns an equity interest (including its interest in
the operating partnership and its preferred equity interests in lower-tier
partnerships), are treated as assets and items of income of Arbor Realty for
purposes of applying the REIT requirements described below. Consequently, to
the extent that Arbor Realty directly or indirectly holds a preferred or other
equity interest in a partnership, the partnership&#146;s assets and operations may
affect Arbor Realty&#146;s ability to qualify as a REIT, even though Arbor Realty
</FONT>
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<P align="left"><FONT size="2">may have no control, or only limited influence, over the partnership. A
summary of certain rules governing the federal income taxation of partnerships
and their partners is provided below in &#147;Tax Aspects of Investments in
Partnerships.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disregarded Subsidiaries</I>. If a REIT owns a corporate subsidiary that is a
&#147;qualified REIT subsidiary,&#148; that subsidiary is disregarded for federal income
tax purposes, and all assets, liabilities and items of income, deduction and
credit of the subsidiary are treated as assets, liabilities and items of
income, deduction and credit of the REIT itself, including for purposes of the
gross income and asset tests applicable to REITs as summarized below. A
qualified REIT subsidiary is any corporation, other than a &#147;taxable REIT
subsidiary&#148; as described below, that is wholly owned by a REIT, or by other
disregarded subsidiaries, or by a combination of the two. Other entities that
are wholly owned by a REIT, including single member limited liability
companies, are also generally disregarded as a separate entities for federal
income tax purposes, including for purposes of the REIT income and asset tests.
Disregarded subsidiaries, along with partnerships in which Arbor Realty holds
an equity interest, are sometimes referred to herein as &#147;pass-through
subsidiaries.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that a disregarded subsidiary of Arbor Realty ceases to be
wholly owned&#151;for example, if any equity interest in the subsidiary is acquired
by a person other than Arbor Realty or another disregarded subsidiary of Arbor
Realty&#151;the subsidiary&#146;s separate existence would no longer be disregarded for
federal income tax purposes. Instead, it would have multiple owners and would
be treated as either a partnership or a taxable corporation. Such an event
could, depending on the circumstances, adversely affect Arbor Realty&#146;s ability
to satisfy the various asset and gross income requirements applicable to REITs,
including the requirement that REITs generally may not own, directly or
indirectly, more than 10% of the securities of another corporation. See
&#147;&#151;Asset Tests&#148; and &#147;&#151;Income Tests.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxable Subsidiaries</I>. A REIT, in general, may jointly elect with
subsidiary corporations, whether or not wholly owned, to treat the subsidiary
corporation as a taxable REIT subsidiary (&#147;TRS&#148;). The separate existence of a
TRS or other taxable corporation, unlike a disregarded subsidiary as discussed
above, is not ignored for federal income tax purposes. Accordingly, such an
entity would generally be subject to corporate income tax on its earnings,
which may reduce the cash flow generated by Arbor Realty and its subsidiaries
in the aggregate, and Arbor Realty&#146;s ability to make distributions to its
stockholders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A REIT is not treated as holding the assets of a taxable subsidiary
corporation or as receiving any income that the subsidiary earns. Rather, the
stock issued by the subsidiary is an asset in the hands of the REIT, and the
REIT recognizes as income, the dividends, if any, that it receives from the
subsidiary. This treatment can affect the income and asset test calculations
that apply to the REIT, as described below. Because a parent REIT does not
include the assets and income of such subsidiary corporations in determining
the parent&#146;s compliance with the REIT requirements, such entities may be used
by the parent REIT to undertake indirectly activities that the REIT rules might
otherwise preclude it from doing directly or through pass-through subsidiaries
(for example, activities that give rise to certain categories of income such as
management fees or foreign currency gains).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Income Tests</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to maintain qualification as a REIT, Arbor Realty annually must
satisfy two gross income requirements. First, at least 75% of Arbor Realty&#146;s
gross income for each taxable year, excluding gross income from sales of
inventory or dealer property in &#147;prohibited transactions,&#148; must be derived from
investments relating to real property or mortgages on real property, including
&#147;rents from real property,&#148; dividends received from other REITs, interest
income derived from mortgage loans secured by real property (including certain
types of mortgage backed securities), and gains from the sale of real estate
assets, as well as income from some kinds of temporary investments. Second, at
least 95% of Arbor Realty&#146;s gross income in each taxable year, excluding gross
income from prohibited transactions, must be derived from some combination of
income that qualifies under the 75% income test described above, as well as
other dividends, interest, and gain from the sale or disposition of stock or
securities, which need not have any relation to real property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income constitutes qualifying mortgage interest for purposes of
the 75% income test (as described above) to the extent that the obligation is
secured by a mortgage on real property. If Arbor Realty receives interest
income with respect to a mortgage loan that is secured by both real property
and other property, and the highest
</FONT>
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<P align="left"><FONT size="2">principal amount of the loan outstanding during a taxable year exceeds the
fair market value of the real property on the date that Arbor Realty acquired
or originated the mortgage loan, the interest income will be apportioned
between the real property and the other collateral, and Arbor Realty&#146;s income
from the arrangement will qualify for purposes of the 75% income test only to
the extent that the interest is allocable to the real property. Even if a loan
is not secured by real property, or is undersecured, the income that it
generates may nonetheless qualify for purposes of the 95% income test.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that the terms of a loan provide for contingent interest
that is based on the cash proceeds realized upon the sale of the property
securing the loan (a &#147;shared appreciation provision&#148;), income attributable to
the participation feature will be treated as gain from sale of the underlying
property, which generally will be qualifying income for purposes of both the
75% and 95% gross income tests, provided that the property is not inventory or
dealer property in the hands of the borrower or the REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that a REIT derives interest income from a mortgage loan or
income from the rental of real property where all or a portion of the amount of
interest or rental income payable is contingent, such income generally will
qualify for purposes of the gross income tests only if it is based upon the
gross receipts or sales, and not the net income or profits, of the borrower or
lessee. This limitation does not apply, however, where the borrower or lessee
leases substantially all of its interest in the property to tenants or
subtenants, to the extent that the rental income derived by the borrower or
lessee, as the case may be, would qualify as rents from real property had it
been earned directly by a REIT, as described below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rents received by Arbor Realty will qualify as &#147;rents from real property&#148;
in satisfying the gross income requirements described above, only if several
conditions are met, including the following. If rent is partly attributable to
personal property leased in connection with a lease of real property, the
portion of the total rent that is attributable to the personal property will
not qualify as &#147;rents from real property&#148; unless it constitutes 15% or less of
the total rent received under the lease. Moreover, for rents received to
qualify as &#147;rents from real property,&#148; the REIT generally must not operate or
manage the property or furnish or render services to the tenants of such
property, other than through an &#147;independent contractor&#148; from which the REIT
derives no revenue. Arbor Realty and its affiliates are permitted, however, to
perform services that are &#147;usually or customarily rendered&#148; in connection with
the rental of space for occupancy only and are not otherwise considered
rendered to the occupant of the property. In addition, Arbor Realty and its
affiliates may directly or indirectly provide non customary services to tenants
of its properties without disqualifying all of the rent from the property if
the payment for such services does not exceed 1% of the total gross income from
the property. For purposes of this test, the income received from such
non-customary services is deemed to be at least 150% of the direct cost of
providing the services. Moreover, Arbor Realty is generally permitted to
provide services to tenants or others through a TRS without disqualifying the
rental income received from tenants for purposes of the REIT income
requirements. Also, rental income will generally qualify as rents from real
property only to the extent that Arbor Realty does not directly or
constructively hold a 10% or greater interest, as measured by vote or value, in
the lessee&#146;s equity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty may indirectly receive distributions from TRSs or other
corporations that are not REITs or qualified REIT subsidiaries. These
distributions will be classified as dividend income to the extent of the
earnings and profits of the distributing corporation. Such distributions will
generally constitute qualifying income for purposes of the 95% gross income
test, but not under the 75% gross income test. Any dividends received by Arbor
Realty from a REIT will be qualifying income in Arbor Realty&#146;s hands for
purposes of both the 95% and 75% income tests.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Arbor Realty fails to satisfy one or both of the 75% or 95% gross
income tests for any taxable year, it may still qualify as a REIT for the year
if it is entitled to relief under applicable provisions of the Internal Revenue
Code. These relief provisions will generally be available if the failure of
Arbor Realty to meet these tests was due to reasonable cause and not due to
willful neglect, Arbor Realty attaches to its tax return a schedule of the
sources of its income, and any incorrect information on the schedule was not
due to fraud with intent to evade tax. It is not possible to state whether
Arbor Realty would be entitled to the benefit of these relief provisions in all
circumstances. If these relief provisions are inapplicable to a particular set
of circumstances involving Arbor Realty, Arbor Realty will not qualify as a
REIT. As discussed above under &#147;Taxation of REITs in General,&#148; even where
these relief provisions apply, a tax would be imposed that is based upon the
amount by which Arbor Realty fails to satisfy the particular gross income test.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Asset Tests</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty, at the close of each calendar quarter, must also satisfy
four tests relating to the nature of its assets. First, at least 75% of the
value of the total assets of Arbor Realty must be represented by some
combination of &#147;real estate assets,&#148; cash, cash items, U.S. government
securities, and, under some circumstances, stock or debt instruments purchased
with new capital. For this purpose, real estate assets include interests in
real property, such as land, buildings, leasehold interests in real property,
stock of other corporations that qualify as REITs, and certain kinds of
mortgage backed securities and mortgage loans. Assets that do not qualify for
purposes of the 75% test are subject to the additional asset tests described
below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The second asset test is that the value of any one issuer&#146;s securities
owned by Arbor Realty may not exceed 5% of the value of Arbor Realty&#146;s total
assets. Third, Arbor Realty may not own more than 10% of any one issuer&#146;s
outstanding securities, as measured by either voting power or value. The 5%
and 10% asset tests do not apply to securities of TRSs, and the 10% value test
does not apply to &#147;straight debt&#148; having specified characteristics. Fourth,
the aggregate value of all securities of TRSs held by a REIT may not exceed 20%
of the value of the REIT&#146;s total assets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the general rule, as noted above, that for purposes of the
REIT income and asset tests, a REIT is treated as owning its share of the
underlying assets of a subsidiary partnership, if a REIT holds indebtedness
issued by a partnership, the indebtedness will be subject to, and may cause a
violation of the asset tests, unless it is a qualifying mortgage asset,
satisfies the rules for &#147;straight debt,&#148; or is sufficiently small so as not to
otherwise cause an asset test violation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any interests held by a REIT in a real estate mortgage investment conduit,
or &#147;REMIC,&#148; are generally treated as qualifying real estate assets, and income
derived by a REIT from interests in REMICs is generally treated as qualifying
income for purposes of the REIT income tests described above. If less than 95%
of the assets of a REMIC are real estate assets, however, then only a
proportionate part of the REIT&#146;s interest in the REMIC, and its income derived
from the interest, qualifies for purposes of the REIT asset and income tests.
Where a REIT holds a &#147;residual interest&#148; in a REMIC from which it derives
&#147;excess inclusion income,&#148; the REIT will be required to either distribute the
excess inclusion income or pay tax on it (or a combination of the two), even
though the income may not be received in cash by the REIT. To the extent that
distributed excess inclusion income is allocable to a particular stockholder,
the income (i)&nbsp;would not be allowed to be offset by any net operating losses
otherwise available to the stockholder, (ii)&nbsp;would be subject to tax as
unrelated business taxable income in the hands of most types of stockholders
that are otherwise generally exempt from federal income tax, and (iii)&nbsp;would
result in the application of U.S. federal income tax withholding at the maximum
rate (30%), without reduction for any otherwise applicable income tax treaty,
to the extent allocable to most types of foreign stockholders. See &#147;Taxation
of Stockholders.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty believes that its holdings of securities and other assets
will comply with the foregoing REIT asset requirements, and it intends to
monitor compliance on an ongoing basis. Independent appraisals have not been
obtained, however, to support Arbor Realty&#146;s conclusions as to the value of all
of its assets. Moreover, values of some assets may not be susceptible to a
precise determination, and values are subject to change in the future.
Furthermore, the proper classification of an instrument as debt or equity for
federal income tax purposes may be uncertain in some circumstances, which could
affect the application of the REIT asset requirements. Accordingly, there can
be no assurance that the IRS will not contend that Arbor Realty&#146;s interests in
subsidiaries or in the securities of other issuers will not cause a violation
of the REIT asset requirements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Annual Distribution Requirements</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to qualify as a REIT, Arbor Realty is required to distribute
dividends, other than capital gain dividends, to its stockholders in an amount
at least equal to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the sum of</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">122</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">90% of the &#147;REIT taxable income&#148; of Arbor Realty (computed
without regard to the deduction for dividends paid and net capital
gains of Arbor Realty), and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">90% of the net income, if any, (after tax) from foreclosure
property (as described below), minus</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the sum of specified items of non-cash income.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These distributions generally must be paid in the taxable year to which
they relate, or in the following taxable year if declared before Arbor Realty
timely files its tax return for the year and if paid with or before the first
regular dividend payment after such declaration. In order for distributions to
be counted for this purpose, and to give rise to a tax deduction by Arbor
Realty, they must not be &#147;preferential dividends.&#148; A dividend is not a
preferential dividend if it is pro rata among all outstanding shares of stock
within a particular class, and is in accordance with the preferences among
different classes of stock as set forth in the organizational documents.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that Arbor Realty distributes at least 90%, but less than
100%, of its &#147;REIT taxable income,&#148; as adjusted, it will be subject to tax at
ordinary corporate tax rates on the retained portion. Arbor Realty may elect
to retain, rather than distribute, its net long-term capital gains and pay tax
on such gains. In this case, Arbor Realty could elect to have its stockholders
include their proportionate share of such undistributed long-term capital gains
in income and receive a corresponding credit for their share of the tax paid by
Arbor Realty. Stockholders of Arbor Realty would then increase the adjusted
basis of their Arbor Realty stock by the difference between the designated
amounts included in their long-term capital gains and the tax deemed paid with
respect to their shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that a REIT has any net operating losses carried forward
from prior tax years, such losses may reduce the amount of distributions that
it must make in order to comply with the REIT distribution requirements. Such
losses, however, will generally not affect the character, in the hands of
stockholders, of any distributions that are actually made by the REIT, which
are generally taxable to stockholders to the extent that the REIT has current
or accumulated earnings and profits. See &#147;Taxation of Stockholders&#151;Taxation of
Taxable U.S. Stockholders.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Arbor Realty fails to distribute during each calendar year at least the
sum of (a)&nbsp;85% of its REIT ordinary income for such year, (b)&nbsp;95% of its REIT
capital gain net income for such year and (c)&nbsp;any undistributed taxable income
from prior periods, Arbor Realty will be subject to a 4% excise tax on the
excess of such required distribution over the sum of (x)&nbsp;the amounts actually
distributed and (y)&nbsp;the amounts of income retained on which it has paid
corporate income tax. Arbor Realty intends to make timely distributions so
that it is not subject to the 4% excise tax.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is possible that Arbor Realty, from time to time, may not have
sufficient cash to meet the distribution requirements due to timing differences
between (a)&nbsp;the actual receipt of cash, including receipt of distributions from
its subsidiaries, and (b)&nbsp;the inclusion of items in income by Arbor Realty for
federal income tax purposes. Potential sources of non-cash taxable income
include loans or mortgage-backed securities held by Arbor Realty as assets that
are issued at a discount and require the accrual of taxable economic interest
in advance of its receipt in cash, loans on which the borrower is permitted to
defer cash payments of interest and distressed loans on which Arbor Realty may
be required to accrue taxable interest income even though the borrower is
unable to make current servicing payments in cash. In the event that such
timing differences occur, in order to meet the distribution requirements, it
might be necessary to arrange for short-term, or possibly long-term,
borrowings, or to pay dividends in the form of taxable in kind distributions of
property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty may be able to rectify a failure to meet the distribution
requirements for a year by paying &#147;deficiency dividends&#148; to stockholders in a
later year, which may be included in Arbor Realty&#146;s deduction for dividends
paid for the earlier year. In this case, Arbor Realty may be able to avoid
losing its REIT status or being taxed on amounts distributed as deficiency
dividends. However, Arbor Realty will be required to pay interest and a
penalty based on the amount of any deduction taken for deficiency dividends.
</FONT>
<P align="center"><FONT size="2">123</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Failure to Qualify</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Arbor Realty fails to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, Arbor Realty will be subject to
tax, including any applicable alternative minimum tax, on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which
Arbor Realty is not a REIT will not be deductible by Arbor Realty, nor will
they be required to be made. In this situation, to the extent of current and
accumulated earnings and profits, distributions to stockholders will generally
be taxable in the case of stockholders who are individuals, at preferential
rates, pursuant to the Jobs and Growth Act and, subject to limitations of the
Internal Revenue Code, corporate distributees may be eligible for the dividends
received deduction. Unless Arbor Realty is entitled to relief under specific
statutory provisions, Arbor Realty will also be disqualified from re-electing
to be taxed as a REIT for the four taxable years following the year during
which qualification was lost. It is not possible to state whether, in all
circumstances, Arbor Realty will be entitled to this statutory relief.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Prohibited Transactions</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income derived from a prohibited transaction is subject to a 100% tax.
The term &#147;prohibited transaction&#148; generally includes a sale or other
disposition of property (other than foreclosure property) that is held
primarily for sale to customers in the ordinary course of a trade or business
by a REIT, by a lower-tier partnership in which the REIT holds an equity
interest or by a borrower that has issued a shared appreciation mortgage or
similar debt instrument to the REIT. Whether property is held &#147;primarily for
sale to customers in the ordinary course of a trade or business&#148; depends on the
particular facts and circumstances. No assurance can be given that any
particular property in which Arbor Realty holds a direct or indirect interest
will not be treated as property held for sale to customers, or that certain
safe-harbor provisions of the Internal Revenue Code that prevent such treatment
will apply. The 100% tax will not apply to gains from the sale of property
that is held through a TRS or other taxable corporation, although such income
will be subject to tax in the hands of the corporation at regular corporate
income tax rates.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Foreclosure Property</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreclosure property is real property and any personal property incident
to such real property (i)&nbsp;that is acquired by a REIT as the result of the REIT
having bid in the property at foreclosure, or having otherwise reduced the
property to ownership or possession by agreement or process of law, after there
was a default (or default was imminent) on a lease of the property or a
mortgage loan held by the REIT and secured by the property, (ii)&nbsp;for which the
related loan or lease was acquired by the REIT at a time when default was not
imminent or anticipated and (iii)&nbsp;for which such REIT makes a proper election
to treat the property as foreclosure property. REITs generally are subject to
tax at the maximum corporate rate (currently 35%) on any net income from
foreclosure property, including any gain from the disposition of the
foreclosure property, other than income that would otherwise be qualifying
income for purposes of the 75% gross income test. Any gain from the sale of
property for which a foreclosure property election has been made will not be
subject to the 100% tax on gains from prohibited transactions described above,
even if the property would otherwise constitute inventory or dealer property in
the hands of the selling REIT. Arbor Realty does not anticipate that it will
receive any income from foreclosure property that is not qualifying income for
purposes of the 75% gross income test, but, if Arbor Realty does receive any
such income, it intends to make an election to treat the related property as
foreclosure property.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Foreign Investments</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that Arbor Realty and its subsidiaries hold or acquire any
investments and, accordingly, pay taxes, in foreign countries, taxes paid by
Arbor Realty in foreign jurisdictions may not be passed through to or used by,
its stockholders, as a foreign tax credit or otherwise. Any foreign
investments may also generate foreign currency gains and losses. Foreign
currency gains are treated as income that does not qualify under the 95% or 75%
income tests, unless certain technical requirements are met. No assurance can
be given that these technical requirements will be met in the case of any
foreign currency gains recognized by Arbor Realty directly or through
pass-through subsidiaries, or that any such gains will not adversely affect
Arbor Realty&#146;s ability to satisfy the REIT qualification requirements.
</FONT>

<P align="center"><FONT size="2">124</FONT>




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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Derivatives and Hedging Transactions</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty and its subsidiaries may enter into hedging transactions with
respect to interest rate exposure on one or more of their assets or
liabilities. Any such hedging transactions could take a variety of forms,
including the use of derivative instruments such as interest rate swap
contracts, interest rate cap or floor contracts, futures or forward contracts
and options. To the extent that Arbor Realty or a pass-through subsidiary
enters into such a contract to reduce interest rate risk on indebtedness
incurred to acquire or carry real estate assets, any periodic income from the
instrument, or gain from the disposition of it, would be qualifying income for
purposes of the REIT 95% gross income test, but not for the 75% gross income
test. Recently proposed legislation, if enacted, would exclude such income from
the REIT 95% gross income test altogether, treating it as neither qualifying nor
non-qualifying income for purposes of that test, while not changing
the treatment as non-qualifying income for purposes of the 75% income
test. To the extent that Arbor
Realty hedges with other types of financial instruments or in other situations
(for example, hedging interest rate risk on loans held by Arbor Realty or
hedges against fluctuations in the value of foreign currencies), the resultant
income will be treated as income that does not qualify under the 95% or 75%
income tests unless certain technical requirements are met. Proposed
legislation, if enacted, would exclude from the REIT 95% income test calculation,
but not from the 75% test, foreign currency gains arising from transactions to hedge risks associated with
debt incurred to acquire or carry real estate assets. Arbor Realty intends to
structure any hedging transactions in a manner that does not jeopardize its
status as a REIT. Arbor Realty may conduct some or all of its hedging
activities through a TRS or other corporate entity, the income from which may
be subject to federal income tax, rather than participating in the arrangements
directly or through pass-through subsidiaries. No assurance can be given,
however, that Arbor Realty&#146;s hedging activities will not give rise to income
that does not qualify for purposes of either or both of the REIT income tests,
and will not adversely affect Arbor Realty&#146;s ability to satisfy the REIT
qualification requirements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxable Mortgage Pools</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An entity, or a portion of an entity, may be classified as a taxable
mortgage pool (&#147;TMP&#148;) under the Internal Revenue Code if (1)&nbsp;substantially all
of its assets consist of debt obligations or interests in debt obligations, (2)
more than 50% of those debt obligations are real estate mortgages or interests
in real estate mortgages as of specified testing dates, (3)&nbsp;the entity has
issued debt obligations (liabilities)&nbsp;that have two or more maturities, and (4)
the payments required to be made by the entity on its debt obligations
(liabilities) &#147;bear a relationship&#148; to the payments to be received by the
entity on the debt obligations that it holds as assets. Under regulations
issued by the U.S. Treasury Department, if less than 80% of the assets of an
entity (or a portion of an entity) consist of debt obligations, these debt
obligations are considered not to comprise &#147;substantially all&#148; of its assets,
and therefore the entity would not be treated as a TMP. Financing arrangements
entered into, directly or indirectly, by Arbor Realty could give rise to TMPs,
with the consequences as described below.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where an entity, or a portion of an entity, is classified as a TMP, it is
generally treated as a taxable corporation for federal income tax purposes. In
the case of a REIT, or a portion of a REIT, or a disregarded subsidiary of a
REIT, that is a TMP, however, special rules apply. The TMP is not treated as a
corporation that is subject to corporate income tax, and the TMP classification
does not directly affect the tax status of the REIT. Rather, the consequences
of the TMP classification would, in general, except as described below, be
limited to the stockholders of the REIT. The Treasury Department has not yet
issued regulations to govern the treatment of stockholders as described below.
A portion of the REIT&#146;s income from the TMP arrangement, which might be
non-cash accrued income, could be treated as &#147;excess inclusion income.&#148; The
REIT&#146;s excess inclusion income would be allocated among its stockholders. A
stockholder&#146;s share of excess inclusion income (i)&nbsp;would not be allowed to be
offset by any net operating losses otherwise available to the stockholder, (ii)
would be subject to tax as unrelated business taxable income in the hands of
most types of stockholders that are otherwise generally exempt from federal
income tax, and (iii)&nbsp;would result in the application of U.S. federal income
tax withholding at the maximum rate (30%), without reduction for any otherwise
applicable income tax treaty, to the extent allocable to most types of foreign
stockholders. See &#147;Taxation of Stockholders.&#148; To the extent that excess
inclusion income were allocated to a tax-exempt stockholder of a REIT that is
not subject to unrelated business income tax (such as government entities), the
REIT would be taxable on this income at the highest applicable corporate tax
rate (currently 35%). The manner in which excess inclusion income would be
allocated among shares of different classes of stock is not clear
under current law. Tax-exempt investors, foreign investors and taxpayers
with net operating losses should carefully consider the tax consequences
described above and are urged to consult their tax advisors.
</FONT>
<P align="center"><FONT size="2">125</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a subsidiary partnership, not wholly owned by Arbor Realty directly or
through one or more disregarded entities (such as the operating partnership),
were a TMP, the foregoing rules would not apply. Rather, the partnership that
is a TMP would be treated as a corporation for federal income tax purposes, and
would potentially be subject to corporate income tax. In addition, this
characterization would alter Arbor Realty&#146;s REIT income and asset test
calculations, and could adversely affect its compliance with those
requirements. Arbor Realty intends to monitor the structure of any TMPs in
which it has an interest to ensure that they will not adversely affect its
status as a REIT.
</FONT>
<P align="left"><FONT size="2"><B>Tax Aspects of Investments in Partnerships</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>General</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty may hold investments through entities that are classified as
partnerships for federal income tax purposes, including its interest in the
operating partnership and the preferred equity interests in lower-tier
partnerships. In general, partnerships are &#147;pass-through&#148; entities that are
not subject to federal income tax. Rather, partners are allocated their
proportionate shares of the items of income, gain, loss, deduction and credit
of a partnership, and are potentially subject to tax on these items, without
regard to whether the partners receive a distribution from the partnership.
Arbor Realty will include in its income its proportionate share of these
partnership items for purposes of the various REIT income tests and in the
computation of its REIT taxable income. Moreover, for purposes of the REIT
asset tests, Arbor Realty will include its proportionate share of assets held
by subsidiary partnerships. See &#147;Taxation of Arbor Realty&#151;Effect of Subsidiary
Entities&#151;Ownership of Partnership Interests.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consequently, to the extent that Arbor Realty holds a preferred or other
equity interest in a partnership, the partnership&#146;s assets and operations may
affect Arbor Realty&#146;s ability to qualify as a REIT, even though Arbor Realty
may have no control, or only limited influence, over the partnership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Entity Classification</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment by Arbor Realty in partnerships involves special tax
considerations, including the possibility of a challenge by the IRS of the
status of any of Arbor Realty&#146;s subsidiary partnerships as a partnership, as
opposed to an association taxable as a corporation, for federal income tax
purposes (for example, if the IRS were to assert that a subsidiary partnership
is a TMP). See &#147;Taxation of Arbor Realty&#151;Taxable Mortgage Pools.&#148; If any of
these entities were treated as an association for federal income tax purposes,
it would be taxable as a corporation and therefore could be subject to an
entity-level tax on its income. In such a situation, the character of the
assets of Arbor Realty and items of gross income of Arbor Realty would change
and could preclude Arbor Realty from satisfying the REIT asset tests
(particularly the tests generally preventing a REIT from owning more than 10%
of the voting securities, or more than 10% of the securities by value, of a
corporation) or the gross income tests as discussed in &#147;Taxation of Arbor
Realty&#151;Asset Tests&#148; and &#147;&#151;Income Tests,&#148; and in turn could prevent Arbor Realty
from qualifying as a REIT. See &#147;Taxation of Arbor Realty&#151;Failure to Qualify,&#148;
above, for a discussion of the effect of the failure of Arbor Realty to meet
these tests for a taxable year. In addition, any change in the status of any
of Arbor Realty&#146;s subsidiary partnerships for tax purposes might be treated as
a taxable event, in which case Arbor Realty could have taxable income that is
subject to the REIT distribution requirements without receiving any cash.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tax Allocations with Respect to Partnership Properties</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Internal Revenue Code and the Treasury regulations, income,
gain, loss and deduction attributable to appreciated or depreciated property
that is contributed to a partnership in exchange for an interest in the
partnership must be allocated for tax purposes in a manner such that the
contributing partner is charged with, or benefits from, the unrealized gain or
unrealized loss associated with the property at the time of the contribution.
The amount of the unrealized gain or unrealized loss is generally equal to the
difference between the fair market value of the contributed property at the
time of contribution, and the adjusted tax basis of such property at the time
of
contribution (a &#147;book-tax difference&#148;). Such allocations are solely for
federal income tax purposes and do not affect the book capital accounts or
other economic or legal arrangements among the partners.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that any subsidiary partnership of Arbor Realty acquires
appreciated (or depreciated) properties by way of capital contributions from
its partners, allocations would need to be made in a manner consistent with
these requirements. Where a partner contributes cash to a partnership at a
time that the partnership holds appreciated (or depreciated) property, the
Treasury regulations provide for a similar allocation of these items to the
other (i.e. non-contributing) partners. These rules may apply to the
contribution by Arbor Realty to any subsidiary partnerships of the cash
proceeds received in offerings of its stock. As a result, partners, including
Arbor Realty, in subsidiary partnerships, could be allocated greater or lesser
amounts of depreciation and taxable income in respect of a partnership&#146;s
properties than would be the case if all of the partnership&#146;s assets (including
any contributed assets) had a tax basis equal to their fair market values at
the time of any contributions to that partnership. This could cause Arbor
Realty to recognize, over a period of time, taxable income in excess of cash
flow from the partnership, which might adversely affect Arbor Realty&#146;s ability
to comply with the REIT distribution requirements discussed above.
</FONT>
<P align="left"><FONT size="2"><B>Taxation of Stockholders</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation of Taxable U.S. Stockholders</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section summarizes the taxation of U.S. stockholders that are not
tax-exempt organizations. For these purposes, a U.S. stockholder is a holder
of common stock that for U.S. federal income tax purposes is:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a citizen or resident of the United States;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a corporation (including an entity treated as a corporation
for U.S. federal income tax purposes) created or organized in or
under the laws of the United States or of a political subdivision
thereof;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an estate whose income is subject to U.S. federal income
taxation regardless of its source; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any trust if (1)&nbsp;a U.S. court is able to exercise primary
supervision over the administration of such trust and one or more
U.S. persons have the authority to control all substantial decisions
of the trust or (2)&nbsp;it has a valid election in place to be treated
as a U.S. person.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a partnership, including for this purpose any entity treated as a
partnership for U.S. federal income tax purposes, holds common stock or
warrants issued by Arbor Realty, the tax treatment of a partner in the
partnership will generally depend upon the status of the partner and the
activities of the partnership. An investor that is a partnership and the
partners in such partnership should consult their tax advisors about the U.S.
federal income tax consequences of the acquisition, ownership and disposition
of common stock and warrants.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Distributions</I>. Provided that Arbor Realty qualifies as a REIT,
distributions made to its taxable U.S. stockholders out of current or
accumulated earnings and profits, and not designated as capital gain dividends,
will generally be taken into account by them as ordinary income but will not be
eligible for the dividends received deduction for corporations. Dividends
received from REITs are generally not eligible to be taxed at the preferential
qualified dividend income rates (15% maximum federal rate through 2008)
applicable to individuals who receive dividends from taxable C corporations
pursuant to the Jobs and Growth Act. An exception applies, however, and
individual stockholders are taxed at such rates on dividends designated by and
received from REITs, to the extent that the dividends are attributable to (i)
income that the REIT previously retained in the prior year, and on which it was
subject to corporate level tax, (ii)&nbsp;dividends received by the REIT from TRSs
or other taxable C corporations, or (iii)&nbsp;income from sales of appreciated
property acquired from C corporations in carryover basis transactions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, distributions from Arbor Realty that are designated as
capital gain dividends will be taxed to stockholders as long-term capital
gains, to the extent that they do not exceed the actual net capital gain of
Arbor Realty for the taxable year, without regard to the period for which the
stockholder has held its stock. A similar treatment will apply to long-term
capital gains retained by Arbor Realty, to the extent that Arbor Realty elects
the application of provisions of the Internal Revenue Code that treat
stockholders of a REIT as having received, for federal income tax purposes,
undistributed capital gains of the REIT, while passing through to stockholders
a corresponding credit for taxes paid by the REIT on such retained capital
gains. Corporate stockholders may be
required to treat up to 20% of some capital gain dividends as ordinary
income. Long-term capital gains are generally taxable at maximum federal rates
of 15% (through 2008) in the case of stockholders who are individuals, and 35%
for corporations. Capital gains attributable to the sale of depreciable real
property held for more than 12
</FONT>
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<P align="left"><FONT size="2">months are subject to a 25% maximum federal
income tax rate for taxpayers who are individuals, to the extent of previously
claimed depreciation deductions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions in excess of current and accumulated earnings and profits
will not be taxable to a stockholder to the extent that they do not exceed the
adjusted basis of the stockholder&#146;s shares in respect of which the
distributions were made, but rather, will reduce the adjusted basis of these
shares. To the extent that such distributions exceed the adjusted basis of a
stockholder&#146;s shares, they will be included in income as long-term capital
gain, or short-term capital gain if the shares have been held for one year or
less. In addition, any dividend declared by Arbor Realty in October, November
or December of any year and payable to a stockholder of record on a specified
date in any such month will be treated as both paid by Arbor Realty and
received by the stockholder on December&nbsp;31 of such year, provided that the
dividend is actually paid by Arbor Realty before the end of January of the
following calendar year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that a REIT has available net operating losses and capital
losses carried forward from prior tax years, such losses may reduce the amount
of distributions that must be made in order to comply with the REIT
distribution requirements. See &#147;Taxation of Arbor Realty&#151;Annual Distribution
Requirements.&#148; Such losses, however, are not passed through to stockholders and
do not offset income of stockholders from other sources, nor do they affect the
character of any distributions that are actually made by a REIT, which are
generally subject to tax in the hands of stockholders to the extent that the
REIT has current or accumulated earnings and profits.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If excess inclusion income from a REMIC residual interest or taxable
mortgage pool is allocated to any Arbor Realty stockholder, that income will be
taxable in the hands of the stockholder and would not be offset by any net
operating losses of the stockholder that would otherwise be available. See
&#147;Taxation of Arbor Realty&#151;Taxable Mortgage Pools.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dispositions of Arbor Realty Stock</I>. In general, capital gains recognized
by individuals upon the sale or disposition of shares of Arbor Realty stock
will, pursuant to the Jobs and Growth Act, be subject to a maximum federal
income tax rate of 15% for taxable years through 2008, if the Arbor Realty
stock is held for more than 12&nbsp;months, and will be taxed at ordinary income
rates (of up to 35% through 2010) if the Arbor Realty stock is held for 12
months or less. Gains recognized by stockholders that are corporations are
subject to federal income tax at a maximum rate of 35%, whether or not
classified as long-term capital gains. Capital losses recognized by a
stockholder upon the disposition of Arbor Realty stock held for more than one
year at the time of disposition will be considered long-term capital losses,
and are generally available only to offset capital gain income of the
stockholder but not ordinary income (except in the case of individuals, who may
offset up to $3,000 of ordinary income each year). In addition, any loss upon
a sale or exchange of shares of Arbor Realty stock by a stockholder who has
held the shares for six months or less, after applying holding period rules,
will be treated as a long-term capital loss to the extent of distributions
received from Arbor Realty that are required to be treated by the stockholder
as long-term capital gain.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a stockholder recognizes a loss upon a subsequent disposition of Arbor
Realty stock in an amount that exceeds a prescribed threshold, it is possible
that the provisions of recently adopted Treasury regulations involving
&#147;reportable transactions&#148; could apply, with a resulting requirement to
separately disclose the loss generating transaction to the IRS. While these
regulations are directed towards &#147;tax shelters,&#148; they are written quite
broadly, and apply to transactions that would not typically be considered tax
shelters. In addition, legislative proposals have been introduced in Congress,
that, if enacted, would impose significant penalties for failure to comply with
these requirements. You should consult your tax advisors concerning any
possible disclosure obligation with respect to the receipt or disposition of
Arbor Realty stock, or transactions that might be undertaken directly or
indirectly by Arbor Realty. Moreover, you should be aware that Arbor Realty
and other participants in transactions involving Arbor Realty (including their
advisors) might be subject to disclosure or other requirements pursuant to
these regulations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation of Non-U.S. Stockholders</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of certain United States federal income and
estate tax consequences of the ownership and disposition of Arbor Realty stock
applicable to non-U.S. holders of Arbor Realty stock. The
</FONT>
<P align="center"><FONT size="2">128</FONT>
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<P align="left"><FONT size="2">discussion is based
on current law and is for general information only. It addresses only
selective and not all aspects of United States federal income and estate
taxation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ordinary Dividends</I>. The portion of dividends received by non-U.S. holders
payable out of the earnings and profits of Arbor Realty which are not
attributable to capital gains of Arbor Realty and which are not effectively
connected with a U.S. trade or business of the non-U.S. holder will generally
be subject to U.S. withholding tax at the rate of 30%, unless reduced by
treaty. Reduced treaty rates are not available to the extent that income is
excess inclusion income allocated to the foreign stockholder. See &#147;Taxation of
Arbor Realty&#151;Taxable Mortgage Pools.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, non-U.S. holders will not be considered to be engaged in a
U.S. trade or business solely as a result of their ownership of Arbor Realty
stock. In cases where the dividend income from a non-U.S. holder&#146;s investment
in Arbor Realty stock is, or is treated as, effectively connected with the
non-U.S. holder&#146;s conduct of a U.S. trade or business, the non-U.S. holder
generally will be subject to U.S. tax at graduated rates, in the same manner as
U.S. stockholders are taxed with respect to such dividends, and may also be
subject to the 30% branch profits tax in the case of a non-U.S. holder that is
a corporation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Non-dividend Distributions</I>. Unless Arbor Realty stock constitutes a U.S.
real property interest (a &#147;USRPI&#148;), distributions by Arbor Realty which are not
dividends out of the earnings and profits of Arbor Realty will not be subject
to U.S. income tax. If it cannot be determined at the time at which a
distribution is made whether or not the distribution will exceed current and
accumulated earnings and profits, the distribution will be subject to
withholding at the rate applicable to dividends. However, the non-U.S. holder
may seek a refund from the IRS of any amounts withheld if it is subsequently
determined that the distribution was, in fact, in excess of Arbor Realty&#146;s
current and accumulated earnings and profits. If Arbor Realty stock
constitutes a USRPI, as described below, distributions by Arbor Realty in
excess of the sum of its earnings and profits plus the stockholder&#146;s basis in
its Arbor Realty stock will be taxed under the Foreign Investment in Real
Property Tax Act of 1980 (&#147;FIRPTA&#148;) at the rate of tax, including any
applicable capital gains rates, that would apply to a U.S. stockholder of the
same type (e.g., an individual or a corporation, as the case may be), and the
collection of the tax will be enforced by a refundable withholding at a rate of
10% of the amount by which the distribution exceeds the stockholder&#146;s share of
Arbor Realty&#146;s earnings and profits.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capital Gain Dividends</I>. Under FIRPTA, a distribution made by Arbor Realty
to a non-U.S. holder, to the extent attributable to gains from dispositions of
USRPIs held by Arbor Realty directly or through pass-through subsidiaries
(&#147;USRPI capital gains&#148;), will be considered effectively connected with a U.S.
trade or business of the non-U.S. holder and will be subject to U.S. income tax
at the rates applicable to U.S. individuals or corporations, without regard to
whether the distribution is designated as a capital gain dividend. In
addition, Arbor Realty will be required to withhold tax equal to 35% of the
amount of dividends to the extent the dividends constitute USRPI capital gains.
Recently proposed legislation, if enacted, would modify the tax treatment of
capital gain dividends distributed by REITs to non-U.S. holders. See &#147;Other
Tax Considerations &#150; Legislative or Other Actions Affecting REITs.&#148;
Distributions subject to FIRPTA may also be subject to a 30% branch profits tax
in the hands of a non-U.S. holder that is a corporation. A distribution is not
a USRPI capital gain if Arbor Realty held the underlying asset solely as a
creditor, although the holding of a shared appreciation mortgage loan or
similarly instrument would not be solely as a creditor. Capital gain dividends
received by a non-U.S. holder from a REIT that are not USRPI capital gains are
generally not subject to U.S. income or withholding tax.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dispositions of Arbor Realty Stock</I>. Unless Arbor Realty stock constitutes
a USRPI, a sale of the stock by a non-U.S. holder generally will not be subject
to U.S. taxation under FIRPTA. The stock will not be treated as a USRPI if
less than 50% of Arbor Realty&#146;s assets throughout a prescribed testing period
consist of interests in real property located within the United States,
excluding, for this purpose, interests in real property solely in a capacity as
a creditor.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if the foregoing test is not met, Arbor Realty stock nonetheless will
not constitute a USRPI if Arbor Realty is a &#147;domestically controlled REIT.&#148; A
domestically controlled REIT is a REIT in which, at all times during a
specified testing period, less than 50% in value of its shares is held
directly or indirectly by non-U.S. holders. Arbor Realty believes that it is,
and it expects to continue to be, a domestically controlled REIT and,
therefore, the sale of Arbor Realty stock should not be subject to taxation
under FIRPTA. Because Arbor Realty stock is transferable, however, no
assurance can be given that Arbor Realty will be a domestically controlled
REIT.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Arbor Realty does not constitute a domestically
controlled REIT, a non-U.S. holder&#146;s sale of stock nonetheless will generally
not be subject to tax under FIRPTA as a sale of a USRPI, provided that (a)&nbsp;the
stock owned is of a class that is &#147;regularly traded,&#148; as defined by applicable
Treasury Department regulations, on an established securities market, and (b)
the selling non-U.S. holder held 5% or less of Arbor Realty&#146;s outstanding stock
of that class at all times during a specified testing period.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If gain on the sale of stock of Arbor Realty were subject to taxation
under FIRPTA, the non-U.S. holder would be subject to the same treatment as a
U.S. stockholder with respect to such gain, subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals, and the purchaser of the stock could be required to withhold
10% of the purchase price and remit such amount to the IRS.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain from the sale of Arbor Realty stock that would not otherwise be
subject to FIRPTA will nonetheless be taxable in the United States to a
non-U.S. holder in two cases: (a)&nbsp;if the non-U.S. holder&#146;s investment in the
Arbor Realty stock is effectively connected with a U.S. trade or business
conducted by such non-U.S. holder, the non-U.S. holder will be subject to the
same treatment as a U.S. stockholder with respect to such gain, or (b)&nbsp;if the
non-U.S. holder is a nonresident alien individual who was present in the United
States for 183&nbsp;days or more during the taxable year and has a &#147;tax home&#148; in the
United States, the nonresident alien individual will be subject to a 30% tax on
the individual&#146;s capital gain.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Estate Tax</I>. Arbor Realty stock owned or treated as owned by an individual
who is not a citizen or resident (as specially defined for U.S. federal estate
tax purposes) of the United States at the time of death will be includable in
the individual&#146;s gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise, and may therefore be subject
to U.S. federal estate tax.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation of Tax-Exempt Stockholders</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts, generally are exempt from
federal income taxation. However, they are subject to taxation on their
unrelated business taxable income (&#147;UBTI&#148;). While some investments in real
estate may generate UBTI, the IRS has ruled that dividend distributions from a
REIT to a tax-exempt entity do not constitute UBTI. Based on that ruling, and
provided that (1)&nbsp;a tax-exempt stockholder has not held its Arbor Realty stock
as &#147;debt financed property&#148; within the meaning of the Internal Revenue Code
(i.e. where the acquisition or holding of the property is financed through a
borrowing by the tax-exempt stockholder), and (2)&nbsp;the Arbor Realty stock is not
otherwise used in an unrelated trade or business, distributions from Arbor
Realty and income from the sale of the Arbor Realty stock should not give rise
to UBTI to a tax-exempt stockholder. To the extent, however, that Arbor Realty
(or a part of Arbor Realty, or a disregarded subsidiary of Arbor Realty) is a
TMP, or if Arbor Realty holds residual interests in a REMIC, a portion of the
dividends paid to a tax-exempt stockholder that is allocable to excess
inclusion income may be subject to tax as UBTI. See &#147;Taxation of Arbor
Realty&#151;Taxable Mortgage Pools.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt stockholders that are social clubs, voluntary employee benefit
associations, supplemental unemployment benefit trusts and qualified group
legal services plans exempt from federal income taxation under sections 501 (c)
(7), (c) (9), (c) (17)&nbsp;and (c) (20)&nbsp;of the Internal Revenue Code, respectively,
are subject to different UBTI rules, which generally will require them to
characterize distributions from Arbor Realty as UBTI.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In certain circumstances, a pension trust that owns more than 10% of Arbor
Realty&#146;s stock could be required to treat a percentage of the dividends from
Arbor Realty as UBTI, if Arbor Realty is a &#147;pension-held REIT.&#148; Arbor Realty
will not be a pension-held REIT unless either (A)&nbsp;one pension trust owns more
than 25% of the value of Arbor Realty&#146;s stock, or (B)&nbsp;a group of pension
trusts, each individually holding more than 10% of the value of Arbor Realty&#146;s
stock, collectively owns more than 50% of such stock. Certain restrictions on
ownership and transfer of Arbor Realty&#146;s stock should generally prevent a
tax-exempt entity from owning more than 10% of the value of Arbor Realty&#146;s
stock, or Arbor Realty from becoming a pension-held REIT.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Tax-exempt stockholders are urged to consult their tax advisors regarding
the federal, state, local and foreign tax consequences of owning Arbor Realty
stock.</B>
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tax Aspects of Warrants</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Allocation of Purchase Price Between the Shares and the Warrants</I>. For
U.S. Federal income tax purposes, your acquisition of a unit will be treated as
an acquisition of a unit consisting of two components: five shares of common
stock and a warrant to purchase one share of common stock. The purchase price
for each unit will be allocated between those components in proportion to their
respective fair market values at the time of purchase, and such allocation will
establish your initial tax basis in the common shares and the warrant that
comprise each unit.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sale or Exchange of Warrants</I>. Upon the sale or exchange of a warrant, a
warrant holder generally will recognize taxable capital gain or loss equal to
the difference between (i)&nbsp;the sum of the amount of cash and the fair market
value of property received in exchange therefor, and (ii)&nbsp;the warrant holder&#146;s
tax basis in the warrant, as described above. Capital gain or loss recognized
by a warrant holder upon the sale or exchange of a warrant generally will be
long-term capital gain or loss if the holding period with respect to the
warrant is more than one year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exercise of Warrants</I>. A warrant holder generally will not recognize
taxable gain or loss upon the exercise of a warrant by paying the exercise
price in cash. The warrant holder&#146;s adjusted tax basis in the shares received
upon exercise will equal the sum of the warrant holder&#146;s tax basis in the
warrant immediately prior to exercise plus the exercise price. Similarly, a
warrant holder should not recognize taxable gain or loss to the extent it
exercises a warrant and pays the exercise price with shares of Arbor Realty
common stock. In that case, the basis of the newly acquired shares would
include the basis of the shares surrendered in exchange therefor.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tax treatment of a warrant holder that elects to pay the exercise
price by surrendering additional warrants for cancellation (a &#147;Cashless
Exercise&#148;) is uncertain. Such an exercise may, for example, be treated as a
tax-free recapitalization, in which case a warrant holder&#146;s tax basis in the
common stock received would equal the tax basis in the surrendered warrants.
It is also possible that a Cashless Exercise could be treated as a taxable
exchange in which gain or loss should be recognized. Due to the absence of
authority as to the federal income tax treatment of a warrant holder making a
Cashless Exercise, there can be no assurance which, if any, of the alternative
tax consequences described above, or of other possible characterizations of a
Cashless Exercise, would be adopted by the IRS or a court of law. Accordingly,
warrant holders should consult their tax advisors as to the tax consequences of
making a Cashless Exercise.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lapse of Warrants</I>. The lapse or expiration without exercising a warrant
generally will result in a capital loss to the warrant holder equal to the
warrant holder&#146;s tax basis in the warrant. The deductibility of capital losses
is subject to limitation. This capital loss will be a long-term capital loss
if the holding period with respect to such warrant is more than one year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Holding Period</I>. The holding period for shares received upon exercise of a
warrant will begin on the day after the warrant is exercised. To the extent
that a warrant is exercised using common stock owned by the warrant holder, the
holding period of the common stock received on exercise will include the
holding period of the shares surrendered.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As discussed above, the tax consequences of a warrant holder making a
Cashless Exercise are uncertain. If such an exercise is tax free because it
qualifies as a tax-free recapitalization, the holding period of such common
stock would include the holding period of the surrendered warrants. If such an
exercise is taxable, then the holding period for the shares actually received
upon the exercise of warrants would begin on the day after the warrants are
exercised and would not include the period during which the warrants were held.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disposition of Shares Issued Upon Exercise of a Warrant</I>. Upon a taxable
disposition of shares issued upon exercise of warrants, a warrant holder
generally will recognize capital gain or loss equal to the difference between
(i)&nbsp;the amount of cash and the fair market value of other property received,
and (ii)&nbsp;the warrant holder&#146;s
adjusted tax basis in the shares. Such gain or loss generally will be
long-term capital gain or loss if the holding period with respect to such
shares is more than one year.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Adjustments to the Warrants</I>. Pursuant to the terms of the warrants, the
exercise price is subject to adjustment from time to time upon the occurrence
of specified events. These adjustments should not give rise to a deemed
taxable exchange of the warrants to the extent such adjustments are pursuant to
the original terms of the warrants. However, under certain circumstances, a
change in conversion ratio or any transaction having a similar effect on the
interest of a warrant holder may be treated as a taxable distribution with
respect to any warrant holder whose proportionate interest in the earnings and
profits of the Company is increased by such change or transaction (even though
no cash is received).
</FONT>
<P align="left"><FONT size="2"><B>Other Tax Considerations</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Legislative or Other Actions Affecting REITs</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003
reduced the rates at which individuals are taxed on capital gains (a maximum
rate of 15% replaces the prior maximum rate of 20%, through 2008), and gains
from the stock of REITs are eligible for the reduced rates. Tax rates for
individuals on dividends received from taxable C corporations were also reduced
(with the maximum rate falling from 38.6% to 15% for tax years through 2008),
although dividends received from REITs would generally continue to be taxed at
regular ordinary income rates (now at a maximum rate of 35% through 2010). See
&#147;Taxation of Stockholders &#150; Taxation of Taxable U.S. Stockholders &#150;
Distributions.&#148; This change in the tax treatment of dividends could cause
investors to perceive investments in REITs to be comparatively less attractive
than investments in other corporations, which could adversely affect the value
of the stock of REITs, including Arbor Realty.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recently proposed legislation would modify the tax treatment of capital
gain dividends distributed by REITs to non-U.S. stockholders. See &#147;Taxation of
Stockholders &#150;Taxation of Non-U.S. Stockholders &#150; Capital Gain Dividends.&#148; The
proposed legislation would treat capital gain dividends received by a non-U.S.
stockholder in the same manner as ordinary income dividends, provided that (1)
the capital gain dividends are received with respect to a class of stock that
is regularly traded on an established securities market located in the United
States, and (2)&nbsp;the non-U.S. stockholder does not own more than 5% of that
class of stock at any time during the taxable year in which the capital gain
dividends are received. Another proposal would modify the effect of specified
types of hedging income on the REIT 95% gross income requirement. See &#147;Taxation
of Arbor Realty &#150; Derivatives and Hedging Transactions.&#148; These proposals would
apply to taxable years beginning after the date of enactment.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rules dealing with federal income taxation are constantly under review
by persons involved in the legislative process and by the IRS and the U.S.
Treasury Department. No assurance can be given as to whether, or in what form,
the legislative proposals described above (or any other proposals affecting
REITs or their stockholders) will be enacted. Changes to the federal tax laws
and interpretations of federal tax laws could adversely affect an investment in
Arbor Realty.
</FONT>
<P align="left"><FONT size="2"><B><I>State, Local and Foreign Taxes</I></B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbor Realty and its subsidiaries and stockholders may be subject to
state, local or foreign taxation in various jurisdictions, including those in
which it or they transact business, own property or reside. Arbor Realty owns
interests in properties located in a number of jurisdictions, and may be
required to file tax returns in certain of those jurisdictions. The state,
local or foreign tax treatment of Arbor Realty and its stockholders may not
conform to the federal income tax treatment discussed above. Any foreign taxes
incurred by Arbor Realty would not pass through to stockholders as a credit
against their United States federal income tax liability. Prospective
investors should consult their tax advisors regarding the application and
effect of state, local and foreign income and other tax laws on an investment
in common stock and warrants of Arbor Realty.
</FONT>
<P align="center"><FONT size="2">132</FONT>
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<!-- link1 "ERISA CONSIDERATIONS" -->
<DIV align="left"><A NAME="022"></A></DIV>
<P align="center"><FONT size="2"><B>ERISA CONSIDERATIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Employee Retirement Income Security Act of 1974, as amended or ERISA,
and Section&nbsp;4975 of the Internal Revenue Code impose certain restrictions on
(a)&nbsp;employee benefit plans (as defined in Section&nbsp;3(3) of ERISA) that are
subject to Title I of ERISA, (b)&nbsp;plans (as defined in Section&nbsp;4975 (e) (1)&nbsp;of
the Internal Revenue Code) that are subject to Section&nbsp;4975 of the Internal
Revenue Code, including individual retirement accounts or Keogh plans, (c)&nbsp;any
entities whose underlying assets include plan assets by reason of such a plan&#146;s
investment in such entities, each of (a), (b)&nbsp;and (c), a Plan and (d)&nbsp;persons
who have certain specified relationships to Plans (referred to as &#147;parties in
interest&#148; under ERISA and &#147;disqualified persons&#148; under the Internal Revenue
Code). Moreover, based on the reasoning of the United States Supreme Court in
<I>John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank</I>, 510 U.S. 86 (1993),
an insurance company&#146;s general account may be deemed to include assets of the
plans investing in the general account (for example, through the purchase of an
annuity contract), and such insurance company might be treated as a party in
interest with respect to a plan by virtue of such investment. ERISA also
imposes certain duties on persons who are fiduciaries of plans subject to
ERISA, and ERISA and Section&nbsp;4975 of the Internal Revenue Code prohibit certain
transactions between a plan and parties in interest or disqualified persons
with respect to such plan. Violations of these rules may result in the
imposition of excise taxes and other penalties and liabilities under ERISA and
the Internal Revenue Code.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ERISA and Section&nbsp;4975 of the Internal Revenue Code prohibit a broad range
of transactions involving plan assets and parties in interest and disqualified
persons, unless a statutory or administrative exemption is available. Parties
in interest and disqualified persons that participate in a prohibited
transaction may be subject to a penalty imposed under ERISA and/or an excise
tax imposed pursuant to Section&nbsp;4975 of the Internal Revenue Code, unless a
statutory or administrative exemption is available. These prohibited
transactions generally are set forth in Section&nbsp;406 of ERISA and Section&nbsp;4975
of the Internal Revenue Code.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, under Department of Labor Regulation&nbsp;Section&nbsp;2510.3 101, 29
C.F.R. 2510.3-101 (the &#147;Plan Assets Regulation&#148;), the purchase with plan assets
of equity interests in us would cause our assets to be deemed plan assets of
the investing Plan which, in turn, would subject us and our assets to the
fiduciary responsibility provisions of ERISA and the prohibited transaction
provisions of ERISA and Section&nbsp;4975 of the Internal Revenue Code unless an
exception to this regulation is applicable.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One exception under the Department of Labor&#146;s Plan Assets Regulation
provides that an investing Plan&#146;s assets will not include any of the underlying
assets of an entity if at all times less than 25% of each class of &#147;equity&#148;
interests in the entity is held by &#147;benefit plan investors.&#148; The term &#147;Benefit
Plan Investor&#148; is defined to include any (1) &#147;employee benefit plan&#148; (as
defined in Section&nbsp;3 (3)&nbsp;of ERISA), whether or not subject to Title I of ERISA,
including without limitation governmental plans, foreign pension plans and
church plans, (2) &#147;plan&#148; (as defined in Section&nbsp;4975 (e) (1)&nbsp;of the Internal
Revenue Code), whether or not subject to Section&nbsp;4975 of the Internal Revenue
Code, including without limitation individual retirement accounts and Keogh
plans or (3)&nbsp;entity whose underlying assets include plan assets by reason of
such an employee benefit plan&#146;s or plan&#146;s investment in such entity, including
without limitation, as applicable, an insurance company general account. The
offered securities will be treated as &#147;equity interests&#148; in us for purposes of the Plan
Assets Regulation and there can be no assurance that the value of the offered securities
held by Benefit Plan Investors will be less than 25% of the total value of offered securities at the completion of this offer or thereafter. No monitoring or other
measures will be taken with respect to the satisfaction of the conditions to
this exception. Certain transactions involving us could be deemed to
constitute direct or indirect prohibited transactions if our assets were deemed
to be &#147;plan assets&#148; of plans acquiring the offered securities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Another exception under the Plan Assets Regulation provides that an
investing plan&#146;s assets will not include any of the underlying assets of an
entity if the class of &#147;equity&#148; interests in question are &#147;publicly offered
securities,&#148; defined as securities that are (1)&nbsp;held by 100 or more investors
who are independent of the issuer and each other, (2)&nbsp;freely transferable, and
(3)&nbsp;either (a)&nbsp;part of a class of securities registered under Section&nbsp;12(b) or
12(g) of the Exchange Act or (b)&nbsp;sold to the plan as part of an offering of
securities to the public under an effective registration statement under the
Securities Act and the class of securities of which that security is part is
registered under the Exchange Act within the requisite time.
</FONT>
<P align="center"><FONT size="2">133</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Accordingly, prior to the time that the offered securities qualify as &#147;publicly offered
securities&#148; pursuant to the plan assets regulation or until another exception
to the regulation is applicable, investors using assets of Plans subject to
ERISA or Section&nbsp;4975 of the Internal Revenue Code (including, as applicable,
assets of an insurance company general account) will not be permitted to
acquire the offered securities and each investor will be deemed to have represented to us
that it is not, and is not using of, a Plan subject to Title I of ERISA or
Section&nbsp;4975 of the Internal Revenue Code.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Any investor that is, or is using assets of, a Plan that is subject to
Title I of ERISA or Section&nbsp;4975 of the Code is required to contact us before
purchasing any offered securities to determine whether the offered securities qualify, at that time, as
&#147;publicly offered securities&#148; or whether some other exception to the Plan
Assets Regulation applies.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any purchaser that is an insurance company using the assets of an
insurance company general account should note that pursuant to Section&nbsp;401(c),
the Department of Labor issued final regulations (the &#147;General Account
Regulations&#148;) providing that the assets of an insurance company general account
will not be treated as &#147;plan assets&#148; for purposes of the fiduciary
responsibility provisions of ERISA and Section&nbsp;4975 of the Code to the extent
such assets relate to contracts issued to employee benefit plans on or before
December&nbsp;31, 1998 and the insurer satisfies various conditions. The plan asset
status of insurance company separate accounts is unaffected by Section&nbsp;401 (c)
of ERISA, and separate account assets continue to be treated as the plan assets
of any such plan invested in a separate account.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain employee benefit plans, such as governmental plans (as defined in
Section&nbsp;3(32) of ERISA) and certain church plans (as defined in Section&nbsp;3(33)
of ERISA), are not subject to the requirements of ERISA or Section&nbsp;4975 of the
Code. Accordingly, assets of such plans may be invested in the offered securities without
regard to the ERISA considerations described herein, subject to the provisions
or other applicable federal and state law. However, any such plan that is
qualified and exempt from taxation under Sections&nbsp;401 (a)&nbsp;and 501 (a)&nbsp;of the
Code is subject to the prohibited transaction rules set forth in Section&nbsp;503 of
the Code.
</FONT>
<P align="center"><FONT size="2">134</FONT>

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<!-- link1 "SELLING STOCKHOLDERS" -->
<DIV align="left"><A NAME="023"></A></DIV>
<P align="center"><FONT size="2"><B>SELLING STOCKHOLDERS</B>
</FONT>

<P align="left" style="margin-left:0%; margin-right:0%"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The units were originally issued and sold by us in the original offering
on July&nbsp;1, 2003. 1,327,989 of these units were sold to JMP, as initial
purchaser, and were simultaneously resold by JMP in transactions exempt from
the registration requirements of the Securities Act to persons reasonably
believed by the initial purchaser to be &#147;qualified institutional buyers&#148; (as
defined in Rule&nbsp;144A under the Securities Act), to a limited number of
institutional &#147;accredited investors&#148; (as defined in Rule&nbsp;501 (a) (1), (2), (3),
(7)&nbsp;or (8)&nbsp;under the Securities Act). The remaining 282,011 units were sold
directly by us to individual &#147;accredited investors&#148; (as defined in Rule&nbsp;501 (a)
(4), (5)&nbsp;or (6)&nbsp;under the Securities Act). Certain investors in the original
offering included institutions and persons affiliated with JMP and us. The
selling stockholders may from time to time offer and sell pursuant to this
prospectus any or all of the offered securities. The term selling stockholders
includes the holders listed below and the beneficial owners of the offered
securities and their transferees, pledgees, donees or other successors.
</FONT>


<P align="left" style="margin-left:0%; margin-right:0%"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth information, as of October 8, 2003, with
respect to the selling stockholders and offered securities beneficially owned
by each selling stockholder that may be offered pursuant to this prospectus.
</FONT>


<P align="center"><FONT size="2">135</FONT>
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<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="63%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Units</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percentage of Class</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Units</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Selling Securityholder</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>and Offered<SUP> (1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Before Resale</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>after Resale</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2"><B>Holders of Units (Unaffiliated with
the Company)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Alan L. Stein and Ruth S. Stein</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Anthony Avila &#038; Jacquelyn Avila</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Archon Partners LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Ascend Offshore Fund, LTD</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Ascend Partners LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Ascend Partners Sapient LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,973</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Barbara Meltzer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Bay Pond Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">71,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.4</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Boston Partners Asset Management,
L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Boston Provident Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">BP Institutional Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">BP Real Estate Investments, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Bricoleur Capital Management, LLC</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Central States Southeast &#038;
Southwest Areas Pension</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Condor Partners LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,570</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Craig R. Johnson &#038; Nichola Jo
Johnson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Cumber International</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Cumberland Benchmarked Partners,
L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Cumberland Partners</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Cuong Q. Dinh</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">David R. Wilmerding, III</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Eric Lippe</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">Farallon Capital Institutional
Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Farallon Capital Institutional
Partners II, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Farallon Capital Institutional
Partners III, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Farallon Capital Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Farbitrage Partners</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Financial Stocks Capital Partners
II L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">First Financial Fund, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Franklin Microcap Value Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">45,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">Fredericks Investments, LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">781</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>



<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Gary M. Meltzer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Gerald L. Tuttle, Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</DIV>



<P align="center"><FONT size="2">136
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="63%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Units</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percentage of Class</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Units</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Selling Securityholder</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>and Offered<SUP> (1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Before Resale</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>after Resale</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Goldman Sachs Asset Management
Foundation</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Gruber &#038; McBaine International</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Harvest Opportunity Partners II,
L.P. (2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Harvest Opportunity Partners
Offshore Fund, Ltd. (2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">HG Holdings Ltd.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">HG Holdings II Ltd.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,901</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Hunter Global Investors Fund I L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43,152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Hunter Asset Management, LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">J. Andrews Harris V Family Trust</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">James E. Thayer, Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Jon Christopher Baker</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Jon. D. Gruber &#038; Linda W. Gruber</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Joseph Jolson &#038; Kathleen Jolson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">KBW Asset Management</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Kenneth C. Haupt</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Kenneth R. Fitzsimmons &#038; Jane Z
Fitzsimmons</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Kensington Realty Income Fund LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,170</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Kensington Strategic Realty Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">73,640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Kevin Richard McClelland</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Kayne Anderson Income Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Kayne Anderson REIT Fund, LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Lagunitas Partners LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.2</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Lewis S. Meltzer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Lion Gate Capital</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Logos Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Lois K. Jolson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Longview Partners B, L.P</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Louis Scowcroft Peery Charitable
Foundation</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">Miami University Endowment</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Miami University Foundation</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Michael Ashner &#038; Susan Ashner</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,683</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Michael T. O&#146;Brien</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Neese Family Equity Investments Ltd.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Northern Arizona University
Foundation, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</DIV>



<P align="center"><FONT size="2">137
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="63%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Units</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percentage of Class</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Units</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Selling Securityholder</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>and Offered<SUP> (1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Before Resale</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>after Resale</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Perry Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">130,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.9</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Peter T. Paul Living Trust</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Precept Capitol Master Fund, GP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Prism Partners I, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Prism Partners II Offshore Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">Richard A. Jolson, MD</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Richard J. Johnson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Richard Reichler</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Rock-Tenn Company</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Saw Island Partners</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Seneca Capital Management LLC</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">38,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Sharon Meltzer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">SVS Taube Family Foundation</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Taube Family Trust</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">The Pickard Family Trust</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">The Tatrall School Endowment</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Thomas Joseph Palmieri</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Tinicum Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">United Capital Management, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Varedus Partners L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Wasatch Funds, Inc. for Wasatch
Small Cap Value Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Watershed Capital Institutional
Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">102,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.3</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Watershed Capital Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Wendy S. Bolton</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">William Lippe</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Willow Creek Capital Partners</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Willow Creek Offshore Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.5</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">WRS Advisors III, LLC</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2"><B>Holders of Units (Affiliated with
the Company)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Allen Josephs (3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25,999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.6</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Anita Kaufman Family Partnership LP (4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Daniel M. Palmier (5) (6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">Erica Josephs (7)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Fred Weber (5)(8) and Chaya Weber</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Frederick C. Herbst (5)(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Guy Robert Milone, Jr. (5)(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">John Natalone (10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Joseph Martello (5)(11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Karen A. Till (18)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</DIV>



<P align="center"><FONT size="2">138
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="63%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Units</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percentage of Class</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Units</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Selling Securityholder</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>and Offered <SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Before Resale</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>after Resale</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Lisa Kaufman (12)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Marie A. Esposito (10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>



<TR valign="bottom">
    <TD><FONT size="2">Paul F. Morehouse Jr. (10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Terence F. Baydala (10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>





<TR valign="bottom">
    <TD><FONT size="2">Walter K. Horn (11)(13)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">William B. Helmreich (5)(11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2"><B>Total Number of Units Offered:</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"><B>1,602,833</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"><B>97.7</B></FONT></TD>
    <TD nowrap><FONT size="2"><B>%</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2"><B>--</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</DIV>


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">*</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Represents less than 1%
</FONT></TD>
</TR>
</TABLE>

<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(1)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">The units consist of five shares of common stock and one warrant to
purchase an additional share of common stock. The warrants comprising the
units do not become exerciseable, detachable and freely tradeable until
after the shares of the common stock comprising the units are registered
under the Securities Act and either listed on a national securities
exchange or The Nasdaq Stock Market, Inc. The shares of common stock and
the warrants comprising the units may not be traded separately until such
listing. See &#147;Description of Stock&#151;Warrants.&#148; Upon the effectiveness of
this registration statement and upon the listing of shares of the common
stock comprising the units on a national securities exchange or The Nasdaq
Stock Market, Inc., selling securityholders will be able to trade
8,014,165 shares of common stock comprising the units and 1,602,833
warrants comprising the units.
</FONT></TD>
</TR>
</TABLE>

<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(2)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Harvest Opportunity Partners Offshore Fund, Ltd. and Harvest Opportunity
Partners II, L.P. are funds managed by JMP Asset Management LLC, an
affiliate of JMP, the initial purchase in the original offering.
</FONT></TD>
</TR>
</TABLE>

<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(3)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Mr.&nbsp;Josephs is the father-in-law of Ivan
Kaufman, our chairman of the board, chief executive officer and
president.</FONT></TD>
</TR>
</TABLE>


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(4)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Anita Kaufman Family Partnership LP is a limited
partnership controlled by Ms.&nbsp;Kaufman, the mother of Ivan
Kaufman, our chairman of the board, chief executive officer and
president.</FONT></TD>
</TR>
</TABLE>


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(5)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">The securityholder has agreed with us, pursuant to a lock-up agreement,
not to offer, pledge, sell contract to sell, sell any option or contract
to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of our common stock, or any securities convertible into or
exercisable for any of our common stock or any right to acquire our common
stock, until the earlier of 180&nbsp;days from the effective date of the shelf
registration statement and two years from the consummation of the original
offering on July&nbsp;1, 2003, subject to certain exceptions.
</FONT></TD>
</TR>
</TABLE>

<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(6)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Mr.&nbsp;Palmier is our Executive Vice President&#151;Asset Management.
</FONT></TD>
</TR>
</TABLE>


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(7)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Ms.&nbsp;Josephs is the mother-in-law of Ivan
Kaufman, our chairman of the board, chief executive officer and
president.</FONT></TD>
</TR>
</TABLE>



<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(8)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Mr.&nbsp;Weber is our Executive Vice President&#151;Structured Finance.
</FONT></TD>
</TR>
</TABLE>

<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(9)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Mr.&nbsp;Herbst is our Chief Financial Officer and Treasurer.
</FONT></TD>
</TR>
</TABLE>


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(10)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">These individuals are non-executive employees of
Arbor Commercial Management, LLC, our manager.</FONT></TD>
</TR>
</TABLE>



<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(11)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Messrs.&nbsp;Horn, Martello and Dr.&nbsp;Helmreich are members of our board of directors.
</FONT></TD>
</TR>
</TABLE>

<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(12)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Ms.&nbsp;Kaufman is the wife of Ivan
Kaufman, our chairman of the board, chief executive officer and
president.</FONT></TD>
</TR>
</TABLE>


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">(13)</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Mr.&nbsp;Horn is our General Counsel and Secretary.
</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">139
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="65%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Natural Person or Persons</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>with Voting or Dispositive</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Selling Securityholder</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Power</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Alan L. Stein and Ruth S. Stein</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Alan L. Stein</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Allen Josephs</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Anita Kaufman Family Partnership LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Anita Kaufman</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Anthony Avila &#038; Jacquelyn Avila</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Archon Partners LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Paul Gray</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
David McGanney</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Joel Beam</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ascend Offshore Fund, LTD</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Malcolm Fairbairn</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ascend Partners LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Malcolm Fairbairn</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ascend Partners Sapient LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Malcolm Fairbairn</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Barbara Meltzer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Bay Pond Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Boston Partners Asset Management, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Boston Provident Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Orin S. Kramer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">BP Institutional Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Orin S. Kramer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">BP Real Estate Investments, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Bricoleur Capital Management, LLC</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Central States Southeast &#038; Southwest Areas<BR>
Pension</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Condor Partners LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Paul Gray</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
David McGanney</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Joel Beam</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Craig R. Johnson &#038; Nichola Jo Johnson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Craig Johnson</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cumber International</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bruce G. Wilcox</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cumberland Benchmarked Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bruce G. Wilcox</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cumberland Partners</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bruce G. Wilcox</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cuong Q. Dinh</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Daniel M. Palmier</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">David R. Wilmerding, III</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Eric Lippe</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Erica Josephs</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Farallon Capital Institutional Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Farallon Partners</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Farallon Capital Institutional Partners II,
L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Farallon Partners</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Farallon Capital Institutional Partners III,
L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Farallon Partners</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Farallon Capital Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Farallon Partners</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Farbitrage Partners</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Richard Kayne</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Financial Stocks Capital Partners II L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Steven N. Stein</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
John M. Stein</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">First Financial Fund, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Franklin Microcap Value Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bruce Baughman</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Fredericks Investments, LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Dick Fredericks</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Fred Weber and Chaya Weber</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Frederick C. Herbst</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Gary M. Meltzer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Gerald L. Tuttle, Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Goldman Sachs Asset Management</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><FONT size="2">Foundation</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>


</TABLE>
</DIV>



<P align="center"><FONT size="2">140
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="65%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Natural Person or Persons</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>with Voting or Dispositive</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Selling Securityholder</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Power</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><FONT size="2">Gruber &#038; McBaine International</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Jon D. Gruber</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
J. Patterson McBaine</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Guy Robert Milone, Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Harvest Opportunity Partners Offshore Fund,
Ltd.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Joseph Jolson</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Harvest Opportunity Partners II, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
JMP Asset Management</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">HG Holdings Ltd.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Duke Buchan III</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">HG Holdings II Ltd.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Duke Buchan III</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Hunter Asset Management, LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Hunter Global Investors Fund I L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Duke Buchan III</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">J. Andrews Harris V Family Trust</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Robert McLean</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Murray Bodine</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">James E. Thayer, Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">John Natalone</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jon Christopher Baker</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Jon. D. Gruber &#038; Linda W. Gruber</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Joseph Jolson &#038; Kathleen Jolson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Joseph Jolson</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Joseph Martello</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Karen A. Till</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">KBW Asset Management</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Michael T. O&#146;Brien</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Kenneth C. Haupt</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Kenneth R. Fitzsimmons &#038; Jane Z. Fitzsimmons</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Kensington Realty Income Fund LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Paul Gray</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
David McGanney</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Joel Beam</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Kensington Strategic Realty Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Paul Gray</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
David McGanney</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Joel Beam</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Kevin Richard McClelland</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Kayne Anderson Income Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Richard Kayne</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Kayne Anderson REIT Fund, LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Richard Kayne</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Lagunitas Partners LP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Jon D. Gruber</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
J. Patterson McBaine</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Lewis S. Meltzer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Lion Gate Capital</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Lisa Kaufman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Lois K. Jolson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Logos Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Clark M. Lehman</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Longview Partners B, L.P</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bruce G. Wilcox</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Louis Scowcroft Peery Charitable Foundation</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Marie A. Esposito</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Miami University Endowment</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Miami University Foundation</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Michael Ashner &#038; Susan Ashner</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Michael T. O&#146;Brien</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>
</TABLE>
</DIV>



<P align="center"><FONT size="2">141
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="65%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Natural Person or Persons</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>with Voting or Dispositive</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Selling Securityholder</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Power</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Neese Family Equity Investments Ltd.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Northern Arizona University Foundation, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Paul F. Morehouse Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Perry Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Richard Perry</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Peter T. Paul Living Trust</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Peter T. Paul</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Precept Capitol Master Fund, GP</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
D. Blair Baker</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Prism Partners I, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Prism Partners II Offshore Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Richard A. Jolson, MD</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Richard J. Johnson</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Richard Reichler</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Rock-Tenn Company</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Saw Island Partners</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
R. Bruce Mosbacher</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Seneca Capital Management LLC</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Sharon Meltzer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">SVS Taube Family Foundation</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Taube Family Trust</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Terence F. Baydala</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">The Pickard Family Trust</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
W. Jeffers Pickard</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">The Tatrall School Endowment</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Thomas Joseph Palmieri</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Tinicum Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Farallon Partners</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">United Capital Management, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Varedus Partners L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Veredus Asset Management</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Walter K. Horn</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Wasatch Funds, Inc. for Wasatch Small Cap
Value Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Watershed Capital Institutional Partners,
L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Watershed Capital Partners, L.P.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Wendy S. Bolton</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">William B. Helmreich</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">William Lippe</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Willow Creek Capital Partners</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Willow Creek Offshore Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">WRS Advisors III, LLC</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bill Mack</FONT></TD>
</TR>
</TABLE>
</DIV>


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" nowrap align="right"><FONT size="2">*</FONT></TD>
 <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">The securityholder has informed us that there is no natural person with
voting or investment power over the respective units.
</FONT></TD>
</TR>
</TABLE>

<P align="left" style="margin-left:0%; margin-right:0%"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as indicated above, none of the selling stockholders has, or within
the past three years has had, any position, office or other material
relationship with us or any of our predecessors or affiliates. Because the
selling stockholders may, pursuant to this prospectus, offer all or some
portion of the offered securities, no estimate can be given as to the amount of
the securities that will be held by the selling stockholders upon termination
of any such sales. In addition, the selling stockholders identified above may have sold, transferred
or otherwise disposed of all or a portion of their securities since the date on
which they provided the
</FONT>



<P align="center"><FONT size="2">142
</FONT>

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<P align="left"><FONT size="2">information regarding their securities, in transactions
exempt from the registration requirements of the Securities Act.
</FONT>


<P align="left" style="margin-left:0%; margin-right:0%"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the original offering, ACM, members of our senior
management and board of directors and certain members of the senior management
of ACM agreed not to offer, pledge, sell contract to sell, sell any option or
contract to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of our common stock, or any securities convertible into
or exercisable for any of our common stock or any right to acquire our common
stock, without the consent of JMP until the earlier of 180&nbsp;days after the date
of effectiveness of the registration statement of which this prospectus is a
part or two years from the consummation of original offering, subject to
certain exceptions. JMP may, at any time, release all or a portion of the
securities subject to the foregoing lock-up provisions.
</FONT>




<P align="center"><FONT size="2">143
</FONT>


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<!-- link1 "PLAN OF DISTRIBUTION" -->
<DIV align="left"><A NAME="024"></A></DIV>

<P align="center"><FONT size="2"><B>PLAN OF DISTRIBUTION</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are registering the securities covered by this prospectus pursuant to
our agreement to register the offered securities in accordance with the terms
of a registration rights agreement that we entered into with the initial
purchaser for the benefit of the selling stockholders in connection with the
original offering. The registration of the offered securities, however, does
not necessarily mean that any of the securities will be offered or sold by the
selling stockholders or their respective donees, pledgees or other transferees
or successors in interest under this prospectus.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The sale of the securities by any selling stockholder, including any
donee, pledgee or other transferee who receives securities from a selling
stockholder, may be effected from time to time by selling them directly to
purchasers or to or through broker-dealers. In connection with any such sale,
any such broker-dealer may act as agent for the selling stockholder or may
purchase from the selling stockholder all or a portion of the securities as
principal, and sales may be made pursuant to any of the methods described
below. These sales may be made on any securities exchange on which our common
shares are then traded, in the over-the-counter market, in negotiated
transactions or otherwise at prices and at terms then prevailing or at prices
related to the then current market prices or at prices otherwise negotiated.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The securities may also be sold in one or more of the following
transactions:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">block transactions (which may involve crosses) in which a
broker-dealer may sell all or a portion of such securities as agent
but may position and resell all or a portion of the block as
principal to facilitate the transaction;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">purchases by any such broker-dealer as principal and resale
by such broker-dealer for its own account pursuant to a prospectus
supplement;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a special offering, an exchange distribution or a secondary
distribution in accordance with applicable rules promulgated by the
National Association of Securities Dealers, or stock exchange rules;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ordinary brokerage transactions and transactions in which any
such broker-dealer solicits purchasers;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sales &#147;at the market&#148; to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such
securities; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sales in other ways not involving market markers or
established trading markets, including direct sales to purchasers.
In effecting sales, broker-dealers engaged by a selling stockholder
may arrange for other broker-dealers to participate.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Broker-dealers will receive commissions or other compensation from the
selling stockholder in the form of commissions, discounts or concessions.
Broker-dealers may also receive compensation from purchasers of the securities
for whom they act as agents or to whom they sell as principals or both.
Compensation as to a particular broker-dealer may be in excess of customary
commissions and will be in amounts to be negotiated.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The distribution of the securities also may be effected from time to time
in one or more underwritten transactions at a fixed price or prices which may
be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Any such
underwritten offering may be on a &#147;best efforts&#148; or a &#147;firm commitment&#148; basis.
In connection with any underwritten offering, underwriters or agents may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders or from purchasers of the securities. Underwriters may
sell the securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there any
underwriter or coordinating broker-dealer acting in connection with the
proposed sale of securities by the selling stockholders. Each of the selling
stockholders that is an affiliate of a broker-dealer has advised us that (i)
each of them, respectively, purchased the securities to be offered by them
pursuant to this prospectus in the ordinary course of its or his, as the case
may be, business and (ii)&nbsp;that, at the time of the purchase of those
securities, they did not have any agreement or understanding, directly or
indirectly, with any person, or any intent, to distribute the securities. We
will file a supplement to this prospectus, if required, under Rule&nbsp;424(b) under
the Securities Act upon
</FONT>
<P align="center"><FONT size="2">144</FONT>
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<P align="left"><FONT size="2">being notified by the selling stockholders that any material arrangement
has been entered into with a broker-dealer for the sale of securities through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer. This supplement will disclose, among other
information:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the name of the selling stockholders and of participating brokers and dealer(s);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the number of securities involved;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the price at which the securities are to be sold;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the commissions paid or the discounts or concessions allowed
to the broker-dealer(s), where applicable;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that the broker-dealer(s) did not conduct any investigation
to verify the information set out or incorporated by reference in
this prospectus; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other facts material to the transaction.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders and any underwriters, or brokers-dealers or
agents that participate in the distribution of the securities may be deemed to
be &#147;underwriters&#148; within the meaning of the Securities Act, and any profit on
the sale of the securities by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents may be deemed
to be underwriting discounts and commissions under the Securities Act. Because
the selling stockholders may be deemed to be &#147;underwriters&#148; under the
Securities Act, the selling stockholders will be subject to the prospectus
delivery requirements of the Securities Act. We have informed the selling
stockholders that the anti-manipulative provisions of Regulation&nbsp;M promulgated
under the Exchange Act, may apply to their sales in the market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, the selling stockholders may pledge their securities
pursuant to the margin provisions of their customer agreements with their
brokers. Upon default by a selling stockholder, the broker may offer and sell
such pledged securities from time to time. Upon a sale of the securities, the
selling stockholders intend to comply with the prospectus delivery requirements
under the Securities Act by delivering a prospectus to each purchaser in the
transaction. We intend to file any amendments or other necessary documents in
compliance with the Securities Act that may be required in the event the
selling stockholders default under any customer agreement with brokers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to comply with the securities laws of certain states, if
applicable, the securities may be sold only through registered or licensed
broker-dealers. We have agreed to pay all expenses incident to the offering and
sale of the securities, other than commissions, discounts and fees of
underwriters, broker-dealers or agents. We have agreed to indemnify the
selling stockholders against certain losses, claims, damages, actions,
liabilities, costs and expenses, including liabilities under the Securities
Act.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders have agreed to indemnify us, our officers and
trustees and each person who controls (within the meaning of the Securities
Act) or is controlled by us, against any losses, claims, damages, liabilities
and expenses arising under the securities laws in connection with this offering
with respect to written information furnished to us by the selling
stockholders.
</FONT>
<P align="center"><FONT size="2">145</FONT>
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<!-- link1 "LEGAL MATTERS" -->
<DIV align="left"><A NAME="025"></A></DIV>
<P align="center"><FONT size="2"><B>LEGAL MATTERS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain legal matters will be passed upon for us by Skadden, Arps, Slate,
Meagher &#038; Flom LLP, New York, New York and Venable LLP, Baltimore, Maryland.
</FONT>

<!-- link1 "EXPERTS" -->
<DIV align="left"><A NAME="026"></A></DIV>
<P align="center"><FONT size="2"><B>EXPERTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of the Structured
Finance Business of Arbor Commercial Mortgage, LLC and Subsidiaries as of December&nbsp;31, 2002
and 2001, and for each of the three years in the period ended December&nbsp;31,
2002 and the financial statements of Mezzobridge Funding
LLC as of and for the year ended December&nbsp;31, 2000, each
appearing in this prospectus and registration statement have been audited by Grant Thornton LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
</FONT>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->
<DIV align="left"><A NAME="027"></A></DIV>
<P align="center"><FONT size="2"><B>WHERE YOU CAN FIND MORE INFORMATION</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed a registration statement, of which this prospectus is a
part, on Form&nbsp;S-11 with the Securities and Exchange Commission (the
&#147;Commission&#148;) relating to this offering. This prospectus does not contain all
of the information in the registration statement and the exhibits and
consolidated financial statements included with the registration statement.
References in this prospectus to any of our contracts, agreements or other
documents are not necessarily complete, and you should refer to the exhibits
attached to the registration statement for copies of the actual contracts,
agreements or documents. You may read and copy the registration statement, the
related exhibits and other material we file with the Commission at the
Commission&#146;s public reference room in Washington, D.C. at Room&nbsp;1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You can also request
copies of those documents, upon payment of a duplicating fee, by writing to the
Commission. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The Commission also
maintains an internet site that contains reports, proxy and information
statements and other information regarding issuers that file with the
Commission. The website address is http://www.sec.gov. You may also request a
copy of these filings, at no cost, by writing or telephoning us as follows:
Arbor Realty Trust, Inc. at 333 Earle Ovington Boulevard, Suite&nbsp;900, Uniondale,
New York 11553, Attention: Frederick C. Herbst.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the effectiveness of the registration statement, we will be subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended (the &#147;Exchange Act&#148;), and, in accordance with the Exchange Act, will
file reports, proxy and information statements and other information with the
Commission. Such annual, quarterly and special reports, proxy and information
statements and other information can be inspected and copied at the locations
set forth above. We will report our consolidated financial statements on a year
ended December&nbsp;31. We intend to furnish our stockholders with annual reports
containing consolidated financial statements audited by our independent
certified public accountants and with quarterly reports containing unaudited
consolidated financial statements for each of the first three quarters of each
fiscal year.
</FONT>
<P align="center"><FONT size="2">146</FONT>
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<!-- link1 "INDEX TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES" -->
<DIV align="left"><A NAME="028"></A></DIV>
<P align="center"><FONT size="2"><B>INDEX TO THE UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF<BR>
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="94%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Page</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Balance Sheet at September&nbsp;30, 2003 (Unaudited)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Statement of Operations for the Three Months Ended September&nbsp;30, 2003 (Unaudited)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Statement of Stockholders&#146; Equity for the Three Months Ended September&nbsp;30, 2003 (Unaudited)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Statement of Cash Flows for the Three Months Ended September&nbsp;30, 2003 (Unaudited)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes to Consolidated Financial Statements (Unaudited)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Schedule&nbsp;IV-
Loans and Other Lending Investments (Unaudited)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto
</FONT>
<P align="center"><FONT size="2">F-1</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>Consolidated Balance Sheet</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="79%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,393,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">214,237,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investment in equity affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">817,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,940,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">255,389,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Liabilities and stockholders equity:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable and repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">91,913,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,917,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">97,831,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,309,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Commitments and contingencies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Stockholders&#146; equity:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred stock, $0.01 par value: 100,000,000 shares
authorized;
3,146,724 shares issued and outstanding</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Common stock, $0.01 par value: 500,000,000 shares
authorized;
8,197,567 shares issued and outstanding</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Additional paid &#150; in capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">112,685,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Retained earnings</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred compensation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(624,826</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total stockholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">113,248,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities and stockholders equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">255,389,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>See notes to consolidated financial statements.</I>
</FONT>
<P align="center"><FONT size="2">F-2</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>Consolidated Statements of Operations</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Three Months Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30, 2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenue:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,664,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,670,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Expenses:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">721,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee compensation and benefits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">446,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Stock based compensation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,587,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling and administrative</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133,304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Management fee</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">293,734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,183,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income before minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,487,079</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income allocated to minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">412,492</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Basic earnings per common share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">      .13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Diluted earnings per common share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">      .13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>See notes to consolidated financial statements.</I>
</FONT>
<P align="center"><FONT size="2">F-3</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>Consolidated Statement of Stockholders&#146; Equity</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Preferred</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Preferred</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Common</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Common</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Additional</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Stock</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Stock Par</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Stock</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Stock Par</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Paid &#150; in</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Deferred</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Retained</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capital</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Compensation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Earnings</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance&#151;July&nbsp;1, 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuance of
preferred stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,146,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuance of
common stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,197,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,975</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,472,165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,554,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Deferred
compensation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,212,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,212,500</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Stock based
compensation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,587,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,587,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance&#151;
September&nbsp;30, 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,146,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">31,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,197,567</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">81,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">112,685,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(624,826</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">113,248,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>See notes to consolidated financial statements.</I>
</FONT>

<P align="center"><FONT size="2">F-4</FONT>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>Consolidated Statement of Cash Flows</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="68%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Three Months</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating activities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,074,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Adjustments to reconcile net income to cash provided by
operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Stock based compensation</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,587,674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">412,492</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Changes in operating assets and liabilities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,940,961</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,917,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,051,392</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investing activities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments originated, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(38,387,740</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Payoffs and paydowns of loans and investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,226,923</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investments in equity affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(817,542</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash used in investing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(27,978,359</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financing activities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from notes payable and repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Payoffs and paydowns of notes payable and repurchase
agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(77,266,033</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuance of preferred stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Issuance of common stock</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110,555,145</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by financing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">33,320,579</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net increase in cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,393,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash at beginning of period</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash at end of period</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,393,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Non cash investing and financing items:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net contributed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">213,076,639</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable and repurchase agreements contributed</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">169,179,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Supplemental cash flow information:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash used to pay interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">483,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>See notes to consolidated financial statements.</I>
</FONT>
<P align="center"><FONT size="2"> F-5</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 1 -DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION</B>
</FONT>

<P align="left"><FONT size="2">Arbor Realty Trust, Inc. (the &#147;Company&#148;) is a Maryland corporation that was
formed in June 2003 to invest in real estate related bridge and mezzanine
loans, preferred equity and, in limited cases, discounted mortgage notes and
other real estate related assets. The Company conducts substantially all of its
operations through the operating partnership, Arbor Realty Limited Partnership
(&#147;ARLP&#148;).
</FONT>
<P align="left"><FONT size="2">On July&nbsp;1, 2003 Arbor Commercial Mortgage, LLC (&#147;ACM&#148;) contributed $213.1
million of structured finance assets and $169.2&nbsp;million of borrowings supported
by $43.9&nbsp;million of equity in exchange for a commensurate equity ownership in
ARLP. In addition, certain employees of ACM were transferred to ARLP. These
assets, liabilities and employees represent a substantial portion of ACM&#146;s
structured finance business (the &#147;SF Business&#148;). The Company is externally
managed and advised by ACM and pays ACM a management fee in accordance with a
management agreement. ACM also sources originations, provides underwriting
services and services all structured finance assets on behalf of ARLP.
</FONT>
<P align="left"><FONT size="2">On July&nbsp;1, 2003 the Company completed a private equity offering of units, each
consisting of five shares of common stock and one warrant to purchase one share
of common stock. Gross proceeds from the private financing totaled $120.2
million. Gross proceeds from the private financing combined with the concurrent
equity contribution by ACM totaled approximately $164.1&nbsp;million in equity
capital. The Company paid offering expenses of $9.6&nbsp;million resulting in
stockholders&#146; equity and minority interest of $154.5&nbsp;million at inception.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B>
</FONT>
<P align="left"><FONT size="2"><I>Use of Estimates</I>
</FONT>
<P align="left"><FONT size="2">The preparation of consolidated financial statements in conformity with
accounting principals generally accepted in the United States of America
requires management to make estimates and assumptions in determining the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
</FONT>
<P align="left"><FONT size="2"><I>Loans and Investments</I>
</FONT>
<P align="left"><FONT size="2">Loans held for investment are intended to be held to maturity and, accordingly,
are carried at cost, net of unamortized loan origination costs and fees, unless
such loan or investment is deemed to be impaired.
</FONT>
<P align="left"><FONT size="2">The Company invests in preferred equity interests that, in some cases, allow
the Company to participate in a percentage of the underlying property&#146;s cash
flows from operations and proceeds from a sale or refinancing. At the
inception of each such investment, management must determine whether such
investment should be accounted for as a loan, joint venture or as real estate.
To date, management has determined that all such investments are properly
accounted for and reported as loans.
</FONT>
<P align="left"><FONT size="2">Specific valuation allowances are established for impaired loans based on the
fair value of collateral on an individual loan basis. The fair value of the
collateral is determined by an evaluation of operating cash flow from the
property during the projected holding period, and estimated sales value
computed by applying an expected capitalization rate to the stabilized net
operating income of the specific property, less selling costs, discounted at
market discount rates.
</FONT>
<P align="center"><FONT size="2"> F-6</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B>
</FONT>
<P align="left"><FONT size="2">If upon completion of the valuation, the fair value of the underlying
collateral securing the impaired loan is less than the net carrying value of
the loan, an allowance is created with a corresponding charge to the provision
for loan losses. The allowance for each loan is maintained at a level believed
adequate by management to absorb probable losses.
</FONT>
<P align="left"><FONT size="2"><I>Revenue Recognition</I>
</FONT>
<P align="left"><FONT size="2">Interest Income &#150; Interest income is recognized on the accrual basis as it
is earned. In most instances, the borrower pays an additional amount of
interest at the time the loan is closed, an origination fee, and deferred
interest upon maturity. This additional income, as well as any direct loan
origination costs incurred, is deferred and recognized over the life of the
related loan as a yield adjustment. Income recognition is suspended for loans
when in the opinion of management a full recovery of income and principal
becomes doubtful. Income recognition is resumed when the loan becomes
contractually current and performance is demonstrated to be resumed Several
of the loans provide for accrual of interest at specified rates, which differ
from current payment terms. Interest is recognized on such loans at the
accrual rate subject to management&#146;s determination that accrued interest and
outstanding principal are ultimately collectible, based on the underlying
collateral and operations of the borrower. If management cannot make this
determination regarding collectibility, interest income is recognized only upon
actual receipt.
</FONT>
<P align="left"><FONT size="2">Gain on sale of loans and real estate&#150; For the sale of loans and real estate,
revenue recognition occurs when all the incidence of ownership passes to the
buyer. In some circumstances, the Company may retain an interest in the
property. When this occurs, the investment in real estate retained is recorded
at its allocated cost and revenue is recognized on the percentage of the
property sold.
</FONT>
<P align="left"><FONT size="2">Income from equity affiliates &#150; The Company may invest in joint ventures that
are formed to acquire, develop and/or sell real estate assets. Such
investments are recorded under the equity method. The Company records its
share of the net income from the underlying properties. The gain or loss on
disposition of a joint venture interest is recorded as gain on sale of loans
and real estate.
</FONT>
<P align="left"><FONT size="2"><I>Income Taxes</I>
</FONT>
<P align="left"><FONT size="2">The Company intends to elect to be taxed as a REIT and to comply with the
provisions of the Internal Revenue Code with respect thereto. A REIT is
generally not subject to federal income tax on that portion of its REIT taxable
income (&#147;Taxable Income&#148;) which is distributed to its shareholders provided
that at least 90% of Taxable Income is distributed and provided that
certain other requirements are met. The Company intends to distribute an
amount at least equal to its Taxable Income, and accordingly, there is no
provision for federal income taxes. The Company may be subject to state or
local income taxes in certain jurisdictions, and to certain other taxes, such
as property, transfer, recording, sales, payroll and excise taxes that are not
based on income.
</FONT>
<P align="center"><FONT size="2"> F-7</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B>
</FONT>
<P align="left"><FONT size="2"><I>Earnings Per Share</I>
</FONT>
<P align="left"><FONT size="2">In accordance with the Statement of Financial Accounting standards No.&nbsp;128
(&#147;SFAS No.&nbsp;128&#148;), the Company presents both basic and diluted earnings per
share. Basic earnings per share excludes dilution and is computed by dividing
net income available to common shareholders by the weighted average number of
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock, where such exercise
or conversion would result in a lower earnings per share amount. In the
private offering on July&nbsp;1, 2003, the Company issued 1,610,000 units, each of
which consists of five share of common stock and a warrant to purchase an
additional share of common stock, at $75.00 per unit. The warrants to acquire
1,610,000 shares of common stock have an exercise price of $15.00 per share and
expire on July&nbsp;1, 2005. This exercise price is equal to the price per share of
common stock in the private offering and approximates the market value of the
common stock at September&nbsp;30, 2003. Therefore, the assumed exercise of the
warrants were not considered to be dilutive for purposes of calculating diluted
earnings per share.
</FONT>
<P align="left"><FONT size="2"><I>Recently Issued Accounting Pronouncements</I>
</FONT>
<P align="left"><FONT size="2">In January 2003, the FASB issued FASB Interpretation No.&nbsp;46, &#147;Consolidation of
Variable Interest Entities&#148; (&#147;FIN 46&#148;). FIN 46 provides guidance on
identifying entities for which control is achieved through means other than
through voting rights (a &#147;variable interest entities&#148; or &#147;VIE&#148;), and how to
determine when and which business enterprise should consolidate a VIE. In
addition, FIN 46 requires that both the primary beneficiary and all other
enterprises with a significant variable interest in VIE make additional
disclosures. The transitional disclosure requirements are effective for the
interim or the annual period ending after December&nbsp;31, 2003. Management is in
the process of evaluating all of its mezzanine loans and preferred equity
investments, which may be deemed variable interest entities under the provision
of FIN 46. A definitive conclusion can not be reached until the evaluation has
been completed.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 3 - LOANS AND INVESTMENTS</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="69%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Bridge loans</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">135,136,947</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mezzanine loans</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56,766,060</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred equity investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21,225,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,977,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">215,105,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unearned revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(868,226</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">214,237,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>Concentration of Borrower Risk</I>
</FONT>

<P align="left"><FONT size="2">The Company is subject to concentration risk in that, as of September&nbsp;30, 2003,
the unpaid principal balance relating to nine loans represented approximately
37% of total loans held for investment and are with three unrelated borrowers.
The Company had 30 loans and investments as of September&nbsp;30, 2003.
</FONT>


<P align="center"><FONT size="2"> F-8</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 4 - INVESTMENT IN EQUITY AFFILIATES</B>
</FONT>
<P align="left"><FONT size="2">In June 2003, ACM invested approximately $818,000 in exchange for a 12.5%
non-controlling interest in a joint venture, which was formed to acquire,
develop and/or sell real estate assets. This investment was purchased by the
Company from ACM in August 2003. The Company accounts for this investment
under the equity method. In addition, as of September&nbsp;30, 2003, the Company had
two mezzanine loans, secured by a second lien position in the ownership
interests of the borrower and the property, to this joint venture totaling $6.0
million outstanding. The loans require monthly interest payments based on
LIBOR and mature in May 2006. Interest income recorded from these loans was
approximately $97,000 for the period ended September&nbsp;30, 2003.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 5 - NOTES PAYABLE AND REPURCHASE AGREEMENTS</B>
</FONT>
<P align="left"><FONT size="2">The Company utilizes warehouse lines of credit and repurchase agreements
to finance its loans and investments. Borrowings underlying these arrangements
are secured by substantially all the Company&#146;s loans and investments.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="83%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Structured transaction facility, financial institution, $250
million committed line, expiration June 2006, interest rate
variable based on LIBOR; the weighted average note rate was
3.38%.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">28,446,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">Repurchase agreement, financial institution, $100&nbsp;million
committed line, expiration November 2003 interest is
variable based on LIBOR; the weighted average note rate was
3.30%.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">63,467,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">Repurchase agreement, financial institution, $50&nbsp;million
committed line, expiration November 2005, interest rate
variable based on LIBOR.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable and repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">91,913,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The $250&nbsp;million structured
transaction facility contains profit-sharing arrangements between the
Company and the lender which provide for profit sharing percentages
ranging from 20% to 45% of net interest income of the loans and
investments financed. This cost is included in interest expense.
</FONT>

<P align="left"><FONT size="2">Each of the credit facilities contains various financial covenants and
restrictions, including minimum net worth and debt-to-equity ratios. The
Company is in compliance with all covenants and restrictions for the period
presented.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 6 &#150; MINORITY INTEREST</B>
</FONT>
<P align="left"><FONT size="2">On July&nbsp;1, 2003 ACM contributed $213.1&nbsp;million of structured finance assets and
$169.2&nbsp;million of borrowings supported by $43.9&nbsp;million of equity in exchange
for a commensurate equity ownership in ARLP, the Company&#146;s operating
partnership. This transaction was accounted for as minority interest and
entitles ACM to a 28% profits interest in the Company which is recorded under
the equity method.
</FONT>
<P align="center"><FONT size="2">F-9</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 7 &#150; COMMITMENTS AND CONTINGENCIES</B>
</FONT>
<P align="left"><FONT size="2"><I>Litigation</I>
</FONT>
<P align="left"><FONT size="2">In the normal course of business, the Company is subject to various legal
proceedings and claims, the resolution of which, in management&#146;s opinion, will
not have a material adverse effect on the financial position or the results of
operations of the Company.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 8 &#150; SHAREHOLDERS&#146; EQUITY</B>
</FONT>
<P align="left"><FONT size="2"><I>Common Stock</I>
</FONT>
<P align="left"><FONT size="2">The Company&#146;s charter provides for the issuance of up to 500&nbsp;million shares of
common stock, par value $.01 per share, and 100&nbsp;million shares of preferred
stock, par value $.01 per share.
</FONT>
<P align="left"><FONT size="2">The Company was incorporated in June 2003 and was initially capitalized through
the sale of 67 shares of common stock for $1,005.
</FONT>
<P align="left"><FONT size="2">On July&nbsp;1, 2003 the Company completed a private offering for the sale of
1,610,000 units (including an over-allotment option), each consisting of five
shares of the Company&#146;s common stock and one warrant to purchase one share of
common stock, at $75 per unit, for proceeds of approximately $110.6&nbsp;million,
net of expenses. 8,050,000 shares of common stock were sold in the offering.
In addition, the Company issued 147,500 shares of stock under the stock
incentive plan as described below under &#147;Deferred Compensation.&#148;
</FONT>
<P align="left"><FONT size="2"><I>Deferred Compensation</I>
</FONT>
<P align="left"><FONT size="2">The Company has a stock incentive plan, under which the board of directors has
the authority to issue shares of stock to certain directors, officers and
employees of the Company and ACM. Under the stock incentive plan, 185,000
shares of common stock were reserved for issuance pursuant to restricted stock
awards, and 147,500 restricted stock awards were made upon consummation of the
private offering of units on July&nbsp;1, 2003. Of the shares awarded, two-thirds
vested immediately and the remaining one-third will vest ratable over three
years on the anniversary date of the initial award. Dividends will be paid on
the restricted shares as dividends are paid on shares of the Company&#146;s common
stock whether or not they are vested. For accounting purposes, the Company
measures the compensation costs for these shares as of the date of the grant
and expenses such amounts against earnings, either at the grant date (for the
portion that vest immediately) or ratably over the respective vesting periods.
Such amounts appear on the Company&#146;s Consolidated Statement of Operations under
&#147;stock-based compensation expense.&#148;
</FONT>
<P align="left"><FONT size="2"><I>Warrants</I>
</FONT>
<P align="left"><FONT size="2">In connection with the private
offering of units by the Company on July&nbsp;1, 2003, the Company issued warrants to acquire
1,610,000 shares of common stock, as adjusted for dilution, at $15 per share.
These warrants expire on July&nbsp;1, 2005.
</FONT>
<P align="center"><FONT size="2">F-10</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 8 &#150; SHAREHOLDERS&#146; EQUITY (continued)</B>
</FONT>
<P align="left"><FONT size="2"><I>Preferred Stock</I>
</FONT>
<P align="left"><FONT size="2">Concurrent with the formation of the Company, ACM contributed a portfolio of
structured finance investments and related debt to ARLP, the operating
partnership of the Company, in exchange for 3,146,724 units of limited
partnership interest in ARLP and warrants to purchase an additional 629,345
operating partnership units. Concurrently, the Company, ARLP and ACM entered
into a pairing agreement. Pursuant to the pairing agreement, each operating
partnership unit issued to ACM and issuable to ACM upon exercise of its
warrants for additional operating partnership units in connection with the
contribution of initial assets was paired with one share of the Company&#146;s
special voting preferred stock. In addition, ACM paid the Company $31,467.
Each share of special voting preferred stock entitles the holder to one vote on
all matters submitted to a vote of the Company&#146;s shareholders. A holder of
special voting preferred stock will not be entitled to any regular or special
dividend payments or other distributions, other than a $.01 per share
liquidation preference. The Company has classified and designated
5,000,000&nbsp;shares of its 100,000,000 authorized shares of
preferred stock as special voting preferred stock.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS</B>
</FONT>
<P align="left"><FONT size="2">The following table summarizes the carrying values and the estimated fair
values of financial instruments as of September&nbsp;30, 2003. Fair value estimates
are dependent upon subjective assumptions and involve significant uncertainties
resulting in variability in estimates with changes in assumptions.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>September 30, 2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Estimated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial assets:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">214,237,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">214,237,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial liabilities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable and repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,913,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,913,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The following methods and assumptions were used by the Company in estimating
the fair value of each class of financial instrument:
</FONT>
<P align="left"><FONT size="2"><I>Loans and investments, net: </I>Fair values of variable-rate loans and investments
with no significant change in credit risk are based on carrying values. Fair
values of other loans and investments are estimated using discounted cash flow
methodology, using discount rates, which, in the opinion of management, best
reflect current market interest rates that would be offered for loans with
similar characteristics and credit quality.
</FONT>
<P align="left"><FONT size="2"><I>Related party loans, net: </I>Fair values of variable-rate loans and investments
with no significant change in credit risk are based on carrying values. Fair
values of other loans and investments are estimated using discounted cash flow
methodology, using discount rates, which, in the opinion of management, best
reflect current market interest rates that would be offered for loans with
similar characteristics and credit quality.
</FONT>
<P align="left"><FONT size="2"><I>Notes payable and repurchase
agreements:</I> Fair values approximate the carrying
values reported in the balance sheets.
</FONT>
<P align="center"><FONT size="2">F-11</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 10 - RELATED PARTY TRANSACTIONS</B>
</FONT>
<P align="left"><FONT size="2">Related Party Loans:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Bridge loans</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">16,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mezzanine loans</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">26,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">ACM has a 50% non-controlling interest in a joint venture, which was formed to
acquire, develop and/or sell real estate assets. At September&nbsp;30, 2003, ACM&#146;s
investments in this joint venture were approximately $2.6&nbsp;million. At
September&nbsp;30, 2003, the Company had a $16.0&nbsp;million bridge loan outstanding to
the joint venture, which is collateralized by a first lien position on a
commercial real estate property. There is a limited guarantee on the loan of
50% by the chief executive officer of the Company and 50% by the key principal
of the joint venture. The loan requires monthly interest payments based on
LIBOR and matures in October 2004. The Company has agreed to provide the
borrower with additional mezzanine financing in the amount of up to $8.0
million. The mezzanine financing requires interest payments based on LIBOR and
matures in May 2006. The loan will be funded in two equal installments of $4.0
million. The funding will be drawn down as construction progresses. The
interest on the first component, which was funded by ACM in June 2003 and was
purchased by the Company in July 2003, will be earned on the full $4.0&nbsp;million,
while the interest on the second component, which has yet to be funded, will be
earned as the $4.0&nbsp;million is drawn down. This additional financing is secured
by a second mortgage lien on the property. Interest income recorded from these
loans was approximately $240,000, for the period ended September&nbsp;30, 2003.
</FONT>
<P align="left"><FONT size="2">The Company&#146;s $16.0&nbsp;million bridge loan to the joint venture was contributed by
ACM as one of the structured finance assets contributed to the Company on July
1, 2003. At the time of contribution, ACM also agreed to provide a limited
guarantee of the loan&#146;s principal amount based any profits realized on its
retained 50% interest in the joint venture with the borrower and ACM&#146;s
participating interests in borrowers under three other contributed structured
finance assets.
</FONT>
<P align="left"><FONT size="2">In June 2003, ACM invested approximately $818,000 in exchange for a 12.5%
non-controlling interest in a joint venture, which was formed to acquire,
develop and/or sell real estate assets. This investment was purchased by the
Company from ACM in August 2003. The Company accounts for this investment
under the equity method. In addition, as of September&nbsp;30, 2003, the Company had
two mezzanine loans, secured by a second lien position in the ownership
interests of the borrower and the property, to this joint venture totaling $6.0
million outstanding. The loans require monthly interest payments based on
LIBOR and mature in May 2006. Interest income recorded from these loans was
approximately $97,000 for the period ended September&nbsp;30, 2003.
</FONT>
<P align="left"><FONT size="2">At the time of ACM&#146;s origination of three of the structured finance assets that
it contributed to the Company on July&nbsp;1, 2003, each of the property owners
related to these contributed assets granted ACM participating interests that
share in a percentage of the cash flows of the underlying properties. Upon
contribution of the structured finance assets, ACM retained these participating
interests and its 50% non-controlling interest in the joint venture to which it
had made the $16.0&nbsp;million bridge loan. ACM agreed that if any portion of the
outstanding amount of any of these four contributed assets is not paid at the
its maturity or repurchase date, ACM will pay to the Company, subject to the
limitation described below, the portion of the unpaid amount of the contributed
asset up to the total amount then received by ACM due to the realization of any
profits on its retained interests associated with any other of the four
contributed assets. However, ACM will no longer be obligated to make such
payments to the Company when the remaining accumulated principal amount of the four contributed assets,
collectively, falls below $5&nbsp;million and none of the four contributed assets is
in default.
</FONT>



<P align="center"><FONT size="2"> F-12</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 11 - MANAGEMENT AGREEMENT</B>
</FONT>
<P align="left"><FONT size="2">The Company and ARLP have entered into a management agreement with ACM which
has an initial term of two years with automatic one year extensions, subject to
certain termination rights. After the initial two year term, the Company will
be able to terminate the management agreement without cause for any reason upon
six months&#146; prior written notice to ACM. If the Company terminates the
management agreement without cause, or gives ACM notice of non-renewal, in
order to manage its operations internally, the Company will be required to pay
ACM a termination fee equal to the base management fee and the incentive
compensation earned by ACM during the 12-month period preceding the
termination. If, without cause, the Company terminates the management
agreement or elects not to renew it for any other reason, the Company will be
required to pay ACM a termination fee equal to two times the base management
fee and the incentive fee earned by ACM during the 12-month period preceding
the termination.
</FONT>
<P align="left"><FONT size="2">The Company&#146;s chief executive officer is also ACM&#146;s chief executive officer and
controlling equity owner. ACM has agreed to provide the Company with structured
finance investment opportunities and loan servicing as well as other services
necessary to operate its business. The Company&#146;s chief executive officer,
chief financial officer and general counsel and secretary are not employees of
the Company. The Company relies to a significant extent on the facilities and
resources of ACM to conduct its operations. The management agreement requires
ACM to manage the business affairs in conformity with the policies and the
general investment guidelines that are approved and monitored by the Company&#146;s
board of directors. ACM&#146;s management of the Company is under the direction or
supervision of the Company&#146;s board of directors.
</FONT>
<P align="left"><FONT size="2">For performing services under the management agreement, the Company will pay
ACM an annual base management fee payable monthly in cash as a percentage of
ARLP&#146;s equity and equal to 0.75% per annum of the equity up to $400&nbsp;million,
0.625% per annum of the equity from $400&nbsp;million to $800&nbsp;million and 0.5% per
annum of the equity in excess of $800&nbsp;million. For purposes of calculating the
base management fee, equity equals the month end value computed in accordance
with generally accepted accounting principles of (1)&nbsp;total partners&#146; equity in
ARLP, plus or minus (2)&nbsp;any unrealized gains, losses or other items that do not
affect realized net income.
</FONT>
<P align="left"><FONT size="2">The Company will also pay ACM incentive compensation each fiscal quarter,
calculated as (1)&nbsp;25% of the amount by which (a)&nbsp;ARLP&#146;s funds from operations
per unit of partnership interest in ARLP, adjusted for certain gains and
losses, exceeds (b)&nbsp;the product of (x)&nbsp;9.5% per annum or the 10&nbsp;year Treasury
Rate plus 3.5%, whichever is greater, and (y)&nbsp;the weighted average of book
value of the net assets contributed by ACM to ARLP per ARLP partnership unit,
the offering price per share of the Company&#146;s common equity in the private
offering on July&nbsp;1, 2003 and subsequent offerings and the issue price per ARLP
partnership unit for subsequent contributions to ARLP, multiplied by (2)&nbsp;the
weighted average of ARLP&#146;s outstanding partnership units. At least 25% of this
incentive compensation is paid to ACM in shares of the Company&#146;s common stock,
subject to ownership limitations in the Company&#146;s charter. The Company has
also agreed to share with ACM a portion of the origination fees that it
receives on loans it originates through ACM.
</FONT>
<P align="left"><FONT size="2">ACM is responsible for all costs incident to the performance of its duties
under the management agreement, including compensation of its employees, rent
for facilities and other &#147;overhead&#148; expenses. The Company is required to pay or
reimburse ACM for all expenses incurred on behalf of the Company in connection
with the raising of capital or the incurrence of debt, interest expenses, taxes and
license fees, litigation and extraordinary or non recurring expenses.
</FONT>

<P align="center"><FONT size="2"> F-13</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">For the Three Months Ended September&nbsp;30, 2003<BR>
(unaudited)
</FONT>

<P align="left"><FONT size="2"><B>NOTE 12 &#150; DIVIDENDS</B>
</FONT>
<P align="left"><FONT size="2">In order to qualify as a REIT, the Company must currently distribute at least
90% of its taxable income and must distribute 100% of its taxable income in
order not to be subject to corporate federal income taxes on retained income.
The Company anticipates it will distribute all of its taxable income to its
shareholders. Because taxable income differs from cash flow from operations
due to non-cash revenues or expenses (such as depreciation), in certain
circumstances, the Company may generate operating cash flow in excess of its
dividends or, alternatively, may be required to borrow to make sufficient
dividend payments.
</FONT>
<P align="left"><FONT size="2">On November&nbsp;5, 2003, the Company declared a dividend of $.25 per share of
common stock, payable with respect to the three months ended September&nbsp;30,
2003, to stockholders of record at the close of business on November&nbsp;5, 2003.
The Company intends to distribute this dividend on November &nbsp;18, 2003.
</FONT>

<P align="center"><FONT size="2"> F-14</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and
Subsidiaries<BR>
Schedule&nbsp;IV- Loans and Other Lending Investments</B>
</FONT>

<P align="center"><FONT size="2"><B>As of September&nbsp;30,
2003<BR>(Unaudited)</B>
</FONT>


<DIV align="left"></DIV>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

   <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

   <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

   <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

   <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Periodic Payment</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Maturity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Interest Pay</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accrual</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Prior</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Face</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Type</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Location</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Terms</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Liens</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1"><B>Senior Mortgages:</B></FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>



<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">New York, NY</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 2.25%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">16,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">16,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Co-op</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">New York, NY</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">10/2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">18.00%</FONT></TD>
    <TD nowrap ALIGN="LEFT"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,100,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">1,100,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 5.50%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD NOWRAP><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family/Office</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Massachusetts</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 7.00%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">5,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 5.00%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Hotel</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">New York, NY</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 6.50%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11,900,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">11,900,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 3.50%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Winter Park, FL</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 5.50%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">15,400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Principal and</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 3.00%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Las Vegas, NV</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 5.25%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">25,232,102</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">25,232,102</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 6.65%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Hotel</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Deland, FL</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 12.50%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,700,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4,700,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Indiana</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">3/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 4.25%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">14,624,845</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">14,624,845</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 4.00%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Ontario, CA</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2005</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 5.50%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,130,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9,130,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 3.50%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Baltimore, MD</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">4/2006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 5.00%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">14,200,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">14,200,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 3.50%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Lauderdale Lakes, FL</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">12/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 5.50%</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 3.00%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">Miami Lakes, FL</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">9/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 5.00%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18,850,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18,850,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Libor &#043; 4.500%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Multi-family</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">San Francisco, CA</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Interest Only</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">7/2004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="1">Floor 6.00%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">N/A</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18,850,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">18,850,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
   <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
 <TD colspan="3"><HR size="1" noshade></TD>
   <TD><FONT size="1">&nbsp;</FONT></TD>
 <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD COLSPAN="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="1">Total Senior Mortgages</FONT></DIV></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">151,136,947</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="1">$</FONT></TD>
    <TD align="right"><FONT size="1">151,136,947</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
   <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
 <TD colspan="3"><HR size="4" noshade></TD>
   <TD><FONT size="1">&nbsp;</FONT></TD>
 <TD colspan="3"><HR size="4" noshade></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">F-15</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>Arbor Realty Trust, Inc. and
Subsidiaries<BR>
Schedule&nbsp;IV- Loans and Other Lending Investments (continued)</B>
</FONT>

<P align="center"><FONT size="2"><B>As of September&nbsp;30,
2003<BR>(Unaudited)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1"><B>&nbsp;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1"><B>Interest</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Periodic Payment</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Maturity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Interest Pay</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Accrual</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Prior</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Carrying</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Type</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Location</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Terms</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Rate Index</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Liens</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Face Amount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="bottom" nowrap align="center"><FONT size="1"><B>Amount</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1"><b>Mezzanine Loans:</b></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Commercial</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">
Brooklyn, NY
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">5/2006
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 3.50%<BR>
Floor 5.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043;
8.00%<BR>

Floor 9.50%
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">1,600,000
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,500,000
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,500,000</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Condo</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">
New York, NY
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">5/2006
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 7.00%<BR>
Floor 10.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">16,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4,000,000</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
New York, NY
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2/2004
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 3.00%<BR>
Floor: 8.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 5.00%
Floor 12.50%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">31,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">10,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">10,000,000</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Commercial</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Brooklyn, NY
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">5/2006
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 3.50%<BR>
Floor 5.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 8.00%
Floor 9.50%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">7,700,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">3,500,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">3,500,000</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Tampa, FL
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">12/2003
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 6.75%<BR>
Floor 12.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">21,375,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4,000,000</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Glassboro, NJ
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">6/2006
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 7.00%<BR>
Floor 10.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">11,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,000,000</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Hotel</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Arizona
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">7/2006
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 7.00%<BR>
Floor 9.00%<BR>
Cap 10.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">10,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,220,491
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,220,491</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Baltimore, MD
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">5/2006
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 4.50% (Year 1);<BR>
Libor &#043; 6.50% (Year 2);<BR>
Libor &#043; 7.50% (Year 3)<BR>
Libor Floor 2.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">14,244,862
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4,725,569
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4,725,569</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
New Jersey
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4/2005
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 5.25<BR>
Floor 6.75%%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">14,016,998
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">3,000,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">3,000,000</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Multifamily</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Baltimore, MD
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">9/2005
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 5.50% (Year 1);<BR>
Libor &#043; 6.50% (Year 2);<BR>
Libor &#043; 7.50% (Year 3)<BR>
Libor Floor 2.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">59,258,232
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">11,520,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">11,520,000</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="1" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="1" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="1">Total Mezzanine Loans</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">166,957,592
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">47,466,060
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">47,466,060</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="4" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="4" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="4" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Preferred Equity:</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Texas
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">1/2004
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 4.50%<BR>
Floor 9.56%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">12,776,051
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4,991,001
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4,991,001</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Holyoke, MA
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">1/2005
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 4.50%<BR>
Floor: 10.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 7.50%
Floor: 13.50%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">5,442,960
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,500,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,500,000</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Baltimore, MD
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">11/2006
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 4.50% (Year 1);<BR>
Libor &#043; 6.50% (Year 2);<BR>
Libor &#043; 7.50% (Year 3)<BR>
Libor Floor 2.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">11,680,502
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">7,074,431
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">7,074,431</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Santa Ana, CA
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">1/2005
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 5.00%<BR>
Floor 12.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">10,647,537
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">3,860,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">3,860,000</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
New Jersey
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">4/2005
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 5.25%<BR>
Floor 6.75%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">189,314,199
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">19,300,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">19,300,000</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Multi-family</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Denver, CO
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">Interest Only
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">3/2004
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">Libor &#043; 6.00%<BR>
Floor 10.00%
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">23,398,573
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,800,000
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">2,800,000</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="1" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="1" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><FONT size="1"><Div style="margin-left:30px;text-indent:-10px;">
Total Preferred Equity</Div></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">253,249,822
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">40,525,432
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">40,525,432</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="4" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="4" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="4" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1"><Div style="margin-left:40px;text-indent:-10px;">Other Investments:</Div></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="1"><Div style="margin-left:50px;text-indent:-10px;">Hotel</Div></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">
Miami, FL
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">8/2023
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">7.39% Fixed
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">N/A
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">10,000,000
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">1,977,245
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">1,977,245</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="4" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="4" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="4" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="1">Total Loans and investments</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">430,207,414
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">241,105,684
</FONT></TD>
    <TD valign="top" align="right"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">241,105,684</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="4" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="1"><HR size="4" noshade>
</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><HR size="4" noshade></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-16</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE STRUCTURED FINANCE BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES" -->
<DIV align="left"><A NAME="029"></A></DIV>
<P align="center"><FONT size="2"><B>INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE STRUCTURED FINANCE BUSINESS<BR>
OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Page</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Report of Independent Certified Public Accountants</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial Statements:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Statements of Assets and Liabilities at December&nbsp;31, 2002 and 2001
and at June&nbsp;30, 2003 (Unaudited)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated Statements of Revenue and Direct Operating Expenses for the Years
Ended December&nbsp;31, 2002, 2001 and 2000, the Six Months Ended (Unaudited) June
30, 2003 and the Nine Months Ended (Unaudited) September&nbsp;30, 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes to Consolidated Financial Statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mezzobridge Funding LLC Financial Statements for the Year Ended and at December&nbsp;31, 2000 (Audited) and
related notes</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-17</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS</B>
</FONT>

<P align="left"><FONT size="2"><B>To the Members of<BR>
Arbor Commercial Mortgage, LLC</B>
</FONT>

<P align="left"><FONT size="2">We have audited the accompanying consolidated statements of assets and
liabilities of the Structured Finance Business (the &#147;SF Business&#148;) or (the
&#147;Company&#148;) of Arbor Commercial Mortgage, LLC and Subsidiaries (&#147;ACM&#148;) as of
December&nbsp;31, 2002 and 2001, and the related consolidated statements of revenue
and direct operating expenses for each of the three years in the period ended
December&nbsp;31, 2002. These financial statements are the responsibility of ACM&#146;s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
</FONT>
<P align="left"><FONT size="2">We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. 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
audits provide a reasonable basis for our opinion.
</FONT>
<P align="left"><FONT size="2">The accompanying financial statements were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Registration Statement on Form&nbsp;S-11 of Arbor
Realty Trust, Inc. and do not purport to be a complete presentation of the
assets and liabilities or results of operations that would have resulted if the
SF Business had operated as an unaffiliated independent company.
</FONT>
<P align="left"><FONT size="2">In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of the SF Business of ACM as
of December&nbsp;31, 2002 and 2001, and the revenue and direct operating expense for
each of the three years in the period ended December&nbsp;31, 2002, in conformity
with accounting principles generally accepted in the United States of America.
</FONT>
<P align="left"><FONT size="2">Grant Thornton LLP
</FONT>

<P align="left"><FONT size="2">New York, New York<BR>
October&nbsp;23, 2003</FONT>

<P align="center"><FONT size="2">F-18</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>Consolidated Statements of Assets and Liabilities</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">204,561,578</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">172,142,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">160,183,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,277,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,952,078</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,880,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investment in equity affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,654,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,586,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,957,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Real estate owned</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,542,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,258,931</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,632,329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,623,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,693,402</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">241,667,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">200,563,236</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">183,713,747</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable and repurchase
agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">171,045,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">141,836,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">132,409,735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,640,962</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,444,329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,676,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">172,686,366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">144,280,806</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">134,086,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Commitments and contingencies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net Assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">68,981,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">56,282,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">49,627,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>See notes to consolidated financial statements.</I>
</FONT>

<P align="center"><FONT size="2">F-19</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>Consolidated Statements of Revenue and Direct Operating Expenses</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Six Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Nine Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>Year Ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Revenue:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,688,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,798,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">14,532,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">14,667,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,707,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on sale of
loans and real
estate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,024,268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,006,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,470,999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,226,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,880,825</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income from
equity
affiliates</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">632,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">632,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,403,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,028,835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,552,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">572,161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,090,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,668,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">652,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,265,147</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,009,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,725,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,965,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,270,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Direct operating
expenses:</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,468,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,832,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,586,640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,029,374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,518,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Employee
compensation
and benefits</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,751,147</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,105,445</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,827,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,888,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,026,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling and
administrative</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">485,266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">582,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">910,924</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">839,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">442,487</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for loan
losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,255,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,315,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total direct
operating expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,737,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,775,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13,639,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,997,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,227,274</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenue in excess
of direct
operating
expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,527,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">8,233,802</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">10,086,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">9,967,993</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">9,042,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>See notes to consolidated financial statements.</I>
</FONT>

<P align="center"><FONT size="2">F-20</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 1 -DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION</B>
</FONT>
<P align="left"><FONT size="2">On July&nbsp;1, 2003 Arbor Commercial Mortgage, LLC (&#147;ACM&#148;) contributed a portfolio
of structured finance investments and related debt to Arbor Realty Limited
Partnership (&#147;ARLP&#148;), the operating partnership of Arbor Realty Trust, Inc.
(&#147;ART&#148;). In addition, certain employees of ACM were transferred to ARLP.
These assets, liabilities and employees represent a substantial portion of
ACM&#146;s structured finance business (&#147;SF Business&#148;) or (the &#147;Company&#148;). Through
its SF Business, ACM invests in real estate related bridge and mezzanine loans,
preferred equity and, in limited cases, and other real estate related assets.
</FONT>
<P align="left"><FONT size="2">The SF Business of Arbor Commercial Mortgage, LLC is not a legal entity and the
assets and liabilities associated with the SF Business are components of a
larger business. Accordingly, the information included in the accompanying
consolidated financial statements has been obtained from ACM&#146;s consolidated
historical accounting records. The SF Business never operated as a separate
business entity or division of ACM but rather as an integrated part of ACM&#146;s
consolidated business. Accordingly, the statements of revenue and direct
operating expenses do not include charges from ACM for corporate general and
administrative expense because ACM considered such items to be corporate
expenses and did not allocate them to individual business units. Such expenses
included costs for ACM&#146;s executive management, corporate facilities and
overhead costs, corporate accounting and treasury functions, corporate legal
matters and other similar costs.
</FONT>
<P align="left"><FONT size="2">The statements of revenue and direct operating expenses include the revenue and
direct operating expenses that relate to the SF Business. Direct operating
expenses include interest expense applicable to the funding costs of the SF
Business loans and investments, salaries and related fringe benefit costs,
provision for loan losses and other expenses directly associated with
revenue-generating activities. Direct operating expenses also include
allocations of certain expenses, such as telephone, office equipment rental and
maintenance, office supplies and marketing, which were directly associated with
the SF Business and were allocated based on headcount of the SF Business in
relation to the total headcount of ACM. All of these allocations are based on
assumptions that management believes are reasonable under the circumstances.
</FONT>
<P align="left"><FONT size="2">A statement of cash flows is not presented because the SF Business did not
maintain a separate cash balance. Other than the debt required to fund the
loans and investments made by the SF Business, its operating activities were
funded by ACM. Because the SF Business never operated as a separate business
or division of ACM, the accompanying consolidated financial statements are not
intended to be a complete presentation of the historical financial position,
results of operations and cash flows of the SF Business. The historical
operating results of the SF Business may not be indicative of the future
operating results of ART. The accompanying consolidated financial statements
were prepared for inclusion in the Form&nbsp;S-11 of ART and do not purport to
reflect the assets and liabilities or results of operations that would have
resulted if the SF Business had operated as an unaffiliated independent
company.
</FONT>

<P align="center"><FONT size="2">F-21</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B>
</FONT>
<P align="left"><FONT size="2"><I>Use of Estimates</I>
</FONT>
<P align="left"><FONT size="2">The preparation of consolidated financial statements in conformity with
accounting principals generally accepted in the United States of America
requires management to make estimates and assumptions in determining the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
</FONT>
<P align="left"><FONT size="2"><I>Real Estate Owned</I>
</FONT>
<P align="left"><FONT size="2">Real estate owned represents commercial real estate property which the SF
Business owns and operates. Such assets are not depreciated and are carried at
the lower of cost or fair value less cost to sell. The Company reviews its
real estate assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
</FONT>
<P align="left"><FONT size="2"><I>Loans and Investments</I>
</FONT>
<P align="left"><FONT size="2">Loans held for investment are intended to be held to maturity and, accordingly,
are carried at cost, net of unamortized loan origination costs and fees, unless
such loan or investment is deemed to be impaired.
</FONT>
<P align="left"><FONT size="2">The SF Business invests in preferred equity interests that allow the SF
Business to participate in a percentage of the underlying property&#146;s cash flows
from operations and proceeds from a sale or refinancing. At the inception of
each such investment, management must determine whether such investment should
be accounted for as a loan, joint venture or as real estate. To date,
management has determined that all such investments are properly accounted for
and reported as loans.
</FONT>
<P align="left"><FONT size="2">Specific valuation allowances are established for impaired loans based on the
fair value of collateral on an individual loan basis. The fair value of the
collateral is determined by an evaluation of operating cash flow from the
property during the projected holding period, and estimated sales value
computed by applying an expected capitalization rate to the stabilized net
operating income of the specific property, less selling costs, discounted at
market discount rates. If upon completion of the valuation, the fair value of
the underlying collateral securing the impaired loan is less than the net
carrying value of the loan, an allowance is created with a corresponding charge
to the provision for loan losses. The allowance for each loan is maintained at
a level believed adequate by management to absorb probable losses.
</FONT>

<P align="center"><FONT size="2">F-22</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B>
</FONT>
<P align="left"><FONT size="2"><I>Revenue Recognition</I>
</FONT>
<P align="left"><FONT size="2">The revenue recognition policies of the SF Business are as follows:
</FONT>
<P align="left"><FONT size="2">Interest Income &#150; Interest income is recognized on the accrual basis as it
is earned. In most instances, the borrower pays an origination fee, an
additional amount of interest at the time the loan is closed, and deferred
interest upon maturity of the loan. This additional income, as well as any
direct loan origination costs incurred, is deferred and recognized over the
life of the related loan as a yield adjustment. Income recognition is
suspended for loans when in the opinion of management a full recovery of income
and principal becomes doubtful. Income recognition is resumed when the loan
becomes contractually current and performance is demonstrated to be resumed
Several of the loans provide for accrual of interest at specified rates, which
differ from current payment terms. Interest is recognized on such loans at the
accrual rate subject to management&#146;s determination that accrued interest and
outstanding principal are ultimately collectible, based on the underlying
collateral and operations of the borrower. If management cannot make this
determination regarding collectibility, interest income is recognized only upon
actual receipt.
</FONT>
<P align="left"><FONT size="2">Gain on sale of loans and real estate&#150; For the sale of loans and real estate,
revenue recognition occurs when all the incidence of ownership passes to the
buyer. In some circumstances, the SF Business may retain an interest in the
property. When this occurs, the investment in real estate retained is recorded
at its allocated cost and revenue is recognized on the percentage of the
property sold.
</FONT>
<P align="left"><FONT size="2">Income from equity affiliates &#150; The SF Business has several joint ventures that
were formed to lend to, acquire, develop and/or sell real estate assets. Such
investments are recorded under the equity method. The company records its
share of the net income from the underlying properties. The gain or loss on
disposition of a joint venture interest is recorded as gain on sale of loans
and real estate.
</FONT>
<P align="left"><FONT size="2">Other Income &#150; Other income includes several types of income which are recorded
upon receipt. Certain of the Company&#146;s loans and investments provide for
additional payments based on the borrower&#146;s operating cash flow, appreciation
of the underlying collateral, payments calculated based on the timing of when
the loan pays off and changes in interest rates. Such amounts are not readily
determinable and are recorded as other income upon receipt.
</FONT>
<P align="left"><FONT size="2"><I>Income Taxes</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No provision or benefit for income taxes has been provided in the
accompanying consolidated financial statements due to the fact that the SF
Business was not operated as a stand-along unit and no allocation of ACM&#146;s
income tax provision/benefit has been made to the SF Business. ACM is a limited
liability company (which is taxed as a partnership), and accordingly, the
taxable income or loss of ACM is included in the federal and state income tax
returns of ACM&#146;s individual members.
</FONT>

<P align="center"><FONT size="2">F-23</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B>
</FONT>
<P align="left"><FONT size="2"><I>Recently Issued Accounting Pronouncements</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2003, the FASB issued FASB Interpretation No.&nbsp;46,
&#147;Consolidation of Variable Interest Entities&#148; (&#147;FIN 46&#148;). FIN 46 provides
guidance on identifying entities for which control is achieved through means
other than through voting rights (a &#147;variable interest entities&#148; or &#147;VIE&#148;), and
how to determine when and which business enterprise should consolidate a VIE.
In addition, FIN 46 requires that both the primary beneficiary and all other
enterprises with a significant variable interest in VIE make additional
disclosures. The transitional disclosure requirements will take effect almost
immediately and are required for all consolidated financial statements
initially issued after January&nbsp;31, 2003. Management is in the process of
evaluating all of its mezzanine loans and preferred equity investments, which
may be deemed variable interest entities under the provision of FIN 46. A
definitive conclusion can not be reached until the evaluation has been
completed.
</FONT>

<P align="left"><FONT size="2"><B>NOTE 3 &#150; SELECTED CASH FLOW INFORMATION</B>
</FONT>

<P align="left"><FONT size="2">A statement of cash flows is not presented because the SF Business did not
maintain a separate cash balance. Other than the debt required to fund the
loans and investments of the SF Business, operating activities were funded by
ACM. Selected cash flow from investing and financing activities is presented
below.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>June
30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>September
30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003<BR>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002<BR>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash flows from investing
activities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments originated</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(117,176,849</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(58,337,833</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(116,810,564</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(53,165,836</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">(60,004,410</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Payoffs and paydowns of loans and
investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">76,106,055</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">73,445,047</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">105,608,865</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,044,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22,982,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from sale of real estate
held for sale</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,801,548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Purchase of joint venture interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7,619,272</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash flows from financing
activities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Proceeds from notes payable and
repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">93,228,860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">44,410,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">86,853,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,558,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">51,316,473</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Payoffs and paydowns of notes
payable and repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(64,019,933</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(62,733,182</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">77,426,577</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(63,111,680</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(27,997,502</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-24</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 4 - LOANS AND INVESTMENTS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>June
30,<BR>2003</B></FONT></TD>

    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Bridge loans</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">120,784,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">93,789,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">81,947,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mezzanine loans</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56,571,799</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59,483,271</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">58,481,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Preferred equity investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,492,643</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,530,562</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,491,001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11,005,835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,469,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,151,162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,854,572</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">175,272,806</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">164,071,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unearned revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,620,513</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,167,814</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,223,042</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Allowance for loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,672,481</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,962,481</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,665,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">204,561,578</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">172,142,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">160,183,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">In 2001 the Company had $1,665,000 in allowance for loan losses related to
three bridge loans, that were deemed to be impaired. In accordance with the
Company&#146;s policy for revenue recognition, income recognition was suspended on
these loans. In 2002 these loans were repaid and the total outstanding
principal balance was collected. The $1,665,000 of allowance for loan losses
was re -allocated to the loans that were deemed to be impaired in 2002.
</FONT>
<P align="left"><FONT size="2">A bridge loan with a carrying value of $10,333,931 was foreclosed and
reclassified as real estate owned in 2002. Prior to foreclosure, the Company
in 2002 recorded a provision for loan losses of $3,075,000 to reflect this
asset at its estimated fair value plus estimated foreclosure cost. This amount
was charged-off when the loan was reclassified as real estate owned. In 2003
the Company paid approximately $284,000 in foreclosure related cost, which were
added to this assets carrying value.
</FONT>
<P align="left"><FONT size="2">A bridge loan with a carrying value of $4,100,000 was deemed to be impaired in
2002 and $700,000 of allowance for loan losses was allocated to this loan to
reflect this loan at its estimated fair value. In accordance with the Company&#146;s
policy for revenue recognition, income recognition has been suspended on this
loan. In 2003, the Company received a $3.75&nbsp;million payment from the borrower
in partial satisfaction of the loan, which amount was $350,000 in excess of
the loan&#146;s carrying value. The Company reduced its allowance for loan losses
and recorded other income for the excess amount received.
</FONT>
<P align="left"><FONT size="2">A bridge loan and a mezzanine loan, secured by the same property, with a
carrying value of $10,584,492 was deemed to be impaired in 2002 and $305,000 of
allowance for loan losses was allocated to these loans to reflect these loans
at their estimated fair values. In accordance with the Company&#146;s policy for
revenue recognition, income recognition has been suspended on these loans
</FONT>
<P align="left"><FONT size="2">A mezzanine loan with a carrying value of $1,728,552 was deemed to be impaired
in 2002 and $660,000 of allowance for possible loan losses was allocated to
this loan as well as a $300,000 provision for loan losses was recorded to
reflect this loan at its estimated fair value. In accordance with the Company&#146;s
policy for revenue recognition, income recognition has been suspended on this
loan.
</FONT>
<P align="center"><FONT size="2">F-25</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 4 - LOANS AND INVESTMENTS (continued)</B>
</FONT>

<P align="left"><FONT size="2"><B>Allowance for Loan Losses:</B></FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>June
30,<BR>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Beginning balance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,962,481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,665,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,425,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,315,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">240,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amounts charged against
allowance for loan
losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(350,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(3,017,519</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ending balance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,672,481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,962,481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,665,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>Concentration of Borrower Risk</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is subject to concentration risk in that, as of June&nbsp;30, 2003,
December&nbsp;31, 2002 and 2001, the unpaid principal balance relating to ten,
eleven and eight loans represented approximately 36%, 46% and 37% of total
loans held for investment and are with four, five and three unrelated
borrowers, respectively. The total number of loans and investments by the
Company was 40, 36 and 34 as of June&nbsp;30, 2003, December&nbsp;31, 2002 and 2001,
respectively.
</FONT>
<P align="center"><FONT size="2">F-26</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 5 - BUSINESS ACQUISITIONS AND INVESTMENT IN EQUITY AFFILIATES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 1998, the Company entered into a joint venture, Mezzobridge
Funding, LLC, with SFG I, an affiliate of Nomura Asset Capital Corp. for the
purpose of acquiring up to $250&nbsp;million of structured finance investments.
Capital contributions and profits were shared equally by the partners. Nomura
Asset Capital Corp. provided financing to the joint venture in the form of a
repurchase agreement. The interest rate charged for the financing was based on
LIBOR. On July&nbsp;31, 2001, the Company purchased from SFG I their interest in the
joint venture.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This transaction was accounted for by the purchase accounting method. The
activities of the former joint venture have been included in the Company&#146;s
statements of revenue and direct operating expenses from the date of
acquisition, August 2001. Summarized financial data of this joint venture is as
follows:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>July
31,<BR>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="3"><FONT size="1"><B><B>(unaudited)</B></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance sheets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,975,408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,094,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans held for investment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95,130,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123,761,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other receivables and deferred costs</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,320,677</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,708,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">100,427,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">128,564,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Liabilities and members&#146; capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable - repurchase agreement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">67,494,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">90,615,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts payable and accrued expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">661,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,133,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,155,562</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,749,046</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Members&#146; capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Arbor</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,135,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,407,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other partner</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,135,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,407,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total members&#146; capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,271,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,815,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities and members&#146; capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">100,427,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">128,564,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-27</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 5 - BUSINESS ACQUISITIONS AND INVESTMENT IN EQUITY AFFILIATES (continued)</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Seven Months Ended</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>July 31,
2001<BR>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Year
Ended</B><BR><B>December 31, 2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statements of operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest earned</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">5,446,464</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">17,835,318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest and other expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,578,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,422,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">867,514</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,413,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income allocated to:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Arbor</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">433,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,706,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other partner</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">433,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,706,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">867,514</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,413,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The Company purchased the entire interest of its partner for $16,135,755, which
was equal to the members&#146; capital of the partner on the date of purchase. The
Company financed this purchase with increased debt on the existing repurchase
agreement of $6,541,075 and cash of $9,594,680, of which $1,975,408 was on hand
in the joint venture at the date of purchase and was distributed to the
partner. In conjunction with the purchase, the existing repurchase agreement
was assumed by the Company. The repurchase agreement expires in November 2003.
</FONT>
<P align="left"><FONT size="2">The Company had a 26% interest in a joint venture, which owns and operates a
multi-family real estate property. At December&nbsp;31, 2001 and 2000 the Company&#146;s
investment in this joint venture was approximately $900,000 and $1.2&nbsp;million,
respectively. During 2001 and 2000 the Company recorded net income from this
joint venture of $1,022,165 and $1,267,844, respectively. In March of 2002,
the Company sold its investment in the joint venture and recorded a gain of
$6.8&nbsp;million. The Company received net income from this joint venture of
$588,600 prior to the sale in 2002.
</FONT>
<P align="left"><FONT size="2">The Company has several other joint ventures that were formed to acquire,
develop and/or sell real estate assets which the Company does not control. At
June&nbsp;30, 2003, December&nbsp;31, 2002 and 2001, the Company&#146;s investments in these
joint ventures were approximately $3.7&nbsp;million, $2.6&nbsp;million and $2.1&nbsp;million,
respectively. The Company recorded net income from these joint ventures of
$43,750 in 2002 and net losses of $52,908 in 2001.
</FONT>
<P align="center"><FONT size="2">F-28</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 6 - NOTES PAYABLE AND REPURCHASE AGREEMENTS</B>
</FONT>

<P align="left"><FONT size="2">The Company utilizes warehouse lines of credit and repurchase agreements to
finance its loans and investments. Borrowings underlying these arrangements
are secured by substantially all the Company&#146;s loans and investments.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>June
30,<BR>2003</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Structured transaction facility, financial
institution, $150&nbsp;million committed line,
expiration August 2004, interest rate variable
based on LIBOR; the weighted average note rate was
4.13%, 4.07% and 5.50%, respectively.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">92,154,975</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">70,184,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">61,720,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Repurchase agreement, financial institution, $100
million committed line, expiration November 2003
interest is variable based on LIBOR; the weighted
average note rate was 3.40%, 3.42% and 4.44%
respectively.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,548,867</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">68,267,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66,941,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Repurchase agreement, financial institution, $50
million committed line, expiration November 2005,
interest rate variable based on LIBOR.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">n/a</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Repurchase agreement, financial institution,
uncommitted line,
Interest rate variable based on LIBOR; the
weighted average
note rate was 3.02%, 3.35% and 3.68%, respectively.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,341,562</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,384,998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,747,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable and repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">171,045,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">141,836,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">132,409,735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The $150&nbsp;million structured
transaction facility contains profit-sharing arrangements between the Company and
the lender which provide for profit sharing percentages ranging from
30% to 45% of net interest income of the loans and investments
financed. This cost is included in interest expense.
</FONT>
<P align="left"><FONT size="2">Each of the credit facilities contains various financial covenants and
restrictions, including minimum net worth and debt-to-equity ratios. The
Company is in compliance with all covenants and restrictions for all periods
presented.
</FONT>
<P align="left"><FONT size="2">In conjunction with ACM&#146;s contribution of a portfolio of structured finance
investments and related debt to ARLP the operating partnership of ART, the
structured finance facility and the two committed repurchase agreements were
assigned to ARLP pursuant to agreements with the relevant financial
institutions.
</FONT>
<P align="center"><FONT size="2">F-29</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 7 - COMMITMENTS AND CONTINGENCIES</B>
</FONT>

<P align="left"><FONT size="2"><I>Litigation</I></FONT>

<P align="left"><FONT size="2">In the normal course of business, the Company is subject to various legal
proceedings and claims, the resolution of which, in management&#146;s opinion, will
not have a material adverse effect on the financial position or the results of
operations of the Company.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS</B>
</FONT>
<P align="left"><FONT size="2">The following table summarizes the carrying values and the estimated fair
values of financial instruments as of June&nbsp;30, 2003, December&nbsp;31, 2002 and
2001. Fair value estimates are dependent upon subjective assumptions and
involve significant uncertainties resulting in variability in estimates with
changes in assumptions.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>June 30,
2003<BR>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31, 2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Estimated</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Estimated</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Estimated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair Value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair Value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair Value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial assets:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans and investments, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">204,561,578</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">204,561,578</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">172,142,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">172,142,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">160,183,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">160,183,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,277,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,277,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,952,078</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,952,078</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,880,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,880,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial liabilities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes payable and
repurchase agreements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">171,045,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">171,045,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">141,836,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">141,836,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,409,735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">132,409,735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The following methods and assumptions were used by the Company in estimating
the fair value of each class of financial instrument:
</FONT>
<P align="left"><FONT size="2"><I>Loans and investments, net</I>: Fair values of variable-rate loans and investments
with no significant change in credit risk are based on carrying values. Fair
values of other loans and investments are estimated using discounted cash flow
methodology, using discount rates, which, in the opinion of management, best
reflect current market interest rates that would be offered for loans with
similar characteristics and credit quality.
</FONT>
<P align="left"><FONT size="2"><I>Related party loans, net</I>: Fair values of variable-rate loans and investments
with no significant change in credit risk are based on carrying values. Fair
values of other loans and investments are estimated using discounted cash flow
methodology, using discount rates, which, in the opinion of management, best
reflect current market interest rates that would be offered for loans with
similar characteristics and credit quality.
</FONT>
<P align="left"><FONT size="2"><I>Notes payable and repurchase agreements</I>: Fair values approximate the carrying
values reported in the balance sheets.
</FONT>
<P align="center"><FONT size="2">F-30</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 9 - RELATED PARTY TRANSACTIONS</B>
</FONT>

<P align="left"><FONT size="2"><B>Related Party Loans:</B></FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>June 30,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

<TD nowrap align="center" colspan="3"><FONT size="1"><B>2003<BR>(unaudited)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Bridge loans</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">16,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">16,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">16,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Mezzanine loans</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,489,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,489,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unearned revenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(211,986</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(47,922</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(119,793</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Related party loans, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">23,277,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">15,952,078</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">15,880,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The Company has a 50% non-controlling interest in a joint venture, which was
formed to acquire, develop and/or sell real estate assets. At June&nbsp;30, 2003,
December&nbsp;31, 2002 and 2001, the Company&#146;s investments in this joint venture
were approximately $2.6&nbsp;million, $2.3&nbsp;million and $1.8&nbsp;million, respectively.
The Company accounts for this investment under the equity method. At June&nbsp;30,
2003 and December&nbsp;31, 2002, the Company had a $16.0&nbsp;million bridge loan
outstanding to the joint venture, which is collateralized by a first lien
position on a commercial real estate property. There is a limited guarantee on
the loan of 50% by the chief executive officer of ACM and 50% by the key
principal of the joint venture. The loan requires monthly interest payments
based on LIBOR and matures in October 2004. In connection with the joint
venture agreement the Company has agreed to provide the borrower with
additional mezzanine financing in the amount of up to $8.0&nbsp;million. The
mezzanine financing requires interest payments based on LIBOR and matures in
May 2006. The loan will be funded in two equal installments of $4.0&nbsp;million.
The funding will be drawn down as construction progresses. The interest on the
first component, which was funded in June 2003, will be earned on the full $4.0
million, while the interest on the second component, which has yet to be
funded, will be earned as the $4.0&nbsp;million is drawn down. This additional
financing is secured by a second mortgage lien on the property. In addition, an
interest and renovation reserve totaling $2.5&nbsp;million is in place to cover both
the bridge and mezzanine loans. Interest income recorded from these loans was
approximately $217,000, $449,000 and $148,000 for the periods ended June&nbsp;30,
2003, December&nbsp;31, 2002 and 2001, respectively.
</FONT>
<P align="left"><FONT size="2">In June 2003, the Company invested approximately $818,000 in exchange for a
12.5% non-controlling interest in a joint venture, which was formed to acquire,
develop and/or sell real estate assets. The Company accounts for this
investment under the equity method. In June 2003, the Company funded two
mezzanine loans to this joint venture totaling $6.0&nbsp;million. The loans require
monthly interest payments based on LIBOR and mature in May 2006. Interest
income recorded from these loans was approximately $8,000 for the period ended
June&nbsp;30, 2003.
</FONT>
<P align="center"><FONT size="2">F-31</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 10 &#150; SUBSEQUENT EVENTS</B>
</FONT>

<P align="left"><FONT size="2">In June 2003 ART, a real estate investment trust was formed to invest in
structured finance assets, particularly real estate related bridge and
mezzanine loans, preferred equity and, in limited cases, discounted mortgage
notes and other real estate related assets. On July&nbsp;1, 2003 in exchange for a
commensurate equity ownership in ART&#146;s operating subsidiary ARLP, ACM
contributed $213.1&nbsp;million of structured finance assets and $169.2&nbsp;million of
borrowings supported by $43.9&nbsp;million of equity. In addition, certain employees
of ACM were transferred to ARLP. These assets, liabilities and employees
represent the substantial portion of ACM&#146;s SF Business.
</FONT>
<P align="left"><FONT size="2">On July&nbsp;1, 2003 ART completed a private placement of ART&#146;s units, each
consisting of five shares of common stock and one warrant to purchase one share
of common stock. Gross proceeds from the private financing combined with the
concurrent equity contribution by ACM totaled approximately $165&nbsp;million in
equity capital. ART will be externally managed and advised by ACM and will pay
ACM a management fee in accordance with the management agreement. ACM will
also originate, underwrite and service all structured finance assets on behalf
of ARLP.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 11 &#150; UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION</B>
</FONT>
<P align="left"><FONT size="2">In June, 2003 ACM formed ART, a newly organized real estate investment trust to
operate and expand its SF Business. On July&nbsp;1, 2003 ART completed a private
placement of ART&#146;s units, each consisting of five shares of ART&#146;s common stock
and one warrant to purchase one share of common stock. Gross proceeds from the
private financing totaled $120.2&nbsp;million. In exchange for a commensurate
equity ownership in ART&#146;s operating subsidiary, ARLP, ACM contributed $213.1
million of structured finance assets and $169.2&nbsp;million of borrowings supported
by $43.9&nbsp;million of equity. These assets and liabilities were contributed at
book value, which approximates market value, and represent 88% of the assets
and 98% of the liabilities of the SF Business as of June&nbsp;30, 2003. In
addition, certain employees of ACM were transferred to ARLP.
</FONT>
<P align="left"><FONT size="2">ART will be externally managed and advised by ACM and will pay ACM a management
fee in accordance with the terms of the management agreement among ACM, ART and
ARLP. ACM will also source originations, provide underwriting services and
service all structured finance assets on behalf of ARLP. As a result, the
operating expenses as presented in the historical consolidated financial
statements would have been affected had ART been formed at an earlier time.
Employee compensation and benefits expense would have decreased by $895,811 and
$1,518,890 for the six months ended June&nbsp;30, 2003 and year ended December&nbsp;31,
2002, respectively, because these costs would have been borne by ACM under
terms of the management agreement. Similarly, selling and administrative
expense would have decreased by $65,752 and $127,753 for the six months ended
June&nbsp;30, 2003 and year ended December&nbsp;31, 2002, respectively.
</FONT>
<P align="left"><FONT size="2">In accordance with the terms of the management agreement, ACM will receive a
management fee, composed of a base management fee and incentive compensation.
The annual base management fee is payable monthly in cash as a percentage of
ARLP&#146;s equity and equal to 0.75% per annum of the equity up to $400&nbsp;million,
0.625% per annum of the equity from $400&nbsp;million to $800&nbsp;million and 0.5% per
annum of the equity in excess of $800&nbsp;million. For purposes of calculating the
base management fee, equity equals the month end value computed in accordance
with generally accepted accounting principles of (1)&nbsp;total partners&#146; equity in
ARLP, plus or minus (2)&nbsp;any unrealized gains, losses or other items that do not
affect realized net income.
</FONT>
<P align="center"><FONT size="2">F-32</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2"><B>The Structured Finance Business of Arbor Commercial Mortgage, LLC<BR>
and Subsidiaries</B>
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
December&nbsp;31, 2002, 2001 and 2000,<BR>
and for the Six Months Ended (unaudited)&nbsp;June&nbsp;30, 2003<BR>
and the Nine Months Ended (unaudited)&nbsp;September&nbsp;30, 2002
</FONT>

<P align="left"><FONT size="2"><B>NOTE 11 &#150; UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION &#151; (Continued)</B>
</FONT>

<P align="left"><FONT size="2">ART will also pay ACM incentive compensation each fiscal quarter, calculated as
(1)&nbsp;25% of the amount by which (a)&nbsp;ARLP&#146;s funds from operations per unit of
partnership interest in ARLP, adjusted for certain gains and losses, exceeds
(b)&nbsp;the product of (x)&nbsp;9.5% per annum or the 10&nbsp;year Treasury Rate plus 3.5%,
whichever is greater, and (y)&nbsp;the weighted average of book value of the net
assets contributed by ACM to ARLP per ARLP partnership unit, the offering price
per share of ART&#146;s common equity in the private offering on July&nbsp;1, 2003 and
subsequent offerings and the issue price per ARLP partnership unit for
subsequent contributions to ARLP, multiplied by (2)&nbsp;the weighted average of
ARLP&#146;s outstanding partnership units. At least 25% of this incentive
compensation is paid to ACM in shares of ART&#146;s common stock, subject to
ownership limitations in ART&#146;s charter. ART has also agreed to share with ACM
a portion of the origination fees that it receives on loans it originates
through ACM.
</FONT>
<P align="left"><FONT size="2">This pro forma information does not reflect the results of the private
financing. However, gross proceeds from the private financing totaled $120.2
million, which combined with ACM&#146;s equity contribution of $43.9&nbsp;million,
resulted in total contributed capital of $164.1&nbsp;million. Offering expenses of
$9.6&nbsp;million were paid by ART, resulting in stockholders equity and minority
interest of ART of $154.5&nbsp;million at its inception.
</FONT>
<P align="center"><FONT size="2">F-33</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "INDEX TO FINANCIAL STATEMENTS OF MEZZOBRIDGE FUNDING LLC" -->
<DIV align="left"><A NAME="030"></A></DIV>
<P align="center"><FONT size="2"><B>INDEX TO FINANCIAL STATEMENTS OF MEZZOBRIDGE FUNDING LLC</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Page</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Report of Independent Certified Public Accountants</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance Sheet</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statement of Operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statement of Members&#146; Capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statement of Cash Flows</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes to Financial Statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-34</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS</B>
</FONT>

<P align="left"><FONT size="2"><B>To the Members of<BR>
Mezzobridge Funding LLC</B>
</FONT>

<P align="left"><FONT size="2">We have audited the accompanying balance sheet of Mezzobridge Funding LLC (the
&#147;Company&#148;) as of December&nbsp;31, 2000, and the related statements of operations,
members&#146; capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Company&#146;s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
</FONT>
<P align="left"><FONT size="2">We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. 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.
</FONT>
<P align="left"><FONT size="2">In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mezzobridge Funding LLC as of
December&nbsp;31, 2000, and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
</FONT>
<P align="left"><FONT size="2">Grant Thornton LLP
</FONT>
<P align="left"><FONT size="2">New York, New York<BR>
February&nbsp;2, 2001
</FONT>

<P align="center"><FONT size="2">F-35</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2">Mezzobridge Funding LLC
</FONT>

<P align="center"><FONT size="2"><B>BALANCE SHEET</B>
</FONT>

<P align="center"><FONT size="2">December&nbsp;31, 2000
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,094,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans held for investment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123,761,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other receivables and deferred costs</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,708,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">128,564,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Liabilities and members&#146; capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Note payable - repurchase agreement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">90,615,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts payable and accrued expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,133,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">91,749,046</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Commitments and contingencies
</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">
Members&#146; capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">36,815,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities and members&#146; capital</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">128,564,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>The accompanying notes are an integral part of this statement.</I>
</FONT>


<P align="center"><FONT size="2">F-36</FONT>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2">Mezzobridge Funding LLC
</FONT>

<P align="center"><FONT size="2"><B>STATEMENT OF OPERATIONS</B>
</FONT>

<P align="center"><FONT size="2">Year ended December&nbsp;31, 2000
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Interest earned</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">17,835,318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total revenues</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">17,835,318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Expenses
</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">
Interest expense</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,472,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling, general and administrative</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for possible loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,422,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,413,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>The accompanying notes are an integral part of this statement.</I>
</FONT>

<P align="center"><FONT size="2">F-37</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2">Mezzobridge Funding LLC
</FONT>

<P align="center"><FONT size="2"><B>STATEMENT OF MEMBERS&#146; CAPITAL</B>
</FONT>

<P align="center"><FONT size="2">Year ended December&nbsp;31, 2000
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Arbor</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>SFG</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">

<TD colspan='2'><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance - December&nbsp;31, 1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">15,488,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">15,388,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">30,876,216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital contributions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,811,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">4,811,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">9,623,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Withdrawals and distributions</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,598,923</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,498,984</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,097,907</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,706,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,706,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,413,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">


<TD colspan='2'><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance - December&nbsp;31, 2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">18,407,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">18,407,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">36,815,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>The accompanying notes are an integral part of this statement.</I>
</FONT>

<P align="center"><FONT size="2">F-38</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2">Mezzobridge Funding LLC
</FONT>

<P align="center"><FONT size="2"><B>STATEMENT OF CASH FLOWS</B>
</FONT>

<P align="center"><FONT size="2">Year ended December&nbsp;31, 2000
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">7,413,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Adjustments to reconcile net income to net cash provided by
operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Provision for possible loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">900,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Changes in operating assets and liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans held for investment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,189,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans held for sale, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other receivables and deferred costs</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,515,523</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounts payable and accrued expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(127,449</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash provided by operating activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,859,127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Decrease in note payable - repurchase agreement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,985,409</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Capital contributions by members</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,623,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Withdrawals and distributions to members</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,097,907</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net cash used in financing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(14,459,622</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net decrease in cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,600,495</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents at beginning of year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,694,637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents at end of year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,094,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Supplemental disclosure of cash flow information:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash paid during the year for interest</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">9,566,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="5"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>The accompanying notes are an integral part of this statement.</I>
</FONT>

<P align="center"><FONT size="2">F-39</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2">Mezzobridge Funding LLC
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO FINANCIAL STATEMENTS</B>
</FONT>

<P align="center"><FONT size="2">December&nbsp;31, 2000
</FONT>

<P align="left"><FONT size="2"><B>NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B>
</FONT>

<P align="left"><FONT size="2"><I>Organization</I></FONT>

<P align="left"><FONT size="2">Mezzobridge Funding LLC (the &#147;Company&#148;), a Delaware limited liability company,
was organized in June 1998 as a result of a joint venture agreement entered
into between Arbor National Commercial Mortgage, LLC (&#147;Arbor&#148;), a New York
limited liability company, and SFG1 (&#147;SFG&#148;), a Delaware business trust, whereby
they would both own 50% of the Company. Capital contributions and profits are
predominantly shared equally between the partners. This agreement provides for
the Company to acquire up to $250&nbsp;million in financing transactions with Nomura
Asset Capital Corporation (&#147;Nomura&#148;), an affiliate of SFG, providing $200
million of financing, including $75&nbsp;million for mezzanine loans, to the Company
in the form of a repurchase agreement. The interest rate charged for the
financing is LIBOR plus 2%. The repurchase agreement expires in June, 2001.
</FONT>
<P align="left"><FONT size="2">The Company seeks out and funds, on a negotiated basis, high yielding lending
and investment opportunities in commercial real estate through mezzanine loans,
bridge loans, note acquisitions and other financing structures. The Company
may also originate mortgages for sale into conduit programs.
</FONT>
<P align="left"><FONT size="2"><I>Use of Estimates</I>
</FONT>
<P align="left"><FONT size="2">The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual results could
differ from these estimates.
</FONT>
<P align="left"><FONT size="2"><I>Cash and Cash Equivalents</I>
</FONT>
<P align="left"><FONT size="2">Cash and cash equivalents include cash on hand and in banks and short-term
investments with maturities of three months or less at purchase.
</FONT>
<P align="left"><FONT size="2"><I>Loans Held for Investment</I>
</FONT>
<P align="left"><FONT size="2">Loans held for investment are collateralized by commercial real estate, which
the Company intends to hold to maturity. These loans are carried at cost
unless the loan is impaired. The Company measures the impairment of these
loans based upon the fair value of the underlying collateral which is
determined on an individual loan basis. The fair value of the collateral is
determined by an evaluation of operating cash flow from the property during the
projected holding period, and estimated sales value computed by applying an
</FONT>
<P align="center"><FONT size="2">F-40</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2">Mezzobridge Funding LLC
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO FINANCIAL STATEMENTS (continued)</B>
</FONT>

<P align="center"><FONT size="2">December&nbsp;31, 2000
</FONT>

<P align="left"><FONT size="2"><B>NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B>
</FONT>
<P align="left"><FONT size="2">expected capitalization rate to the stabilized net operating income of the
specific property, less selling costs, discounted at market discount rates. If
upon completion of the valuations, the fair value of the underlying collateral
securing the impaired loan is less than the recorded loan, an allowance is
created with a corresponding charge to expense.
</FONT>
<P align="left"><FONT size="2"><I>Revenue Recognition</I>
</FONT>
<P align="left"><FONT size="2">Fees earned on loans held for investment are deferred and accreted into income
as an adjustment to yield over the life of the loan. Fees earned on loans held
for sale are recognized when all the incidence of ownership passes to the
buyer.
</FONT>
<P align="left"><FONT size="2"><I>Income Taxes</I>
</FONT>
<P align="left"><FONT size="2">The Company is a limited liability company (which is taxed as a partnership)
and, accordingly, the taxable income or loss of the Company is includable in
the Federal and state income tax returns of the Company&#146;s individual members.
The Company will incur state income taxes in those states where it is not
recognized as a limited liability company.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 2 - LOANS HELD FOR INVESTMENT</B>
</FONT>
<P align="left"><FONT size="2">Loans held for investment at December&nbsp;31, 2000 consist of:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Principal</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">128,210,413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unearned discount, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2,458,858</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Allowance for possible loan losses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,990,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans held for investment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">123,761,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><I>Concentration of Borrower Risk</I>
</FONT>

<P align="left"><FONT size="2">The Company is subject to concentration risk in that, as of December&nbsp;31, 2000,
the unpaid principal balance relating to two loans represented approximately
30.2% of total loans held for investment. These loans are with two unrelated
borrowers. The Company had 15 loans held for investment as of December&nbsp;31,
2000.
</FONT>
<P align="center"><FONT size="2">F-41</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2">Mezzobridge Funding LLC
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO FINANCIAL STATEMENTS (continued)</B>
</FONT>

<P align="center"><FONT size="2">December&nbsp;31, 2000
</FONT>

<P align="left"><FONT size="2"><B>NOTE 3 - NOTE PAYABLE - REPURCHASE AGREEMENT</B>
</FONT>

<P align="left"><FONT size="2">The Company utilizes a repurchase agreement with Nomura in conjunction with its
lending and investing activities. Borrowings under this agreement are secured
by all of the Company&#146;s loans held for investment.
</FONT>
<P align="left"><FONT size="2">The repurchase agreement provides the Company with a $200&nbsp;million committed
line that expires June 2001 with interest variable based on LIBOR. In the
event the expiration date is not extended, the repurchase agreement will remain
in effect for existing loans for an additional twelve-month period. The
weighted-average note rate for 2000 was 8.39%. The amount outstanding under
this agreement at December&nbsp;31, 2000 was $90,615,593.
</FONT>
<P align="left"><FONT size="2">The repurchase agreement contains various financial covenants and restrictions,
including minimum net worth and debt-to-equity ratios. The Company is in
compliance with these covenants and restrictions.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 4 - MEMBERS&#146; CAPITAL</B>
</FONT>

<P align="left"><FONT size="2">The maximum capital contribution by Arbor and SFG under the joint venture
agreement is $25&nbsp;million each.
</FONT>
<P align="left"><FONT size="2"><B>NOTE 5 - LOAN SERVICING</B>
</FONT>

<P align="left"><FONT size="2">Arbor services the Company&#146;s commercial loan portfolio. The Company pays Arbor
a fee for processing, underwriting and servicing these loans. Cash held in
escrow on behalf of the Company by Arbor for certain of these mortgages at
December&nbsp;31, 2000 was approximately $2.3&nbsp;million. These cash balances and
related escrow liabilities are not reflected in the accompanying balance
sheets. These escrows are maintained in separate accounts at a federally
insured depository institution.
</FONT>
<P align="center"><FONT size="2">F-42</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="center"><FONT size="2">Mezzobridge Funding LLC
</FONT>

<P align="center"><FONT size="2"><B>NOTES TO FINANCIAL STATEMENTS (continued)</B>
</FONT>

<P align="center"><FONT size="2">December&nbsp;31, 2000
</FONT>

<P align="left"><FONT size="2"><B>NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS</B>
</FONT>

<P align="left"><FONT size="2">The following table summarizes the carrying values and the estimated fair
values of financial instruments, as of December&nbsp;31, 2000. Fair value estimates
are dependent upon subjective assumptions and involve significant uncertainties
resulting in variability in estimates with changes in assumptions.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Estimated</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>fair value</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial assets:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,094,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1,094,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loans held for investment, net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123,761,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">123,761,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Financial liabilities:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Note payable - repurchase agreement</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">90,615,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">90,615,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">The following methods and assumptions were used by the Company in estimating
the fair value of each class of financial instrument.
</FONT>
<P align="left"><FONT size="2"><I>Cash and cash equivalents</I>: Fair value approximates the carrying value reported
in the balance sheets.
</FONT>
<P align="left"><FONT size="2"><I>Loans held for investment, net</I>: Fair values of variable-rate loans with no
significant change in credit risk are based on carrying values. Fair values of
other loans are estimated using discounted cash flow methodology, using
discount rates, which, in the opinion of management, best reflect current
market interest rates that would be offered for loans with similar
characteristics and credit quality.
</FONT>
<P align="left"><FONT size="2"><I>Note payable - repurchase agreement</I>: Fair value approximates the carrying
value reported in the balance sheets.
</FONT>
<P align="center"><FONT size="2">F-43</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Prospective investors may rely only on the information
contained in this Prospectus. Arbor has not authorized anyone to provide
prospective investors with different or additional information. This Prospectus
is not an offer to sell nor is it seeking an offer to buy these securities in
any jurisdiction where the offer or sale is not permitted. The information
contained in this Prospectus is correct only as of the date of this Prospectus,
regardless of the time of the delivery of this Prospectus or any sale of these
securities.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Until &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2004, (25&nbsp;days after the date of this prospectus), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
requirement is in addition to the dealers&#146; obligation to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.</B>
</FONT>

<P align="center"><FONT size="2"><B>TABLE OF CONTENTS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Page</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PROSPECTUS SUMMARY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RISK FACTORS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">FORWARD LOOKING STATEMENTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">USE OF PROCEEDS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DISTRIBUTION POLICY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PRICE
RANGE OF UNITS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SELECTED
UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF ARBOR REALTY TRUST,
INC AND SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE
STRUCTURED FINANCE BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND
SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MANAGEMENT&#146;S DISCUSSION &#038; ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE STRUCTURED FINANCE
BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES </FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ARBOR REALTY TRUST, INC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">OUR MANAGER AND THE MANAGEMENT AGREEMENT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MANAGEMENT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">REGISTRATION RIGHTS AND LOCK-UP AGREEMENTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DESCRIPTION OF STOCK</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SECURITIES ELIGIBLE FOR FUTURE SALE</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">BOOK ENTRY ISSUANCE; THE DEPOSITORY TRUST COMPANY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">IMPORTANT PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">OUR OPERATING PARTNERSHIP AGREEMENT</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">FEDERAL INCOME TAX CONSIDERATIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">ERISA CONSIDERATIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SELLING STOCKHOLDERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PLAN OF DISTRIBUTION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LEGAL MATTERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EXPERTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INDEX
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF ARBOR REALTY TRUST, INC. AND SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INDEX
TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE STRUCTURED FINANCE BUSINESS OF ARBOR COMMERCIAL MORTGAGE, LLC AND SUBSIDIARIES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INDEX TO FINANCIAL STATEMENTS OF MEZZOBRIDGE FUNDING LLC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="bottom">
    <TD align="left" nowrap><FONT size="2"><B>&#091;ARBOR LOGO&#093;</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center"><FONT size="5"><B>Arbor Realty Trust,
Inc.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="4"><B>1,602,833&nbsp;Units<BR><BR>
8,014,165&nbsp;Shares of
Common Stock Comprising the Units</B>
</FONT>

<P align="center"><FONT size="4"><B>1,602,833&nbsp;Warrants Comprising the Units</B>
</FONT>

<P align="center"><FONT size="4"><B>1,602,833&nbsp;Shares of Common
Stock Underlying the Warrants</B>
</FONT>

<P align="center"><FONT size="4"><B>PROSPECTUS</B>
</FONT>

<P align="center"><FONT size="4">_________, 200__
</FONT>



<P align="center"><FONT size="4">&nbsp;</FONT>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>PART II</B>
</FONT>

<P align="center"><FONT size="2"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B>
</FONT>

<P align="left"><FONT size="2"><B>Item&nbsp;31. Other Expenses of Issuance and Distribution.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the costs and expenses expected to be
incurred in connection with the sale and distribution of the securities being
registered, all of which are being borne by the registrant.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Securities and Exchange Commission registration fee</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$11,670.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">National Association of Securities Dealers, Inc. and Blue
Sky Registration Fees</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Printing and engraving expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Legal Fees and Expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Accounting Fees and Expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Miscellaneous</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">* To be filed by amendment.
</FONT>

<P align="left"><FONT size="2"><B>Item&nbsp;32. Sales to Special Parties.</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;33.
</FONT>
<P align="left"><FONT size="2"><B>Item&nbsp;33. Recent Sales of Unregistered Securities</B>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;26, 2003, in connection with the incorporation of Arbor Realty
Trust, Inc. (the &#147;Company&#148;), the Company issued 67 shares of common stock, par
value $.01 per share (the &#147;Common Stock&#148;) to Arobr Commercial Mortgage, LLC
(&#147;ACM&#148;) for $1,005. Such issuance was exempt from the registration
requirements of the Securities Act pursuant to Section&nbsp;4(2) thereof.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003 the Company sold 1,610,000 units, each unit consisting of
five shares of Common Stock, and one warrant to purchase one share of Common
Stock of the Company (the &#147;Units&#148;). Of the 1,610,000 Units sold, 1,327,989
Units (the &#147;144A Units&#148;) were sold to Qualified Institutional Buyers (as
defined in Rule&nbsp;144A under the Securities Act) in reliance on the exemption
from the registration requirements of the Securities Act provided by Rule&nbsp;144A
under the Securities Act and to a limited number of &#147;accredited investors&#148; (as
defined in Rule&nbsp;501 under the Securities Act) in reliance on the exemption from
the registration requirements of the Securities Act provided by Regulation&nbsp;D
under the Securities Act. The initial purchaser of such Units was JMP
Securities LLC (&#147;JMP&#148;). The offering price per Unit was $75. The aggregate
proceeds to the Company from such offering and the aggregate initial
purchaser&#146;s discount were $92,627,232.75 and $6,971,942.25, respectively.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The remaining 282,011 Units (the &#147;AI Units&#148;) were sold to certain
accredited investors, including affiliates and employees of each of ACM and
JMP, in reliance on the exemption from the registration requirements of the
Securities Act provided by Regulation&nbsp;D under the Securities Act. JMP acted as
placement agent in connection with the sale of the AI Units. The offering price
per Unit was $75, except that 104,767 of the AI Units were sold to JMP
employees and certain entities affiliated with JMP at a price of $69.75 per
Unit. JMP received a placement fee of $5.25 for 91,697 of the AI Units sold to
certain accredited investors and $2.25 for 85,547 of the AI Units sold to
accredited investors who were affiliated with the Company. JMP did not receive
a placement fee with respect to the sale of the 104,767 AI Units sold to JMP
employees and certain entities affiliated with JMP. The aggregate proceeds to
the Company from such offering and the aggregate placement fee to JMP were
$19,926,908.25 and $673,890.00, respectively.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, the Company issued 3,146,724 shares of the Company&#146;s
special voting preferred stock, par value $.01 per share (the &#147;Special
Preferred Stock&#148;) to ACM for $31,467. Such issuance was exempt from the
registration requirements of the Securities Act pursuant to Section&nbsp;4(2)
thereof.
</FONT>


<P align="center"><FONT size="2">II-1</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Item&nbsp;34. Indemnification of Directors and Officers.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a)&nbsp;actual receipt of an improper benefit or profit in money,
property or services or (b)&nbsp;active and deliberate dishonesty established by a
final judgment and which is material to the cause of action. The Company&#146;s
charter contains such a provision which eliminates directors&#146; and officers&#146;
liability to the maximum extent permitted by Maryland law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The charter authorizes the Company, to the maximum extent permitted by
Maryland law, to indemnify any present or former director or officer or any
individual who, while a director of the Company and at the request of the
Company, serves or has served another corporation, real estate investment
trust, partnership, joint venture, trust, employee benefit plan or other
enterprise as a director, officer, partner or trustee, from and against any
claim or liability to which that person may become subject or which that person
may incur by reason of his or her status as a present or former director or
officer of the Company and to pay or reimburse their reasonable expenses in
advance of final disposition of a proceeding. The bylaws obligate the Company,
to the maximum extent permitted by Maryland law, to indemnify any present or
former director or officer or any individual who, while a director of the
Company and at the request of the Company, serves or has served another
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or other enterprise as a director, officer, partner or
trustee and who is made a party to the proceeding by reason of his service in
that capacity from and against any claim or liability to which that person may
become subject or which that person may incur by reason of his or her status as
a present or former director or officer of the Company and to pay or reimburse
their reasonable expenses in advance of final disposition of a proceeding. The
charter and bylaws also permit the Company to indemnify and advance expenses to
any person who served a predecessor of the Company in any of the capacities
described above and any employee or agent of the Company or a predecessor of
the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maryland law requires a corporation (unless its charter provides
otherwise, which the Company&#146;s charter does not) to indemnify a director or
officer who has been successful in the defense of any proceeding to which he is
made a party by reason of his service in that capacity. Maryland law permits a
corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by them in connection with any proceeding to which
they may be made a party by reason of their service in those or other
capacities unless it is established that (a)&nbsp;the act or omission of the
director or officer was material to the matter giving rise to the proceeding
and (i)&nbsp;was committed in bad faith or (ii)&nbsp;was the result of active and
deliberate dishonesty, (b)&nbsp;the director or officer actually received an
improper personal benefit in money, property or services or (c)&nbsp;in the case of
any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful. However, under Maryland law, a
Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis
that personal benefit was improperly received, unless in either case a court
orders indemnification and then only for expenses. In addition, Maryland law
permits a corporation to advance reasonable expenses to a director or officer
upon the corporation&#146;s receipt of (a)&nbsp;a written affirmation by the director or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by the corporation and (b)&nbsp;a written undertaking
by him or on his behalf to repay the amount paid or reimbursed by the
corporation if it is ultimately determined that the standard of conduct was not
met.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has also agreed to indemnify our directors and executive officers to the maximum extent permitted by Maryland law, and pay
such persons&#146; expenses in defending any civil or criminal proceeding in advance
of final disposition of such proceeding.
</FONT>
<P align="center"><FONT size="2">II-2</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Item&nbsp;35. Treatment of Proceeds From Stock Being Registered.</B>
</FONT>

<P align="left"><FONT size="2">N/A</FONT>

<P align="left"><FONT size="2"><B>Item&nbsp;36. Financial Statements and Exhibits.</B></FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The following financial statements are being filed as part of this
Registration Statement:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Unaudited Consolidated Financial Statements of Arbor Realty Trust, Inc. and
Subsidiaries</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Balance Sheet at September&nbsp;30, 2003 (Unaudited)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Statement of Operations for the Three Months Ended
September&nbsp;30, 2003 (Unaudited)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Statement of Stockholders&#146; Equity for the Three Months
Ended September&nbsp;30, 2003 (Unaudited)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Statement of Cash Flow for the Three Months Ended
September&nbsp;30, 2003 (Unaudited)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Notes to Consolidated Financial
Statements (Unaudited)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Schedule&nbsp;IV- Loans and Other Lending Investments (Unaudited)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Financial Statements of the Structured Finance
Business of Arbor Commercial Mortgage, LLC and Subsidiaries</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Report of Independent Certified Public Accountants</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Statements of Assets and Liabilities at December&nbsp;31,
2002 and 2001 and at June&nbsp;30, 2003 (Unaudited)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Statements of Revenue and Direct Operating Expenses
for the Years Ended December&nbsp;31, 2002, 2001 and 2000, for the Six
Months Ended June&nbsp;30, 2003 (Unaudited) and for the Nine Months
Ended September&nbsp;30, 2002 (Unaudited)</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Notes to Consolidated Financial Statements</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Financial Statements of Mezzobridge Funding LLC</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Report of Independent Certified Public Accountants</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Balance Sheet at December&nbsp;31, 2000</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Statement of Operations for the Year ended December&nbsp;31, 2000</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Statement of Members&#146; Capital for the Year Ended December&nbsp;31, 2000</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Statement of Cash Flows for the Year Ended December&nbsp;31, 2000</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Notes to Financial Statements</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">II-3</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The following is a list of exhibits filed as part of this Registration
Statement.</FONT></TD>
</TR>
</TABLE>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>&nbsp;</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Contribution Agreement, dated July&nbsp;1, 2003, by and among Arbor
Realty Trust, Inc., Arbor Commercial Mortgage, LLC and Arbor
Realty Limited Partnership**</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Guaranty, dated July&nbsp;1, 2003, made by Arbor Commercial Mortgage,
LLC and certain wholly-owned subsidiaries of Arbor Commercial
Mortgage, LLC in favor of Arbor Realty Limited Partnership, ANMB
Holdings, LLC and ANMB Holdings II, LLC**</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indemnity Agreement, dated July&nbsp;1, 2003 by and among Arbor Realty
Trust, Inc., Arbor Commercial Mortgage, LLC, Ivan Kaufman and
Arbor Realty Limited Partnership</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Articles of Incorporation of the Registrant</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Articles Supplementary of the Registrant</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bylaws of the Registrant</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Certificate for Common Stock*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Global Unit Certificate*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Warrant Certificate (included as Exhibit&nbsp;A to Exhibit&nbsp;4.4)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Warrant Agreement, dated July&nbsp;1, 2003, between Arbor Realty Trust,
Inc. and American Stock Transfer &#038; Trust Company</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Registration Rights Agreement, dated July&nbsp;1, 2003, between Arbor
Realty Trust, Inc. and JMP Securities LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Opinion of Venable LLP relating to the legality of the securities
being registered*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">8.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Opinion of Skadden, Arps, Slate, Meagher &#038; Flom LLP regarding tax
matters*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Management Agreement, dated July&nbsp;1, 2003, by and among Arbor
Realty Trust, Inc., Arbor Commercial Mortgage, LLC and Arbor
Realty Limited Partnership</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Services Agreement, dated July&nbsp;1, 2003, by and among Arbor
Realty Trust, Inc., Arbor Commercial Mortgage, LLC and Arbor
Realty Limited Partnership</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Non-Competition Agreement, dated July&nbsp;1, 2003, by and among Arbor
Realty Trust, Inc., Arbor Realty Limited Partnership and Ivan
Kaufman</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Agreement of Limited Partnership of Arbor Realty
Limited Partnership, dated July
1, 2003, by and among Arbor Commercial Mortgage, LLC, Arbor
Realty Limited Partnership, Arbor Realty LPOP, Inc. and Arbor
Realty GPOP, Inc.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Warrant Agreement, dated July&nbsp;1, 2003, between Arbor Realty
Limited Partnership, Arbor Realty Trust, Inc. and Arbor Commercial
Mortgage, LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Registration Rights Agreement, dated July&nbsp;1, 2003, between Arbor
Realty Trust, Inc. and Arbor Commercial Mortgage, LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Pairing Agreement, dated July&nbsp;1, 2003, by and among Arbor Realty
Trust, Inc., Arbor Commercial Mortgage, LLC Arbor Realty Limited
Partnership, Arbor Realty LPOP, Inc. and Arbor Realty GPOP, Inc.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
2003 Omnibus Stock Incentive Plan</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Restricted Stock Agreement</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Benefits Participation Agreement, dated July&nbsp;1, 2003, between
Arbor Realty Trust, Inc. and Arbor Management, LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Indemnification Agreement</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">21.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Subsidiaries of the Registrant</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Consent of Grant Thornton LLP</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Consent of Venable LLP (contained in Exhibit&nbsp;5.1)*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">23.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Consent of Skadden, Arps, Slate, Meagher &#038; Flom LLP (contained in
Exhibit&nbsp;8.1)*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">24.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Powers of attorney (included in the signature page to this
Registration Statement)</FONT></TD>
</TR>


</TABLE>
</DIV>


<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">To be filed by amendment.</FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">**&nbsp;</FONT></TD>
    <TD align="left"><FONT size="2">
    Portions of the exhibit have been omitted pursuant to a request
    for confidential treatment by Arbor Realty Trust, Inc.</FONT></TD>
</TR>

</TABLE>


<P align="center"><FONT size="2">II-4</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="88%"><FONT size="2">To include any prospectus required by
Section&nbsp;10(a)(3) of the Securities Act of 1933;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">To reflect in the prospectus any
facts or events arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the law or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule&nbsp;424(b) if, in the aggregate,
the changes in volume and price represent no more than
20&nbsp;percent change in the maximum aggregate offering
price set forth in the &#147;Calculation of Registration Fee&#148;
table in the effective registration statement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">To include any material information
with respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration
statement;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(iii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The undersigned registrant hereby undertakes that:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of this registration
statement in reliance upon Rule&nbsp;430A and contained in a form
of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4)&nbsp;or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the
time it was declared effective.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">for the purposes determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">II-5</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>






<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">registration statement relating to the securities offered
herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">II-6</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="031"></A></DIV>
<P align="center"><FONT size="2"><B>SIGNATURES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form&nbsp;S-11 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on
November&nbsp;13, 2003.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="7" align="left" valign="top"><FONT size="2">
ARBOR REALTY TRUST, INC.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top" colspan="3"><FONT size="2">/s/ Frederick C. Herbst</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="6" align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Frederick C. Herbst</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Financial Officer<BR>
and Treasurer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
</FONT>
<P align="center"><FONT size="2"><B>POWER OF ATTORNEY</B>
</FONT>

<P align="left"><FONT size="2">EACH PERSON IN SO SIGNING, ALSO MAKES, CONSTITUTES AND APPOINTS FREDERICK C.
HERBST, AND WALTER K. HORN AND EACH OF THEM ACTING ALONE, HIS TRUE AND LAWFUL
ATTORNEY-IN-FACT, WITH FULL POWER OF SUBSTITUTION, TO EXECUTE AND CAUSE TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE REQUIREMENTS
OF THE SECURITIES ACT, ANY AND ALL AMENDMENTS AND POST-EFFECTIVE AMENDMENTS TO
THIS REGISTRATION STATEMENT, WITH EXHIBITS THERETO AND OTHER DOCUMENTS IN
CONNECTION THEREWITH, AND ANY RELATED REGISTRATION STATEMENT AND ITS AMENDMENTS
AND POST-EFFECTIVE AMENDMENTS FILED PURSUANT TO RULE 462(B) UNDER THE ACT, WITH
EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, AND HEREBY
RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEY-IN-FACT OR HIS SUBSTITUTE OR
SUBSTITUTES MAY DO OR CAUSE TO BE DONE BY VIRTUE THEREOF.
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Signature</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Title</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Date</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" colspan="3"><FONT size="2">/s/ Ivan Kaufman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Chairman of the Board, Chief</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">November&nbsp;6, 2003</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Executive Officer and President</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" align="center"><FONT size="2">Ivan Kaufman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Principal Executive officer)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>



<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" colspan="3"><FONT size="2">/s/ Frederick C. Herbst</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Chief Financial Officer and Treasurer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">November&nbsp;6, 2003</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">(Principal Financial officer)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="3" align="center"><FONT size="2">Frederick C. Herbst</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD align="center" colspan="3"><FONT size="2">/s/ Jonathan A. Bernstein</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">November&nbsp;6, 2003</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" align="center"><FONT size="2">Jonathan A. Bernstein</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
<TR valign="bottom">
    <TD align="center" colspan="3"><FONT size="2">/s/ William Helmreich</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">November&nbsp;6, 2003</FONT></TD>
</TR>
</TR>

<TR>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" align="center"><FONT size="2">William Helmreich</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
<TR valign="bottom">
    <TD align="center" colspan="3"><FONT size="2">/s/ Walter K. Horn</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">November&nbsp;6, 2003</FONT></TD>
</TR>
</TR>

<TR>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="center"><FONT size="2">Walter K. Horn</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>





<TR valign="bottom">
    <TD align="center" colspan="3"><FONT size="2">/s/ C. Michael Kojaian</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">November&nbsp;6, 2003</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" align="center"><FONT size="2">C. Michael Kojaian</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD align="center" colspan="3"><FONT size="2">/s/ Melvin F. Lazar</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">November&nbsp;6, 2003</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="center"><FONT size="2">Melvin F. Lazar</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD align="center" colspan="3"><FONT size="2">/s/ Joseph Martello</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">November&nbsp;6, 2003</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="center"><FONT size="2">Joseph Martello</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P align="center"><FONT size="2">II-7</FONT>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "EXHIBIT INDEX" -->
<DIV align="left"><A NAME="032"></A></DIV>
<P align="center"><FONT size="2"><B>EXHIBIT INDEX</B>
</FONT>




<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>&nbsp;</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Contribution Agreement, dated July&nbsp;1, 2003, by and among Arbor
Realty Trust, Inc., Arbor Commercial Mortgage, LLC and Arbor
Realty Limited Partnership**</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Guaranty, dated July&nbsp;1, 2003, made by Arbor Commercial Mortgage,
LLC and certain wholly-owned subsidiaries of Arbor Commercial
Mortgage, LLC in favor of Arbor Realty Limited Partnership, ANMB
Holdings, LLC and ANMB Holdings II, LLC**</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indemnity Agreement, dated July&nbsp;1, 2003 by and among Arbor Realty
Trust, Inc., Arbor Commercial Mortgage, LLC, Ivan Kaufman and
Arbor Realty Limited Partnership</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Articles of Incorporation of the Registrant</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Articles Supplementary of the Registrant</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">3.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bylaws of the Registrant</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Certificate for Common Stock*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Global Unit Certificate*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Warrant Certificate (included as Exhibit&nbsp;A to Exhibit&nbsp;4.4)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Warrant Agreement, dated July&nbsp;1, 2003, between Arbor Realty Trust,
Inc. and American Stock Transfer &#038; Trust Company</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Registration Rights Agreement, dated July&nbsp;1, 2003, between Arbor
Realty Trust, Inc. and JMP Securities LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Opinion of Venable LLP relating to the legality of the securities
being registered*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">8.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Opinion of Skadden, Arps, Slate, Meagher &#038; Flom LLP regarding tax
matters*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Management Agreement, dated July&nbsp;1, 2003, by and among Arbor
Realty Trust, Inc., Arbor Commercial Mortgage, LLC and Arbor
Realty Limited Partnership</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Services Agreement, dated July&nbsp;1, 2003, by and among Arbor
Realty Trust, Inc., Arbor Commercial Mortgage, LLC and Arbor
Realty Limited Partnership</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Non-Competition Agreement, dated July&nbsp;1, 2003, by and among Arbor
Realty Trust, Inc., Arbor Realty Limited Partnership and Ivan
Kaufman</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Agreement of Limited Partnership of Arbor
Realty Limited Partnership, dated July
1, 2003, by and among Arbor Commercial Mortgage, LLC, Arbor
Realty Limited Partnership, Arbor Realty LPOP, Inc. and Arbor
Realty GPOP, Inc.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Warrant Agreement, dated July&nbsp;1, 2003, between Arbor Realty
Limited Partnership, Arbor Realty Trust, Inc. and Arbor Commercial
Mortgage, LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Registration Rights Agreement, dated July&nbsp;1, 2003, between Arbor
Realty Trust, Inc. and Arbor Commercial Mortgage, LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Pairing Agreement, dated July&nbsp;1, 2003, by and among Arbor Realty
Trust, Inc., Arbor Commercial Mortgage, LLC Arbor Realty Limited
Partnership, Arbor Realty LPOP, Inc. and Arbor Realty GPOP, Inc.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
2003 Omnibus Stock Incentive Plan</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Restricted Stock Agreement</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Benefits Participation Agreement, dated July&nbsp;1, 2003, between
Arbor Realty Trust, Inc. and Arbor Management, LLC</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">10.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Indemnification Agreement</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">21.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Subsidiaries of the Registrant</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Consent of Grant Thornton LLP</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Consent of Venable LLP (contained in Exhibit&nbsp;5.1)*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">23.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Consent of Skadden, Arps, Slate, Meagher &#038; Flom LLP (contained in
Exhibit&nbsp;8.1)*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">24.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Powers of attorney (included in the signature page to this
Registration Statement)</FONT></TD>
</TR>
</TABLE>
</DIV>
<P align="left"><HR size="1" align="left" noshade width="20%">
<TABLE width="100%" cellpadding="0" cellspacing="0" border="0">
<TR>
 <TD width="1%"><FONT size="2">*</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD width="96%"><FONT size="2">To be filed by amendment.</FONT></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR>
 <TD width="1%"><FONT size="2">**</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD width="96%"><FONT size="2">Portions of the exhibit have been
omitted pursuant to a request for confidential treatment by Arbor
Realty Trust, Inc.</FONT></TD>
</TR>
</TABLE>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>3
<FILENAME>y90410exv2w1.txt
<DESCRIPTION>CONTRIBUTION AGREEMENT
<TEXT>
<PAGE>

                                                                     EXHIBIT 2.1

                                  CONTRIBUTION
                                    AGREEMENT

                  This CONTRIBUTION AGREEMENT (this "Agreement"), dated as of
July 1, 2003, is by and among Arbor Commercial Mortgage, LLC, a New York limited
liability company ("ACM"), Arbor Realty Trust, Inc., a Maryland corporation
("ART") and Arbor Realty Limited Partnership, a Delaware limited partnership
("ARLP").

                              W I T N E S S E T H:

                           WHEREAS, ACM owns (1) the bridge loans relating to
commercial and multifamily properties listed on Schedule A-1 hereto (the "Bridge
Loans"), (2) the mezzanine loans relating to commercial and multifamily
properties listed on Schedule A-2 hereto (the "Mezzanine Loans"), (3) the loans
relating to commercial and multifamily properties listed on Schedule A-3 hereto
(the "Other Loans" and together with the Bridge Loans and the Mezzanine Loans,
the "ACM Initial Assets"), (4) 100% of the membership interests of ANMB Holdings
II, LLC (the "ANMB II Membership Interests") which owns the mezzanine loan
relating to a multifamily property listed on Schedule A-4 hereto (the "Central
Jersey Mezzanine Loan" and together with the ACM Initial Assets, the "Initial
Assets"), and (5) 100% of the membership interests (the "Membership Interests")
of the entities listed on Schedule B hereto (the "Preferred Equity Holders"),
each of which have an equity interest, as listed on Schedule C hereto, in
entities owning commercial or multifamily properties (the "Preferred Equity
Interests");

                           WHEREAS, ACM desires to contribute all of the ACM
Initial Assets, the ANMB II Membership Interests and the Membership Interests
(together, the "Contributed Assets") to ARLP in exchange for 3,146,724 units of
limited partnership interest in ARLP (the "Partnership Units") and 629,345
warrants, each of which entitles ACM to purchase an additional Partnership Unit
(the "Warrants");

                           WHEREAS, ARLP desires to issue the Partnership Units
and the Warrants to ACM in exchange for the Contributed Assets; and

                           WHEREAS, ART will contribute the net proceeds of an
offering of its units, each of which consists of five shares of common stock of
ART (the "Common Stock") and a warrant to purchase an additional share of Common
Stock (the "Units"), pursuant to the Offering Memorandum, dated June 26, 2003,
to Arbor

The material marked [*] has been omitted pursuant to a request for
confidential treatment by Arbor Realty Trust, Inc. and has been filed
separately with the Securities and Exchange Commission.
<PAGE>

Realty GPOP, Inc., a Delaware corporation and a wholly owned subsidiary of ART
("GPOP"), and Arbor Realty LPOP, Inc., a Delaware corporation and a wholly owned
subsidiary of ART ("LPOP"); and

                  WHEREAS, each of GPOP and LPOP will contribute the net
proceeds its receives from ART to ARLP in exchange for units of limited
partnership interest in ARLP, concurrently with ACM's contribution of the
Contributed Assets.

                           NOW, THEREFORE, in consideration for the foregoing
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:

1.       Contribution of the Contributed Assets. On the terms and subject to the
         conditions of this Agreement, ACM shall transfer, assign, convey and
         deliver to ARLP all right, title and interest in and to the Contributed
         Assets and ARLP shall issue the Partnership Units and the Warrants to
         ACM.

2.       Conditions.

a.       The obligation of ARLP to issue the Partnership Units and the Warrants
         to ACM in exchange for the Contributed Assets is subject to the
         following conditions (which may be waived by ARLP in ARLP's sole
         discretion): (i) that at the time of the Closing referred to in Section
         3, each of the representations and warranties of ACM made in this
         Agreement shall be true and correct, (ii) ACM shall have executed and
         delivered, and, if applicable, caused to be delivered, to ARLP an
         assignment, substantially in the form of Exhibit A (the "Assignment and
         Assumption") and such assignments and other instruments of conveyance,
         assignment and transfer, all in form satisfactory to ARLP, as shall be
         effective to vest in ARLP good title in and to the Contributed Assets,
         (iii) all approvals and consents to the transactions contemplated by
         this Agreement shall have been obtained from all necessary third
         parties, and (iv) to the best of ACM's knowledge, there shall be no
         material pending or threatened litigation regarding the Contributed
         Assets.

b.       The obligation of ACM to contribute the Contributed Assets to ARLP for
         the Partnership Units and the Warrants is subject to the following
         conditions (which may be waived by ACM in ACM's sole discretion): (i)
         that at the time of the Closing each of the representations and
         warranties of ARLP made in this Agreement shall be true and correct,
         and (ii) ARLP shall have executed and delivered to ACM the Assignment
         and Assumption.

<PAGE>

3.       Closing. The closing (the "Closing") of the transfer of the Contributed
         Assets, the Partnership Units and the Warrants shall be held, at such
         time and place as the parties may mutually agree upon, on July 1, 2003.

         a.       ACM shall deliver to ARLP at the Closing (i) the Assignment
                  and Assumption, (ii) with respect to each ACM Initial Asset,
                  an endorsement by ACM of the related promissory note or notes,
                  without recourse, to ARLP, or its designee, (iii) with respect
                  to ACM's 100% membership interest in ANMB Holdings II, LLC
                  ("ANMB II"), the operating agreement evidencing the equity
                  interest of ANMB II in the entity owning the underlying
                  property and an instrument of assignment effecting the
                  transfer of such membership interests, and (iv) with respect
                  to each of ACM's 100% Membership Interests in Preferred Equity
                  Holders, the operating agreement evidencing the equity
                  interest of the applicable Preferred Equity Holder in the
                  entity owning the underlying property and an instrument of
                  assignment effecting the transfer of the Membership Interests,
                  and (v) such other instruments of transfer executed by ACM as
                  ARLP shall reasonably request, provided that ARLP shall
                  prepare any such instruments and deliver the same to ACM at
                  Closing.

         b.       ARLP shall deliver to ACM (i) a certificate or other
                  documentation evidencing 3,146,724 of its Partnership Units
                  and (ii) a certificate or other documentation evidencing
                  629,345 Warrants.

4.       Representations and Warranties of ACM.

a.       ACM hereby represents and warrants to ARLP and ART, as follows:

i.       ACM is a limited liability company duly organized, validly existing and
         in good standing under the laws of the State of New York;

ii.      ACM has the full power and authority to enter into and consummate all
         transactions contemplated by this Agreement, has duly authorized the
         execution, delivery and performance of this Agreement, and has duly
         executed and delivered this Agreement;

iii.     This Agreement, assuming due authorization, execution and delivery by
         ARLP and ART, constitutes a valid, legal and binding obligation of ACM,
         enforceable against ACM in accordance with the terms hereof, subject to
         (A) applicable bankruptcy insolvency, reorganization, moratorium and
         other laws affecting the enforcement of creditors' rights generally,
         (B) general principles of equity, regardless of whether such
         enforcement is considered in a proceeding in equity or at law and (C)
         public

<PAGE>

         policy considerations underlying the securities laws, to the extent
         that such public policy considerations limit the enforceability of the
         provisions of this Agreement that purport to provide indemnification
         for securities laws liabilities;

iv.      The execution and delivery by ACM of this Agreement and its performance
         of, and compliance with, the terms of this Agreement will not conflict
         with or constitute a breach, violation, or default under (A) its
         certificate of formation or operating agreement, (B) any law, any order
         or decree of any court or arbiter, or any order, regulation or demand
         of any federal, state or local government or regulatory authority,
         which violation is likely to affect materially and adversely either the
         ability of ACM to perform its obligations under this Agreement or the
         financial condition of ACM or (C) any indenture, loan or credit
         agreement, or any other agreement, contract, instrument, mortgage,
         lien, lease, permit, authorization, order, writ, judgment, injunction
         or decree to which ACM is a party or by which any Contributed Asset is
         bound or affected, except for such conflicts with (1) certain
         provisions of (a) the operating agreement of ACM, dated as of January
         1, 2003, and (b) the operating agreement of the sole managing member of
         ACM, Arbor Management, LLC, each of which have been validly waived by
         each of the members thereto, (2) (a) the First Amended and Restated
         Warehousing Credit, Term Loan and Security Agreement (Structured
         Facility and Servicing Secured Facility), dated as of April 1, 2003
         (the "Warehousing Credit Facility"), by and between [*] and ACM, (b)
         the Master Repurchase Agreement, dated as of November 18, 2002 (the
         "[*] Repurchase Agreement"), by and between [*] and ACM, and (c) the
         Master Repurchase Agreement, dated as of November 1, 2002 (the "[*]
         Repurchase Agreement"), by and between [*] and ACM, for which each of
         [*], respectively, have consented to the transactions contemplated by
         this Agreement and (3) the Recognition Agreement, dated as of November
         14, 2001, by and between Fremont Investors and Loan ("Fremont") and
         ACM, for which Fremont has given its consent with further assurances to
         the transactions contemplated by this Agreement; the consummation of
         the transactions contemplated by this Agreement will not result in the
         cancellation, modification or termination of, or the acceleration of,
         or the creation of any charges, claims, conditions, security interests,
         hypothecations, encumbrances, mortgages, liens or pledges
         (collectively, "Liens") on the Contributed Assets pursuant to any
         agreement, license, lease understanding, contract, indenture, mortgage,
         instrument, promise, undertaking or other commitment or obligation
         ("Contracts") under which ACM or any Contributed Asset subject to or
         bound, except for (x) the termination of the Liens


The material marked [*] has been omitted pursuant to a request for
confidential treatment by Arbor Realty Trust, Inc. and has been filed
separately with the Securities and Exchange Commission.
<PAGE>
         of [*] pursuant to the Warehousing Credit Facility, the [*] Repurchase
         Agreement and the [*] Repurchase Agreement, respectively, on the
         Contributed Assets and (y) the creation of the Liens of [*] on the
         Contributed Assets by the execution of the (i) Assignment and
         Assumption Agreement, to be dated as of July 1, 2003, by and between
         ACM and ARLP with respect to the [*], (ii) Structured Facility
         Warehousing Credit and Security Agreement, to be dated as of July 1,
         2003, by and between [*] and ARLP, and (iii) the Master Repurchase
         Agreement, to be dated as of July 1, 2003, by and between [*] and ARLP,
         respectively;

v.       In selecting the ACM Initial Assets, the ANMB II Membership Interests
         and the Membership Interests for pledge pursuant hereto, no selection
         procedure was employed by ACM that was intended to adversely affect the
         interests of ARLP;

vi.      Except as disclosed by ACM to ARLP and ART in writing and accepted in
         writing by ARLP and ART, ACM has not dealt with any person that may be
         entitled to any commission or compensation in connection with the
         transfer of the Contributed Assets. ACM or Obligor has paid any and all
         amounts due to any such person, and ARLP shall have no responsibility
         for any payments due any such person;

vii.     There are no Contracts, and ACM will not enter into Contracts, with any
         other person or entity to sell, transfer, assign or in any manner
         create a Lien on, the Contributed Assets, except for the right, title,
         interest, lien and security interest of (A) [*] under the Warehousing
         Credit Facility, (B) [*] under the [*] Repurchase Agreement, (C) [*]
         under the [*] Repurchase Agreement, or to not sell, transfer or assign
         the Contributed Assets to ARLP;

viii.    No consents, other than those that have been obtained or obtained with
         further assurances, are required for the transfer of the Contributed
         Assets in accordance with the terms of this Agreement; and


The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
<PAGE>
ix.      Each Contributed Asset was created in accordance with, and complies
         with the requirements of, the internal procedures of ACM, including,
         without limitation, ACM's underwriting policies procedures and
         standards.

b.       With respect to the Bridge Loans listed on Schedule A-1 hereto (except
         for the 1025 5th Avenue Bridge Loan), the Mezzanine Loans listed on
         Schedule A-2 hereto, the Albion Loan (as defined on Schedule A-3
         hereto) and the Central Jersey Mezzanine Loan, ACM represents and
         warrants to ART and ARLP that:

i.       ACM is in possession of a file relating to each of the Initial Assets
         which contains (1) each of the documents required to evidence ACM's
         interest in the Initial Asset (including all promissory notes, security
         agreements, guarantees and other agreements that evidence or secure
         such Initial Assets) and (2) when applicable, certain other documents
         relating to the underlying property (the "Initial Asset File");

ii.      Immediately prior to the assignment of each Contributed Asset to ARLP,
         ACM was the sole legal, beneficial and equitable owner of each
         Contributed Asset, except for the right, title, interest, lien and
         security interest of (A)[*] under the Warehousing Credit Facility,
         (B)[*] under the [*] Repurchase Agreement, (C)[*] under the [*]
         Repurchase Agreement; and ACM transferred each Contributed Asset to
         ARLP free and clear of any Lien, except for the Liens described in this
         Section 4(b)(ii); in the event that ARLP's interest in a Bridge Loan is
         deemed to be a security interest, such security interest is valid,
         perfected and of first priority; in the event that ARLP's interest in a
         Mezzanine Loan is deemed to be a security interest, such security
         interest is valid, perfected and is a first priority lien on the
         pledged ownership interest related to the Mezzanine Loan;

iii.     Neither the notes relating to the Initial Assets (the "Initial Asset
         Notes") nor the Initial Assets are subject to any right of rescission,
         set-off, counterclaim or defense, including the defense of usury, nor
         will the operation of any term of the Initial Asset Notes or the
         Initial Assets, nor the exercise of any right thereunder, render the
         Initial Asset Notes or Initial Assets unenforceable, in whole or in
         part, except to the extent enforcement may be limited by (A) applicable
         bankruptcy, insolvency, and other similar laws affecting creditor's
         rights generally, or (B) general equitable principals, regardless of
         whether the issue of enforceability is considered in a proceeding in
         equity or at law, or subject to any right of rescission, set-off,
         counterclaim or


The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
<PAGE>

         defense, including the defense of usury and no such right of
         rescission, set-off, counterclaim or defense has been asserted;

iv.      Up to and including the Closing, all payments required to be made with
         respect to an Initial Asset under the terms of the related Initial
         Asset Note have been made before the end of any grace or cure period
         for such payment. ACM has not advanced funds, or induced, solicited or
         received any advance of funds from a party other than the obligor on
         the related Initial Asset Note (the "Obligor"), directly or indirectly,
         for the payment of any amount required by the Initial Asset Note. There
         has been no delinquency beyond the end of any applicable period of
         grace in any payment by the Obligor under the terms of any Initial
         Asset Note;

v.       The Initial Asset Note relating to each Initial Asset has been endorsed
         to ARLP in a form and in a manner sufficient to convey to ARLP all
         right, title and interest therein of ACM in all relevant jurisdictions,
         except to the extent that a recording or other filing is required to
         transfer such Initial Asset;

vi.      To the best of ACM's knowledge, based upon an opinion of Obligor's
         counsel, each Initial Asset at origination did not violate any
         applicable federal, state or local law;

vii.     With respect to each Initial Asset that relates to a property that is
         secured by a mortgage in favor of ACM (each a "Mortgaged Property"), a
         title insurance policy insuring the lien created by such mortgage was
         effective on the date of ACM's financing of such Initial Asset, such
         policy is valid and remains in full force and effect, and, to the best
         of ACM's knowledge each such policy was issued by a title insurer
         qualified to do business in the jurisdiction where the applicable
         Mortgaged Property is located, which policy insures either ACM or the
         original holder of the Initial Asset as to the Lien of the Initial
         Asset; no claims have been made under such title insurance policy and
         no prior holder of the applicable Initial Asset, including ACM, has
         done, by act or omission, anything that would impair the coverage of
         such title insurance policy;

viii.    To the best of ACM's knowledge based upon its review of the related
         title insurance policy, each mortgage related to a Mortgaged Property
         (A) is properly recorded (or, if the mortgage related to such Mortgaged
         Property was created within 30 days prior to the date of this Agreement
         and is not yet recorded, the mortgage relating to such Mortgaged
         Property has been submitted for recording, is in form and substance
         acceptable for recording and, when properly recorded, will be
         sufficient under the laws of the jurisdiction wherein the Mortgaged
         Property is located to reflect record of the Lien of such Mortgaged
         Property) and the mortgage relating to the Mortgaged Property is a
         valid, continuing and enforceable lien (subject only to the matters

<PAGE>

         described in the next sentence) on the Mortgaged Property, including
         all improvements on the Mortgaged Property owned by the Obligor, all
         other fixtures on the Mortgaged Property owned by the Obligor and all
         additions, alterations and replacements made at any time with respect
         to the foregoing, and (B) provides for an assignment of leases and
         rents from the Mortgaged Property, or, if the related Initial Asset
         does not so provide, a separate assignment of mortgage was executed by
         the Obligor, was properly recorded (or, if such mortgage was created
         within 30 days prior to the date this Agreement and is not yet
         recorded, such mortgage has been submitted for recording, is in form
         and substance acceptable for recording and, when properly recorded,
         will be sufficient under the laws of the jurisdiction wherein the
         Mortgaged Property is located to reflect record of the Lien of such
         assignment) and creates a valid, existing and enforceable lien and
         security interest on the leases and rents from the related Mortgaged
         Property and other property described therein. The Lien on each
         Mortgaged Property is subject only to (1) the Lien of current real
         property taxes not yet due and payable, (2) covenants, conditions and
         restrictions, rights of way, easements and other matters of public
         record as of the date of recording that are acceptable to mortgage
         lending institutions generally, are specifically referred to in
         lender's title insurance policy delivered to ACM and are taken into
         account in determining, or do not materially adversely affect, the
         appraisal value of the Mortgaged Property, and (3) other matters to
         which like properties are commonly subject that do not materially
         interfere with the benefits of the security intended to be provided by
         such Initial Asset or the use, enjoyment, value or marketability of the
         related Mortgaged Property;

ix.      In the case of a Mortgaged Property, the security agreement, chattel
         mortgage or equivalent document delivered in connection with the
         Mortgaged Property establishes and creates a valid, continuing and
         enforceable Lien and security interest in all furniture, fixtures and
         equipment on or used in connection with the related Mortgaged Property
         and other property described therein. Either a Uniform Commercial Code
         financing statement has been filed and/or recorded in all places
         necessary to perfect a valid security interest in the personal property
         subject to the Lien of the Mortgaged Property or any separate security
         agreement, chattel mortgage or equivalent document or, in the case of a
         Mortgaged Property created within 30 days prior to the date of this
         Agreement, ACM has a right to file a Uniform Commercial Code financing
         statement with respect to the personal property subject to the Lien of
         such Mortgaged Property or any separate security agreement, chattel
         mortgage or equivalent document and upon such recordation and/or filing
         thereof in all necessary places, ACM will have a perfected and valid
         security interest in such personal property;

x.       There are no delinquent taxes or assessment liens against any Mortgaged
         Property;

<PAGE>

xi.      There are no mechanics' liens or initiation of a mechanics' lien
         affecting any Mortgaged Property, except those (A) that are insured
         against by a title insurance policy, (B) that are subordinate to the
         Lien of the related Initial Asset, if applicable or (C) the payments
         required for such work, labor or materials are not yet due and payable,
         or if due and payable and unpaid are the subject of a good faith
         contest;

xii.     To the best of ACM's knowledge based on the appraisal or engineering
         report produced at the origination of the Initial Asset, except to the
         extent that it was contemplated at the time of the origination of the
         Initial Asset that repairs, restorations and improvements would be made
         to the underlying property, each related property is in good repair and
         free of structural defects, damage, waste and defects in any
         mechanical, electrical, plumbing and safety systems therein that would
         materially and adversely affect the value of such related property, and
         there is no proceeding pending for the total or partial condemnation
         thereof. Except to the extent that it was contemplated at the time of
         the origination of the Initial Asset that repairs, renovations and
         improvements would be made to the building system and the related
         property, as applicable all building systems are in good working order
         subject to ordinary wear and tear. ACM inspected the related property
         in connection with the origination of the related to the Initial
         Assets;

xiii.    There is no material default, breach, violation or event of
         acceleration existing under the Initial Asset or the Initial Asset Note
         and no event that, with the passage of time, or with notice and the
         expiration of any grace or cure period, would constitute a material
         default, breach, violation or event of acceleration thereunder;

xiv.     Each Initial Asset and related Initial Asset Note is the legal, valid
         and binding obligation of the maker thereof, enforceable in accordance
         with its terms, subject to (A) applicable bankruptcy, insolvency,
         reorganization, moratorium and other laws affecting the enforcement of
         creditors' rights generally, and (B) general principles of equity,
         regardless of whether such enforcement is considered in a proceeding in
         equity or at law. All parties to each Initial Asset had legal capacity
         to execute such Initial Asset and related Initial Asset Note, and each
         Initial Asset has been duly and properly executed by such parties and
         constitutes a legal, valid and binding obligation of each party
         thereto, subject to (A) applicable bankruptcy, insolvency,
         reorganization, moratorium and other laws affecting the enforcement of
         creditors' rights generally, and (B) general principles of equity,
         regardless of whether such enforcement is considered in a proceeding in
         equity or at law;

xv.      Each Initial Asset contains customary and enforceable provisions that
         render the rights and remedies of the holder thereof adequate for the
         practical realization

<PAGE>

         against the applicable collateral securing the Initial Asset (the
         "Collateral") of the benefits of the security intended to be provided
         thereby;

xvi.     With respect to each Initial Asset constituting a deed of trust, a
         trustee, duly qualified under applicable law to serve as such, has been
         properly designated and currently so serves and is named in such
         Initial Asset, and no fees or expenses are or will become payable to
         the trustee under the deed of trust, except in connection with a
         trustee's sale after default by the Obligor;

xvii.    The improvements upon each property related to an Initial Asset are
         covered by a valid and existing hazard insurance policy with a
         generally acceptable carrier, which policy provides for fire, extended
         coverage and such other hazards as are customary in the area where the
         property related to an Initial Asset is located representing coverage
         not less than the outstanding principal balance of the related Initial
         Asset or the minimum amount required to compensate for damage or loss
         of the improvements thereon on a replacement cost basis, whichever is
         less. Such insurance policies contain a standard mortgagee clause
         naming, in the case of an Initial Asset, ACM and its successors in
         interest as mortgagee, and ACM has received no notice that any premiums
         due and payable thereon have not been paid; the related Initial Asset
         obligates the Obligor to maintain all such insurance at the Obligor's
         cost and expense, and upon the Obligor's failure to do so, authorizes
         the holder of such Initial Asset to obtain and maintain such insurance
         at the Obligor's cost and expense and to seek reimbursement therefor
         from the Obligor;

xviii.   If a property related to an Initial Asset is in an area identified in
         the Federal Register by the Federal Emergency Management Agency as
         having special flood hazards and if required by law, a flood insurance
         policy in a form meeting the requirements of the current guidelines of
         the Flood Insurance Administration is in effect with respect to such
         property with a generally acceptable carrier in an amount representing
         coverage not less than the least of (A) the outstanding principal
         balance of the related Initial Asset, (B) the minimum amount required
         to compensate for damages or loss on a replacement cost basis or (C)
         the maximum amount of insurance that is available under the Flood
         Disaster Protection Act of 1973;

xix.     When applicable, the Initial Asset File contains an appraisal of the
         property relating to the Initial Asset made and signed, prior to the
         approval of the application for the Initial Asset, by an appraiser,
         duly appointed by ACM, who had no interest, direct or indirect, in the
         property or in any Initial Asset made by the approval or disapproval of
         the Initial Asset, who, based on a review of the appraisal, was
         state-licensed or state certified (if required under the laws of the
         state in which the related property is located) at the time the
         appraisal was conducted and signed, who, to the knowledge

<PAGE>

         of ACM, is a member of and has a professional designation from a
         nationally recognized appraisal organization. Such appraisal states
         that the appraiser examined the property;

xx.      To the best of ACM's knowledge, no material misrepresentation, fraud or
         similar occurrence with respect to an Initial Asset has taken place on
         the part of any person involved in the origination of the Initial Asset
         or in the application of any insurance in relation to such Initial
         Asset;

xxi.     To the best of ACM's knowledge, if one or more commercial tenants lease
         a portion of a property related to a Initial Asset, each such tenant is
         conducting business only in that portion of such property covered by
         its space lease, except where improvements are being made to such
         space, all tenant improvements to be completed by Obligor under a lease
         have been completed, and the payment of rent under each lease has
         commenced. To the best of ACM's knowledge, no residential space lease,
         occupancy agreement or license agreement contains an option to
         purchase, right of first refusal to purchase, or any other similar
         provision that adversely affects the Initial Asset or that might
         adversely affect the rights of ARLP. Except as set forth on Schedule
         4(b)(xxi) hereto, no commercial space lease, occupancy agreement or
         license agreement contains an option to purchase, right of first
         refusal to purchase, or any other similar provision that adversely
         affects the Initial Asset or that might adversely affect the rights of
         ARLP. To ACM's actual knowledge, each property related to an Initial
         Asset is not subject to any lease other than the space leases described
         in the rent roll related to the Initial Asset, and no person has any
         possessory interest in, or right to occupy, such property except under
         and pursuant to such a space lease. Each such material space lease,
         occupancy agreement or license agreement is subordinate to the Initial
         Asset either pursuant to its terms or a recorded subordination
         agreement and contains a customary provision for termination for cause;

xxii.    To the best of ACM's knowledge, each property related to an Initial
         Asset is in all material respects in material compliance with and
         lawfully used, operated and occupied under applicable zoning and
         building laws or regulations, and ACM has not received notification
         from any governmental authority that any such property fails to comply
         with such laws or regulations, is being used, operated or occupied
         unlawfully or has failed to obtain or maintain any inspection, license
         or certificates material to the operation of such property;

xxiii.   To the best of ACM's knowledge, all material inspections, licenses and
         certificates required to be made or issued with respect to all occupied
         portions of the property related to an Initial Asset, with respect to
         the use and occupancy of the same,

<PAGE>

         including, but not limited to, certificates of occupancy and fire
         underwriting certificates, have been made or obtained from the
         appropriate authorities and the property is lawfully occupied under
         applicable law;

xxiv.    All of the material improvements that were included for the purpose of
         determining the appraisal value of a Mortgaged Property lie wholly
         within the boundaries and building restriction lines of such property,
         and no significant improvements on adjoining properties encroach upon
         the Mortgaged Property;

xxv.     When applicable, the related Initial Asset File contains a report (the
         "Assessment Report") of an environmental assessment made with respect
         to each property related to an Initial Asset by an independent
         qualified environmental professional who had no interest, direct or
         indirect, in such property or in any Initial Asset secured thereby, and
         whose compensation was not affected by the approval or disapproval of
         the Initial Asset. To the best of ACM's knowledge and except as
         disclosed in the Assessment Report in the Initial Asset File, each
         related property is in material compliance with all environmental laws,
         ordinances, rules, regulations and orders of federal, state or
         governmental authorities relating thereto.

xxvi.    To the best of ACM's knowledge and except as disclosed in the
         Assessment Report in the Initial Asset File, each related property of
         an Initial Asset is free from contamination from any hazardous
         materials and no hazardous materials have been used, stored or
         otherwise handled in any manner on, in from or affecting any related
         property except in compliance with all environmental laws. Neither ACM
         nor, to the best knowledge of ACM, any Obligor has received
         notification from any federal, state or other governmental authority
         relating to any hazardous materials on or affecting the related
         property or to any potential or known liability under any environmental
         law arising from the ownership or operation of a related property. For
         the purposes of this subsection, the term "hazardous materials" shall
         include, without limitation, gasoline, petroleum products, explosives,
         radioactive materials, polychlorinated biphenyls or related or similar
         materials, asbestos or any material containing asbestos, lead,
         lead-based paint, area formaldehyde insulation and any other substance
         or material as may be defined as a hazardous or toxic substance by any
         federal, state or local environmental law, ordinance, rule, regulation
         or order, including, without limitation, the Comprehensive
         Environmental Response, Compensation, and Liability Act, the Clean Air
         Act, the Clean Water Act, the Resource Conservation and Recovery Act,
         the Toxic Substances Control Act and any regulations promulgated
         pursuant thereto;

xxvii.   To the best of ACM's knowledge, there are no actions, suits or
         proceedings before any court, administrative agency or arbitrator
         concerning an Initial Asset or the

<PAGE>

         related Collateral that might materially and adversely affect (1) title
         to such Initial Asset, (2) the validity or enforceability thereof, (3)
         the value of the Collateral as security for the Initial Asset or (4)
         the marketability of such Collateral;

xxviii.  Except for Partners Portfolio Mezzanine Loan (as defined on Schedule
         A-2 hereto), none of the Initial Assets is cross-collateralized with
         any Initial Asset other than another Initial Asset;

xxix.    Each Initial Asset does not by its terms permit the repayment thereof
         for an amount less than the outstanding principal balance thereof plus
         accrued interest;

xxx.     No Obligor is, to ACM's actual knowledge, a debtor in any state or
         federal bankruptcy or insolvency proceeding;

xxxi.    With respect to each Initial Asset that is a Mezzanine Loan:

(1)      The first mortgage related to the Initial Asset permits such Mezzanine
         Loan and the related first mortgage lender has consented to the rights
         of the lender under the Mezzanine Loan, if such consent is required to
         be obtained pursuant to the documents securing the loan;

(2)      With the exception of 333 East 34th Street Mezzanine Loan and Partners
         Portfolio Mezzanine Loan (each as defined on Schedule A-2 hereto), each
         Mezzanine Loan is directly secured by the pledge (the "Pledge
         Agreement") of all of the equity interest in the related Obligor. Each
         Pledge Agreement has been duly authorized, executed and delivered by
         each of the parties thereto and is a legal, valid and binding
         obligation of each of the parties thereto, subject to (A) applicable
         bankruptcy, insolvency, reorganization, moratorium and other laws
         affecting the enforcement of creditors' rights generally and (B)
         general principles of equity, regardless of whether such enforcement is
         considered a proceeding in equity or at law; and

(3)      Each related Pledge Agreement creates a valid, first priority security
         interest in the entire equity interest in the related mortgagor.

xxxii.   With respect to each Preferred Equity Holder:

(1)      Each Preferred Equity Holder is duly formed, validity existing and in
         good standing under the laws of their respective jurisdiction of
         formation;

(2)      Each Preferred Equity Interest owned by each Preferred Equity Holder is
         owned by such Preferred Equity Holder free and clear of any and all
         Liens, except for the right, title, interest, lien and security
         interest of (A) [*]

The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.


<PAGE>
         under the Warehousing Credit Facility, (B) [*] under the [*] Repurchase
         Agreement, and (C) [*] under the [*] Repurchase Agreement; and

(3)      Each Preferred Equity Holder is entitled to receive preferred
         distributions under and in accordance with the terms of the operating
         agreement for the entity in which such Preferred Equity Holder holds
         such Preferred Equity Interest.

xxxiii.  No Preferred Equity Holder has (A) made a general assignment for the
         benefit of creditors, (B) filed any voluntary petition in bankruptcy or
         suffered the filing of any involuntary petition by its creditors, (C)
         suffered the appointment of a receiver to take possession of all, or
         substantially all, of its assets, (D) suffered the attachment or other
         judicial seizure of all, or substantially all, of its assets, (E)
         admitted in writing its inability to pay its debts as they come due, or
         (F) made an offer of settlement, extension or composition to its
         creditors generally.

xxxiv.   Each Preferred Equity Holder and each entity controlled directly or
         indirectly by a Preferred Equity Holder (collectively the "Entities")
         is, and at all times during its existence has been, a partnership or
         limited liability company classified as a partnership (rather than an
         association or a publicly traded partnership taxable as a corporation)
         for federal income tax purposes, except for any Entity with respect to
         which an election to be treated as a taxable REIT subsidiary ("TRS")
         has been or will be made effective for all periods following the
         Closing, or which has been or will be contributed to a TRS. To the best
         of ACM's knowledge, each Entity has timely, including extensions, filed
         all material tax returns required to be filed by it and has timely,
         including extensions, paid all material taxes required to be paid by it
         and none of the tax returns filed by any of the Entities is the subject
         of a pending or ongoing audit, and no federal, state, location or
         foreign taxing authority has asserted any material tax deficiency or
         other assessment in writing against any Entity or any property of any
         Entity.

5.       Representations and Warranties of ARLP. ARLP hereby represents and
         warrants to ACM as follows:

a.       ARLP is duly organized, validly existing and in good standing under the
         laws of the State of Delaware;

The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
<PAGE>

b.       ARLP has the full power and authority to enter into and consummate all
         transactions contemplated by this Agreement, has duly authorized the
         execution, delivery and performance of this Agreement and has duly
         executed and delivered this Agreement;

c.       This Agreement, assuming due authorization, execution and delivery by
         ACM, constitutes a valid, legal and binding obligation of ARLP,
         enforceable against ARLP in accordance with the terms hereof, subject
         to (A) applicable bankruptcy, insolvency, reorganization, moratorium
         and other laws affecting the enforcement of creditors' rights
         generally, (B) general principles of equity, regardless of whether such
         enforcement is considered in a proceeding in equity or at law and (C)
         public policy considerations underlying the securities laws, to the
         extent that such public policy considerations limit the enforceability
         of the provisions of this Agreement that purport to provide
         indemnification for securities laws liabilities; and

d.       ARLP is not in violation of, and its execution and delivery of this
         Agreement and its performance of, and compliance with, the terms of
         this Agreement will not constitute a violation of, any law, any order
         or decree of any court or arbiter, or any order, regulation or demand
         of any federal, state or local governmental or regulatory authority,
         which violation, in ARLP 's good faith and reasonable judgment, is
         likely to affect materially and adversely either the ability of ARLP to
         perform its obligations under this Agreement or the financial condition
         of ARLP.

6.       Investment Representations and Warranties. ACM hereby represents and
         warrants to ART and ARLP as follows:

a.       The Partnership Units and the Warrants to be acquired by ACM are being
         acquired for ACM's own account with the present intention of holding
         such interests for purposes of investment, and ACM has no intention of
         selling such interests in a public distribution, and the Partnership
         Units and the Warrants will not be disposed of in contravention of the
         Securities Act of 1933, as amended (the "Act"), or any applicable state
         securities laws. No other person will have any direct or indirect
         (other than through the ownership of a direct or indirect interest in
         ACM) beneficial interest in or right to the Partnership Units or
         Warrants purchased hereunder;

b.       ACM understands that the Partnership Units and Warrants have not been
         registered under the Act or any state securities laws by reason of
         specific exemptions under the provisions thereof, the availability of
         which depend in part upon the bona fide nature of ACM's investment
         intent and upon the accuracy of ACM's representations made in this
         Section 6. ACM understands that the Partnership Units and the Warrants
         have not been approved or disapproved by the Securities and Exchange
         Commission or by any other federal or state agency. ACM understands
         that ARLP is relying upon the

<PAGE>

         representations and agreements contained in this Section 6 for the
         purpose of determining whether this transaction meets the requirements
         for such exemptions under the Act and any state securities laws;

c.       ACM understands that the Partnership Units and Warrants are "restricted
         securities" under the applicable federal securities laws and that the
         Securities Act and the rules of the Securities and Exchange Commission
         provide in substance that ACM may dispose of the Partnership Units and
         the Warrants only pursuant to an effective registration statement under
         the Securities Act or an exemption therefrom, and ACM understands that
         ARLP has no current obligation or intention to register the Partnership
         Units or the Warrants. ACM also understands that no public market
         exists for any of the securities issued by ARLP and that ARLP has no
         obligation to ensure that a broad public market will exist for
         securities of ARLP. Accordingly, ACM understands that under the rules
         of the Securities and Exchange Commission, ACM may only dispose of the
         Partnership Units and the Warrants in transactions that are exempt from
         registration under the Act. As a consequence of all of the foregoing,
         ACM understands that it must bear the economic risk of the investment
         in the Partnership Units and the Warrants for an indefinite period of
         time;

d.       ACM is an "accredited investor "as that term is defined in Rule 501(a)
         under the Act. ACM was not formed solely for making an investment in
         the Partnership Units or Warrants. ACM acknowledges that an investment
         in the Partnership Units and the Warrants is not recommended for
         investors who have any need for a current return on this investment or
         who cannot bear the risk of losing their entire investment. ACM
         acknowledges that: (i) it has adequate means of providing for its
         current needs and has no need for liquidity in this investment; (ii) it
         is able to bear the economic risk of this investment; (iii) it is able
         to hold the Partnership Units and the Warrants indefinitely; and (iv)
         it is able to afford a complete loss of this investment;

e.       ACM either (i) has a preexisting personal or business relationship with
         ARLP or (ii) by reason of its business or financial experience, or by
         reason of the business or financial experience of its financial advisor
         who is unaffiliated with and who is not compensated, directly or
         indirectly, by ARLP or any affiliate or selling agent of ARLP, ACM is
         capable of evaluating the risks and merits of an investment in the
         Partnership Units and the Warrants and of protecting its own interests
         in connection with the investment and investment commitment pursuant to
         this Agreement; and

f.       ACM has been given the opportunity to perform its own due diligence,
         investigation of the business, operations, assets, liabilities and
         financial condition of ARLP, including access to the records and books
         of ARLP. ACM has had an opportunity to

<PAGE>

         ask questions of and receive answers from ARLP concerning the business
         and assets of ARLP in a manner deemed appropriate by ACM.

7.       Survival of Representations, Warranties and Covenants. All
         representations, warranties and covenants contained in this Agreement
         shall survive the Closing. Upon discovery by any of the parties hereto
         of a breach of any of the representations and warranties set forth in
         Sections 4, 5 and 6 that materially and adversely affects the interests
         of the other parties hereto, the party discovering such breach shall
         give prompt written notice to the other party hereto.

8.       Indemnity.

a.       ACM hereby agrees to indemnify and hold ART and ARLP harmless from and
         against any and all damage, expense, loss, cost, claim or liability
         (each a "Claim") suffered or incurred by ART and ARLP as a result of
         any untruth or inaccuracy in any of the representations or warranties
         made by ACM in Sections 4 and 6 of this Agreement;

b.       Scope of Indemnity. Notwithstanding anything to the contrary otherwise
         provided in this Agreement:

i.       No indemnity shall be available under Section 8(a) until the
         indemnifiable Claims against ACM exceed the total amount of $200,000,
         except in the case of Claims arising under breaches of any
         representations or warranties in Section 4(a)(ii), Section 4(b)(ii),
         Section 4(b)(x), Section 4(b)(xxxii), Section 4(b)(xxxiv) or Section 6
         (for purposes of determining whether the $200,000 threshold amount has
         been met, any qualification or limitation of a representation or
         warranty by reference to the materiality of matters stated herein
         having or not having a material adverse effect or words of similar
         effect shall be disregarded);

ii.      Except in the case of fraud, the indemnification set forth in Section
         8(a) shall be limited to an amount equal to the value of the
         Partnership Units received by ACM on the date hereof;

iii.     The indemnification set forth in Section 8(a) shall only extend to any
         Claim of which written notice has been given within twelve months
         following the Closing, except with respect to Claims arising under (A)
         Section 4(b)(xxv) and Section 4(b)(xxvi), for which written notice has
         been given within thirty-six months following the Closing, (B) Section
         4(b)(x) and Section 4(b)(xxxiv), for which written notice has been
         given within the applicable statute of limitations following the
         Closing, and (C) Section 4b(ii), Section 4(b)(xxxii) and Section 6; and

<PAGE>

c.       Notice to ACM. Each of ART and ARLP shall give prompt written notice to
         ACM as to the assertion of any Claim, or the commencement of any Claim.
         The omission of either of ART or ARLP to notify ACM of any such Claim
         shall not relieve ACM from any liability in respect of such Claim that
         it may have to either of ART or ARLP on account of this Agreement nor
         shall it relieve ACM from any other liability that it may have to
         either of ART or ARLP, provided, however, that ACM shall be relieved of
         liability to the extent that the failure so to notify (a) shall have
         caused prejudice to the defense of such claim, or (b) shall have
         increased the costs or liability of ACM by reason of the inability or
         failure of ACM (because of the lack of prompt notice from either of ART
         or ARLP) to be involved in any investigations or negotiations regarding
         any such claim. In case any such claim shall be asserted or commenced
         against either of ART or ARLP and it shall notify ACM thereof, ACM
         shall be entitled to participate in the negotiation or administration
         thereof and, to the extent it may wish, to assume the defense thereof
         with counsel reasonably satisfactory to the party against which such
         Claim was initially asserted or commenced, and, after notice from ACM
         to the party against which such Claim was initially asserted or
         commenced of its election so to assume the defense thereof, which
         notice shall be given within 15 days of its receipt of such notice from
         the party against which such Claim was initially asserted or commenced,
         ACM will not be liable to the party against which such Claim was
         initially asserted or commenced hereunder for any legal or other
         expenses subsequently incurred by the party against which such Claim
         was initially asserted or commenced in connection with the defense
         thereof other than reasonable costs of investigation. ACM shall not
         settle any claim without the written consent of the party against which
         such Claim was initially asserted or commenced, which consent shall not
         be unreasonably withheld or delayed.

9.       Covenants.

         ACM hereby agrees to provide ARLP with a limited guaranty with respect
         to the 130 West 30th Street Bridge Loan (as defined on Schedule A-1
         hereto), 333 East 34th Street Mezzanine Loan and the Central Jersey
         Mezzanine Loan (each as defined on Schedule A-2 hereto) and the
         Preferred Equity Interest held by ANMB Holdings, LLC (as described on
         Schedule C hereto), pursuant to a Guaranty, made by ACM in favor of
         ARLP, substantially in the form of Exhibit B;

10.      Specific Performance. ACM and ARLP acknowledge that damages would be an
         inadequate remedy for any breach of the provisions of this Agreement
         and agree that the obligations of the parties hereunder shall be
         specifically enforceable.

<PAGE>

11.      Expenses. Whether or not the Closing occurs, all costs and expenses
         incurred in connection with this Agreement and the transactions
         contemplated hereby shall be paid by ACM.

12.      Further Assurances. From time to time following the Closing, ACM shall
         execute and deliver, or cause to be executed and delivered, to ARLP
         such other documents or instruments of conveyance and transfer as ARLP
         may reasonably request or as may be otherwise necessary to more
         effectively convey and transfer to, and vest in, ARLP, the ACM Initial
         Assets, the ANMB II Membership Interests, the Membership Interests and
         the Liabilities, or in order to fully effectuate and to implement the
         purposes, terms and provisions of this Agreement. To the extent that
         hereafter ACM receives any payments in respect of the Initial Assets or
         the Membership Interests on or after the date of the Closing, ACM shall
         forward the same to ARLP within five (5) business days.

13.      Entire Agreement: No Other Representations. Except as expressly agreed
         in a separate writing signed by the parties hereto on or after the date
         of this Agreement, this Agreement constitutes the entire agreement, and
         supersedes all other prior agreements and understandings, both written
         and oral, between the parties, with respect to the subject matter
         hereof. Except as set forth herein, ACM makes no representation,
         express or implied, with respect to the Initial Assets or the
         Membership Interests or the enforceability, collectability, suitability
         or value thereof.

14.      Severability. The provisions of this Agreement shall be deemed
         severable and the invalidity or unenforceability of any provision shall
         not affect the validity or enforceability of the other provisions
         hereof. If any provision of this Agreement, or the application thereof
         to any person or entity or any circumstance, is invalid or
         unenforceable (a) a suitable and equitable provision shall be
         substituted therefor in order to carry out, so far as may be valid and
         enforceable, the intent and purpose of such invalid or unenforceable
         provision and (b) the remainder of this Agreement and the application
         of such provision to other persons or entities or circumstances shall
         not be affected by such invalidity or unenforceability, nor shall such
         invalidity or unenforceability affect the validity or enforceability of
         such provision, or the application thereof, in any other jurisdiction.

15.      Interpretation. The section references and headings herein are for
         convenience of reference only, do not constitute part of this Agreement
         and shall not be deemed to limit or otherwise affect any of the
         provisions hereof.

16.      Successors and Assigns. This Agreement shall be binding upon and inure
         to the benefit of the parties hereto and their successors and assigns.
         ARLP shall have the

<PAGE>

         right to assign its rights under this agreement as respects any ACM
         Initial Asset, the ANMB II Membership Interests or any of the
         Membership Interests to any purchaser of such ACM Initial Asset the
         ANMB II Membership Interests or any of the Membership Interests Nothing
         in this Agreement, expressed or implied, is intended or shall be
         construed to confer upon any person or entity other than the parties
         and their successors and assigns any right, remedy or claim under or by
         reason of this Agreement.

17.      Counterparts. This Agreement may be executed in one or more
         counterparts, each of which shall be deemed to be an original but all
         of which shall constitute one instrument.

18.      Choice of Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES HEREUNDER
         SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
         STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES GOVERNING CONFLICTS OF
         LAWS.

<PAGE>

                           IN WITNESS WHEREOF, the parties hereto have executed
         this Agreement as of the date first above written.

                                         ARBOR COMMERCIAL MORTGAGE, LLC

                                         By: /s/ Frederick C. Herbst
                                             ---------------------------
                                             Name: Frederick C. Herbst
                                             Title: Chief Financial Officer

                                         ARBOR REALTY TRUST, INC.

                                         By: /s/ Frederick C. Herbst
                                             ---------------------------
                                             Name: Frederick C. Herbst
                                             Title: Chief Financial Officer

                                         ARBOR REALTY LIMITED PARTNERSHIP

                                         By: Arbor Realty GPOP, Inc.,
                                             its General Partner

                                             By: /s/ Frederick C. Herbst
                                                 -----------------------------
                                                 Name: Frederick C. Herbst
                                                 Title: Secretary and Treasurer

<PAGE>

                                  SCHEDULE A-1

                                  BRIDGE LOANS

"1025 5th Avenue Bridge Loan" means the bridge loan evidenced by the Promissory
Note, dated as of October 10, 2002, by Adam C. Hochfelder and Amy M. Hochfelder
in favor of Arbor Commercial Mortgage, LLC.

"130 West 30th Street Bridge Loan" means the bridge loan evidenced by the
Amended, Consolidated and Restated Promissory Note, dated as of September 20,
2001 by 130 West 30th, LLC in favor of Arbor Commercial Mortgage, LLC.

"Concord and Henry Bridge Loan" means the bridge loan evidenced by the
Promissory Note, dated April 3, 2003, by Henry Terrace, LLC and 100 Concord St.,
LLC in favor of Arbor Commercial Mortgage, LLC.

"Dylan Hotel Bridge Loan" means the bridge loan evidenced by the Amended and
Restated Mortgage Note, dated as of March 31, 2003, by Grand Palace Hotel at the
Park LLC in favor of Arbor Commercial Mortgage, LLC, subject to all right, title
and interest of BD Hotels, LLC ("BD") to a certain amount of the principal and
interest payments due on Dylan Hotel Bridge Loan and such other rights, title
and interests of BD with respect to the Dylan Hotel Bridge Loan, each as granted
by ACM to BD pursuant to the Participation Agreement, dated as of April 8, 2003
between Arbor Commercial Mortgage, LLC and BD.

"Emerald Bay Bridge Loan" means the bridge loan evidenced by the Promissory
Note, dated as of May 14, 2003, by Empirian Bay LLC in favor of Arbor Commercial
Mortgage, LLC, subject to all right, title and interest of RFC to a certain
amount of the principal and interest payments due on Emerald Bay Bridge Loan and
such other rights, title and interests of [*] with respect to the Emerald Bay
Bridge Loan, each as granted by ACM to [*] pursuant to the Participation
Agreement, dated as of May 14, 2003 between Arbor Commercial Mortgage, LLC and
[*].

"Grand Plaza Bridge Loan" means the bridge loan evidenced by the Promissory
Note, dated as of November 27, 2002, by Grand Plaza Limited Partnership in favor
of Arbor Commercial Mortgage, LLC.

"Holiday Inn - Deland Bridge Loan" means the bridge loan evidenced by the
Promissory Note, dated as of March 31, 2000 by Hospitality Associates of Deland
Florida, Ltd., in favor of Arbor National Commercial Mortgage, LLC.


The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
<PAGE>

"NHP Bridge Loan" means the bridge loan evidenced by the Promissory Note, dated
as of February 27, 2003, by NSH Affordable Housing of Indiana, Inc. in favor of
Arbor Commercial Mortgage, LLC.

"Palmetto Villas Bridge Loan" means the bridge loan evidence by the Promissory
Note, dated as of May 7, 2003, by Palmetto Villas Investors, LLC in favor of
Arbor Commercial Mortgage, LLC.

"Partners Portfolio Bridge Loan" means the bridge loan evidenced by the
Promissory Note with respect to Tranch A, dated as of April 30, 2003, by SRH/LA
Chesapeake Apartments, L.P., SRH/LA Nottingham, LLC, SRH/LA Hunter, LLC, SRH/LA
Melvin, LLC in favor of Arbor Commercial Mortgage, LLC.

"Tropical Gardens Bridge Loan" means the bridge loan evidenced by the Promissory
Note, dated as of December 20, 2002, by NHP Tropical Gardens Limited Partnership
in favor of Arbor Commercial Mortgage, LLC.

"Vermillion Apartments Bridge Loan" means the bridge loan evidenced by the
Promissory Note, dated as of September 24, 2002, by SRH Vermillion Limited
Partnership in favor of Arbor Commercial Mortgage, LLC.

<PAGE>

                                  SCHEDULE A-2

                                 MEZZANINE LOANS

"333 East 34th Street Mezzanine Loan" means the mezzanine loan evidenced by the
Promissory Note by 333 East 34th, LLC, dated as of January 9, 2002, in favor of
Arbor Commercial Mortgage, LLC.

"Carlton Arms Mezzanine Loan" means the mezzanine loan evidenced by the
Promissory Note, dated as of November 14, 2001, by Carlton Arms, LLC and HRA
Egypt Lake, Inc. in favor of Arbor Commercial Mortgage, LLC.

"Partners Portfolio Mezzanine Loan" means the mezzanine loan evidenced by the
Promissory Note with respect to Tranch B, dated as of April 30, 2003, by SRH/LA
Chesapeake Apartments, L.P., SRH/LA Nottingham, LLC, SRH/LA Hunter, LLC, SRH/LA
Melvin, LLC in favor of Arbor Commercial Mortgage, LLC.

"Turtle Creek Apartments Mezzanine Loan" means the mezzanine loan evidenced by
the Promissory Note, dated as of October 7, 2002, by Turtle Creek Development,
L.P. in favor of Arbor Commercial Mortgage, LLC.

<PAGE>

                                  SCHEDULE A-3

                                   OTHER LOANS

"Albion Loan" means the loan evidenced by the Severed Promissory Note B, dated
as of March 14, 2001, by Albion Associates, Ltd. in favor of Mezzobridge Funding
LLC, and assigned to Arbor Commercial Mortgage LLC as of July 31, 2001.

"Ornstein Loan" means the loan evidenced by the Multifamily Note, dated as of
August 31, 1995, by and between Ornstein 215-217 East 86 LLC and Arbor National
Commercial Mortgage Corporation.

<PAGE>

                                  SCHEDULE A-4

"Central Jersey Mezzanine Loan" means the mezzanine loan evidenced by the
Promissory Note made as of August 1, 2002 by Central Jersey Sub VI LLC and
Central Jersey Sub VII LLC in favor of ANMB II, as amended by (1) the
Modification of Promissory Note and Other Loan Documents and Assumption and
Reaffirmation, made as of October 31, 2002, by and among Central Jersey Sub VII
LLC, Central Jersey Sub VIII LLC, Central Jersey Prime III LLC, Livingston
Terrace L.L.C., Highland Montgomery L.L.C., Rubin Schron, David Lichtenstein,
Joseph Tabak and Jersey Central Management, L.L.C. and ANMB II and (2) the
Second Modification of Promissory Note and Other Loan Documents and
Reaffirmation, dated as of May 9, 2003, by and among Central Jersey Sub VII LLC,
Central Jersey Sub VIII LLC, Central Jersey Prime III LLC, Livingston Terrace
L.L.C., Highland Montgomery L.L.C., Rubin Schron, David Lichtenstein, Joseph
Tabak and Jersey Central Management, L.L.C. and ANMB II.

<PAGE>

                                   SCHEDULE B

                            PREFERRED EQUITY HOLDERS

1.       ANMB Holdings, LLC, a wholly-owned subsidiary of ACM and the holder of
         100% of the preferred interests in Central Jersey Prime Holdings LLC,
         pursuant to the Limited Liability Company Agreement of Central Jersey
         Prime Holdings LLC, dated as of May 9, 2003, by and among Central
         Jersey LLC, ANMB Holdings, LLC, Arbor National CJ LLC, TRAC Central
         Jersey LLC and CAM Jersey LLC.

2.       Arbor Park Place LLC, a wholly-owned subsidiary of ACM and holder of
         18% of the membership interest in Santa Ana Park Place Associates LLC,
         pursuant to the Operating Agreement of Santa Ana Park Place Associates
         LLC, dated as of January 8, 2002, by and among Santa Ana Park Place
         Corp., Hanover Financial Company and Arbor Park Place LLC.

3.       Arbor Devonshire, LLC, a wholly-owned subsidiary of ACM and holder of
         100% of the preferred interests of Merchant Devonshire Limited
         Partnership, pursuant to the Amended and Restated Limited Partnership
         Agreement of Merchant Devonshire Limited Partnership, dated as of
         December 23, 1998 (the "Devonshire LP Agreement"), by and among Third
         Merchant Investors Corp., Arbor Devonshire, LLC and First Merchants
         Group Limited Partnership, as amended by Amendment No. 1 to the
         Devonshire LP Agreement, dated as of May 30, 2000, Amendment No. 2 to
         the Devonshire LP Agreement, dated as of January 1, 2002 and Amendment
         No. 3 to the Devonshire LP Agreement, dated as of January 1, 2003.

4.       Arbor Texas CDS, LLC, a wholly-owned subsidiary of ACM and holder of
         100% of the Class C Partnership Units of CDS-Texas Investors, L.P.,
         pursuant to the Amended and Restated Agreement of Limited Partnership
         of CDS-Texas Investors, L.P., dated as of January 1, 2003, by and among
         Daniel R. Stanger, Christian V. Young, Dean A. Allara, Skyline Property
         Associates II, L.P. and Arbor Texas CDS, LLC.

5.       ACM Gateway, LLC, a wholly-owned subsidiary of ACM and holder of 100%
         of the preferred interests of BP-CO 4 Property Associates, LLC,
         pursuant to the Limited Liability Company Agreement of BP-CO 4 Property
         Associates, LLC, dated as of February 8, 2002, by and among BP Villages
         Management, Inc, ACM Gateway, LLC and other junior members.

<PAGE>

                                   SCHEDULE C

                           PREFERRED EQUITY INTERESTS

1.       100% of the preferred interests, held by Arbor Devonshire, LLC, a
         wholly owned subsidiary, of Merchant Devonshire Limited Partnership as
         evidenced by the Amended and Restated Limited Partnership Agreement of
         Merchant Devonshire Limited Partnership, entered into as of January 17,
         2002, by and among Third Merchant Investors Corp., Arbor Devonshire LLC
         and First Merchants Group Limited Partnership.

2.       100% of the Class C Partnership Units of CDS-Texas Investors, L.P.,
         held by Arbor Texas CDS, LLC, a wholly owned subsidiary, as evidenced
         by the Amended and Restated Agreement of Limited Partnership of
         CDS-Texas Investors, L.P., by and among Daniel R. Stanger, Christian V.
         Young, Dean A. Allara, Skyline Property Associates II, L.P. and Arbor
         Texas CDS, LLC.

3.       100% of the preferred interests of Central Jersey Prime Holdings, LLC,
         held by ANMB Holdings, LLC, as evidenced by the Limited Liability
         Company Agreement of Central Jersey Prime Holdings, LLC, dated as of
         May 9, 2003, by and among Central Jersey LLC, ANMB Holdings, LLC, Arbor
         National CJ LLC, TRAC Central Jersey LLC and CAM Jersey LLC.

4.       18% of the membership interests in Santa Ana Park Place Associates LLC,
         held by Arbor Park Place, LLC, and evidenced by the Operating Agreement
         of Santa Ana Park Place Associates LLC, dated as of January 8, 2002, by
         and among Santa Ana Park Place Corp., Hanover Financial Company and
         Arbor Park Place LLC;

5.       100% of the preferred interests of BP-CO 4 Property Associates, LLC
         held by ACM Gateway, LLC and evidenced by the Limited Liability Company
         Agreement of BP-CO 4 Property Associates, LLC, effective as of February
         8, 2002, by and among BP Villages Management, Inc, ACM Gateway, LLC and
         other junior members.

<PAGE>

                                                              SCHEDULE 4(b)(XXI)

         None.

<PAGE>

                                                                       EXHIBIT A

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

         This ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as July 1, 2003, is
executed and delivered, by and between Arbor Commercial Mortgage, LLC, a
Delaware limited liability company ("ACM") and Arbor Realty Limited Partnership,
a Delaware limited partnership ("ARLP"), pursuant to that certain Contribution
Agreement dated as of July 1, 2003 (the "Contribution Agreement"), by and among
ACM, Arbor Realty Trust, Inc., a Maryland corporation ("ART") and ARLP.

                                    RECITALS

         WHEREAS, pursuant to the Contribution Agreement, ARLP has agreed to
transfer the Partnership Units and the Warrants to ACM in exchange for the
Contributed Assets, upon the terms and conditions specified in the Contribution
Agreement.

         Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed thereto in the Contribution Agreement.

         NOW, THEREFORE, in consideration of the promises contained in the
Contribution Agreement and for other good and valuable consideration, ARLP and
ACM agree as follows:

1.   ACM does hereby transfer, convey, assign and deliver to ARLP, and ARLP
     hereby accepts from ACM, all of the rights, title and interests of ACM in,
     to and under the ACM Initial Assets (including all promissory notes,
     security agreements, guarantees and other agreements that evidence or
     secure such ACM Initial Assets), in each case to have and hold unto ARLP,
     its successors and assigns forever.

2.   ACM does hereby transfer, convey, assign and deliver to ARLP, and ARLP
     hereby accepts from ACM, (a) 100% of the Membership Interests of each of
     the Preferred Equity Holders of the Preferred Equity Interests and (b) 100%
     of the ANMB II Membership Interests, in each case to have and hold unto
     ARLP, its successors and assigns forever.

3.   ARLP hereby assumes all of the liabilities and agrees to perform any and
     all duties and obligations of ACM under the documents that evidence or
     otherwise

<PAGE>

     govern the rights and obligations of ACM with respect to the liabilities
     and under any agreement referred to paragraph 1, with respect to the ACM
     Initial Assets.

4.   The terms and provisions of this Assignment and Assumption Agreement shall
     be binding upon and inure to the benefit of the parties and their
     respective successors and assigns.

5.   This Assignment and Assumption Agreement shall be governed by and construed
     in accordance with the laws of the State of New York without giving effect
     to principles governing conflicts of laws.

<PAGE>

IN WITNESS WHEREOF, each of ARLP and ACM have caused this Assignment and
Assumption Agreement to be duly executed and attested to by its officer hereunto
duly authorized as of the day and year first above written.

                                       ARBOR COMMERCIAL MORTGAGE, LLC

                                       By: _________________________
                                       Name: Frederick C. Herbst
                                       Title: Chief Financial Officer

                                       ARBOR REALTY LIMITED PARTNERSHIP

                                       By: Arbor Realty GPOP, Inc.,
                                           its General Partner

                                           By: _________________________
                                               Name: Frederick C. Herbst
                                               Title: Secretary and Treasurer

<PAGE>

                                                                       EXHIBIT B

                                    GUARANTY

                  This GUARANTY (this "Guaranty"), dated as of July 1, 2003, is
by Arbor Commercial Mortgage, LLC, a New York limited liability company ("ACM"),
ACM 34th Street, LLC, a Delaware limited liability company and a wholly-owned
subsidiary of ACM ("ACM 34th"), Arbor 30th LLC, a New York limited liability
company and a wholly-owned subsidiary of ACM ("Arbor 30th"), Arbor National CJ
LLC, a New York limited liability company and a wholly-owned subsidiary of ACM
("CJ") and Arbor National CJ II, LLC, a New York limited liability company and a
wholly-owned subsidiary of ACM ("CJ II", and together with ACM 34th, Arbor 30th
and CJ, the "Subsidiary Guarantors"), in favor of Arbor Realty Limited
Partnership, a Delaware limited partnership ("ARLP"), ANMB Holdings, LLC, a New
York limited liability company ("ANMB") and ANMB Holdings II, LLC, a New York
limited liability company ("ANMB II").

                               W I T N E S S E T H

                  WHEREAS, pursuant to the terms of that certain contribution
agreement (the "Contribution Agreement"), dated as of July 1, 2003 (the
"Contribution Date"), by and among ACM, Arbor Realty Trust, Inc., a Maryland
corporation ("ART") and ARLP (capitalized terms used but not defined herein have
the meanings assigned to them in the Contribution Agreement), ACM has agreed to
contribute (i) the ACM Initial Assets, (ii) ACM's membership interests in ANMB
II, the original lender under the Central Jersey Mezzanine Loan, and (iii) the
Membership Interests of the Preferred Equity Holders of the Preferred Equity
Investments to ARLP, collectively, in exchange for the Partnership Units and the
Warrants;

         WHEREAS, each of the 333 East 34th Street Mezzanine Loan, the 130 West
30th Street Bridge Loan and the Central Jersey Mezzanine Loan (collectively, the
"Guaranteed Loans") are Initial Assets;

         WHEREAS, ANMB is a Preferred Equity Holder in that it holds 100% of the
preferred interests of Central Jersey Prime Holdings, LLC (the "Guaranteed
Preferred Equity Investment" and together with the Guaranteed Loans, the
"Guaranteed Investments");

<PAGE>

         WHEREAS, ACM 34th holds a 15% Percentage Interest (as defined in the
Operating Agreement of 333 East 34th, LLC) in 333 East 34th, LLC, the borrower
under the 333 East 34th Street Mezzanine Loan;

         WHEREAS, Arbor 30th holds a 50% Percentage Interest (as defined in the
Operating Agreement of 130 West 30th, LLC) in 130 West 30th, LLC, the borrower
under the 130 West 30th Street Bridge Loan;

         WHEREAS, CJ II holds a 18% Sharing Percentage (as defined in the
Operating Agreement of Central Jersey Prime III LLC) in Central Jersey Prime III
LLC, the managing member of the borrower under the Central Jersey Mezzanine
Loan;

         WHEREAS, CJ holds a 18% Junior Interest (as defined in the Operating
Agreement of Central Jersey Prime Holdings LLC) in Central Jersey Prime Holdings
LLC; and

                  WHEREAS, ACM and the Subsidiary Guarantors (together, the
"Guarantors") desire to provide ARLP, ANMB and ANMB II with a limited guaranty
of (i) the repayment of a certain portion of the principal balance of each of
the Guaranteed Loans and (ii) the repurchase of a certain portion of the
preferred capital contribution of ANMB in Central Jersey Prime Holdings LLC.

                  NOW, THEREFORE, in consideration of the foregoing and the
covenants and obligations set forth in this Guaranty, the parties hereto agree
as follows:

1.       Definitions. The following terms, as used in this Guaranty, shall have
         the following meanings (unless otherwise expressly provided herein):

         "130 West 30th Street Note" means the Amended, Consolidated and
         Restated Promissory Note made as of September 20, 2001 by 130 West
         30th, LLC in favor of ACM.

         "130 West 30th Operating Agreement" means the Operating Agreement of
         130 West 30th, LLC, dated as of September 20, 2001, by and between H.J.
         Development, LLC and Arbor 30th.

         "333 East 34th Street Note" means the Promissory Note made as of
         January 9, 2002 by 333 East 34th, LLC in favor of ACM.

<PAGE>

         "333 East 34th Operating Agreement" means the Operating Agreement of
         333 East 34th, LLC, dated as of June 19, 2001, by and among ACM 34th,
         East 34th Street Management, LLC and 333 East 34th Street, LLC.

         "Central Jersey Mezzanine Operating Agreement" means the Operating
         Agreement of Central Jersey Prime III LLC, dated as of July 12, 2000,
         by and among Central Jersey LLC, ANMB II, TRAC Central Jersey II LLC
         and CJ II, as amended by the Amendment to Operating Agreement, dated as
         of August 1, 2002 and the Amendment to Operating Agreement, dated as of
         May 9, 2003.

         "Central Jersey Note" means the Promissory Note made as of August 1,
         2002 by Central Jersey Sub VI LLC and Central Jersey Sub VII LLC in
         favor of ANMB II, as amended by (1) the Modification of Promissory Note
         and Other Loan Documents and Assumption and Reaffirmation, made as of
         October 31, 2002, by and among Central Jersey Sub VII LLC, ANMB II and
         the other parties thereto and (2) the Second Modification of Promissory
         Note and Other Loan Documents and Reaffirmation, made as of May 9,
         2003, by and among Central Jersey Sub VII LLC, ANMB II and the other
         parties thereto.

         "Central Jersey Preferred Operating Agreement" means the Limited
         Liability Company Agreement of Central Jersey Prime Holdings LLC, dated
         as of May 9, 2003, by and among Central Jersey LLC, ANMB, CJ and TRAC
         Central Jersey LLC.

         "Guaranteed Loan Principal Balance" means:

         (a)      with respect to the 130 West 30th Street Bridge Loan, the
         outstanding principal balance of the 130 West 30th Street Bridge Loan
         as of the Contribution Date, namely $16,000,000.00, plus (a) any
         Interest Expense relating to the 130 West 30th Street Bridge Loan paid
         by ARLP subsequent to the Contribution Date, minus (b) the aggregate of
         the following amounts received by ARLP subsequent to the Contribution
         Date in accordance with the terms of the 130 West 30th Street Note: (i)
         interest payments on the unpaid principal balance of the 130 West 30th
         Street Bridge Loan, and (ii) Late Charges (as defined Section 1.3 of
         the 130 West 30th Street Note);

         (b)      with respect to the 333 East 34th Street Mezzanine Loan, the
         outstanding principal balance of the 333 East 34th Street Mezzanine
         Loan as of the Contribution Date, namely $10,000,000.00, plus (a) any
         Interest Expense relating to the 333 East 34th Street Mezzanine Loan
         paid by ARLP

<PAGE>

         subsequent to the Contribution Date, minus (b) the aggregate of the
         following amounts received by ARLP subsequent to the Contribution Date
         in accordance with the terms of the 333 East 34th Street Note: (i)
         interest payments on the unpaid principal balance of the 333 East 34th
         Street Mezzanine Loan, (ii) Late Charges (as defined Section 1.9 of the
         333 East 34th Street Note), and (iii) Extension Fees (as defined
         Section 2.7 of the 130 West 30th Street Note); and

         (c)      with respect to the Central Jersey Mezzanine Loan, the
         outstanding principal balance of the Central Jersey Mezzanine Loan as
         of the Contribution Date, namely $3,000,000.00, plus (a) any Interest
         Expense relating to the Central Jersey Mezzanine Loan paid by ANMB II
         (or ARLP, if applicable) subsequent to the Contribution Date, minus (b)
         the aggregate of the following amounts received by ANMB II (or ARLP, if
         applicable) subsequent to the Contribution Date in accordance with the
         terms of the Central Jersey Note: (i) interest payments on the unpaid
         principal balance of the Central Jersey Mezzanine Loan, and (ii) any
         Exit Fees (as defined in the Central Jersey Note).

         "Guaranteed Preferred Capital Contribution" means the Unreturned
         Preferred Capital Contribution (as defined in the Central Jersey
         Preferred Operating Agreement) as of the Contribution Date, namely
         $19,300,000.00, plus (a) any Interest Expense relating to the Central
         Jersey Preferred Equity Investment paid by ARLP (or ANMB, if
         applicable) subsequent to the Contribution Date, minus (b) the
         aggregate of the following amounts received by ANMB subsequent to the
         Contribution Date: (i) any Capital Proceeds or Net Cash Receipts (as
         each such term is defined in the Central Jersey Preferred Operating
         Agreement) and (ii) any Preferred Return (as defined in the Central
         Jersey Preferred Operating Agreement).

         "Interest Expense" means any interest payments made by ARLP after the
         Contribution Date with respect to any of the Guaranteed Investments
         pursuant to (a) the Assignment and Assumption Agreement, dated as of
         July 1, 2003, by and between ACM and ARLP relating to the [*]
         Repurchase Agreement, (b) the Structured Facility Warehousing Credit
         and Security Agreement, dated as of July 1, 2003, by and between [*]
         and ARLP, (c) the Master Repurchase Agreement, dated as of July 1,
         2003, by and between [*] and ARLP, or (d) any other warehouse facility,
         repurchase agreement, credit agreement or other


The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
<PAGE>

         agreement entered into by ARLP which provides financing for the
         Guaranteed Investments.

         "Subsidiary Guarantors' Aggregate Return" means the total of the
         following amounts received prior to and including the Termination Date:

         (a)      any "net cash flow" (as such term is defined in the 130 West
         30th Operating Agreement) distributed to Arbor 30th pursuant to Section
         8 of the 130 West 30th Operating Agreement, subject to the terms and
         provisions of the 130 West 30th Operating Agreement, plus

         (b)      any Cash Available for Distribution (as defined in the 333
         East 34th Operating Agreement) distributed to ACM 34th pursuant to
         Article IV of the 333 East 34th Operating Agreement, subject to the
         terms and provisions of the 333 East 34th Operating Agreement, plus

         (c)      any Capital Proceeds and Net Cash Receipts (as each such term
         is defined in the Central Jersey Preferred Operating Agreement)
         distributed to CJ pursuant to Article 5 of the Central Jersey Preferred
         Operating Agreement, subject to the terms and provisions of the Central
         Jersey Preferred Operating Agreement, plus

         (d)      any Available Cash or Capital Proceeds (as each such term is
         defined in the Central Jersey Mezzanine Operating Agreement) or Special
         Tax Distributions (as described in Section 8.9 of the Central Jersey
         Mezzanine Operating Agreement) distributed to CJ II pursuant to Article
         8 of the Central Jersey Mezzanine Operating Agreement, subject to the
         terms and provisions of the Central Jersey Mezzanine Operating
         Agreement.

2.       Guaranty.

         (a)      Subject to the limitations set forth in Section 3 hereof, if
         any portion of the Guaranteed Loan Principal Balance of any of the
         Guaranteed Loans is not paid to ARLP or ANMB II, as applicable, at the
         applicable Guaranteed Loan's maturity date in accordance with the terms
         of the note and other loan documents relating to such Guaranteed Loan
         (the "Unpaid Guaranteed Loan Principal Balance"), the Guarantors,
         jointly and severally, hereby agree to pay to ARLP or ANMB II, as
         applicable, the portion of the Unpaid Guaranteed Loan Principal Balance
         of such Guaranteed Loan that is equal to or less than the Subsidiary
         Guarantors' Aggregate Return.

<PAGE>

         (b)      Subject to the limitations set forth in Section 3 hereof, if
         any portion of the Guaranteed Preferred Capital Contribution is not
         paid to ANMB (or ARLP, if applicable) at the Required Purchase Date (as
         defined in the Central Jersey Preferred Operating Agreement) in
         accordance with Section 11.3 of the Central Jersey Preferred Operating
         Agreement (the "Unpaid Guaranteed Preferred Capital Contribution"), the
         Guarantors, jointly and severally, hereby agree to pay to ANMB (or
         ARLP, if applicable) the portion of the Unpaid Guaranteed Preferred
         Capital Contribution that is equal to or less than the Subsidiary
         Guarantors' Aggregate Return.

         (c)      As an Unpaid Guaranteed Loan Principal Balance or the Unpaid
         Guaranteed Preferred Capital Contribution becomes due and payable from
         time to time by the Guarantors pursuant to Section 2(a) and Section
         2(b), respectively, ARLP shall deliver to ACM, within 10 business days
         of such amounts becoming due, written notice stating the amount of such
         Unpaid Guaranteed Loan Principal Balance or Unpaid Guaranteed Preferred
         Capital Contribution, as applicable. To the extent that the Subsidiary
         Guarantors' Aggregate Return as of the date such notice is received is
         greater than or equal to the amount stated in such notice, the
         Guarantors shall disburse the Unpaid Guaranteed Loan Principal Balance
         or Unpaid Guaranteed Preferred Capital Contribution, as applicable, to
         ARLP, ANMB II or ANMB, as applicable, within 10 business days of
         receipt of such notice. To the extent that the Subsidiary Guarantors'
         Aggregate Return as of the date such notice is received is less than
         the amount stated in such notice, such Unpaid Guaranteed Loan Principal
         Balance or Unpaid Guaranteed Preferred Capital Contribution, as
         applicable, shall remain due and payable by the Guarantors, and, as
         amounts constituting Subsidiary Guarantors' Aggregate Return are
         received by the Guarantors, such amounts shall be disbursed to ARLP,
         ANMB II or ANMB, as applicable, within five business days following
         their receipt, until all Unpaid Guaranteed Loan Principal Balances or
         the Unpaid Guaranteed Preferred Capital Contribution, as applicable,
         has been fully paid.

3.       Termination. This Guaranty will be terminated and the Guarantors will
         no longer be obligated to pay any further amounts to ARLP or ANMB II,
         as applicable, in respect of any of the Guaranteed Loans or to pay any
         further amounts to ANMB in respect of the Guaranteed Preferred Equity
         Investment on the date on which all of the following conditions are met
         (the "Termination Date"):

<PAGE>

         (a) the remaining aggregate Unpaid Guaranteed Loan Principal Balance of
             the Guaranteed Loans, plus the remaining Unpaid Guaranteed
             Preferred Capital Contribution, is less than $5,000,000,

         (b) no Event of Default (as such term is defined in note and the loan
             documents relating to each of the Guaranteed Loans) with respect to
             any Guaranteed Loan has occurred and is continuing, and

         (c) no Trigger Event (as defined in the Central Jersey Preferred
             Operating Agreement) has occurred and is continuing.

4.       Notice of Receipt of Returns. ACM shall provide written notice to ARLP
         within 15 business days of the end of each fiscal quarter of all
         amounts that constitute Subsidiary Guarantors' Aggregate Return
         received by the Guarantors during the preceding quarter.

5.       Governing Law. This Guaranty shall be governed by and construed in
         accordance with the laws of the State of New York.

6.       Severability. If any provision of this Guaranty or the application of
         any such provision to any person or circumstances shall be held invalid
         by a court of competent jurisdiction, the remainder of this Guaranty,
         including the remainder of the provision held invalid, or the
         application of such provision to persons or circumstances other than
         those as to which it is held invalid, shall not be affected thereby.

7.       Counterparts. This Guaranty may be executed in one or more
         counterparts, each of which shall be deemed to be an original, but all
         of which together shall constitute one and the same instrument.

8.       Headings. All section headings herein are for convenience of reference
         and are not part of this Guaranty, and no construction or interference
         shall be derived therefrom.

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto has executed this
Guaranty as of the date first above written.

                                            ARBOR COMMERCIAL MORTGAGE, LLC

                                            By: _____________________________
                                            Name: Frederick C. Herbst
                                            Title: Chief Financial Officer

<PAGE>

                                            ARBOR 30th, LLC

                                            By: _____________________________
                                                Name:
                                                Title:

                                            ACM 34th STREET LLC

                                            By: _____________________________
                                                Name:
                                                Title:

                                            ARBOR NATIONAL CJ LLC

                                            By: _____________________________
                                                Name:
                                                Title:

                                            ARBOR NATIONAL CJ II, LLC

                                            By: _____________________________
                                                Name:
                                                Title:

<PAGE>

Acknowledged and Accepted by:

ARBOR REALTY LIMITED PARTNERSHIP

         By: ARBOR REALTY GPOP, INC.,
         its General Partner

         By: _______________________________
             Name: Frederick C. Herbst
             Title: Treasurer and Secretary

<PAGE>

ANMB HOLDINGS, LLC

By: ARBOR REALTY LIMITED PARTNERSHIP,
    its sole member

    By: ARBOR REALTY GPOP, INC.,
        its General Partner

        By: ________________________
            Name: Frederick C. Herbst
            Title: Treasurer and Secretary

ANMB HOLDINGS II, LLC

By: ARBOR REALTY LIMITED PARTNERSHIP,
    its sole member

    By: ARBOR REALTY GPOP, INC.,
        its General Partner

        By: ________________________
            Name: Frederick C. Herbst
            Title: Treasurer and Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.2
<SEQUENCE>4
<FILENAME>y90410exv2w2.txt
<DESCRIPTION>GUARANTY
<TEXT>
<PAGE>

                                                                     EXHIBIT 2.2

                                    GUARANTY

                  This GUARANTY (this "Guaranty"), dated as of July 1, 2003, is
by Arbor Commercial Mortgage, LLC, a New York limited liability company ("ACM"),
ACM 34th Street, LLC, a Delaware limited liability company and a wholly-owned
subsidiary of ACM ("ACM 34th"), Arbor 30th LLC, a New York limited liability
company and a wholly-owned subsidiary of ACM ("Arbor 30th"), Arbor National CJ
LLC, a New York limited liability company and a wholly-owned subsidiary of ACM
("CJ") and Arbor National CJ II, LLC, a New York limited liability company and a
wholly-owned subsidiary of ACM ("CJ II", and together with ACM 34th, Arbor 30th
and CJ, the "Subsidiary Guarantors"), in favor of Arbor Realty Limited
Partnership, a Delaware limited partnership ("ARLP"), ANMB Holdings, LLC, a New
York limited liability company ("ANMB") and ANMB Holdings II, LLC, a New York
limited liability company ("ANMB II").

                               W I T N E S S E T H

                  WHEREAS, pursuant to the terms of that certain contribution
agreement (the "Contribution Agreement"), dated as of July 1, 2003 (the
"Contribution Date"), by and among ACM, Arbor Realty Trust, Inc., a Maryland
corporation ("ART") and ARLP (capitalized terms used but not defined herein have
the meanings assigned to them in the Contribution Agreement), ACM has agreed to
contribute (i) the ACM Initial Assets, (ii) ACM's membership interests in ANMB
II, the original lender under the Central Jersey Mezzanine Loan, and (iii) the
Membership Interests of the Preferred Equity Holders of the Preferred Equity
Investments to ARLP, collectively, in exchange for the Partnership Units and the
Warrants;

         WHEREAS, each of the 333 East 34th Street Mezzanine Loan, the 130 West
30th Street Bridge Loan and the Central Jersey Mezzanine Loan (collectively, the
"Guaranteed Loans") are Initial Assets;

         WHEREAS, ANMB is a Preferred Equity Holder in that it holds 100% of the
preferred interests of Central Jersey Prime Holdings, LLC (the "Guaranteed
Preferred Equity Investment" and together with the Guaranteed Loans, the
"Guaranteed Investments");

         WHEREAS, ACM 34th holds a 15% Percentage Interest (as defined in the
Operating Agreement of 333 East 34th, LLC) in 333 East 34th, LLC, the borrower
under the 333 East 34th Street Mezzanine Loan;

         WHEREAS, Arbor 30th holds a 50% Percentage Interest (as defined in the
Operating Agreement of 130 West 30th, LLC) in 130 West 30th, LLC, the borrower
under the 130 West 30th Street Bridge Loan;

The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
<PAGE>

         WHEREAS, CJ II holds a 18% Sharing Percentage (as defined in the
Operating Agreement of Central Jersey Prime III LLC) in Central Jersey Prime III
LLC, the managing member of the borrower under the Central Jersey Mezzanine
Loan;

         WHEREAS, CJ holds a 18% Junior Interest (as defined in the Operating
Agreement of Central Jersey Prime Holdings LLC) in Central Jersey Prime Holdings
LLC; and

                  WHEREAS, ACM and the Subsidiary Guarantors (together, the
"Guarantors") desire to provide ARLP, ANMB and ANMB II with a limited guaranty
of (i) the repayment of a certain portion of the principal balance of each of
the Guaranteed Loans and (ii) the repurchase of a certain portion of the
preferred capital contribution of ANMB in Central Jersey Prime Holdings LLC.

                  NOW, THEREFORE, in consideration of the foregoing and the
covenants and obligations set forth in this Guaranty, the parties hereto agree
as follows:

1.       Definitions. The following terms, as used in this Guaranty, shall have
         the following meanings (unless otherwise expressly provided herein):

         "130 West 30th Street Note" means the Amended, Consolidated and
         Restated Promissory Note made as of September 20, 2001 by 130 West
         30th, LLC in favor of ACM.

         "130 West 30th Operating Agreement" means the Operating Agreement of
         130 West 30th, LLC, dated as of September 20, 2001, by and between H.J.
         Development, LLC and Arbor 30th.

         "333 East 34th Street Note" means the Promissory Note made as of
         January 9, 2002 by 333 East 34th, LLC in favor of ACM.

         "333 East 34th Operating Agreement" means the Operating Agreement of
         333 East 34th, LLC, dated as of June 19, 2001, by and among ACM 34th,
         East 34th Street Management, LLC and 333 East 34th Street, LLC.

         "Central Jersey Mezzanine Operating Agreement" means the Operating
         Agreement of Central Jersey Prime III LLC, dated as of July 12, 2000,
         by and among Central Jersey LLC, ANMB II, TRAC Central Jersey II LLC
         and CJ II, as amended by the Amendment to Operating Agreement, dated as
         of August 1, 2002 and the Amendment to Operating Agreement, dated as of
         May 9, 2003.

         "Central Jersey Note" means the Promissory Note made as of August 1,
         2002 by Central Jersey Sub VI LLC and Central Jersey Sub VII LLC in
         favor of ANMB II, as amended by (1) the Modification of Promissory Note
         and Other Loan Documents and Assumption and Reaffirmation, made as of
         October 31, 2002, by and among Central Jersey Sub VII LLC, ANMB II and
         the other parties thereto and (2) the Second Modification of Promissory
         Note and Other Loan Documents

<PAGE>

         and Reaffirmation, made as of May 9, 2003, by and among Central Jersey
         Sub VII LLC, ANMB II and the other parties thereto.

         "Central Jersey Preferred Operating Agreement" means the Limited
         Liability Company Agreement of Central Jersey Prime Holdings LLC, dated
         as of May 9, 2003, by and among Central Jersey LLC, ANMB, CJ and TRAC
         Central Jersey LLC.

         "Guaranteed Loan Principal Balance" means:

         (a)      with respect to the 130 West 30th Street Bridge Loan, the
         outstanding principal balance of the 130 West 30th Street Bridge Loan
         as of the Contribution Date, namely $16,000,000.00, plus (a) any
         Interest Expense relating to the 130 West 30th Street Bridge Loan paid
         by ARLP subsequent to the Contribution Date, minus (b) the aggregate of
         the following amounts received by ARLP subsequent to the Contribution
         Date in accordance with the terms of the 130 West 30th Street Note: (i)
         interest payments on the unpaid principal balance of the 130 West 30th
         Street Bridge Loan, and (ii) Late Charges (as defined Section 1.3 of
         the 130 West 30th Street Note);

         (b)      with respect to the 333 East 34th Street Mezzanine Loan, the
         outstanding principal balance of the 333 East 34th Street Mezzanine
         Loan as of the Contribution Date, namely $10,000,000.00, plus (a) any
         Interest Expense relating to the 333 East 34th Street Mezzanine Loan
         paid by ARLP subsequent to the Contribution Date, minus (b) the
         aggregate of the following amounts received by ARLP subsequent to the
         Contribution Date in accordance with the terms of the 333 East 34th
         Street Note: (i) interest payments on the unpaid principal balance of
         the 333 East 34th Street Mezzanine Loan, (ii) Late Charges (as defined
         Section 1.9 of the 333 East 34th Street Note), and (iii) Extension Fees
         (as defined Section 2.7 of the 130 West 30th Street Note); and

         (c)      with respect to the Central Jersey Mezzanine Loan, the
         outstanding principal balance of the Central Jersey Mezzanine Loan as
         of the Contribution Date, namely $3,000,000.00, plus (a) any Interest
         Expense relating to the Central Jersey Mezzanine Loan paid by ANMB II
         (or ARLP, if applicable) subsequent to the Contribution Date, minus (b)
         the aggregate of the following amounts received by ANMB II (or ARLP, if
         applicable) subsequent to the Contribution Date in accordance with the
         terms of the Central Jersey Note: (i) interest payments on the unpaid
         principal balance of the Central Jersey Mezzanine Loan, and (ii) any
         Exit Fees (as defined in the Central Jersey Note).

         "Guaranteed Preferred Capital Contribution" means the Unreturned
         Preferred Capital Contribution (as defined in the Central Jersey
         Preferred Operating Agreement) as of the Contribution Date, namely
         $19,300,000.00, plus (a) any Interest Expense relating to the Central
         Jersey Preferred Equity Investment paid by ARLP (or ANMB, if
         applicable) subsequent to the Contribution Date, minus (b) the
         aggregate of the following amounts received by ANMB subsequent to the

<PAGE>

         Contribution Date: (i) any Capital Proceeds or Net Cash Receipts (as
         each such term is defined in the Central Jersey Preferred Operating
         Agreement) and (ii) any Preferred Return (as defined in the Central
         Jersey Preferred Operating Agreement).

         "Interest Expense" means any interest payments made by ARLP after the
         Contribution Date with respect to any of the Guaranteed Investments
         pursuant to (a) the Assignment and Assumption Agreement, dated as of
         July 1, 2003, by and between ACM and ARLP relating to the [*]
         Repurchase Agreement, (b) the Structured Facility Warehousing Credit
         and Security Agreement, dated as of July 1, 2003, by and between [*]
         and ARLP, (c) the Master Repurchase Agreement, dated as of July 1,
         2003, by and between [*] and ARLP, or (d) any other warehouse facility,
         repurchase agreement, credit agreement or other agreement entered into
         by ARLP which provides financing for the Guaranteed Investments.

         "Subsidiary Guarantors' Aggregate Return" means the total of the
following amounts received prior to and including the Termination Date:

         (a)      any "net cash flow" (as such term is defined in the 130 West
         30th Operating Agreement) distributed to Arbor 30th pursuant to Section
         8 of the 130 West 30th Operating Agreement, subject to the terms and
         provisions of the 130 West 30th Operating Agreement, plus

         (b)      any Cash Available for Distribution (as defined in the 333
         East 34th Operating Agreement) distributed to ACM 34th pursuant to
         Article IV of the 333 East 34th Operating Agreement, subject to the
         terms and provisions of the 333 East 34th Operating Agreement, plus

         (c)      any Capital Proceeds and Net Cash Receipts (as each such term
         is defined in the Central Jersey Preferred Operating Agreement)
         distributed to CJ pursuant to Article 5 of the Central Jersey Preferred
         Operating Agreement, subject to the terms and provisions of the Central
         Jersey Preferred Operating Agreement, plus

         (d)      any Available Cash or Capital Proceeds (as each such term is
         defined in the Central Jersey Mezzanine Operating Agreement) or Special
         Tax Distributions (as described in Section 8.9 of the Central Jersey
         Mezzanine Operating Agreement) distributed to CJ II pursuant to Article
         8 of the Central Jersey Mezzanine Operating Agreement, subject to the
         terms and provisions of the Central Jersey Mezzanine Operating
         Agreement.

2.       Guaranty.

         (a)      Subject to the limitations set forth in Section 3 hereof, if
         any portion of the Guaranteed Loan Principal Balance of any of the
         Guaranteed Loans is not paid to


The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
<PAGE>

         ARLP or ANMB II, as applicable, at the applicable Guaranteed Loan's
         maturity date in accordance with the terms of the note and other loan
         documents relating to such Guaranteed Loan (the "Unpaid Guaranteed Loan
         Principal Balance"), the Guarantors, jointly and severally, hereby
         agree to pay to ARLP or ANMB II, as applicable, the portion of the
         Unpaid Guaranteed Loan Principal Balance of such Guaranteed Loan that
         is equal to or less than the Subsidiary Guarantors' Aggregate Return.

         (b)      Subject to the limitations set forth in Section 3 hereof, if
         any portion of the Guaranteed Preferred Capital Contribution is not
         paid to ANMB (or ARLP, if applicable) at the Required Purchase Date (as
         defined in the Central Jersey Preferred Operating Agreement) in
         accordance with Section 11.3 of the Central Jersey Preferred Operating
         Agreement (the "Unpaid Guaranteed Preferred Capital Contribution"), the
         Guarantors, jointly and severally, hereby agree to pay to ANMB (or
         ARLP, if applicable) the portion of the Unpaid Guaranteed Preferred
         Capital Contribution that is equal to or less than the Subsidiary
         Guarantors' Aggregate Return.

         (c)      As an Unpaid Guaranteed Loan Principal Balance or the Unpaid
         Guaranteed Preferred Capital Contribution becomes due and payable from
         time to time by the Guarantors pursuant to Section 2(a) and Section
         2(b), respectively, ARLP shall deliver to ACM, within 10 business days
         of such amounts becoming due, written notice stating the amount of such
         Unpaid Guaranteed Loan Principal Balance or Unpaid Guaranteed Preferred
         Capital Contribution, as applicable. To the extent that the Subsidiary
         Guarantors' Aggregate Return as of the date such notice is received is
         greater than or equal to the amount stated in such notice, the
         Guarantors shall disburse the Unpaid Guaranteed Loan Principal Balance
         or Unpaid Guaranteed Preferred Capital Contribution, as applicable, to
         ARLP, ANMB II or ANMB, as applicable, within 10 business days of
         receipt of such notice. To the extent that the Subsidiary Guarantors'
         Aggregate Return as of the date such notice is received is less than
         the amount stated in such notice, such Unpaid Guaranteed Loan Principal
         Balance or Unpaid Guaranteed Preferred Capital Contribution, as
         applicable, shall remain due and payable by the Guarantors, and, as
         amounts constituting Subsidiary Guarantors' Aggregate Return are
         received by the Guarantors, such amounts shall be disbursed to ARLP,
         ANMB II or ANMB, as applicable, within five business days following
         their receipt, until all Unpaid Guaranteed Loan Principal Balances or
         the Unpaid Guaranteed Preferred Capital Contribution, as applicable,
         has been fully paid.

3.       Termination. This Guaranty will be terminated and the Guarantors will
         no longer be obligated to pay any further amounts to ARLP or ANMB II,
         as applicable, in respect of any of the Guaranteed Loans or to pay any
         further amounts to ANMB in respect of the Guaranteed Preferred Equity
         Investment on the date on which all of the following conditions are met
         (the "Termination Date"):

<PAGE>

         (a) the remaining aggregate Unpaid Guaranteed Loan Principal Balance of
             the Guaranteed Loans, plus the remaining Unpaid Guaranteed
             Preferred Capital Contribution, is less than $5,000,000,

         (b) no Event of Default (as such term is defined in note and the loan
             documents relating to each of the Guaranteed Loans) with respect to
             any Guaranteed Loan has occurred and is continuing, and

         (c) no Trigger Event (as defined in the Central Jersey Preferred
             Operating Agreement) has occurred and is continuing.

4.       Notice of Receipt of Returns. ACM shall provide written notice to ARLP
         within 15 business days of the end of each fiscal quarter of all
         amounts that constitute Subsidiary Guarantors' Aggregate Return
         received by the Guarantors during the preceding quarter.

5.       Governing Law. This Guaranty shall be governed by and construed in
         accordance with the laws of the State of New York.

6.       Severability. If any provision of this Guaranty or the application of
         any such provision to any person or circumstances shall be held invalid
         by a court of competent jurisdiction, the remainder of this Guaranty,
         including the remainder of the provision held invalid, or the
         application of such provision to persons or circumstances other than
         those as to which it is held invalid, shall not be affected thereby.

7.       Counterparts. This Guaranty may be executed in one or more
         counterparts, each of which shall be deemed to be an original, but all
         of which together shall constitute one and the same instrument.

8.       Headings. All section headings herein are for convenience of reference
         and are not part of this Guaranty, and no construction or interference
         shall be derived therefrom.

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto has executed this
Guaranty as of the date first above written.

                                            ARBOR COMMERCIAL MORTGAGE, LLC

                                            By: /s/ Frederick C. Herbst
                                                --------------------------
                                                Name: Frederick C. Herbst
                                                Title: Chief Financial Officer

<PAGE>

                                            ARBOR 30th, LLC

                                            By: Arbor Commercial Mortgagte, LLC

                                            By: /s/ Guy R. Milone, Jr.
                                                --------------------------
                                                Name: Guy R. Milone, Jr.
                                                Title: Associate General
                                                Counsel/Member

                                            ACM 34th STREET LLC

                                            By: Arbor Commercial Mortgagte, LLC

                                            By: /s/ Guy R. Milone, Jr.
                                                --------------------------
                                                Name: Guy R. Milone, Jr.
                                                Title: Associate General
                                                Counsel/Member

                                            ARBOR NATIONAL CJ LLC

                                            By: /s/ Valerie Sganga
                                                --------------------------
                                                Name: Valerie Sganga
                                                Title: Authorized Signatory

                                            ARBOR NATIONAL CJ II, LLC

                                            By: /s/ Alissa M. Omelas
                                                --------------------------
                                                Name: Alissa M. Omelas
                                                Title: Authorized Signatory

<PAGE>

Acknowledged and Accepted by:

ARBOR REALTY LIMITED PARTNERSHIP

By: ARBOR REALTY GPOP, INC.,
    its General Partner

    By: /s/ Frederick C. Herbst
        --------------------------
        Name: Frederick C. Herbst
        Title: Treasurer and Secretary

<PAGE>

ANMB HOLDINGS, LLC

By: ARBOR REALTY LIMITED PARTNERSHIP,
    its sole member

    By: ARBOR REALTY GPOP, INC.,
        its General Partner

        By: /s/ Frederick C. Herbst
            -------------------------------
            Name: Frederick C. Herbst
            Title: Treasurer and Secretary

ANMB HOLDINGS II, LLC

By: ARBOR REALTY LIMITED PARTNERSHIP,
    its sole member

    By: ARBOR REALTY GPOP, INC.,
        its General Partner

        By: /s/ Frederick C. Herbst
            --------------------------------
            Name: Frederick C. Herbst
            Title: Treasurer and Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.3
<SEQUENCE>5
<FILENAME>y90410exv2w3.txt
<DESCRIPTION>INDEMNITY AGREEMENT
<TEXT>
<PAGE>

                                                                     EXHIBIT 2.3

                               INDEMNITY AGREEMENT

                  This INDEMNITY AGREEMENT, dated as of July 1, 2003 (this
"Agreement"), is by and among Arbor Commercial Mortgage, LLC, a New York limited
liability company ("ACM"), Arbor Realty Trust, Inc., a Maryland corporation
("ART"), Arbor Realty Limited Partnership, a Delaware limited partnership
("ARLP") and Mr. Ivan Kaufman ("Kaufman"). Capitalized terms not defined herein
have the meaning ascribed to them in the Contribution Agreement, dated as of
July 1, 2003, by and among ACM, ART and ARLP.

                  WHEREAS, pursuant to the Contribution Agreement, ACM has
contributed Initial Assets to ARLP which include the Ornstein Loan and the 1025
5th Avenue Bridge Loan; and

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:

                                    ARTICLE I

                                 INDEMNIFICATION

1.1      ACM and Kaufman, hereby jointly and severally agree to indemnify and
         hold ART and ARLP harmless from and against damages, expenses, losses,
         costs, claims or liabilities (each a "Claim") suffered or incurred by
         ART and ARLP as a direct result of any untruth or inaccuracy in any of
         the representations or warranties made by ACM in Section 4(b) of the
         Contribution Agreement with respect to the 1025 5th Avenue Bridge Loan
         or the Ornstein Loan as if such representations and warranties were
         made with respect to the 1025 5th Avenue Bridge Loan or the Ornstein
         Loan in the Contribution Agreement.

1.2      (a)      The indemnification set forth in Section 1.1 shall only extend
         to a Claim with respect to the Ornstein Loan of which written notice
         has been given prior to the repayment in full of any and all amounts
         due under the Ornstein Loan; and

         (b)      The indemnification set forth in Section 1.1 shall only extend
         to a Claim with respect to the 1025 5th Avenue Bridge Loan of which
         written notice has been given prior to the repayment in full of any and
         all amounts due under the 1025 5th Avenue Bridge Loan.

1.3      Each of ART and ARLP shall give prompt written notice to ACM (the
         receipt of which by ACM shall constitute notice to Kaufman) as to the
         assertion of any Claim, or the commencement of any Claim. The omission
         of either of ART or ARLP to notify ACM of any such Claim shall not
         relieve ACM or Kaufman from

<PAGE>

         any liability in respect of such Claim that they may have to either of
         ART or ARLP on account of this Agreement nor shall it relieve ACM or
         Kaufman from any other liability that it may have to either of ART or
         ARLP, provided, however, that ACM and Kaufman shall be relieved of
         liability to the extent that the failure so to notify shall have caused
         prejudice to the defense of such claim. In case any such claim shall be
         asserted or commenced against either of ART or ARLP and it shall notify
         ACM thereof, ACM shall be entitled to participate in the negotiation or
         administration thereof and, to the extent it may wish, to assume the
         defense thereof with counsel reasonably satisfactory to the party
         against which such Claim was initially asserted or commenced, and,
         after notice from ACM to the party against which such Claim was
         initially asserted or commenced of its election so to assume the
         defense thereof, which notice shall be given within 15 days of its
         receipt of such notice from the party against which such Claim was
         initially asserted or commenced, ACM will not be liable to the party
         against which such Claim was initially asserted or commenced hereunder
         for any legal or other expenses subsequently incurred by the party
         against which such Claim was initially asserted or commenced in
         connection with the defense thereof other than reasonable costs of
         investigation. ACM shall not settle any claim without the written
         consent of the party against which such Claim was initially asserted or
         commenced, which consent shall not be unreasonably withheld or delayed.

1.4      Notwithstanding the foregoing, nothing in this Agreement shall limit
         any rights of indemnification that ART or ARLP shall have from ACM or
         Kaufman pursuant to any other agreements or understandings between any
         of the parties hereto.

                                   ARTICLE II

                               GENERAL PROVISIONS

                  2.1      Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.

                  2.2      Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without regard
to any applicable conflicts of law provisions thereof.

                  2.3      Assignment; Successors. This Agreement and the
rights, interests or obligations of any party hereunder shall not be assigned by
any party hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties hereto. Subject to the foregoing, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                                            ARBOR COMMERCIAL MORTGAGE, LLC

                                            By: /s/ Frederick C. Herbst
                                                --------------------------
                                                Name: Frederick C Herbst
                                                Title: Chief Financial Officer

                                            /s/ Ivan Kaufman
                                            ------------------------------
                                            Ivan Kaufman

                                            ARBOR REALTY TRUST, INC.

                                            By: /s/ Frederick C. Herbst
                                                --------------------------
                                                Name: Frederick C. Herbst
                                                Title: Chief Financial Officer,
                                                       Treasurer and Secretary

                                            ARBOR REALTY LIMITED PARTNERSHIP

                                            By: ARBOR REALTY GPOP, INC.,
                                                its General Partner

                                            By: /s/ Frederick C. Herbst
                                                --------------------------
                                                Name: Frederick C. Herbst
                                                Title: Secretary and Treasurer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>6
<FILENAME>y90410exv3w1.txt
<DESCRIPTION>ARTICLES OF INCORPORATION
<TEXT>
<PAGE>

                                                                     EXHIBIT 3.1

                            ARBOR REALTY TRUST, INC.

                            ARTICLES OF INCORPORATION

                                    ARTICLE I

                                  INCORPORATOR

                  The undersigned, James J. Hanks, Jr., whose address is c/o
Venable, Baetjer and Howard, LLP, 1800 Mercantile Bank & Trust Bldg., 2 Hopkins
Plaza, Baltimore, Maryland 21201, being at least 18 years of age, does hereby
form a corporation under the general laws of the State of Maryland.

                                   ARTICLE II

                                      NAME

                  The name of the corporation (the "Corporation") is:

                            Arbor Realty Trust, Inc.

                                   ARTICLE III

                                     PURPOSE

                  The purposes for which the Corporation is formed are to engage
in any lawful act or activity (including, without limitation or obligation,
engaging in business as a real estate investment trust under the Internal
Revenue Code of 1986, as amended, or any successor statute (the "Code")) for
which corporations may be organized under the general laws of the State of
Maryland as now or hereafter in force. For purposes of these Articles, "REIT"
means a real estate investment trust under Sections 856 through 860 of the Code.

                                   ARTICLE IV

                  PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

<PAGE>

                  The address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 300 East Lombard
Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in the State of Maryland is The Corporation Trust Incorporated, 300
East Lombard Street, Baltimore, Maryland 21202. The resident agent is a Maryland
corporation.

                                    ARTICLE V

                        PROVISIONS FOR DEFINING, LIMITING
                      AND REGULATING CERTAIN POWERS OF THE
                CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

                  Section 5.1 Number and Classification of Directors. The
business and affairs of the Corporation shall be managed under the direction of
the Board of Directors. The number of directors of the Corporation initially
shall be five, which number may be increased or decreased pursuant to the
Bylaws, but shall never be less than the minimum number required by the Maryland
General Corporation Law. The names of the directors who shall serve, and the
class in which they shall serve, until their successors are duly elected and
qualify are:

                               Jonathan A. Bernstein - Class I

                               Joseph Martello - Class I

                               C. Michael Kojaian - Class II

                               Ivan Kaufman - Class II

                               William Helmreich - Class III

These directors may increase the number of directors and may fill any vacancy,
whether resulting from an increase in the number of directors or otherwise, on
the Board of Directors occurring before the first annual meeting of stockholders
in the manner provided in the Bylaws.

                  The Board shall always include (except during a period not to
exceed sixty days following the death, resignation, removal or incapacity of an
Independent Director) at least a majority of directors ("Independent Directors")
who are not (i) directors, officers, employees or the equivalent of Arbor
Commercial Mortgage, LLC, a New York limited liability company, or

                                       2
<PAGE>

its affiliates (excluding from the definition of affiliates for this purpose, if
applicable, the Corporation and its subsidiaries) or their subsidiaries or
divisions (collectively "ACM"), or (ii) an officer or employee of the
Corporation or its subsidiaries or (iii) a relative of a principal executive
officer of ACM or the Corporation or its subsidiaries; provided, however, that,
notwithstanding the requirement that at least a majority of the directors be
Independent Directors, no action otherwise validly taken by the Board during a
period in which less than a majority of its members are Independent Directors
shall be invalidated or otherwise affected by such circumstance. Notwithstanding
anything to the contrary contained in this Section 5.1, only Independent
Directors, even if only one, shall have the power to consider and vote upon any
matter as to which the Board determines that ACM or any director or officer of
the Corporation, other than an Independent Director, has a conflict of interest.

                  The directors (other than any director elected solely by
holders of one or more classes or series of Preferred Stock) shall be
classified, with respect to the terms for which they severally hold office, into
three classes, with Class I directors to hold office initially for a term
expiring at the annual meeting of stockholders in 2004, Class II directors to
hold office initially for a term expiring at the annual meeting of stockholders
in 2005 and Class III directors to hold office initially for a term expiring at
the annual meeting of stockholders in 2006, with the members of each class to
hold office until their successors are duly elected and qualify. At each annual
meeting of the stockholders, commencing with the 2004 annual meeting, the
successors to the class of directors whose term expires at such meeting shall be
elected to hold office for a term expiring at the annual meeting of stockholders
held in the third year following the year of their election and until their
successors are duly elected and qualify.

                  Section 5.2 Authorization by Board of Stock Issuance. The
Board of Directors may authorize the issuance from time to time of shares of
stock of the Corporation of any class or series, whether now or hereafter
authorized, or securities or rights convertible into shares of its stock of any
class or series, whether now or hereafter authorized, for such consideration as
the Board of Directors may deem advisable (or without consideration in the case
of a stock split or

                                       3
<PAGE>

stock dividend), subject to such restrictions or limitations, if any, as may be
set forth in the charter or the Bylaws.

                  Section 5.3 Preemptive and Appraisal Rights. No holder of any
stock or any other security of the Corporation, whether now or hereafter
authorized, shall be entitled to exercise the rights of an objecting stockholder
under Title 3, Subtitle 2 of the MGCL. Except as may be provided by the Board of
Directors in setting the terms of classified or reclassified shares of stock
pursuant to Section 6.4 or as may otherwise be provided by contract, no holder
of shares of stock of the Corporation shall, as such holder, have any preemptive
right to purchase or subscribe for any additional shares of stock of the
Corporation or any other security of the Corporation which it may issue or sell.

                  Section 5.4 Indemnification. The Corporation shall have the
power, to the maximum extent permitted by Maryland law in effect from time to
time, to obligate itself to indemnify, and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to, (a) any individual
who is a present or former director or officer of the Corporation or (b) any
individual who, while a director of the Corporation and at the request of the
Corporation, serves or has served as a director, officer, partner or trustee of
another corporation, real estate investment trust, partnership, joint venture,
trust, employee benefit plan or any other enterprise from and against any claim
or liability to which such person may become subject or which such person may
incur by reason of his status as a present or former director or officer of the
Corporation. The Corporation shall have the power, with the approval of the
Board of Directors, to provide such indemnification and advancement of expenses
to a person who served a predecessor of the Corporation in any of the capacities
described in (a) or (b) above and to any employee or agent of the Corporation or
a predecessor of the Corporation.

                  Section 5.5 Determinations by Board. The determination as to
any of the following matters, made in good faith by or pursuant to the direction
of the Board of Directors consistent with the charter and in the absence of
actual receipt of an improper benefit in money, property or services or active
and deliberate dishonesty established by a court, shall be final and

                                       4
<PAGE>

conclusive and shall be binding upon the Corporation and every holder of shares
of its stock: the amount of the net income of the Corporation for any period and
the amount of assets at any time legally available for the payment of dividends,
redemption of its stock or the payment of other distributions on its stock; the
amount of paid-in surplus, net assets, other surplus, annual or other net
profit, net assets in excess of capital, undivided profits or excess of profits
over losses on sales of assets; the amount, purpose, time of creation, increase
or decrease, alteration or cancellation of any reserves or charges and the
propriety thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged);
the fair value, or any sale, bid or asked price to be applied in determining the
fair value, of any asset owned or held by the Corporation; any matter relating
to the acquisition, holding and disposition of any assets by the Corporation; or
any other matter relating to the business and affairs of the Corporation.

                  Section 5.6 REIT Qualification. If the Corporation elects to
qualify for federal income tax treatment as a REIT, the Board of Directors shall
use its reasonable best efforts to take such actions as are necessary or
appropriate to preserve the status of the Corporation as a REIT; however, if the
Board of Directors determines that it is no longer in the best interests of the
Corporation to continue to be qualified as a REIT, the Board of Directors may
revoke or otherwise terminate the Corporation's REIT election pursuant to
Section 856(g) of the Code. The Board of Directors also may determine that
compliance with any restriction or limitation on stock ownership and transfers
set forth in Article VII is no longer required for REIT qualification.

                  Section 5.7 Removal of Directors. Subject to the rights of
holders of one or more classes or series of Preferred Stock to elect or remove
one or more directors, any director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and then only by the
affirmative vote of at least two-thirds of the votes entitled to be cast
generally in the election of directors. For the purpose of this paragraph,
"cause" shall mean, with respect to any particular director, conviction of a
felony or a final judgment of a court of competent jurisdiction holding that
such director caused demonstrable, material harm to the Corporation through bad

                                       5
<PAGE>

faith or active and deliberate dishonesty.

                  Section 5.8 Advisor Agreements. Subject to such approval of
stockholders and other conditions, if any, as may be required by any applicable
statute, rule or regulation, the Board of Directors may authorize the execution
and performance by the Corporation of one or more agreements with any person,
corporation, association, company, trust, partnership (limited or general) or
other organization whereby, subject to the direction and control of the Board of
Directors, any such other person, corporation, association, company, trust,
partnership (limited or general) or other organization shall render or make
available to the Corporation managerial, investment, advisory and/or related
services, office space and other services and facilities (including, if deemed
advisable by the Board of Directors, the management or supervision of the
investments of the Corporation) upon such terms and conditions as may be
provided in such agreement or agreements (including, if deemed fair and
equitable by the Board of Directors, the compensation payable thereunder by the
Corporation).

                  Section 5.9 Extraordinary Actions. Except as specifically
provided in Section 5.7 (relating to removal of directors) and Article VIII,
notwithstanding any provision of law permitting or requiring any action to be
taken or approved by the affirmative vote of the holders of shares entitled to
cast a greater number of votes, any such action shall be effective and valid if
taken or approved by the affirmative vote of holders of shares of stock of the
Corporation entitled to cast a majority of all the votes entitled to be cast on
the matter.

                                   ARTICLE VI

                                      STOCK

                  Section 6.1 Authorized Shares. The Corporation has authority
to issue 600,000,000 shares of stock, consisting of 500,000,000 shares of Common
Stock, $.01 par value per share ("Common Stock"), and 100,000,000 shares of
Preferred Stock, $.01 par value per share ("Preferred Stock"). The aggregate par
value of all authorized shares of stock having par value is $6,000,000. If
shares of one class of stock are classified or reclassified into shares of
another class of stock pursuant to this Article VI, the number of authorized
shares of the former

                                       6
<PAGE>

class shall be automatically decreased and the number of shares of the latter
class shall be automatically increased, in each case by the number of shares so
classified or reclassified, so that the aggregate number of shares of stock of
all classes that the Corporation has authority to issue shall not be more than
the total number of shares of stock set forth in the first sentence of this
paragraph. The Board of Directors, without any action by the stockholders of the
Corporation, may amend the charter from time to time to increase or decrease the
aggregate number of shares of stock or the number of shares of stock of any
class or series that the Corporation has authority to issue.

                  Section 6.2 Common Stock. Subject to the provisions of Article
VII, each share of Common Stock shall entitle the holder thereof to one vote.
The Board of Directors may reclassify any unissued shares of Common Stock from
time to time in one or more classes or series of stock.

                  Section 6.3 Preferred Stock. The Board of Directors may
classify any unissued shares of Preferred Stock and reclassify any previously
classified but unissued shares of Preferred Stock of any series from time to
time in one or more classes or series of stock.

                  Section 6.4 Classified or Reclassified Shares. Prior to
issuance of classified or reclassified shares of any class or series, the Board
of Directors by resolution shall: (a) designate that class or series to
distinguish it from all other classes and series of stock of the Corporation;
(b) specify the number of shares to be included in the class or series; (c) set
or change, subject to the provisions of Article VII and subject to the express
terms of any class or series of stock of the Corporation outstanding at the
time, the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms and
conditions of redemption for each class or series; and (d) cause the Corporation
to file articles supplementary with the State Department of Assessments and
Taxation of Maryland ("SDAT"). Any of the terms of any class or series of stock
set or changed pursuant to clause (c) of this Section 6.4 may be made dependent
upon facts or events ascertainable outside the charter (including determinations
by the Board of Directors or other facts or events within the control of

                                       7
<PAGE>

the Corporation) and may vary among holders thereof, provided that the manner in
which such facts, events or variations shall operate upon the terms of such
class or series of stock is clearly and expressly set forth in the articles
supplementary filed with the SDAT.

                  Section 6.5 Charter and Bylaws. All persons who shall acquire
stock in the Corporation shall acquire the same subject to the provisions of the
charter and the Bylaws.

                                   ARTICLE VII

                 RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES

                  Section 7.1 Definitions. For the purpose of this Article VII,
the following terms shall have the following meanings:

                  Aggregate Stock Ownership Limit. The term "Aggregate Stock
Ownership Limit" shall mean not more than 9.6 percent in value of the aggregate
of the outstanding shares of Capital Stock. The value of the outstanding shares
of Capital Stock shall be determined by the Board of Directors of the
Corporation in good faith, which determination shall be conclusive for all
purposes hereof.

                  Beneficial Ownership. The term "Beneficial Ownership" shall
mean ownership of Capital Stock by a Person, whether the interest in the shares
of Capital Stock is held directly or indirectly (including by a nominee), and
shall include interests that would be treated as owned through the application
of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The
terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall
have the correlative meanings.

                  Business Day. The term "Business Day" shall mean any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions in New York City are authorized or required by law,
regulation or executive order to close.

                  Capital Stock. The term "Capital Stock" shall mean all classes
or series of stock of the Corporation, including, without limitation, Common
Stock and Preferred Stock.

                  Charitable Beneficiary. The term "Charitable Beneficiary"
shall mean one or more beneficiaries of the Trust as determined pursuant to
Section 7.3.6, provided that each such

                                       8
<PAGE>

organization must be described in Section 501(c)(3) of the Code and
contributions to each such organization must be eligible for deduction under
each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

                  Charter. The term "Charter" shall mean the charter of the
Corporation, as that term is defined in the MGCL.

                  Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.

                  Common Stock Ownership Limit. The term "Common Stock Ownership
Limit" shall mean not more than 9.6 percent (in value or in number of shares,
whichever is more restrictive) of the aggregate of the outstanding shares of
Common Stock of the Corporation. The number and value of outstanding shares of
Common Stock of the Corporation shall be determined by the Board of Directors of
the Corporation in good faith, which determination shall be conclusive for all
purposes hereof.

                  Constructive Ownership. The term "Constructive Ownership"
shall mean ownership of Capital Stock by a Person, whether the interest in the
shares of Capital Stock is held directly or indirectly (including by a nominee),
and shall include interests that would be treated as owned through the
application of Section 318(a) of the Code, as modified by Section 856(d)(5) of
the Code. The terms "Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have the correlative meanings.

                  Excepted Holder. The term "Excepted Holder" shall mean a
stockholder of the Corporation for whom an Excepted Holder Limit is created by
these Articles or by the Board of Directors pursuant to Section 7.2.7.

                  Excepted Holder Limit. The term "Excepted Holder Limit" shall
mean, provided that the affected Excepted Holder agrees to comply with the
requirements established by the Board of Directors pursuant to Section 7.2.7,
and subject to adjustment pursuant to Section 7.2.8, the limit established by
the Board of Directors pursuant to Section 7.2.7, which limit may be expressed,
in the discretion of the Board of Directors, as one or more percentages and/or
numbers

                                       9
<PAGE>

of shares of stock of the Corporation, and may apply with respect to one or more
classes of stock, or to all classes of stock in the aggregate.

                  Initial Date. The term "Initial Date" shall mean the initial
date upon which shares of Capital Stock of the Corporation are initially issued
pursuant to that certain Purchase/Placement Agreement, to be dated on or about
June 26, 2003, between the Corporation and JMP Securities, LLC.

                  Market Price. The term "Market Price" on any date shall mean,
with respect to any class or series of outstanding shares of Capital Stock, the
Closing Price for such Capital Stock on such date. The "Closing Price" on any
date shall mean the last sale price for such Capital Stock, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, for such Capital Stock, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, if such Capital Stock
is not listed or admitted to trading on the NYSE, as reported in The PORTAL
Market or, if such Capital Stock is not listed or admitted to trading on the
NYSE or The PORTAL Market, on the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which such Capital Stock is listed or admitted to trading or, if
such Capital Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the The Nasdaq Stock Market, Inc. or, if such system is no longer in use, the
principal other automated quotation system that may then be in use or, if such
Capital Stock is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in such Capital Stock selected by the Board of Directors of the Corporation or,
in the event that no trading price is available for such Capital Stock, the fair
market value of the Capital Stock, as determined in good faith by the Board of
Directors of the Corporation.

                  MGCL. The term "MGCL" shall mean the Maryland General
Corporation Law,

                                       10
<PAGE>

as amended from time to time.

                  NYSE. The term "NYSE" shall mean the New York Stock Exchange.

                  Person. The term "Person" shall mean an individual,
corporation, partnership, estate, trust (including a trust qualified under
Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set
aside for or to be used exclusively for the purposes described in Section 642(c)
of the Code, association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity and also includes a
group as that term is used for purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, and a group to which an Excepted Holder Limit
applies.

                  Prohibited Owner. The term "Prohibited Owner" shall mean, with
respect to any purported Transfer, any Person who, but for the provisions of
Section 7.2.1, would Beneficially Own or Constructively Own shares of Capital
Stock, and if appropriate in the context, shall also mean any Person who would
have been the record owner of the shares that the Prohibited Owner would have so
owned.

                  REIT. The term "REIT" shall mean a real estate investment
trust within the meaning of Section 856 of the Code.

                  Restriction Termination Date. The term "Restriction
Termination Date" shall mean the first day after the Initial Date on which the
Corporation determines pursuant to Section 5.6 of the Charter that it is no
longer in the best interests of the Corporation to attempt to, or continue to,
qualify as a REIT or that compliance with the restrictions and limitations on
Beneficial Ownership, Constructive Ownership and Transfers of shares of Capital
Stock set forth herein is no longer required in order for the Corporation to
qualify as a REIT.

                  The PORTAL Market. The term "The PORTAL Market" shall mean The
PORTAL Market(R), a subsidiary of The Nasdaq Stock Market, Inc.

                  Transfer. The term "Transfer" shall mean any issuance, sale,
transfer, gift, assignment, devise or other disposition, as well as any other
event that causes any Person to acquire or change its level of Beneficial
Ownership or Constructive Ownership, or any agreement

                                       11
<PAGE>

to take any such action or cause any such event, of Capital Stock or the right
to vote or receive dividends on Capital Stock, including (a) the granting or
exercise of any option (or any disposition of any option), (b) any disposition
of any securities or rights convertible into or exchangeable for Capital Stock
or any interest in Capital Stock or any exercise of any such conversion or
exchange right and (c) Transfers of interests in other entities that result in
changes in Beneficial or Constructive Ownership of Capital Stock; in each case,
whether voluntary or involuntary, whether owned of record, Constructively Owned
or Beneficially Owned and whether by operation of law or otherwise. The terms
"Transferring" and "Transferred" shall have the correlative meanings.

                  Trust. The term "Trust" shall mean any trust provided for in
Section 7.3.1.

                  Trustee. The term "Trustee" shall mean the Person unaffiliated
with the Corporation and a Prohibited Owner that is appointed by the Corporation
to serve as trustee of the Trust.

                  Section 7.2  Capital Stock.

                           Section 7.2.1  Ownership Limitations.

                                    (a)      Basic Restrictions.

                                             (i) During the period commencing on
the Initial Date and prior to the Restriction Termination Date (1) No Person,
other than an Excepted Holder, shall Beneficially Own or Constructively Own
shares of Capital Stock in excess of the Aggregate Stock Ownership Limit, (2) no
Person, other than an Excepted Holder, shall Beneficially Own or Constructively
Own shares of Common Stock in excess of the Common Stock Ownership Limit and (3)
no Excepted Holder shall Beneficially Own or Constructively Own shares of
Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder.

                                             (ii) During the period commencing
on the Initial Date and prior to the Restriction Termination Date, no Person
shall Beneficially or Constructively Own shares of Capital Stock to the extent
that such Beneficial or Constructive Ownership of Capital Stock would result in
the Corporation being "closely held" within the meaning of Section 856(h)

                                       12
<PAGE>

of the Code (without regard to whether the ownership interest is held during the
last half of a taxable year), or otherwise failing to qualify as a REIT
(including, but not limited to, Beneficial or Constructive Ownership that would
result in the Corporation owning (actually or Constructively) an interest in a
tenant that is described in Section 856(d)(2)(B) of the Code if the income
derived by the Corporation from such tenant would cause the Corporation to fail
to satisfy any of the gross income requirements of Section 856(c) of the Code).

                                             (iii) No Person shall, after
January 29, 2004, Transfer any Beneficial Ownership or Constructive Ownership of
shares of Capital Stock if, as a result of the Transfer, the Capital Stock would
be beneficially owned by less than 100 Persons (determined under the principles
of Section 856(a)(5) of the Code).

                                    (b)      Transfer in Trust. If any Transfer
of shares of Capital Stock (whether or not such Transfer is the result of a
transaction entered into through the facilities of the NYSE or any other
national securities exchange or automated inter-dealer quotation system) occurs
which, if effective, would result in any Person Beneficially Owning or
Constructively Owning shares of Capital Stock in violation of Section 7.2.1(a),

                                             (i) then that number of shares of
the Capital Stock the Beneficial or Constructive Ownership of which otherwise
would cause such Person to violate Section 7.2.1(a) (rounded to the nearest
whole share) shall be automatically transferred to a Trust for the benefit of a
Charitable Beneficiary, as described in Section 7.3, effective as of the close
of business on the Business Day prior to the date of such Transfer, and such
Person shall acquire no rights in such shares; or

                                             (ii) if the transfer to the Trust
described in clause (i) of this sentence would not be effective for any reason
to prevent the violation of Section 7.2.1(a), then the Transfer of that number
of shares of Capital Stock that otherwise would cause any Person to violate
Section 7.2.1(a) shall be void ab initio, and the intended transferee shall
acquire no rights in such shares of Capital Stock.

                                             (iii) In determining which shares
of Capital Stock are to be

                                       13
<PAGE>

transferred to a Trust in accordance with this Section 7.2.1(b) and Section 7.3
hereof, shares shall be so transferred to a Trust in such manner as minimizes
the aggregate value of the shares that are transferred to the Trust (except to
the extent that the Board of Directors determines that the shares transferred to
the Trust shall be those directly or indirectly held or Beneficially Owned or
Constructively Owned by a Person or Persons that caused or contributed to the
application of this Section 7.2.1(b)), and to the extent not inconsistent
therewith, on a pro rata basis.

                                             (iv) To the extent that, upon a
transfer of shares of Capital Stock pursuant to this Section 7.2.1(b), a
violation of any provision of Section 7.2.1(a) would nonetheless be continuing,
(for example where the ownership of shares of Capital Stock by a single Trust
would result in the Capital Stock being beneficially owned (determined under the
principles of Section 856(a)(5) of the Code) by less than 100 persons), then
shares of Capital Stock shall be transferred to that number of Trusts, each
having a distinct Trustee and a Charitable Beneficiary or Beneficiaries that are
distinct from those of each other Trust, such that there is no violation of any
provision of Section 7.2.1(a).

                           Section 7.2.2 Remedies for Breach. If the Board of
Directors of the Corporation or any duly authorized committee thereof shall at
any time determine in good faith that a Transfer or other event has taken place
that results in a violation of Section 7.2.1 or that a Person intends to acquire
or has attempted to acquire Beneficial or Constructive Ownership of any shares
of Capital Stock in violation of Section 7.2.1 (whether or not such violation is
intended), the Board of Directors or a committee thereof shall take such action
as it deems advisable to refuse to give effect to or to prevent such Transfer or
other event, including, without limitation, causing the Corporation to redeem
shares, refusing to give effect to such Transfer on the books of the Corporation
or instituting proceedings to enjoin such Transfer or other event; provided,
however, that any Transfer or attempted Transfer or other event in violation of
Section 7.2.1 shall automatically result in the transfer to the Trust described
above, and, where applicable, such Transfer (or other event) shall be void ab
initio as provided above irrespective of any action (or non-action) by the Board
of Directors or a committee thereof.

                                       14
<PAGE>

                           Section 7.2.3 Notice of Restricted Transfer. Any
Person who acquires or attempts or intends to acquire Beneficial Ownership or
Constructive Ownership of shares of Capital Stock that will or may violate
Section 7.2.1(a) or any Person who would have owned shares of Capital Stock that
resulted in a transfer to the Trust pursuant to the provisions of Section
7.2.1(b) shall immediately give written notice to the Corporation of such event,
or in the case of such a proposed or attempted transaction, give at least 15
days prior written notice, and shall provide to the Corporation such other
information as the Corporation may request in order to determine the effect, if
any, of such Transfer on the Corporation's status as a REIT.

                           Section 7.2.4 Owners Required To Provide Information.
From the Initial Date and prior to the Restriction Termination Date:

                                    (a)      every owner of more than five
percent (or such lower percentage as required by the Code or the Treasury
Regulations promulgated thereunder) of the outstanding shares of Capital Stock,
within 30 days after the end of each taxable year, shall give written notice to
the Corporation stating the name and address of such owner, the number of shares
of Capital Stock and other shares of the Capital Stock Beneficially Owned and a
description of the manner in which such shares are held. Each such owner shall
provide to the Corporation such additional information as the Corporation may
request in order to determine the effect, if any, of such Beneficial Ownership
on the Corporation's status as a REIT and to ensure compliance with the
Aggregate Stock Ownership Limit and the Common Stock Ownership Limit; and

                                    (b)      each Person who is a Beneficial or
Constructive Owner of Capital Stock and each Person (including the stockholder
of record) who is holding Capital Stock for a Beneficial or Constructive Owner
shall provide to the Corporation such information as the Corporation may
request, in good faith, in order to determine the Corporation's status as a REIT
and to comply with requirements of any taxing authority or governmental
authority or to determine such compliance.

                           Section 7.2.5 Remedies Not Limited. Subject to
Section 5.6 of the

                                       15
<PAGE>

Charter, nothing contained in this Section 7.2 shall limit the authority of the
Board of Directors of the Corporation to take such other action as it deems
necessary or advisable to protect the Corporation and the interests of its
stockholders in preserving the Corporation's status as a REIT.

                           Section 7.2.6 Ambiguity. In the case of an ambiguity
in the application of any of the provisions of this Section 7.2, Section 7.3, or
any definition contained in Section 7.1, the Board of Directors of the
Corporation shall have the power to determine the application of the provisions
of this Section 7.2 or Section 7.3 or any such definition with respect to any
situation based on the facts known to it. In the event Section 7.2 or 7.3
requires an action by the Board of Directors and the Charter fails to provide
specific guidance with respect to such action, the Board of Directors shall have
the power to determine the action to be taken so long as such action is not
contrary to the provisions of Sections 7.1, 7.2 or 7.3.

                           Section 7.2.7  Exceptions.

                                    (a)      Subject to Section 7.2.1(a)(ii),
the Board of Directors of the Corporation, in its sole discretion, may exempt a
Person from the Aggregate Stock Ownership Limit and the Common Stock Ownership
Limit, as the case may be, and may establish or increase an Excepted Holder
Limit for such Person if:

                                             (i) the Board of Directors obtains
such representations and undertakings from such Person as are reasonably
necessary to ascertain that no individual's Beneficial or Constructive Ownership
of such shares of Capital Stock will violate Section 7.2.1(a)(ii);

                                             (ii) such Person does not and
represents that it will not own, actually or Constructively, an interest in a
tenant of the Corporation (or a tenant of any entity owned or controlled by the
Corporation) that would cause the Corporation to own, actually or
Constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B)
of the Code) in such tenant and the Board of Directors obtains such
representations and undertakings from such Person as are reasonably necessary to
ascertain this fact (for this purpose, a tenant from whom the Corporation (or an
entity owned or controlled by the Corporation) derives (and is expected to

                                       16
<PAGE>

continue to derive) a sufficiently small amount of revenue such that, in the
opinion of the Board of Directors of the Corporation, rent from such tenant
would not adversely affect the Corporation's ability to qualify as a REIT, shall
not be treated as a tenant of the Corporation); and

                                             (iii) such Person agrees that any
violation or attempted violation of any such representation or undertaking (or
other action which is contrary to the restrictions contained in Sections 7.2.1
through 7.2.6) will result in such shares of Capital Stock being automatically
transferred to a Trust in accordance with Sections 7.2.1(b) and 7.3.

                                    (b)      Prior to granting any exception
pursuant to Section 7.2.7(a), the Board of Directors of the Corporation may
require a ruling from the Internal Revenue Service, or an opinion of counsel, in
either case in form and substance satisfactory to the Board of Directors in its
sole discretion, as it may deem necessary or advisable in order to determine or
ensure the Corporation's status as a REIT. Notwithstanding the receipt of any
ruling or opinion, the Board of Directors may impose such conditions or
restrictions as it deems appropriate in connection with granting such exception.

                                    (c)      Subject to Section 7.2.1(a)(ii), an
underwriter which participates in a public offering or a private placement of
Capital Stock (or securities convertible into or exchangeable for Capital Stock)
may Beneficially Own or Constructively Own shares of Capital Stock (or
securities convertible into or exchangeable for Capital Stock) in excess of the
Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, or both such
limits, but only to the extent necessary to facilitate such public offering or
private placement.

                                    (d)      The Board of Directors may only
reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written
consent of such Excepted Holder at any time, or (2) pursuant to the terms and
conditions of any agreement or undertaking entered into with such Excepted
Holder in connection with the establishment of the Excepted Holder Limit for
that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage
or amount that is less than the Common Stock Ownership Limit.

                           Section 7.2.8 Increase in Aggregate Stock Ownership
and Common Stock

                                       17
<PAGE>

Ownership Limits. The Board of Directors may from time to time increase the
Common Stock Ownership Limit and the Aggregate Stock Ownership Limit.

                           Section 7.2.9 Legend. Each certificate for shares of
Capital Stock shall bear substantially the following legend:

                  The shares represented by this certificate are subject to
                  restrictions on Beneficial and Constructive Ownership and
                  Transfer for the purpose of the Corporation's maintenance of
                  its status as a Real Estate Investment Trust under the
                  Internal Revenue Code of 1986, as amended (the "Code").
                  Subject to certain further restrictions and except as
                  expressly provided in the Corporation's Charter, (i) no Person
                  may Beneficially or Constructively Own shares of the
                  Corporation's Common Stock in excess of 9.6 percent (in value
                  or number of shares) of the outstanding shares of Common Stock
                  of the Corporation unless such Person is an Excepted Holder
                  (in which case the Excepted Holder Limit shall be applicable);
                  (ii) no Person may Beneficially or Constructively Own shares
                  of Capital Stock of the Corporation in excess of 9.6 percent
                  of the value of the total outstanding shares of Capital Stock
                  of the Corporation, unless such Person is an Excepted Holder
                  (in which case the Excepted Holder Limit shall be applicable);
                  (iii) no Person may Beneficially or Constructively Own Capital
                  Stock that would result in the Corporation being "closely
                  held" under Section 856(h) of the Code or otherwise cause the
                  Corporation to fail to qualify as a REIT; and (iv) no Person
                  may Transfer shares of Capital Stock if such Transfer would
                  result in the Capital Stock of the Corporation being owned by
                  fewer than 100 Persons. Any Person who Beneficially or
                  Constructively Owns or attempts to Beneficially or
                  Constructively Own shares of Capital Stock which causes or
                  will cause a Person to Beneficially or Constructively Own
                  shares of Capital Stock in excess or in violation of the above
                  limitations must immediately notify the Corporation. If any of
                  the restrictions on transfer or ownership are violated, the
                  shares of Capital Stock represented hereby will be
                  automatically transferred to a Trustee of a Trust for the
                  benefit of one or more Charitable Beneficiaries or, upon the
                  occurrence of certain events, attempted Transfers in violation
                  of the restrictions described above may be void ab initio. All
                  capitalized terms in this legend have the meanings defined in
                  the charter of the Corporation, as the same may be amended
                  from time to time, a copy of which, including the restrictions
                  on transfer and ownership, will be furnished to each holder of
                  Capital Stock of the Corporation on request and without
                  charge.

                                       18
<PAGE>

                           Instead of the foregoing legend, the certificate may
state that the Corporation will furnish a full statement about certain
restrictions on transferability to a stockholder on request and without charge.

                  Section 7.3 Transfer of Capital Stock in Trust.

                           Section 7.3.1 Ownership in Trust. Upon any purported
Transfer or other event described in Section 7.2.1(b) that would result in a
transfer of shares of Capital Stock to a Trust, such shares of Capital Stock
shall be deemed to have been transferred to the Trustee as trustee of a Trust
for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer
to the Trustee shall be deemed to be effective as of the close of business on
the Business Day prior to the purported Transfer or other event that results in
the transfer to the Trust pursuant to Section 7.2.1(b). The Trustee shall be
appointed by the Corporation and shall be a Person unaffiliated with the
Corporation and any Prohibited Owner. Each Charitable Beneficiary shall be
designated by the Corporation as provided in Section 7.3.6.

                           Section 7.3.2 Status of Shares Held by the Trustee.
Shares of Capital Stock held by the Trustee shall be issued and outstanding
shares of Capital Stock of the Corporation. The Prohibited Owner shall have no
rights in the shares held by the Trustee. The Prohibited Owner shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends or other distributions and shall not possess any
rights to vote or other rights attributable to the shares held in the Trust.

                           Section 7.3.3 Dividend and Voting Rights. The Trustee
shall have all voting rights and rights to dividends or other distributions with
respect to shares of Capital Stock held in the Trust, which rights shall be
exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend
or other distribution paid prior to the discovery by the Corporation that the
shares of Capital Stock have been transferred to the Trustee shall be paid by
the recipient of such dividend or distribution to the Trustee upon demand and
any dividend or other distribution authorized but unpaid shall be paid when due
to the Trustee. Any dividend or


                                       19
<PAGE>

distribution so paid to the Trustee shall be held in trust for the Charitable
Beneficiary. The Prohibited Owner shall have no voting rights with respect to
shares held in the Trust and, subject to Maryland law, effective as of the date
that the shares of Capital Stock have been transferred to the Trustee, the
Trustee shall have the authority (at the Trustee's sole discretion) (i) to
rescind as void any vote cast by a Prohibited Owner prior to the discovery by
the Corporation that the shares of Capital Stock have been transferred to the
Trustee and (ii) to recast such vote in accordance with the desires of the
Trustee acting for the benefit of the Charitable Beneficiary; provided, however,
that if the Corporation has already taken irreversible corporate action, then
the Trustee shall not have the authority to rescind and recast such vote.
Notwithstanding the provisions of this Article VII, until the Corporation has
received notification that shares of Capital Stock have been transferred into a
Trust, the Corporation shall be entitled to rely on its share transfer and other
stockholder records for purposes of preparing lists of stockholders entitled to
vote at meetings, determining the validity and authority of proxies and
otherwise conducting votes of stockholders.

                           Section 7.3.4 Sale of Shares by Trustee. Within 20
days of receiving notice from the Corporation that shares of Capital Stock have
been transferred to the Trust, the Trustee of the Trust shall sell the shares
held in the Trust to a person, designated by the Trustee, whose ownership of the
shares will not violate the ownership limitations set forth in Section 7.2.1(a).
Upon such sale, the interest of the Charitable Beneficiary in the shares sold
shall terminate and the Trustee shall distribute the net proceeds of the sale to
the Prohibited Owner and to the Charitable Beneficiary as provided in this
Section 7.3.4. The Prohibited Owner shall receive the lesser of (1) the price
paid by the Prohibited Owner for the shares or, if the Prohibited Owner did not
give value for the shares in connection with the event causing the shares to be
held in the Trust (e.g., in the case of a gift, devise or other such
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
net sales proceeds in excess of the amount payable to the Prohibited Owner shall
be

                                       20
<PAGE>

immediately paid to the Charitable Beneficiary. If, prior to the discovery by
the Corporation that shares of Capital Stock have been transferred to the
Trustee, such shares are sold by a Prohibited Owner, then (i) such shares shall
be deemed to have been sold on behalf of the Trust and (ii) to the extent that
the Prohibited Owner received an amount for such shares that exceeds the amount
that such Prohibited Owner was entitled to receive pursuant to this Section
7.3.4, such excess shall be paid to the Trustee upon demand.

                           Section 7.3.5 Purchase Right in Stock Transferred to
the Trustee. Shares of Capital Stock transferred to the Trustee shall be deemed
to have been offered for sale to the Corporation, or its designee, at a price
per share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on
the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer until the Trustee has sold the shares
held in the Trust pursuant to Section 7.3.4. Upon such a sale to the
Corporation, the interest of the Charitable Beneficiary in the shares sold shall
terminate and the Trustee shall distribute the net proceeds of the sale to the
Prohibited Owner.

                           Section 7.3.6 Designation of Charitable
Beneficiaries. By written notice to the Trustee, the Corporation shall designate
one or more nonprofit organizations to be the Charitable Beneficiary of the
interest in the Trust such that (i) the shares of Capital Stock held in the
Trust would not violate the restrictions set forth in Section 7.2.1(a) in the
hands of such Charitable Beneficiary and (ii) each such organization must be
described in Section 501(c)(3) of the Code and contributions to each such
organization must be eligible for deduction under each of Sections 170(b)(1)(A),
2055 and 2522 of the Code.

                  Section 7.4 Exchange Transactions. Nothing in this Article VII
shall preclude the settlement of any transaction entered into through the
facilities of the NYSE, The PORTAL Market or any other national securities
exchange or automated inter-dealer quotation system. The fact that the
settlement of any transaction occurs shall not negate the effect of any other
provision of this Article VII and any transferee in such a transaction shall be
subject to all of the

                                       21
<PAGE>

provisions and limitations set forth in this Article VII.

                  Section 7.5 Enforcement. The Corporation is authorized
specifically to seek equitable relief, including injunctive relief, to enforce
the provisions of this Article VII.

                  Section 7.6 Non-Waiver. No delay or failure on the part of the
Corporation or the Board of Directors in exercising any right hereunder shall
operate as a waiver of any right of the Corporation or the Board of Directors,
as the case may be, except to the extent specifically waived in writing.

                                  ARTICLE VIII

                                   AMENDMENTS

                  The Corporation reserves the right from time to time to make
any amendment to its charter, now or hereafter authorized by law, including any
amendment altering the terms or contract rights, as expressly set forth in the
charter, of any shares of outstanding stock. All rights and powers conferred by
the charter on stockholders, directors and officers are granted subject to this
reservation. Except as otherwise provided in the charter, any amendment to the
charter shall be valid only if approved by the affirmative vote of a majority of
all the votes entitled to be cast on the matter. However, any amendment to
Section 5.1, Section 5.7 or to this sentence of the charter shall be valid only
if approved by the affirmative vote of two-thirds of all the votes entitled to
be cast on the matter.

                                   ARTICLE IX

                             LIMITATION OF LIABILITY

                  To the maximum extent that Maryland law in effect from time to
time permits limitation of the liability of directors and officers of a
corporation, no director or officer of the Corporation shall be liable to the
Corporation or its stockholders for money damages. Neither the amendment nor
repeal of this Article IX, nor the adoption or amendment of any other provision
of the charter or Bylaws inconsistent with this Article IX, shall apply to or
affect in any respect the applicability of the preceding sentence with respect
to any act or failure to act which occurred prior to such amendment, repeal or
adoption.

                                       22
<PAGE>

                  IN WITNESS WHEREOF, I have signed these Articles of
Incorporation and acknowledge the same to be my act on this 24th day of June,
2003.

                                                     /s/ James J. Hanks, Jr.
                                                     ---------------------------
                                                     James J. Hanks, Jr.

                                       23

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>7
<FILENAME>y90410exv3w2.txt
<DESCRIPTION>ARTICLES SUPPLEMENTARY
<TEXT>
<PAGE>

                                                                     EXHIBIT 3.2

                            ARBOR REALTY TRUST, INC.

                             ARTICLES SUPPLEMENTARY

                  Arbor Realty Trust, Inc., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:

                  FIRST: Under a power contained in Section 6.3 of Article VI of
the charter of the Corporation (the "Charter"), the Board of Directors of the
Corporation (the "Board of Directors"), by unanimous written consent dated June
30, 2003, reclassified and designated 5,000,000 shares of Preferred Stock (as
defined in the Charter) as 5,000,000 shares (the "Shares") of Special Voting
Preferred Stock, $.01 par value per share, with the voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption as set forth as follows, which upon any restatement
of the Charter shall be made part of Article VI of the Charter, with any
necessary or appropriate changes to the enumeration or lettering of sections or
subsections hereof.

1.       Designation and Amount.

         The shares of such class shall be designated as "Special Voting
Preferred Stock" and the number of shares constituting such class shall be
5,000,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors and filing of articles supplementary in accordance with
the Maryland General Corporation Law stating that such increase or decrease has
been so authorized; provided, however, that no decrease shall reduce the number
of shares of Special Voting Preferred Stock to a number less than the number of
shares of Special Voting Preferred Stock then outstanding.

2.       Definitions.

                  For purposes of the Special Voting Preferred Stock, the
following terms shall have the meanings indicated:

                  "ACM" shall mean Arbor Commercial Mortgage, LLC, a New York
limited liability company, and any successor thereof.

                  "Adjustment Factor" shall have the meaning assigned to such
term in the Partnership Agreement and initially shall be one.

                  "Affiliate" shall mean a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.

<PAGE>

                  "Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities with respect to the Special Voting Preferred Stock.

                  "Common Stock" shall mean the Common Stock, $.01 par value per
share, of the Corporation.

                  "Operating Partnership" shall mean Arbor Realty Limited
Partnership, a Delaware limited partnership, and any successor thereof.

                  "Pairing Agreement" shall mean the Pairing Agreement, dated as
of the date hereof, by and among the Corporation, Arbor Realty LPOP, Inc, Arbor
Realty GPOP, Inc., ACM and the Operating Partnership, as may be amended from
time to time.

                  "Partnership Agreement" shall mean the Agreement of Limited
Partnership of the Operating Partnership, as the same may be amended from time
to time.

                  "Partnership Common Units" shall have the meaning set forth in
the Partnership Agreement.

                  "Person" shall mean an individual or a corporation,
partnership, trust, unincorporated organization, association, limited liability
company or other entity.

                  "Preferred Stock" shall mean the Preferred Stock, $.01 par
value per share, of the Corporation.

                  "UPREIT Combination Transaction" shall mean any consolidation,
merger, combination or other transaction consummated by the Corporation in
connection with which the holders of Partnership Common Units will either (i)
continue to hold Partnership Common Units or (ii) will have their Partnership
Common Units converted or changed into or exchanged for partnership interests
and/or other securities of another operating partnership in an UPREIT structure.

3.       Dividends and Distributions.

                  Except as set forth in Section 7 hereof, the holders of shares
of Special Voting Preferred Stock shall not be entitled to any regular or
special dividend payments. Without limiting the foregoing, the holders of shares
of Special Voting Preferred Stock shall not be entitled to any dividends or
other distributions declared or paid with respect to the shares of Common Stock
or any other stock of the Corporation.

4.       Voting Rights.

                  With respect to all matters submitted to a vote of the
stockholders of the

<PAGE>

Corporation, each share of Special Voting Preferred Stock shall entitle the
holder thereof to a number of votes equal to the Adjustment Factor in effect on
the record date for determining the holders of stock of the Corporation entitled
to vote on such matter. The holders of shares of Special Voting Preferred Stock
shall vote collectively with the holders of shares of Common Stock as one class
on all matters submitted to a vote of stockholders of the Corporation, and,
except as expressly set forth in Section 9 hereof, the holders of shares of
Special Voting Preferred Stock shall have no other voting rights, as a separate
class or other otherwise, including any rights to vote as a class with respect
to any extraordinary corporate action such as a merger, consolidation,
dissolution, liquidation or the like.

5.       Pairing.

         The Corporation shall not issue or agree to issue any shares of Special
Voting Preferred Stock to any Person unless effective provision has been made
for the simultaneous issuance by the Operating Partnership to the same Person of
the same number of Partnership Common Units, and for the pairing of such shares
of Special Voting Preferred Stock and Partnership Common Units in accordance
with the Pairing Agreement. Until the limitation on transfer provided for in
Section 1 of the Pairing Agreement shall be terminated in accordance with the
terms of the Pairing Agreement:

         a.       No share of Special Voting Preferred Stock shall be
                  transferable, and no such share shall be transferred on the
                  stock transfer books of the Corporation, except in accordance
                  with the provisions of the Pairing Agreement.

         b.       A legend shall be placed on the face of each certificate
                  representing ownership of shares of Special Voting Preferred
                  Stock referring to the restriction on transfer set forth
                  herein and in the Pairing Agreement.

6.       Reacquired Shares.

                  Any shares of Special Voting Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be cancelled automatically, shall cease to be outstanding and shall become
authorized but unissued shares of Special Voting Preferred Stock, and the former
holder or holders thereof shall have no further rights (hereunder or otherwise)
with respect to such shares (except as provided in Section 8 hereof). Any shares
of Special Voting Preferred Stock that are cancelled in accordance with the
preceding sentence may be reissued or reclassified by the Corporation in
accordance with the applicable provisions of the Charter.

7.       Liquidation, Dissolution or Winding Up.

                  In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, before any
assets of the Corporation shall be distributed, paid or set aside for the
holders of any equity securities ranking junior to the Special

<PAGE>

Voting Preferred Stock as to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, the Corporation shall pay to the
holders of shares of Special Voting Preferred Stock $.01 per share of Special
Voting Preferred Stock. For the purposes of this Section 7, (i) a consolidation
or merger of the Corporation with one or more entities, (ii) a sale or transfer
of all or substantially all of the Corporation's assets, or (iii) a statutory
share exchange shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Corporation.

8.       Cancellation and Redemption.

                  (a) In the event that the Operating Partnership is party to
any consolidation, merger, combination or other transaction, other than in
connection with an UPREIT Combination Transaction, pursuant to which the
Partnership Common Units are converted or changed into or exchanged for stock
and/or other securities of any other entity and/or cash or any other property,
then in any such case the shares of Special Voting Preferred Stock shall be
concurrently redeemed by the Corporation, out of assets legally available
therefor from the distribution received by the Corporation pursuant to Section
4.a of the Pairing Agreement, at a redemption price payable in cash equal to
$.01 per share of Special Voting Preferred Stock, shall be cancelled
automatically and cease to be outstanding and shall become authorized but
unissued shares of Special Voting Preferred Stock as contemplated by Section 6
above, and thereafter the former holders thereof shall have no further rights
(hereunder or otherwise) with respect to such shares (except the rights to
receive the cash payable upon such redemption, without interest thereon, upon
surrender and endorsement of their certificates if so required).

                  (b) If at any time any Qualifying Person (as defined in the
Partnership Agreement) elects to have redeemed, pursuant to Section 8.6 of the
Partnership Agreement, any Partnership Common Unit that is paired with a share
of Special Voting Preferred Stock and such Partnership Common Unit is redeemed
by the Operating Partnership under Section 8.6.A of the Partnership Agreement,
then concurrently with the redemption by the Operating Partnership of any such
Partnership Common Units in accordance with the terms and conditions of the
Partnership Agreement, the shares of Special Voting Preferred Stock paired with
the Partnership Common Units being so redeemed shall be concurrently redeemed by
the Corporation, out of assets legally available therefor from the distribution
received by the Corporation pursuant to Section 4.a of the Pairing Agreement, at
a redemption price payable in cash equal to $.01 per share of Special Voting
Preferred Stock, shall be cancelled automatically and cease to be outstanding
and shall become authorized but unissued shares of Special Voting Preferred
Stock as contemplated by Section 6 above, and thereafter the former holders
thereof shall have no further rights (hereunder or otherwise) with respect to
such shares (except the rights to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required).

                  (c) If at any time any Qualifying Person elects to have
redeemed, pursuant to Section 8.6 of the Partnership Agreement, any Partnership
Common Unit that is paired with a share of Special Voting Preferred Stock and
the Corporation exercises its rights under Section

<PAGE>

8.6.B of the Partnership Agreement to acquire any or all of such Partnership
Common Units in exchange for shares of Common Stock, then concurrently with the
acquisition by the Corporation of any such Partnership Common Units in exchange
for shares of Common Stock in accordance with the terms and conditions of the
Partnership Agreement, the shares of Special Voting Preferred Stock paired with
the Partnership Common Units being so acquired shall be concurrently redeemed by
the Corporation, out of assets legally available therefor from the distribution
received by the Corporation pursuant to Section 4.a of the Pairing Agreement, at
a redemption price payable in cash equal to $.01 per share of Special Voting
Preferred Stock, shall be cancelled automatically and cease to be outstanding
and shall become authorized but unissued shares of Special Voting Preferred
Stock as contemplated by Section 6 above, and thereafter the former holders
thereof shall have no further rights (hereunder or otherwise) with respect to
such shares (except the rights to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required).

9.       Amendments and Mergers.

                  The Charter shall not be amended in any manner that would
materially alter or change the powers, preferences or special rights of the
Special Voting Preferred Stock, as set forth herein, so as to affect them
adversely without the affirmative vote of the holders of at least a majority of
the outstanding shares of Special Voting Preferred Stock, voting separately as a
class; provided, however, that the amendment of the provisions of the Charter so
as to authorize or create, or to increase the authorized amount of, any equity
securities of the Corporation shall not be deemed to materially and adversely
affect the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Special Voting
Preferred Stock.

                  The Corporation shall not consummate any UPREIT Combination
Transaction without the affirmative vote of the holders of at least a majority
of the outstanding shares of Special Voting Preferred Stock, voting separately
as a class, unless (i) the Corporation is the surviving entity, or (ii) in
connection with any UPREIT Combination Transaction in which the Corporation is
not the surviving entity if, as result of the merger or consolidation, the
holders of Special Voting Preferred Stock receive shares of stock or beneficial
interest or other equity securities with preferences, rights and privileges not
materially inferior to the preferences, rights and privileges of the Special
Voting Preferred Stock.

10.      Fractional Shares.

                  Special Voting Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder's fractional
share, to exercise voting rights and to have the benefit of all other rights of
holders of Special Voting Preferred Stock.

                  SECOND: The Shares have been reclassified and designated by
the Board of Directors under the authority contained in the Charter.

<PAGE>

                  THIRD: These Articles Supplementary have been approved by the
Board of Directors in the manner and by the vote required by law.

                  FOURTH: The undersigned President of the Corporation
acknowledges these Articles Supplementary to be the corporate act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned President acknowledges that, to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

                  IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
President, and attested to by its Secretary, on this 1st day of July, 2003.

                                            ARBOR REALTY TRUST, INC.

                                            By: /s/ Ivan Kaufman    (SEAL)
                                                --------------------------
                                                Name: Ivan Kaufman
                                                Title: President

ATTEST:

/s/ Frederick C. Herbst
----------------------------
Name: Frederick C. Herbst
Title: Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.3
<SEQUENCE>8
<FILENAME>y90410exv3w3.txt
<DESCRIPTION>BYLAWS
<TEXT>
<PAGE>

                                                                     EXHIBIT 3.3

                            ARBOR REALTY TRUST, INC.

                                     BYLAWS

                                    ARTICLE I

                                     OFFICES

                  Section 1.        PRINCIPAL OFFICE. The principal office of
the Corporation in the State of Maryland shall be located at such place as the
Board of Directors may designate.

                  Section 2.        ADDITIONAL OFFICES. The Corporation may have
additional offices, including a principal executive office, at such places as
the Board of Directors may from time to time determine or the business of the
Corporation may require.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

                  Section 1.        PLACE. All meetings of stockholders shall be
held at the principal executive office of the Corporation or at such other place
as shall be set by the Board of Directors and stated in the notice of the
meeting.

                  Section 2.        ANNUAL MEETING. An annual meeting of the
stockholders for the election of directors and the transaction of any business
within the powers of the Corporation shall be held on a date and at the time set
by the Board of Directors during the month of May in each year.

                  Section 3.        SPECIAL MEETINGS.

                  (a) General. The chairman of the board, president, chief
executive officer or Board of Directors may call a special meeting of the
stockholders. Subject to subsection (b) of this Section 3, a special meeting of
stockholders shall also be called by the secretary of the Corporation upon the
written request of stockholders entitled to cast not less than a majority of all
the votes entitled to be cast at such meeting.

                  (b) Stockholder Requested Special Meetings. (1) Any
stockholder of record seeking to have stockholders request a special meeting
shall, by sending written notice to the secretary (the "Record Date Request
Notice") by registered mail, return receipt requested, request the Board of
Directors to fix a record date to determine the stockholders entitled to request
a special meeting (the "Request Record Date"). The Record Date Request Notice
shall set forth the purpose of the meeting and the matters proposed to be acted
on at it, shall be signed by one or more stockholders of record as of the date
of signature (or their agents duly authorized in writing), shall bear the date
of signature of

                                        1
<PAGE>

each such stockholder (or such agent) and shall set forth all information
relating to each such stockholder that must be disclosed in solicitations of
proxies for election of directors in an election contest (even if an election
contest is not involved), or is otherwise required, in each case pursuant to
Regulation 14A (or any successor provision) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Upon receiving the Record Date Request
Notice, the Board of Directors may fix a Request Record Date. The Request Record
Date shall not precede and shall not be more than ten days after the close of
business on the date on which the resolution fixing the Request Record Date is
adopted by the Board of Directors. If the Board of Directors, within ten days
after the date on which a valid Record Date Request Notice is received, fails to
adopt a resolution fixing the Request Record Date and make a public announcement
of such Request Record Date, the Request Record Date shall be the close of
business on the tenth day after the first date on which the Record Date Request
Notice is received by the secretary.

                  (2) In order for any stockholder to request a special meeting,
one or more written requests for a special meeting signed by stockholders of
record (or their agents duly authorized in writing) as of the Request Record
Date entitled to cast not less than a majority (the "Special Meeting
Percentage") of all of the votes entitled to be cast at such meeting (the
"Special Meeting Request") shall be delivered to the secretary. In addition, the
Special Meeting Request shall set forth the purpose of the meeting and the
matters proposed to be acted on at it (which shall be limited to the matters set
forth in the Record Date Request Notice received by the secretary), shall bear
the date of signature of each such stockholder (or such agent) signing the
Special Meeting Request, shall set forth the name and address, as they appear in
the Corporation's books, of each stockholder signing such request (or on whose
behalf the Special Meeting Request is signed), the class, series and number of
all shares of stock of the Corporation which are owned by each such stockholder,
and the nominee holder for, and number of, shares owned by such stockholder
beneficially but not of record, shall be sent to the secretary by registered
mail, return receipt requested, and shall be received by the secretary within 60
days after the Request Record Date. Any requesting stockholder may revoke his,
her or its request for a special meeting at any time by written revocation
delivered to the secretary.

                  (3) The secretary shall inform the requesting stockholders of
the reasonably estimated cost of preparing and mailing the notice of meeting
(including the Corporation's proxy materials). The secretary shall not be
required to call a special meeting upon stockholder request and such meeting
shall not be held unless, in addition to the documents required by paragraph (2)
of this Section 3(b), the secretary receives payment of such reasonably
estimated cost prior to the mailing of any notice of the meeting.

                  (4) Except as provided in the next sentence, any special
meeting shall be held at such place, date and time as may be designated by the
president, chief executive officer or Board of Directors, whoever has called the
meeting. In the case of any special meeting called by the secretary upon the
request of stockholders (a "Stockholder Requested Meeting"), such meeting shall
be held at such place, date and time as may be designated by the Board of
Directors; provided, however, that the date of any Stockholder Requested Meeting
shall be not more than 90 days after the record date for such meeting (the
"Meeting Record Date"); and provided further that if the Board of Directors
fails to designate, within ten days after the date that a valid Special Meeting
Request is actually received by the secretary (the "Delivery Date"), a date and
time for a Stockholder Requested Meeting, then such meeting shall be held at
2:00 p.m. local time on the 90th day after the Meeting

                                        2
<PAGE>

Record Date or, if such 90th day is not a Business Day (as defined below), on
the first preceding Business Day; and provided further that in the event that
the Board of Directors fails to designate a place for a Stockholder Requested
Meeting within ten days after the Delivery Date, then such meeting shall be held
at the principal executive office of the Corporation. In fixing a date for any
special meeting, the president, chief executive officer or Board of Directors
may consider such factors as he, she or it deems relevant within the good faith
exercise of business judgment, including, without limitation, the nature of the
matters to be considered, the facts and circumstances surrounding any request
for the meeting and any plan of the Board of Directors to call an annual meeting
or a special meeting. In the case of any Stockholder Requested Meeting, if the
Board of Directors fails to fix a Meeting Record Date that is a date within 30
days after the Delivery Date, then the close of business on the 30th day after
the Delivery Date shall be the Meeting Record Date.

                  (5) If written revocations of requests for the special meeting
have been delivered to the secretary and the result is that stockholders of
record (or their agents duly authorized in writing), as of the Request Record
Date, entitled to cast less than the Special Meeting Percentage have delivered,
and not revoked, requests for a special meeting to the secretary, the secretary
shall: (i) if the notice of meeting has not already been mailed, refrain from
mailing the notice of the meeting and send to all requesting stockholders who
have not revoked such requests written notice of any revocation of a request for
the special meeting, or (ii) if the notice of meeting has been mailed and if the
secretary first sends to all requesting stockholders who have not revoked
requests for a special meeting written notice of any revocation of a request for
the special meeting and written notice of the secretary's intention to revoke
the notice of the meeting, revoke the notice of the meeting at any time before
ten days before the commencement of the meeting. Any request for a special
meeting received after a revocation by the secretary of a notice of a meeting
shall be considered a request for a new special meeting.

                  (6) The chairman of the Board of Directors, the president or
the Board of Directors may appoint regionally or nationally recognized
independent inspectors of elections to act as the agent of the Corporation for
the purpose of promptly performing a ministerial review of the validity of any
purported Special Meeting Request received by the secretary. For the purpose of
permitting the inspectors to perform such review, no such purported request
shall be deemed to have been delivered to the secretary until the earlier of (i)
five Business Days after receipt by the secretary of such purported request and
(ii) such date as the independent inspectors certify to the Corporation that the
valid requests received by the secretary represent at least a majority of the
issued and outstanding shares of stock that would be entitled to vote at such
meeting. Nothing contained in this paragraph (6) shall in any way be construed
to suggest or imply that the Corporation or any stockholder shall not be
entitled to contest the validity of any request, whether during or after such
five Business Day period, or to take any other action (including, without
limitation, the commencement, prosecution or defense of any litigation with
respect thereto, and the seeking of injunctive relief in such litigation).

                  (7) For purposes of these Bylaws, "Business Day" shall mean
any day other than a Saturday, a Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law or executive order
to close.

                  Section 4.        NOTICE. Not less than ten nor more than 90
days before each meeting of stockholders, the secretary shall give to each
stockholder entitled to vote at such meeting

                                        3
<PAGE>

and to each stockholder not entitled to vote who is entitled to notice of the
meeting written or printed notice stating the time and place of the meeting and,
in the case of a special meeting or as otherwise may be required by any statute,
the purpose for which the meeting is called, either by mail, by presenting it to
such stockholder personally, by leaving it at the stockholder's residence or
usual place of business or by any other means permitted by Maryland law. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the stockholder at the stockholder's address as it
appears on the records of the Corporation, with postage thereon prepaid.

                  Any business of the Corporation may be transacted at an annual
meeting of stockholders without being specifically designated in the notice,
except such business as is required by any statute to be stated in such notice.
No business shall be transacted at a special meeting of stockholders except as
specifically designated in the notice.

                  Section 5. ORGANIZATION AND CONDUCT. Every meeting of
stockholders shall be conducted by an individual appointed by the Board of
Directors to be chairman of the meeting or, in the absence of such appointment,
by the chairman of the board or, in the case of a vacancy in the office or
absence of the chairman of the board, by one of the following officers present
at the meeting: the vice chairman of the board, if there be one, the president,
the vice presidents in their order of rank and seniority, or, in the absence of
such officers, a chairman chosen by the stockholders by the vote of a majority
of the votes cast by stockholders present in person or by proxy. The secretary,
or, in the secretary's absence, an assistant secretary, or in the absence of
both the secretary and assistant secretaries, a person appointed by the Board of
Directors or, in the absence of such appointment, a person appointed by the
chairman of the meeting shall act as secretary. In the event that the secretary
presides at a meeting of the stockholders, an assistant secretary, or in the
absence of assistant secretaries, an individual appointed by the Board of
Directors or the chairman of the meeting, shall record the minutes of the
meeting. The order of business and all other matters of procedure at any meeting
of stockholders shall be determined by the chairman of the meeting. The chairman
of the meeting may prescribe such rules, regulations and procedures and take
such action as, in the discretion of such chairman, are appropriate for the
proper conduct of the meeting, including, without limitation, (a) restricting
admission to the time set for the commencement of the meeting; (b) limiting
attendance at the meeting to stockholders of record of the Corporation, their
duly authorized proxies and other such individuals as the chairman of the
meeting may determine; (c) limiting participation at the meeting on any matter
to stockholders of record of the Corporation entitled to vote on such matter,
their duly authorized proxies and other such individuals as the chairman of the
meeting may determine; (d) limiting the time allotted to questions or comments
by participants; (e) maintaining order and security at the meeting; (f) removing
any stockholder or any other individual who refuses to comply with meeting
procedures, rules or guidelines as set forth by the chairman of the meeting; and
(g) recessing or adjourning the meeting to a later date and time and place
announced at the meeting. Unless otherwise determined by the chairman of the
meeting, meetings of stockholders shall not be required to be held in accordance
with the rules of parliamentary procedure.

                  Section 6. QUORUM. At any meeting of stockholders, the
presence in person or by proxy of stockholders entitled to cast a majority of
all the votes entitled to be cast at such meeting shall constitute a quorum; but
this section shall not affect any requirement under any statute or the charter
of the Corporation for the vote necessary for the adoption of any measure. If,
however,

                                        4
<PAGE>

such quorum shall not be present at any meeting of the stockholders, the
chairman of the meeting or the stockholders entitled to vote at such meeting,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time to a date not more than 120 days after the original record date
without notice other than announcement at the meeting. At such adjourned meeting
at which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally notified.

                  The stockholders present either in person or by proxy, at a
meeting which has been duly called and convened, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.

                  Section 7.        VOTING. A plurality of all the votes cast at
a meeting of stockholders duly called and at which a quorum is present shall be
sufficient to elect a director. Each share may be voted for as many individuals
as there are directors to be elected and for whose election the share is
entitled to be voted. A majority of the votes cast at a meeting of stockholders
duly called and at which a quorum is present shall be sufficient to approve any
other matter which may properly come before the meeting, unless more than a
majority of the votes cast is required by statute or by the charter of the
Corporation. Unless otherwise provided in the charter, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of stockholders.

                  Section 8.        PROXIES. A stockholder may cast the votes
entitled to be cast by the shares of stock owned of record by the stockholder in
person or by proxy executed by the stockholder or by the stockholder's duly
authorized agent in any manner permitted by law. Such proxy or evidence of
authorization of such proxy shall be filed with the secretary of the Corporation
before or at the meeting. No proxy shall be valid more than eleven months after
its date unless otherwise provided in the proxy.

                  Section 9.        VOTING OF STOCK BY CERTAIN HOLDERS. Stock of
the Corporation registered in the name of a corporation, partnership, trust or
other entity, if entitled to be voted, may be voted by the president or a vice
president, a general partner or trustee thereof, as the case may be, or a proxy
appointed by any of the foregoing individuals, unless some other person who has
been appointed to vote such stock pursuant to a bylaw or a resolution of the
governing body of such corporation or other entity or agreement of the partners
of a partnership presents a certified copy of such bylaw, resolution or
agreement, in which case such person may vote such stock. Any director or other
fiduciary may vote stock registered in his or her name as such fiduciary, either
in person or by proxy.

                  Shares of stock of the Corporation directly or indirectly
owned by it shall not be voted at any meeting and shall not be counted in
determining the total number of outstanding shares entitled to be voted at any
given time, unless they are held by it in a fiduciary capacity, in which case
they may be voted and shall be counted in determining the total number of
outstanding shares at any given time.

                  The Board of Directors may adopt by resolution a procedure by
which a stockholder may certify in writing to the Corporation that any shares of
stock registered in the name of the

                                        5
<PAGE>

stockholder are held for the account of a specified person other than the
stockholder. The resolution shall set forth the class of stockholders who may
make the certification, the purpose for which the certification may be made, the
form of certification and the information to be contained in it; if the
certification is with respect to a record date or closing of the stock transfer
books, the time after the record date or closing of the stock transfer books
within which the certification must be received by the Corporation; and any
other provisions with respect to the procedure which the Board of Directors
considers necessary or desirable. On receipt of such certification, the person
specified in the certification shall be regarded as, for the purposes set forth
in the certification, the stockholder of record of the specified stock in place
of the stockholder who makes the certification.

                  Section 10.       INSPECTORS. The Board of Directors, in
advance of any meeting, may, but need not, appoint one or more individual
inspectors or one or more entities that designate individuals as inspectors to
act at the meeting or any adjournment thereof. If an inspector or inspectors are
not appointed, the person presiding at the meeting may, but need not, appoint
one or more inspectors. In case any person who may be appointed as an inspector
fails to appear or act, the vacancy may be filled by appointment made by the
Board of Directors in advance of the meeting or at the meeting by the chairman
of the meeting. The inspectors, if any, shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. Each such report
shall be in writing and signed by him or her or by a majority of them if there
is more than one inspector acting at such meeting. If there is more than one
inspector, the report of a majority shall be the report of the inspectors. The
report of the inspector or inspectors on the number of shares represented at the
meeting and the results of the voting shall be prima facie evidence thereof.

                  Section 11.       ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR
DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.

                  (a) Annual Meetings of Stockholders. (1) Nominations of
individuals for election to the Board of Directors and the proposal of other
business to be considered by the stockholders may be made at an annual meeting
of stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or
at the direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record both at the time of giving of notice
by the stockholder as provided for in this Section 11(a) and at the time of the
annual meeting, who is entitled to vote at the meeting and who has complied with
this Section 11(a).

                  (2)      For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause (iii) of
paragraph (a)(1) of this Section 11, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for action by the stockholders. To be
timely, a stockholder's notice shall set forth all information required under
this Section 11 and shall be delivered to the Secretary at the principal
executive office of the Corporation not less than 90 days nor more than 120 days
prior to the first anniversary of the date of mailing of the notice for the
preceding year's annual meeting; provided, however, that in the event that the
date of the mailing of

                                        6
<PAGE>

the notice for the annual meeting is advanced or delayed by more than 30 days
from the first anniversary of the date of mailing of the notice for the
preceding year's annual meeting, notice by the stockholder to be timely must be
so delivered not earlier than the 120th day prior to the date of mailing of the
notice for such annual meeting and not later than the close of business on the
later of the 90th day prior to the date of mailing of the notice for such annual
meeting or the tenth day following the day on which public announcement of the
date of mailing of the notice for such meeting is first made. In no event shall
the public announcement of a postponement or adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice as described
above. Such stockholder's notice shall set forth (i) as to each individual whom
the stockholder proposes to nominate for election or reelection as a director,
(A) the name, age, business address and residence address of such individual,
(B) the class, series and number of any shares of stock of the Corporation that
are beneficially owned by such individual, (C) the date such shares were
acquired and the investment intent of such acquisition and (D) all other
information relating to such individual that is required to be disclosed in
solicitations of proxies for election of directors in an election contest (even
if an election contest is not involved), or is otherwise required, in each case
pursuant to Regulation 14A (or any successor provision) under the Exchange Act
and the rules thereunder (including such individual's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected); (ii) as to any other business that the stockholder proposes to bring
before the meeting, a description of such business, the reasons for proposing
such business at the meeting and any material interest in such business of such
stockholder and any Stockholder Associated Person (as defined below),
individually or in the aggregate, including any anticipated benefit to the
stockholder and the Stockholder Associated Person therefrom; (iii) as to the
stockholder giving the notice and any Stockholder Associated Person, the class,
series and number of all shares of stock of the Corporation which are owned by
such stockholder and by such Stockholder Associated Person, if any, and the
nominee holder for, and number of, shares owned beneficially but not of record
by such stockholder and by any such Stockholder Associated Person; (iv) as to
the stockholder giving the notice and any Stockholder Associated Person covered
by clauses (ii) or (iii) of this paragraph (2) of this Section 11(a), the name
and address of such stockholder, as they appear on the Corporation's stock
ledger and current name and address, if different, and of such Stockholder
Associated Person; and (v) to the extent known by the stockholder giving the
notice, the name and address of any other stockholder supporting the nominee for
election or reelection as a director or the proposal of other business on the
date of such stockholder's notice.

                  (3)      Notwithstanding anything in this subsection (a) of
this Section 11 to the contrary, in the event the Board of Directors increases
or decreases the maximum or minimum number of directors in accordance with
Article III, Section 2 of these Bylaws, and there is no public announcement of
such action at least 100 days prior to the first anniversary of the date of
mailing of the notice of the preceding year's annual meeting, a stockholder's
notice required by this Section 11(a) shall also be considered timely, but only
with respect to nominees for any new positions created by such increase, if it
shall be delivered to the Secretary at the principal executive office of the
Corporation not later than the close of business on the tenth day following the
day on which such public announcement is first made by the Corporation.

                  (4)      For purposes of this Section 11, "Stockholder
Associated Person" of any stockholder shall mean (i) any person controlling,
directly or indirectly, or acting in concert with, such stockholder, (ii) any
beneficial owner of shares of stock of the Corporation owned of record or

                                        7
<PAGE>

beneficially by such stockholder and (iii) any person controlling, controlled by
or under common control with such Stockholder Associated Person.

         (b)      Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
individuals for election to the Board of Directors may be made at a special
meeting of stockholders at which directors are to be elected (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any stockholder of the
Corporation who is a stockholder of record both at the time of giving of notice
provided for in this Section 11 and at the time of the special meeting, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in this Section 11. In the event the Corporation calls a special meeting
of stockholders for the purpose of electing one or more individuals to the Board
of Directors, any such stockholder may nominate an individual or individuals (as
the case may be) for election as a director as specified in the Corporation's
notice of meeting, if the stockholder's notice required by paragraph (2) of this
Section 11(a) shall be delivered to the Secretary at the principal executive
office of the Corporation not earlier than the 120th day prior to such special
meeting and not later than the close of business on the later of the 90th day
prior to such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of a postponement or adjournment of a
special meeting commence a new time period for the giving of a stockholder's
notice as described above.

         (c)      General. (1) Upon written request by the secretary or the
Board of Directors or any committee thereof, any stockholder proposing a nominee
for election as a director or any proposal for other business at a meeting of
stockholders shall provide, within five Business Days of delivery of such
request (or such other period as may be specified in such request), written
verification, satisfactory, in the discretion of the Board of Directors or any
committee thereof or any authorized officer of the Corporation, to demonstrate
the accuracy of any information submitted by the stockholder pursuant to this
Section 11. If a stockholder fails to provide such written verification within
such period, the information as to which written verification was requested may
be deemed not to have been provided in accordance with this Section 11.

                  (2)      Only such individuals who are nominated in accordance
with this Section 11 shall be eligible for election as directors, and only such
business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with this Section 11. The chairman of
the meeting shall have the power to determine whether a nomination or any other
business proposed to be brought before the meeting was made or proposed, as the
case may be, in accordance with this Section 11.

                  (3)      For purposes of this Section 11, (a) the "date of
mailing of the notice" shall mean the date of the proxy statement for the
solicitation of proxies for election of directors and (b) "public announcement"
shall mean disclosure (i) in a press release reported by the Dow Jones News
Service, Associated Press or comparable news service or (ii) in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to the Exchange Act.

                                        8
<PAGE>

                  (4)      Notwithstanding the foregoing provisions of this
Section 11, a stockholder shall also comply with all applicable requirements of
state law and of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 11. Nothing in this Section 11
shall be deemed to affect any right of a stockholder to request inclusion of a
proposal in, nor the right of the Corporation to omit a proposal from, the
Corporation's proxy statement pursuant to Rule 14a-8 (or any successor
provision) under the Exchange Act.

                  Section 12.       VOTING BY BALLOT. Voting on any question or
in any election may be viva voce unless the presiding officer shall order or any
stockholder shall demand that voting be by ballot.

                  Section 13.       CONTROL SHARE ACQUISITION ACT.
Notwithstanding any other provision of the charter of the Corporation or these
Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law (or any
successor statute) shall not apply to any acquisition by any person of shares of
stock of the Corporation. This section may be repealed, in whole or in part, at
any time, whether before or after an acquisition of control shares and, upon
such repeal, may, to the extent provided by any successor bylaw, apply to any
prior or subsequent control share acquisition.

                                   ARTICLE III

                                    DIRECTORS

                  Section 1.        GENERAL POWERS. The business and affairs of
the Corporation shall be managed under the direction of its Board of Directors.

                  Section 2.        NUMBER, TENURE AND QUALIFICATIONS. At any
regular meeting or at any special meeting called for that purpose, a majority of
the entire Board of Directors may establish, increase or decrease the number of
directors, provided that the number thereof shall never be less than the minimum
number required by the Maryland General Corporation Law, nor more than 9, and
further provided that the tenure of office of a director shall not be affected
by any decrease in the number of directors.

                  Section 3.        ANNUAL AND REGULAR MEETINGS. An annual
meeting of the Board of Directors shall be held immediately after and at the
same place as the annual meeting of stockholders, no notice other than this
Bylaw being necessary. In the event such meeting is not so held, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors. The Board
of Directors may provide, by resolution, the time and place for the holding of
regular meetings of the Board of Directors without other notice than such
resolution.

                  Section 4.        SPECIAL MEETINGS. Special meetings of the
Board of Directors may be called by or at the request of the chairman of the
board, the chief executive officer, the president or by a majority of the
directors then in office. The person or persons authorized to call special
meetings of the Board of Directors may fix any place as the place for holding
any special meeting of the Board of Directors called by them. The Board of
Directors may provide, by

                                        9
<PAGE>

resolution, the time and place for the holding of special meetings of the Board
of Directors without other notice than such resolution.

                  Section 5.        NOTICE. Notice of any special meeting of the
Board of Directors shall be delivered personally or by telephone, electronic
mail, facsimile transmission, United States mail or courier to each director at
his or her business or residence address. Notice by personal delivery,
telephone, electronic mail or facsimile transmission shall be given at least 24
hours prior to the meeting. Notice by United States mail shall be given at least
three days prior to the meeting. Notice by courier shall be given at least two
days prior to the meeting. Telephone notice shall be deemed to be given when the
director or his or her agent is personally given such notice in a telephone call
to which the director or his or her agent is a party. Electronic mail notice
shall be deemed to be given upon transmission of the message to the electronic
mail address given to the Corporation by the director. Facsimile transmission
notice shall be deemed to be given upon completion of the transmission of the
message to the number given to the Corporation by the director and receipt of a
completed answer-back indicating receipt. Notice by United States mail shall be
deemed to be given when deposited in the United States mail properly addressed,
with postage thereon prepaid. Notice by courier shall be deemed to be given when
deposited with or delivered to a courier properly addressed. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the Board of Directors need be stated in the notice, unless
specifically required by statute or these Bylaws.

                  Section 6.        QUORUM. A majority of the directors shall
constitute a quorum for transaction of business at any meeting of the Board of
Directors, provided that, if less than a majority of such directors are present
at said meeting, a majority of the directors present may adjourn the meeting
from time to time without further notice, and provided further that if, pursuant
to the charter of the Corporation or these Bylaws, the vote of a majority of a
particular group of directors is required for action, a quorum must also include
a majority of such group.

         The directors present at a meeting which has been duly called and
convened may continue to transact business until adjournment, notwithstanding
the withdrawal of enough directors to leave less than a quorum.

         Section 7.       VOTING. The action of the majority of the directors
present at a meeting at which a quorum is present shall be the action of the
Board of Directors, unless the concurrence of a greater proportion is required
for such action by applicable statute or the charter. If enough Directors have
withdrawn from a meeting to leave less than a quorum but the meeting is not
adjourned, the action of a majority of that number of Directors necessary to
constitute a quorum at such meeting shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such
action by applicable statute or by the charter.

                  Section 8. ORGANIZATION. At each meeting of the Board of
Directors, the chairman of the board or, in the absence of the chairman, the
vice chairman of the board, if any, shall act as Chairman. In the absence of
both the chairman and vice chairman of the board, the chief executive officer or
in the absence of the chief executive officer, the president or in the absence
of the president, a director chosen by a majority of the directors present,
shall act as Chairman. The secretary or, in his or her absence, an assistant
secretary of the Corporation, or in the absence of the

                                       10
<PAGE>

secretary and all assistant secretaries, a person appointed by the Chairman,
shall act as Secretary of the meeting.

                  Section 9.        TELEPHONE MEETINGS. Directors may
participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.

                  Section 10.       WRITTEN CONSENT BY DIRECTORS. Any action
required or permitted to be taken at any meeting of the Board of Directors may
be taken without a meeting, if a consent in writing to such action is signed by
each director and such written consent is filed with the minutes of proceedings
of the Board of Directors.

                  Section 11.       VACANCIES. If for any reason any or all the
directors cease to be directors, such event shall not terminate the Corporation
or affect these Bylaws or the powers of the remaining directors hereunder (even
if fewer than three directors remain). Any vacancy on the Board of Directors for
any cause other than an increase in the number of directors shall be filled by a
majority of the remaining directors, even if such majority is less than a
quorum. Any vacancy in the number of directors created by an increase in the
number of directors may be filled by a majority vote of the entire Board of
Directors. Any individual so elected as director shall serve until the next
annual meeting of stockholders and until his or her successor is elected and
qualifies.

                  Section 12.       COMPENSATION. Directors shall not receive
any stated salary for their services as directors but, by resolution of the
Board of Directors, may receive compensation per year and/or per meeting and/or
per visit to real property or other facilities owned or leased by the
Corporation and for any service or activity they performed or engaged in as
directors. Directors may be reimbursed for expenses of attendance, if any, at
each annual, regular or special meeting of the Board of Directors or of any
committee thereof and for their expenses, if any, in connection with each
property visit and any other service or activity they performed or engaged in as
directors; but nothing herein contained shall be construed to preclude any
directors from serving the Corporation in any other capacity and receiving
compensation therefor.

                  Section 13.       LOSS OF DEPOSITS. No director shall be
liable for any loss which may occur by reason of the failure of the bank, trust
company, savings and loan association, or other institution with whom moneys or
stock have been deposited.

                  Section 14.       SURETY BONDS. Unless required by law, no
director shall be obligated to give any bond or surety or other security for the
performance of any of his or her duties.

                  Section 15.       RELIANCE. Each director, officer, employee
and agent of the Corporation shall, in the performance of his or her duties with
respect to the Corporation, be fully justified and protected with regard to any
act or failure to act in reliance in good faith upon the books of account or
other records of the Corporation, upon an opinion of counsel or upon reports
made to the Corporation by any of its officers or employees or by the adviser,
accountants, appraisers or other experts or consultants selected by the Board of
Directors or officers of the Corporation, regardless of whether such counsel or
expert may also be a director.

                                       11
<PAGE>

         Section 16.      CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS. The directors shall have no responsibility to devote their full time to
the affairs of the Corporation. Any director or officer, employee or agent of
the Corporation, in his or her personal capacity or in a capacity as an
affiliate, employee, or agent of any other person, or otherwise, may have
business interests and engage in business activities similar to or in addition
to or in competition with those of or relating to the Corporation.

                                   ARTICLE IV

                                   COMMITTEES

                  Section 1.        NUMBER, TENURE AND QUALIFICATIONS. The Board
of Directors may appoint from among its members an Executive Committee, an Audit
Committee, a Compensation Committee and other committees, composed of one or
more directors, to serve at the pleasure of the Board of Directors.

                  Section 2.        POWERS. The Board of Directors may delegate
to committees appointed under Section 1 of this Article any of the powers of the
Board of Directors, except as prohibited by law.

                  Section 3.        MEETINGS. Notice of committee meetings shall
be given in the same manner as notice for special meetings of the Board of
Directors. A majority of the members of the committee shall constitute a quorum
for the transaction of business at any meeting of the committee. The act of a
majority of the committee members present at a meeting shall be the act of such
committee. The Board of Directors may designate a chairman of any committee, and
such chairman or, in the absence of a chairman, any two members of any committee
(if there are at least two members of the Committee) may fix the time and place
of its meeting unless the Board shall otherwise provide. In the absence of any
member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint another director to act in
the place of such absent member. Each committee shall keep minutes of its
proceedings.

                  Section 4.        TELEPHONE MEETINGS. Members of a committee
of the Board of Directors may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation in a meeting by
these means shall constitute presence in person at the meeting.

                  Section 5.        WRITTEN CONSENT BY COMMITTEES. Any action
required or permitted to be taken at any meeting of a committee of the Board of
Directors may be taken without a meeting, if a consent in writing to such action
is signed by each member of the committee and such written consent is filed with
the minutes of proceedings of such committee.

                  Section 6.        VACANCIES. Subject to the provisions hereof,
the Board of Directors shall have the power at any time to change the membership
of any committee, to fill all vacancies, to designate alternate members to
replace any absent or disqualified member or to dissolve any such committee.

                                       12
<PAGE>

                                    ARTICLE V

                                    OFFICERS

                  Section 1.        GENERAL PROVISIONS. The officers of the
Corporation shall include a president, a secretary and a treasurer and may
include a chairman of the board, a vice chairman of the board, a chief executive
officer, one or more vice presidents, a chief operating officer, a chief
financial officer, a chief credit officer, one or more assistant secretaries and
one or more assistant treasurers. In addition, the Board of Directors may from
time to time elect such other officers with such powers and duties as they shall
deem necessary or desirable. The officers of the Corporation shall be elected
annually by the Board of Directors, except that the chief executive officer or
president may from time to time appoint one or more vice presidents, assistant
secretaries and assistant treasurers or other officers. Each officer shall hold
office until his or her successor is elected and qualifies or until his or her
death, or his or her resignation or removal in the manner hereinafter provided.
Any two or more offices except president and vice president may be held by the
same person. Election of an officer or agent shall not of itself create contract
rights between the Corporation and such officer or agent.

                  Section 2.        REMOVAL AND RESIGNATION. Any officer or
agent of the Corporation may be removed, with or without cause, by the Board of
Directors if in its judgment the best interests of the Corporation would be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Any officer of the Corporation may
resign at any time by giving written notice of his or her resignation to the
Board of Directors, the chairman of the board, the president or the secretary.
Any resignation shall take effect immediately upon its receipt or at such later
time specified in the notice of resignation. The acceptance of a resignation
shall not be necessary to make it effective unless otherwise stated in the
resignation. Such resignation shall be without prejudice to the contract rights,
if any, of the Corporation.

                  Section 3.        VACANCIES. A vacancy in any office may be
filled by the Board of Directors for the balance of the term.

                  Section 4.        CHIEF EXECUTIVE OFFICER. The Board of
Directors may designate a chief executive officer. In the absence of such
designation, the chairman of the board shall be the chief executive officer of
the Corporation. The chief executive officer shall have general responsibility
for implementation of the policies of the Corporation, as determined by the
Board of Directors, and for the management of the business and affairs of the
Corporation.

                  Section 5.        CHIEF OPERATING OFFICER. The Board of
Directors may designate a chief operating officer. The chief operating officer
shall have the responsibilities and duties as set forth by the Board of
Directors or the chief executive officer.

                  Section 6.        CHIEF FINANCIAL OFFICER. The Board of
Directors may designate a chief financial officer. The chief financial officer
shall have the responsibilities and duties as set forth by the Board of
Directors or the chief executive officer.

                                       13
<PAGE>

                  Section 7.        CHIEF CREDIT OFFICER. The Board of Directors
may designate a chief credit officer. The chief credit officer shall have the
responsibilities and duties as set forth by the Board of Directors or the chief
executive officer.

                  Section 8.        CHAIRMAN OF THE BOARD. The Board of
Directors shall designate a chairman of the board. The chairman of the board
shall preside over the meetings of the Board of Directors and of the
stockholders at which he shall be present. The chairman of the board shall
perform such other duties as may be assigned to him or her by the Board of
Directors.

                  Section 9.        PRESIDENT. In the absence of a chief
executive officer, the president shall in general supervise and control all of
the business and affairs of the Corporation. In the absence of a designation of
a chief operating officer by the Board of Directors, the president shall be the
chief operating officer. He may execute any deed, mortgage, bond, contract or
other instrument, except in cases where the execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation or shall be required by law to be otherwise executed;
and in general shall perform all duties incident to the office of president and
such other duties as may be prescribed by the Board of Directors from time to
time.

                  Section 10.       VICE PRESIDENTS. In the absence of the
president or in the event of a vacancy in such office, the vice president (or in
the event there be more than one vice president, the vice presidents in the
order designated at the time of their election or, in the absence of any
designation, then in the order of their election) shall perform the duties of
the president and when so acting shall have all the powers of and be subject to
all the restrictions upon the president; and shall perform such other duties as
from time to time may be assigned to such vice president by the president or by
the Board of Directors. The Board of Directors may designate one or more vice
presidents as executive vice president or as vice president for particular areas
of responsibility.

                  Section 11.       SECRETARY. The secretary shall (a) keep the
minutes of the proceedings of the stockholders, the Board of Directors and
committees of the Board of Directors in one or more books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation; (d) keep a register of the
post office address of each stockholder which shall be furnished to the
secretary by such stockholder; (e) have general charge of the stock transfer
books of the Corporation; and (f) in general perform such other duties as from
time to time may be assigned to him by the chief executive officer, the
president or by the Board of Directors.

                  Section 12.       TREASURER. The treasurer shall have the
custody of the funds and securities of the Corporation and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. In the absence of a designation of a chief financial
officer by the Board of Directors, the treasurer shall be the chief financial
officer of the Corporation.

                  The treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and Board of Directors, at the
regular meetings of the Board of Directors or whenever it may so

                                       14
<PAGE>

require, an account of all his or her transactions as treasurer and of the
financial condition of the Corporation.

                  If required by the Board of Directors, the treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of his or her office and for the restoration to the Corporation, in
case of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, moneys and other property of whatever kind in his or
her possession or under his or her control belonging to the Corporation.

                  Section 13.       ASSISTANT SECRETARIES AND ASSISTANT
TREASURERS. The assistant secretaries and assistant treasurers, in general,
shall perform such duties as shall be assigned to them by the secretary or
treasurer, respectively, or by the president or the Board of Directors. The
assistant treasurers shall, if required by the Board of Directors, give bonds
for the faithful performance of their duties in such sums and with such surety
or sureties as shall be satisfactory to the Board of Directors.

                  Section 14.       SALARIES. The salaries and other
compensation of the officers shall be fixed from time to time by the Board of
Directors and no officer shall be prevented from receiving such salary or other
compensation by reason of the fact that he is also a director.

                                   ARTICLE VI

                      CONTRACTS, LOANS, CHECKS AND DEPOSITS

                  Section 1.        CONTRACTS. The Board of Directors may
authorize any officer or agent to enter into any contract or to execute and
deliver any instrument in the name of and on behalf of the Corporation and such
authority may be general or confined to specific instances. Any agreement, deed,
mortgage, lease or other document shall be valid and binding upon the
Corporation when authorized or ratified by action of the Board of Directors and
executed by an authorized person.

                  Section 2.        CHECKS AND DRAFTS. All checks, drafts or
other orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation shall be signed by such officer or agent
of the Corporation in such manner as shall from time to time be determined by
the Board of Directors.

                  Section 3.        DEPOSITS. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the Board of
Directors may designate.

                                       15
<PAGE>

                                   ARTICLE VII

                                      STOCK

                  Section 1.        CERTIFICATES. Except as otherwise provided
in these Bylaws, this Section shall not be interpreted to limit the authority of
the Board of Directors to issue some or all of the shares of any or all of its
classes or series without certificates. Each stockholder, upon written request
to the secretary of the Corporation, shall be entitled to a certificate or
certificates which shall represent and certify the number of shares of each
class of stock held by him in the Corporation. Each certificate shall be signed
by the chairman of the board, the president or a vice president and
countersigned by the secretary or an assistant secretary or the treasurer or an
assistant treasurer and may be sealed with the seal, if any, of the Corporation.
The signatures may be either manual or facsimile. Certificates shall be
consecutively numbered; and if the Corporation shall, from time to time, issue
several classes of stock, each class may have its own number series. A
certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing shares
which are restricted as to their transferability or voting powers, which are
preferred or limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option of the
Corporation, shall have a statement of such restriction, limitation, preference
or redemption provision, or a summary thereof, plainly stated on the
certificate. If the Corporation has authority to issue stock of more than one
class, the certificate shall contain on the face or back a full statement or
summary of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of each
class of stock and, if the Corporation is authorized to issue any preferred or
special class in series, the differences in the relative rights and preferences
between the shares of each series to the extent they have been set and the
authority of the Board of Directors to set the relative rights and preferences
of subsequent series. In lieu of such statement or summary, the certificate may
state that the Corporation will furnish a full statement of such information to
any stockholder upon request and without charge. If any class of stock is
restricted by the Corporation as to transferability, the certificate shall
contain a full statement of the restriction or state that the Corporation will
furnish information about the restrictions to the stockholder on request and
without charge.

                  Section 2.        TRANSFERS. Upon surrender to the Corporation
or the transfer agent of the Corporation of a stock certificate duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.

                  The Corporation shall be entitled to treat the holder of
record of any share of stock as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share or on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of the
State of Maryland.

                  Notwithstanding the foregoing, transfers of shares of any
class of stock will be subject in all respects to the charter of the Corporation
and all of the terms and conditions contained therein.

                                       16
<PAGE>

                  Section 3.        REPLACEMENT CERTIFICATE. Any officer
designated by the Board of Directors may direct a new certificate to be issued
in place of any certificate previously issued by the Corporation alleged to have
been lost, stolen or destroyed upon the making of an affidavit of that fact by
the person claiming the certificate to be lost, stolen or destroyed. When
authorizing the issuance of a new certificate, an officer designated by the
Board of Directors may, in his or her discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or the owner's legal representative to advertise the same in such
manner as he shall require and/or to give bond, with sufficient surety, to the
Corporation to indemnify it against any loss or claim which may arise as a
result of the issuance of a new certificate.

                  Section 4.        CLOSING OF TRANSFER BOOKS OR FIXING OF
RECORD DATE. The Board of Directors may set, in advance, a record date for the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders or determining stockholders entitled to receive payment
of any dividend or the allotment of any other rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in any
case, shall not be prior to the close of business on the day the record date is
fixed and shall be not more than 90 days and, in the case of a meeting of
stockholders, not less than ten days, before the date on which the meeting or
particular action requiring such determination of stockholders of record is to
be held or taken.

                  In lieu of fixing a record date, the Board of Directors may
provide that the stock transfer books shall be closed for a stated period but
not longer than 20 days. If the stock transfer books are closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days before the date
of such meeting.

                  If no record date is fixed and the stock transfer books are
not closed for the determination of stockholders, (a) the record date for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day on which the notice of
meeting is mailed or the 30th day before the meeting, whichever is the closer
date to the meeting; and (b) the record date for the determination of
stockholders entitled to receive payment of a dividend or an allotment of any
other rights shall be the close of business on the day on which the resolution
of the directors, declaring the dividend or allotment of rights, is adopted.

                  When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except when (i) the
determination has been made through the closing of the transfer books and the
stated period of closing has expired or (ii) the meeting is adjourned to a date
more than 120 days after the record date fixed for the original meeting, in
either of which case a new record date shall be determined as set forth herein.

                  Section 5.        STOCK LEDGER. The Corporation shall maintain
at its principal office or at the office of its counsel, accountants or transfer
agent, an original or duplicate share ledger containing the name and address of
each stockholder and the number of shares of each class held by such
stockholder.

                                       17
<PAGE>

                  Section 6.        FRACTIONAL STOCK; ISSUANCE OF UNITS. The
Board of Directors may issue fractional stock or provide for the issuance of
scrip, all on such terms and under such conditions as they may determine.
Notwithstanding any other provision of the charter or these Bylaws, the Board of
Directors may issue units consisting of different securities of the Corporation.
Any security issued in a unit shall have the same characteristics as any
identical securities issued by the Corporation, except that the Board of
Directors may provide that for a specified period securities of the Corporation
issued in such unit may be transferred on the books of the Corporation only in
such unit.

                                  ARTICLE VIII

                                 ACCOUNTING YEAR

                  The Board of Directors shall have the power, from time to
time, to fix the fiscal year of the Corporation by a duly adopted resolution.

                                   ARTICLE IX

                                  DISTRIBUTIONS

                  Section 1.        AUTHORIZATION. Dividends and other
distributions upon the stock of the Corporation may be authorized by the Board
of Directors, subject to the provisions of law and the charter of the
Corporation. Dividends and other distributions may be paid in cash, property or
stock of the Corporation, subject to the provisions of law and the charter.

                  Section 2.        CONTINGENCIES. Before payment of any
dividends or other distributions, there may be set aside out of any assets of
the Corporation available for dividends or other distributions such sum or sums
as the Board of Directors may from time to time, in its absolute discretion,
think proper as a reserve fund for contingencies, for equalizing dividends or
other distributions, for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors shall determine
to be in the best interest of the Corporation, and the Board of Directors may
modify or abolish any such reserve.

                                    ARTICLE X

                                INVESTMENT POLICY

                  Subject to the provisions of the charter of the Corporation,
the Board of Directors may from time to time adopt, amend, revise or terminate
any policy or policies with respect to investments by the Corporation as it
shall deem appropriate in its sole discretion.

                                       18
<PAGE>

                                   ARTICLE XI

                                      SEAL

                  Section 1.        SEAL. The Board of Directors may authorize
the adoption of a seal by the Corporation. The seal shall contain the name of
the Corporation and the year of its incorporation and the words "Incorporated
Maryland." The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof.

                  Section 2.        AFFIXING SEAL. Whenever the Corporation is
permitted or required to affix its seal to a document, it shall be sufficient to
meet the requirements of any law, rule or regulation relating to a seal to place
the word "(SEAL)" adjacent to the signature of the person authorized to execute
the document on behalf of the Corporation.

                                   ARTICLE XII

                     INDEMNIFICATION AND ADVANCE OF EXPENSES

                  To the maximum extent permitted by Maryland law in effect from
time to time, the Corporation shall indemnify and, without requiring a
preliminary determination of the ultimate entitlement to indemnification, shall
pay or reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any individual who is a present or former director or officer
of the Corporation and who is made a party to the proceeding by reason of his or
her service in that capacity or (b) any individual who, while a director of the
Corporation and at the request of the Corporation, serves or has served as a
director, officer, partner or trustee of such corporation, real estate
investment trust, partnership, joint venture, trust, employee benefit plan or
other enterprise and who is made a party to the proceeding by reason of his or
her service in that capacity. The Corporation may, with the approval of its
Board of Directors, provide such indemnification and advance for expenses to a
person who served a predecessor of the Corporation in any of the capacities
described in (a) or (b) above and to any employee or agent of the Corporation or
a predecessor of the Corporation.

                  Neither the amendment nor repeal of this Article, nor the
adoption or amendment of any other provision of the Bylaws or charter of the
Corporation inconsistent with this Article, shall apply to or affect in any
respect the applicability of the preceding paragraph with respect to any act or
failure to act which occurred prior to such amendment, repeal or adoption.

                                  ARTICLE XIII

                                WAIVER OF NOTICE

                  Whenever any notice is required to be given pursuant to the
charter of the Corporation or these Bylaws or pursuant to applicable law, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at nor the purpose of any meeting need be set forth in the waiver of notice,
unless specifically required by statute. The

                                       19
<PAGE>

attendance of any person at any meeting shall constitute a waiver of notice of
such meeting, except where such person attends a meeting for the express purpose
of objecting to the transaction of any business on the ground that the meeting
is not lawfully called or convened.

                                   ARTICLE XIV

                               AMENDMENT OF BYLAWS

                  The Board of Directors shall have the exclusive power to
adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

                                       20

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4
<SEQUENCE>9
<FILENAME>y90410exv4w4.txt
<DESCRIPTION>WARRANT AGREEMENT
<TEXT>
<PAGE>

                                                                     EXHIBIT 4.4

                                WARRANT AGREEMENT

                                 BY AND BETWEEN

                            ARBOR REALTY TRUST, INC.

                                       AND

                     AMERICAN STOCK TRANSFER & TRUST COMPANY

                                AS WARRANT AGENT

                   1,610,000 WARRANTS TO PURCHASE COMMON STOCK

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                                 <C>
ARTICLE 1.......................................................................................................      2
DEFINITIONS.....................................................................................................      2
     Section 1.       Definitions...............................................................................      2
ARTICLE 2.......................................................................................................      4
THE WARRANT AGENT...............................................................................................      4
     Section 2.1      Appointment of Warrant Agent..............................................................      4
     Section 2.2      Duties of Warrant Agent...................................................................      4
     Section 2.3      Compensation; Indemnification.............................................................      6
     Section 2.4      Resignation; Successor Warrant Agents.....................................................      6
ARTICLE 3.......................................................................................................      8
THE WARRANTS....................................................................................................      8
     Section 3.1      Number of Warrants........................................................................      8
     Section 3.2      Issuance of Warrants......................................................................      8
     Section 3.3      Registration of Transfer and Exchange.....................................................      9
     Section 3.4      Execution And Delivery....................................................................     14
     Section 3.5      Destroyed, Lost, Mutilated Or Stolen Warrant Certificates.................................     14
     Section 3.6      Persons Deemed Owners.....................................................................     15
     Section 3.7      Cancellation Of Warrant Certificates......................................................     15
     Section 3.8      No Rights As Stockholders.................................................................     15
ARTICLE 4.......................................................................................................     16
EXERCISE OF WARRANTS............................................................................................     16
     Section 4.1      Exercise Period...........................................................................     16
     Section 4.2      Shares Issuable Upon Exercise; Exercise Price.............................................     16
     Section 4.3      Method Of Exercise........................................................................     16
     Section 4.4      Issuance Of Common Stock..................................................................     17
     Section 4.5      Fractions Of Shares.......................................................................     17
     Section 4.6      Adjustment Of Exercise Price..............................................................     18
     Section 4.7      Notice Of Certain Corporate Action........................................................     20
     Section 4.8      Company To Reserve Common Stock...........................................................     21
     Section 4.9      Taxes On Exercises........................................................................     21
     Section 4.10     Covenant As To Common Stock...............................................................     21
     Section 4.11     Provisions In Case Of Consolidation, Merger Or Sale Of Assets.............................     21
     Section 4.12     No Change Of Warrant Necessary............................................................     22
     Section 4.13     Enforcement Of Rights.....................................................................     22
     Section 4.14     Available Information.....................................................................     22
ARTICLE 5.......................................................................................................     23
AMENDMENTS......................................................................................................     23
     Section 5.1      Amendment Of Agreement....................................................................     23
     Section 5.2.     Record Date...............................................................................     23
ARTICLE 6.......................................................................................................     23
MISCELLANEOUS PROVISIONS........................................................................................     23
     Section 6.1      Counterparts..............................................................................     23
     Section 6.2      Governing Law.............................................................................     24
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                            <C>
Section 6.3      Descriptive Headings......................................................................     24
Section 6.4      Notices...................................................................................     24
Section 6.5      Maintenance Of Office.....................................................................     24
Section 6.6      Successors And Assigns....................................................................     25
Section 6.7      Separability..............................................................................     25
Section 6.8      Persons Having Rights Under Agreement.....................................................     25

EXHIBIT A - FORM OF WARRANT CERTIFICATE....................................................................    A-1
EXHIBIT B - TRANSFER INSTRUCTION...........................................................................    B-1
</TABLE>

                                       ii

<PAGE>

                                WARRANT AGREEMENT

         This Agreement, dated as of the date set forth on the signature page,
by and between Arbor Realty Trust, Inc., a Maryland corporation with an office
at 333 Earle Ovington Boulevard, Suite 900, Uniondale, New York 11553 (the
"Company"), and American Stock Transfer & Trust Company, with an office at 59
Maiden Lane, Plaza Level, New York, NY 10038, Attention: Corporate Department
(the "Warrant Agent").

                                   WITNESSETH

         A. The Company has authorized the issuance of up to 1,400,000 units
("Units") (or 1,610,000 if the Initial Purchaser's over-allotment option is
exercised in full), each Unit consisting of shares of its Common Stock, par
value $0.01 per share, (the "Common Stock"), and one Common Stock purchase
warrant (each a "Warrant," and collectively, the "Warrants"), each Warrant
initially entitling the holders thereof to purchase one additional share of its
Common Stock, which Warrants are to be attached initially to the shares of
Common Stock issued as provided in Paragraph C below;

         B. Such Units are to be offered by the Company pursuant to that certain
Offering Memorandum, dated as of June 26, 2003 (the "Offering Memorandum") and
purchased (i) by the Initial Purchaser named in that certain Purchase/Placement
Agreement (the "Purchase/Placement Agreement") dated as of June 26, 2003 and
thereafter, subject to the terms thereof, offered to (A) Qualified Institutional
Buyers ("QIBs") (as defined in Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act")), and (B) a limited number of institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act), and (ii) by individual "accredited investors" (as defined in
Rule 501(a)(4), (5) or (6) of the Securities Act) (collectively, "Accredited
Investors") pursuant to those certain Subscription Agreements accepted by the
Company as of July 1, 2003;

         C. In accordance with the provisions of Section 3 of this Agreement,
the Warrants will not be detachable from the Common Stock until the shares of
Common Stock underlying the Units are both (i) registered with the Securities
and Exchange Commission (the "Commission") pursuant to the Securities Act and
(ii) listed for trading on a national securities exchange on the Nasdaq Stock
Market, Inc. After the shares of Common Stock underlying the Units are
registered and listed as provided for in the immediately preceding sentence, the
Warrants may be detached and transferred separately from the shares of Common
Stock to which they were attached upon issuance of the Units. The Warrants will
expire on the date that is two years after the date of the Offering Memorandum;
and

         D. The Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange, replacement and exercise of the Warrants.

                                       1

<PAGE>

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

SECTION 1. DEFINITIONS

         Capitalized terms used herein shall have the following meanings:

         Accredited Investors. Shall have the meaning set forth in the Recitals.

         Acquiror. Shall have the meaning set forth in Section 4.11.

         Business Day. Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in the City of New York are
authorized or obligated by federal, state or local law or executive order to
close.

         Commission. Shall have the meaning set forth in the Recitals.

         Common Stock. Shall have the meaning set forth in the Recitals.

         Consideration. Shall have the meaning set forth in Section 4.11.

         Corporate Trust Office. The principal office of the Warrant Agent at 59
Maiden Lane, Plaza Level, New York, NY 10038, Attention: Corporate Department,
or such other address at which at any particular time its corporate trust
business shall be administered.

         Corporation. A corporation, association, company, joint-stock company
or business trust.

         Definitive Warrant Certificates. A Warrant Certificate that is in the
form set forth in Exhibit A to this Agreement and that does not include the
information called for by footnote 1 of Exhibit A to this Agreement.

         Depositary. The Depository Trust Company as the depositary with respect
to the Warrants issuable or issued in whole or in part in global form, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Agreement, and thereafter "Depositary" shall mean or include
such successor.

         Detachment Date. The date that is when the Common Stock underlying the
Units is both registered with the Commission pursuant to the Securities Act and
listed on a national securities exchange or the Nasdaq Stock Market, Inc.

         Exchange Act. The Securities Exchange Act of 1934, as amended.

         Exchange Period. Shall have the meaning set forth in Section 4.1.

                                       2

<PAGE>

         Exercise Price. Shall have the meaning set forth in Section 4.2.

         Expiration Date. The date that is two years after the date of the
Offering Memorandum.

         Global Warrant Certificate. A Warrant Certificate that is in the form
set forth in Exhibit A to this Agreement and that includes the information
called for by footnote 1 of Exhibit A to this Agreement.

         Holder. A Person in whose name a Warrant Certificate is registered in
the Warrant Register.

         Initial Purchaser. Shall have the meaning set forth in the
Purchase/Placement Agreement.

         NASDAQ. Shall have the meaning set forth in Section 4.6(e).

         Person. An individual, limited or general partnership, Corporation,
joint venture, trust or unincorporated organization, or any other entity,
including a government or agency or political subdivision thereof.

         Purchase/Placement Agreement. Shall have the meaning set forth in the
Recitals.

         Responsible Officers. Shall have the meaning set forth in Section
2.2(c).

         Restricted Global Warrant Certificate. Shall have the meaning set forth
in Section 3.2.

         QIB. Shall have the meaning set forth in the Recitals.

         Registration Rights Agreement. The Registration Rights Agreement, dated
as of the date hereof, among the Company and the Initial Purchasers of the
Units.

         Rule 144. Rule 144 promulgated under the Securities Act.

         Rule 144A. Rule 144A promulgated under the Securities Act.

         Securities Act. Shall have the meaning set forth in the Recitals.

         Trading Day. Any day other than a Saturday or Sunday or a day on which
securities are not traded on any national securities exchange.

         Transaction. Shall have the meaning set forth in Section 4.11.

         Transfer Restricted Warrants. Each Warrant until the date on which such
Warrant (i) has been disposed of pursuant to an effective registration statement
under the Securities Act, (ii) is distributed to the public pursuant to Rule 144
or is freely salable pursuant to Rule 144(k) (or any similar provisions then in
force), (iii) is otherwise freely tradable without registration under the
Securities Act or (iv) has been acquired by the Company.

         Unrestricted Global Warrant Certificate. Shall have the meaning set
forth in Section 3.2.

                                       3

<PAGE>

         Warrant Agent. American Stock Transfer & Trust Company until a
successor Warrant Agent shall have become such pursuant to the applicable
provisions of this Agreement, and thereafter "Warrant Agent" shall mean such
successor Warrant Agent.

         Warrant Certificate. A certificate representing Warrants issued under
this Agreement.

         Warrant Custodian. The Warrant Agent or such other entity that is a
"fast agent" meeting the requirements of the Depositary as the Warrant Agent
shall designate from time to time, to act as custodian with respect to the
Warrants in global form, or any successor entity thereto.

         Warrant Register. Shall have the meaning set forth in Section 3.3(a).

                                    ARTICLE 2

                                THE WARRANT AGENT

SECTION 2.1 APPOINTMENT OF WARRANT AGENT.

         The Company hereby appoints the Warrant Agent as its agent in respect
of the Warrants and the Warrant Certificates, upon the terms and subject to the
conditions set forth herein, and subject to resignation or removal of the
Warrant Agent as provided herein. The Warrant Agent agrees to accept such
appointment, upon the terms and subject to the conditions set forth herein.

         The Warrant Agent shall have the powers and authority granted to it by
this Agreement and such further powers and authority to act on behalf of the
Company as the Company may hereafter grant to or confer upon it.

SECTION 2.2 DUTIES OF WARRANT AGENT.

         The Warrant Agent accepts its obligations set forth herein upon the
terms and conditions hereof, including the following, to all of which the
Company agrees and to all of which the rights hereunder of the Holders from time
to time of the Warrant Certificates shall be subject:

                  (a)      The Warrant Agent shall act hereunder as agent and in
         a ministerial capacity for the Company, and its duties shall be
         determined solely by the provisions hereof. In acting under this
         Agreement and with respect to the Warrant Certificates, the Warrant
         Agent does not assume any obligation or relationship of agency or trust
         for or with any Holder.

                  (b)      The Warrant Agent shall be obligated to perform such
         duties as are specifically set forth herein and in the Warrant
         Certificates and no implied duties or obligations shall be read into
         this Agreement or the Warrant Certificates against the Warrant Agent.
         The Warrant Agent shall have no duty or responsibility in case of any
         default by the Company in the performance of its covenants or
         agreements contained in this Agreement or the Warrant Certificates or
         in the case of the receipt of any written

                                       4

<PAGE>

         demand from any Holder with respect to such default, including, without
         limiting the generality of the foregoing, any duty or responsibility to
         initiate or attempt to initiate any proceeding at law or otherwise, or
         to make any demand upon the Company.

                  (c)      The Warrant Agent is hereby authorized and directed
         to accept written instructions with respect to the performance of its
         duties hereunder from any one of the Chief Executive Officer, the
         President or the Chief Financial Officer of the Company or from any
         other officer of the Company authorized by resolutions duly adopted by
         the Board of Directors of the Company to give such instructions (each a
         "Responsible Officer"), and to apply to such Responsible Officers for
         advice or instructions in connection with its duties, and it shall not
         be liable for any action taken or suffered to be taken by it in good
         faith in accordance with instructions from any Responsible Officer with
         respect to any matter arising in connection with the Warrant Agent's
         duties and obligations arising under this Agreement.

                  (d)      The Warrant Agent shall not be liable for any action
         taken, suffered or omitted to be taken by it in good faith in
         accordance with any notice, statement, instruction, request, direction,
         order or demand of a Responsible Officer of the Company believed by it
         to be genuine. Any such notice, statement, instruction, request,
         direction, order or demand of the Company shall be sufficiently
         evidenced by an instrument signed by a Responsible Officer.

                  (e)      Whenever in the performance of its duties under this
         Agreement, the Warrant Agent shall deem it necessary or desirable that
         any fact or matter be proved or established by the Company prior to
         taking or suffering any action hereunder, such fact or matter (unless
         other evidence in respect thereof be herein specifically prescribed)
         may be deemed to be conclusively proved and established by a
         certificate signed by a Responsible Officer, and such certificate shall
         be full authorization to the Warrant Agent for any action taken or
         suffered in good faith by it under the provisions of this Agreement in
         reliance upon such certificate.

                  (f)      The Warrant Agent, to the extent permitted by
         applicable law, may engage or be interested in any financial or other
         transaction with the Company and may act on, or as depository, trustee
         or agent for, any committee or body of holders of shares or other
         obligations of the Company as freely as if it were not the Warrant
         Agent hereunder. Nothing in this Agreement shall be deemed to prevent
         the Warrant Agent from acting in any other capacity for the Company.

                  (g)      The Warrant Agent shall not, by countersigning or
         delivering Warrant Certificates or by any other act hereunder, be
         deemed to make any representations as to the validity, value or
         authorization of the Warrant Certificates or the Warrants represented
         thereby or of any securities or other property issued or issuable upon
         exercise of any Warrant or whether any stock issued upon exercise of
         any Warrant is fully paid and nonassessable.

                  (h)      The Warrant Agent shall not at any time be under any
         duty or responsibility to any Holder to determine whether any fact
         exists that may require any adjustment to the Exercise Price, or with
         respect to the nature or extent of any adjustment, when made, or with
         respect to the method employed in making any adjustment to the Exercise
         Price.

                                       5

<PAGE>

                  (i)      The Warrant Agent shall not be liable for any act or
         omission in connection with this Agreement except for its own
         negligence or willful misconduct.

                  (j)      The Warrant Agent may at any time consult with
         counsel satisfactory to it and shall incur no liability or
         responsibility in respect of any action taken, suffered or omitted to
         be taken by it in good faith in accordance with the opinion or advice
         of such counsel.

                  (k)      The Company agrees that it will perform, execute,
         acknowledge and deliver, or cause to be performed, executed,
         acknowledged and delivered, all such further and other acts,
         instruments and assurances as may reasonably be required by the Warrant
         Agent for the carrying out or performing by the Warrant Agent of the
         provisions of this Agreement.

                  (l)      The Warrant Agent shall not be required to risk or
         expend its own funds in the performance of its obligations and duties
         hereunder unless it has obtained an indemnity reasonably satisfactory
         to it to reimburse it for such expenditure.

                  (m)      The Warrant Agent shall not be under any liability
         for interest on, and shall not be required to invest, any monies at any
         time received by it pursuant to any of the provisions of this Agreement
         or of the Warrant Certificates. The Warrant Agent shall not be
         accountable for the use or application by the Company of the proceeds
         of the exercise of any Warrant.

SECTION 2.3 COMPENSATION; INDEMNIFICATION.

         The Company agrees to pay the Warrant Agent from time to time such
compensation as shall be agreed upon by the Company and the Warrant Agent, and
the Company agrees to reimburse the Warrant Agent for its reasonable
out-of-pocket expenses and disbursements incurred without negligence, willful
misconduct or bad faith on its part in connection with the services rendered by
it hereunder.

         The Company also agrees to indemnify the Warrant Agent for, and to hold
it harmless against, any loss, liability or expense, including judgments, costs
and reasonable counsel fees, incurred without negligence, willful misconduct or
bad faith on the part of the Warrant Agent, arising out of or in connection with
its acting as Warrant Agent hereunder. The obligations of the Company under this
Section 2.3 shall survive the exercise and the expiration of the Warrants and
the resignation and removal of the Warrant Agent.

SECTION 2.4 RESIGNATION; SUCCESSOR WARRANT AGENTS.

         The Warrant Agent may at any time resign as Warrant Agent and be
discharged from all further duties and liabilities hereunder (except liabilities
arising as a result of the Warrant Agent's own negligence or willful
misconduct), by giving written notice to the Company and each holder of Warrants
of such resignation, specifying the date on which such resignation shall be
effective; provided, that such notice shall be given no less than 90 days prior
to such effective date. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor

                                       6

<PAGE>

Warrant Agent by written instrument in duplicate signed on behalf of the Company
by a Responsible Officer, one copy of which shall be delivered to the resigning
Warrant Agent and one copy to the successor Warrant Agent. Such resignation
shall become effective upon the acceptance of the appointment by the successor
Warrant Agent.

         The Company may, at any time and for any reason, remove the Warrant
Agent and appoint a successor Warrant Agent by written instrument in duplicate,
specifying such removal and the date on which it is to become effective, signed
by a Responsible Officer of the Company, one copy of which shall be delivered to
the Warrant Agent being removed and one copy to the successor Warrant Agent.

         Upon resignation or removal of the Warrant Agent, if the Company shall
fail to appoint a successor Warrant Agent within a period of 90 days after
receipt of such notice of resignation or removal, then any Holder may apply to a
court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Pending appointment of a successor to the Warrant Agent, either
by the Company or by such a court, the duties of the Warrant Agent shall be
carried out by the Company.

         Any appointment of a successor Warrant Agent shall become effective
upon acceptance of appointment by the successor Warrant Agent as provided in
this Section 2.4. As soon as practicable after the appointment of the successor
Warrant Agent, the Company shall cause written notice of the change in the
Warrant Agent to be given to each of Holder.

         Each successor Warrant Agent shall execute and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder and all the provisions of this Agreement, and thereupon such successor
Warrant Agent shall, without any further act, deed or conveyance, become vested
with the same powers, rights, duties and responsibilities of its predecessor
hereunder, with like effect as if it had been originally named herein, and the
Warrant Agent shall thereupon become obligated to transfer, deliver and pay
over, and such successor Warrant Agent shall be entitled to receive, all moneys,
securities, records or other property on deposit with or held by the Warrant
Agent under this Agreement.

         Any Person into which the Warrant Agent may be converted or merged, or
any corporation resulting from any consolidation to which the Warrant Agent
shall be a party, or any corporation succeeding to the trust business of the
Warrant Agent, shall be a successor Warrant Agent under this Agreement without
any further act on the part of any party. Any such successor Warrant Agent shall
promptly cause notice of its succession as Warrant Agent to be mailed to the
Company and to each Holder.

                                       7

<PAGE>

                                    ARTICLE 3

                                  THE WARRANTS

SECTION 3.1 NUMBER OF WARRANTS.

         The number of Warrants that may be issued and delivered under this
Agreement is limited to 1,400,000 Warrants (or 1,610,000 if the Initial
Purchaser's over-allotment option is exercised in full pursuant to Section 1(b)
of the Purchase/Placement Agreement), except for Warrants issued and delivered
in connection with any transfer of, in exchange for, or in lieu of, other
Warrants (which other Warrants shall be canceled) in accordance with the terms
of this Agreement.

SECTION 3.2 ISSUANCE OF WARRANTS.

         Prior to the Detachment Date, beneficial ownership of each Warrant
shall be evidenced by the Unit certificate to which such Warrant relates,
bearing the following legend:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE INCLUDE THE BENEFICIAL
OWNERSHIP IN A STOCK PURCHASE WARRANT FOR ONE SHARE OF COMMON STOCK OF THE
COMPANY, SUBJECT TO ADJUSTMENTS AS SET FORTH IN THE WARRANT AGREEMENT GOVERNING
THE WARRANTS, WHICH STOCK PURCHASE WARRANT IS HELD BY THE WARRANT AGENT AND IS
DEEMED TO BE ATTACHED HERETO AND IS NOT DETACHABLE HEREFROM NOR EXERCISABLE
EXCEPT AS SET FORTH IN THE WARRANT AGREEMENT. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PROVISIONS AND ENTITLED TO THE BENEFITS OF SUCH
WARRANT AGREEMENT, A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY AND
WILL BE MADE AVAILABLE TO ANY SHAREHOLDER UPON REQUEST WITHOUT CHARGE. UPON
DETACHMENT OF THE WARRANT FOLLOWING THE DETACHMENT DATE, A SEPARATE COMMON STOCK
CERTIFICATE AND A WARRANT CERTIFICATE REPRESENTING OWNERSHIP OF THE COMMON STOCK
AND THE WARRANTS, RESPECTIVELY, WILL BE ISSUED TO THE REGISTERED HOLDER OF THIS
UNIT CERTIFICATE.

         After the Detachment Date, Warrants offered and sold to QIBs will be,
except as provided in the last paragraph of this Section 3.3, issued in the form
of a single, permanent Global Warrant Certificate in definitive, fully
registered form, in substantially the form set forth in Exhibit A to this
Agreement (including the information called for by footnotes 1, 2, 3 and 4
thereof) (the "Restricted Global Warrant Certificate"), which will be deposited
with the Warrant Custodian and registered in the name of the Depositary or a
nominee of the Depositary.

         Warrants transferred pursuant to an effective registration statement
under the Securities Act or in reliance on Rule 144 (and, in each such case, in
accordance with Section 3.3 of this Agreement) will be, upon request of the
transferor, represented by a single, permanent Global

                                       8

<PAGE>

Warrant Certificate in definitive, fully registered form, in substantially the
form set forth in Exhibit A to this Agreement (including the information called
for by footnotes 1, 3 and 4 thereof) (the "Unrestricted Global Warrant
Certificate"), which will be held by the Warrant Custodian and registered in the
name of the Depositary or a nominee of the Depositary.

         Each Global Warrant Certificate shall represent such of the outstanding
Warrants as shall be specified therein and each shall provide that it shall
represent the aggregate number of outstanding Warrants from time to time
endorsed thereon and that the aggregate amount of outstanding Warrants
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, transfers and exercises. Any endorsement of a
Global Warrant Certificate to reflect the amount of any increase or decrease in
the amount of outstanding Warrants represented thereby shall be made by the
Warrant Agent or the Warrant Custodian, at the direction of the Warrant Agent,
in accordance with instructions given by the Holder of the Global Warrant
Certificate and in accordance with Section 3.3 of this Agreement.

         After the Detachment Date, Warrants offered and sold (i) to Accredited
Investors who are not QIBs or (ii) to QIBs who elect by written notice to the
Company to take physical delivery of Definitive Warrant Certificates rather than
a beneficial interest in a Global Warrant Certificate, will be issued in the
form of Definitive Warrant Certificates. Definitive Warrant Certificates may
also be issued in accordance with Section 3.3 of this Agreement.

SECTION 3.3 REGISTRATION OF TRANSFER AND EXCHANGE.

                  (a)      General. The Company shall cause to be kept at the
         Corporate Trust Office of the Warrant Agent a register (the register
         maintained in such office and in any other office or agency designated
         pursuant to Section 6.5 of this Agreement being herein collectively
         referred to as the "Warrant Register") in which the Warrant Agent shall
         provide for the registration of Warrant Certificates and of transfers
         and exchanges of Warrants.

                  (b)      Transfer of a Beneficial Interest in a Global Warrant
         Certificate. The transfer and exchange of a beneficial interest in a
         Global Warrant Certificate shall be effected through the Depositary in
         accordance with this Agreement (including the restrictions on transfer
         set forth herein) and the procedures of the Depositary therefor.

                  (c)      Transfer and Exchange of Definitive Warrant
         Certificates. A Holder of a Definitive Warrant Certificate may at any
         time transfer such Definitive Warrant Certificate or exchange such
         Definitive Warrant Certificate for Definitive Warrant Certificates
         representing an equal number of Warrants in accordance with this
         subsection (c). Upon receipt by the Warrant Agent of:

                                    (i)      a Definitive Warrant Certificate,
                           duly endorsed or accompanied by appropriate
                           instruments of transfer, in form reasonably
                           satisfactory to the Warrant Agent, and

                                    (ii)     if such Definitive Warrant
                           Certificate represents Transfer Restricted Warrants,
                           a certificate in substantially the form set forth in

                                       9

<PAGE>

                           Exhibit B to this Agreement from the Holder thereof
                           requesting Definitive Warrant Certificates and
                           stating that such Warrants are being:

                                             (1)      delivered to the Warrant
                                    Agent for registration in the name of such
                                    Holder, without transfer; or

                                             (2)      transferred pursuant to an
                                    effective registration statement under the
                                    Securities Act; or

                                             (3)      transferred to a QIB in
                                    accordance with Rule 144A; or

                                             (4)      transferred in reliance on
                                    an exemption from the registration
                                    requirements of the Securities Act other
                                    than that provided by Rule 144A (in which
                                    case the Definitive Warrant Certificate
                                    surrendered shall also be accompanied by an
                                    opinion of counsel reasonably acceptable to
                                    the Company and the Warrant Agent to the
                                    effect that such transfer is in compliance
                                    with the Securities Act),

then the Warrant Agent will cancel the surrendered Definitive Warrant
Certificate, the Company will execute one or more Definitive Warrant
Certificates representing the amount of Warrants to be transferred or exchanged
and the Warrant Agent will countersign and deliver to the transferee or Holder
such Definitive Warrant Certificates and the Warrant Agent will register such
Definitive Warrant Certificates in the name of the transferee or Holder.

                  (d)      Transfer of a Definitive Warrant Certificate for a
         Beneficial Interest in a Global Warrant Certificate. A Holder of a
         Definitive Warrant Certificate may at any time, subject to the rules
         and procedures of the Depositary, transfer such Definitive Warrant
         Certificate for an equivalent beneficial interest in the appropriate
         Global Warrant Certificate in accordance with this subsection (d). Upon
         receipt by the Warrant Agent of:

                                    (i)      a Definitive Warrant Certificate,
                           duly endorsed or accompanied by appropriate
                           instruments of transfer, in form reasonably
                           satisfactory to the Warrant Agent, together with an
                           instruction of the transferor thereof requesting an
                           equivalent beneficial interest in the appropriate
                           Global Warrant Certificate; and

                                    (ii)     if such Definitive Warrant
                           Certificate represents Transfer Restricted Warrants,
                           a certificate in substantially the form set forth in
                           Exhibit B to this Agreement from the transferor
                           thereof stating that such Warrants are being
                           transferred:

                                             (1)      to a QIB in accordance
                                    with Rule 144A (in which case the
                                    appropriate Global Warrant Certificate shall
                                    be the Restricted Global Warrant
                                    Certificate); or

                                             (2)      pursuant to an effective
                                    registration statement under the Securities
                                    Act or in reliance on Rule 144 (in each of
                                    which cases the appropriate Global Warrant
                                    Certificate shall be the

                                       10

<PAGE>

                                    Unrestricted Global Warrant Certificate and,
                                    in the case of a transfer in reliance on
                                    Rule 144, the Warrant Agent shall also
                                    receive an opinion of counsel reasonably
                                    acceptable to the Company and to the Warrant
                                    Agent to the effect that such transfer is in
                                    compliance with the Securities Act),

then the Warrant Agent will cancel the surrendered Definitive Warrant
Certificate, the Warrant Custodian, in accordance with the standing instructions
and procedures existing among the Depositary and the Warrant Custodian, will
increase the aggregate number of Warrants covered by the appropriate Global
Warrant Certificate in the amount to be transferred and the Depositary will
effect the transfer in accordance with its procedures therefor.

                  (e)      Transfer or Exchange of a Beneficial Interest in a
         Global Warrant Certificate for a Definitive Warrant Certificate. A
         Holder of a beneficial interest in a Global Warrant Certificate may at
         any time, subject to the rules and procedures of the Depositary,
         transfer or exchange such beneficial interest for one or more
         Definitive Warrant Certificates in accordance with this subsection (e).
         Upon receipt by the Warrant Custodian of:

                                    (i)      an instruction given in accordance
                           with the procedures of the Depositary on behalf of a
                           Holder of a beneficial interest in a Global Warrant
                           Certificate to reduce the Global Warrant Certificate
                           by the number of Warrants to be transferred or
                           exchanged; and

                                    (ii)     if such Global Warrant Certificate
                           is the Restricted Global Warrant Certificate, a
                           certificate (which may be submitted by facsimile
                           promptly followed by an original) in substantially
                           the form set forth in Exhibit B to this Agreement
                           from the Holder of such beneficial interest stating
                           that such Warrants are being:

                                             (1)      delivered to the Warrant
                                    Agent for registration in the name of such
                                    Holder, without change of beneficial
                                    ownership; or

                                             (2)      transferred pursuant to an
                                    effective registration statement under the
                                    Securities Act; or

                                             (3)      transferred to a QIB in
                                    accordance with Rule 144A; or

                                             (4)      transferred in reliance on
                                    an exemption from the registration
                                    requirements of the Securities Act other
                                    than that provided by Rule 144A (which case
                                    the Warrant Custodian shall also receive an
                                    opinion of counsel reasonably acceptable to
                                    the Company and to the Warrant Custodian to
                                    the effect that such transfer is in
                                    compliance with the Securities Act),

then the Warrant Custodian, in accordance with the standing instructions and
procedures existing among the Depositary and the Warrant Custodian, will reduce
the amount of Warrants covered

                                       11

<PAGE>

by the appropriate Global Warrant Certificate, the Company will execute one or
more Definitive Warrant Certificates in the aggregate amount of Warrants to be
transferred or exchanged and the Warrant Agent will countersign and deliver to
the transferee or Holder such Definitive Warrant Certificates and the Warrant
Agent shall register the Definitive Warrant Certificates in the name of such
transferee or Holder.

                  (f)      Transfer of a Beneficial Interest in the Restricted
         Global Warrant Certificate for a Beneficial Interest in the
         Unrestricted Global Warrant Certificate. A Holder of a beneficial
         interest in the Restricted Global Warrant Certificate may at any time,
         subject to the rules and procedures of the Depositary, transfer all or
         part of its interest in the Restricted Global Warrant Certificate for
         an equivalent interest in the Unrestricted Global Warrant Certificate
         in accordance with this subsection (f). Upon receipt by the Warrant
         Custodian of:

                                    (i)      an instruction given in accordance
                           with the procedures of the Depositary on behalf of a
                           Holder of a beneficial interest in the Restricted
                           Global Warrant Certificate to reduce such Global
                           Warrant Certificate by the amount of the interest to
                           be transferred and increase the Unrestricted Global
                           Warrant Certificate by a like amount, and

                                    (ii)     a certificate (which may be
                           submitted by facsimile promptly followed by an
                           original) in substantially the form set forth in
                           Exhibit B to this Agreement from the Person
                           designated by the Depositary as such Holder, to the
                           effect that such interest is being transferred in
                           reliance on Rule 144 (in which case the Warrant
                           Custodian shall also receive an opinion of counsel
                           reasonably acceptable to the Company and to the
                           Warrant Custodian to the effect that such transfer is
                           in compliance with the Securities Act) or pursuant to
                           an effective registration statement under the
                           Securities Act,

then the Warrant Custodian, in accordance with the standing instructions and
procedures existing among the Depositary and the Warrant Custodian, will so
reduce the Restricted Global Warrant Certificate and increase the Unrestricted
Global Warrant Certificate, and the transfer and exchange of such beneficial
interest shall be effected through the Warrant Custodian and the Depositary in
accordance with this Agreement and the procedures of the Depositary and the
Warrant Custodian therefor.

                  (g)      Restrictions on Transfer of Global Warrant
         Certificates. Notwithstanding any other provisions of this Agreement
         (other than the provisions set forth in subsection (h) of this Section
         3.3), a Global Warrant Certificate may not be transferred except as a
         whole by the Depositary to a nominee of the Depositary or by a nominee
         of the Depositary to the Depositary or another nominee of the
         Depositary or by the Depositary or any such nominee to a successor
         Depositary or a nominee of such successor Depositary.

                  (h)      Issuance of Definitive Warrant Certificates in the
         Absence of a Depositary. If at any time the Depositary notifies the
         Company that the Depositary is unwilling or unable to continue as
         Depositary for the Global Warrant Certificates and a

                                       12

<PAGE>

         successor Depositary for the Global Warrant Certificates is not
         appointed by the Company within 90 days after delivery of such notice,
         then the Warrant Custodian, in accordance with the standing
         instructions and procedures existing among the Depositary and the
         Warrant Custodian, will cancel the Global Warrant Certificates, the
         Company will execute Definitive Warrant Certificates representing an
         aggregate number of Warrants equal to the aggregate number of Warrants
         evidenced by the Global Warrant Certificates, and the Warrant Agent
         will countersign and deliver to each Person designated by the
         Depositary as a Holder of a beneficial interest in the Global Warrant
         Certificates a Definitive Warrant Certificate evidencing a number of
         Warrants equal to such interest.

                  (i)      Legends. Except as permitted by this subsection (i),
         the Restricted Global Warrant Certificate and the Definitive Warrant
         Certificates (and all Warrant Certificates issued in exchange therefor
         or substitution thereof) shall bear a legend in substantially the form
         set forth in Exhibit A to this Agreement. A Definitive Warrant
         Certificate that does not bear the legends set forth in Exhibit A to
         this Agreement will be executed, countersigned and delivered in the
         case of (i) a transfer pursuant to an effective registration statement
         under the Securities Act of a Transfer Restricted Warrant in accordance
         with subsection (c)(ii)(2) of this Section 3.3, (ii) a transfer in
         reliance on Rule 144 of a Transfer Restricted Warrant in accordance
         with subsection (c)(ii)(4) of this Section 3.3; (iii) a transfer
         pursuant to an effective registration statement under the Securities
         Act of a beneficial interest in the Restricted Global Warrant
         Certificate in accordance with subsection (e)(ii)(2) of this Section
         3.3; (iv) a transfer in reliance on Rule 144 of a beneficial interest
         in the Restricted Global Warrant Certificate in accordance with
         subsection (e)(ii)(4) of this Section 3.3; or (v) a transfer or
         exchange of a beneficial interest in the Unrestricted Global Warrant
         Certificate or of a Warrant represented by a Definitive Warrant
         Certificate that is not a Transfer Restricted Warrant.

                  (j)      Cancellation and/or Adjustment of Global Warrant
         Certificate. At such time as all interests in a Global Warrant
         Certificate have either been exchanged for Definitive Warrant
         Certificates, exercised for shares of Common Stock or canceled, such
         Global Warrant Certificate shall be returned to or retained and
         canceled by the Warrant Agent. At any time prior to such cancellation,
         if any beneficial interest in a Global Warrant Certificate is exchanged
         for Definitive Warrant Certificates, exercised for shares of Common
         Stock or canceled, the number of Warrants represented by such Global
         Warrant Certificate shall be reduced and an endorsement shall be made
         on such Global Warrant Certificate, by the Warrant Agent or the Warrant
         Custodian, at the direction of the Warrant Agent, to reflect such
         reduction.

                  (k)      Taxes. No service charge shall be payable by any
         Holder for any registration of transfer or exchange of Warrant
         Certificates, but the Company may require payment of a sum sufficient
         to cover any tax or other governmental charge that may be imposed in
         connection with any registration of transfer or exchange of Warrant
         Certificates other than exchanges not involving any transfer.

                                       13

<PAGE>

SECTION 3.4 EXECUTION AND DELIVERY.

         The Warrant Certificates shall be executed on behalf of the Company by
its Chief Executive Officer, its President or its Chief Financial Officer, under
its corporate seal reproduced thereon, attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Warrant
Certificates may be manual or facsimile. Warrant Certificates bearing the manual
or facsimile signatures of individuals who were at any time the proper officers
of the Company shall bind the Company, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the delivery of such
Warrant Certificates or the date they are countersigned by the Warrant Agent.

         No Warrant Certificate or the Warrants represented thereby shall be
valid or be entitled to any benefit under this Agreement unless such Warrant
Certificate has been countersigned by an authorized officer of the Warrant Agent
by manual signature. All Warrant Certificates shall be dated the date they are
countersigned by the Warrant Agent.

         At any time and from time to time after the execution and delivery of
this Agreement, the Company shall deliver Warrant Certificates executed by the
Company in accordance with this Section 3.4 to the Warrant Agent. Subject to
Section 3.1 of this Agreement, the Warrant Agent shall, upon the written request
of a Responsible Officer of the Company, countersign and deliver Warrant
Certificates representing such number of Warrants, registered in such names and
bearing such legends as may be specified in such request. The Warrant Agent
shall also countersign and deliver Warrant Certificates as otherwise provided in
this Agreement.

SECTION 3.5 DESTROYED, LOST, MUTILATED OR STOLEN WARRANT CERTIFICATES.

         If there shall be delivered to the Company and the Warrant Agent
evidence to their satisfaction of the destruction, loss, mutilation or theft of
any Warrant Certificate and such security and indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Warrant Agent that such Warrant
Certificate has been acquired by a bona fide purchaser, and in the case of
mutilation, upon surrender of such Warrant Certificate to the Warrant Agent for
cancellation, the Company shall execute and the Warrant Agent shall countersign
and deliver, in lieu of or exchange for any such destroyed, lost, mutilated or
stolen Warrant Certificate, a new Warrant Certificate for a like number of
Warrants, bearing a number not contemporaneously outstanding.

         Upon the issuance of any new Warrant Certificate under this Section
3.5, the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Warrant Agent) connected
therewith.

         Every substitute Warrant Certificate issued and delivered pursuant to
this Section 3.5 in lieu of any destroyed, lost or stolen Warrant Certificate
shall constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Warrant Certificate shall be at any
time enforceable by anyone, and shall be entitled to all the benefits of,

                                       14

<PAGE>

and be subject to all the limitations of rights set forth in, this Agreement
equally and proportionately with any and all other Warrant Certificates duly
issued and delivered hereunder.

         The provisions of this Section 3.5 are exclusive and shall preclude (to
the extent lawful) any and all other rights and remedies with respect to the
replacement of destroyed, lost, mutilated or stolen Warrant Certificates
notwithstanding any law or statute existing or hereafter enacted to the
contrary.

SECTION 3.6 PERSONS DEEMED OWNERS.

         The Company and the Warrant Agent, and any agent of the Company or the
Warrant Agent, may deem and treat the Person in whose name a Warrant Certificate
is registered in the Warrant Register as the absolute, true and lawful owner of
such Warrant Certificate and the Warrants represented thereby (notwithstanding
any notation of ownership or other writing thereon made by any Person) for all
purposes, and neither the Company nor the Warrant Agent nor any of their
respective agents shall be affected by any notice or knowledge to the contrary.

SECTION 3.7 CANCELLATION OF WARRANT CERTIFICATES.

         All Warrant Certificates surrendered for registration of transfer,
exchange or exercise shall be delivered to the Warrant Agent and shall be
promptly canceled by the Warrant Agent. The Company may at any time deliver to
the Warrant Agent for cancellation any Warrant Certificates previously delivered
hereunder that the Company may have acquired in any manner whatsoever, and all
Warrant Certificates so delivered shall be promptly canceled by the Warrant
Agent. No Warrant Certificates shall be delivered in lieu of or in exchange for
any Warrant Certificates canceled by the Warrant Agent, except as expressly
permitted by this Agreement.

SECTION 3.8 NO RIGHTS AS STOCKHOLDERS.

         Nothing contained in this Agreement or in the Warrant Certificates
shall be construed as conferring upon the Holders or any transferees any of the
rights of stockholders of the Company, including without limitation, the right
to vote or to receive dividends or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter. Nothing contained in this Agreement shall be construed as
imposing any liabilities on such holder to purchase any securities or as a
stockholder of the Company, whether such liabilities are assumed by the Company
or by creditors or stockholders of the Company or otherwise.

                                       15

<PAGE>

                                    ARTICLE 4

                              EXERCISE OF WARRANTS

SECTION 4.1 EXERCISE PERIOD.

         Subject to and upon compliance with the provisions of this Agreement,
at the option of the Holder thereof, a Warrant may be exercised at the Exercise
Price in effect at the time of exercise, at any time on any Business Day during
the period (the "Exercise Period") commencing on the Detachment Date and ending
5:00 P.M., New York time, on the Expiration Date, unless the Exercise Period is
extended by the Company. Following the Expiration Date, any Warrant not
previously exercised shall expire and be null and void, and all rights of the
Holder under the Warrant Certificate evidencing such Warrant and under this
Agreement shall cease.

SECTION 4.2 SHARES ISSUABLE UPON EXERCISE; EXERCISE PRICE.

         Subject to and upon compliance with the provisions of this Agreement,
each Warrant shall entitle the Holder thereof to purchase from the Company one
share of Common Stock of the Company at an exercise price (the "Exercise Price")
of $15.00 per share of Common Stock. The Exercise Price and the number and kind
of securities or other property issuable upon exercise of the Warrants shall be
adjusted in certain instances as provided in Section 4.6 of this Agreement.

SECTION 4.3 METHOD OF EXERCISE.

         Each Warrant may be exercised in whole or in part. In order to exercise
any Warrants, the Holder thereof shall present and surrender the Warrant
Certificate evidencing the Warrants to the Warrant Agent at the office or agency
of the Company maintained for that purpose pursuant to Section 6.5, with the
Notice of Exercise on the Warrant Certificate duly completed and executed by the
Holder or by the Holder's legal representative or attorney duly authorized in
writing to the satisfaction of the Warrant Agent, and accompanied by payment in
full of the aggregate Exercise Price for the number of shares of Common Stock
specified in the Notice of Exercise, and of any other amounts required to be
paid in connection with such exercise, (i) by cash or certified or official bank
check, (ii) by surrendering additional Warrants or shares of Common Stock for
cancellation to the extent that the Company may lawfully accept shares of Common
Stock in the Company, or (iii) by such other means as is acceptable to the
Company in the lawful currency of the United States of America which as of the
time of payment is legal tender for payment of public or private debts. In the
event the holder exercising its Warrants holds an interest in a Global Warrant
Certificate, such holder shall exercise Warrants owned of record by such holder
and represented by a Global Warrant Certificate by delivering (i) proof of
record ownership of such Warrants if required by the Company and (ii) a notice
of exercise in substantially the form set forth in the Warrant as appropriately
adjusted. The value per share of Common Stock surrendered in accordance with
this Section 4.3 equals the current market price per share of Common Stock as
defined in Section 4.6(e) of this Agreement as of the business day next

                                       16

<PAGE>

preceding the date the Warrant Certificates are surrendered for exercise and the
value of a Warrant being equal to the difference between such current market
price and the Exercise Price.

         Warrants shall be deemed to have been exercised immediately prior to
the close of business on the date of surrender of the Warrant Certificate
representing such Warrants for exercise in accordance with the foregoing
provisions, and at such time the Person or Persons entitled to receive the
Common Stock issuable upon exercise shall be treated for all purposes as the
record holder or holders of such Common Stock at the close of business on the
date of such surrender, notwithstanding that the stock transfer books of the
Company shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to such Person or Persons.

         If any Warrant Certificate is surrendered for the exercise of less than
all the Warrants represented thereby, the Company shall execute, and the Warrant
Agent shall countersign and deliver to the Holder thereof, at the expense of the
Company, a new Warrant Certificate, dated the date of such exercise, evidencing
the number of Warrants remaining unexercised unless such Warrants shall have
expired.

SECTION 4.4 ISSUANCE OF COMMON STOCK.

         Upon the exercise of any Warrants, the Warrant Agent shall (i) cause an
amount equal to the amount paid by the Holder upon exercise to be paid to the
Company by depositing the same in an account designated by the Company for that
purpose or delivering such payment in such other manner as is acceptable to the
Company, and (ii) immediately inform the Company in writing of such exercise and
deposit or delivery, including the number of Warrants exercised and the
instructions of the exercising Holder with respect to delivery of the shares of
Common Stock issuable upon such exercise. Within five Business Days of the
Company's receipt of notice from the Warrant Agent pursuant to clause (ii) in
the immediately preceding sentence, the Company shall issue and deliver or cause
to be delivered at such office or agency maintained pursuant to Section 6.5 a
certificate or certificates evidencing the number of full shares of Common Stock
issuable upon exercise of such Warrants, registered in such name or names as may
be directed by such Holder in the Notice of Exercise, together with a check for
payment in lieu of any fractional share, as provided in Section 4.5 of this
Agreement.

SECTION 4.5 FRACTIONS OF SHARES.

         No fractional shares of Common Stock shall be issued upon exercise of
any Warrants. If more than one Warrant shall be exercised at one time by the
same Holder, the number of full shares which shall be issuable upon exercise
thereof shall be computed on the basis of the aggregate number of shares of
Common Stock issuable under the Warrants so exercised. In lieu of any fractional
share of Common Stock that would otherwise be issuable upon exercise of any
Warrant or Warrants, the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the market price per share
of Common Stock (as determined by the Board of Directors of the Company or in
any manner prescribed by the Board of Directors) at the close of business on the
day such exercise is deemed to have occurred.

                                       17

<PAGE>

SECTION 4.6 ADJUSTMENT OF EXERCISE PRICE.

                  (a)      In the event the Company after the date hereof shall
         (i) pay a dividend or make a distribution on the Company's Common Stock
         in shares of capital stock of the Company, (ii) subdivide its
         outstanding shares of Common Stock, (iii) combine its outstanding
         shares of Common Stock into a smaller number of shares, or (iv) issue
         by reclassification of its shares of Common Stock any shares of capital
         stock of the Company, the exercise right and the Exercise Price in
         effect immediately prior to such action shall be adjusted so that the
         holder of any Warrant thereafter surrendering such Warrant for exercise
         shall be entitled to receive the number of shares of capital stock of
         the Company that such holder would have owned immediately following
         such action had such Warrant been exercised immediately prior to the
         record date for such action or to such action, as appropriate. An
         adjustment made pursuant to this Section 4.6 shall, in the case of a
         subdivision, combination or reclassification become effective
         retroactively immediately after the record date thereof. If, as a
         result of an adjustment made pursuant to this Section 4.6, the holder
         of any Warrant thereafter surrendered for exercise shall become
         entitled to receive shares of two or more classes of capital stock of
         the Company, the Board of Directors of the Company (whose determination
         shall be described in a certificate filed with the Warrant Agent) shall
         in good faith determine the allocation of the adjusted Exercise Price
         between or among shares of such classes of capital stock.

                  (b)      In the event the Company after the date hereof shall
         distribute to all the holders of Common Stock any dividend or other
         distribution (other than a cash distribution made as a dividend payable
         out of earnings or out of any earned surplus legally available for
         dividends under the laws of the jurisdiction of incorporation of the
         Company) or any evidence of indebtedness or any assets in respect of
         the Common Stock, or rights to subscribe or purchase shares of Common
         Stock at a price per share less than the current market price per share
         of Common Stock (as determined in Section 4.6(e) of this Agreement) at
         the record date referenced below, then, and thereafter successively
         upon each such distribution, the Exercise Price in effect immediately
         prior to such distribution shall forthwith be reduced to a price
         determined by multiplying the Exercise Price in effect immediately
         prior to such distribution by a fraction, (i) the numerator of which
         shall be the current market price per share of Common Stock (as
         determined in Section 4.6(e) of this Agreement) at the record date
         referenced below, less the fair market value (as determined in good
         faith by the Board of Directors of the Company, whose determination
         shall be described in a certificate filed with the Warrant Agent) of
         the portion of such evidences of indebtedness or such assets so
         distributed, or of such subscription or purchase rights, applicable to
         one share of Common Stock and (ii) the denominator of which shall be
         such current market price per share of Common Stock. An adjustment made
         pursuant to Section 4.6(b) shall become effective retroactively
         immediately after the record date for the determination of stockholders
         entitled to receive such distribution.

                  (c)      After each adjustment of the Exercise Price pursuant
         to Sections 4.6(a) and 4.6(b) of this Agreement, the total number of
         shares of Common Stock or fractional part thereof purchasable upon the
         exercise of each Warrant shall be proportionately adjusted to the
         product obtained by multiplying the number of shares of Common Stock

                                       18

<PAGE>

         purchasable upon exercise of each Warrant by a fraction, (i) the
         numerator of which shall be the Exercise Price in effect immediately
         prior to the adjustment and (ii) the denominator of which shall be the
         Exercise Price immediately following the adjustment.

                  (d)      The certificate of any independent firm of public
         accountants of recognized national standing selected by the Board of
         Directors of the Company shall be conclusive evidence of the
         correctness of any computations under Sections 4.6(a) and 4.6(b) of
         this Agreement.

                  (e)      For the purposes of Sections 4.3, 4.6(a) and 4.6(b)
         of this Agreement, the current market price per share of Common Stock
         as of any date of determination shall be deemed to be the average of
         the daily closing prices for the consecutive 20 trading days preceding
         the day of determination. The closing price for the day shall be the
         last reported sale price regular way or, in case no such reported sale
         takes place on that day, the average of the reported closing bid and
         asked prices regular way, in either case as officially reported by the
         principal stock exchange on which the Common Stock is listed or
         admitted to trading, or, if the Common Stock is not listed or admitted
         to trading on any national securities exchange, the average of closing
         bid and asked prices as furnished by the National Association of
         Securities Dealers, Inc. through the National Association of Securities
         Dealers, Inc. Automated Quotation System ("NASDAQ") or similar
         organization if NASDAQ is no longer reporting such information.

                  (f)      No adjustment of the Exercise Price shall be required
         under Sections 4.6(a) and 4.6(b) of this Agreement if the amount of
         such adjustment is less than 1%; provided, however, that any
         adjustments that by reason of the foregoing are not required at the
         time to be made shall be carried forward and taken into account and
         included in determining the amount of any subsequent adjustment. If the
         Company shall take a record of holders of Common Stock for the purpose
         of entitling them to receive any dividend or distribution and
         thereafter and before the distribution to stockholders of any such
         dividend or distribution, legally abandon its plan to pay or deliver
         such dividend or distribution, then no adjustment of the Exercise Price
         shall be required by reason of the taking of such record. All
         calculations under this Section 4.6 shall be made to the nearest cent
         or to the nearest one-hundredth of a share, as the case may be.

                  (g)      Whenever the Exercise Price is adjusted pursuant to
         this Section 4.6, the Company shall promptly file with the Warrant
         Agent and with each transfer agent for the Common Stock a certificate
         signed by the Chief Executive Officer, President or Chief Financial
         Officer and by the Treasurer or an Assistant Treasurer or the Secretary
         or an Assistant Secretary of the Company setting forth in reasonable
         detail the events requiring the adjustment, the method by which such
         adjustment was calculated, and specifying the Exercise Price and the
         number or kind or class of shares or other securities or property
         purchasable upon exercise of the Warrants after giving effect to such
         adjustment, and will cause to be mailed, first class, postage prepaid a
         summary thereof to the registered holders of the Warrant Certificates
         at their last addressees as they appear on the registry books of the
         Warrant Agent.

                  (h)      For the purposes of this Section 4.6, the term
         "Common Stock" shall mean (i) the class of stock designated as the
         common stock, par value $0.01 per share, of the

                                       19

<PAGE>

         Company, at the date of this Agreement and (ii) any other class of
         stock resulting from successive changes or reclassifications of such
         Common Stock consisting solely of changes in par value, or from par
         value to no par value, or from no par value to par value. In the event
         that at any time, as a result of an adjustment made pursuant to Section
         4.6(a) of this Agreement, shares of capital stock of the Company other
         than shares of Common Stock are issuable upon exercise of the Warrants,
         thereafter the number of such other shares so issuable shall be subject
         to adjustment from time to time in a manner and on terms as nearly
         equivalent as practicable to the provisions with respect to the Common
         Stock contained in this Section 4.6, and all other provisions of this
         Agreement with respect to Common Stock shall apply on like terms to any
         such other shares. Subject to the foregoing, and unless the context
         requires otherwise, all references to Common Stock in this Agreement
         and in the Warrant Certificates shall, in the event of an adjustment
         pursuant to this Section 4.6, be deemed to refer also to any other
         securities or property then issuable upon exercise of the Warrants as a
         result of such adjustments.

SECTION 4.7 NOTICE OF CERTAIN CORPORATE ACTION.

         In case:

                  (a)      the Company shall declare a dividend (or any other
         distribution) on the Common Stock payable otherwise than exclusively in
         cash; or

                  (b)      the Company shall authorize the granting to the
         holders of the Common Stock of rights, options or warrants to subscribe
         for or purchase any shares of capital stock of any class or of any
         other rights; or

                  (c)      of any reclassification of the Common Stock of the
         Company (other than a merger which is effected solely to change the
         jurisdiction of incorporation of the Company), or of any consolidation
         or merger to which the Company is a party and for which approval of any
         stockholders of the Company is required, or of the sale or transfer of
         all or substantially all of the assets of the Company; or

                  (d)      of the voluntary or involuntary dissolution,
         liquidation or winding up of the Company;

then the Company shall, if notice of such event is sent to the holders of the
Company's Common Stock generally, cause to be filed at each office or agency
maintained pursuant to Section 6.5 of this Agreement for the purpose of
exercising Warrants, and shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Warrant Register, on or prior to the date
information regarding such corporate action is sent to holders of the Company's
Common Stock generally, a notice stating (i) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined, or (ii) the date on which such
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding up (or amendment thereto) is expected to become effective, and the date
as of which it is expected that holders of record of such class of Common Stock
shall be entitled to exchange their shares of Common Stock for

                                       20

<PAGE>

securities, cash or other property deliverable upon such reclassification,
consolidation, merger, transfer, dissolution, liquidation or winding up. The
Warrant Agent shall not be responsible for giving such notice or for the
contents of any such notice to the Holders.

SECTION 4.8 COMPANY TO RESERVE COMMON STOCK.

         The Company shall, at all times during the Exercise Period, reserve and
keep available, free from preemptive rights, out of its authorized but unissued
Common Stock, for the purpose of effecting the exercise of Warrants, the full
number of shares of Common Stock then issuable upon the exercise of all
outstanding Warrants.

SECTION 4.9 TAXES ON EXERCISES.

         The Company shall pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on exercise of Warrants
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of (i) income of the Holder or (ii) any transfer
involved in the issue and delivery of shares of Common Stock in name other than
that of the Holder of the Warrant or Warrants to be exercised, and no such issue
or delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such taxes or has established to the
satisfaction of the Company that such tax has been paid.

SECTION 4.10 COVENANT AS TO COMMON STOCK.

         The Company covenants that all shares of Common Stock that may be
issued upon exercise of any Warrants will, upon issue and payment of the
Exercise Price therefor, be validly issued, fully paid and nonassessable and
free and clear from all taxes, liens, charges, security interests, encumbrances
and other restrictions created by or through the Company.

SECTION 4.11 PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS.

         In case of any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any sale or transfer of all or substantially all of the assets of the Company
(each, a "Transaction"), the Person formed by such Transaction or which acquires
such assets, as the case may be (the "Acquiror"), shall execute and deliver to
the Warrant Agent prior to the consummation of the Transaction a warrant
agreement (or supplement to this Warrant Agreement) providing that the Holder of
each Warrant then outstanding shall have the right thereafter, during the period
such Warrant shall be exercisable in accordance with this Warrant Agreement, to
exercise such Warrant only into the kind and amount of securities, cash and
other property (collectively, the "Consideration") receivable upon such
Transaction by a holder of the number of shares of Common Stock of the Company
into which such Warrant might have been exercised immediately prior to such
Transaction, assuming such holder of

                                       21

<PAGE>

Common Stock of the Company (i) is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a "constituent
person"), or an affiliate of a constituent person and (ii) failed to exercise
such Holder's rights of election, if any, as to the kind or amount of
Consideration receivable upon such Transaction (provided that if the kind or
amount of Consideration receivable upon such Transaction is not the same for
each share of Common Stock held immediately prior to such Transaction by Persons
other than a constituent person or an affiliate thereof and in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purpose of this Section 4.11 the kind and amount of Consideration
receivable upon such Transaction by each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares). Such warrant agreement shall provide for adjustments upon
the occurrence of events with respect to the Acquiror similar to the events
described in Sections 4.6(a) and (b) of this Agreement, which, for events
subsequent to the effective date of such warrant agreement, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
of this Agreement. The above provisions of this Section shall similarly apply to
successive Transactions.

SECTION 4.12 NO CHANGE OF WARRANT NECESSARY.

         Irrespective of any adjustment in the Exercise Price or in the number
or kind of shares or other property issuable upon exercise of the Warrants, the
Warrant Certificates theretofore or thereafter issued may continue to express
the same Exercise Price and number and kind of shares issuable upon exercise per
Warrant as are stated in the Warrant Certificates initially issued pursuant to
this Agreement.

SECTION 4.13 ENFORCEMENT OF RIGHTS.

         Notwithstanding any of the provisions of this Agreement, any Holder,
without the consent of the Warrant Agent or any other Holder, may enforce, and
may institute and maintain any suit, action or proceeding against the Company to
enforce, such Holder's right to exercise the Warrants evidenced by such Holder's
Warrant Certificate in the manner provided in such Warrant Certificate and this
Agreement.

SECTION 4.14 AVAILABLE INFORMATION.

         The Company shall promptly file with the Warrant Agent (and cause the
Warrant Agent to deliver to the holders of the Warrants upon request to the
Company) copies of its annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.

                                       22

<PAGE>

                                    ARTICLE 5

                                   AMENDMENTS

SECTION 5.1 AMENDMENT OF AGREEMENT.

         The Warrant Agent and the Company may, without the consent of any
Holders, amend this Agreement in such manner as they shall deem appropriate to
cure any ambiguity, to correct any defective or inconsistent provision or
manifest mistake or error herein contained, or in any other manner that they may
deem necessary or desirable and which shall not adversely affect the rights of
the Holders of Warrants. This Agreement shall not otherwise be modified,
supplemented or amended in any respect by the Warrant Agent and the Company,
except with the consent in writing of the Holders of outstanding Warrants
representing not less than a majority of the Warrants then outstanding;
provided, however, that the consent in writing of each and every Holder shall be
required for any such modification, supplement or amendment which (a) changes
the Exercise Period (except to extend the expiration of the Exercise Period to a
later date) or increases the Exercise Price, or (b) reduces the percentage of
Holders of outstanding Warrants the consent of who is required to modify,
supplement or amend this Agreement.

         Any modification, supplement or amendment pursuant to this Section 5.1
shall be binding upon all present and future Holders, whether or not they have
consented to such modification, supplement or amendment, and whether or not
notation of such modification, supplement or amendment is made upon any Warrant
Certificate issued to such Holder.

SECTION 5.2. RECORD DATE.

         The Company may set a record date for purposes of determining the
identity of Holders entitled to consent to any modification, supplement or
amendment to this Agreement. If the Company does not set a record date, the
record date shall be 30 days prior to the first solicitation of such consent.

                                    ARTICLE 6

                            MISCELLANEOUS PROVISIONS

SECTION 6.1 COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
the same instrument.

                                       23

<PAGE>

SECTION 6.2 GOVERNING LAW.

         THIS AGREEMENT AND THE WARRANT CERTIFICATES ISSUED HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF.

SECTION 6.3 DESCRIPTIVE HEADINGS.

         The descriptive headings of this Agreement are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.

SECTION 6.4 NOTICES.

         Any notice, request or other document permitted or required hereunder
to be given to any Holder shall be sufficiently given if in writing and mailed
first-class postage prepaid, to each Holder affected by such event, at its
address as it appears in the Warrant Register. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holders shall affect the
sufficiency of such notice with respect to other Holders. Any notice required
hereunder to be given to any Holder may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Warrant Agent, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

         Any notice, request, waiver, consent or other document provided or
permitted by this Agreement to be given to (i) the Warrant Agent by any Holder
or by the Company shall be sufficient for every purpose hereunder if in writing
and mailed, first-class postage prepaid or sent by facsimile, to and received by
the Warrant Agent at its Corporate Trust Office, and (ii) the Company by the
Warrant Agent or by any Holder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid or sent by facsimile, to the Company at the address
or facsimile number of its principal office specified in the first paragraph of
this Agreement or at any other address or facsimile number previously furnished
in writing to the Warrant Agent by the Company.

         In the event the Warrant Agent shall receive any notice, demand or
other document addressed to the Company by any Holder, the Warrant Agent shall
promptly forward such notice or demand to the Company.

SECTION 6.5 MAINTENANCE OF OFFICE.

         So long as any of the Warrants remain outstanding, the Company shall
designate and maintain in the State of New York an office or agency where
Warrant Certificates may be surrendered for registration of transfer or for
exchange, where Warrants may be surrendered for exercise and where notices and
demands to or upon the Company in respect of the Warrants and

                                       24

<PAGE>

this Warrant Agreement may be served. The Company may from time to time change
or rescind such designation as it may deem desirable or expedient. The Company
will give prompt written notice to the Warrant Agent of the location, and any
change in the location, of such office or agency. The Company hereby designates
the Corporate Trust Office of the Warrant Agent as the initial agency maintained
for each such purpose. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to notify the Warrant Agent of the
location thereof or of any change in the location thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Warrant Agent, and the Company hereby appoints the Warrant Agent
as its agent to receive all such presentations, surrenders, notices and demands.

         The Company may also from time to time designate one or more other
offices or agencies (in or outside the State of New York) where Warrant
Certificates may be presented or surrendered for any or all such purposes and
may from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the State of New York for such
purposes. The Company shall give prompt written notice to the Warrant Agent of
any such designation or rescission, and of any change in the location of, any
such other office or agency.

SECTION 6.6 SUCCESSORS AND ASSIGNS.

         All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.

SECTION 6.7 SEPARABILITY.

         In case any provision in this Agreement or in the Warrant Certificates
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

SECTION 6.8 PERSONS HAVING RIGHTS UNDER AGREEMENT.

         Nothing in this Agreement or in the Warrant Certificates, expressed or
implied, is intended, or shall be construed, to give any Person, other than the
parties hereto and their successors hereunder, and the Holders of Warrants, any
benefit, right, remedy or claim under or by reason of this Agreement.

                                       25

<PAGE>

         IN WITNESS WHEREOF, the Company and the Warrant Agent have caused this
Agreement to be executed by their duly authorized officers as of the date set
forth below.

                                    ARBOR REALTY TRUST, INC.

                                    By: /s/ Frederick C. Herbst
                                        -----------------------------------
                                        Frederick C. Herbst
                                        Chief Financial Officer

Witness: Dated: July 1, 2003

By: /s/ Tymour Okasha
    ---------------------------
                                    AMERICAN STOCK TRANSFER & TRUST COMPANY

                                    By: /s/ George Karfunkel
                                        -----------------------------------
                                        Name:  George Karfunkel
                                        Title: Executive Vice President

Witness: Dated: July 1, 2003

By: /s/ Susan Silber
    ---------------------------
Name: Susan Silber
Title: Assistant Secretary

                                       26
<PAGE>

                                    EXHIBIT A

                           FORM OF WARRANT CERTIFICATE

              Certificate Number                          ____________ Warrants

                VOID AND EXPIRED AFTER 5:00 p.m. on July 1, 2005

                              WARRANTS TO PURCHASE
                        __________ SHARES OF COMMON STOCK

                            ARBOR REALTY TRUST, INC.

         (1) UNLESS AND UNTIL EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THE SECURITIES EVIDENCED HEREBY MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC") TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.(1)

         (2) THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED(2) (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THE SECURITIES EVIDENCED HEREBY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE
HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER ANY SECURITY EVIDENCED HEREBY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") THAT IS TWO YEARS

--------------
(1) Paragraph to be included in a Warrant Certificate issued in the form of a
Global Warrant Certificate.

(2) Paragraph to be included in a Warrant Certificate representing Transfer
Restricted Warrants.

                                      A-1

<PAGE>

AFTER THE LATER OF (X) THE ORIGINAL ISSUE DATE HEREOF AND (Y) THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF SUCH
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER," AS SUCH TERM IS DEFINED IN, AND IN COMPLIANCE WITH, RULE 144A
PROMULGATED UNDER THE SECURITIES ACT, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3), (7)
OR (8) OF RULE 501 PROMULGATED UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (E) TO AN INDIVIDUAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(4), (5) OR (6) OF RULE 501 PROMULGATED UNDER THE SECURITIES
ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE WARRANT
AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D)
OR (E), TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

         This Warrant Certificate certifies that ________, or registered
assigns, is the Holder of _________ Warrants (the "Warrants") to purchase shares
of Common Stock, par value $0.01 per share (the "Common Stock"), of Arbor Realty
Trust, Inc., a Maryland corporation (the "Company"). Each Warrant entitles the
Holder, at any time on any Business Day during the Exercise Period (as defined
in the Warrant Agreement), to purchase from the Company one share of Common
Stock of the Company at an Exercise Price of $15.00 per share (as such Exercise
Price may be amended in accordance with this Warrant Certificate or the Warrant
Agreement) upon surrender of this Warrant Certificate and payment of the
Exercise Price at any office or agency maintained for that purpose by the
Company.

         Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on the Expiration Date shall thereafter be null and void.

         THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW PROVISIONS THEREOF.

                                      A-2

<PAGE>

         Reference is hereby made to the further provisions of this Warrant
Certificate on the reverse hereof, which provisions shall for all purposes have
the same effect as though fully set forth at this place.

         This Warrant Certificate shall not be entitled to any benefit under the
Warrant Agreement between the Company and American Stock Transfer & Trust
Company, as Warrant Agent (the "Warrant Agreement") or valid for any purpose
unless countersigned by the Warrant Agent.

         IN WITNESS WHEREOF, the Company has caused this Warrant certificate to
be duly executed and a facsimile of its corporate seal to be imprinted thereon.

                                    Dated:

                                    ARBOR REALTY TRUST, INC.

                                    By: ________________________________
                                        Frederick C. Herbst
                                        Chief Financial Officer

Attest: ___________________

                                    AMERICAN STOCK TRANSFER & TRUST COMPANY,
                                    as Warrant Agent

                                    By: ________________________________
                                        Name:
                                        Title:

Attest: ___________________

                                      A-3

<PAGE>

                                 [Reverse Side]

         The Warrants represented by this Warrant Certificate are part of a duly
authorized issue of Warrants of Arbor Realty Trust, Inc. (the "Company")
expiring 5:00 p.m., New York City time, on the Expiration Date. The Warrants
represented hereby are issued pursuant to and are subject in all respects to the
terms and conditions set forth in the Warrant Agreement (the "Warrant
Agreement"), by and between the Company and American Stock Transfer & Trust
Company (the "Warrant Agent"), which Warrant Agreement and any amendments
thereto are hereby incorporated by reference in and made a part of this
instrument, and to which reference is hereby made for a description of the
respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Company, the Warrant Agent and the Holders of Warrants. A copy
of the Warrant Agreement may be obtained from the Company at 333 Earle Ovington
Boulevard, Suite 900, Uniondale, New York 11553, Attention: Frederick C. Herbst,
or the Warrant Agent at American, Stock Transfer & Trust Company, Attention:
Corporate Department, by a written request from the Holder hereof or which may
be inspected by any Holder or such Holder's agent at the principal office of the
Company or the Warrant Agent. [The Warrants represented hereby are entitled to
the benefits of a Registration Rights Agreement dated as of July 1, 2003.](3)
Subject to and upon compliance with the provisions of the Warrant Agreement,
each Warrant entitles the Holder, at any time on any Business Day during the
Exercise Period to purchase from the Company one share of Common Stock, $0.01
par value ("Common Stock") (or such other number of shares of Common Stock if an
adjustment has been made as provided in the Warrant Agreement), of the Company
at an Exercise Price of $15.00 per share (or at the current adjusted Exercise
Price if an adjustment has been made as provided in the Warrant Agreement). The
Warrants may be exercised upon the presentation and surrender of this Warrant
Certificate to the Company at its office or agency maintained for that purpose,
with the form of Notice of Exercise set forth hereon duly completed and
executed, accompanied by payment of the Exercise Price for each such Warrant
exercised and any other amounts required to be paid, as provided in the Warrant
Agreement. In the event the holder exercising its Warrants holds an interest in
a Global Warrant Certificate, such holder shall exercise Warrants owned of
record by such holder and represented by a Global Warrant Certificate by
delivering (i) proof of record ownership of such Warrants if required by the
Company and (ii) a notice of exercise in substantially the form set forth below
as appropriately adjusted. The Exercise Price shall be payable (i) by cash or
certified or official bank check, (ii) by surrendering additional Warrants or
shares of Common Stock for cancellation to the extent that the Company may
lawfully accept shares of Common Stock in the Company, or (iii) by such other
means as is acceptable to the Company in the lawful currency of the United
States of America which as of the time of payment is legal tender for payment of
public or private debts. The value per share of Common Stock surrendered in
accordance with this provision equals the current market price per share of
Common Stock as defined in the Warrant Agreement as of the business day next
preceding the date the Warrant is surrendered for exercise and the value of this
Warrant being equal to the difference between such current market price and the
Exercise Price. The Exercise Price and the

-------------
(3) Bracketed language to be included if the Warrant Certificate represents
Transfer Restricted Warrants.

                                      A-4

<PAGE>

number and kind of securities or other property issuable upon exercise of each
Warrant is subject to adjustment as provided in the Warrant Agreement.

         Within five Business Days of the Company's receipt of notice from the
Warrant Agent of the exercise of any Warrants, the Company shall issue and
deliver, or cause to be delivered, to the Holder, at such office or agency
maintained for such purpose pursuant to the Warrant Agreement, a certificate or
certificates evidencing the number of full shares of Common Stock to which such
Holder is entitled, registered in such name or names as may be directed by such
Holder pursuant to the Notice of Exercise set forth on this Warrant Certificate.
No fractional shares of Common Stock will be issued upon exercise of any
Warrant, but instead of any fractional interest, the Company shall pay to the
Holder a cash adjustment as provided in the Warrant Agreement.

         In the case of the exercise of less than all the Warrants represented
hereby, this Warrant Certificate shall be canceled upon the surrender hereof and
a new Warrant Certificate or Warrant Certificates shall be issued and delivered
for the balance of such Warrants represented hereby.

         Prior to the exercise of any Warrant represented hereby, the Holder
shall not be entitled to any rights of a stockholder of the Company by reason of
such Person being a Holder, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided in the
Warrant Agreement.

         The Warrant Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of Warrants under the
Warrant Agreement at any time by the Company and the Warrant Agent with the
consent of the Holders of at least a majority of the Warrants at the time
outstanding. Any such consent shall be conclusive and binding upon the Holder of
this Warrant Certificate and upon all future Holders of any Warrant Certificate
issued upon the registration of transfer of the Warrants evidenced hereby, or in
exchange hereof or in lieu hereof, whether or not notation of such consent or
waiver is made thereon. Notwithstanding the immediately preceding sentence, the
Warrant Agreement provides that the consent in writing of each and every Holder
shall be required for any such modification, supplement or amendment which (a)
changes the Exercise Period (except to extend the expiration of the Exercise
Period to a later date) or increases the Exercise Price, or (b) reduces the
percentage of Holders of outstanding Warrants the consent of who is required to
modify, supplement or amend the Warrant Agreement.

         As provided in the Warrant Agreement and subject to the limitations set
forth therein, transfer of the Warrants represented by this Warrant Certificate
is registrable upon surrender of this Warrant Certificate at the office or
agency of the Company maintained for that purpose, and thereupon one or more new
Warrant Certificates representing the Warrants so transferred will be issued to
the designated transferee or transferees. As provided in the Warrant Agreement
and subject to the limitations set forth therein, this Warrant Certificate is
exchangeable for new Warrant Certificates representing a like number of
Warrants, as requested by the Holder surrendering the same.

                                      A-5

<PAGE>

         No service charge shall be payable by a Holder for any such
registration of transfer or exchange, but the Company shall require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

         Prior to due presentment of this Warrant Certificate for registration
of transfer, the Company and the Warrant Agent and any agent of the Company or
the Warrant Agent may treat the Person in whose name this Warrant Certificate is
registered as the absolute, true and lawful owner hereof and of the Warrants
represented hereby (notwithstanding any notation or ownership or other writing
hereon made by any Person) for all purposes, and shall not be affected by any
notice or knowledge to the contrary.

         All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.

                                      A-6

<PAGE>

                               NOTICE OF EXERCISE

         The undersigned hereby irrevocably elects to exercise ________ of the
Warrants represented by this Warrant Certificate and purchase the whole number
of shares issuable and deliverable upon exercise of such Warrants, and herewith
tenders payment for such shares in accordance with the terms of the Warrant
Agreement. The undersigned hereby directs that the certificate or certificates
for the shares issuable and deliverable upon exercise, together with any check
in payment for fractional shares and any Warrant Certificate representing any
unexercised Warrants represented by this Warrant Certificate, be issued in the
name of and delivered to the undersigned, unless a different name is indicated
below. The undersigned will pay any transfer taxes or other governmental charge
payable with respect to any such shares to be issued in the name of a person
other than the undersigned.

                     INSTRUCTIONS FOR REGISTRATION OF SHARES
                           (please typewrite or print)

Name: _________________________________________________________________
Address: ______________________________________________________________
Social Security or Other Taxpayer Identification Number: ______________
Dated: ____________________

Signature:  ___________________________
Note: Signature must conform to name of Holder appearing on face hereof)

Signature must be guaranteed by a member of an accepted medallion guarantee
program if shares of Common Stock are to be issued, or Warrant Certificate(s)
are to be delivered, other than to and in the name of the Holder.

       ______________________
       Signature Guarantee

                  Fill in for registration of shares of Common Stock and Warrant
Certificate(s) if to be issued otherwise than to the Holder:

       ____________________________________           Social Security or other
                  (Name)               Taxpayer Identification Number:

       ____________________________________       ______________________________
                  (Name)

       ____________________________________       ______________________________
          Please print name and address
          (including zip code)

                                      A-7

<PAGE>

                                    EXHIBIT B

                              TRANSFER INSTRUCTION

                      RE: ARBOR REALTY TRUST, INC. WARRANTS

         Reference is made to the Warrant Agreement dated as of July 1, 2003,
relating to the Warrants (the "Agreement"). This Instruction and Certification
relates to Warrants held by ___________________________ (the
"Transferor/Holder"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreement.

                       Instruction of Transfer or Exchange
        (to be completed whether or not the Warrants to be transferred or
                   exchanged are Transfer Restricted Warrants)

         1.       The Transferor/Holder hereby instructs the Warrant Agent to
(check one box):

       [ ] Transfer or exchange one or more Definitive Warrant Certificates in
accordance with Section 3.3(c) of the Agreement; or

       [ ] Transfer one or more Definitive Warrant Certificates for a beneficial
interest in a Global Warrant Certificate in accordance with Section 3.3(d) of
the Agreement; or

       [ ] Transfer or exchange a beneficial interest in a Global Warrant
Certificate for one or more Definitive Warrant Certificates in accordance with
Section 3.3(e) of the Agreement; or

       [ ] Transfer a beneficial interest in the Restricted Global Warrant
Certificate for a beneficial interest in the Unrestricted Global Warrant
Certificate in accordance with Section 3.3(f) of the Agreement.

         2.       The Transferor/Holder has requested Definitive Warrant
Certificates above and hereby further instructs the Warrant Agent to issue such
Definitive Warrant Certificates without the restrictive legends referenced in
Section 3.3(i) of the Agreement (check box if applicable): [ ]

                                  CERTIFICATION

                                      B-1

<PAGE>

  (to be completed for a transfer or exchange of Transfer Restricted Warrants
                                     only)

         3.       In connection with the transfer or exchange requested above,
the Transferor/Holder does hereby certify that (check one box):

       [ ] One or more Definitive Warrant Certificates, or an interest in a
Global Warrant Certificate, is being obtained by the Transferor/Holder, without
transfer or change in beneficial ownership (in accordance with Section
3.3(c)(ii)(1) or Section 3.3(e)(ii)(1) of the Agreement); or

       [ ] one or more Definitive Warrant Certificates, or an interest in a
Global Warrant Certificate, is being transferred pursuant to an effective
registration statement under the Securities Act (in satisfaction of Section
3.3(c)(ii)(2), Section 3.3(d)(ii)(2), Section 3.3(e)(ii)(2) or Section 3.3(f) of
the Agreement).

       [ ] one or more Definitive Warrant Certificates, or an interest in a
Global Warrant Certificate, is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A) in reliance on Rule 144A (in satisfaction of
Section 3.3(c)(ii)(3), Section 3.3(d)(ii)(1) or Section 3.3(e)(ii)(3); or

       [ ] one or more Definitive Warrant Certificates, or an interest in a
Global Warrant Certificate, is being obtained in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A under the Securities Act, and an opinion of counsel to the
effect that such transfer complies with, and does not require registration
under, the Securities Act accompanies this Instruction and Certification (in
satisfaction of Section 3.3(c)(ii)(4), Section 3.3(d)(ii)(2), Section
3.3(e)(ii)(4) or Section 3.3(f) of the Agreement.

[INSERT NAME OF TRANSFEROR/HOLDER]

Date: _____________________         By: ________________________________

                                      B-2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.5
<SEQUENCE>10
<FILENAME>y90410exv4w5.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>
<PAGE>

                                                                     EXHIBIT 4.5

                                   EXHIBIT 4.5

                          REGISTRATION RIGHTS AGREEMENT

                                 BY AND BETWEEN

                            ARBOR REALTY TRUST, INC.

                                       AND

                               JMP SECURITIES LLC

<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of July 1, 2003, by and between ARBOR REALTY TRUST, INC., a
Maryland corporation (the "Company") and JMP SECURITIES LLC, a Delaware limited
liability company ("JMP"), for the benefit of (i) JMP and purchasers from JMP as
initial purchaser under the Purchase/Placement Agreement (as defined below) of
units of the Company (the "Units"), each of which consists of five (5) shares of
the Company's $.01 par value per share common stock ("Common Stock") and one
warrant (each a "Warrant" or collectively the "Warrants") to purchase a share of
Common Stock; (ii) the participants ("Participants") in the private placement by
the Company of the Units; and (iii) each of their respective direct and indirect
transferees.

         This Agreement is made pursuant to the Purchase/Placement Agreement
(the "Purchase/Placement Agreement"), dated June 26, 2003, by and between the
Company, Arbor Realty Limited Partnership, Arbor Commercial Mortgage, LLC and
JMP. In order to induce JMP to enter into the Purchase/Placement Agreement, the
Company has agreed to provide the registration rights provided for in this
Agreement to JMP, the Participants and their direct and indirect transferees.
The execution of this Agreement is a condition to the closing of the
transactions contemplated by the Purchase/Placement Agreement.

         The parties hereby agree as follows:

1.       DEFINITIONS

         As used in this Agreement, the following terms shall have the following
meanings:

         Additional Dividends: As defined in Section 5(d) hereof.

         Affiliate: As to any specified Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such other
Person and (ii) any executive officer, director, trustee or general partner of
such Person.

         Business Day: With respect to any act to be performed hereunder, each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York or other applicable place where such
act is to occur are authorized or obligated by applicable law, regulation or
executive order to close.

         Commission: The Securities and Exchange Commission.

         Common Stock: As defined in the preamble.

         Company: As defined in the preamble.

         Controlling Person: As defined in Section 6(a) hereof.

<PAGE>

         End Of Suspension Notice: As defined in Section 5(b) hereof.

         Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission pursuant thereto.

         Holder: Each record owner of any Registrable Securities from time to
time, including JMP and its Affiliates.

         Indemnified Party: As defined in Section 6(c) hereof.

         Indemnifying Party: As defined in Section 6(c) hereof.

         Ipo Registration Statement: As defined in Section 2 hereof.

         Liabilities: As defined in Section 6(a) hereof.

         NASD: The National Association of Securities Dealers, Inc.

         Participants: As defined in the preamble.

         Partnership Units: As defined in the preamble.

         Person: An individual, partnership, corporation, trust, unincorporated
organization, government or agency or political subdivision thereof, or any
other legal entity.

         Proceeding: An action, claim, suit or proceeding (including without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the knowledge of the Person subject thereto,
threatened.

         Prospectus: The prospectus included in any Registration Statement,
including any preliminary prospectus, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.

         Purchaser Indemnitee: As defined in Section 6(a) hereof.

         Purchase/Placement Agreement: As defined in the preamble.

         Registrable Securities: All or any portion of the Units, the shares of
Common Stock comprising the Units, the Warrants, and the shares of Common Stock
underlying the Warrants issued from time to time upon original issuance thereof
and at all times subsequent thereto, including upon the transfer thereof by the
original Holder or any subsequent Holder and any securities issued in respect of
such securities by reason of or in connection with any exchange for or
replacement of such securities or any stock dividend, stock distribution, stock
split, purchase in any rights offering or in connection

<PAGE>

with any combination of shares, recapitalization, merger or consolidation, or
any other equity securities issued pursuant to any other pro rata distribution
with respect to the Common Stock, until, in the case of any such securities, the
earliest to occur of (a) the date on which it has been registered effectively
pursuant to the Securities Act and disposed of in accordance with the
Registration Statement relating to it, (b) the date on which either it is
distributed to the public pursuant to Rule 144 or is saleable pursuant to Rule
144(k) promulgated by the Commission pursuant to the Securities Act or (c) the
date on which it is sold to the Company.

         Registration Default:  As defined in Section 5(d) hereof.

         Registration Expenses: Any and all expenses incident to the performance
of or compliance with this Agreement, including, without limitation: (i) all
Commission, securities exchange, NASD registration, listing, inclusion and
filing fees, (ii) all fees and expenses incurred in connection with compliance
with international, federal or state securities or blue sky laws (including,
without limitation, any registration, listing and filing fees and reasonable
fees and disbursements of counsel in connection with blue sky qualification of
any of the Registrable Securities and the preparation of a blue sky memorandum
and compliance with the rules of the NASD), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, duplicating, printing,
delivering and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities sales
agreements, certificates and any other documents relating to the performance
under and compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing or inclusion of any of the Registrable Securities on
any securities exchange or The Nasdaq Stock Market pursuant to Section 4(n) of
this Agreement, (v) the fees and disbursements of counsel for the Company and of
the independent public accountants (including, without limitation, the expenses
of any special audit and "cold comfort" letters required by or incident to such
performance), and reasonable fees and disbursements of one counsel for the
selling Holders and (vi) any fees and disbursements customarily paid in issues
and sales of securities (including the fees and expenses of any experts retained
by the Company in connection with any Registration Statement), but excluding
brokers' or underwriters' discounts and commissions, if any, relating to the
sale or disposition of Registrable Securities by a Holder.

         Registration Statement: Any registration statement of the Company that
covers the resale of Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.

         Rule 144: Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

<PAGE>

         Rule 144A: Rule 144A promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

         Rule 158: Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

         Rule 415: Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

         Rule 424: Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

         Rule 429: Rule 429 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

         Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Commission pursuant thereto.

         Shelf Registration Statement: As defined in Section 2 hereof.

         Suspension Event: As defined in Section 5(b) hereof.

         Suspension Notice: As defined in Section 5(b) hereof.

         Underwritten Offering: A sale of securities of the Company on a
firm-commitment basis to an underwriter or underwriters for reoffering to the
public.

         Units: As defined in the Preamble

         Warrants: As defined in the Preamble.

<PAGE>

2.       REGISTRATION RIGHTS

         As set forth in Section 4 hereof, the Company agrees to file with the
Commission no later than December 31, 2003 and to use its best efforts to cause
to be declared effective by the Commission on or before December 31, 2003, but
in any event no later than June 30, 2004, either (i) a Registration Statement on
Form S-11 or such other form under the Securities Act providing for the initial
public offering of shares of Common Stock (an "IPO Registration Statement"),
which IPO Registration Statement will provide for the resale by the Holders of
any and all Registrable Securities (subject to Section 2(a)(ii) hereof) or (ii)
subject to Section 2(b) hereof, a shelf Registration Statement on Form S-11 or
such other form under the Securities Act then available to the Company providing
for the resale pursuant to Rule 415 from time to time by the Holders of any and
all Registrable Securities (a "Shelf Registration Statement").

         (a)      IPO REGISTRATION. If the Company files an IPO Registration
Statement, the Company will notify each Holder of the proposed filing and afford
each Holder of Registrable Securities an opportunity to include in such IPO
Registration Statement all or any part of the Registrable Securities then held
by such Holder. Each Holder desiring to include in any such IPO Registration
Statement all or part of the Registrable Securities held by such Holder shall,
within twenty (20) days after receipt of the above-described notice from the
Company, so notify the Company of the number of Registrable Securities such
Holder wishes to include in such IPO Registration Statement and complete, sign
and return the selling stockholder questionnaire included with the notice.

                  (i)      RIGHT TO TERMINATE REGISTRATION. The Company shall
         have the right to terminate or withdraw any IPO Registration Statement
         initiated by it prior to its effectiveness whether or not any Holder
         has elected to include Registrable Securities in such registration.

                  (ii)     UNDERWRITING. If an IPO Registration Statement is for
         an Underwritten Offering, then the Company shall so advise the Holders
         of Registrable Securities. In such event, the right of any such
         Holder's Registrable Securities to be included in a registration
         pursuant to this Section 2(a) shall be conditioned upon such Holder's
         participation in such underwriting and the inclusion of such Holder's
         Registrable Securities in the underwriting to the extent provided
         herein. All Holders proposing to distribute their Registrable
         Securities through such underwriting shall enter into an underwriting
         agreement in customary form with the representatives of underwriters
         selected for such underwriting and complete and execute any
         questionnaires, powers of attorney, indemnities, 90 day lock-up
         agreements, securities escrow agreements and other documents reasonably
         required under the terms of such underwriting, and furnish to the
         Company such information as the Company may reasonably request in
         writing for inclusion in the Registration Statement; provided, however,
         that no Holder shall be required to make any representations or
         warranties to or agreements with the Company or the underwriters other
         than representations, warranties or agreements

<PAGE>

         regarding such Holder and such Holder's intended method of distribution
         for the securities to be registered and any other representation
         required by law. Notwithstanding any other provision of this Agreement,
         if the representatives of the underwriters determine in good faith that
         marketing factors require a limitation on the number of shares to be
         underwritten, then the representatives of the underwriters may exclude
         securities (including Registrable Securities of Holders) from the
         registration, and the underwriting shall be allocated among the Company
         and all Holders pro rata on the basis of Registrable Securities offered
         for such registration by the Company and each Holder electing to
         participate in such registration. If any Holder disapproves of the
         terms of any such underwriting, such Holder may elect to withdraw
         therefrom by notice to the Company and the underwriter, delivered at
         least five (5) Business Days prior to the effective date of the
         Registration Statement. Any Registrable Securities excluded or
         withdrawn from such underwriting shall be excluded and withdrawn from
         the registration.

                  (iii)    HOLD-BACK AGREEMENT. By electing to include
         Registrable Securities in any registration pursuant to this Section
         2(a), the Holder of the Registrable Securities shall be deemed to have
         agreed not to effect any public sale or distribution of securities of
         the Company of the same or similar class or classes of the securities
         included in the Registration Statement or any securities convertible
         into or exchangeable or exercisable for such securities, including a
         sale pursuant to Rule 144 or Rule 144A under the Securities Act, during
         such periods as reasonably requested (but in no event for a period
         longer than thirty (30) days prior to and one hundred eighty (180) days
         following the effective date of the IPO Registration Statement) by the
         representatives of the underwriters, if an Underwritten Offering, or by
         the Company in any other registration.

                  (iv)     REGISTRABLE SECURITIES NOT SOLD UNDER IPO
         REGISTRATION STATEMENT. If (w) the Company terminates or withdraws the
         IPO Registration Statement prior to its effectiveness or the
         distribution of all Registrable Securities, if any, registered
         thereunder, (x) the underwriters exercise their right pursuant to
         Section 2(a)(ii) of this Agreement to exclude any Registrable
         Securities from the IPO Registration Statement, (y) any Holder elects
         to withdraw or not to include any Registrable Securities in the IPO
         Registration Statement, or (z) any Registrable Securities are otherwise
         not registered under and distributed pursuant to the IPO Registration
         Statement, then the Company shall file a Shelf Registration Statement
         relating to any Registrable Securities not registered under and
         distributed pursuant to an IPO Registration Statement as soon as
         practicable, but in no event later than (a) in the case of the
         withdrawal or abandonment of the offering pursuant to the IPO
         Registration Statement, the date which is the later of December 31,
         2003 or thirty (30) days after the earlier of the withdrawal or
         abandonment of the offering pursuant to the IPO Registration Statement
         or (b) the date one hundred eighty (180) days after the consummation of
         the offering pursuant to the IPO Registration Statement.

<PAGE>

         (b)      SHELF REGISTRATION. If the Company elects to file a Shelf
Registration Statement or is otherwise required to file a Shelf Registration
Statement pursuant to this Section 2, it shall notify each Holder of the
proposed filing and afford each Holder an opportunity to include in such Shelf
Registration Statement all or any part of the Registrable Securities then held
by such Holder. Each Holder desiring to include in any such Shelf Registration
Statement all or part of the Registrable Securities held by such Holder shall,
within twenty (20) days after receipt of the above-described notice from the
Company, so notify the Company of the number of Registrable Securities such
Holder wishes to include in such Shelf Registration Statement and complete, sign
and return the selling stockholder questionnaire included with the notice. The
Company shall cause the Shelf Registration Statement to be declared effective by
the Commission no later than June 30, 2004 or, in the case of a Shelf
Registration Statement filed pursuant to Section 2(a)(iv), within eighty (80)
days after the filing thereof with the Commission. Any Shelf Registration
Statement shall provide for the resale from time of time, and pursuant to any
method or combination of methods legally available (including, without
limitation, an Underwritten Offering, a direct sale to purchasers, a sale
through brokers or agents, or a sale over the internet) by the Holders of any
and all Registrable Securities.

         (c)      EXPENSES. The Company shall pay all Registration Expenses in
connection with the registration of the Registrable Securities pursuant to this
Agreement. Each Holder participating in a registration pursuant to this Section
2 shall bear such Holder's proportionate share (based on the total number of
Registrable Securities sold in such registration) of all discounts, commissions
or other amounts payable to underwriters or brokers in connection with a
registration of Registrable Securities pursuant to this Agreement.

3.       RULES 144 AND 144A REPORTING

         With a view to making available the benefits of certain rules and
regulations of the Commission that may at any time permit the sale of the
Registrable Securities to the public without registration, the Company agrees
to:

         (a)      make available adequate current public information, as defined
in Rule 144, at all times after the one year has elapsed from the date of this
Agreement and any Registrable Securities are not eligible for resale under Rule
144(k) promulgated by the Commission;

         (b)      file with the Commission in a timely manner all reports and
other documents required to be filed by the Company under the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements);

         (c)      so long as a Holder owns any Registrable Securities, if the
Company is not required to file reports and other documents under the Securities
Act and the Exchange Act, it will make available other information as required
by, and so long as necessary to permit sales of Registrable Securities pursuant
to, Rule 144 or Rule 144A; and

<PAGE>

         (d)      so long as a Holder owns any Registrable Securities, to
furnish to the Holder promptly upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 (at any time
prior to ninety (90) days after the effective date of the first Registration
Statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to the reporting requirements of the Exchange Act), a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company, and take such further actions, as a Holder
may reasonably request in availing itself of any Rule or regulation of the
Commission allowing a Holder to sell any such Registrable Securities without
registration.

4.       REGISTRATION PROCEDURES

         In connection with the obligations of the Company with respect to any
registration pursuant to this Agreement, the Company shall use its best efforts
to effect or cause to be effected the registration of the Registrable Securities
under the Securities Act to permit the sale of such Registrable Securities by
the Holder or Holders in accordance with the Holder's or Holders' intended
method or methods of distribution, and the Company shall:

         (a)      prepare and file with the Commission, as specified in this
Agreement, a Registration Statement, which Registration Statement shall comply
as to form in all material respects with the requirements of the applicable form
and include all financial statements required by the Commission to be filed
therewith, and use its best efforts to cause such Registration Statement to
become effective as soon as practicable after filing and to remain effective,
subject to Section 5 hereof, until the earlier of (i) the date on which all such
Registrable Securities are sold in accordance with the intended distribution of
such Registrable Securities, (ii) none of the Units, the shares of Common Stock
comprising the Units, the Warrants or the shares of Common Stock underlying the
Warrants or any portion thereof are Registrable Securities or (iii) the second
anniversary of the effective date of such Registration Statement (subject to
extension as provided in Section 5(c) hereof), provided, however, that the
Company shall not be required to cause any IPO Registration Statement to remain
effective for any period longer than ninety (90) days following the effective
date of such IPO Registration Statement (subject to extension as provided in
Section 5(c) hereof); provided, further, that if the Company has an effective
Shelf Registration Statement on Form S-11 under the Securities Act and becomes
eligible to use Form S-3 or such other short-form registration statement form
under the Securities Act, the Company may, upon thirty (30) Business Days prior
notice to all Holders of Registrable Securities, register any Registrable
Securities registered but not yet distributed under the effective Shelf
Registration Statement on such a short-form Shelf Registration Statement and,
once the short-form Shelf Registration Statement is declared effective,
de-register such shares under the previous Registration Statement or transfer
the filing fees from the previous Shelf Registration Statement (such transfer
pursuant to Rule 429, if applicable) unless any Holder of Registrable Securities
registered under the initial Shelf Registration Statement notifies the Company
within twenty (20) Business Days of receipt of the Company notice that such a
registration under a new Shelf Registration Statement and de-registration of the
initial Shelf Registration

<PAGE>

Statement would interfere with its distribution of Registrable Securities
already in progress; the Company shall furnish at a reasonable time prior to the
filing thereof with the Commission, a copy of any Registration Statement and
each amendment or supplement, if any, to the Prospectus included therein
(including any documents incorporated by reference therein) and shall use its
best efforts to reflect in each such document, when so filed with the
Commission, such comments as JMP or such other representative of all the Holders
may reasonably propose.

         (b)      subject to Section 4(i) of this Agreement, (i) prepare and
file with the Commission such amendments and post-effective amendments to each
such Registration Statement as may be necessary to keep such Registration
Statement effective for the period described in Section 4(a) hereof; (ii) cause
each Prospectus contained therein to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424; and (iii)
comply in all material respects with the provisions of the Securities Act with
respect to the disposition of all securities covered by each Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the selling Holders thereof;

         (c)      furnish to the Holders of Registrable Securities, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other documents as
such Holder may reasonably request, in order to facilitate the public sale or
other disposition of the Registrable Securities; the Company consents to the use
of such Prospectus, including each preliminary Prospectus, by the Holders of
Registrable Securities, if any, in connection with the offering and sale of the
Registrable Securities covered by any such Prospectus;

         (d)      use its best efforts to register or qualify, or obtain
exemption from the registration or qualification requirements for, all
Registrable Securities by the time the applicable Registration Statement is
declared effective by the Commission under all applicable state securities or
"blue sky" laws of such jurisdictions as JMP shall reasonably request in
writing, keep each such registration or qualification or exemption effective
during the period such Registration Statement is required to be kept effective
pursuant to Section 4(a) and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities owned by
such Holder; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction or to register as a broker
or dealer in such jurisdiction where it would not otherwise be required to
qualify but for this Section 4(d) and except as may be required by the
Securities Act, (ii) subject itself to taxation in any such jurisdiction, or
(iii) submit to the general service of process in any such jurisdiction;

         (e)      use its best efforts to cause all Registrable Securities
covered by such Registration Statement to be registered and approved by such
other governmental agencies or authorities as may be necessary to enable the
Holders thereof to consummate the disposition of such Registrable Securities;

<PAGE>

         (f)      notify JMP and each Holder of Registrable Securities promptly
and, if requested by JMP or any Holder, confirm such advice in writing (i) when
a Registration Statement has become effective, when any post-effective
amendments become effective or upon the filing of a supplement to any
Prospectus, (ii) of the issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any Proceeding for that purpose, (iii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or related Prospectus
or for additional information (such notice to be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been
made), (iv) of the happening of any event during the period a Registration
Statement is effective as a result of which such Registration Statement or the
related Prospectus or any document incorporated by reference therein contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, or any document incorporated by reference therein,
in light of the circumstances under which they were made) not misleading (such
notice to be accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made) and (v) at the request of any such
Holder, promptly to furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such Prospectus as may be necessary so that, as
thereafter delivered to the purchaser of such securities, such Prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;

         (g)      make every reasonable effort to avoid the issuance of, or if
issued, to obtain the withdrawal of, any order enjoining or suspending the use
or effectiveness of a Registration Statement or suspending the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as promptly as practicable;

         (h)      upon request, furnish to each requesting Holder of Registrable
Securities, without charge, at least one conformed copy of each Registration
Statement and any post-effective amendment or supplement thereto (including
documents incorporated therein by reference or exhibits thereto, if requested);

         (i)      except as provided in Section 5, upon the occurrence of any
event contemplated by Section 4(f)(iv) hereof, prepare as promptly as
practicable a supplement or post-effective amendment to a Registration Statement
or the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;

<PAGE>

         (j)      if requested by the representative of the underwriters, if
any, or any Holders of Registrable Securities being sold in connection with such
offering, (i) as promptly as practicable incorporate in a Prospectus supplement
or post-effective amendment such information as the representative of the
underwriters, if any, or such Holders indicate relates to them or otherwise
reasonably request be included therein and (ii) make all required filings of
such Prospectus supplement or such post- effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;

         (k)      use its best efforts to furnish to each Holder of Registrable
Securities covered by a Registration Statement for an Underwritten Offering and
the underwriters a signed counterpart, addressed to each such Holder and the
underwriters of: (i) an opinion of counsel for the Company, dated as of the date
of each closing of the sale of Registrable Securities pursuant to such
Registration Statement for an Underwritten Offering, reasonably satisfactory to
the underwriters, covering such matters as are customarily covered in opinions
delivered to underwriters in underwritten public offerings of securities; and
(ii) a "comfort" letter, dated the effective date of such Registration Statement
for an Underwritten Offering and the date of each closing under the underwriting
agreement, signed by the independent public accountants who have certified the
Company's financial statements included in such Registration Statement for an
Underwritten Offering, covering substantially the same matters with respect to
such Registration Statement for an Underwritten Offering (and the Prospectus
included therein) and with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to underwriters in underwritten public offerings of securities and
such other financial matters as the underwriters may reasonably request;

         (l)      enter into customary agreements (including in the case of an
Underwritten Offering, an underwriting agreement in customary form) and take all
other action in connection therewith in order to expedite or facilitate the
distribution of the Registrable Securities included in such Registration
Statement and, in the case of an Underwritten Offering, make representations and
warranties to the underwriters in such form and scope as are customarily made by
issuers to underwriters in underwritten offerings, to make the same
representations and warranties to the Holders of Registrable Securities covered
by such Registration Statement and confirm the same to the extent customary if
and when requested;

         (m)      make available for inspection by one representative of the
Holders and the representative of any underwriters participating in any
disposition pursuant to a Registration Statement and one law firm and one
accounting firm retained by each representative of such Holders or underwriters,
all financial and other records, corporate documents and properties of the
Company and cause the officers, directors and employees of the Company to supply
all information reasonably requested by any such representative, the
representative of the underwriters, counsel thereto or accountants in connection
with a Registration Statement; provided, however, that such records, documents
or information that the Company determines, in good faith, to be confidential

<PAGE>

and notifies such representatives, representative of the underwriters, counsel
thereto or accountants are confidential shall not be disclosed by the
representatives, representative of the underwriters, counsel thereto or
accountants unless (i) the disclosure of such records, documents or information
is necessary to avoid or correct a material misstatement or omission in a
Registration Statement or Prospectus, (ii) the release of such records,
documents or information is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, or (iii) such records, documents or information
have been generally made available to the public by the Company;

         (n)      use its best efforts (including, without limitation, seeking
to cure any deficiencies cited by the exchange or market in the Company's
listing or inclusion application) to list or include all Registrable Securities
on the Nasdaq Stock Market (unless the Company qualifies and chooses to list all
Registrable Securities on the New York Stock Exchange, in which event the
Company shall use its best efforts to list all Registrable Securities on the New
York Stock Exchange);

         (o)      prepare and file in a timely manner all documents and reports
required by the Exchange Act and, to the extent the Company's obligation to file
such reports pursuant to Section 15(d) of the Exchange Act expires prior to the
expiration of the effectiveness period of the Registration Statement as required
by Section 4(a) hereof, the Company shall register the class of securities
represented by the Registrable Securities under the Exchange Act and shall
maintain such registration through the effectiveness period required by Section
4(a) hereof;

         (p)      provide a CUSIP number for the class of securities represented
by the Registrable Securities, not later than the effective date of the
Registration Statement;

         (q)      (i) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, (ii) make generally
available to its stockholders, as soon as reasonably practicable, earnings
statements covering at least twelve (12) months beginning after the effective
date of the Registration Statement that satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder, no later than forty-five (45)
days after the end of each fiscal year of the Company and (iii) not file any
Registration Statement or Prospectus or amendment or supplement to such
Registration Statement or Prospectus to which the Holders of at least 66 and
2/3% of Registrable Securities covered by any Registration Statement shall have
reasonably objected on the grounds that such Registration Statement or
Prospectus or amendment or supplement does not comply in all material respects
with the requirements of the Securities Act, such Holders having been furnished
with a copy thereof at least two (2) Business Days prior to the filing thereof;

         (r)      provide and cause to be maintained a registrar and transfer
agent for all Registrable Securities covered by any Registration Statement from
and after a date not later than the effective date of such Registration
Statement;

<PAGE>

         (s)      in connection with any sale or transfer of the Registrable
Securities (whether or not pursuant to a Registration Statement) that will
result in the security being delivered no longer being Registrable Securities,
cooperate with the Holders and the representative of the underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing
the Registrable Securities to be sold, which certificates shall not bear any
transfer restrictive legends and to enable such Registrable Securities to be in
such denominations and registered in such names as the representative of the
underwriters, if any, or the Holders may request at least two (2) Business Days
prior to any sale of the Registrable Securities; and

         (t)      upon effectiveness of the first Registration Statement filed
under this Agreement, the Company will take such actions and make such filings
as are necessary to effect the registration of the Common Stock under the
Exchange Act simultaneously with or immediately following the effectiveness of
the Registration Statement.

         The Company may require the Holders of Registrable Securities to
furnish to the Company such information regarding the proposed distribution by
such Holder of such Registrable Securities as the Company may from time to time
reasonably request in writing or as shall be required to effect the registration
of the Registrable Securities and no Holder shall be entitled to be named as a
selling stockholder in any Registration Statement and no Holder shall be
entitled to use the Prospectus forming a part thereof if such Holder does not
provide such information to the Company.

         Each Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 4(f)(iii) or
4(f)(iv) hereof, such Holder will immediately discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus. If so directed
by the Company, such Holder will deliver to the Company (at the expense of the
Company) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.

5.       BLACK-OUT PERIOD; ADDITIONAL DIVIDENDS

         (a)      Subject to the provisions of this Section 5 and a good faith
determination by a majority of the Board of Directors of the Company that it is
in the best interests of the Company to suspend the use of the Registration
Statement, following the effectiveness of a Registration Statement (and the
filings with any international, federal or state securities commissions), the
Company, by notice to JMP and to the Holders, may direct the Holders to suspend
sales of the Registrable Securities pursuant to the Registration Statement for a
period not to exceed thirty (30) days in any three month period or ninety (90)
days in the aggregate in any twelve (12) month period, if any of the following
events shall occur: (i) a primary Underwritten Offering by the Company where the
Company is advised by the representative of the underwriters for such
Underwritten Offering that the sale of Registrable Securities pursuant to the
Registration Statement would have a material adverse effect on the Company's
primary offering; or (ii) pending negotiations relating

<PAGE>

to, or the consummation of, a transaction or the occurrence of an event (x) that
would require additional disclosure of material information by the Company in
the Registration Statement (or such filings) and which has not been so
disclosed, (y) as to which the Company has a bona fide business purpose for
preserving confidentiality, or (z) that renders the Company unable to comply
with Commission requirements, in each case under circumstances that would make
it unduly burdensome to cause the Registration Statement (or such filings) to
become effective or to promptly amend or supplement the Registration Statement
on a post-effective basis, as applicable. Upon the occurrence of any such
suspension, the Company shall use its best efforts to cause the Registration
Statement to become effective or to promptly amend or supplement the
Registration Statement on a post-effective basis or to take such action as is
necessary to make resumed use of the Registration Statement compatible with the
Company's best interests, as applicable, so as to permit the Holders to resume
sales of the Registrable Securities as soon as possible.

         (b)      Subject to the limitations in Section 5(a), in the case of an
event that causes the Company to suspend the effectiveness of a Registration
Statement pursuant to Section 5(a) (a "Suspension Event"), the Company shall
give notice (a "Suspension Notice") to JMP and to the Holders to suspend sales
of the Registrable Securities the Suspension Notice shall state that such
suspension shall continue only for so long as the Suspension Event or its effect
is continuing and the Company is taking all reasonable steps to terminate
suspension of the effectiveness of the Registration Statement as promptly as
possible. The Holders shall not effect any sales of the Registrable Securities
pursuant to such Registration Statement (or such filings) at any time after it
has received a Suspension Notice from the Company and prior to receipt of an End
of Suspension Notice. If so directed by the Company, each Holder will deliver to
the Company (at the expense of the Company) all copies other than permanent file
copies then in such Holder's possession of the Prospectus covering the
Registrable Securities at the time of receipt of the Suspension Notice. The
Holders may recommence effecting sales of the Registrable Securities pursuant to
the Registration Statement (or such filings) following further notice to such
effect (an "End of Suspension Notice") from the Company, which End of Suspension
Notice shall be given by the Company to the Holders and JMP in the manner
described above promptly following the conclusion of any Suspension Event and
its effect.

         (c)      If the Company shall give a Suspension Notice pursuant to this
Section 5, the Company agrees that it shall extend the period of time during
which the Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from the date of the giving of
the Suspension Notice to and including the date when Holders shall have received
the End of Suspension Notice and copies of the supplemented or amended
Prospectus necessary to resume sales.

         (d)      If (i) the IPO Registration Statement, if required to be
filed, is not filed with the Commission on or prior to December 31, 2003, (ii)
the IPO Registration Statement is not declared effective by the Commission by
June 30, 2004, (iii) the Shelf Registration Statement, if required to be filed,
is not filed with the Commission on or

<PAGE>

prior to the later of December 31, 2003, or thirty (30) days after the earlier
of the withdrawal or abandonment of the offering pursuant to the IPO
registration statement (iv) the Shelf Registration Statement, if required to be
filed, is not filed within one hundred eighty (180) days of the consummation of
the offering pursuant to the IPO Registration Statement, (v) the Shelf
Registration Statement is not declared effective by the Commission by June 30,
2004 or in the case of a Shelf Registration Statement required to be filed
pursuant to Section 2(a)(iv), the Shelf Registration Statement is not declared
effective by the Commission within eighty (80) days after the filing thereof or
(vi) after the IPO Registration Statement or the Shelf Registration Statement
has been declared effective such Registration Statement ceases to be effective
or usable in connection with resales of Registrable Securities during a period
in which it is required to be effective without being succeeded immediately by
any additional Registration Statement or post-effective amendment covering the
Registrable Securities, which has been filed and declared effective, a
"Registration Default" will be deemed to have occurred. In the case of a
Registration Default, the Company will pay additional dividends ("Additional
Dividends") to each holder of Registrable Securities who has complied with such
Holder's obligations under this Agreement. Additional Dividends will paid by the
Company out of funds required to be allocated and distributed to the entities
through which the Company holds its interest in Arbor Realty Limited
Partnership, a Delaware limited partnership (the "OP") out of the OP's income.
The amount of Additional Dividends payable during any quarter in which a
Registration Default has occurred and is continuing shall be $.0625 per share of
Common Stock which constitutes or underlies a Registrable Security (subject to
adjustment in the event of a stock split, stock recombination, stock dividend
and the like) and shall escalate at the end of such quarter and at the end of
each quarter thereafter by an additional $.0625 per share of Common Stock which
constitutes or underlies a Registrable Security (subject to adjustment in the
event of a stock split, stock recombination, stock dividend and the like);
provided that, such Additional Dividends shall not exceed $.25 per share of
Common Stock which constitutes or underlies a Registrable Security (subject to
adjustment in the event of a stock split, stock recombination, stock dividend
and the like) per quarter. Following the cure of all Registration Defaults,
Additional Dividends will cease to accrue with respect to such Registration
Default. To the extent a Registration Default is cured during a quarter, partial
Additional Dividends shall be payable for such quarter and shall be calculated
on the basis of a ninety day quarter consisting of three equal thirty day
months. All accrued Additional Dividends shall be paid by wire transfer of
immediately available funds or by federal funds check by the Company on the
first Business Day of each quarter following a Registration Default. In the
event that any Additional Dividends are not paid when due, such overdue
Additional Dividends, if any, shall bear interest until paid at the maximum
interest rate allowed by law, compounded quarterly. The parties hereto agree
that the Additional Dividends provided for in this Section 5(d) constitute a
reasonable estimate of the damages that may be incurred by Holders by reason of
a Registration Default.

<PAGE>

6.       INDEMNIFICATION AND CONTRIBUTION

         (a)      The Company agrees to indemnify and hold harmless (i) JMP and
each Holder of Registrable Securities, (ii) each Person, if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act), any such Person (any of the Persons referred to in this clause
(ii) being hereinafter referred to as a "Controlling Person"), and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any such Person or any Controlling Person (any Person referred to in clause
(i), (ii) or (iii) may hereinafter be referred to as an "Purchaser Indemnitee"),
to the fullest extent lawful, from and against any and all losses, claims,
damages, judgments, actions, out-of-pocket expenses, and other liabilities (the
"Liabilities"), including without limitation and as incurred, reimbursement of
all reasonable costs of investigating, preparing, pursuing or defending any
claim or action, or any Proceeding by any governmental agency or body, commenced
or threatened, including the reasonable fees and expenses of counsel to any
Purchaser Indemnitee, joint or several, directly or indirectly related to, based
upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished to
such Purchaser Indemnitee any amendments or supplements thereto), or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
Liabilities arise out of or are based upon (x) any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Purchaser Indemnitee furnished to the Company
or any underwriter in writing by such Purchaser Indemnitee expressly for use
therein, (y) any untrue statement contained in or omission from a Prospectus if
a copy of the corrected Prospectus (as then amended or supplemented, if the
Company shall have furnished to or on behalf of the Holder participating in the
distribution relating to the relevant Registration Statement any amendments or
supplements thereto) was not sent or given by or on behalf of such Holder to the
Person asserting any such Liabilities who purchased Registrable Securities, if
such Prospectus (or Prospectus as amended or supplemented) is required by law to
be sent or given at or prior to the written confirmation of the sale of such
Shares to such Person and the untrue statement contained in or omission from
such Prospectus was corrected (or the Prospectus as amended or supplemented), or
(z) use of any Registration Statement, Prospectus or any preliminary Prospectus
during a period when a stop order has been issued in respect thereof or any
Proceeding for that purpose have been initiated, or use of a Prospectus or any
preliminary Prospectus has been suspended pursuant to Sections 4(f)(ii),
4(f)(iii), 4(f)(iv) or 5(a); provided, however, in each case, that the Company
provided prior notice of such stop order, initiation of Proceedings or
suspension. The Company shall notify the Holders promptly of the institution,
threat or assertion of any claim, Proceeding (including any governmental
investigation), or litigation of which it shall have become aware in connection
with the matters addressed by this Agreement which involves the Company or a
Purchaser Indemnitee. The indemnity provided for herein shall remain in full
force and effect regardless of any investigation made by or on behalf of any
Purchaser Indemnitee.

<PAGE>

         (b)      In connection with any Registration Statement in which a
Holder of Registrable Securities is participating, such Holder agrees, severally
and not jointly, to indemnify and hold harmless the Company, each Person who
signs the Registration Statement, each Person who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act and the respective partners, directors, officers, members, representatives,
employees and agents of such Person or Controlling Person to the same extent as
the foregoing indemnity from the Company to each Purchaser Indemnitee, but only
with reference to untrue statements or omissions or alleged untrue statements or
omissions made in reliance upon and in strict conformity with information
relating to such Purchaser Indemnitee furnished to the Company in writing by
such Purchaser Indemnitee expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary Prospectus.
The liability of any Purchaser Indemnitee pursuant to this paragraph shall in no
event exceed the net proceeds received by such Purchaser Indemnitee from sales
of Registrable Securities giving rise to such obligations.

         (c)      If any suit, action, Proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to paragraph (a)
or (b) above, such Person (the "Indemnified Party"), shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party"), in
writing of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 6, except to the extent the Indemnifying Party is materially
prejudiced by the failure to give notice), and the Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such Proceeding and shall pay the
reasonable fees and expenses actually incurred by such counsel related to such
Proceeding. Notwithstanding the foregoing, in any such Proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party,
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed in writing to the contrary, (ii) the Indemnifying Party failed within a
reasonable time after notice of commencement of the action to assume the defense
and employ counsel reasonably satisfactory to the Indemnified Party, (iii) the
Indemnifying Party and its counsel do not actively and vigorously pursue the
defense of such action or (iv) the named parties to any such action (including
any impleaded parties), include both such Indemnified Party and the Indemnifying
Party, or any Affiliate of the Indemnifying Party, and such Indemnified Party
shall have been reasonably advised by counsel that, either (x) there may be one
or more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party or such Affiliate of the Indemnifying
Party or (y) a conflict may exist between such Indemnified Party and the
Indemnifying Party or such Affiliate of the Indemnifying Party (in which case
the Indemnifying Party shall not have the right to assume nor direct the defense
of such action on behalf of such Indemnified Party, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
action or separate but

<PAGE>

substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel), for all such Indemnified Parties, which firm shall be
designated, in the case of Purchaser Indemnities, in writing by those
Indemnified Parties who sold a majority of the Registrable Securities sold by
all such Indemnified Parties and any such separate firm for the Company, the
directors, the officers and such control Persons of the Company as shall be
designated in writing by the Company. The Indemnifying Party shall not be liable
for any settlement of any Proceeding effected without its written consent, which
consent shall not be unreasonably withheld, but if settled with such consent or
if there be a final, non-appealable judgment for the plaintiff, the Indemnifying
Party agrees to indemnify any Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened Proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

         (d)      If the indemnification provided for in paragraphs (a) and (b)
of this Section 6 is for any reason held to be unavailable to an Indemnified
Party in respect of any Liabilities referred to therein (other than by reason of
the exceptions provided therein) or is insufficient to hold harmless a party
indemnified thereunder, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Liabilities
(i) in such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Party(ies) on the other
in connection with the statements or omissions that resulted in such
Liabilities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party(ies) and the Indemnified Party, as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and any Purchaser Indemnitees on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Purchaser Indemnitees
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

         (e)      The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
(even if such indemnified parties were treated as one entity for such purpose),
or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph 6(d) above. The amount paid or payable
by an Indemnified Party as a result of any Liabilities referred to paragraph
6(d) shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses actually incurred by

<PAGE>

such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6, in no event
shall a Purchaser Indemnitee be required to contribute any amount in excess of
the amount by which proceeds received by such Purchaser Indemnitee from sales of
Registrable Securities exceeds the amount of any damages that such Purchaser
Indemnitee has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. For purposes of this
Section 6, each Person, if any, who controls (within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act) JMP or a Holder of Registrable
Securities shall have the same rights to contribution as JMP or such Holder, as
the case may be, and each Person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act) the Company, and
each officer, director, partner, employee, representative, agent or manager of
the Company shall have the same rights to contribution as the Company. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or Proceeding against such party in respect of which a claim
for contribution may be made against another party or parties, notify each party
or parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 6 or otherwise, except to the extent that any party is materially
prejudiced by the failure to give notice. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act),
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

         (f)      The indemnity and contribution agreements contained in this
Section 6 will be in addition to any liability which the indemnifying parties
may otherwise have to the indemnified parties referred to above. The Purchaser
Indemnitee's obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of Shares sold by each of the Purchaser
Indemnitees hereunder and not joint.

7.       MARKET STAND-OFF AGREEMENT

         Each Holder hereby agrees that it shall not, to the extent requested by
the Company or an underwriter of securities of the Company, sell or otherwise
transfer or dispose of any Registrable Securities or other shares of Common
Stock of the Company or any securities convertible into or exchangeable or
exercisable for shares of Common Stock of the Company then owned by such Holder
(other than to donees or partners of the Holder who agree to be similarly bound)
within thirty (30) days prior to and one hundred eighty (180) days following
either (x) the effective date of an IPO Registration Statement of the Company
filed under the Securities Act or (y) the date of an Underwritten Offering
pursuant to a Shelf Registration Statement of the Company filed under the
Securities Act; provided, however, that with respect to the one hundred eighty
(180)-day restriction that follows the effective date of an IPO Registration
Statement, such agreement shall not be applicable to Registrable Securities sold
pursuant to such Registration Statement.

<PAGE>

         In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the
securities subject to this Section 7 and to impose stop transfer instructions
with respect to the Registrable Securities and such other securities of each
Holder (and the securities of every other Person subject to the foregoing
restriction) until the end of such period.

8.       MARKET MAKING

         In connection with the listing of the Registrable Securities, JMP shall
act as a market maker and shall use its reasonable efforts to engage additional
market makers as may be required under the rules and regulations of the Nasdaq
Stock Market or the New York Stock Exchange, as applicable. JMP shall have no
obligation to act as a market maker or use its reasonable efforts to engage
additional market makers after the Company completes a subsequent underwritten
public offering of its common shares.

9.       TERMINATION OF THE COMPANY'S OBLIGATION

         Subject to Section 11(j) of this Agreement, the Company shall have no
obligation pursuant to this Agreement with respect to any Registrable Securities
proposed to be sold by a Holder in a registration pursuant to this Agreement if,
in the opinion of counsel to the Company, all such Registrable Securities
proposed to be sold by a Holder may be sold in a three-month period without
registration under the Securities Act pursuant to Rule 144 under the Securities
Act.

10.      LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS

         From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holders of a majority of the shares of
Common Stock and Common Stock equivalents representing or underlying the then
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company that would allow such holder
or prospective holder (a) to include such securities in any Registration
Statement filed pursuant to the terms hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of such holder's or
prospective holder's securities will not reduce the amount of Registrable
Securities of the Holders that is included, or (b) to have his securities
registered on a registration statement that could be declared effective prior
to, or within one hundred twenty (120) days of, the effective date of any
Registration Statement filed pursuant to this Agreement.

11.      MISCELLANEOUS

         (a)      Remedies. In the event of a breach by the Company of any of
its obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein or, in the
case of JMP, in the Purchase/Placement Agreement, or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. Subject to

<PAGE>

Section 6, the Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

         (b)      Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, without the written consent of the Company and Holders
beneficially owning not less than fifty percent (50%) of the shares of Common
Stock and Common Stock equivalents representing or underlying the then
outstanding Registrable Securities; provided, however, that for purposes of this
Agreement, Registrable Securities that are owned, directly or indirectly, by an
Affiliate of the Company shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
Notwithstanding the foregoing, a waiver or consent to or departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of a Holder whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders may be given by such Holder; provided,
however, that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

         (c)      Notices. All notices and other communications, provided for or
permitted hereunder shall be made in writing by delivered by facsimile (with
receipt confirmed), overnight courier or registered or certified mail, return
receipt requested, or by telegram

                  (i)      if to a Holder of Registrable Securities, at the most
         current address given by the transfer agent and registrar of the
         Registrable Securities to the Company; and

                  (ii)     if to the Company at the offices of the Company at
         333 Earle Ovington Boulevard, Suite 900, Uniondale, New York 11553,
         Attention: Frederick C. Herbst; (facsimile: (516) 832-8043) or to such
         other address as the Company may have furnished to JMP in writing in
         accordance with this Agreement.

         (d)      Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including, without limitation and without the need for an express
assignment or assumption, subsequent Holders of Registrable Securities. The
Company agrees that the Holders shall be third party beneficiaries to the
agreements made hereunder by JMP and the Company, and each Holder shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder; provided,
however, that such Holder fulfills all of its obligations hereunder.

<PAGE>

         (e)      Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

         (f)      Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

         (g)      Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY STATE COURT IN THE STATE OF NEW YORK OR ANY
FEDERAL COURT SITTING IN STATE OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

         (h)      Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties hereto that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

         (i)      Entire Agreement. This Agreement, together with the
Purchase/Placement Agreement, is intended by the parties hereto as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein.

         (j)      Survival. This Agreement is intended to survive the
consummation of the transactions contemplated by the Purchase/Placement
Agreement. The indemnification

<PAGE>

and contribution obligations under Section 6 of this Agreement shall survive the
termination of the Company's obligations under Sections 2 or 9 of this
Agreement.

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                              ARBOR REALTY TRUST, INC.

                                              By: /s/ Frederick C. Herbst
                                                  ---------------------------
                                                  Frederick C. Herbst
                                                  Chief Financial Officer

                                              JMP SECURITIES LLC

                                              By: /s/ Carter D. Mack
                                                  ---------------------------
                                                  Carter D. Mack
                                                  Managing Director

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>11
<FILENAME>y90410exv10w1.txt
<DESCRIPTION>MANAGEMENT AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

                        MANAGEMENT AND ADVISORY AGREEMENT

                  THIS MANAGEMENT AND ADVISORY AGREEMENT is made as of July 1,
2003 (the "Agreement") by and among ARBOR REALTY TRUST, INC., a Maryland
corporation ("Parent REIT"), ARBOR REALTY LIMITED PARTNERSHIP, a Delaware
limited partnership (the "Operating Partnership", and together with Parent REIT,
collectively, the "Company"), and ARBOR COMMERCIAL MORTGAGE, LLC, a New York
limited liability company (together with its permitted assigns, "Manager").

                              W I T N E S S E T H :

                  WHEREAS, Parent REIT expects to qualify for the tax benefits
available to a REIT (as defined below);

                  WHEREAS, Arbor Realty GPOP, Inc., a Delaware corporation and a
wholly owned subsidiary of the Parent REIT ("GPOP") is the sole general partner
of the Operating Partnership and Arbor Realty LPOP, Inc., a Delaware corporation
and a wholly owned subsidiary of the Parent REIT ("LPOP") is a limited partner
of the Operating Partnership, and Parent REIT has contributed (or will
contribute on the Closing Date (as defined below)) to GPOP and LPOP all of its
assets (including, without limitation, all of the proceeds of the initial 144A
securities offering of the Common Shares, as further described in that certain
Offering Memorandum, dated June 26, 2003 (the "Offering Memorandum"), and GPOP
and LPOP will in turn contribute such assets to the Operating Partnership, and
the Parent REIT will conduct substantially all of its operations through the
Operating Partnership;

                  WHEREAS, Parent REIT and the Operating Partnership desire to
avail themselves of the experience, sources of information, advice, assistance
and certain facilities of or available to Manager and to have Manager undertake
the duties and responsibilities hereinafter set forth on behalf of Parent REIT
and the Operating Partnership as provided in this Agreement; and

                  WHEREAS, Manager is willing to render such services on the
terms and conditions hereinafter set forth.

                  NOW THEREFORE, in consideration of the mutual agreements
herein set forth, the parties hereto agree as follows:

         1.       Definitions. The following terms have the meanings assigned
                  them:

                  (a)      "Agreement" has the meaning assigned in the first
paragraph.

                  (b)      "Board of Directors" means the Board of Directors of
Parent REIT first named herein, the provisions of Section 1(mm) to the contrary
notwithstanding.

                                        1
<PAGE>

                  (c)      "Change of Control" means a change in the direct or
indirect (i) beneficial ownership of more than fifty percent (50%) of the
combined voting power (of any Person together with any affiliates of such Person
or Persons otherwise associated or acting in concert with such Person) of
Manager's then outstanding equity interests, or (ii) power to direct or control
the management policies of Manager, whether through the ownership of beneficial
equity interests, common directors or officers, by contract or otherwise. Change
of Control shall not include public offerings of the capital stock of Manager or
any assignment of this Agreement by Manager as permitted hereby and in
accordance with the terms hereof.

                  (d)      "Closing Date" means the date of this Agreement,
being the date of closing of Parent REIT's private placement of Common Shares as
identified in the Offering Memorandum.

                  (e)      "Code" means the Internal Revenue Code of 1986, as
amended.

                  (f)      "Common Share" means a share of capital stock of
Parent REIT now or hereafter authorized and issued as common voting stock of
Parent REIT.

                  (g)      "Company" has the meaning assigned in the first
paragraph.

                  (h)      "Company Account" has the meaning assigned in Section
5.

                  (i)      "Company Target Investments" means multifamily and
commercial mortgage loans and customized financing transactions, including
bridge loans, mezzanine loans, preferred equity investments, note acquisitions
and participation interests in owners of real properties.

                  (j)      "Company Termination Notice" has the meaning assigned
in Section 13(b).

                  (k)      "Deferred Interest" has the meaning assigned in
Section 8(c).

                  (l)      "Effective Termination Date" has the meaning assigned
in Section 13(b).

                  (m)      "Excess Funds" has the meaning assigned in Section
2(f).

                  (n)      "Exchange Act" means the Securities Exchange Act of
1934, as amended.

                  (o)      "Expenses" has the meaning assigned in Section 9.

                  (p)      "Funds from Operations" has the meaning assigned by
the National Association of Real Estate Investment Trusts and means net income
(computed in accordance with GAAP) excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization on real
estate assets, and after adjustments for unconsolidated partnerships and joint
ventures.

                  (q)      "GAAP" means generally accepted accounting principles
in effect in the U.S. on the date such principles are applied, consistently
applied.

                                        2
<PAGE>

                  (r)      "Governing Instruments" means, with respect to any
Person, the articles of incorporation and bylaws in the case of a corporation,
the certificate of limited partnership (if applicable) and partnership agreement
in the case of a general or limited partnership or the articles of formation and
operating agreement in the case of a limited liability company.

                  (s)      "Guidelines" has the meaning assigned in Section
2(b)(i).

                  (t)      "Incentive Fee" has the meaning assigned in Section
8(d)(i).

                  (u)      "Incentive Fee Payment" has the meaning assigned in
Section 8(d)(ii).

                  (v)      "Independent Directors" means the members of the
Board of Directors who are not officers or employees of Manager and who are
otherwise "independent" in accordance with Parent REIT's Governing Instruments.

                  (w)      "Initial Assets" means the investments contributed to
the Company on the Closing Date described on pages 44 through 52 of the Offering
Memorandum.

                  (x)      "Invested Equity" has the meaning assigned in Section
8(a)(i).

                  (y)      "Investment Company Act" means the Investment Company
Act of 1940, as amended.

                  (z)      "Investments" means the investments of the Company.

                  (aa)     "Management Fee" has the meaning assigned in Section
8(a)(i).

                  (bb)     "Management Fee Payment" has the meaning assigned in
Section 8(a)(ii).

                  (cc)     "Manager" has the meaning assigned in the first
paragraph.

                  (dd)     "Manager Indemnified Party" has the meaning assigned
in Section 11(b).

                  (ee)     "Manager Parties" has the meaning assigned in Section
3(b).

                  (ff)     "Manager Target Investments" has the meaning assigned
in Section 3(c).

                  (gg)     "Manager Termination Notice" has the meaning assigned
in Section 13(d).

                  (hh)     "Notice of Proposal to Negotiate" has the meaning
assigned in Section 13(c).

                  (ii)     "Non-Competition Agreement" means that certain
Non-Competition Agreement, dated as of the date hereof, among Parent REIT, the
Operating Partnership and Principal.

                  (jj)     "Offering Memorandum" has the meaning assigned in the
recitals.

                                        3
<PAGE>

                  (kk)     "OP Unit" means a unit of partnership interest in the
Operating Partnership now or hereafter authorized and issued as a unit of
partnership interest in the Operating Partnership.

                  (ll)     "Operating Partnership" has the meaning assigned in
the first paragraph.

                  (mm)     "Parent REIT" has the meaning assigned in the first
paragraph. All references herein to Parent REIT shall, except as otherwise
expressly provided herein, be deemed to include the Parent REIT first named
herein and the Subsidiaries of the Parent REIT; provided, that unless any such
Subsidiary seeks to qualify for the tax benefits available to a REIT, provisions
of this Agreement contemplating Parent REIT's status as a REIT shall apply only
to Parent REIT and not to such Subsidiary, other than to the extent the same
affect the Parent REIT first named herein.

                  (nn)     "Person" means any individual, corporation,
partnership, joint venture, limited liability company, estate, trust,
unincorporated association, any federal, state, county or municipal government
or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.

                  (oo)     "Principal" means Ivan Kaufman, an individual.

                  (pp)     "REIT" means a corporation or trust which qualifies
as a real estate investment trust in accordance with Sections 856 through 860 of
the Code.

                  (qq)     "Services Agreement" means that certain Services
Agreement, dated as of the date hereof, among the parties hereto.

                  (rr)     "Subsidiary" means any subsidiary of Parent REIT, any
partnership, the general partner of which is Parent REIT or any subsidiary of
Parent REIT and any limited liability company, the managing member of which is
Parent REIT or any subsidiary of Parent REIT.

                  (ss)     "Ten Year U.S. Treasury Rate" means the arithmetic
average of the weekly average yield to maturity for actively traded current
coupon U.S. Treasury fixed interest rate securities (adjusted to constant
maturities of ten (10) years) published by the Federal Reserve Board during a
fiscal year, or, if such rate is not published by the Federal Reserve Board, any
Federal Reserve Bank or agency or department of the federal government selected
by the Company. If the Company determines in good faith that the Ten Year U.S.
Treasury Rate cannot be calculated as provided above, then the rate will be the
arithmetic average of the per annum average yields to maturities, based upon
closing asked prices on each business day during a quarter, for each actively
traded marketable U.S. Treasury fixed interest rate security with a final
maturity date not less than eight (8) and not more than twelve (12) years from
the date of the closing asked prices as chosen and quoted for each business day
in each such quarter in New York City by at least three (3) recognized dealers
in U.S. government securities selected by the Company.

                  (tt)     "U.S." means United States of America.

                                        4
<PAGE>

         2.       Appointment and Duties of Manager.

                  (a)      Appointment. The Company hereby appoints Manager to
manage the assets of the Company subject to the further terms and conditions set
forth in this Agreement, and Manager hereby agrees to use its commercially
reasonable efforts to perform each of the duties set forth herein. The
appointment of Manager shall be exclusive to Manager except to the extent that
Manager otherwise agrees, in its sole and absolute discretion, and except to the
extent that Manager elects pursuant to the terms of this Agreement to cause the
duties of Manager hereunder to be provided by third parties.

                  (b)      Duties. Manager, in its capacity as manager of the
assets and the day-to-day operations of the Company, at all times will be
subject to the supervision of the Board of Directors and will have only such
functions and authority as the Company may delegate to it, including, without
limitation, the functions and authority identified herein and delegated to
Manager hereby. Manager will be responsible for the day-to-day operations of the
Company and will perform (or cause to be performed) such services and activities
relating to the assets and operations of the Company as may be appropriate,
including, without limitation:

                           (i)      serving as the Company's consultant with
         respect to the periodic review of the investment criteria and
         parameters for Investments, borrowings and operations, any
         modifications to which shall be approved by a majority of the
         Independent Directors (such policy guidelines as are in effect on the
         date hereof, as the same may be modified with such approval, the
         "Guidelines"), and other policies for approval by the Board of
         Directors;

                           (ii)     investigation, analysis and selection of
         investment opportunities;

                           (iii)    with respect to prospective investments by
         the Company and dispositions of Investments, conducting negotiations
         with real estate brokers, sellers and purchasers, and their respective
         agents and representatives, investment bankers, mortgage bankers and
         owners of privately and publicly held real estate companies;

                           (iv)     coordinating and managing operations of any
         joint venture or co-investment interests held by the Company and
         conducting all matters with the joint venture or co-investment
         partners;

                           (v)      providing executive and administrative
         personnel, office space and office services required in rendering
         services to the Company;

                           (vi)     administering the day-to-day operations of
         the Company and performing and supervising the performance of such
         other administrative functions necessary in the management of the
         Company as may be agreed upon by Manager and the Board of Directors,
         including, without limitation, collection of interest, fee and other
         income, payment of the Company's debts and obligations, payment of
         dividends or distributions to the holders of the Common Shares and
         maintenance of appropriate back-office infrastructure to perform such
         administrative functions;

                                        5
<PAGE>

                           (vii)    communicating on behalf of the Company with
         the holders of any equity or debt securities of the Company as required
         to satisfy the reporting and other requirements of any governmental
         entities or agencies or trading markets and to maintain effective
         relations with such holders;

                           (viii)   counseling Parent REIT in connection with
         policy decisions to be made by the Board of Directors;

                           (ix)     evaluating and recommending to the Board of
         Directors hedging strategies and, as the Board of Directors shall
         request or Manager shall deem appropriate, engaging in hedging
         activities on behalf of the Company, in a manner consistent with such
         strategies, as so modified from time to time, Parent REIT's status as a
         REIT and the Guidelines;

                           (x)      counseling Parent REIT regarding the
         maintenance of its status as a REIT and monitoring compliance with the
         various REIT qualification tests and other rules set out in the Code
         and the Treasury Regulations promulgated thereunder;

                           (xi)     counseling the Company regarding the
         maintenance of its exemption from the Investment Company Act and
         monitoring compliance with the requirements for maintaining such
         exemption;

                           (xii)    assisting the Company in developing criteria
         for debt and equity financing that is specifically tailored to the
         Company's investment objectives, making available to the Company its
         knowledge and experience with respect to Company Target Investments and
         other real estate and real estate-related transactions and serving as
         the originating lender of such investments comprising Company Target
         Investments;

                           (xiii)   representing and making recommendations to
         the Company in connection with its investment in a diversified
         portfolio of Company Target Investments and other real estate
         transactions with select borrowers and principals;

                           (xiv)    investing and re-investing any moneys and
         securities of Parent REIT or the Operating Partnership (including
         investing in short-term investments pending investment in Investments,
         payment of fees, costs and expenses or payments of dividends or
         distributions to stockholders and partners of Parent REIT and the
         Operating Partnership) and advising Parent REIT and the Operating
         Partnership with respect to its capital structure and capital raising;

                           (xv)     causing Parent REIT and the Operating
         Partnership to retain qualified accountants and legal counsel, as
         applicable, to assist in developing appropriate accounting and
         compliance procedures and testing systems with respect to financial
         reporting obligations, as applicable, and the Parent REIT's compliance
         with the provisions of the Code applicable to REITs and the Treasury
         Regulations promulgated thereunder and to conduct quarterly compliance
         reviews with respect thereto;

                                        6
<PAGE>

                           (xvi)    causing Parent REIT and the Operating
         Partnership to qualify to do business in all applicable jurisdictions
         and to obtain and maintain all appropriate licenses;

                           (xvii)   assisting Parent REIT and the Operating
         Partnership in complying with all regulatory requirements applicable to
         Parent REIT and the Operating Partnership in respect of its business
         activities, including preparing or causing to be prepared all financial
         statements required under applicable regulations and contractual
         undertakings and all reports and documents required under the Exchange
         Act;

                           (xviii)  taking all necessary actions to enable the
         Parent REIT and the Operating Partnership to make required tax filings
         and reports, including, with respect to the Parent REIT, soliciting
         stockholders for required information to the extent provided by the
         provisions of the Code applicable to REITs and the Treasury Regulations
         promulgated thereunder;

                           (xix)    handling and resolving all claims, disputes
         or controversies (including all litigation, arbitration, settlement or
         other proceedings or negotiations) in which the Company may be involved
         or to which the Company may be subject arising out of the Company's
         day-to-day operations, subject to such limitations or parameters as may
         be imposed from time to time by the Board of Directors;

                           (xx)     using commercially reasonable efforts to
         cause expenses incurred by or on behalf of the Company to be
         reasonable, customary and within any budgeted parameters or expense
         guidelines set by the Board of Directors from time to time;

                           (xxi)    using commercially reasonable efforts to
         cause Parent REIT and the Operating Partnership to comply with all
         applicable laws; and

                           (xxii)   performing such other services as may be
         required from time to time for management and other activities relating
         to the assets of the Company as the Board of Directors shall reasonably
         request or Manager shall deem appropriate under particular
         circumstances.

                  (c)      Subcontracts. Manager may enter into agreements with
other parties, including its affiliates, for the purpose of engaging one or more
property and/or asset managers for and on behalf, and at the sole cost and
expense, of the Company to provide property management, asset management,
leasing, development and/or similar services to the Company with respect to the
Investments, pursuant to property management agreement(s) and/or asset
management agreement(s) with terms which are then customary for agreements
regarding the management of assets similar in type, quality and value to the
assets of the Company; provided, that any such agreements entered into with
affiliates of Manager shall be (i) on terms no more favorable to such affiliate
then would be obtained from a third party on an arm's-length basis, and (ii) to
the extent the same do not fall within the provisions of the Guidelines,
approved by a majority of the Independent Directors.

                  (d)      Service Providers. Manager may retain for and on
behalf of the Company such services of accountants, legal counsel, appraisers,
insurers, brokers, transfer agents,

                                        7
<PAGE>

registrars, developers, investment banks, financial advisors, banks, other
lenders and other Persons, including Manager's affiliates, as Manager deems
necessary or advisable in connection with the management and operations of the
Company; provided, that any agreements entered into with affiliates of Manager
to perform any such services shall be (i) on terms no more favorable to such
affiliate then would be obtained from a third party on an arm's-length basis,
and (ii) to the extent the same do not fall within the provisions of the
Guidelines, approved by a majority of the Independent Directors. The Company
shall pay all expenses, and reimburse Manager for Manager's expenses incurred on
its behalf, in connection with any such services to the extent such expenses are
reimbursable by the Company to Manager pursuant to Section 9.

                  (e)      Reporting Requirements.

                           (i)      As frequently as Manager may deem necessary
         or advisable, or at the direction of the Board of Directors, Manager
         shall prepare, or cause to be prepared, with respect to any Investment
         (i) at the Company's sole cost and expense, an appraisal prepared by an
         independent real estate appraiser, (ii) reports and information on the
         Company's operations and asset performance, and (iii) such other
         information reasonably requested by the Company. The Company shall pay
         all expenses, and reimburse Manager for Manager's expenses incurred on
         its behalf, in connection with the foregoing clauses (ii) and (iii) to
         the extent such expenses are reimbursable by the Company to Manager
         pursuant to Section 9.

                           (ii)     Manager shall prepare, or cause to be
         prepared, at the sole cost and expense of the Company, all reports,
         financial or otherwise, with respect to Parent REIT and the Operating
         Partnership reasonably required by the Board of Directors in order for
         Parent REIT and the Operating Partnership to comply with their
         Governing Instruments or any other materials required to be filed with
         any governmental entity or agency, and shall prepare, or cause to be
         prepared, all materials and data necessary to complete such reports and
         other materials including, without limitation, an annual audit of the
         Company's books of account by a nationally recognized independent
         accounting firm of good reputation.

                           (iii)    Manager shall prepare regular reports for
         the Board of Directors to enable the Board of Directors to review the
         Company's acquisitions, portfolio composition and characteristics,
         credit quality, performance and compliance with the Guidelines and
         policies approved by the Board of Directors.

                  (f)      Excess Funds. Notwithstanding anything contained in
this Agreement to the contrary, except to the extent that the payment of
additional moneys is proven by the Company to have been required as a direct
result of Manager's acts or omissions which result in the right of the Company
to terminate this Agreement pursuant to Section 15 and except as expressly
provided in Section 11(c), Manager shall not be required to expend money
("Excess Funds") in excess of that contained in any applicable Company Account
or otherwise made available by the Company to be expended by Manager hereunder.

                  (g)      Reliance by Manager. In performing its duties under
this Section 2, Manager shall be entitled to rely reasonably on qualified
experts and professionals (including,

                                        8
<PAGE>

without limitation, accountants, legal counsel and other professional service
providers) hired by Manager.

         3.       Dedication; Right of First Refusal; Exclusivity; Survival.

                  (a)      Devotion of Time. Manager will provide a dedicated
management team, including the Chief Executive Officer, the Chief Financial
Officer and the Chief Operating Officer of Manager, to provide the management
services to be provided by Manager to the Company hereunder, the members of
which team shall devote such of their time to the management of the Company as
the Independent Directors deem necessary and appropriate, commensurate with the
level of activity of the Company from time to time. The Company shall have the
benefit of Manager's best judgment and effort in rendering services and, in
furtherance of the foregoing, Manager shall not undertake activities which, in
its reasonable judgment, will substantially adversely affect the performance of
its obligations under this Agreement.

                  (b)      Additional Activities; Right of First Refusal. Except
to the extent set forth in Section 3(a) and subject to the provisions of this
Section 3(b), Manager and any of its affiliates, and any of the officers and
employees of any of the foregoing (the "Manager Parties"), may engage in other
businesses and render services of any kind to any other Person, including
investment in, or advisory service to others investing in, Company Target
Investments and other real estate and real estate-related transactions;
provided, however, prior to any Manager Party engaging in transactions involving
or rendering services relating to Company Target Investments other than on
behalf of or to the Company, if (i) such transaction is consistent with the
Company's investment objectives and within the Guidelines, and (ii) the
parameters of the transaction are of a character which would not adversely
affect the status of Parent REIT as a REIT, Manager shall offer such investment
opportunity to the Company by delivering to the Company's credit committee a
written description thereof containing the economic and other material terms of
the transaction. The credit committee shall have five (5) days to accept or
reject the offer by a majority vote of the members of the credit committee. If
the credit committee rejects the offer, Manager shall present the investment
opportunity to the Independent Directors who shall have five (5) days to accept
or reject the offer by majority vote. If the Independent Directors reject the
offer and allow Manager to pursue the investment opportunity, any Manager Party
may pursue the same provided the economic and other material terms thereof are
not materially more beneficial to the applicable Manager Party than the economic
and other material terms to the Company would have been under the transaction
described in the original offer. If the economic and other material terms of the
transaction to be engaged in by the applicable Manager Party are modified so
that the benefits thereof to the applicable Manager Party are materially more
beneficial to the applicable Manager Party than such terms to the Company would
have been under the transaction described in the original offer, then Manager
must offer the revised transaction opportunity to the Company and the provisions
of this Section 3(b) shall apply to the revised offer as though it were an
original offer. If the Company accepts, either by majority vote of the credit
committee or the Independent Directors, an investment opportunity offered by
Manager hereunder, the Company must reimburse Manager for its expenses relating
thereto to the extent the same would be reimbursable by the Company to Manager
pursuant to Section 9. For the avoidance of doubt, the Manager Parties may not
pursue

                                        9
<PAGE>

an investment opportunity offered to the Company hereunder without the
Independent Directors' permission to do so as otherwise contemplated in this
Section 3(b).

                  (c)      Manager Exclusivity Rights. Manager and any other
Manager Party may, and the Company agrees not to, pursue any investment
opportunities consisting of multifamily and commercial mortgage loans that meet
the underwriting and approval guidelines of (i) Fannie Mae, (ii) the Federal
Housing Administration, and (iii) conduit commercial lending programs secured by
first liens on real property (collectively, "Manager Target Investments").

                  (d)      Officers, Employees, Etc. Manager, members, partners,
officers, employees and agents of Manager or affiliates of Manager may serve as
directors, officers, employees, agents, nominees or signatories for Parent REIT,
the Operating Partnership or any other Subsidiary, to the extent permitted by
their Governing Instruments, as may be amended from time to time, or by any
resolutions duly adopted by the Board of Directors pursuant to Parent REIT's
Governing Instruments. When executing documents or otherwise acting in such
capacities for Parent REIT, the Operating Partnership or such other Subsidiary,
such Persons shall use their respective titles with respect to Parent REIT, the
Operating Partnership or such Subsidiary.

                  (e)      Survival; Origination Period. For a period of one (1)
year following the expiration or earlier termination of this Agreement, Manager
shall continue (and have the exclusive right, if (i) the Company did not
terminate this Agreement for cause, or (ii) Manager terminated this Agreement
for cause, as cause for each party is determined in accordance with Section 15)
to serve as the originating lender of investments comprising Company Target
Investments as contemplated under Section 2(b)(xii), and the provisions and
terms of Sections 3(b), 3(c) and 8(b) shall continue to apply. For the avoidance
of doubt, Manager will not earn the Management Fee or the Incentive Fee during
this one (1) year period.

         4.       Agency. Manager shall act as agent of Parent REIT and the
Operating Partnership in making, acquiring, financing and disposing of
Investments, disbursing and collecting the Company's funds, paying the debts and
fulfilling the obligations of the Company, supervising the performance of
professionals engaged by or on behalf of Parent REIT or the Operating
Partnership and handling, prosecuting and settling any claims of or against the
Company, the Board of Directors, holders of Parent REIT's or the Operating
Partnership's securities or the Company's representatives or properties.

         5.       Bank Accounts. At the direction of the Board of Directors,
Manager may establish and maintain one or more bank accounts in the name of
Parent REIT, the Operating Partnership or any other Subsidiary (any such
account, a "Company Account"), collect and deposit funds into any such Company
Account or Company Accounts and disburse funds from any such Company Account or
Company Accounts, under such terms and conditions as the Board of Directors may
approve. Manager shall from time-to-time render appropriate accountings of such
collections and payments to the Board of Directors and, upon request, to the
auditors of Parent REIT, the Operating Partnership or any other Subsidiary.

                                       10
<PAGE>

         6.       Records; Confidentiality.

                  (a)      Records. Manager shall maintain appropriate books of
account and records relating to services performed under this Agreement, and
such books of account and records shall be accessible for inspection by
representatives of Parent REIT, the Operating Partnership or any other
Subsidiary at any time during normal business hours upon one (1) business day's
advance written notice.

                  (b)      Confidentiality. Manager shall keep confidential any
nonpublic information obtained in connection with the services rendered under
this Agreement and shall not disclose any such information (or use the same
except in furtherance of its duties under this Agreement), except: (i) with the
prior written consent of the Board of Directors; (ii) to legal counsel,
accountants and other professional advisors, so long as Manager informs such
Persons of the confidential nature of such information and directs them to treat
such information confidentially; (iii) to appraisers in the ordinary course of
business; (iv) to governmental officials having jurisdiction over Manager; (v)
as required by law or legal process to which Manager or any Person to whom
disclosure is permitted hereunder is a party or in connection with Manager's
assertion in any judicial or nonjudicial proceeding of any claim, counterclaim
or defense against the Company; or (vi) information which has previously become
available through the actions of a Person other than Manager not resulting from
Manager's violation of this Section 6(b). The provisions of this Section 6(b)
shall survive the expiration or earlier termination of this Agreement.

         7.       Obligations of Manager; Restrictions.

                  (a)      Asset Representations and Warranties. Manager shall
require each seller or transferor of investment assets to the Company to make
such representations and warranties regarding such assets as may, in the
judgment of Manager, be necessary and appropriate. In addition, Manager shall
take such other action as it deems necessary or appropriate with regard to the
protection of the Investments.

                  (b)      Restrictions. Manager shall refrain from any action
that, in its sole judgment made in good faith, (i) is not in compliance with the
Guidelines, (ii) would adversely affect the status of Parent REIT as a REIT, or
(iii) would violate any law, rule or regulation of any governmental body or
agency having jurisdiction over Parent REIT, the Operating Partnership or any
other Subsidiary or that would otherwise not be permitted by such Person's
Governing Instruments. If Manager is ordered to take any such action by the
Board of Directors, Manager shall promptly notify the Board of Directors of
Manager's judgment that such action would adversely affect such status or
violate any such law, rule or regulation or Governing Instruments.
Notwithstanding the foregoing, Manager, its directors, officers, stockholders
and employees shall not be liable to Parent REIT, the Operating Partnership or
any other Subsidiary, the Board of Directors or Parent REIT's or the Operating
Partnership's stockholders or partners for any act or omission by Manager, its
directors, officers, stockholders or employees except as provided in Section 11.

                  (c)      Interested Party Transaction. Manager shall not (i)
consummate any transaction which would involve the acquisition by the Company of
property in which Manager

                                       11
<PAGE>

or any of its affiliates has an ownership interest or the sale by the Company of
property to Manager or any of its affiliates, or (ii) under circumstances where
Manager is subject to an actual or potential conflict of interest because it
manages both the Company and another Person (not an affiliate of the Company)
with which the Company has a contractual relationship, take any action
constituting the granting to such other Person of a waiver, forebearance or
other relief, or the enforcement against such other Person of remedies, under or
with respect to the applicable contract, unless such transaction or action, as
the case may be and in each case, is approved by a majority of the Independent
Directors.

                  (d)      Joint Ventures. The Company shall not invest in joint
ventures with Manager or any of its affiliates, unless such Investment is (i)
made in accordance with the Guidelines, and (ii) approved in advance by a
majority of the Independent Directors.

                  (e)      Board of Director Review. The Board of Directors
periodically reviews the Guidelines and the Company's portfolio of Investments.
If a majority of the Independent Directors determine in their periodic review of
transactions that a particular transaction does not comply with the Guidelines,
then a majority of the Independent Directors will consider what corrective
action, if any, can be taken.

                  (f)      Insurance. Manager shall at all times during the term
of this Agreement (including the initial term and any renewal term) maintain a
tangible net worth equal to or greater than $1,000,000. In addition, Manager
shall maintain "errors and omissions" insurance coverage and such other
insurance coverage which is customarily carried by property, asset and
investment managers performing functions similar to those of Manager under this
Agreement with respect to assets similar to the assets of the Company, in an
amount which is comparable to that customarily maintained by other managers or
servicers of similar assets.

         8.       Compensation.

                  (a)      Management Fee.

                           (i)      During the term of this Agreement, the
         Company shall pay Manager an annual management fee (the "Management
         Fee") based on Equity, as follows:

                                    (A)      0.75% per annum of Equity up to
                  $400,000,000 of Equity;

                                    (B)      in the event that Equity is greater
                  than $400,000,000, the amount set forth in clause (A) above
                  plus 0.625% per annum of Equity in excess of $400,000,000 and
                  up to $800,000,000; and

                                    (C)      in the event that Equity is greater
                  than $800,000,000, the amounts set forth in clauses (A) and
                  (B) above plus 0.5% per annum of Equity in excess of
                  $800,000,000.

         "Equity" means, computed in accordance with GAAP as of the end of each
         calendar month, (1) the total equity of Parent REIT and all limited
         partners of the Operating

                                       12
<PAGE>

         Partnership, plus or minus, as applicable (2) any unrealized gains,
         losses or other items that do not affect realized net income of the
         Operating Partnership.

                           (ii)     The Management Fee shall be payable in
         arrears in cash, in monthly installments, and Manager shall calculate
         each installment thereof (taking into account any reductions of the
         Management Fee pursuant to Section 8(c) and Section 1(c) of the
         Services Agreement), and deliver such calculation to the Board of
         Directors, within fifteen (15) days following the last day of each
         calendar month. The Company shall pay Manager each installment of the
         Management Fee (each, a "Management Fee Payment") within twenty (20)
         days following the last day of the calendar month with respect to which
         such Management Fee Payment is payable.

                           (iii)    The provisions of this Section 8(a) shall
         survive the expiration or earlier termination of this Agreement;
         provided, however, the Management Fee is subject to adjustment pursuant
         to and in accordance with the provisions of Section 13(c).

                  (b)      Origination Fees. With respect to Manager's
origination of Company Target Investments consisting of bridge and mezzanine
loans pursuant to Section 2(b)(xii), the Company shall pay Manager an amount
equal to the origination fee paid by the borrower thereunder, up to a maximum
amount of one percent (1.0%) of the original principal amount of such loan. Any
remaining portion of the origination fee shall be retained by the Company. The
provisions of this Section 8(b) shall survive the expiration or earlier
termination of this Agreement and the one-year origination period described in
Section 3(e).

                  (c)      Waiver of Deferred Interest. Manager agrees to
cooperate with the Company with respect to the characterization of exit fees
payable by the applicable borrower under any of the Initial Assets or the other
Investments as interest or deferred interest pursuant to the terms of the
applicable loan documents ("Deferred Interest") in such a manner that the
characterization thereof as interest or deferred interest is reasonably likely
to be accepted for U.S. federal income tax purposes. With respect to Investments
other than the Initial Assets, Manager shall use commercially reasonable efforts
to structure the applicable loan documents in a manner intended to achieve such
characterization of exit fees. With respect to the Initial Assets and any other
Investments whose terms provide for the payment of Deferred Interest, the
Company agrees to waive any or all Deferred Interest payable in accordance with
the terms of the applicable loan documents or if such borrowers refinance their
respective loans with permanent financing consisting of Manager Target
Investments. To the extent that any such Deferred Interest is so waived, the
Management Fee Payment due to Manager for the month in which such waiver is made
shall be reduced by an amount equal to fifty percent (50%) of the amount of the
Deferred Interest waived. In the event the aggregate of any such debits then
available and unapplied against a Management Fee Payment exceeds the amount of
the Management Fee Payment payable for any given calendar month, the excess
unapplied debit shall be carried over and applied as a credit against the
Management Fee Payment otherwise payable in the next succeeding calendar month
or months until fully applied. In the event, upon the expiration or earlier
termination of this Agreement, any excess debits remain to be applied against
the Management Fee Payments, Manager shall pay to the Company the amount of such
excess unapplied debits.

                                       13
<PAGE>

                  (d)      Incentive Fee.

                           (i)      In addition to the Management Fee, the
         Company shall pay Manager an annual incentive fee (the "Incentive Fee")
         on a cumulative, but not compounding, basis, equal to the product of
         (A) twenty-five percent (25%) of the dollar amount by which (1)(a) the
         Operating Partnership's Funds from Operations (before giving effect to
         payment of the Incentive Fee) per OP Unit (based on the weighted
         average number of OP Units outstanding, including OP Units issued to
         Parent REIT corresponding to outstanding Common Shares), plus (b) gains
         (or losses) from debt restructuring and sales of property per OP Unit
         (based on the weighted average number of OP Units outstanding,
         including OP Units issued to Parent REIT corresponding to outstanding
         Common Shares), exceed (2) the product of (a) the weighted average
         (based on Common Shares and OP Units) of (i) the book value per OP Unit
         of the net assets contributed by Manager to the Company at its
         inception, (ii) the offering price per Common Share at the initial 144A
         securities offering of Parent REIT described in the Offering
         Memorandum, (iii) the offering price per Common Share (including Common
         Shares issued upon the exercise of warrants or options) at any
         secondary Common Share offerings by Parent REIT (adjusted for any prior
         capital dividends or distributions), and (iv) the issue price per OP
         Unit for subsequent contributions to the Operating Partnership, and (b)
         the greater of (i) nine and one-half percent (9.5%) per annum, and (ii)
         the Ten Year U.S. Treasury Rate plus three and one-half percent (3.5%)
         per annum, and (B) the weighted average number of OP Units outstanding,
         including OP Units issued to Parent REIT corresponding to outstanding
         Common Shares.

                           (ii)     The Incentive Fee shall be payable annually
         in arrears; provided, however, Manager shall receive quarterly
         installments thereof in advance, and Manager shall calculate each such
         installment based on the period of twelve (12) months ending on the
         last day of the fiscal quarter with respect to which such installment
         is payable (provided, for calendar year 2003, such calculations shall
         be based on the period of three (3) or six (6) months, as applicable,
         ending on the last day of the fiscal quarter with respect to which such
         installment is payable), and deliver such calculation to the Board of
         Directors, within forty-five (45) days following the last day of each
         fiscal quarter. The Company shall pay Manager each installment of the
         Incentive Fee (each, an "Incentive Fee Payment") within sixty (60) days
         following the last day of the fiscal quarter with respect to which such
         Incentive Fee Payment is payable.

                           (iii)    Twenty-five percent (25%) of the Incentive
         Fee shall (subject to the remaining provisions of this Section
         8(d)(iii)) be payable to Manager in Common Shares, and the remainder
         thereof shall be paid in cash; provided, Manager may (subject to the
         remaining provisions of this Section 8(d)(iii)) elect, by so indicating
         in the installment calculation delivered to Board of Directors, to
         receive more than twenty-five percent (25%) of the Incentive Fee in the
         form of Common Shares; provided, however, Manager may not receive
         payment of any portion of the Incentive Fee in the form of Common
         Shares, either automatically or by election, if such payment would
         result a violation of the Common Share ownership restrictions set forth
         in Parent REIT's Governing Instruments. For purposes of determining the
         Common Share equivalent of

                                       14
<PAGE>

         the amount of the Incentive Fee payable in Common Shares, (A) prior to
         the date the Common Shares are publicly traded, each Common Share shall
         have a value equal to the book value per Common Share on the last day
         of the fiscal quarter with respect to which the Incentive Fee is being
         paid, and (B) from and after the date the Common Shares are publicly
         traded, each Common Share shall have a value equal to the average
         closing price per Common Share based on the period of (20) days ending
         on and including the last trading day of the fiscal quarter with
         respect to which the Incentive Fee is being paid. Manager's receipt of
         Common Shares in accordance herewith shall be subject to all applicable
         securities exchange rules and securities laws (including, without
         limitation, prohibitions on insider trading).

                           (iv)     Each Incentive Fee Payment shall be deemed
         to be an advance of a portion of the Incentive Fee payable for the
         subject fiscal year. Manager shall calculate the Incentive Fee payable
         during the immediately preceding fiscal year (or partial fiscal year,
         if applicable, following the expiration or earlier termination of this
         Agreement), and deliver such calculation to the Board of Directors,
         within seventy-five (75) days following (A) the last day of each fiscal
         year during the term, and (B) the date of expiration or earlier
         termination of this Agreement. If the amount of the Incentive Fee for
         such fiscal year (or partial fiscal year, if applicable) exceeds the
         sum of the Incentive Fee Payments made during such fiscal year (or
         partial fiscal year, if applicable), the Company shall pay Manager the
         amount of such underpayment, subject to the provisions of Section
         8(d)(iii), within fifteen (15) days after the date Manager delivers
         such calculation to the Board of Directors. If the amount of the
         Incentive Fee for such fiscal year (or partial fiscal year, if
         applicable) is less than the sum of the Incentive Fee Payments made
         during such fiscal year (or partial fiscal year, if applicable),
         Manager shall refund to the Company the amount of such overpayment, in
         cash, within fifteen (15) days after the date Manager delivers such
         calculation to the Board of Directors.

                           (v)      The provisions of this Section 8(d) shall
         survive the expiration or earlier termination of this Agreement.

         9.       Expenses. The Company shall pay all of its expenses and shall
reimburse Manager for documented expenses of Manager incurred on its behalf in
accordance with this Agreement (collectively, the "Expenses"). Expenses include
all costs and expenses which are expressly designated elsewhere in this
Agreement as the Company's expenses, together with the following:

                  (a)      expenses in connection with the issuance and
transaction costs incident to the acquisition, disposition and financing of
Investments;

                  (b)      legal, accounting, tax and auditing fees and expenses
of third parties for services rendered for Parent REIT and the Operating
Partnership by providers retained by Manager;

                  (c)      compensation, benefits and expenses of the
Independent Directors and Parent REIT's and the Operating Partnership's
employees;

                                       15
<PAGE>

                  (d)      travel and other out-of-pocket expenses incurred by
Parent REIT's and the Operating Partnership's employees in connection with the
purchase, financing, refinancing, sale or other disposition of Investments;

                  (e)      compensation and expenses of the Company's custodian
and transfer agent, if any;

                  (f)      the cost of liability insurance to indemnify (i) the
Company's directors and officers, (ii) Manager and its directors and employees,
and (iii) the underwriters in connection with any securities offerings of Parent
REIT or the Operating Partnership;

                  (g)      any litigation, arbitration or similar costs incurred
by Manager on behalf of the Company relating to or arising from any claim,
dispute or action brought by or against the Company;

                  (h)      costs associated with the establishment and
maintenance of any credit facilities or other indebtedness of the Company
(including, without limitation, commitment and origination fees, legal fees,
closing and other costs) or any securities offerings of Parent REIT or the
Operating Partnership;

                  (i)      costs incurred in raising capital for Parent REIT and
the Operating Partnership, including fees and expenses of investment banks,
financial advisors, banks and other lenders;

                  (j)      key man life insurance costs for the Chief Executive
Officer of Parent REIT;

                  (k)      expenses relating to interest payments, dividends or
distributions in cash or any other form made or caused to be made by the Board
of Directors to or on account of the holders of securities or units of Parent
REIT, the Operating Partnership or any other Subsidiary, including, without
limitation, in connection with any dividend reinvestment plan;

                  (l)      expenses relating to the production and distribution
of communications to holders of securities or units of Parent REIT, the
Operating Partnership or any other Subsidiary and other bookkeeping and clerical
work necessary to maintain relations with the holders of such securities or
units and to comply with the continuous reporting and other requirements of
governmental entities or agencies, including, without limitation, (i) costs of
preparing and filing required reports with the Securities and Exchange
Commission, (ii) costs payable by Parent REIT to any transfer agent or registrar
in connection with the listing and/or trading of the Common Shares on any
exchange, (iii) fees payable by Parent REIT to any such exchange in connection
with its listing, and (iv) costs of preparing, printing and mailing Parent
REIT's annual report to its shareholders and proxy materials with respect to any
meeting of Parent REIT's shareholders;

                  (m)      other costs and expenses relating to the Company's
business and investment operations, including, without limitation, the costs and
expenses of acquiring,

                                       16
<PAGE>

owning, protecting, maintaining, developing and disposing of Investments,
including taxes, license fees and appraisal, reporting, audit and legal fees;
and

                  (n)      such other extraordinary or non-recurring expenses as
are incurred by Manager in connection with the performance of its services
hereunder, provided, to the extent the same are incurred with respect to matters
that do not fall within the provisions of the Guidelines, such expenses are
approved by a majority of the Independent Directors.

                  Without regard to the amount of compensation received under
this Agreement by Manager, Manager shall bear the following expenses: (i) the
wages and salaries of Manager's officers and employees; (ii) rent attributable
to the offices occupied by Manager separate from the office maintained for the
Company; and (iii) all other "overhead" expenses of Manager. The foregoing
notwithstanding, Manager agrees that it shall provide, at its expense, office
space to the Company's employees.

         10.      Expense Reports and Reimbursements. Manager shall prepare a
statement documenting the Expenses incurred during, and deliver the same to the
Company within forty-five (45) days following, each fiscal quarter. Expenses
incurred by Manager on behalf of the Company shall be reimbursed by the Company
within sixty (60) days following each fiscal quarter. The provisions of this
Section 10 shall survive the expiration or earlier termination of this Agreement
and the one-year origination period described in Section 3(e).

         11.      Limits of Manager Responsibility; Indemnification.

                  (a)      Limits of Manager Responsibility. Manager assumes no
responsibility under this Agreement other than to render the services set forth
herein in good faith and shall not be responsible for any action of the Board of
Directors in following or declining to follow any advice or recommendations of
Manager, including as set forth in Section 7(b). Manager, its members, managers,
officers and employees will not be liable to Parent REIT, the Operating
Partnership, any other Subsidiary, the Board of Directors or Parent REIT's, the
Operating Partnership's or any other Subsidiary's stockholders or partners for
any acts or omissions by Manager, its members, managers, officers or employees
pursuant to or in accordance with this Agreement, except as otherwise expressly
provided in Section 11(c).

                  (b)      Indemnification by Company. Parent REIT and/or the
Operating Partnership shall, to the full extent lawful, reimburse, indemnify and
hold Manager, its members, managers, officers and employees and each other
Person, if any, controlling Manager (each, a "Manager Indemnified Party")
harmless for and from any and all expenses, losses, damages, liabilities,
demands, charges and claims of any nature whatsoever (including reasonable
attorneys' fees and disbursements), excluding any claims by Manager's employees
relating to the terms and conditions of their employment by Manager, in respect
of or arising out of (i) any acts or omissions of such Manager Indemnified Party
made in good faith in the performance of Manager's duties hereunder and not
constituting such Manager Indemnified Party's bad faith, willful misconduct,
gross negligence or material breach (beyond any applicable cure period) of
Manager's duties under this Agreement, and (ii) the Company's or any of its
shareholder's, director's, officer's or employee's bad faith, willful
misconduct, gross negligence or material breach (beyond any applicable cure
period) of the Company's obligations under this Agreement.

                                       17
<PAGE>

                  (c)      Indemnification by Manager. Manager shall, to the
full extent lawful, reimburse, indemnify and hold each of Parent REIT and the
Operating Partnership, its shareholders, directors, officers and employees and
each other Person, if any, controlling Parent REIT or the Operating Partnership
harmless for and from any and all expenses, losses, damages, liabilities,
demands, charges and claims of any nature whatsoever (including reasonable
attorneys' fees and disbursements) in respect of or arising out of (i) Manager's
or any of its member's, manager's, officer's or employee's bad faith, willful
misconduct, gross negligence or material breach (beyond any applicable cure
period) of Manager's duties under this Agreement, and (ii) any claims by
Manager's employees relating to the terms and conditions of their employment by
Manager.

                  (d)      Survival. The provisions of this Section 11 shall
survive the expiration or earlier termination of this Agreement and the one-year
origination period described in Section 3(e).

         12.      No Joint Venture. Nothing in this Agreement shall be construed
to make the Company and Manager partners or joint venturers or impose any
liability as such on either of them.

         13.      Term; Termination.

                  (a)      Term. This Agreement shall remain in full force and
effect for a period of two (2) years following the date hereof and, unless
terminated by the Company or Manager as set forth below, shall be renewed
automatically for successive one (1) year periods thereafter, until this
Agreement is terminated in accordance with the terms hereof.

                  (b)      Non-Renewal/Termination Without Cause by Company. If
the Company elects not to renew this Agreement at the expiration of the initial
term or any renewal term thereafter as set forth in Section 13(a), or otherwise
desires at any time after the expiration of the initial term to terminate this
Agreement without cause, the Company shall deliver to Manager at least six (6)
months' prior written notice thereof (the "Company Termination Notice"). In the
Company Termination Notice, the Company shall specify the date, not less than
six (6) months from the date of the Company Termination Notice, on which this
Agreement shall terminate (the "Effective Termination Date"). For the avoidance
of doubt, the Company shall not have the right to terminate this Agreement
without cause during the initial term hereof.

                  (c)      Unfair Manager Compensation. The Company may
terminate this Agreement in accordance with the terms and provisions of Section
13(b), effective upon six (6) months' prior written notice to Manager and
payment to Manager of a termination fee equal to two (2) times the amount of the
Management Fee and the Incentive Fee earned by Manager during the period of
twelve (12) full calendar months most recently ended prior to such termination,
for any reason. If such reason arises from a decision made by majority vote of
the Independent Directors that the Management Fee payable to Manager is unfair,
the Company shall not have the foregoing termination right in the event Manager
agrees to continue to perform its duties hereunder at a fee that the Independent
Directors determine to be fair; provided, however, Manager shall have the right
to renegotiate the Management Fee by delivering to the Company, not less than
three (3) months prior to the pending Effective Termination Date, written

                                       18
<PAGE>

notice (a "Notice of Proposal to Negotiate") of its intention to renegotiate the
Management Fee. Thereupon, the Company and Manager shall endeavor to negotiate
the Management Fee in good faith. Provided that the Company and Manager agree to
a revised Management Fee (or other compensation structure) within three (3)
months following the Company's receipt of the Notice of Proposal to Negotiate,
the Company Termination Notice shall be deemed of no force and effect, and this
Agreement shall continue in full force and effect on the terms stated herein,
except that the Management Fee shall be the revised Management Fee (or other
compensation structure) then agreed upon by the Company and Manager. The Company
and Manager agree to execute and deliver an amendment to this Agreement setting
forth such revised Management Fee promptly upon reaching an agreement regarding
same. In the event that the Company and Manager are unable to agree to a revised
Management Fee during such three (3) month period, this Agreement shall
terminate on the Effective Termination Date. The Company's obligation to pay the
termination fee set forth in this Section 13(c) shall survive the termination of
this Agreement.

                  (d)      Non-Renewal/Termination Without Cause by Manager. If
Manager elects not to renew this Agreement at the expiration of the initial term
or any renewal term thereafter as set forth in Section 13(a), or otherwise
desires at any time after the expiration of the initial term to terminate this
Agreement without cause, Manager shall deliver to the Company at least six (6)
months' prior written notice thereof (the "Manager Termination Notice"). In the
Manager Termination Notice, Manager shall specify the date, not less than six
(6) months from the date of the Manager Termination Notice, on which this
Agreement shall terminate. This Agreement shall terminate on the date specified
in the Manager Termination Notice. For the avoidance of doubt, Manager shall not
have the right to terminate this Agreement without cause during the initial term
hereof.

                  (e)      Termination Fees.

                           (i)      Payable by Company. In the event the Company
         elects not to renew or terminates this Agreement without cause as
         permitted under Section 13(b) as a result of its decision to manage its
         assets internally, the Company shall pay to Manager, on the effective
         date of such termination, a termination fee equal to the amount of the
         Management Fee and the Incentive Fee earned by Manager during the
         period of twelve (12) full calendar months most recently ended prior to
         such termination. In the event the Company elects not to renew or
         terminates this Agreement without cause for any reason other than a
         decision to manage its assets internally, the termination fee payable
         by the Company to Manager shall be equal to two (2) times the amount of
         the Management Fee and the Incentive Fee earned by Manager during the
         period of twelve (12) full calendar months most recently ended prior to
         such termination. The Company's obligation to pay a termination fee
         shall survive the termination of this Agreement.

                           (ii)     Payable by Manager. Prior to the third (3rd)
         anniversary of the date hereof, in the event Manager: (A) elects not to
         renew or terminates this Agreement without cause (but only as permitted
         under Section 13(d)) within two (2) years after a Change of Control
         occurred or within two (2) years after Manager executed an agreement
         that would result in a Change of Control; or (B) delivered a Manager
         Termination Notice indicating its election not to renew or to terminate
         this Agreement (but only as permitted

                                       19
<PAGE>

         under Section 13(d)), then a Change of Control occurs or Manager
         executes an agreement that will result in a Change of Control within
         one (1) year thereafter, Manager shall pay to the Company, on the
         effective date of termination of this Agreement, a termination fee
         equal to two (2) times the amount of the Management Fee and the
         Incentive Fee earned by Manager during the period of twelve (12) full
         calendar months most recently ended prior to such termination.
         Manager's obligation to pay such termination fee shall survive the
         termination of this Agreement.

                  (f)      Survival. If this Agreement is terminated pursuant to
this Section 13, such termination shall be without any further liability or
obligation of either party to the other, except as otherwise expressly provided
herein.

         14.      Assignment.

                  (a)      Manager Assignment. Except as set forth in Section
14(c), this Agreement shall terminate at the Company's election and without
payment of any termination fee, and any such assignment shall be null and void,
in the event of its assignment, in whole or in part, by Manager, unless Manager
obtains the prior written consent of Parent REIT and a majority of the
Independent Directors; provided, however, no such consent shall be required in
the case of an assignment by Manager to any affiliate whose day-to-day business
and operations are managed and supervised by Principal. Any permitted assignment
by Manager shall bind the assignee in the same manner as Manager is bound by the
terms of this Agreement, and Manager shall be liable to the Company for all
errors or omissions of the assignee under any such assignment. In addition, the
assignee shall execute and deliver to the Company a counterpart of this
Agreement naming such assignee as Manager. For purposes of this Section 14(a)
and Section 14(c), "affiliate" means any Person controlling, controlled by or
under common control with Manager, and "control" means the direct or indirect
ownership of at least fifty-one percent (51%) of the beneficial equity interests
in and voting power of such Person (and "controlling" and "under common control
with" have meanings correlative to the foregoing).

                  (b)      Parent REIT Assignment. This Agreement shall not be
assigned by Parent REIT without Manager's prior written consent; provided,
however, no such consent shall be required in the case of an assignment by
Parent REIT to (i) a Subsidiary to which Parent REIT is also assigning its
general partnership interest in the Operating Partnership, or (ii) a REIT or
other organization which is a successor (by merger, consolidation or purchase of
assets) to Parent REIT, in which case such successor organization shall be bound
under this Agreement and by the terms of such assignment in the same manner as
Parent REIT is bound by the terms of this Agreement.

                  (c)      Manager Affiliate Subcontract and Partial Assignment.
Notwithstanding any provision of this Agreement, Manager may subcontract and
assign any or all of its responsibilities under Sections 2(b), (c) and (d) to
any of its affiliates whose day-to-day business and operations are managed and
supervised by Principal in accordance with the terms of this Agreement
applicable to any such subcontract or assignment, and the Company hereby
consents to any such subcontract and assignment. In addition, provided that
Manager provides prior written notice to the Company for informational purposes
only, nothing contained in this

                                       20
<PAGE>

Agreement shall preclude any pledge, hypothecation or other transfer of any
amounts payable to Manager under this Agreement.

         15.      Termination for Cause.

                  (a)      By Company. The Company may terminate this Agreement,
by a majority vote of the Independent Directors and without payment of a
termination fee, if:

                           (i)      Manager commits fraud or acts or fails to
         act in a manner that constitutes gross negligence in the performance of
         its duties hereunder;

                           (ii)     Manager misappropriates or embezzles Company
         funds;

                           (iii)    Manager commits some other willful violation
         of this Agreement in its corporate capacity (as distinguished from the
         acts of any employees of Manager which are taken without the complicity
         of Principal);

                           (iv)     Parent REIT removes Principal from the
         position of Chief Executive Officer of Parent REIT for cause (as cause
         is defined in and interpreted in accordance with the Non-Competition
         Agreement);

                           (v)      a Change of Control occurs;

                           (vi)     Principal is no longer Chief Executive
         Officer of Manager (provided such condition is not a result of
         Principal's death, disability or incapacity); or

                           (vii)    Manager defaults in the performance or
         observance of any material term, condition or covenant contained in
         this Agreement to be performed or observed on its part, and such
         default continues for a period of thirty (30) days after written notice
         thereof from the Company specifying such default and requesting that
         the same be remedied within such thirty (30) day period; provided,
         however, Manager shall have an additional sixty (60) days to cure such
         default if (A) such default cannot reasonably be cured with in thirty
         (30) days but can be cured within ninety (90) days, and (B) Manager
         shall have commenced to cure such default within the initial thirty
         (30) day period and thereafter diligently proceeds to cure the same
         within ninety (90) days of the date of the Company's original notice of
         the default.

Termination of this Agreement pursuant to this Section 15(a) shall become
effective, in case of the foregoing (A) clauses (i) through (iv), upon seven (7)
days' prior written notice to Manager, (B) clauses (v) and (vi), upon thirty
(30) days' prior written notice to Manager, and (C) clause (vii), in the event
of Manager's failure to cure and provided the Company has delivered to Manager a
termination notice, upon the expiration of the applicable cure period.

                  (b)      By Manager. Manager may terminate this Agreement,
without payment of a termination fee, if the Company defaults in the performance
or observance of any material term, condition or covenant contained in this
Agreement to be performed or observed on its part, and such default continues
for a period of thirty (30) days after written notice thereof from Manager
specifying such default and requesting that the same be remedied within such
thirty

                                       21
<PAGE>

(30) day period. This Agreement shall terminate, in the event of the Company's
failure to cure and provided Manager has delivered to the Company a termination
notice, upon the expiration of such thirty (30) day cure period.

         16.      Action Upon Termination or Expiration of Origination Period.
From and after the effective date of termination of this Agreement pursuant to
Sections 13, 14 or 15 or the expiration of the origination period described in
Section 3(e), as applicable, Manager shall not be entitled to compensation for
further services under this Agreement but shall be paid all compensation
accruing to the date of termination or expiration of the origination period, as
applicable, and a termination fee, if applicable. Upon such termination or
expiration, Manager shall forthwith:

                  (a)      after deducting any accrued compensation and
reimbursement for Expenses to which it is then entitled, pay over to the Company
all money collected and held for the account of the Company pursuant to this
Agreement;

                  (b)      deliver to the Board of Directors a full accounting,
including a statement showing all payments collected and all money held by it,
covering the period following the date of the last accounting furnished to the
Board of Directors with respect to the Company; and

                  (c)      deliver to the Board of Directors all property and
documents of the Company provided to or obtained by Manager pursuant to or in
connection with this Agreement, including all copies and extracts thereof in
whatever form, then in Manager's possession or under its control.

         17.      Release of Money or other Property Upon Written Request.
Manager agrees that any money or other property of the Company held by Manager
under this Agreement shall be held by Manager as custodian for the Company, and
Manager's records shall be clearly and appropriately marked to reflect the
ownership of such money or other property by the Company. Upon the receipt by
Manager of a written request signed by a duly authorized officer of the Company
requesting Manager to release to the Company any money or other property then
held by Manager for the account of the Company under this Agreement, Manager
shall release such money or other property to the Company within a reasonable
period of time, but in no event later than sixty (60) days following such
request. Manager shall not be liable to the Company, the Independent Directors
or Parent REIT's or the Operating Partnership's stockholders or partners for any
acts or omissions by the Company in connection with the money or other property
released to the Company in accordance with the terms hereof. The Company shall
indemnify Manager and its members, managers, officers and employees against any
and all expenses, losses, damages, liabilities, demands, charges and claims of
any nature whatsoever which arise in connection with Manager's release of such
money or other property to the Company in accordance with the terms of this
Section 17. Indemnification pursuant to this Section 17 shall be in addition to
any right of Manager to indemnification under Section 11.

         18.      Notices. Unless expressly provided otherwise in this
Agreement, all notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made and received when delivered against receipt or upon actual
receipt of (a) personal delivery, (b) delivery by a reputable

                                       22
<PAGE>

overnight courier, (c) delivery by facsimile transmission against answerback, or
(d) delivery by registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:

If to Parent REIT
or the Operating Partnership:      Arbor Realty Trust, Inc.
                                   333 Earle Ovington Boulevard, Suite 900
                                   Uniondale, New York 11553
                                   Attention: Chairman of the Board of Directors
                                   Facsimile: 516-832-8043

If to Manager:                     Arbor Commercial Mortgage, LLC
                                   333 Earle Ovington Boulevard
                                   Uniondale, New York 11553
                                   Attention: Frederick C. Herbst
                                   Facsimile: 516-832-8043

                  Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions of this Section 18 for the giving of notice.

         19.      Binding Nature of Agreement; Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and permitted
assigns as provided in this Agreement.

         20.      Entire Agreement. This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter of this Agreement. The express
terms of this Agreement control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms of this Agreement. This
Agreement may not be modified or amended other than by an agreement in writing
signed by the parties hereto.

         21.      Governing Law. This Agreement and all questions relating to
its validity, interpretation, performance and enforcement shall be governed by
and construed, interpreted and enforced in accordance with the laws of the State
of New York, notwithstanding any New York or other conflict-of-law provisions to
the contrary.

         22.      Indulgences, Not Waivers. Neither the failure nor any delay on
the part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.

                                       23
<PAGE>

         23.      Titles Not to Affect Interpretation. The titles of sections,
paragraphs and subparagraphs contained in this Agreement are for convenience
only, and they neither form a part of this Agreement nor are they to be used in
the construction or interpretation of this Agreement.

         24.      Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts of this Agreement, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.

         25.      Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

         26.      Principles of Construction. Words used herein regardless of
the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context requires. All references to recitals,
sections, paragraphs and schedules are to the recitals, sections, paragraphs and
schedules in or to this Agreement unless otherwise specified.

         27.      Amendments. This Agreement may be amended only in a writing
signed by the parties hereto; provided the same has been approved by a majority
of the Independent Directors. The approval of the holders of the Common Shares
shall not be required for any amendments to this Agreement.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       24
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                                         Manager:

                                         ARBOR COMMERCIAL MORTGAGE, LLC,
                                         a New York limited liability company

                                             By: /s/ Frederick C. Herbst
                                                 -----------------------------
                                             Name: Frederick C. Herbst
                                             Title: Chief Financial Officer

                                         Parent REIT:

                                         ARBOR REALTY TRUST, INC.,
                                         a Maryland corporation

                                         By: /s/ Frederick C. Herbst
                                             ----------------------------------
                                         Name: Frederick C. Herbst
                                         Title: Chief Financial Officer

                                         Operating Partnership:

                                         ARBOR REALTY LIMITED PARTNERSHIP,
                                         a Delaware limited partnership

                                         By: Arbor Realty GPOP, Inc.,
                                             a Delaware corporation,
                                             its general partner

                                             By: /s/ Frederick C. Herbst
                                                 ------------------------------
                                             Name: Frederick C. Herbst
                                             Title: Secretary and Treasurer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>12
<FILENAME>y90410exv10w2.txt
<DESCRIPTION>SERVICES AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.2

                               SERVICES AGREEMENT

                  THIS SERVICES AGREEMENT (this "Agreement"), dated as of July
1, 2003, is made by and among ARBOR REALTY TRUST, INC., a Maryland corporation
("Parent REIT"), ARBOR REALTY LIMITED PARTNERSHIP, a Delaware limited
partnership ("Arbor OP", and together with Parent REIT, collectively, the
"Company"), and ARBOR COMMERCIAL MORTGAGE, LLC, a New York limited liability
company ("ACM").

                  WHEREAS, ACM provides certain management and advisory services
to Parent REIT and Arbor OP pursuant to that certain Management and Advisory
Agreement, dated as of July 1, 2003 (the "Management Agreement"), by and among
the parties hereto;

                  WHEREAS, ACM desires to avail itself of the experience, advice
and assistance of the asset management group of the Company to manage and
service certain of ACM's assets consisting of sub- and non-performing mortgage
loans (the "Serviced Assets"); and

                  WHEREAS, the Company is willing to perform the Services (as
defined below) on the terms and conditions hereinafter set forth.

                  NOW THEREFORE, in consideration of the mutual agreements
herein set forth and intending to be legally bound, the parties hereto hereby
agree as follows:

         1.       Services.

                  (a)      In exchange for ACM's agreement with respect to the
Management Fee, as defined in and payable by the Company pursuant to the terms
of the Management Agreement, the Company agrees to provide the following asset
management services (the "Services") to ACM with respect to the Serviced Assets:

                           (i)      reviewing loan files of the Serviced Assets
         to: (A) assess ACM's rights in and to collateral securing the subject
         loans, including bank accounts, letters of credit and funds held in
         escrow; and (B) identify guarantees, other credit support and
         additional sources of equity, if any;

                           (ii)     conducting due diligence with respect to the
         Serviced Assets with an emphasis on exit strategies and exploring,
         developing and implementing strategic opportunities and plans to
         restructure debt and equity positions;

                           (iii)    reviewing current operating statements of
         profit and loss and past and current rent rolls to assess operating and
         financial performance and the impact of existing and potential
         financial and operational issues relating to the collateral for the
         Serviced Assets;

                                        1
<PAGE>

                           (iv)     recommending short- and long-term strategic
         alternatives for the management and disposition of the Serviced Assets
         based on the relevant market and market trends;

                           (v)      overseeing rehabilitation projects and
         assessing whether new appraisals or environmental assessment or
         physical needs reports are necessary with respect to the collateral for
         the Serviced Assets;

                           (vi)     formulating appropriate courses of action
         and conducting negotiations among all concerned parties regarding the
         workout of Serviced Assets;

                           (vii)    structuring workout proposals and preparing
         analyses indicating the viability thereof;

                           (viii)   evaluating liquidity concerns and capital
         adequacy and reserve requirements and performing liquidity analyses of
         properties and ownership entities with respect to the collateral for
         the Serviced Assets; and

                           (ix)     performing such other services as may be
         required from time to time for management and other activities relating
         to the Serviced Assets as ACM shall reasonably request.

                  (b)      The Company, for and on behalf of the asset
management group, makes no, and shall not be deemed to have made, any warranty
regarding the quality of, and shall not be subject to any other standards or
requirements of quality with respect to the performance of the Services;
provided, however, the Company shall perform the Services (i) with the same
degree of care and skill as it uses or would use in the performance of similar
services relating to the management of the Company's assets, and (ii) in
accordance with all applicable foreign, federal, state and local laws and
regulations.

                  (c)      The Board of Directors will periodically review the
scope of the Services being provided to ACM and the time required of the asset
management group of the Company to perform the same. If the Board of Directors
determine by a majority vote that the nature of the Services and the asset
management group's devotion of time with respect thereto have exceeded the Board
of Directors' anticipated levels, as factored into the calculation of the
Management Fee, by more than fifteen percent (15%) of such anticipated levels
per fiscal quarter, then the Company shall deliver to ACM written notice thereof
describing its findings in reasonable detail and indicating its desire to
renegotiate the Management Fee or to reduce the scope of the Services, the
quantity of the Serviced Assets or the time required to be devoted to the
Services by the asset management group. Thereupon, the Company and ACM shall
endeavor to renegotiate such matters in good faith. The Company and ACM agree to
execute and deliver an amendment to the Management Agreement, if applicable,
setting forth any revised Management Fee promptly upon reaching an agreement
regarding same.

2.       Term. This Agreement shall become effective on the date hereof, remain
in full force and effect throughout the term of the Management Agreement as
extended in accordance

                                        2
<PAGE>

therewith and terminate simultaneously with the expiration or earlier
termination of the Management Agreement; provided, however, that this Agreement
shall remain in full force and effect during the origination period described in
Section 3(e) of the Management Agreement.

3.       Indemnification.

                  (a)      By the Company. The Company shall, to the full extent
lawful, reimburse, indemnify and hold ACM, its members, managers, officers and
employees and each other Person, if any, controlling ACM harmless for and from
any and all expenses, losses, damages, liabilities, demands, charges and claims
of any nature whatsoever (including reasonable attorneys' fees and
disbursements) in respect of or arising out of (i) the Company's or any of its
partner's, shareholder's, director's, officer's or employee's bad faith, willful
misconduct, gross negligence or material breach of the Company's duties under
this Agreement, and (ii) any claims by the Company's employees relating to the
terms and conditions of their employment by the Company.

                  (b)      By ACM. ACM shall, to the full extent lawful,
reimburse, indemnify and hold the Company, its partners, shareholders,
directors, officers and employees and each other Person, if any, controlling the
Company (each, a "Company Indemnified Party") harmless for and from any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever (including reasonable attorneys' fees and disbursements),
excluding any claims by the Company's employees relating to the terms and
conditions of their employment by the Company, in respect of or arising out of
(i) any acts or omissions of such Company Indemnified Party made in good faith
in the performance of the Company's duties hereunder and not constituting such
Company Indemnified Party's bad faith, willful misconduct, gross negligence or
material breach of the Company's duties under this Agreement, and (ii) ACM's or
any of its member's, manager's, officer's or employee's bad faith, willful
misconduct, gross negligence or material breach of ACM's obligations under this
Agreement.

4.       Confidentiality.

                  (a)      The Company shall keep confidential any nonpublic
information obtained relating to the Serviced Assets and its performance of the
Services and shall not disclose any such information (or use the same except in
furtherance of its duties under this Agreement), except: (i) with ACM's prior
written consent; (ii) to legal counsel, accountants and other professional
advisors, so long as the Company informs such Persons of the confidential nature
of such information and directs them to treat such information confidentially;
(iii) to appraisers in the ordinary course of business; (iv) to governmental
officials having jurisdiction over the Company; (v) as required by law or legal
process to which the Company or any Person to whom disclosure is permitted
hereunder is a party or in connection with the Company's assertion in any
judicial or nonjudicial proceeding of any claim, counterclaim or defense against
ACM; or (vi) information which has previously become available through the
actions of a Person other than the Company not resulting from the Company's
violation of this Section 4(a). The provisions of this Section 4(a) shall
survive the expiration or earlier termination of this Agreement.

                                        3
<PAGE>

                  (b)      Promptly after the expiration or earlier termination
of this Agreement, the Company shall return to ACM all confidential and
proprietary information provided to or obtained by the Company pursuant to or in
connection with this Agreement and the performance of the Services hereunder,
including all copies and extracts thereof in whatever form, in its possession or
under its control.

5.       Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and mailed, faxed or
delivered by hand or courier service:

         (a)      if to Parent REIT or Arbor OP, to:

                  Arbor Realty Trust, Inc.
                  333 Earle Ovington Blvd., Suite 900
                  Uniondale, New York 11553
                  Attention: Chairman of the Board of Directors

         (b)      If to ACM:

                  Arbor Commercial Mortgage, LLC
                  333 Earle Ovington Blvd., Suite 900
                  Uniondale, New York 11553
                  Attention: Frederick C. Herbst

6.       Cooperation; Further Assurances. Each party hereto shall cooperate with
and provide assistance to the other parties consistent with the terms and
conditions hereof to enable (a) the full performance of all obligations
hereunder, and (b) the review and audit of books and records as they relate to
the provision of the Services; such cooperation and assistance to include,
without limitation, providing the other parties and their respective
representatives and agents (including, without limitation, outside auditors)
with reasonable access, during normal business hours and upon reasonable advance
notice, to its employees, representatives and agents and its books, records,
offices and properties relating to the Services.

7.       Entire Agreement. Except for the terms of the Management Agreement
relating to the calculation of the Management Fee, this Agreement shall
constitute the entire agreement among the parties relating to the subject matter
hereof and shall supersede all other prior or contemporary agreements,
understandings, negotiations and discussions whether oral or written.

8.       Amendment and Modification; Assignment. Neither this Agreement nor any
of the terms or provisions hereof may be changed, supplemented, waived, modified
or assigned except by a written instrument executed by the parties hereto (or in
the case of a waiver, by the party granting such waiver); provided, however, (a)
ACM may assign this Agreement to any Person to whom ACM assigns the Management
Agreement (pursuant to the terms thereof) and who acquires the Serviced Assets,
and (b) Parent REIT may assign this Agreement to any Person to whom Parent REIT
assigns the Management Agreement (pursuant to the terms thereof).

                                        4
<PAGE>

9.       Counterparts. This Agreement may be executed in two or more
counterparts, each of which may be signed by any of the parties hereto, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.

10.      Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by,
construed, interpreted and enforced in accordance with the laws of the State of
New York, notwithstanding any New York or other conflict-of-law provisions to
the contrary.

11.      Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
hereof and the remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.

12.      Definitions and Interpretation.

(a)      Defined Terms. Capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the Management Agreement.

(b)      Singular and Plural Forms. The use herein of the singular form shall
also denote the plural form, and the use herein of the plural form shall denote
the singular form, as in each case the context may require.

                         [NO FURTHER TEXT ON THIS PAGE]

                                        5
<PAGE>

                  IN WITNESS WHEREOF, the parties to hereto have duly executed
this Agreement as of the day and year first written above.

                                    Parent REIT:

                                    ARBOR REALTY TRUST, INC.,
                                    a Maryland corporation

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------
                                    Name: Frederick C. Herbst
                                    Title: Chief Financial Officer

                                    Arbor OP:

                                    ARBOR REALTY LIMITED PARTNERSHIP,
                                    a Delaware limited partnership

                                    By:  Arbor Realty GPOP, Inc.,
                                         a Delaware corporation,
                                         its general partner

                                         By: /s/ Frederick C. Herbst
                                             -----------------------------
                                         Name: Frederick C. Herbst
                                         Title: Secretary and Treasurer

                                    ACM:

                                    ARBOR COMMERCIAL MORTGAGE, LLC,
                                    a New York limited liability company

                                         By: /s/ Frederick C. Herbst
                                             -----------------------------
                                         Name: Frederick C. Herbst
                                         Title: Chief Financial Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>13
<FILENAME>y90410exv10w3.txt
<DESCRIPTION>NON-COMPETITION AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.3

                            NON-COMPETITION AGREEMENT

         This NON-COMPETITION AGREEMENT (this "Agreement") is made and entered
into as of July 1, 2003, by and among Arbor Realty Trust, Inc., a Maryland
corporation (the "REIT"), Arbor Realty Limited Partnership, a Delaware limited
partnership of which the REIT holds a general partner and a limited partner
interest through wholly owned subsidiaries (the "Operating Partnership",
together with the REIT, the "Company"), and Ivan Kaufman (the "Executive").
Capitalized terms not defined herein shall have the meanings ascribed to them in
that certain Management and Advisory Agreement, dated as of July 1, 2003, by and
between Arbor Commercial Mortgage, LLC, a New York limited liability company
("ACM"), and the Company (the "Management Agreement").

         WHEREAS, the Executive is the chief executive officer and chairman of
the Board of Directors of the REIT and president and chief executive officer of
ACM; and

         WHEREAS, pursuant to the Management Agreement, ACM will manage and
advise the Company and provide a dedicated management team, including the
Executive, to provide the management services to the Company, and the Executive
is willing to provide the management services to the Company; and

         WHEREAS, the Company desires to have the Executive enter into this
Agreement in order to protect the Company from unfair competition, and the
Executive is willing to enter into this Agreement in order to induce the Company
to permit the Executive to participate in the Company's 2003 Omnibus Stock
Incentive Plan.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Company and the Executive,
the parties hereto agree as follows:

                  1.       Non-Solicitation and Non-Competition. During the term
of this Agreement,

                           (a)      the Executive shall not, directly or
indirectly, on the Executive's own behalf or on behalf of any other Person,
solicit, induce, encourage or attempt to solicit or induce any employee of the
Company or its subsidiaries to terminate, alter or cease his, her or its
relationship with the Company or its subsidiaries for any purpose; the Executive
shall not, directly or indirectly, on the Executive's own behalf or on behalf of
any other Person, solicit, induce, encourage or attempt to solicit or induce any
employee of ACM or its subsidiaries to terminate, alter or cease his, her or its
relationship with ACM or its subsidiaries for the purpose of employing such
employee in a business that solicits or intends to solicit Company Target
Investments;

                           (b)      the Executive shall not, except as pursuant
to the Management Agreement, directly or indirectly, on the Executive's own
behalf or on behalf of any other

<PAGE>

Person, solicit, induce, divert, appropriate or attempt to solicit, induce,
divert or appropriate to any Person (1) a Company Target Investment, or (ii) a
customer of the Company, ACM or its subsidiaries, which customer is a potential
obligor on a Company Target Investment;

                           (c)      the Executive shall not, except as pursuant
to the Management Agreement, directly or indirectly, own manage, operate, join,
control or participate in or be connected with, as an officer, director,
adviser, employee, consultant, partner or agent (whether paid or unpaid), any
entity, business, individual, partnership, firm or corporation, which is at the
time engaged in a business which is, directly or indirectly, in competition with
the business of the REIT with respect to Company Target Investments; and

                           (d)      Nothing stated herein shall be interpreted
to prohibit or preclude the Executive's authority and ability to manage the
Company, ACM or any of their respective subsidiaries and to supervise, review or
terminate any employees of each of the Company, ACM, or any of their respective
subsidiaries.

                  2.       Right of First Refusal; Exclusivity. The Executive
and the Company acknowledge that as an officer of ACM, the Executive is a
Manager Party and that the provisions set forth in Sections 3(b) and 3(c) of the
Management Agreement are hereby incorporated by reference into this Agreement as
though fully set forth herein.

                  3.       Term. Subject to the provisions set forth below, this
Agreement shall remain in full force and effect for the following periods:

                           (a)      as long as the Executive serves as chief
executive officer of the REIT;

                           (b)      as long as the Executive serves as an
officer or, directly or indirectly, controls ACM (such service or control
causing him to be an "Affiliate"), during the term of the Management Agreement
plus the agreed term of any Origination Period;

                           (c)      if the Executive ceases to be an Affiliate
of ACM and, within the first five (5) years of the term of the Management
Agreement, ceases to be chief executive officer of the REIT for any reason other
than (i) the Executive terminates his position for Good Reason, (ii) the REIT
terminates the Executive's position without Cause or (iii) a Change of Control,
for a period of one (1) year commencing on the earlier of (A) the date that he
ceases to be chief executive officer of the REIT or (B) the expiration of the
Origination Period;

                           (d)      if, within the first three (3) years of the
term of the Management Agreement, (i) there is a Change of Control, (ii) the
Executive ceases to be an Affiliate of ACM and (iii) the Executive terminates
his position as chief executive officer of the REIT other than for Good Reason,
for a period of one (1) year commencing on the date that he terminates his
position as chief executive officer of the REIT; and

                                        2
<PAGE>

                           (e)      if the Executive ceases to be an Affiliate
of ACM and ceases to be chief executive officer of the REIT for the reasons set
forth below, for the period preceding the date he ceases to be chief executive
officer of the REIT:

                                    (i)      the Executive terminates his
         position as chief executive officer of the REIT for Good Reason (as
         defined below);

                                    (ii)     the REIT terminates the Executive's
         position as chief executive officer of the REIT for any reason other
         than for Cause (as defined below); or

                                    (iii)    if, following a Change of Control,
         the Executive terminates his position as chief executive officer of the
         REIT after the first three (3) years of the term of the Management
         Agreement.

                  4.       Termination for Cause by the Company. The Company may
         terminate the Executive's position as chief executive officer of the
         REIT for Cause at any time. For purposes of this Agreement, Cause shall
         be deemed to exist if a majority of the Independent Directors
         determines that:

                           (a)      the Executive has committed fraud or acts or
fails to act in a manner that constitutes gross negligence in the performance of
his duties under this Agreement or the Management Agreement;

                           (b)      the Executive has misappropriated or
embezzled Company funds; and

                           (c)      the Executive otherwise engages in a willful
violation of this Agreement, defaults in the performance or observance of any
material term, condition or covenant contained in this Agreement to be performed
or observed on its part, or materially fails to follow the reasonable directive
of the Board of Directors of the REIT or the general partner of the Operating
Partnership, and such violation, default or failure continues for a period of
thirty (30) days after written notice thereof from the Company specifying such
violation, default or failure and requesting that the same be remedied within
such thirty (30) day period; provided, however, the Executive shall have an
additional sixty (60) days to cure such violation, default or failure if (A)
such violation, default or failure cannot reasonably be cured with in thirty
(30) days but can be cured within ninety (90) days, and (B) the Executive shall
have commenced to cure such violation, default or failure within the initial
thirty (30) day period and thereafter diligently proceeds to cure the same
within ninety (90) days of the date of the Company's original notice of the
violation, default or failure.

Termination for Cause pursuant to this Section 4 shall become effective, in case
of the foregoing clauses (a) and (b), upon seven (7) days' prior written notice
to the Executive, and clause (c), upon the expiration of the applicable cure
period and notice to the Executive.

                                        3
<PAGE>

                  5.       Termination for Good Reason by the Executive. The
Executive may terminate his position as chief executive officer of the REIT,
effective upon sixty (60) days' prior written notice to the Company, if the
Company engages in a willful violation or defaults in the performance or
observance of Section 3(c) of the Management Agreement, and such violation or
default continues for a period of thirty (30) days after written notice thereof
from the Executive specifying such violation or default and requesting that the
same be remedied within such thirty (30) day period (termination for "Good
Reason").

                  6.       Adequate Consideration and Ability to Earn
Livelihood. The Executive expressly acknowledges that (i) he will be able to
earn a livelihood without violating the covenants set forth in this Agreement,
and (ii) his ability to do so was a condition precedent to the Company's
entering into this Agreement.

                  7.       Reasonable Limit. The Company and the Executive have
attempted to limit the Executive's right to compete only to the extent necessary
to protect the Company and its subsidiaries from unfair competition. The
Executive expressly acknowledges that the restrictive provisions of this
Agreement constitute reasonable restrictions. If, however, the scope or
enforceability of the restrictive provisions contained in this Agreement is
disputed at any time, a court or other trier of fact may modify and enforce the
covenant to the extent that it believes is reasonable under the circumstances
existing at that time.

                  8.       Breach of Agreement. In the event the Company
terminates this Agreement for Cause, the Executive acknowledges that the legal
remedies may be inadequate and that, in addition to monetary damages, the
Company shall be entitled, without necessity of posting any bond, to any
injunctive order restraining such breach immediately upon the commencement of
any suit therefor by the Company.

                  9.       Assignment.

                           (a)      This Agreement shall not be assigned by the
Executive without the Company's prior written consent.

                           (b)      This Agreement shall not be assigned by the
REIT without the Executive's prior written consent; provided, however, no such
consent shall be required in the case of an assignment by the REIT to another
Real Estate Investment Trust or other organization which is a successor (by
merger, consolidation or purchase of assets) to the REIT, in which case such
successor organization shall be bound under this Agreement and by the terms of
such assignment in the same manner as the REIT is bound by the terms of this
Agreement.

                  10.      Notices. Unless expressly provided otherwise in this
Agreement, all notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made and received when delivered against receipt or upon actual
receipt of (a) personal delivery, (b) delivery by a reputable overnight courier,
(c) delivery by facsimile transmission

                                        4
<PAGE>

against answerback, or (d) delivery by registered or certified mail, postage
prepaid, return receipt requested, addressed as set forth below:

                                        5
<PAGE>

If to the REIT or the              Arbor Realty Trust, Inc.
Operating Partnership:             333 Earle Ovington Boulevard, Suite 900
                                   Uniondale, New York  11553
                                   Attention: Chairman of the Board of Directors
                                   Facsimile: (516) 832-8043

If to the Executive:               Ivan Kaufman
                                   333 Earle Ovington Boulevard, Suite 900
                                   Uniondale, New York  11553
                                   Facsimile: (516) 832-8043

                  Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions of this Section 11 for the giving of notice.

                  11.      Binding Nature of Agreement; Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
permitted assigns as provided in this Agreement.

                  12.      Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter of this Agreement.
The express terms of this Agreement control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms of this
Agreement. This Agreement may not be modified or amended other than by an
agreement in writing signed by the parties hereto.

                  13.      Governing Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement shall be
governed by and construed, interpreted and enforced in accordance with the laws
of the State of New York, notwithstanding any New York or other conflict-of-law
provisions to the contrary.

                  14.      Indulgences, Not Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party to asserted to have granted
such waiver.

                  15.      Titles Not to Affect Interpretation. The titles of
sections, paragraphs and subparagraphs contained in this Agreement are for
convenience only, and they

                                        6
<PAGE>

neither form a part of this Agreement nor are they to be used in the
construction or interpretation of this Agreement.

                  16.      Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts of this Agreement, individually or
taken together, shall bear the signatures of all of the parties reflected hereon
as the signatories.

                  17.      Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

                  18.      Principles of Construction. Words used herein
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, as the context
requires. All references to recitals, sections, paragraphs and schedules are to
the recitals, sections, paragraphs and schedules in or to this Agreement unless
otherwise specified.

                  19.      Amendments. This Agreement may be amended only in a
writing signed by the parties hereto; provided the same has been approved by a
majority of the Independent Directors.

                         [NO FURTHER TEXT ON THIS PAGE]

                                        7
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                    Arbor Realty Trust, Inc.,
                                    a Maryland corporation

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------------
                                    Name: Frederick C. Herbst
                                    Title: Chief Financial Officer,
                                           Treasurer and Secretary

                                    Arbor Realty Limited Partnership,
                                    a Delaware liability partnership

                                    By: Arbor Realty GPOP, Inc.
                                        a Delaware corporation, its general
                                        partner

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------------
                                    Name: Frederick C. Herbst
                                    Title: Secretary and Treasurer

                                    /s/ Ivan Kaufman
                                    --------------------------------------------
                                    Ivan Kaufman

                                        8

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>14
<FILENAME>y90410exv10w4.txt
<DESCRIPTION>AMENDED/RESTATED AGREEMENT OF LIMITED PARTNERSHIP
<TEXT>
<PAGE>

--------------------------------------------------------------------------------
                                                                    EXHIBIT 10.4

                              AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                        ARBOR REALTY LIMITED PARTNERSHIP

                         a Delaware limited partnership

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

            THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
            OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
           TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
         REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
         AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM
          AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT
          THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
        EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER
                 APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.

                            dated as of July 1, 2003

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

<PAGE>


<TABLE>
<S>                                                                                                           <C>
                                              ARTICLE I DEFINED TERMS

                                         ARTICLE II ORGANIZATIONAL MATTERS

Section 2.1       Organization..........................................................................      15

Section 2.2       Name..................................................................................      15

Section 2.3       Registered Office and Agent; Principal Office.........................................      15

Section 2.4       Power of Attorney.....................................................................      15

Section 2.5       Term..................................................................................      16

                                                ARTICLE III PURPOSE

Section 3.1       Purpose and Business..................................................................      17

Section 3.2       Powers................................................................................      17

Section 3.3       Partnership Only for Partnership Purposes.............................................      17

Section 3.4       Representations and Warranties by the Parties.........................................      17

                                         ARTICLE IV CAPITAL CONTRIBUTIONS

Section 4.1       Capital Contributions of the Partners.................................................      19

Section 4.2       Issuances of Additional Partnership Interests.........................................      19

Section 4.3       Additional Funds and Capital Contributions............................................      20

Section 4.4       Stock Option Plan.....................................................................      21

Section 4.5       No Interest; No Return................................................................      22

Section 4.6       Conversion or Redemption of Preferred Shares..........................................      22

Section 4.7       Conversion or Redemption of Junior Shares.............................................      22

Section 4.8       Other Contribution Provisions.........................................................      23

Section 4.9       Not Publicly Traded...................................................................      23

Section 4.10      Warrants..............................................................................      23

Section 4.11      Class A Preferred Units...............................................................      23

Section 4.12      Restricted Units......................................................................      23

                                              ARTICLE V DISTRIBUTIONS

Section 5.1       Requirement and Characterization of Distributions.....................................      23

Section 5.2       Distributions in Kind.................................................................      24

Section 5.3       Amounts Withheld......................................................................      24

Section 5.4       Distributions Upon Liquidation........................................................      24

Section 5.5       Distributions to Reflect Issuance of Additional Partnership Units.....................      24

Section 5.6       Restricted Distributions..............................................................      24

                                              ARTICLE VI ALLOCATIONS

Section 6.1       Timing and Amount of Allocations of Net Income and Net Loss...........................      24

Section 6.2       General Allocations...................................................................      24

Section 6.3       Additional Allocation Provisions......................................................      25
</TABLE>

                                        i
<PAGE>

<TABLE>
<S>                                                                                                           <C>
Section 6.4       Tax Allocations.......................................................................      27

                                 ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1       Management............................................................................      28

Section 7.2       Certificate of Limited Partnership....................................................      31

Section 7.3       Restrictions on General Partner's Authority...........................................      31

Section 7.4       Reimbursement of the General Partner..................................................      32

Section 7.5       Outside Activities of the General Partner.............................................      33

Section 7.6       Contracts with Affiliates.............................................................      33

Section 7.7       Indemnification.......................................................................      34

Section 7.8       Liability of the General Partner......................................................      35

Section 7.9       Other Matters Concerning the General Partner..........................................      36

Section 7.10      Title to Partnership Assets...........................................................      37

Section 7.11      Reliance by Third Parties.............................................................      37

                              ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1       Limitation of Liability...............................................................      37

Section 8.2       Management of Business................................................................      37

Section 8.3       Outside Activities of Limited Partners................................................      37

Section 8.4       Return of Capital.....................................................................      38

Section 8.5       Adjustment Factor.....................................................................      38

Section 8.6       Redemption Rights of Qualifying Parties...............................................      38

Section 8.7       Partnership Right to Call Limited Partner Interests...................................      42

Section 8.8       Mergers...............................................................................      42

                                 ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1       Records and Accounting................................................................      42

Section 9.2       Partnership Year......................................................................      43

Section 9.3       Reports...............................................................................      43

                                               ARTICLE X TAX MATTERS

Section 10.1      Preparation of Tax Returns............................................................      43

Section 10.2      Tax Elections.........................................................................      43

Section 10.3      Tax Matters Partner...................................................................      43

Section 10.4      Withholding...........................................................................      44

Section 10.5      Organizational Expenses...............................................................      45

                                       ARTICLE XI TRANSFERS AND WITHDRAWALS

Section 11.1      Transfer..............................................................................      45

Section 11.2      Transfer of General Partner's Partnership Interest....................................      45
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                           <C>
Section 11.3      Transfer of Limited Partners' Partnership Interests...................................      46

Section 11.4      Substituted Limited Partners..........................................................      47

Section 11.5      Assignees.............................................................................      48

Section 11.6      General Provisions....................................................................      48

                                         ARTICLE XII ADMISSION OF PARTNERS

Section 12.1      Admission of Successor General Partner................................................      49

Section 12.2      Admission of Additional Limited Partners..............................................      49

Section 12.3      Amendment of Agreement and Certificate of Limited Partnership.........................      50

Section 12.4      Limit on Number of Partners...........................................................      50

                               ARTICLE XIII DISSOLUTION, LIQUIDATION AND TERMINATION

Section 13.1      Dissolution...........................................................................      50

Section 13.2      Winding Up............................................................................      50

Section 13.3      Deemed Distribution and Recontribution................................................      52

Section 13.4      Rights of Limited Partners............................................................      52

Section 13.5      Notice of Dissolution.................................................................      52

Section 13.6      Cancellation of Certificate of Limited Partnership....................................      52

Section 13.7      Reasonable Time for Winding-Up........................................................      52

                 ARTICLE XIV PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS

Section 14.1      Procedures for Actions and Consents of Partners.......................................      53

Section 14.2      Amendments............................................................................      53

Section 14.3      Meetings of the Partners..............................................................      53

                                           ARTICLE XV GENERAL PROVISIONS

Section 15.1      Addresses and Notice..................................................................      53

Section 15.2      Titles and Captions...................................................................      54

Section 15.3      Pronouns and Plurals..................................................................      54

Section 15.4      Further Action........................................................................      54

Section 15.5      Binding Effect........................................................................      54

Section 15.6      Waiver................................................................................      54

Section 15.7      Counterparts..........................................................................      54

Section 15.8      Applicable Law........................................................................      54

Section 15.9      Entire Agreement......................................................................      54

Section 15.10     Invalidity of Provisions..............................................................      55

Section 15.11     Limitation to Preserve REIT Status....................................................      55

Section 15.12     No Partition..........................................................................      55

Section 15.13     No Third-Party Rights Created Hereby..................................................      55

Section 15.14     No Rights as Stockholders.............................................................      56
</TABLE>

                                       iii
<PAGE>

<TABLE>
<S>                                                                                                           <C>
Section 15.15     Parent REIT...........................................................................      56
</TABLE>

<TABLE>
<S>              <C>                                            <C>
Exhibit A        PARTNERS AND PARTNERSHIP UNITS                 A-1

Exhibit B        EXAMPLES REGARDING FACTOR                      B-1

Exhibit C        NOTICE OF REDEMPTION                           C-1

Exhibit D        FORM OF UNIT CERTIFICATE                       D-1
</TABLE>

                                       iv
<PAGE>

                         AMENDED AND RESTATED AGREEMENT
                                       OF
                               LIMITED PARTNERSHIP
                                       OF
                        ARBOR REALTY LIMITED PARTNERSHIP

                  THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
ARBOR REALTY LIMITED PARTNERSHIP, dated as of July 1, 2003, is entered into by
and among ARBOR REALTY GPOP, INC., a Delaware corporation (the "General
Partner"), ARBOR REALTY LPOP, INC., a Delaware corporation (the "Initial Limited
Partner"), ARBOR COMMERCIAL MORTGAGE, LLC, a New York limited liability company
(as a Limited Partner, and, together with the Initial Limited Partner, the
"Limited Partners") and ARBOR REALTY TRUST, INC., a Maryland corporation that
intends to elect to be taxed as a real estate investment trust (the "Parent
REIT").

                  WHEREAS, ARBOR REALTY LIMITED PARTNERSHIP (the "Partnership")
was formed by ARBOR REALTY GPOP, INC., as general partner, and ARBOR REALTY
LPOP, INC., as initial limited partner, as a limited partnership under the laws
of the State of Delaware by the filing of a Certificate of Limited Partnership
with the Secretary of State of Delaware on June 24, 2003;

                  WHEREAS, ARBOR REALTY GPOP, INC. and ARBOR REALTY LPOP, INC.
entered into that certain Agreement of Limited Partnership of Arbor Realty
Limited Partnership on June 24, 2003;

                  WHEREAS, ARBOR REALTY GPOP, INC. and ARBOR REALTY LPOP, INC.
now desire to admit and ARBOR COMMERCIAL MORTGAGE, LLC wishes to join the
Partnership as a limited partner;

                  WHEREAS, ARBOR REALTY GPOP, INC., ARBOR REALTY LPOP, INC. and
ARBOR COMMERCIAL MORTGAGE, LLC wish to establish their relative general and
limited partnership interests in the Partnership;

                  WHEREAS, ARBOR REALTY GPOP, INC. and ARBOR REALTY LPOP, INC.
are wholly-owned subsidiaries of Parent REIT; and

                  WHEREAS, the Limited Partners, the General Partner and the
Parent REIT desire to enter into this Amended and Restated Agreement of Limited
Partnership as of July 1, 2003.

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                    ARTICLE I
                                  DEFINED TERMS

                  The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.

                  "Act" means the Delaware Revised Uniform Limited Partnership
Act (6 Del. C. Section 17-101 et seq.), as it may be amended from time to time,
and any successor to such statute.

                  "Actions" has the meaning set forth in Section 7.7 hereof.

                  "Additional Funds" has the meaning set forth in Section 4.3.A
hereof.

<PAGE>

                  "Additional Limited Partner" means a Person who is admitted to
the Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2
hereof and who is shown as such on the books and records of the Partnership.

                  "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Partnership Year, after giving effect to the following
adjustments:

                                    (i)      decrease such deficit by any
         amounts that such Partner is obligated to restore pursuant to this
         Agreement or by operation of law upon liquidation of such Partner's
         Partnership Interest or is deemed to be obligated to restore pursuant
         to the penultimate sentence of each of Regulations Sections
         1.704-2(g)(1) and 1.704-2(i)(5); and

                                    (ii)     increase such deficit by the items
         described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.

                  "Adjustment Factor" means 1.0; provided, however, that in the
event that:

                                    (i)      the Parent REIT (a) declares or
         pays a dividend on its outstanding REIT Shares in REIT Shares or makes
         a distribution to all holders of its outstanding REIT Shares in REIT
         Shares, (b) splits or subdivides its outstanding REIT Shares or (c)
         effects a reverse stock split or otherwise combines its outstanding
         REIT Shares into a smaller number of REIT Shares, the Adjustment Factor
         shall be adjusted by multiplying the Adjustment Factor previously in
         effect by a fraction, (i) the numerator of which shall be the number of
         REIT Shares issued and outstanding on the record date for such
         dividend, distribution, split, subdivision, reverse split or
         combination (assuming for such purposes that such dividend,
         distribution, split, subdivision, reverse split or combination has
         occurred as of such time) and (ii) the denominator of which shall be
         the actual number of REIT Shares (determined without the above
         assumption) issued and outstanding on the record date for such
         dividend, distribution, split, subdivision, reverse split or
         combination;

                                    (ii)     the Parent REIT distributes any
         rights, options or warrants to all holders of its REIT Shares to
         subscribe for or to purchase or to otherwise acquire REIT Shares (or
         other securities or rights convertible into, exchangeable for or
         exercisable for REIT Shares) at a price per share less than the Value
         of a REIT Share on the record date for such distribution (each a
         "Distributed Right"), then the Adjustment Factor shall be adjusted by
         multiplying the Adjustment Factor previously in effect by a fraction
         (a) the numerator of which shall be the number of REIT Shares issued
         and outstanding on the record date plus the maximum number of REIT
         Shares purchasable under such Distributed Rights and (b) the
         denominator of which shall be the number of REIT Shares issued and
         outstanding on the record date plus a fraction (1) the numerator of
         which is the maximum number of REIT Shares purchasable under such
         Distributed Rights times the minimum purchase price per REIT Share
         under such Distributed Rights and (2) the denominator of which is the
         Value of a REIT Share as of the record date; provided, however, that,
         if any such Distributed Rights expire or become no longer exercisable,
         then the Adjustment Factor shall be adjusted, effective retroactive to
         the date of distribution of the Distributed Rights, to reflect a
         reduced maximum number of REIT Shares or any change in the minimum
         purchase price for the purposes of the above fraction; and

                                    (iii)    the Parent REIT shall, by dividend
         or otherwise, distribute to all holders of its REIT Shares evidences of
         its indebtedness or assets (including securities, but excluding any
         dividend or distribution referred to in subsection (i) above), which
         evidences of indebtedness or assets relate to assets not received by
         the Parent REIT pursuant

                                        2
<PAGE>

         to a pro rata distribution by the Partnership, then the Adjustment
         Factor shall be adjusted to equal the amount determined by multiplying
         the Adjustment Factor in effect immediately prior to the close of
         business on the date fixed for determination of shareholders entitled
         to receive such distribution by a fraction (i) the numerator of which
         shall be such Value of a REIT Share on the date fixed for such
         determination and (ii) the denominator of which shall be the Value of a
         REIT Share on the dates fixed for such determination less the then fair
         market value (as determined by the General Partner, whose determination
         shall be conclusive) of the portion of the evidences of indebtedness or
         assets so distributed applicable to one REIT Share.

Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if any,
for such event, provided, however, that any Limited Partner may waive, by
written notice to the General Partner, the effect of any adjustment to the
Adjustment Factor applicable to the Partnership Common Units held by such
Limited Partner, and, thereafter, such adjustment will not be effective as to
such Partnership Common Units. For illustrative purposes, examples of
adjustments to the Adjustment Factor are set forth on Exhibit B attached hereto.

                  "Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling or controlled by or under common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

                  "Agreement" means this Amended and Restated Agreement of
Limited Partnership of Arbor Realty Limited Partnership, as it may be amended,
supplemented or restated from time to time.

                  "Applicable Percentage" has the meaning set forth in Section
8.6.B hereof.

                  "Appraisal" means, with respect to any assets, the written
opinion of an independent third party experienced in the valuation of similar
assets, selected by the General Partner in good faith. Such opinion may be in
the form of an opinion by such independent third party that the value for such
property or asset as set by the General Partner is fair, from a financial point
of view, to the Partnership.

                  "Assignee" means a Person to whom one or more Partnership
Common Units have been Transferred in a manner permitted under this Agreement,
but who has not become a Substituted Limited Partner, and who has the rights set
forth in Section 11.5 hereof.

                  "Available Cash" means, with respect to any period for which
such calculation is being made,

                                    (i)      the sum, without duplication, of:

                                             (1)      the Partnership's Net
         Income or Net Loss (as the case may be) for such period,

                                             (2)      Depreciation and all other
         noncash charges to the extent deducted in determining Net Income or Net
         Loss for such period,

                                             (3)      the amount of any
         reduction in reserves of the Partnership referred to in clause (ii)(6)
         below (including, without limitation, reductions resulting because the
         General Partner determines such amounts are no longer necessary),

                                             (4)      the excess, if any, of the
         net cash proceeds from the sale, exchange, disposition, financing or
         refinancing of Property for such period over the gain (or loss, as the
         case may be), if any, recognized from such sale, exchange, disposition,

                                        3
<PAGE>

         financing or refinancing during such period (excluding Terminating
         Capital Transactions), and

                                             (5)      all other cash received
         (including amounts previously accrued as Net Income and amounts of
         deferred income) or any net amounts borrowed by the Partnership for
         such period that was not included in determining Net Income or Net Loss
         for such period;

                                    (ii)     less the sum, without duplication,
         of:

                                             (1)      all principal debt
         payments made during such period by the Partnership,

                                             (2)      capital expenditures made
         by the Partnership during such period,

                                             (3)      investments in any entity
         (including loans made thereto) to the extent that such investments are
         not otherwise described in clause (ii)(1) or clause (ii)(2) above,

                                             (4)      all other expenditures and
         payments not deducted in determining Net Income or Net Loss for such
         period (including amounts paid in respect of expenses previously
         accrued),

                                             (5)      any amount included in
         determining Net Income or Net Loss for such period that was not
         received by the Partnership during such period,

                                             (6)      the amount of any increase
         in reserves (including, without limitation, working capital reserves)
         established during such period that the General Partner determines are
         necessary or appropriate in its sole and absolute discretion, and

                                             (7)      any amount distributed or
         paid in redemption of any Limited Partner Interest or Partnership Units
         including, without limitation, any Cash Amount paid.

Notwithstanding the foregoing, Available Cash shall not include (a) any cash
received or reductions in reserves, or take into account any disbursements made,
or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Partnership or (b) any Capital Contributions,
whenever received.

                  "Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to close.

                  "Capital Account" means, with respect to any Partner, the
Capital Account maintained by the General Partner for such Partner on the
Partnership's books and records in accordance with the following provisions:

                  A.    To each Partner's Capital Account, there shall be added
such Partner's Capital Contributions, such Partner's distributive share of Net
Income and any items in the nature of income or gain that are specially
allocated pursuant to Section 6.3 hereof, and the principal amount of any
Partnership liabilities assumed by such Partner or that are secured by any
property distributed to such Partner.

                  B.    From each Partner's Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses that

                                        4
<PAGE>

are specially allocated pursuant to Section 6.3 hereof, and the principal amount
of any liabilities of such Partner assumed by the Partnership or that are
secured by any property contributed by such Partner to the Partnership.

                  C.    In the event any interest in the Partnership is
Transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent that it relates
to the Transferred interest.

                  D.    In determining the principal amount of any liability for
purposes of subsections (A) and (B) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.

                  E.    The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Sections
1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner
consistent with such Regulations. If the General Partner shall determine that it
is prudent to modify the manner in which the Capital Accounts are maintained in
order to comply with such Regulations, the General Partner may make such
modification provided that such modification will not have a material effect on
the amounts distributable to any Partner without such Partner's Consent. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q) and (ii) make any appropriate modifications in the event
that unanticipated events might otherwise cause this Agreement not to comply
with Regulations Section 1.704-1(b) or Section 1.704-2.

                  "Capital Account Deficit" has the meaning set forth in Section
13.2.C hereof.

                  "Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any Contributed Property
that such Partner contributes to the Partnership pursuant to Section 4.1, 4.2 or
4.3 hereof or is deemed to contribute pursuant to Section 4.4 hereof.

                  "Cash Amount" means, with respect to a Tendering Party, an
amount of cash equal to the product of (A) the Value of a REIT Share and (B)
such Tendering Party's REIT Shares Amount determined as of the date of receipt
by the General Partner of such Tendering Party's Notice of Redemption or, if
such date is not a Business Day, the immediately preceding Business Day;
provided, however, that,

                  (1)   in the event of a Declination not followed by an
         Offering Funding, the Cash Amount shall be an amount of cash equal to
         the product of (x) 100% minus such Tendering Party's Applicable
         Percentage, and (y) the product of the amounts contemplated by clauses
         (A) and (B) above, and

                  (2)   in the event of a Declination followed by an Offering
         Funding, the Cash Amount shall be an amount of cash equal to the
         product of: (i) the amount contemplated by clause (B) above, (ii)100%
         minus such Tendering Party's Applicable Percentage, and (iii) the
         Offering Value. The term "Offering Value" shall be the quotient
         obtained by dividing the Offering Funding Amount by the number of
         Offering Funding Shares sold in such Offering Funding.

                  "Certificate" means the Certificate of Limited Partnership of
the Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.

                  "Charter" means the Articles of Incorporation of the Parent
REIT filed with the State Department of Assessments and Taxation of Maryland, as
amended, supplemented or restated from time to time.

                  "Class A Preferred Units" have the meaning set forth in
Section 4.11 hereof.

                  "Closing Price" has the meaning set forth in the definition of
"Value."

                                        5
<PAGE>

                  "Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time or any successor statute thereto, as interpreted by
the applicable Regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.

                  "Company Employees" means the employees of the Partnership,
the Parent REIT and any of their subsidiaries.

                  "Consent" means the consent to, approval of, or vote in favor
of a proposed action by a Partner given in accordance with Article 14 hereof.

                  "Consent of the Limited Partners" means the Consent of a
Majority in Interest of the Limited Partners, which Consent shall be obtained
prior to the taking of any action for which it is required by this Agreement
and, except as otherwise provided in this Agreement, may be given or withheld by
a Majority in Interest of the Limited Partners.

                  "Contributed Property" means each item of Property or other
asset, in such form as may be permitted by the Act, but excluding cash,
contributed or deemed contributed to the Partnership (or deemed contributed by
the Partnership to a "new" partnership pursuant to Code Section 708).

                  "Controlled Entity" means, as to any Limited Partner, (a) any
corporation more than fifty percent (50%) of the outstanding voting stock of
which is owned by such Limited Partner or such Limited Partner's Family Members,
(b) any trust, whether or not revocable, of which such Limited Partner or such
Limited Partner's Family Members are the sole beneficiaries, (c) any partnership
of which such Limited Partner is the managing partner and in which such Limited
Partner or such Limited Partner's Family Members hold partnership interests
representing at least twenty-five percent (25%) of such partnership's capital
and profits and (d) any limited liability company of which such Limited Partner
is the manager or managing member and in which such Limited Partner or such
Limited Partner's Family Members hold membership interests representing at least
twenty-five percent (25%) of such limited liability company's capital and
profits.

                  "Cut-Off Date" means the fifth (5th) Business Day after the
General Partner's receipt of a Notice of Redemption.

                  "Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (ii) all amounts owed by such
Person to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person that, in accordance with generally accepted
accounting principles, should be capitalized.

                  "Declination" has the meaning set forth in Section 8.6.D
hereof.

                  "Depreciation" means, for each Partnership Year or other
applicable period, an amount equal to the federal income tax depreciation,
amortization or other cost recovery deduction allowable with respect to an asset
for such year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or period, Depreciation shall be in an amount that bears the same
ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that
if the federal income tax depreciation, amortization or other cost recovery
deduction for such year or period is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable method
selected by the General Partner.

                                        6
<PAGE>

                  "Distributed Right" has the meaning set forth in the
definition of "Adjustment Factor."

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

                  "Family Members" means, as to a Person that is an individual,
such Person's spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters and inter vivos or testamentary trusts of which only such
Person and his spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters are beneficiaries.

                  "Funding Debt" means any Debt incurred by or on behalf of the
Parent REIT for the purpose, in whole or in part, of providing funds to the
Partnership.

                  "General Partner" means Arbor Realty GPOP, Inc., a Delaware
corporation, and its successors and assigns, as the general partner of the
Partnership in their capacities as general partner of the Partnership; provided,
however, that as the context requires, references herein to the General Partner
shall also mean the General Partner's corporate parent, the Parent REIT.

                  "General Partner Interest" means the Partnership Interest held
by the General Partner, which Partnership Interest is an interest as a general
partner under the Act. A General Partner Interest may be expressed as a number
of Partnership Common Units, Partnership Preferred Units or any other
Partnership Units.

                  "General Partner Loan" has the meaning set forth in Section
4.3.D hereof.

                  "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:

                        (a)      The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market value
of such asset as determined by the General Partner and agreed to by the
contributing Partner. In any case in which the General Partner and the
contributing Partner are unable to agree as to the gross fair market value of
any contributed asset or assets, such gross fair market value shall be
determined by Appraisal.

                        (b)      The Gross Asset Values of all Partnership
assets immediately prior to the occurrence of any event described in clause (i),
clause (ii), clause (iii), clause (iv) or clause (v) hereof shall be adjusted to
equal their respective gross fair market values, as determined by the General
Partner using such reasonable method of valuation as it may adopt, as of the
following times:

                                    (i)      the acquisition of an additional
         interest in the Partnership (other than in connection with the
         execution of this Agreement but including, without limitation,
         acquisitions pursuant to Section 4.2 hereof or contributions or deemed
         contributions by the General Partner pursuant to Section 4.2 hereof) by
         a new or existing Partner in exchange for more than a de minimis
         Capital Contribution, if the General Partner reasonably determines that
         such adjustment is necessary or appropriate to reflect the relative
         economic interests of the Partners in the Partnership;

                                    (ii)     the distribution by the Partnership
         to a Partner of more than a de minimis amount of Property as
         consideration for an interest in the Partnership, if the General
         Partner reasonably determines that such adjustment is necessary or
         appropriate to reflect the relative economic interests of the Partners
         in the Partnership;

                                    (iii)    the liquidation of the Partnership
         within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

                                        7
<PAGE>

                                    (iv)     upon the admission of a successor
         General Partner pursuant to Section 12.1 hereof; and

                                    (v)      at such other times as the General
         Partner shall reasonably determine necessary or advisable in order to
         comply with Regulations Sections 1.704-1(b) and 1.704-2.

                        (c)      The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of such asset on
the date of distribution as determined by the distributee and the General
Partner provided that, if the distributee is the General Partner or if the
distributee and the General Partner cannot agree on such a determination, such
gross fair market value shall be determined by Appraisal.

                        (d)      The Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subsection (d) to the extent that the General Partner reasonably determines that
an adjustment pursuant to subsection (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subsection (d).

                        (e)      If the Gross Asset Value of a Partnership asset
has been determined or adjusted pursuant to subsection (a), subsection (b) or
subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Losses.

                  "Holder" means either (a) a Partner or (b) an Assignee, owning
a Partnership Unit, that is treated as a member of the Partnership for federal
income tax purposes.

                  "Incapacity" or "Incapacitated" means, (i) as to any Partner
who is an individual, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her person or his or her estate; (ii) as to any Partner that is a corporation or
limited liability company, the filing of a certificate of dissolution, or its
equivalent, or the revocation of the corporation's charter; (iii) as to any
Partner that is a partnership, the dissolution and commencement of winding up of
the partnership; (iv) as to any Partner that is an estate, the distribution by
the fiduciary of the estate's entire interest in the Partnership; (v) as to any
trustee of a trust that is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment, or (h) an
appointment referred to in clause (g) above is not vacated within ninety (90)
days after the expiration of any such stay.

                  "Indemnitee" means (i) any Person made a party to a proceeding
by reason of its status as (A) the General Partner, (B) the Parent REIT or (C) a
director of the General Partner or the Parent REIT or an officer or employee of
the Partnership, the Parent REIT or the General Partner and (ii) such other
Persons (including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability), in its sole and absolute discretion.

                                        8
<PAGE>

                  "Independent Director" shall have the meaning assigned to such
term in the Charter, provided that if the Parent REIT has completed a Qualified
Public Offering, the term "Independent Director" shall have the meaning assigned
to such term under the rules and regulations of the principal national
securities exchange or interdealer quotation system on which the REIT Shares are
then listed.

                  "Initial Limited Partner" means Arbor Realty LPOP, Inc., a
Delaware corporation.

                  "Interest" means interest, original issue discount and other
similar payments or amounts paid by the Partnership for the use or forbearance
of money.

                  "IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.

                  "Junior Share" means a share of capital stock of the Parent
REIT now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are inferior or junior
to the REIT Shares.

                  "Limited Partner" means any Person named as a Limited Partner
in Exhibit A attached hereto, as such Exhibit A may be amended from time to
time, or any Substituted Limited Partner or Additional Limited Partner, in such
Person's capacity as a Limited Partner in the Partnership.

                  "Limited Partner Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply with
the terms and provisions of this Agreement. A Limited Partner Interest may be
expressed as a number of Partnership Common Units, Partnership Preferred Units
or other Partnership Units.

                  "Liquidating Event" has the meaning set forth in Section 13.1
hereof.

                  "Liquidator" has the meaning set forth in Section 13.2.A
hereof.

                  "Majority in Interest of the Limited Partners" means Limited
Partners holding more than fifty percent (50%) of the outstanding Partnership
Common Units held by all Limited Partners.

                  "Market Price" has the meaning set forth in the definition of
"Value."

                  "Net Income" or "Net Loss" means, for each Partnership Year of
the Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:

                        (a)      Any income of the Partnership that is exempt
from federal income tax and not otherwise taken into account in computing Net
Income (or Net Loss) pursuant to this definition of "Net Income" or "Net Loss"
shall be added to (or subtracted from, as the case may be) such taxable income
(or loss);

                        (b)      Any expenditure of the Partnership described in
Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income (or Net Loss) pursuant to this definition
of "Net Income" or "Net Loss," shall be subtracted from (or added to, as the
case may be) such taxable income (or loss);

                        (c)      In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subsection (b) or subsection (c) of
the definition of "Gross Asset Value," the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;

                                        9
<PAGE>

                        (d)      Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;

                        (e)      In lieu of the depreciation, amortization and
other cost recovery deductions that would otherwise be taken into account in
computing such taxable income or loss, there shall be taken into account
Depreciation for such Partnership Year;

                        (f)      To the extent that an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts
as a result of a distribution other than in liquidation of a Partner's interest
in the Partnership, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of the asset
and shall be taken into account for purposes of computing Net Income or Net
Loss; and

                        (g)      Notwithstanding any other provision of this
definition of "Net Income" or "Net Loss," any item that is specially allocated
pursuant to Section 6.3 hereof shall not be taken into account in computing Net
Income or Net Loss. The amounts of the items of Partnership income, gain, loss
or deduction available to be specially allocated pursuant to Section 6.3 hereof
shall be determined by applying rules analogous to those set forth in this
definition of "Net Income" or "Net Loss."

                  "New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or Preferred Shares, excluding Preferred Shares, Junior
Shares and grants under the Stock Option Plans, or (ii) any Debt issued by the
General Partner that provides any of the rights described in clause (i).

                  "Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).

                  "Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).

                  "Notice of Redemption" means the Notice of Redemption
substantially in the form of Exhibit C attached to this Agreement.

                  "Offering Funding" has the meaning set forth in Section
8.6.D(2) hereof.

                  "Offering Funding Amount" means the dollar amount equal to (i)
the product of (x) the number of Offering Funding Shares sold in an Offering
Funding and (y) the offering price per share of such Offering Funding Shares in
such Offering Funding, less (ii) the aggregate underwriting discounts and
commissions in such Offering Funding.

                  "Offering Funding Shares" has the meaning set forth in Section
8.6.D(2) hereof.

                  "Ownership Limit" means the applicable restriction or
restrictions on ownership of shares of the Parent REIT imposed under the
Charter.

                  "Paired Common Unit" has the meaning set forth in the Pairing
Agreement.

                  "Pairing Agreement" means the Pairing Agreement by and among
the Parent REIT, the General Partner, the Initial Limited Partner, the
Partnership, and Arbor Commercial Mortgage, LLC, dated as of July 1, 2003.

                                       10
<PAGE>

                  "Parent REIT" means Arbor Realty Trust, Inc., a Maryland
corporation that intends to be taxed as a REIT and is the corporate parent of
the General Partner and the Initial Limited Partner.

                  "Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.

                  "Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).

                  "Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).

                  "Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).

                  "Partnership" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.

                  "Partnership Common Unit" means a fractional share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
hereof, but does not include any Partnership Preferred Unit or any other
Partnership Unit specified in a Partnership Unit Designation or this Agreement
as being other than a Partnership Common Unit; provided, however, that the
General Partner Interest and the Limited Partner Interests shall have the
differences in rights and privileges as specified in this Agreement. The
ownership of Partnership Common Units may (but need not, in the sole and
absolute discretion of the General Partner) be evidenced by the form of
certificate for Partnership Common Units attached hereto as Exhibit D.

                  "Partnership Interest" means an ownership interest in the
Partnership held by either a Limited Partner or the General Partner and includes
any and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. A Partnership
Interest may be expressed as a number of Partnership Common Units, Partnership
Preferred Units or other Partnership Units.

                  "Partnership Junior Unit" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1 or Section 4.2 or Section 4.3 hereof that has distribution rights,
or rights upon liquidation, winding up and dissolution, that are inferior or
junior to the Partnership Common Units.

                  "Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).

                  "Partnership Preferred Unit" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1, Section 4.2 or Section 4.3 hereof that has distribution rights, or
rights upon liquidation, winding up and dissolution, that are superior or prior
to the Partnership Common Units.

                  "Partnership Record Date" means a record date established by
the General Partner for the distribution of Available Cash pursuant to Section
5.1 hereof, which record date shall generally be the same as the record date
established by the General Partner for a distribution to its shareholders of
some or all of its portion of such distribution.

                  "Partnership Unit" shall mean a Partnership Common Unit, a
Partnership Preferred Unit, a Partnership Junior Unit or any other fractional
share of the Partnership Interests that the General Partner has authorized
pursuant to Section 4.1, Section 4.2 or Section 4.3 hereof.

                  "Partnership Unit Designation" shall have the meaning set
forth in Section 4.2 hereof.

                                       11
<PAGE>

                  "Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.

                  "Percentage Interest" means, as to each Partner, its interest,
if any, in the Partnership Common Units as determined by dividing the
Partnership Common Units owned by such Partner by the total number of
Partnership Common Units then outstanding as specified in Exhibit A attached
hereto, as such Exhibit may be amended from time to time. To the extent that the
Partnership issues more than one class or series of Partnership Interests, the
interest of such class or series shall be determined as set forth in this
Agreement or any amendment hereto.

                  "Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association, limited liability company or
other entity.

                  "Preferred Share" means a share of capital stock of the Parent
REIT now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are superior or prior
to the REIT Shares.

                  "Primary Offering Notice" has the meaning set forth in Section
8.6.F(4) hereof.

                  "Properties" means any assets and property of the Partnership
such as, but not limited to, interests in real property and personal property,
including, without limitation, fee interests, interests in ground leases,
interests in limited liability companies, joint ventures or partnerships,
interests in mortgages, and Debt instruments as the Partnership may hold from
time to time and "Property" shall mean any one such asset or property.

                  "Qualified Public Offering" means the sale in a public
offering registered under the Securities Act of shares of common stock in which
the REIT Shares are listed on a national securities exchange or interdealer
quotation system.

                  "Qualified REIT Subsidiary" means a qualified REIT subsidiary
of the Parent REIT within the meaning of Code Section 856(i)(2).

                  "Qualified Transferee" means an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act.

                  "Qualifying Party" means (a) a Limited Partner, (b) an
Additional Limited Partner, or (c) a Substituted Limited Partner succeeding to
all or part of a Limited Partner Interest of (i) a Limited Partner, or (ii) an
Additional Limited Partner, in each case other than the Initial Limited Partner.

                  "Redemption" has the meaning set forth in Section 8.6.A
hereof.

                  "Registration Rights Agreement" means the Registration Rights
Agreement between Parent REIT and JMP Securities LLC, dated as of July 1, 2003.

                  "Regulations" means the applicable income tax regulations
under the Code, whether such regulations are in proposed, temporary or final
form, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

                  "Regulatory Allocations" has the meaning set forth in Section
6.3.B(viii) hereof.

                  "Restricted Partnership Common Units" has the meaning set
forth in Section 4.12 hereof.

                  "REIT" means a real estate investment trust qualifying under
Code Section 856.

                  "REIT Consideration" means the aggregate number of REIT Shares
equal to the product of the REIT Shares Amount and the Applicable Percentage.

                                       12
<PAGE>

                  "REIT Partner" means (a) a Partner, including, without
limitation, the General Partner, that is, or has made an election to qualify as,
a REIT, (b) any Qualified REIT Subsidiary of any Partner that is, or has made an
election to qualify as, a REIT and (c) any Partner that is a Qualified REIT
Subsidiary of a REIT.

                  "REIT Party" means the Parent REIT, the General Partner and/or
the Initial Limited Partner.

                  "REIT Payment" has the meaning set forth in Section 15.11
hereof.

                  "REIT Requirements" means the requirements for qualification
as a REIT under the Code and regulations, including, without limitation, the
distribution requirements contained in Section 857(a) of the Code.

                  "REIT Share" means a share of the Parent REIT's Common Stock,
par value $.01 per share. Where relevant in this Agreement, "REIT Shares"
includes shares of the Parent REIT's Common Stock, par value $.01 per share,
issued upon conversion of Preferred Shares or Junior Shares.

                  "REIT Shares Amount" means a number of REIT Shares equal to
the product of (a) the number of Tendered Units and (b) the Adjustment Factor in
effect on the Specified Redemption Date with respect to such Tendered Units;
provided, however, that, in the event that the Parent REIT issues to all holders
of REIT Shares as of a certain record date rights, options, warrants or
convertible or exchangeable securities entitling the Parent REIT's shareholders
to subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "Rights"), with the record date for such Rights issuance
falling within the period starting on the date of the Notice of Redemption and
ending on the day immediately preceding the Specified Redemption Date, which
Rights will not be distributed before the relevant Specified Redemption Date,
then the REIT Shares Amount shall also include such Rights that a holder of that
number of REIT Shares would be entitled to receive, expressed, where relevant
hereunder, in a number of REIT Shares determined by the General Partner in good
faith.

                  "Related Party" means, with respect to any Person, any other
Person whose ownership of shares of the General Partner's capital stock would be
attributed to the first such Person under Code Section 544 (as modified by Code
Section 856(h)(1)(B)).

                  "Rights" has the meaning set forth in the definition of "REIT
Shares Amount."

                  "SEC" means the Securities and Exchange Commission.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  "Services Agreement" means any management, development or
advisory agreement with a property and/or asset manager for the provision of
property management, asset management, leasing, development and/or similar
services with respect to the Properties and any agreement for the provision of
services of accountants, legal counsel, appraisers, insurers, brokers, transfer
agents, registrars, developers, financial advisors and other professional
services.

                  "Single Funding Notice" has the meaning set forth in Section
8.6.D(3) hereof.

                  "Special Voting Preferred Stock" means shares of Special
Voting Preferred Stock, $0.01 par value per share, of Parent REIT, as designated
by articles supplementary to the Charter and subject to the Pairing Agreement.

                  "Specified Redemption Date" means the later of (a) the tenth
(10th) Business Day after the receipt by the General Partner of a Notice of
Redemption or (b) in the case of a Declination followed by an Offering Funding,
the Business Day next following the date of the closing of the Offering Funding;
provided, however, that the Specified Redemption Date, as well as the closing of
a Redemption, or an acquisition of Tendered Units by a REIT Party pursuant to
Section 8.6.B hereof, on any Specified Redemption Date, may be

                                       13
<PAGE>

deferred, in the REIT Party's sole and absolute discretion, for such time (but
in any event not more than one hundred fifty (150) days in the aggregate) as may
reasonably be required to effect, as applicable, (i) an Offering Funding or
other necessary funding arrangements, (ii) compliance with the Securities Act or
other law (including, but not limited to, (a) state "blue sky" or other
securities laws and (b) the expiration or termination of the applicable waiting
period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended) and (iii) satisfaction or waiver of other commercially reasonable
and customary closing conditions and requirements for a transaction of such
nature.

                  "Stock Option Plan" means any stock option plan hereafter
adopted by the Partnership or the Parent REIT.

                  "Subsidiary" means, with respect to any Person, any other
Person (which is not an individual) of which a majority of (i) the voting power
of the voting equity securities or (ii) the outstanding equity interests is
owned, directly or indirectly, by such Person; provided, however, that, with
respect to the Partnership, "Subsidiary" means solely a partnership or limited
liability company (taxed, for federal income tax purposes, as a partnership and
not as an association or publicly traded partnership taxable as a corporation)
of which the Partnership is a partner or member, as applicable, unless the
General Partner has received an unqualified opinion from independent counsel of
recognized standing, or a ruling from the IRS, that the ownership of shares of
stock of a corporation or other entity will not jeopardize the Parent REIT's
status as a REIT, in which event the term "Subsidiary" shall include the
corporation or other entity which is the subject of such opinion or ruling.

                  "Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4 hereof.

                  "Tax Items" has the meaning set forth in Section 6.4.A hereof.

                  "Tendered Units" has the meaning set forth in Section 8.6.A
hereof.

                  "Tendering Party" has the meaning set forth in Section 8.6.A
hereof.

                  "Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.

                  "Transfer," when used with respect to a Partnership Unit, or
all or any portion of a Partnership Interest, means any sale, assignment,
bequest, conveyance, devise, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; provided,
however, that when the term is used in Article 11 hereof, "Transfer" does not
include (a) any Redemption of Partnership Common Units by the Partnership, or
acquisition of Tendered Units by a REIT Party, pursuant to Section 8.6 hereof or
(b) any redemption of Partnership Units pursuant to any Partnership Unit
Designation. The terms "Transferred" and "Transferring" have correlative
meanings.

                  "Unitholder" means the General Partner or any Holder of
Partnership Units.

                  "Value" means, on any date of determination with respect to a
REIT Share, the average of the daily Market Prices for ten (10) consecutive
trading days immediately preceding the date of determination except that, as
provided in Section 4.4.B. hereof, the Market Price for the trading day
immediately preceding the date of exercise of a stock option under any Stock
Option Plans shall be substituted for such average of daily market prices for
purposes of Section 4.4 hereof; provided, however, that for purposes of Section
8.6, the "date of determination" shall be the date of receipt by the General
Partner of a Notice of Redemption or, if such date is not a Business Day, the
immediately preceding Business Day. The term "Market Price" on any date shall
mean, with respect to any class or series of outstanding REIT Shares, the
Closing Price for such REIT Shares on such date. The "Closing Price" on any date
shall mean the last sale price for such REIT Shares, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, for such REIT Shares, in either case as reported in the
principal consolidated transaction reporting system with

                                       14
<PAGE>

respect to securities listed or admitted to trading on the New York Stock
Exchange or, if such REIT Shares are not listed or admitted to trading on the
New York Stock Exchange, as reported on the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such REIT Shares are listed or admitted to trading
or, if such REIT Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
or, if such system is no longer in use, the principal other automated quotation
system that may then be in use or, if such REIT Shares are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in such REIT Shares selected by
the Board of Directors of the General Partner or, in the event that no trading
price is available for such REIT Shares, the fair market value of the REIT
Shares, as determined in good faith by the Board of Directors of the General
Partner.

         In the event that the REIT Shares Amount includes Rights (as defined in
the definition of "REIT Shares Amount") that a holder of REIT Shares would be
entitled to receive, then the Value of such Rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.

                  "Warrants" mean warrants to purchase additional Partnership
Common Units pursuant to the Warrant Agreement.

                  "Warrant Agreement" means the Warrant Agreement between the
Partnership, the Parent REIT, and Arbor Commercial Mortgage, LLC, dated as of
July 1, 2003.

                                   ARTICLE II
                             ORGANIZATIONAL MATTERS

                  Section 2.1 Organization. The Partnership is a limited
partnership organized pursuant to the provisions of the Act and upon the terms
and subject to the conditions set forth in this Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Act. The Partnership Interest of each Partner shall be personal property for all
purposes.

                  Section 2.2 Name. The name of the Partnership is "ARBOR REALTY
LIMITED PARTNERSHIP." The Partnership's business may be conducted under any
other name or names deemed advisable by the General Partner, including the name
of the General Partner or any Affiliate thereof. The words "Limited
Partnership," "LP," "L.P.," "Ltd." or similar words or letters shall be included
in the Partnership's name where necessary for the purposes of complying with the
laws of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and from
time to time and shall notify the Partners of such change in the next regular
communication to the Partners.

                  Section 2.3 Registered Office and Agent; Principal Office. The
address of the registered office of the Partnership in the State of Delaware is
located at 1209 Orange Street, Wilmington, Delaware, 19801, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office is The Corporation Trust Company. The principal office of the
Partnership is located at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY
11553, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.

                  Section 2.4 Power of Attorney.

                  A.       Each Limited Partner and each Assignee hereby
irrevocably constitutes and appoints the General Partner, any Liquidator, and
authorized officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its name, place and
stead to:

                                       15
<PAGE>

                                                      (1) execute, swear to,
         seal, acknowledge, deliver, file and record in the appropriate public
         offices (a) all certificates, documents and other instruments
         (including, without limitation, this Agreement and the Certificate and
         all amendments, supplements or restatements thereof) that the General
         Partner or the Liquidator deems appropriate or necessary to form,
         qualify or continue the existence or qualification of the Partnership
         as a limited partnership (or a partnership in which the limited
         partners have limited liability to the extent provided by applicable
         law) in the State of Delaware and in all other jurisdictions in which
         the Partnership may conduct business or own property; (b) all
         instruments that the General Partner or the Liquidator deems
         appropriate or necessary to reflect any amendment, change, modification
         or restatement of this Agreement in accordance with its terms; (c) all
         conveyances and other instruments or documents that the General Partner
         or the Liquidator deems appropriate or necessary to reflect the
         dissolution and liquidation of the Partnership pursuant to the terms of
         this Agreement, including, without limitation, a certificate of
         cancellation; (d) all conveyances and other instruments or documents
         that the General Partner or the Liquidator deems appropriate or
         necessary to reflect the distribution or exchange of assets of the
         Partnership pursuant to the terms of this Agreement; (e) all
         instruments relating to the admission, withdrawal, removal or
         substitution of any Partner pursuant to, or other events described in,
         Article 11, Article 12 or Article 13 hereof or the Capital Contribution
         of any Partner; and (f) all certificates, documents and other
         instruments relating to the determination of the rights, preferences
         and privileges relating to Partnership Interests; and

                                                      (2) execute, swear to,
         acknowledge and file all ballots, consents, approvals, waivers,
         certificates and other instruments appropriate or necessary, in the
         sole and absolute discretion of the General Partner or the Liquidator,
         to make, evidence, give, confirm or ratify any vote, consent, approval,
         agreement or other action that is made or given by the Partners
         hereunder or is consistent with the terms of this Agreement or
         appropriate or necessary, in the sole and absolute discretion of the
         General Partner or the Liquidator, to effectuate the terms or intent of
         this Agreement.

Nothing contained herein shall be construed as authorizing the General Partner
or the Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.

                  B.       The foregoing power of attorney is hereby declared to
be irrevocable and a special power coupled with an interest, in recognition of
the fact that each of the Limited Partners and Assignees will be relying upon
the power of the General Partner or the Liquidator to act as contemplated by
this Agreement in any filing or other action by it on behalf of the Partnership,
and it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the Transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units or Partnership Interest and
shall extend to such Limited Partner's or Assignee's heirs, successors, assigns
and personal representatives. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the General Partner or the
Liquidator, acting in good faith pursuant to such power of attorney; and each
such Limited Partner or Assignee hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the General Partner or
the Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
the Liquidator's request therefor, such further designation, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case may
be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.

                  Section 2.5 Term. Pursuant to Section 17-217(d) of the Act,
the term of the Partnership commenced on June 24, 2003 and shall continue until
the Partnership is dissolved pursuant to the provisions of Article 13 hereof or
as otherwise provided by law.

                                   ARTICLE III
                                     PURPOSE

                                       16
<PAGE>

                  Section 3.1 Purpose and Business. The purpose and nature of
the Partnership is to conduct any business, enterprise or activity permitted by
or under the Act; provided, however, such business and arrangements and
interests may be limited to and conducted in such a manner as to permit the
Parent REIT, in the sole and absolute discretion of the General Partner, at all
times to be classified as a REIT. In connection with the foregoing, the
Partnership shall have full power and authority to enter into, perform and carry
out contracts of any kind, to borrow and lend money and to issue and guarantee
evidence of indebtedness, whether or not secured by mortgage, deed of trust,
pledge or other lien and, directly or indirectly, to acquire and construct
additional Properties necessary, useful or desirable in connection with its
business.

                  Section 3.2 Powers.

                  A.       The Partnership shall be empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership.

                  B.       The Partnership may contribute from time to time
Partnership capital to one or more newly formed entities solely in exchange for
equity interests therein (or in a wholly-owned subsidiary entity thereof).

                 C.       Notwithstanding any other provision in this
Agreement, the General Partner may cause the Partnership not to take, or to
refrain from taking, any action that, in the judgment of the General Partner, in
its sole and absolute discretion, (i) could adversely affect the ability of the
Parent REIT to continue to qualify as a REIT, (ii) could subject the Parent REIT
to any additional taxes under Code Section 857 or Code Section 4981 or any other
related or successor provision of the Code, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over Parent
REIT or the General Partner, their securities or the Partnership.

                  Section 3.3 Partnership Only for Partnership Purposes. This
Agreement shall not be deemed to create a company, venture or partnership
between or among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner
shall have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall be
responsible or liable for any indebtedness or obligation of another Partner, and
the Partnership shall not be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.

                  Section 3.4 Representations and Warranties by the Parties.

                  A.       Each Partner (including, without limitation, each
Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner,
respectively) that is an individual represents and warrants to each other
Partner that (i) the consummation of the transactions contemplated by this
Agreement to be performed by such Partner will not result in a breach or
violation of, or a default under, any material agreement by which such Partner
or any of such Partner's property is bound, or any statute, regulation, order or
other law to which such Partner is subject, (ii) subject to the last sentence of
this Section 3.4.A, such Partner is neither a "foreign person" within the
meaning of Code Section 1445(f) nor a "foreign partner" within the meaning of
Code Section 1446(e), (iii) such Partner does not own, directly or indirectly,
(a) nine and nine tenths percent (9.9%) or more of the total combined voting
power of all classes of stock entitled to vote, or nine and nine tenths percent
(9.9%) or more of the total number of shares of all classes of stock, of any
corporation that is a tenant of either (I) the Parent REIT, the General Partner
or any Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture or limited liability company of which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member or (b) an
interest of nine and nine tenths percent (9.9%) or more in the assets or net
profits of any tenant of either (I) the Parent REIT, the General Partner or any
Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture, or limited liability company of which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member and (iv)
this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms. Notwithstanding anything

                                       17
<PAGE>

contained herein to the contrary, in the event that the representation contained
in the foregoing clause (ii) would be inaccurate if given by a Partner, such
Partner (w) shall not be required to make and shall not be deemed to have made
such representation, if it delivers to the General Partner in connection with or
prior to its execution of this Agreement written notice that it may not
truthfully make such representation, (x) hereby agrees that it is subject to,
and hereby authorizes the General Partner to withhold, all withholdings to which
such a "foreign person" or "foreign partner", as applicable, is subject under
the Code and (y) hereby agrees to cooperate fully with the General Partner with
respect to such withholdings, including by effecting the timely completion and
delivery to the General Partner of all governmental forms required in connection
therewith.

                  B.       Each Partner (including, without limitation, each
Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner,
respectively) that is not an individual represents and warrants to each other
Partner(s) that (i) all transactions contemplated by this Agreement to be
performed by it have been duly authorized by all necessary action, including,
without limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or shareholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its partnership or operating agreement, trust
agreement, articles, charter or bylaws, as the case may be, any material
agreement by which such Partner or any of such Partner's properties or any of
its partners, members, beneficiaries, trustees or shareholders, as the case may
be, is or are bound, or any statute, regulation, order or other law to which
such Partner or any of its partners, members, trustees, beneficiaries or
shareholders, as the case may be, is or are subject, (iii) subject to the last
sentence of this Section 3.4.B, such Partner is neither a "foreign person"
within the meaning of Code Section 1445(f) nor a "foreign partner" within the
meaning of Code Section 1446(e), (iv) such Partner does not own, directly or
indirectly, (a) nine and nine tenths percent (9.9%) or more of the total
combined voting power of all classes of stock entitled to vote, or nine and
eight nine percent (9.9%) or more of the total number of shares of all classes
of stock, of any corporation that is a tenant of either (I) the Parent REIT, the
General Partner or any Qualified REIT Subsidiary, (II) the Partnership or (III)
any partnership, venture or limited liability company of which the Parent REIT,
the General Partner, any Qualified REIT Subsidiary or the Partnership is a
member or (b) an interest of nine and nine tenths percent (9.9%) or more in the
assets or net profits of any tenant of either (I) the Parent REIT, the General
Partner or any Qualified REIT Subsidiary, (II) the Partnership or (III) any
partnership, venture or limited liability company for which the Parent REIT, the
General Partner, any Qualified REIT Subsidiary or the Partnership is a member
and (v) this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms. Notwithstanding anything contained herein to the
contrary, in the event that the representation contained in the foregoing clause
(iii) would be inaccurate if given by a Partner, such Partner (w) shall not be
required to make and shall not be deemed to have made such representation, if it
delivers to the General Partner in connection with or prior to its execution of
this Agreement written notice that it may not truthfully make such
representation, (x) hereby agrees that it is subject to, and hereby authorizes
the General Partner to withhold, all withholdings to which such a "foreign
person" or "foreign partner", as applicable, is subject under the Code and (y)
hereby agrees to cooperate fully with the General Partner with respect to such
withholdings, including by effecting the timely completion and delivery to the
General Partner of all internal revenue forms required in connection therewith.

                  C.       Each Partner (including, without limitation, each
Substituted Limited Partner as a condition to becoming a Substituted Limited
Partner) represents, warrants and agrees that it has acquired and continues to
hold its interest in the Partnership for its own account for investment purposes
only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, and not with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.

                  D.       The representations and warranties contained in
Sections 3.4.A, 3.4.B and 3.4.C hereof shall survive the execution and delivery
of this Agreement by each Partner (and, in the case of an Additional Limited
Partner or a Substituted Limited Partner, the admission of such Additional
Limited Partner or Substituted Limited Partner as a Limited Partner in the
Partnership) and the dissolution, liquidation and termination of the
Partnership.

                                       18
<PAGE>

                  E.       Each Partner (including, without limitation, each
Substituted Limited Partner as a condition to becoming a Substituted Limited
Partner) hereby acknowledges that no representations as to potential profit,
cash flows, funds from operations or yield, if any, in respect of the
Partnership or the Parent REIT have been made by any Partner or any employee or
representative or Affiliate of any Partner, and that projections and any other
information, including, without limitation, financial and descriptive
information and documentation, that may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

                  Section 4.1 Capital Contributions of the Partners. The
Partners have made Capital Contributions to the Partnership and own Partnership
Units in the amount set forth for such Partner on Exhibit A, as the same may be
amended from time to time by the General Partner to the extent necessary to
reflect accurately sales, exchanges or other Transfers, redemptions, Capital
Contributions, the issuance of additional Partnership Units, or similar events
having an effect on a Partner's ownership of Partnership Units. Except as
provided by law or in Sections 4.2, 4.3, 4.10 or 10.4 hereof, the Partners shall
have no obligation or right to make any additional Capital Contributions or
loans to the Partnership.

                  Section 4.2 Issuances of Additional Partnership Interests.

                  A.       General. The General Partner is hereby authorized to
cause the Partnership to issue additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose, at any time or from time to
time, to the Partners (including the General Partner) or to other Persons, and
to admit such Persons as Additional Limited Partners, for such consideration and
on such terms and conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of any Limited
Partners. Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units (i) upon the
conversion, redemption or exchange of any Debt, Partnership Units or other
securities issued by the Partnership, (ii) for less than fair market value, so
long as the General Partner concludes in good faith that such issuance is in the
best interests of the General Partner and the Partnership, and (iii) in
connection with any merger of any other Person into the Partnership or any
Subsidiary of the Partnership if the applicable merger agreement provides that
Persons are to receive Partnership Units in exchange for their interests in the
Person merging into the Partnership or any Subsidiary of the Partnership.
Subject to Delaware law, any additional Partnership Interests may be issued in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties as shall be determined by the General Partner, in its
sole and absolute discretion without the approval of any Limited Partner, and
set forth in this Agreement or a written document thereafter attached to and
made an exhibit to this Agreement (each, a "Partnership Unit Designation").
Without limiting the generality of the foregoing, the General Partner shall have
authority to specify (a) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (b) the right of each such class or series of Partnership Interests
to share in Partnership distributions; (c) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; (d) the voting rights, if any, of each such class or series of
Partnership Interests; and (e) the conversion, redemption or exchange rights
applicable to each such class or series of Partnership Interests. Upon the
issuance of any additional Partnership Interest, the General Partner shall amend
Exhibit A as appropriate to reflect such issuance.

                  B.       Issuances to the General Partner. No additional
Partnership Units shall be issued to the General Partner or the Initial Limited
Partner unless (i) the additional Partnership Units are issued to all Partners
in proportion to their respective Percentage Interests with respect to the class
of Partnership Units so issued, (ii) (a) the additional Partnership Units are
(x) Partnership Common Units issued in connection with an issuance of REIT
Shares, or (y) Partnership Units (other than Partnership Common Units) issued in
connection with an issuance, conversion or exercise of Preferred Shares, New
Securities or other interests in the Parent REIT (other than REIT Shares), which
Preferred Shares, New Securities or other interests have designations,
preferences and other rights, terms and provisions that are substantially the
same as the designations,

                                       19
<PAGE>

preferences and other rights, terms and provisions of the additional Partnership
Units issued to the General Partner or the Initial Limited Partner, and (b) the
Parent REIT contributes or otherwise causes to be transferred to the Partnership
the cash proceeds or other consideration received in connection with the
issuance of such REIT Shares, Preferred Shares, New Securities or other
interests in the Parent REIT, (iii) the additional Partnership Units are issued
upon the conversion, redemption or exchange of Debt, Partnership Units or other
securities issued by the Partnership, or (iv) the additional Partnership Units
are issued pursuant to Sections 4.3B, 4.4, 4.6 or Section 4.7.

                  C.       No Preemptive Rights. No Person, including, without
limitation, any Partner or Assignee, shall have any preemptive, preferential,
participation or similar right or rights to subscribe for or acquire any
Partnership Interest.

                  Section 4.3 Additional Funds and Capital Contributions.

                  A.       General. The General Partner may, at any time and
from time to time, determine that the Partnership requires additional funds
("Additional Funds") for the acquisition or development of additional
Properties, for the redemption of Partnership Units or for such other purposes
as the General Partner may determine in its sole and absolute discretion.
Additional Funds may be obtained by the Partnership, at the election of the
General Partner, in any manner provided in, and in accordance with, the terms of
this Section 4.3 without the approval of any Limited Partners.

                  B.       Additional Capital Contributions. The General
Partner, on behalf of the Partnership, may obtain any Additional Funds by
accepting Capital Contributions from any Partners or other Persons. In
connection with any such Capital Contribution (of cash or property), the General
Partner is hereby authorized to cause the Partnership from time to time to issue
additional Partnership Units (as set forth in Section 4.2 above) in
consideration therefor and the Percentage Interests of the General Partner and
the Limited Partners shall be adjusted to reflect the issuance of such
additional Partnership Units.

                  C.       Loans by Third Parties. The General Partner, on
behalf of the Partnership, may obtain any Additional Funds by causing the
Partnership to incur Debt to any Person upon such terms as the General Partner
determines appropriate, including making such Debt convertible, redeemable or
exchangeable for Partnership Units; provided, however, that the Partnership
shall not incur any such Debt if (i) a breach, violation or default of such Debt
would be deemed to occur by virtue of the Transfer by any Limited Partner of any
Partnership Interest, or (ii) such Debt is recourse to any Partner (unless the
Partner otherwise agrees).

                  D.       General Partner Loans. The General Partner, on behalf
of the Partnership, may obtain any Additional Funds by causing the Partnership
to incur Debt with the General Partner or the Parent REIT (each, a "General
Partner Loan") if (i) such Debt is, to the extent permitted by law, on
substantially the same terms and conditions (including interest rate, repayment
schedule, and conversion, redemption, repurchase and exchange rights) as Funding
Debt incurred by the General Partner or the Parent REIT, the net proceeds of
which are lent to the Partnership to provide such Additional Funds, or (ii) such
Debt is on terms and conditions no less favorable to the Partnership than would
be available to the Partnership from any third party; provided, however, that
the Partnership shall not incur any such Debt if (a) a breach, violation or
default of such Debt would be deemed to occur by virtue of the Transfer by any
Limited Partner of any Partnership Interest, or (b) such Debt is recourse to any
Partner (unless the Partner otherwise agrees).

                  E.       Issuance of Securities by the Parent REIT.

                                             (1) The Parent REIT shall
         contribute the cash proceeds or other consideration received from any
         issuances, since the formation of the Partnership, of REIT Shares,
         Preferred Shares, Junior Shares or New Securities, as the case may be,
         and from the exercise of the rights contained in any such additional
         New Securities, to the General Partner or the Initial Limited Partner
         and the General Partner or the Initial Limited Partner, as the case may
         be, shall contribute such proceeds to the Partnership in exchange for
         (x) in the case of an issuance of REIT Shares, Partnership Common
         Units, or (y) in the case of an issuance of Preferred Shares, Junior
         Shares or

                                       20
<PAGE>

         New Securities, Partnership Units with designations, preferences and
         other rights, terms and provisions that are substantially the same as
         the designations, preferences and other rights, terms and provisions of
         such Preferred Shares, Junior Shares or New Securities.

                                             (2) The General Partner and the
         Initial Limited Partner shall contribute any cash or other
         consideration that each have received from the Parent REIT, since the
         formation of the Partnership, to the Partnership in exchange for
         Partnership Common Units.

                                             (3) The Parent REIT shall not issue
         any additional REIT Shares, Preferred Shares, Junior Shares or New
         Securities unless the Parent REIT contributes the cash proceeds or
         other consideration received from the issuance of such additional REIT
         Shares, Preferred Shares, Junior Shares or New Securities, as the case
         may be, and from the exercise of the rights contained in any such
         additional New Securities, to the General Partner or the Initial
         Limited Partner and the General Partner or the Initial Limited Partner,
         as the case may be, shall contribute such proceeds to the Partnership
         in exchange for (x) in the case of an issuance of REIT Shares,
         Partnership Common Units, or (y) in the case of an issuance of
         Preferred Shares, Junior Shares or New Securities, Partnership Units
         with designations, preferences and other rights, terms and provisions
         that are substantially the same as the designations, preferences and
         other rights, terms and provisions of such Preferred Shares, Junior
         Shares or New Securities; provided, however, that notwithstanding the
         foregoing, the General Partner may issue REIT Shares, Preferred Shares,
         Junior Shares or New Securities (a) pursuant to Section 4.4 or Section
         8.6.B hereof, (b) pursuant to a dividend or distribution (including any
         stock split) of REIT Shares, Preferred Shares, Junior Shares or New
         Securities to all of the holders of REIT Shares, Preferred Shares,
         Junior Shares or New Securities, as the case may be, (c) upon a
         conversion, redemption or exchange of Preferred Shares, (d) upon a
         conversion of Junior Shares into REIT Shares, (e) upon a conversion,
         redemption, exchange or exercise of New Securities, or (f) in
         connection with an acquisition of a property or other asset to be
         owned, directly or indirectly, by the General Partner if the General
         Partner determines that such acquisition is in the best interests of
         the Partnership. In the event of any issuance of additional REIT
         Shares, Preferred Shares, Junior Shares or New Securities by the Parent
         REIT, and the contribution to the General Partner or the Initial
         Limited Partner of the cash proceeds or other consideration received
         from such issuance, and the contribution to the Partnership, by the
         General Partner or the Initial Limited Partner, as the case may be, of
         such proceeds, the Partnership shall pay the Parent REIT's expenses
         associated with such issuance, including any underwriting discounts or
         commissions (it being understood that payment of some or all of such
         expenses may be made by the Parent REIT on behalf of the Partnership
         out of the gross proceeds of such issuance prior to the contribution of
         such proceeds by the Parent REIT to the General Partner or the Initial
         Limited Partner, as the case may be).

                  Section 4.4 Stock Option Plan.

                  A.       Options Granted to Company Employees and Independent
Directors. If at any time or from time to time, in connection with a Stock
Option Plan, a stock option granted to a Company Employee or an Independent
Director is duly exercised:

                                             (1) the General Partner shall, as
         soon as practicable after such exercise, make a Capital Contribution to
         the Partnership in an amount equal to the exercise price paid to the
         General Partner (or the Parent REIT) by such exercising party in
         connection with the exercise of such stock option.

                                             (2) on the date that the General
         Partner makes a capital contribution pursuant to 4.4.A(1) hereof, the
         General Partner shall be deemed to have contributed to the Partnership
         as a Capital Contribution, in consideration of an additional

                                       21
<PAGE>

         Limited Partner Interest (expressed in and as additional Partnership
         Common Units), an amount equal to the Value of a REIT Share as of the
         date of exercise multiplied by the number of REIT Shares then being
         issued in connection with the exercise of such stock option.

                                             (3) An equitable Percentage
         Interest adjustment shall be made in which the General Partner shall be
         treated as having made a cash contribution equal to the amount
         described in Section 4.4.A(2) hereof.

                  B.       Special Valuation Rule. For purposes of this Section
4.4, in determining the Value of a REIT Share, only the trading date immediately
preceding the exercise of the relevant stock option under the Stock Option Plan
shall be considered.

                  C.       Future Stock Incentive Plans. Nothing in this
Agreement shall be construed or applied to preclude or restrain the General
Partner or the Parent REIT from adopting, modifying or terminating stock
incentive plans, including any Stock Option Plan, for the benefit of employees,
directors or other business associates of the General Partner, the Parent REIT,
the Partnership or any of their Affiliates. The Limited Partners acknowledge and
agree that, in the event that any such plan is adopted, modified or terminated
by the General Partner or Parent REIT amendments to this Section 4.4 may become
necessary or advisable and that any approval or consent of the Limited Partners
required pursuant to the terms of this Agreement in order to effect any such
amendments requested by the General Partner shall not be unreasonably withheld
or delayed.

                  Section 4.5 No Interest; No Return. No Partner shall be
entitled to interest on its Capital Contribution or on such Partner's Capital
Account. Except as provided herein or by law, no Partner shall have any right to
demand or receive the return of its Capital Contribution from the Partnership.

                  Section 4.6 Conversion or Redemption of Preferred Shares.

                  A.       Conversion of Preferred Shares. If, at any time, any
of the Preferred Shares are converted into REIT Shares, in whole or in part,
then a number of Partnership Preferred Units equal to the number of Preferred
Shares so converted shall automatically be converted into a number of
Partnership Common Units equal to (i) the number of REIT Shares issued upon such
conversion divided by (ii) the Adjustment Factor then in effect, and the
Percentage Interests of the General Partner and the Limited Partners shall be
adjusted to reflect such conversion.

                  B.       Redemption of Preferred Shares. If, at any time, any
Preferred Shares are redeemed (whether by exercise of a put or call,
automatically or by means of another arrangement) by the General Partner for
cash, the Partnership shall, immediately prior to such redemption of Preferred
Shares, redeem an equal number of Partnership Preferred Units held by the
General Partner, upon the same terms and for the same price per Partnership
Preferred Unit, as such Preferred Shares are redeemed.

                  Section 4.7 Conversion or Redemption of Junior Shares.

                  A.       Conversion of Junior Shares. If, at any time, any of
the Junior Shares are converted into REIT Shares, in whole or in part, then a
number of Partnership Common Units equal to (i) the number of REIT Shares issued
upon such conversion divided by (ii) the Adjustment Factor then in effect shall
be issued to the General Partner, and the Percentage Interests of the General
Partner and the Limited Partners shall be adjusted to reflect such conversion.

                  B.       Redemption of Junior Shares. If, at any time, any
Junior Shares are redeemed (whether by exercise of a put or call, automatically
or by means of another arrangement) by the General Partner for cash, the
Partnership shall, immediately prior to such redemption of Junior Shares, redeem
an equal number of Partnership Junior Units held by the General Partner, upon
the same terms and for the same price per Partnership Junior Unit, as such
Junior Shares are redeemed.

                                       22
<PAGE>

                  Section 4.8 Other Contribution Provisions. In the event that
any Partner is admitted to the Partnership and is given a Capital Account in
exchange for services rendered to the Partnership, unless otherwise determined
by the General Partner in its sole and absolute discretion, such transaction
shall be treated by the Partnership and the affected Partner as if the
Partnership had compensated such partner in cash and such Partner had
contributed the cash to the capital of the Partnership. In addition, with the
consent of the General Partner, one or more Limited Partners may enter into
contribution agreements with the Partnership which have the effect of providing
a guarantee of certain obligations of the Partnership.

                  Section 4.9 Not Publicly Traded. The General Partner, on
behalf of the Partnership, shall use its best efforts not to take any action
which would result in the Partnership being a "publicly traded partnership"
under and as such term is defined in Section 7704(b) of the Code.

                  Section 4.10 Warrants. Warrants to purchase additional
Partnership Common Units shall be issued in the amounts and pursuant to the
terms of the Warrant Agreement. Partnership Common Units shall be issued upon
the exercise of the Warrants in accordance with the Warrant Agreement.

                  Section 4.11 Class A Preferred Units. In accordance with
Section 4.3E, the Parent REIT shall contribute the proceeds of the issuance of
shares of Special Voting Preferred Stock to the Initial Limited Partner. The
Initial Limited Partner shall contribute such proceeds to the Partnership in
exchange for a number of Class A Preferred Units equal to the number of shares
of Special Voting Preferred Stock issued by the Parent REIT. The holder of each
Class A Preferred Unit shall receive a Capital Account, and be entitled to a
preferential distribution in liquidation, of $.01 per Class A Preferred Unit.
Ownership of a Class A Preferred Unit shall not entitle the holder thereof to
any allocation of profits or losses of the Partnership. To the extent that
shares of Special Voting Preferred Stock are redeemed by the Parent REIT, a like
number of Class A Preferred Units shall have been first redeemed by the
Partnership for the same price per Class A Preferred Unit and in accordance with
the terms of the Pairing Agreement. Except as otherwise provided herein or
required by law, the ownership of a Class A Preferred Unit shall not entitle the
holder thereof to any voting rights hereunder. The Class A Preferred Units shall
be owned and held solely by the Initial Limited Partner.

                  Section 4.12 Restricted Units.In accordance with Section 4.3E,
to the extent the Parent REIT issues shares of restricted common stock pursuant
to a stock incentive plan, the Partnership shall issue to the Initial Limited
Partner an equal number of Partnership Common Units that are subject to a
similar vesting schedule, forfeiture provisions and other terms and conditions
that correspond to those of the restricted common stock ("Restricted Partnership
Common Units").

                                   ARTICLE V
                                 DISTRIBUTIONS

                  Section 5.1 Requirement and Characterization of Distributions.
Subject to the terms of any Partnership Unit Designation, the General Partner
shall cause the Partnership to distribute quarterly all, or such portion as the
General Partner may in its sole and absolute discretion determine, of Available
Cash generated by the Partnership during such quarter to the Holders of
Partnership Units on such Partnership Record Date with respect to such quarter:
(i) first, with respect to any Partnership Interests that are entitled to any
preference in distribution, in accordance with the rights of such class(es) of
Partnership Interests (and, within such class(es), pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date), and (ii)
second, with respect to any Partnership Interests that are not entitled to any
preference in distribution, in accordance with the rights of such class of
Partnership Interests (and, within such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date).
Notwithstanding the preceding sentence, in the event that items of Partnership
income are specially allocated pursuant to Section 6.3E hereof (relating to the
absence of an effective registration statement for the sale of shares of common
stock of the Parent REIT), distributions with respect to Partnership Common
Units shall first be made in accordance with such allocations, with any excess
distributed pro rata in accordance with the preceding sentence. Distributions
payable with respect to any Partnership Units that were not outstanding during
the entire quarterly period in respect of which any distribution is made shall
be prorated based on the portion of the period that such units were outstanding.
The General Partner in its sole and absolute discretion may distribute to the
Unitholders Available Cash on a

                                       23
<PAGE>

more frequent basis and provide for an appropriate Partnership Record Date.
Notwithstanding anything herein to the contrary, the General Partner shall make
such reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with the Parent REIT's qualification as a REIT, to cause the
Partnership to distribute sufficient amounts to enable the Parent REIT to pay
shareholder dividends that will (a) satisfy the REIT Requirements, and (b)
except to the extent otherwise determined by the General Partner, avoid any
federal income or excise tax liability of the Parent REIT.

                  Section 5.2 Distributions in Kind. No right is given to any
Unitholder to demand and receive property other than cash as provided in this
Agreement. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind of Partnership assets to the
Unitholders, and such assets shall be distributed in such a fashion as to ensure
that the fair market value is distributed and allocated in accordance with
Articles 5, 6 and 10 hereof.

                  Section 5.3 Amounts Withheld. All amounts withheld pursuant to
the Code or any provisions of any state or local tax law and Section 10.4 hereof
with respect to any allocation, payment or distribution to any Unitholder shall
be treated as amounts paid or distributed to such Unitholder pursuant to Section
5.1 hereof for all purposes under this Agreement.

                  Section 5.4 Distributions Upon Liquidation. Notwithstanding
the other provisions of this Article 5, net proceeds from a Terminating Capital
Transaction, and any other cash received or reductions in reserves made after
commencement of the liquidation of the Partnership, shall be distributed to the
Unitholders in accordance with Section 13.2 hereof.

                  Section 5.5 Distributions to Reflect Issuance of Additional
Partnership Units. In the event that the Partnership issues additional
Partnership Units pursuant to the provisions of Article 4 hereof, subject to
Section 7.3.D, the General Partner is hereby authorized to make such revisions
to this Article 5 as it determines are necessary or desirable to reflect the
issuance of such additional Partnership Units, including, without limitation,
making preferential distributions to certain classes of Partnership Units.

                  Section 5.6 Restricted Distributions. Notwithstanding any
provision to the contrary contained in this Agreement, neither the Partnership
nor the General Partner, on behalf of the Partnership, shall make a distribution
to any Unitholder on account of its Partnership Interest or interest in
Partnership Units if such distribution would violate Section 17-607 of the Act
or other applicable law.

                                   ARTICLE VI
                                   ALLOCATIONS

                  Section 6.1 Timing and Amount of Allocations of Net Income and
Net Loss. Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each Partnership Year of the Partnership as of the end
of each such year. Except as otherwise provided in this Article 6, and subject
to Section 11.6.C hereof, an allocation to a Unitholder of a share of Net Income
or Net Loss shall be treated as an allocation of the same share of each item of
income, gain, loss or deduction that is taken into account in computing Net
Income or Net Loss.

                  Section 6.2 General Allocations.

                  A.       In General. Subject to the terms of any Partnership
Unit Designation and Section 4.11, except as otherwise provided in this Article
6 and subject to Section 11.6.C hereof, Net Income and Net Loss shall be
allocated to each of the Holders of Partnership Common Units in accordance with
their respective Percentage Interests at the end of each Partnership Year.

                  B.       Allocations to Reflect Issuance of Additional
Partnership Units. In the event that the Partnership issues additional
Partnership Units pursuant to the provisions of Article 4 hereof, the General

                                       24
<PAGE>

Partner is hereby authorized to make such revisions to this Section 6.2 as it
determines are necessary or desirable to reflect the terms of the issuance of
such additional Partnership Units, including, without limitation, making
preferential allocations to certain classes of Partnership Units.

                  Section 6.3 Additional Allocation Provisions. Notwithstanding
the foregoing provisions of this Article 6:

                  A.       Special Allocations Regarding Partnership Preferred
Units. If any Partnership Preferred Units are redeemed pursuant to Section 4.6.B
hereof (treating a full liquidation of the General Partner Interest for purposes
of this Section 6.3.A as including a redemption of any then outstanding
Partnership Preferred Units pursuant to Section 4.6.B hereof), for the
Partnership Year that includes such redemption (and, if necessary, for
subsequent Partnership Years) (a) gross income and gain shall be allocated to
the General Partner to the extent that the amounts paid or payable with respect
to the Partnership Preferred Units so redeemed (or treated as redeemed) exceed
the aggregate Capital Contributions (net of liabilities assumed or taken subject
to by the Partnership) per Partnership Preferred Unit allocable to the
Partnership Preferred Units so redeemed (or treated as redeemed) and (b)
deductions and losses shall be allocated to the General Partner to the extent
that the aggregate Capital Contributions (net of liabilities assumed or taken
subject to by the Partnership) per Partnership Preferred Unit allocable to the
Partnership Preferred Units so redeemed (or treated as redeemed) exceed the
amount paid or payable with respect to the Partnership Preferred Units so
redeemed (or treated as redeemed).

                  B.       Regulatory Allocations.

                                             (i)      Minimum Gain Chargeback.
         Except as otherwise provided in Regulations Section 1.704-2(f),
         notwithstanding the provisions of Section 6.2 hereof, or any other
         provision of this Article 6, if there is a net decrease in Partnership
         Minimum Gain during any Partnership Year, each Holder of Partnership
         Units shall be specially allocated items of Partnership income and gain
         for such year (and, if necessary, subsequent years) in an amount equal
         to such Holder's share of the net decrease in Partnership Minimum Gain,
         as determined under Regulations Section 1.704-2(g). Allocations
         pursuant to the previous sentence shall be made in proportion to the
         respective amounts required to be allocated to each Holder pursuant
         thereto. The items to be allocated shall be determined in accordance
         with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
         6.3.B(i) is intended to qualify as a "minimum gain chargeback" within
         the meaning of Regulations Section 1.704-2(f) and shall be interpreted
         consistently therewith.

                                             (ii)     Partner Minimum Gain
         Chargeback. Except as otherwise provided in Regulations Section
         1.704-2(i)(4) or in Section 6.3.B(i) hereof, if there is a net decrease
         in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
         during any Partnership Year, each Holder of Partnership Units who has a
         share of the Partner Minimum Gain attributable to such Partner
         Nonrecourse Debt, determined in accordance with Regulations Section
         1.704-2(i)(5), shall be specially allocated items of Partnership income
         and gain for such year (and, if necessary, subsequent years) in an
         amount equal to such Holder's share of the net decrease in Partner
         Minimum Gain attributable to such Partner Nonrecourse Debt, determined
         in accordance with Regulations Section 1.704-2(i)(4). Allocations
         pursuant to the previous sentence shall be made in proportion to the
         respective amounts required to be allocated to each General Partner,
         Limited Partner and other Holder pursuant thereto. The items to be so
         allocated shall be determined in accordance with Regulations Sections
         1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.B(ii) is intended to
         qualify as a "chargeback of partner nonrecourse debt minimum gain"
         within the meaning of Regulations Section 1.704-2(i) and shall be
         interpreted consistently therewith.

                                             (iii)    Nonrecourse Deductions and
         Partner Nonrecourse Deductions. Any Nonrecourse Deductions for any
         Partnership Year shall be specially allocated to the Holders of
         Partnership Units in accordance with their Partnership Units. Any
         Partner Nonrecourse Deductions for any Partnership Year shall be
         specially allocated to the

                                       25
<PAGE>

         Holder(s) who bears the economic risk of loss with respect to the
         Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
         are attributable, in accordance with Regulations Section 1.704-2(i).

                                             (iv)     Qualified Income Offset.
         If any Holder of Partnership Units unexpectedly receives an adjustment,
         allocation or distribution described in Regulations Section
         1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
         gain shall be allocated, in accordance with Regulations Section
         1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient
         to eliminate, to the extent required by such Regulations, the Adjusted
         Capital Account Deficit of such Holder as quickly as possible, provided
         that an allocation pursuant to this Section 6.3.B(iv) shall be made if
         and only to the extent that such Holder would have an Adjusted Capital
         Account Deficit after all other allocations provided in this Article 6
         have been tentatively made as if this Section 6.3.B(iv) were not in the
         Agreement. It is intended that this Section 6.3.B(iv) qualify and be
         construed as a "qualified income offset" within the meaning of
         Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
         consistently therewith.

                                             (v)      Gross Income Allocation.
         In the event that any Holder of Partnership Units has a deficit Capital
         Account at the end of any Partnership Year that is in excess of the sum
         of (1) the amount (if any) that such Holder is obligated to restore to
         the Partnership upon complete liquidation of such Holder's Partnership
         Interest (including, the Holder's interest in outstanding Partnership
         Preferred Units and other Partnership Units) and (2) the amount that
         such Holder is deemed to be obligated to restore pursuant to the
         penultimate sentences of Regulations Sections 1.704-2(g)(1) and
         1.704-2(i)(5), each such Holder shall be specially allocated items of
         Partnership income and gain in the amount of such excess to eliminate
         such deficit as quickly as possible, provided that an allocation
         pursuant to this Section 6.3.B(v) shall be made if and only to the
         extent that such Holder would have a deficit Capital Account in excess
         of such sum after all other allocations provided in this Article 6 have
         been tentatively made as if this Section 6.3.B(v) and Section 6.3.B(iv)
         hereof were not in the Agreement.

                                             (vi)     Limitation on Allocation
         of Net Loss. To the extent that any allocation of Net Loss would cause
         or increase an Adjusted Capital Account Deficit as to any Holder of
         Partnership Units, such allocation of Net Loss shall be reallocated
         among the other Holders of Partnership Units in accordance with their
         respective Partnership Units, subject to the limitations of this
         Section 6.3.B(vi).

                                             (vii)    Section 754 Adjustment. To
         the extent that an adjustment to the adjusted tax basis of any
         Partnership asset pursuant to Code Section 734(b) or Code Section
         743(b) is required, pursuant to Regulations Section
         1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4),
         to be taken into account in determining Capital Accounts as the result
         of a distribution to a Holder of Partnership Units in complete
         liquidation of its interest in the Partnership, the amount of such
         adjustment to the Capital Accounts shall be treated as an item of gain
         (if the adjustment increases the basis of the asset) or loss (if the
         adjustment decreases such basis), and such gain or loss shall be
         specially allocated to the Holders in accordance with their Partnership
         Common Units in the event that Regulations Section
         1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such
         distribution was made in the event that Regulations Section
         1.704-1(b)(2)(iv)(m)(4) applies.

                                             (viii)   Curative Allocations. The
         allocations set forth in Sections 6.3.B(i), (ii), (iii), (iv), (v),
         (vi) and (vii) hereof (the "Regulatory Allocations") are intended to
         comply with certain regulatory requirements, including the requirements
         of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the
         provisions of Section 6.1 hereof, the Regulatory Allocations shall be
         taken into account in allocating other items of income, gain, loss and
         deduction among the Holders of Partnership Units so that to the extent
         possible without violating the requirements giving rise to the
         Regulatory Allocations, the net amount

                                       26
<PAGE>

         of such allocations of other items and the Regulatory Allocations to
         each Holder of a Partnership Unit shall be equal to the net amount that
         would have been allocated to each such Holder if the Regulatory
         Allocations had not occurred.

                  C.       Special Allocations Upon Liquidation. Notwithstanding
any provision in this Article VI to the contrary, in the event that the
Partnership disposes of all or substantially all of its assets in a transaction
that will lead to a liquidation of the Partnership pursuant to Article 13
hereof, then any Net Income or Net Loss realized in connection with such
transaction and thereafter (and, if necessary, constituent items of income,
gain, loss and deduction) shall be specially allocated among the Partners as
required so as to cause liquidating distributions pursuant to Section 13.2.A(4)
hereof to be made in the same amounts and proportions as would have resulted had
such distributions instead been made pursuant to Article 5 hereof (other than
Section 5.4 hereof).

                  D.       Allocation of Excess Nonrecourse Liabilities. The
Partnership shall allocate "nonrecourse liabilities" (within the meaning of
Regulations Section 1.752-1(a)(2)) of the Partnership that are secured by
multiple Properties under any reasonable method chosen by the General Partner in
accordance with Regulations Section 1.752-3(a)(3)(b). The Partnership shall
allocate "excess nonrecourse liabilities" of the Partnership under any method
approved under Regulations Section 1.752-3(a)(3) as chosen by the General
Partner. For purposes of determining a Holder's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Holder's interest in Partnership profits
shall be equal to such Holder's share of Partnership Units.

                  E.       Failure to Register REIT Shares. In the event that a
registration statement with respect to REIT Shares is not filed with the SEC by
December 31, 2003, or is not declared effective by June 30, 2004, or upon the
occurrence of another event as described in Section 5(d) of the Registration
Rights Agreement, items of Partnership income that are otherwise allocable to
Partnership Common Units shall thereafter first be allocated to those
Partnership Common Units that are held by the General Partner and the Initial
Limited Partner, in the amount of $0.0625 per Partnership Common Unit per
quarter, thereafter increasing by an additional $0.0625 per Partnership Common
Unit per quarter, up to a maximum allocation of $0.25 per Partnership Common
Unit per quarter, for so long as such situation as described in Section 5(d) of
the Registration Rights Agreement persists, provided, however, that if an event
described in subparagraph (i) of the definition of Adjustment Factor occurs, the
number of Partnership Common Units held by the General Partner and the Initial
Limited Partner shall for purposes of this Section 6.3 be multiplied by the
Adjustment Factor determined by taking into account adjustments under
subparagraph (i) of the definition of Adjustment Factor but without taking into
account any adjustments under subparagraphs (ii) and (iii) of the definition of
Adjustment Factor.

                  F.       Exercise of Warrants. To the extent that a
Partnership Unit is issued upon exercise of a Warrant described in Section 4.10,
and the value of such Partnership Unit differs from the amount paid therefor
(including the amount, if any, paid in connection with the issuance of such
Warrant), such difference shall be allocated among the Partners in the manner
prescribed by Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s), or any
successor provision thereto.

                  Section 6.4 Tax Allocations.

                  A.       In General. Except as otherwise provided in this
Section 6.4, for income tax purposes under the Code and the Regulations each
Partnership item of income, gain, loss and deduction (collectively, "Tax Items")
shall be allocated among the Holders of Partnership Common Units in the same
manner as its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Sections 6.2 and 6.3 hereof.

                  B.       Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that is
contributed to the Partnership with a Gross Asset Value that varies from its
basis in the hands of the contributing Partner immediately preceding the date of
contribution shall be allocated among the Holders of Partnership Common Units
for income tax purposes pursuant to Regulations promulgated under Code Section
704(c) so as to take into account such variation. The Partnership

                                       27
<PAGE>

shall account for such variation under any method approved under Code Section
704(c) and the applicable Regulations as chosen by the General Partner,
including, without limitation, the "remedial allocation method" as described in
Regulations Section 1.704-3(d). In the event that the Gross Asset Value of any
partnership asset is adjusted pursuant to subsection (b) of the definition of
"Gross Asset Value" (provided in Article 1 hereof), subsequent allocations of
Tax Items with respect to such asset shall take account of the variation, if
any, between the adjusted basis of such asset and its Gross Asset Value in the
same manner as under Code Section 704(c) and the applicable Regulations.

                                   ARTICLE VII
                      MANAGEMENT AND OPERATIONS OF BUSINESS

                  Section 7.1 Management.

                  A.       Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership are and shall be exclusively vested in the General Partner, and no
Limited Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The General
Partner may not be removed by the Partners with or without cause, except with
the consent of the General Partner. In addition to the powers now or hereafter
granted to a general partner of a limited partnership under applicable law or
that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof including
Section 7.3, shall have full power and authority to do all things deemed
necessary or desirable by it to conduct the business of the Partnership, to
exercise all powers set forth in Section 3.2 hereof and to effectuate the
purposes set forth in Section 3.1 hereof, including, without limitation:

                                             (1)      the making of any
         expenditures, the lending or borrowing of money (including, without
         limitation, making prepayments on loans and borrowing money or selling
         assets to permit the Partnership to make distributions to its Partners
         in such amounts as will permit the Parent REIT (so long as the Parent
         REIT desires to maintain or restore its status as a REIT) to avoid the
         payment of any federal income tax (including, for this purpose, any
         excise tax pursuant to Code Section 4981) and to make distributions
         sufficient to permit the Parent REIT to maintain or restore REIT status
         or otherwise to satisfy the REIT Requirements), the assumption or
         guarantee of, or other contracting for, indebtedness and other
         liabilities, the issuance of evidences of indebtedness (including the
         securing of same by deed to secure debt, mortgage, deed of trust or
         other lien or encumbrance on the Partnership's assets) and the
         incurring of any obligations that it deems necessary for the conduct of
         the activities of the Partnership;

                                             (2)      the making of tax,
         regulatory and other filings, or rendering of periodic or other reports
         to governmental or other agencies having jurisdiction over the business
         or assets of the Partnership;

                                             (3)      the acquisition, sale,
         lease, transfer, exchange or other disposition of any, all or
         substantially all of the assets of the Partnership (including, but not
         limited to, the exercise or grant of any conversion, option, privilege
         or subscription right or any other right available in connection with
         any assets at any time held by the Partnership) or the merger,
         consolidation, reorganization or other combination of the Partnership
         with or into another entity;

                                             (4)      the mortgage, pledge,
         encumbrance or hypothecation of any assets of the Partnership, the use
         of the assets of the Partnership (including, without limitation, cash
         on hand) for any purpose consistent with the terms of this Agreement
         and on any terms that it sees fit, including, without limitation, the
         financing of the operations and activities of the Parent REIT, the
         General Partner, the Partnership or any of the Partnership's
         Subsidiaries, the lending of funds to other Persons (including, without
         limitation, the Partnership's Subsidiaries) and the repayment of
         obligations of the Partnership, its

                                       28
<PAGE>

         Subsidiaries and any other Person in which the Partnership has an
         equity investment, and the making of capital contributions to and
         equity investments in the Partnership's Subsidiaries;

                                             (5)      the management, operation,
         leasing, landscaping, repair, alteration, demolition, replacement or
         improvement of any Property, including, without limitation, any
         Contributed Property, or other asset of the Partnership or any
         Subsidiary, whether pursuant to a Services Agreement or otherwise;

                                             (6)      the negotiation, execution
         and performance of any contracts, leases, conveyances or other
         instruments that the General Partner considers useful or necessary to
         the conduct of the Partnership's operations or the implementation of
         the General Partner's powers under this Agreement, including
         contracting with contractors, developers, consultants, accountants,
         legal counsel, other professional advisors and other agents and the
         payment of their expenses and compensation out of the Partnership's
         assets;

                                             (7)      the distribution of
         Partnership cash or other Partnership assets in accordance with this
         Agreement, the holding, management, investment and reinvestment of cash
         and other assets of the Partnership, and the collection and receipt of
         revenues, rents and income of the Partnership;

                                             (8)      the maintenance of such
         insurance for the benefit of the Partnership and the Partners as it
         deems necessary or appropriate, including, without limitation, (i)
         casualty, liability and other insurance on the Properties and (ii)
         liability insurance for the Indemnitees hereunder;

                                             (9)      the formation of, or
         acquisition of an interest in, and the contribution of property to, any
         further limited or general partnerships, limited liability companies,
         joint ventures or other relationships that it deems desirable
         (including, without limitation, the acquisition of interests in, and
         the contributions of property to, any Subsidiary and any other Person
         in which it has an equity investment from time to time); provided,
         however, that, as long as the Parent REIT has determined to continue to
         qualify as a REIT, the General Partner may not engage in any such
         formation, acquisition or contribution that would cause the Parent REIT
         to fail to qualify as a REIT within the meaning of Code Section 856(a);

                                             (10)     the control of any matters
         affecting the rights and obligations of the Partnership, including the
         settlement, compromise, submission to arbitration or any other form of
         dispute resolution, or abandonment, of any claim, cause of action,
         liability, debt or damages, due or owing to or from the Partnership,
         the commencement or defense of suits, legal proceedings, administrative
         proceedings, arbitrations or other forms of dispute resolution, and the
         representation of the Partnership in all suits or legal proceedings,
         administrative proceedings, arbitrations or other forms of dispute
         resolution, the incurring of legal expense, and the indemnification of
         any Person against liabilities and contingencies to the extent
         permitted by law;

                                             (11)     the undertaking of any
         action in connection with the Partnership's direct or indirect
         investment in any Subsidiary or any other Person (including, without
         limitation, the contribution or loan of funds by the Partnership to
         such Persons);

                                             (12)     except as otherwise
         specifically set forth in this Agreement, the determination of the fair
         market value of any Partnership property distributed in kind using such
         reasonable method of valuation as it may adopt; provided that such
         methods are otherwise consistent with the requirements of this
         Agreement;

                                       29
<PAGE>

                                             (13)     the enforcement of any
         rights against any Partner pursuant to representations, warranties,
         covenants and indemnities relating to such Partner's contribution of
         property or assets to the Partnership;

                                             (14)     the exercise, directly or
         indirectly, through any attorney-in-fact acting under a general or
         limited power of attorney, of any right, including the right to vote,
         appurtenant to any asset or investment held by the Partnership;

                                             (15)     the exercise of any of the
         powers of the General Partner enumerated in this Agreement on behalf of
         or in connection with any Subsidiary of the Partnership or any other
         Person in which the Partnership has a direct or indirect interest, or
         jointly with any such Subsidiary or other Person;

                                             (16)     the exercise of any of the
         powers of the General Partner enumerated in this Agreement on behalf of
         any Person in which the Partnership does not have an interest, pursuant
         to contractual or other arrangements with such Person;

                                             (17)     the making, execution and
         delivery of any and all deeds, leases, notes, deeds to secure debt,
         mortgages, deeds of trust, security agreements, conveyances, contracts,
         guarantees, warranties, indemnities, waivers, releases or legal
         instruments or agreements in writing necessary or appropriate in the
         judgment of the General Partner for the accomplishment of any of the
         powers of the General Partner enumerated in this Agreement;

                                             (18)     the issuance of additional
         Partnership Units, as appropriate and in the General Partner's sole and
         absolute discretion, in connection with Capital Contributions by
         Additional Limited Partners and additional Capital Contributions by
         Partners pursuant to Article 4 hereof;

                                             (19)     the selection and
         dismissal of Company Employees (including, without limitation,
         employees having titles or offices such as president, vice president,
         secretary and treasurer), and agents, outside attorneys, accountants,
         consultants and contractors of the Partnership or the General Partner,
         the determination of their compensation and other terms of employment
         or hiring and the delegation to any such Company Employee the authority
         to conduct the business of the Partnership in accordance with the terms
         of this Agreement; and

                                             (20)     an election to dissolve
         the Partnership pursuant to Section 13.1.C hereof.

                  B.       Each of the Limited Partners agrees that, except as
provided in Section 7.3 hereof, the General Partner is authorized to execute,
deliver and perform the above-mentioned agreements and transactions on behalf of
the Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement, the Act or any applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.

                  C.       At all times from and after the date hereof, the
General Partner may cause the Partnership to establish and maintain working
capital and other reserves in such amounts as the General Partner, in its sole
and absolute discretion, deems appropriate and reasonable from time to time.

                  D.       In exercising its authority under this Agreement, the
General Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner (including the General Partner) of any action
taken by it. The General Partner and the Partnership shall not have liability to
a Limited Partner

                                       30
<PAGE>

under any circumstances as a result of an income tax liability incurred by such
Limited Partner as a result of an action (or inaction) by the General Partner
pursuant to its authority under this Agreement.

                  Section 7.2 Certificate of Limited Partnership. To the extent
that such action is determined by the General Partner to be reasonable and
necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate and do all the things to maintain the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) under the laws of the State of Delaware and
each other state, the District of Columbia or any other jurisdiction, in which
the Partnership may elect to do business or own property. Except as otherwise
required under the Act, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability to the extent provided by applicable
law) in the State of Delaware and any other state, or the District of Columbia
or other jurisdiction, in which the Partnership may elect to do business or own
property.

                  Section 7.3 Restrictions on General Partner's Authority.

                  A.       The General Partner may not take any action in
contravention of this Agreement, including, without limitation:

                                             (1)      taking any action that
         would make it impossible to carry on the ordinary business of the
         Partnership, except as otherwise provided in this Agreement;

                                             (2)      possessing Property, or
         assigning any rights in specific Property, for other than a Partnership
         purpose except as otherwise provided in this Agreement, including,
         without limitation, Section 7.10;

                                             (3)      admitting a Person as a
         Partner, except as otherwise provided in this Agreement;

                                             (4)      performing any act that
         would subject a Limited Partner to liability as a general partner in
         any jurisdiction or any other liability except as provided Section 10.4
         hereof or under the Act; or

                                             (5)      entering into any
         contract, mortgage, loan or other agreement that prohibits or restricts
         the ability of (a) the General Partner, the Parent REIT or the
         Partnership from satisfying its obligations under Section 8.6 hereof in
         full or (b) a Limited Partner from exercising its rights under Section
         8.6 hereof to effect a Redemption in full, except, in either case, with
         the written consent of such Limited Partner affected by the prohibition
         or restriction.

                  B.       The General Partner shall not, without the prior
Consent of the Limited Partners, except as provided in Sections 4.2.A, 5.5,
6.2.B and 7.3.C hereof, amend, modify or terminate this Agreement.

                  C.       Notwithstanding Section 7.3.B hereof, the General
Partner shall have the power, without the Consent of the Limited Partners, to
amend this Agreement as may be required to facilitate or implement any of the
following purposes:

                                             (1)      to add to the obligations
         of the General Partner or surrender any right or power granted to the
         General Partner or any Affiliate of the General Partner for the benefit
         of the Limited Partners;

                                       31
<PAGE>

                                             (2)      to reflect the admission,
         substitution or withdrawal of Partners or the termination of the
         Partnership in accordance with this Agreement, and to amend Exhibit A
         in connection with such admission, substitution or withdrawal;

                                             (3)      to reflect a change that
         is of an inconsequential nature and does not adversely affect the
         Limited Partners in any material respect, or to cure any ambiguity,
         correct or supplement any provision in this Agreement not inconsistent
         with law or with other provisions, or make other changes with respect
         to matters arising under this Agreement that will not be inconsistent
         with law or with the provisions of this Agreement;

                                             (4)      to satisfy any
         requirements, conditions or guidelines contained in any order,
         directive, opinion, ruling or regulation of a federal or state agency
         or contained in federal or state law;

                                             (5)      (a) to reflect such
         changes as are reasonably necessary for the Parent REIT to maintain or
         restore its status as a REIT or to satisfy the REIT Requirements; or
         (b) to reflect the Transfer of all or any part of a Partnership
         Interest between the General Partner or Initial Limited Partner and any
         Qualified REIT Subsidiary;

                                             (6)      to modify the manner in
         which Capital Accounts are computed (but only to the extent set forth
         in the definition of "Capital Account" or contemplated by the Code or
         the Regulations); and

                                             (7)      to issue additional
         Partnership Interests in accordance with Section 4.2.

                  D.       Notwithstanding Sections 7.3.B and 7.3.C hereof, this
Agreement shall not be amended, and no action may be taken by the General
Partner, without the Consent of each Partner adversely affected thereby, if such
amendment or action would (i) convert a Limited Partner Interest in the
Partnership into a General Partner Interest (except as a result of the General
Partner acquiring such Partnership Interest), (ii) modify the limited liability
of a Limited Partner, (iii) alter the rights of any Partner to receive the
distributions to which such Partner is entitled, pursuant to Article 5 or
Section 13.2.A hereof, or alter the allocations specified in Article 6 hereof
(except, in any case, as permitted pursuant to Sections 4.2, 5.5, 6.2.B and
7.3.C hereof), (iv) alter or modify the Redemption rights, Cash Amount, REIT
Consideration, or REIT Shares Amount as set forth in Sections 8.6 and 11.2
hereof, or amend or modify any related definitions, or (v) amend this Section
7.3.D; provided, however, that the Consent of each Partner adversely affected
shall not be required for any amendment or action that affects all Partners
holding the same class or series of Partnership Units on a uniform or pro rata
basis. Further, no amendment may alter the restrictions on the General Partner's
authority set forth elsewhere in this Section 7.3 without the Consent specified
therein. Any such amendment or action consented to by any Partner shall be
effective as to that Partner, notwithstanding the absence of such consent by any
other Partner.

                  Section 7.4 Reimbursement of the General Partner.

                  A.       The General Partner shall not be compensated for its
services as general partner of the Partnership except as provided in this
Agreement (including the provisions of Articles 5 and 6 hereof regarding
distributions, payments and allocations to which it may be entitled in its
capacity as the General Partner).

                  B.       Subject to Sections 7.4.C and 15.11 hereof, the
Partnership shall be liable for, and shall reimburse the General Partner and the
Parent REIT on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all sums expended in
connection with the Partnership's business, including, without limitation, (i)
expenses relating to the ownership of interests in and management and operation
of, or for the benefit of, the Partnership, (ii) compensation of officers and
employees, including, without limitation, payments under future compensation
plans of the Parent REIT that may provide for stock units, or phantom stock,
pursuant to which employees of the Parent REIT will receive payments based upon
dividends on or the value of REIT Shares, (iii) director fees and expenses and
(iv) if the

                                       32
<PAGE>

Parent REIT becomes a public company, all costs and expenses of the Parent REIT
being a public company, including costs of filings with the SEC, reports and
other distributions to its shareholders; provided, however, that the amount of
any reimbursement shall be reduced by any interest earned by the Parent REIT
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership as permitted pursuant to Section 7.5 hereof. Such
reimbursements shall be in addition to any reimbursement of the General Partner
as a result of indemnification pursuant to Section 7.7 hereof.

                  C.       To the extent practicable, Partnership expenses shall
be billed directly to and paid by the Partnership and, subject to Section 15.11
hereof, reimbursements to the General Partner or any of its Affiliates by the
Partnership pursuant to this Section 7.4 shall be treated as non-income
reimbursements, and not as "guaranteed payments" within the meaning of Code
Section 707(c) or other form of gross income.

                  Section 7.5 Outside Activities of the General Partner. The
General Partner and the Parent REIT shall not directly or indirectly enter into
or conduct any business, other than in connection with (a) the ownership,
acquisition and disposition of Partnership Interests as General Partner, (b) the
management of the business of the Partnership, (c) if the Parent REIT becomes a
reporting company with a class (or classes) of securities registered under the
Exchange Act, the operation of the Parent REIT as such, (d) the Parent REIT's
operations as a REIT, (e) the offering, sale, syndication, private placement or
public offering of stock, bonds, securities or other interests, (f) financing or
refinancing of any type related to the Partnership or its assets or activities,
(g) any of the foregoing activities as they relate to a Subsidiary of the
Partnership or of the General Partner and (h) such activities as are incidental
thereto. Nothing contained herein shall be deemed to prohibit the General
Partner from executing guarantees of Partnership debt for which it would
otherwise be liable in its capacity as General Partner. Subject to Section 7.3.B
hereof, the Parent REIT shall not own any assets or take title to assets (other
than temporarily in connection with an acquisition prior to contributing such
assets to the Partnership) other than interests in the General Partner, The
Initial Limited Partner, Subsidiaries of the Partnership and other than such
cash and cash equivalents, bank accounts or similar instruments or accounts as
the Parent REIT deems reasonably necessary, taking into account Section 7.1.D
hereof and the requirements necessary for the Parent REIT to carry out its
responsibilities contemplated under this Agreement and the Charter and to
qualify as a REIT. Notwithstanding the foregoing, if the Parent REIT acquires
assets in its own name and owns Property other than through the Partnership, the
Partners agree to negotiate in good faith to amend this Agreement, including,
without limitation, the definition of "Adjustment Factor," to reflect such
activities and the direct ownership of assets by the Parent REIT. The Parent
REIT and any Affiliates of the Parent REIT may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests.

                  Section 7.6 Contracts with Affiliates.

                  A.       The Partnership may lend or contribute funds or other
assets to its Subsidiaries or other Persons in which it has an equity
investment, and such Persons may borrow funds from the Partnership, on terms and
conditions established in the sole and absolute discretion of the General
Partner. The foregoing authority shall not create any right or benefit in favor
of any Subsidiary or any other Person.

                  B.       Except as provided in Section 7.5 hereof and subject
to Section 3.1 hereof, the Partnership may transfer assets to joint ventures,
limited liability companies, partnerships, corporations, business trusts or
other business entities in which it is or thereby becomes a participant upon
such terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion,
believes to be advisable.

                  C.       Except as expressly permitted by this Agreement,
neither the General Partner nor any of its Affiliates shall sell, transfer or
convey any property to the Partnership, directly or indirectly, except pursuant
to transactions that are determined by the General Partner in good faith to be
fair and reasonable.

                  D.       The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may propose and
adopt on behalf of the Partnership employee benefit plans funded by the
Partnership for the benefit of employees of the Parent REIT, the Partnership,
Subsidiaries of the Partnership or

                                       33
<PAGE>

any Affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership or any of the Partnership's
Subsidiaries.

                  E.       The General Partner is expressly authorized to enter
into, in the name and on behalf of the Partnership, any Services Agreement with
Affiliates of any of the Partnership or the General Partner, on such terms as
the General Partner, in its sole and absolute discretion, believes are
advisable.

                  Section 7.7 Indemnification.

                  A.       To the fullest extent permitted by applicable law,
the Partnership shall indemnify each Indemnitee from and against any and all
losses, claims, damages, liabilities (whether joint or several), expenses
(including, without limitation, attorney's fees and other legal fees and
expenses), judgments, fines, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership ("Actions") as set forth in this Agreement in which such Indemnitee
may be involved, or is threatened to be involved, as a party or otherwise;
provided, however, that the Partnership shall not indemnify an Indemnitee (i)
for the act or omission of the Indemnitee material to the matter giving rise to
the proceeding which was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) for any transaction for which such Indemnitee
received an improper personal benefit (in money, property or services) in
violation or breach of any provision of this Agreement; or (iii) in the case of
a criminal proceeding, for an unlawful act or omission by the Indemnitee for
which the Indemnitee had reasonable cause to believe was unlawful. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of
the Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Section 7.7 in
favor of any Indemnitee having or potentially having liability for any such
indebtedness. It is the intention of this Section 7.7.A that the Partnership
indemnify each Indemnitee to the fullest extent permitted by law. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by conviction
of an Indemnitee or upon a plea of nolo contendere or its equivalent by an
Indemnitee, or an entry of an order of probation against an Indemnitee prior to
judgment, does not create a presumption that such Indemnitee acted in a manner
contrary to that specified in this Section 7.7.A with respect to the subject
matter of such proceeding. Any indemnification pursuant to this Section 7.7
shall be made only out of the assets of the Partnership, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the Partnership
to fund its obligations under this Section 7.7.

                  B.       To the fullest extent permitted by law, expenses
incurred by an Indemnitee who is a party to a proceeding or otherwise subject to
or the focus of or is involved in any Action shall be paid or reimbursed by the
Partnership as incurred by the Indemnitee in advance of the final disposition of
the Action upon receipt by the Partnership of (i) a written affirmation by the
Indemnitee of the Indemnitee's good faith belief that the standard of conduct
necessary for indemnification by the Partnership as authorized in this Section
7.7.A has been met, and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.

                  C.       The indemnification provided by this Section 7.7
shall be in addition to any other rights to which an Indemnitee or any other
Person may be entitled under any agreement, pursuant to any vote of the
Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee
unless otherwise provided in a written agreement with such Indemnitee or in the
writing pursuant to which such Indemnitee is indemnified.

                  D.       The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of any of the Indemnitees and such
other Persons as the General Partner shall determine, against any liability that
may be asserted against or expenses that may be incurred by such Person in
connection with the

                                       34
<PAGE>

Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.

                  E.       Any liabilities which an Indemnitee incurs as a
result of acting on behalf of the Partnership, the Parent REIT or the General
Partner (whether as a fiduciary or otherwise) in connection with the operation,
administration or maintenance of an employee benefit plan or any related trust
or funding mechanism (whether such liabilities are in the form of excise taxes
assessed by the IRS, penalties assessed by the Department of Labor, restitutions
to such a plan or trust or other funding mechanism or to a participant or
beneficiary of such plan, trust or other funding mechanism, or otherwise) shall
be treated as liabilities or judgments or fines under this Section 7.7, unless
such liabilities arise as a result of (i) the act or omission of the Indemnitee
material to the matter giving rise to the proceeding which was committed in bad
faith or was the result of active and deliberate dishonesty; (ii) any
transaction for which such Indemnitee received an improper personal benefit (in
money, property or services) in violation or breach of any provision of this
Agreement; or (iii) in the case of a criminal proceeding, an unlawful act or
omission by the Indemnitee for which the Indemnitee had reasonable cause to
believe was unlawful.

                  F.       In no event may an Indemnitee subject any of the
Partners to personal liability by reason of the indemnification provisions set
forth in this Agreement.

                  G.       An Indemnitee shall not be denied indemnification in
whole or in part under this Section 7.7 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.

                  H.       The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other
Persons. Any amendment, modification or repeal of this Section 7.7 or any
provision hereof shall be prospective only and shall not in any way affect the
obligations of the Partnership or the limitations on the Partnership's liability
to any Indemnitee under this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.

                  I.       It is the intent of the Partners that any amounts
paid by the Partnership to the General Partner pursuant to this Section 7.7
shall be treated as "guaranteed payments" within the meaning of Code Section
707(c).

                  Section 7.8 Liability of the General Partner.

                  A.       Notwithstanding anything to the contrary set forth in
this Agreement, neither the General Partner nor any of its directors or officers
shall be liable or accountable in damages or otherwise to the Partnership, any
Partners or any Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact or law or of
any act or omission if the General Partner or such director or officer acted in
good faith.

                  B.       The Limited Partners expressly acknowledge that the
General Partner is acting for the benefit of the Partnership, the Limited
Partners and the General Partner's shareholders collectively and that the
General Partner is under no obligation to give priority to the separate
interests of the Limited Partners or the General Partner's shareholders
(including, without limitation, the tax consequences to Limited Partners,
Assignees or the General Partner's shareholders) in deciding whether to cause
the Partnership to take (or decline to take) any actions.

                  C.       Subject to its obligations and duties as General
Partner set forth in Section 7.1.A hereof, the General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its employees or
agents (subject to the supervision and control of the General Partner). The
General Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by it in good faith.

                                       35
<PAGE>

                  D.       To the extent that, at law or in equity, the General
Partner has duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or the Limited Partners, the General Partner shall not be
liable to the Partnership or to any other Partner for its good faith reliance on
the provisions of this Agreement. The provisions of this Agreement, to the
extent that they restrict the duties and liabilities of the General Partner
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such General Partner.

                  E.       Notwithstanding anything herein to the contrary,
except for fraud, willful misconduct or gross negligence, or pursuant to any
express indemnities given to the Partnership by any Partner pursuant to any
other written instrument, no Partner shall have any personal liability
whatsoever, to the Partnership or to the other Partner(s), for the debts or
liabilities of the Partnership or the Partnership's obligations hereunder, and
the full recourse of the other Partner(s) shall be limited to the interest of
that Partner in the Partnership. To the fullest extent permitted by law, no
officer, director or shareholder of the General Partner or Parent REIT shall be
liable to the Partnership for money damages except for (i) active and deliberate
dishonesty established by a non-appealable final judgment or (ii) actual receipt
of an improper benefit or profit in money, property or services. Without
limitation of the foregoing, and except for fraud, willful misconduct or gross
negligence, or pursuant to any such express indemnity, no property or assets of
any Partner, other than its interest in the Partnership, shall be subject to
levy, execution or other enforcement procedures for the satisfaction of any
judgment (or other judicial process) in favor of any other Partner(s) and
arising out of, or in connection with, this Agreement. This Agreement is
executed by the officers of the General Partner solely as officers of the same
and not in their own individual capacities.

                  F.       Any amendment, modification or repeal of this Section
7.8 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's, and its officers' and
directors', liability to the Partnership and the Limited Partners under this
Section 7.8 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.

                  Section 7.9 Other Matters Concerning the General Partner.

                  A.       The General Partner may rely and shall be protected
in acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties.

                  B.       The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance upon the opinion of
such Persons as to matters that the General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.

                  C.       The General Partner shall have the right, in respect
of any of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact. Each
such attorney shall, to the extent provided by the General Partner in the power
of attorney, have full power and authority to do and perform all and every act
and duty that is permitted or required to be done by the General Partner
hereunder.

                  D.       Notwithstanding any other provision of this Agreement
or the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the Parent REIT to
continue to qualify as a REIT, (ii) for the Parent REIT otherwise to satisfy the
REIT Requirements, (iii) to avoid the Parent REIT incurring any taxes

                                       36
<PAGE>

under Code Section 857 or Code Section 4981, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.

                  Section 7.10 Title to Partnership Assets. Title to Partnership
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively with other Partners or Persons, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.

                  Section 7.11 Reliance by Third Parties. Notwithstanding
anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner has full power
and authority, without the consent or approval of any other Partner or Person,
to encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
take any and all actions on behalf of the Partnership, and such Person shall be
entitled to deal with the General Partner as if it were the Partnership's sole
party in interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies that may be available against such
Person to contest, negate or disaffirm any action of the General Partner in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or its representatives be obligated to ascertain that the terms
of this Agreement have been complied with or to inquire into the necessity or
expediency of any act or action of the General Partner or its representatives.
Each and every certificate, document or other instrument executed on behalf of
the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying in good faith
thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (iii) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.

                                  ARTICLE VIII
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

                  Section 8.1 Limitation of Liability. The Limited Partners
shall have no liability under this Agreement (other than for breach thereof)
except as expressly provided in Section 10.4 or under the Act.

                  Section 8.2 Management of Business. No Limited Partner or
Assignee (other than the General Partner, any of its Affiliates or any officer,
director, member, employee, partner, agent or trustee of the General Partner,
the Partnership or any of their Affiliates, in their capacity as such) shall
take part in the operations, management or control (within the meaning of the
Act) of the Partnership's business, transact any business in the Partnership's
name or have the power to sign documents for or otherwise bind the Partnership.
The transaction of any such business by the General Partner, any of its
Affiliates or any officer, director, member, employee, partner, agent,
representative, or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.

                  Section 8.3 Outside Activities of Limited Partners. Subject to
any agreements entered into pursuant to Section 7.6.E hereof and any other
agreements entered into by a Limited Partner or its Affiliates with the General
Partner, the Partnership or a Subsidiary (including, without limitation, any
employment agreement), any Limited Partner and any Assignee, officer, director,
employee, agent, trustee, Affiliate, member

                                       37
<PAGE>

or shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct or
indirect competition with the Partnership or that are enhanced by the activities
of the Partnership. Neither the Partnership nor any Partner shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. Subject to such agreements, none of the Limited Partners
nor any other Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any business ventures of any
other Person (other than the General Partner, to the extent expressly provided
herein), and such Person shall have no obligation pursuant to this Agreement,
subject to Section 7.6.E hereof and any other agreements entered into by a
Limited Partner or its Affiliates with the General Partner, the Partnership or a
Subsidiary, to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character that, if presented to the Partnership, any Limited
Partner or such other Person, could be taken by such Person.

                  Section 8.4 Return of Capital. Except pursuant to the rights
of Redemption set forth in Section 8.6 hereof, no Limited Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the
extent of distributions made pursuant to this Agreement or upon termination of
the Partnership as provided herein. Except to the extent provided in Article 6
hereof or otherwise expressly provided in this Agreement, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions.

                  Section 8.5 Adjustment Factor. The Partnership shall notify
any Limited Partner that is a Qualifying Party, on request, of the then current
Adjustment Factor or any change made to the Adjustment Factor.

                  Section 8.6 Redemption Rights of Qualifying Parties.

                  A.       Subject to Section 11.6.D, a Qualifying Party, but no
other Limited Partner or Assignee, shall have the right (subject to the terms
and conditions set forth herein) to require the Partnership to redeem (a
"Redemption") all or a portion of the Partnership Common Units held by such
Qualifying Party (such Partnership Common Units being hereafter "Tendered
Units") in exchange for the Cash Amount payable on the Specified Redemption
Date. Any Redemption shall be exercised pursuant to a Notice of Redemption
delivered to the General Partner by such Qualifying Party (the "Tendering
Party") when exercising the Redemption right. The Partnership's obligation to
effect a Redemption, however, shall not arise or be binding against the
Partnership (i) until and unless there has been a Declination and (ii) before
the Business Day following the Cut-Off Date. Regardless of the binding or
non-binding nature of a pending Redemption, a Tendering Party shall have no
right to receive distributions with respect to any Tendered Units (other than
the Cash Amount) paid after delivery of the Notice of Redemption, whether or not
the Partnership Record Date for such distribution precedes or coincides with
such delivery of the Notice of Redemption; provided, however, that in the event
that the General Partner on behalf of the Partnership elects to fund the Cash
Amount with the proceeds of an Offering Funding pursuant to Section 8.6.D
hereof, the Tendering Party's right to receive distributions shall not be
suspended as hereinbefore provided and such Tendering Party shall have the right
to receive distributions actually made hereunder prior to the date of the
closing of the Offering Funding the proceeds of which are used to pay the Cash
Amount. In the event of a Redemption, the Cash Amount shall be delivered as a
certified check payable to the Tendering Party or, in the General Partner's sole
and absolute discretion, in immediately available funds. Notwithstanding
anything to the contrary contained in this Section 8.6A, no right to require a
Redemption shall be exercisable by a Qualifying Party prior to the earlier of
(x) two years following the issuance of shares of common stock by the Parent
REIT in an offering pursuant to Rule 144A under the Securities Act, or (y) 180
days following the effectiveness of a registration statement covering the sale
of common stock of the Parent REIT sold in such offering pursuant to Rule 144A.

                  B.       Notwithstanding the provisions of Section 8.6.A
hereof, on or before the close of business on the Cut-Off Date, a REIT Party
may, in its sole and absolute discretion but subject to the Ownership Limit and
the transfer restrictions and other limitations of the Charter, elect to
acquire, some or all of the Tendered Units from the Tendering Party (such
percentage being referred to as the "Applicable Percentage") in exchange for the
REIT Consideration. In making such election, the REIT Party shall act in a fair,
equitable and reasonable manner that neither prefers one group or class of
Qualifying Parties over another nor discriminates

                                       38
<PAGE>

against a group or class of Qualifying Parties. If the REIT Party so elects, on
the Specified Redemption Date the Tendering Party shall sell the Applicable
Percentage of the Tendered Units to the REIT Party in exchange for the REIT
Consideration. The Tendering Party shall submit (i) such information,
certification or affidavit as the Parent REIT may reasonably require in
connection with the application of the Ownership Limit and other restrictions
and limitations of the Charter to any such acquisition and (ii) such written
representations, investment letters, legal opinions or other instruments
necessary, in the view of the REIT Party to effect compliance with the
Securities Act. In the event of a purchase of any Tendered Units by the REIT
Party pursuant to this Section 8.6.B, the Tendering Party shall no longer have
the right to cause the Partnership to effect a Redemption of such Tendered
Units, and, upon notice to the Tendering Party by the REIT Party given on or
before the close of business on the Cut-Off Date, that the REIT Party has
elected to acquire some or all of the Tendered Units pursuant to this Section
8.6.B, the obligation of the Partnership to effect a Redemption of the Tendered
Units as to which the notice by the REIT Party relates shall not accrue or
arise. The REIT Consideration shall be delivered by the REIT Party as duly
authorized, validly issued, fully paid and non-assessable REIT Shares and, if
applicable, Rights, free of any pledge, lien, encumbrance or restriction, other
than the Ownership Limit and other restrictions provided in the Charter, the
Bylaws of the Parent REIT, the Securities Act and relevant state securities or
"blue sky" laws. Neither any Tendering Party whose Tendered Units are acquired
by the REIT Party pursuant to this Section 8.6.B, any Partner, any Assignee nor
any other interested Person shall have any right to require or cause the Parent
REIT to register, qualify or list any REIT Shares owned or held by such Person,
whether or not such REIT Shares are issued pursuant to this Section 8.6.B, with
the SEC, with any state securities commissioner, department or agency, under the
Securities Act or the Exchange Act or with any stock exchange; provided,
however, that this limitation shall not be in derogation of any registration or
similar rights granted pursuant to any other written agreement between the
Parent REIT and any such Person. Notwithstanding any delay in such delivery, the
Tendering Party shall be deemed the owner of such REIT Shares and Rights for all
purposes, including, without limitation, rights to vote or consent, receive
dividends, and exercise rights, as of the Specified Redemption Date. REIT Shares
issued upon an acquisition of the Tendered Units by the Parent REIT pursuant to
this Section 8.6.B may contain such legends regarding restrictions under the
Securities Act and applicable state securities laws as the Parent REIT in good
faith determines to be necessary or advisable in order to ensure compliance with
such laws.

                  C.       Notwithstanding the provisions of Section 8.6.A and
8.6.B hereof, no Tendering Party shall have any rights (including any right to a
Redemption pursuant to Section 8.6A) under this Agreement that would otherwise
be prohibited under the Charter with respect to the Ownership Limit. To the
extent that any attempted Redemption or acquisition of the Tendered Units by the
REIT Party pursuant to Section 8.6.B hereof would be in violation of this
Section 8.6.C, it shall be null and void ab initio, and the Tendering Party
shall not acquire any rights or economic interests in REIT Shares otherwise
issuable by the Parent REIT under Section 8.6.B hereof.

                  D.       To the extent that the REIT Party declines or fails
to exercise its purchase rights for all Tendered Units pursuant to Section 8.6.B
hereof following receipt of a Notice of Redemption (a "Declination"):

                                             (1)      The General Partner shall
         give notice of such Declination to the Tendering Party on or before the
         close of business on the Cut-Off Date. The failure of the General
         Partner to give notice of such Declination by the close of business on
         the Cut-Off Date shall itself constitute a Declination.

                                             (2)      Subject to Section 11.6.D,
         the Parent REIT on behalf of the Partnership may elect to raise funds
         for the payment of all or any percentage of the Cash Amount either (a)
         by contribution by a REIT Party of funds from the proceeds of a private
         placement or registered public offering (each, an "Offering Funding")
         by the Parent REIT of a number of REIT Shares or other securities of
         the Parent REIT ("Offering Funding Shares") or (b) from any other
         sources (including, but not limited to, the sale of any Property and
         the incurrence of additional Debt) available to the Partnership.

                                             (3)      If an Offering Funding has
         been elected by the General Partner, promptly upon the General
         Partner's receipt of the Notice of Redemption

                                       39
<PAGE>

         and the General Partner giving notice of its Declination, the General
         Partner shall give notice (a "Single Funding Notice") to all Qualifying
         Parties then holding a Partnership Interest (or an interest therein)
         and having Redemption rights pursuant to this Section 8.6 and require
         that all such Qualifying Parties elect whether or not to effect a
         Redemption of their Partnership Common Units to be funded through an
         Offering Funding. In the event that any such Qualifying Party elects to
         effect such a Redemption, it shall give notice thereof and of the
         number of Partnership Common Units to be made subject thereto in
         writing to the General Partner within ten (10) Business Days after
         receipt of the Single Funding Notice, and such Qualifying Party shall
         be treated as a Tendering Party for all purposes of this Section 8.6.
         In the event that a Qualifying Party does not so elect, it shall be
         deemed to have waived its right to effect a Redemption; provided,
         however, that the General Partner shall not be required to acquire
         Partnership Common Units pursuant to this Section 8.6.D more than twice
         within a calendar year from a particular Qualifying Party.

Any proceeds from an Offering Funding that are in excess of the aggregate Cash
Amount paid to all Tendering Parties pursuant to this Section 8.6.D shall be for
the sole benefit of the Parent REIT. The Parent REIT shall make a Capital
Contribution of such amounts to the Partnership for an additional General
Partner Interest. Any such contribution shall entitle the General Partner to an
equitable Percentage Interest adjustment.

                  E.       Notwithstanding the provisions of Section 8.6.B
hereof, the REIT Party shall not, under any circumstances, elect to acquire
Tendered Units in exchange for the REIT Consideration if such exchange would be
prohibited under the Charter.

                  F.       Notwithstanding anything herein to the contrary (but
subject to Section 8.6.C hereof), with respect to any Redemption (or any tender
of Partnership Common Units for Redemption if the Tendered Units are acquired by
a REIT Party pursuant to Section 8.6.B hereof) pursuant to this Section 8.6:

                                             (1)      All Partnership Common
         Units acquired by a REIT Party pursuant to Section 8.6.B hereof may, at
         the election of the REIT Party, be converted into and deemed to be a
         General Partner Interest comprised of the same number of Partnership
         Common Units.

                                             (2)      Subject to the Ownership
         Limit, no Tendering Party may effect a Redemption for less than five
         hundred (500) Partnership Common Units or, if such Tendering Party
         holds (as a Limited Partner or, economically, as an Assignee) less than
         five hundred (500) Partnership Common Units, all of the Partnership
         Common Units held by such Tendering Party.

                                             (3)      Each Tendering Party (a)
         may effect a Redemption only once in each fiscal quarter of a
         twelve-month period, unless otherwise permitted by the General Partner,
         in its sole and absolute discretion and (b) may not effect a Redemption
         during the period after the Partnership Record Date with respect to a
         distribution and before the record date established by the Parent REIT
         for a distribution to its shareholders of some or all of its portion of
         such Partnership distribution.

                                             (4)      Notwithstanding anything
         herein to the contrary, with respect to any Redemption or acquisition
         of Tendered Units by a REIT Party pursuant to Section 8.6.B hereof, in
         the event that the General Partner gives notice to all Limited Partners
         (but excluding any Assignees) then owning Partnership Interests (a
         "Primary Offering Notice") that the Parent REIT desires to effect a
         primary offering of its equity securities, then, unless the General
         Partner otherwise consents, commencement of the actions denoted in
         Section 8.6.D hereof as to an Offering Funding, if any, with respect to
         any Notice of Redemption thereafter received, whether or not the
         Tendering Party is a Limited Partner, may be delayed until the earlier
         of (a) the completion of the primary offering or (b) ninety (90) days
         following the giving of the Primary Offering Notice.

                                       40
<PAGE>

                                             (5)      Without the consent of the
         General Partner, no Tendering Party may effect a Redemption within
         ninety (90) days following the closing of any prior Offering Funding.

                                             (6)      The consummation of such
         Redemption (or an acquisition of Tendered Units by a REIT Party
         pursuant to Section 8.6.B hereof, as the case may be) shall be subject
         to the expiration or termination of the applicable waiting period, if
         any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
         amended.

                                             (7)      Subject to Section 8.6.A,
         the Tendering Party shall continue to own (subject, in the case of an
         Assignee, to the provision of Section 11.5 hereof) all Partnership
         Common Units subject to any Redemption, and be treated as a Limited
         Partner or an Assignee, as applicable, with respect to such Partnership
         Common Units for all purposes of this Agreement, until such Partnership
         Common Units are either paid for by the Partnership pursuant to Section
         8.6.A hereof or transferred to a REIT Party and paid for, by the
         issuance of the REIT Shares, pursuant to Section 8.6.B hereof on the
         Specified Redemption Date. Until a Specified Redemption Date and an
         acquisition of the Tendered Units by a REIT Party pursuant to Section
         8.6.B hereof, the Tendering Party shall have no rights as a shareholder
         of the Parent REIT with respect to the REIT Shares issuable in
         connection with such acquisition.

                                             (8)      Each Limited Partner
         covenants and agrees with the REIT Party that all Tendered Units shall
         be delivered to the appropriate REIT Party free and clear of all liens,
         claims and encumbrances whatsoever and should any such liens, claims
         and/or encumbrances exist or arise with respect to such Tendered Units,
         the REIT Party shall be under no obligation to acquire the same. Each
         Limited Partner further agrees that, in the event any state or local
         property transfer tax is payable as a result of the transfer of its
         Tendered Units to a REIT Party (or its designee), such Limited Partner
         shall assume and pay such transfer tax.

                                             (9)      No Limited Partner may
         require a Redemption hereunder to the extent that the issuance of REIT
         Consideration pursuant to Section 8.6.B hereof would violate ownership
         limitations contained in the Charter or would violate any REIT
         Requirement (notwithstanding that any such Tendered Units could
         otherwise be acquired for cash pursuant to Section 8.6.A hereof).

                                             (10)     No Tendering Party may
         require a Redemption hereunder if the issuance of REIT Consideration
         would be likely to cause the acquisition of such REIT Consideration by
         such Tendering Party to be "integrated" with any other distribution of
         common stock of the Parent REIT or of Limited Partnership Interests for
         purposes of complying with the Securities Act.

For purposes of determining compliance with the restrictions set forth in this
Section 8.6.F, all Partnership Common Units beneficially owned by a Related
Party of a Tendering Party shall be considered to be owned or held by such
Tendering Party.

                  G.       In connection with an exercise of Redemption rights
pursuant to this Section 8.6, the Tendering Party shall submit the following to
the General Partner, in addition to the Notice of Redemption:

                                             (1)      A written affidavit, dated
         the same date as the Notice of Redemption, (a) disclosing the actual
         and constructive ownership, as determined for purposes of Code Sections
         856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and
         (ii) any Related Party and (b) representing that, after giving effect
         to the Redemption or an acquisition of the Tendered Units by the
         General Partner pursuant to Section 8.6.B hereof, neither the Tendering
         Party nor any Related Party will own REIT Shares in excess of the
         Ownership Limit;

                                       41
<PAGE>

                                             (2)      A written representation
         that neither the Tendering Party nor any Related Party has any
         intention to acquire any additional REIT Shares prior to the closing of
         the Redemption or an acquisition of the Tendered Units by a REIT Party
         pursuant to Section 8.6.B hereof on the Specified Redemption Date; and

                                             (3)      An undertaking to certify,
         at and as a condition to the closing of (i) the Redemption or (ii) the
         acquisition of the Tendered Units by a REIT Party pursuant to Section
         8.6.B hereof on the Specified Redemption Date, that either (a) the
         actual and constructive ownership of REIT Shares by the Tendering Party
         and any Related Party remain unchanged from that disclosed in the
         affidavit required by Section 8.6.G(1) or (b) after giving effect to
         the Redemption or an acquisition of the Tendered Units by a REIT Party
         pursuant to Section 8.6.B hereof, neither the Tendering Party nor any
         Related Party shall own REIT Shares in violation of the Ownership
         Limit.

                  Section 8.7 Partnership Right to Call Limited Partner
Interests. Notwithstanding any other provision of this Agreement, on and after
the date on which the aggregate Percentage Interests of the Limited Partners are
less than one percent (1%), the Partnership shall have the right, but not the
obligation, from time to time and at any time to redeem any and all outstanding
Limited Partner Interests by treating any Limited Partner as a Tendering Party
who has delivered a Notice of Redemption pursuant to Section 8.6 hereof for the
amount of Partnership Common Units to be specified by the General Partner, in
its sole and absolute discretion, by notice to such Limited Partner that the
Partnership has elected to exercise its rights under this Section 8.7. Such
notice given by the General Partner to a Limited Partner pursuant to this
Section 8.7 shall be treated as if it were a Notice of Redemption delivered to
the General Partner by such Limited Partner. For purposes of this Section 8.7,
(a) any Limited Partner (whether or not otherwise a Qualifying Party) may, in
the General Partner's sole and absolute discretion, be treated as a Qualifying
Party that is a Tendering Party and (b) the provisions of Sections 8.6.F(2),
8.6.F(3) and 8.6.F(5) hereof shall not apply, but the remainder of Section 8.6
hereof shall apply, mutatis mutandis.

                  Section 8.8 Mergers.

                  The General Partner shall not permit the Partnership to be a
party to any consolidation, merger, combination or other transaction pursuant to
which the Partnership Common Units are converted or changed into or exchanged
for partnership interests and/or other securities of another operating
partnership in an UPREIT or similar structure, in each case without the
affirmative vote of the holders of at least a majority of the outstanding Paired
Common Units, voting separately as a class, unless upon consummation of any such
consolidation, merger, combination or other transaction, the holders of Paired
Common Units shall receive shares of stock or beneficial interest or other
equity securities with preferences, rights and privileges not materially
inferior to the preferences, rights and privileges of the Special Voting
Preferred Stock (which shares of stock or beneficial interest or other equity
securities shall be issued by the parent REIT of such operating partnership).
This Section 8.8 shall not be amended or modified without the prior consent of
the holders of at least a majority of the Paired Common Units.

                                   ARTICLE IX
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

                  Section 9.1 Records and Accounting.

                  A.       The General Partner shall keep or cause to be kept at
the principal office of the Partnership those records and documents required to
be maintained by the Act and other books and records deemed by the General
Partner to be appropriate with respect to the Partnership's business, including,
without limitation, all books and records necessary to provide to the Limited
Partners any information, lists and copies of documents required to be provided
pursuant to Section 8.5.A or Section 9.3 hereof. Any records maintained by or on
behalf of the Partnership in the regular course of its business may be kept on,
or be in the form for,

                                       42
<PAGE>

magnetic tape, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into clearly
legible written form within a reasonable period of time.

                  B.       The books of the Partnership shall be maintained, for
financial and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles, or on such other basis as the General
Partner determines to be necessary or appropriate. To the extent permitted by
sound accounting practices and principles, the Partnership and the General
Partner may operate with integrated or consolidated accounting records,
operations and principles.

                  Section 9.2 Partnership Year. The Partnership Year of the
Partnership shall be the calendar year.

                  Section 9.3 Reports.

                  A.       As soon as practicable, but in no event later than
one hundred five (105) days after the close of each Partnership Year, the
General Partner shall cause to be mailed to each Limited Partner of record as of
the close of the Partnership Year an annual report containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared solely on a consolidated basis with the General Partner, for such
Partnership Year, presented in accordance with generally accepted accounting
principles, such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner.

                  B.       As soon as practicable, but in no event later than
one hundred five (105) days after the close of each calendar quarter (except the
last calendar quarter of each year), the General Partner shall cause to be
mailed to each Limited Partner of record as of the last day of the calendar
quarter a report containing unaudited financial statements of the Partnership,
or of the General Partner if such statements are prepared solely on a
consolidated basis with the General Partner, and such other information as may
be required by applicable law or regulation or as the General Partner determines
to be appropriate.

                  C.       At the request of any Limited Partner, the General
Partner shall provide access to the books, records and workpapers upon which the
reports required by this Section 9.3 are based, to the extent required by the
Act.

                                    ARTICLE X
                                   TAX MATTERS

                  Section 10.1 Preparation of Tax Returns. The General Partner
shall arrange for the preparation and timely filing of all returns with respect
to Partnership income, gains, deductions, losses and other items required of the
Partnership for federal and state income tax purposes and shall use all
reasonable effort to furnish, within ninety (90) days of the close of each
taxable year, the tax information reasonably required by Limited Partners for
federal and state income tax reporting purposes. The Limited Partners shall
promptly provide the General Partner with such information relating to the
Contributed Properties, including tax basis and other relevant information, as
may be reasonably requested by the General Partner from time to time.

                  Section 10.2 Tax Elections. Except as otherwise provided
herein, the General Partner shall, in its sole and absolute discretion,
determine whether to make or revoke any available election pursuant to the Code,
including, but not limited to, the election under Code Section 754.

                  Section 10.3 Tax Matters Partner.

                  A.       The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. The tax matters
partner shall receive no compensation for its services. All third-party costs
and expenses incurred by the tax matters partner in performing its duties as
such (including legal and accounting fees and expenses) shall be borne by the
Partnership in addition to any reimbursement pursuant to Section 7.4 hereof.
Nothing herein shall be construed to restrict the Partnership from engaging an
accounting

                                       43
<PAGE>

         firm to assist the tax matters partner in discharging its duties
         hereunder, so long as the compensation paid by the Partnership for such
         services is reasonable. At the request of any Limited Partner, the
         General Partner agrees to consult with such Limited Partner with
         respect to the preparation and filing of any returns and with respect
         to any subsequent audit or litigation relating to such returns;
         provided, however, that the filing of such returns shall be in the sole
         and absolute discretion of the General Partner.

                  B.       The tax matters partner is authorized, but not
required:

                                             (1)      to enter into any
         settlement with the IRS with respect to any administrative or judicial
         proceedings for the adjustment of Partnership items required to be
         taken into account by a Partner for income tax purposes (such
         administrative proceedings being referred to as a "tax audit" and such
         judicial proceedings being referred to as "judicial review"), and in
         the settlement agreement the tax matters partner may expressly state
         that such agreement shall bind all Partners, except that such
         settlement agreement shall not bind any Partner (i) who (within the
         time prescribed pursuant to the Code and Regulations) files a statement
         with the IRS providing that the tax matters partner shall not have the
         authority to enter into a settlement agreement on behalf of such
         Partner or (ii) who is a "notice partner" (as defined in Code Section
         6231) or a member of a "notice group" (as defined in Code Section
         6223(b)(2));

                                             (2)      in the event that a notice
         of a final administrative adjustment at the Partnership level of any
         item required to be taken into account by a Partner for tax purposes (a
         "final adjustment") is mailed to the tax matters partner, to seek
         judicial review of such final adjustment, including the filing of a
         petition for readjustment with the United States Tax Court or the
         United States Claims Court, or the filing of a complaint for refund
         with the District Court of the United States for the district in which
         the Partnership's principal place of business is located;

                                             (3)      to intervene in any action
         brought by any other Partner for judicial review of a final adjustment;

                                             (4)      to file a request for an
         administrative adjustment with the IRS at any time and, if any part of
         such request is not allowed by the IRS, to file an appropriate pleading
         (petition or complaint) for judicial review with respect to such
         request;

                                             (5)      to enter into an agreement
         with the IRS to extend the period for assessing any tax that is
         attributable to any item required to be taken into account by a Partner
         for tax purposes, or an item affected by such item; and

                                             (6)      to take any other action
         on behalf of the Partners in connection with any tax audit or judicial
         review proceeding to the extent permitted by applicable law or
         regulations.

The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole and absolute discretion of the tax matters partner
and the provisions relating to indemnification of the General Partner set forth
in Section 7.7 hereof shall be fully applicable to the tax matters partner in
its capacity as such.

                  Section 10.4 Withholding. Each Limited Partner hereby
authorizes the Partnership to withhold from or pay on behalf of or with respect
to such Limited Partner any amount of federal, state, local or foreign taxes
that the General Partner determines that the Partnership is required to withhold
or pay with respect to any amount distributable or allocable to such Limited
Partner pursuant to this Agreement, including, without limitation, any taxes
required to be withheld or paid by the Partnership pursuant to Code Section
1441, Code Section 1442, Code Section 1445 or Code Section 1446. Any amount paid
on behalf of or with respect to a Limited Partner shall constitute a loan by the
Partnership to such Limited Partner, which loan shall be repaid by such Limited
Partner within fifteen (15) days after notice from the General Partner that such
payment must be

                                       44
<PAGE>

made unless (i) the Partnership withholds such payment from a distribution that
would otherwise be made to the Limited Partner or (ii) the General Partner
determines, in its sole and absolute discretion, that such payment may be
satisfied out of the Available Funds of the Partnership that would, but for such
payment, be distributed to the Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.4. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.4 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have lent such amount to such defaulting Limited Partner and
shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner (including, without limitation, the right to receive
distributions). Any amounts payable by a Limited Partner hereunder shall bear
interest at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in The Wall Street Journal,
plus four (4) percentage points (but not higher than the maximum lawful rate)
from the date such amount is due (i.e., fifteen (15) days after demand) until
such amount is paid in full. Each Limited Partner shall take such actions as the
Partnership or the General Partner shall request in order to perfect or enforce
the security interest created hereunder.

                  Section 10.5 Organizational Expenses. The Partnership shall
elect to deduct expenses, if any, incurred by it in organizing the Partnership
ratably over a 60 month period as provided in Section 709 of the Code.

                                   ARTICLE XI
                            TRANSFERS AND WITHDRAWALS

                  Section 11.1 Transfer.

                  A.       No part of the interest of a Partner shall be subject
to the claims of any creditor, to any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.

                  B.       No Partnership Interest shall be Transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article 11. Any Transfer or purported Transfer of a Partnership Interest
not made in accordance with this Article 11 shall be null and void ab initio.

                  C.       Notwithstanding the other provisions of this Article
11 (other than Section 11.6.D hereof), the Partnership Interests of the General
Partner may be Transferred, in whole or in part, at any time or from time to
time, to any Person that is, at the time of such Transfer, a Qualified REIT
Subsidiary. Any transferee of the entire General Partner Interest pursuant to
this Section 11.1.C shall automatically become, without further action or
Consent of any Limited Partners, the sole general partner of the Partnership,
subject to all the rights, privileges, duties and obligations under this
Agreement and the Act relating to a general partner. Upon any Transfer permitted
by this Section 11.1.C, the transferor Partner shall be relieved of all its
obligations under this Agreement. The provisions of Section 11.2.B (other than
the last sentence thereof), 11.3, 11.4.A and 11.5 hereof shall not apply to any
Transfer permitted by this Section 11.1.C.

                  D.       No Transfer of any Partnership Interest may be made
to a lender to the Partnership or any Person who is related (within the meaning
of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose
loan constitutes a Nonrecourse Liability, without the consent of the General
Partner in its sole and absolute discretion; provided that as a condition to
such consent, the lender will be required to enter into an arrangement with the
Partnership and the General Partner to redeem or exchange for the REIT
Consideration any Partnership Units in which a security interest is held by such
lender concurrently with such time as such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.

                  Section 11.2 Transfer of General Partner's Partnership
Interest.

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<PAGE>

                  A.       The General Partner may not Transfer any of its
General Partner Interest or withdraw from the Partnership except as provided in
Sections 11.1.C, 11.2.B and 11.2.C hereof. In every instance where the General
Partner's ability to merge, transfer its General Partner Interest, or withdraw
from the Partnership is limited pursuant to this Section 11.2, the Parent REIT's
ability to merge or transfer its stock of the General Partner shall be similarly
limited.

                  B.       Except as set forth in Section 11.1.C above and
Section 11.2.C below, the General Partner shall not withdraw from the
Partnership and shall not Transfer all or any portion of its interest in the
Partnership (whether by sale, disposition, statutory merger or consolidation,
liquidation or otherwise) without the Consent of the Limited Partners, which
Consent may be given or withheld in the sole and absolute discretion of the
Limited Partners. Upon any Transfer of such a Partnership Interest pursuant to
the Consent of the Limited Partners and otherwise in accordance with the
provisions of this Section 11.2.B, the transferee shall become a successor
General Partner for all purposes herein, and shall be vested with the powers and
rights of the transferor General Partner, and shall be liable for all
obligations and responsible for all duties of the General Partner, once such
transferee has executed such instruments as may be necessary to effectuate such
admission and to confirm the agreement of such transferee to be bound by all the
terms and provisions of this Agreement with respect to the Partnership Interest
so acquired. It is a condition to any Transfer otherwise permitted hereunder
that the transferee assumes, by operation of law or express agreement, all of
the obligations of the transferor General Partner under this Agreement with
respect to such Transferred Partnership Interest, and such Transfer shall
relieve the transferor General Partner of its obligations under this Agreement
without the Consent of the Limited Partners. In the event that the General
Partner withdraws from the Partnership, in violation of this Agreement or
otherwise, or otherwise dissolves or terminates, or upon the bankruptcy of the
General Partner, a Majority in Interest of the Limited Partners may elect to
continue the Partnership business by selecting a successor General Partner in
accordance with the Act.

                  C.       Notwithstanding Section 11.2.B, the General Partner
may merge with another entity if immediately after such merger substantially all
of the assets of the surviving entity, other than the General Partner Interest
held by the General Partner, are contributed to the Partnership as a Capital
Contribution in exchange for Partnership Units.

                  Section 11.3 Transfer of Limited Partners' Partnership
Interests.

                  A.       General. No Limited Partner shall Transfer all or any
portion of its Partnership Interest to any transferee without the consent of the
General Partner, which consent may be withheld in its sole and absolute
discretion, provided, however, that subject to Section 11.3E hereof, Arbor
Commercial Mortgage, LLC may distribute some or all of its Partnership Interests
to its owners, and any Limited Partner that is an individual may transfer all or
any portion of his Partnership Interest to his immediate family or a trust for
his immediate family without the consent of the General Partner, provided,
further, that the General Partner has the right not to admit such transferee as
a Limited Partner in the Partnership.

                  B.       Conditions to Transfer Consent. Without limiting the
generality of Section 11.3.A hereof, it is expressly understood and agreed that
the General Partner will not consent to any Transfer of all or any portion of
any Partnership Interest pursuant to Section 11.3.A above unless such Transfer
meets each of the following conditions:

                                             (1)      Qualified Transferee. Such
         Transfer is made only to a single Qualified Transferee; provided,
         however, that, for such purposes, all Qualified Transferees that are
         Affiliates, or that comprise investment accounts or funds managed by a
         single Qualified Transferee and its Affiliates, shall be considered
         together to be a single Qualified Transferee.

                                             (2)      Assumption of Obligations.
         The transferee in such Transfer assumes by operation of law or express
         agreement all of the obligations of the transferor Limited Partner
         under this Agreement with respect to such Transferred Partnership
         Interest; provided, that no such Transfer (unless made pursuant to a
         statutory merger or consolidation wherein all obligations and
         liabilities of the transferor Partner are assumed by a successor
         corporation by operation of law) shall relieve the transferor Partner
         of its

                                       46
<PAGE>

         obligations under this Agreement without the approval of the General
         Partner, in its sole and absolute discretion. Notwithstanding the
         foregoing, any transferee of any Transferred Partnership Interest shall
         be subject to any and all ownership limitations contained in the
         Charter that may limit or restrict such transferee's ability to
         exercise its Redemption rights, including, without limitation, the
         Ownership Limit. Any transferee, whether or not admitted as a
         Substituted Limited Partner, shall take subject to the obligations of
         the transferor hereunder. Unless admitted as a Substituted Limited
         Partner, no transferee, whether by a voluntary Transfer, by operation
         of law or otherwise, shall have any rights hereunder, other than the
         rights of an Assignee as provided in Section 11.5 hereof.

                                             (3)      Effective Date. Such
         Transfer is effective as of the first day of a fiscal quarter of the
         Partnership.

                  C.       Incapacity. If a Limited Partner is subject to
Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners, for the purpose of settling or managing the estate, and such
power as the Incapacitated Limited Partner possessed to Transfer all or any part
of its interest in the Partnership. The Incapacity of a Limited Partner, in and
of itself, shall not dissolve or terminate the Partnership.

                  D.       Opinion of Counsel. In connection with any proposed
Transfer of a Limited Partner Interest, the General Partner shall have the right
to receive an opinion of counsel reasonably satisfactory to it to the effect
that the proposed Transfer may be effected without registration under the
Securities Act and will not otherwise violate any federal or state securities
laws or regulations applicable to the Partnership or the Partnership Interests
Transferred.

                  E.       Adverse Tax Consequences. No Transfer by a Limited
Partner of its Partnership Interests (including any Redemption, any other
acquisition of Partnership Units by the Partnership or a REIT Party) may be made
to or by any person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation or would result in a termination of the Partnership under Code
Section 708, or (ii) such Transfer would be effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Code Section 7704.

                  Section 11.4 Substituted Limited Partners.

                  A.       A transferee of the interest of a Limited Partner
pursuant to a Transfer consented to by the General Partner pursuant to Section
11.3.A may be admitted as a Substituted Limited Partner only with the consent of
the General Partner, which consent may be given or withheld by the General
Partner in its sole and absolute discretion. The failure or refusal by the
General Partner to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or the General Partner. Subject to the foregoing, an Assignee
shall not be admitted as a Substituted Limited Partner until and unless it
furnishes to the General Partner (i) evidence of acceptance, in form and
substance satisfactory to the General Partner, of all the terms, conditions and
applicable obligations of this Agreement, (ii) a counterpart signature page to
this Agreement executed by such Assignee and (iii) such other documents and
instruments as may be required or advisable, in the sole and absolute discretion
of the General Partner, to effect such Assignee's admission as a Substituted
Limited Partner.

                  B.       A transferee who has been admitted as a Substituted
Limited Partner in accordance with this Article 11 shall have all the rights and
powers and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.

                  C.       Upon the admission of a Substituted Limited Partner,
the General Partner shall amend Exhibit A to reflect the name, address and
number of Partnership Units of such Substituted Limited Partner and to eliminate
or adjust, if necessary, the name, address and number of Partnership Units of
the predecessor of such Substituted Limited Partner.

                                       47
<PAGE>

                  Section 11.5 Assignees. If the General Partner, in its sole
and absolute discretion, does not consent to the admission of any transferee of
any Partnership Interest as a Substituted Limited Partner in connection with a
transfer permitted by the General Partner pursuant to Section 11.3.A, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive distributions
from the Partnership and the share of Net Income, Net Losses and other items of
income, gain, loss, deduction and credit of the Partnership attributable to the
Partnership Units assigned to such transferee and the rights to Transfer the
Partnership Units only in accordance with the provisions of this Article 11, but
shall not be deemed to be a holder of Partnership Units for any other purpose
under this Agreement, and shall not be entitled to effect a Consent or vote or
effect a Redemption with respect to such Partnership Units on any matter
presented to the Limited Partners for approval (such right to Consent or vote or
effect a Redemption, to the extent provided in this Agreement or under the Act,
fully remaining with the transferor Limited Partner). In the event that any such
transferee desires to make a further assignment of any such Partnership Units,
such transferee shall be subject to all the provisions of this Article 11 to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.

                  Section 11.6 General Provisions.

                  A.       No Limited Partner may withdraw from the Partnership
other than as a result of a permitted Transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11, with respect to which the
transferee becomes a Substituted Limited Partner, or pursuant to a redemption
(or acquisition by the General Partner) of all of its Partnership Units pursuant
to a Redemption under Section 8.6 hereof and/or pursuant to any Partnership Unit
Designation.

                  B.       Any Limited Partner who shall Transfer all of its
Partnership Units in a Transfer (i) consented to by the General Partner pursuant
to this Article 11 where such transferee was admitted as a Substituted Limited
Partner, (ii) pursuant to the exercise of its rights to effect a redemption of
all of its Partnership Units pursuant to a Redemption under Section 8.6 hereof
and/or pursuant to any Partnership Unit Designation or (iii) to the General
Partner, whether or not pursuant to Section 8.6.B hereof, shall cease to be a
Limited Partner.

                  C.       If any Partnership Unit is Transferred in compliance
with the provisions of this Article 11, or is redeemed by the Partnership, or
acquired by the General Partner pursuant to Section 8.6 hereof, on any day other
than the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items of income, gain, loss, deduction and credit
attributable to such Partnership Unit for such Partnership Year shall be
allocated to the transferor Partner or the Tendering Party, as the case may be,
and, in the case of a Transfer or assignment other than a Redemption, to the
transferee Partner, by taking into account their varying interests during the
Partnership Year in accordance with Code Section 706(d), using the "interim
closing of the books" method or another permissible method selected by the
General Partner. Solely for purposes of making such allocations, each of such
items for the calendar month in which a Transfer occurs shall be allocated to
the transferee Partner and none of such items for the calendar month in which a
Transfer or a Redemption occurs shall be allocated to the transferor Partner or
the Tendering Party, as the case may be, if such Transfer occurs on or before
the fifteenth (15th) day of the month, otherwise such items shall be allocated
to the transferor. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is before the
date of such Transfer, assignment or Redemption shall be made to the transferor
Partner or the Tendering Party, as the case may be, and, in the case of a
Transfer other than a Redemption, all distributions of Available Cash thereafter
attributable to such Partnership Unit shall be made to the transferee Partner.

                  D.       In no event may any Transfer or assignment of a
Partnership Interest by any Partner (including any Redemption, any acquisition
of Partnership Units by the General Partner or any other acquisition of
Partnership Units by the Partnership) be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii) in
violation of applicable law; (iii) of any component portion of a Partnership
Interest, such as the Capital Account, or rights to distributions, separate and
apart from all other components of a Partnership Interest; (iv) in the event
that such Transfer would cause the Parent REIT to cease

                                       48
<PAGE>

to comply with the REIT Requirements; (v) if such Transfer would, in the opinion
of counsel to the Partnership, Parent REIT or the General Partner, cause a
termination of the Partnership for federal or state income tax purposes (except
as a result of the Redemption (or acquisition by a REIT Party) of all
Partnership Common Units held by all Limited Partners); (vi) if such Transfer
would, in the opinion of legal counsel to the Partnership, cause the Partnership
to cease to be classified as a partnership for federal income tax purposes
(except as a result of the Redemption (or acquisition by a REIT Party) of all
Partnership Common Units held by all Limited Partners); (vii) if such Transfer
would cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in ERISA Section
3(14)) or a "disqualified person" (as defined in Code Section 4975(c)); (viii)
if such Transfer would, in the opinion of legal counsel to the Partnership,
cause any portion of the assets of the Partnership to constitute assets of any
employee benefit plan pursuant to Department of Labor Regulations Section
2510.2-101; (ix) if such Transfer requires the registration of such Partnership
Interest pursuant to any applicable federal or state securities laws; (x) if
such Transfer causes the Partnership to become a "publicly traded partnership,"
as such term is defined in Code Section 469(k)(2) or Code 7704(b); (xi) if such
Transfer causes the Partnership (as opposed to the General Partner) to become a
reporting company under the Exchange Act; or (xii) if such Transfer subjects the
Partnership to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended.

                                   ARTICLE XII
                              ADMISSION OF PARTNERS

                  Section 12.1 Admission of Successor General Partner. A
successor to all of the General Partner's General Partner Interest pursuant to
Section 11.2 hereof who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
immediately prior to such Transfer. Any such successor shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission.

                  Section 12.2 Admission of Additional Limited Partners.

                  A.       After the date hereof, a Person (other than an
existing Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance, in form and substance satisfactory to the General
Partner, of all of the terms and conditions of this Agreement, including,
without limitation, the power of attorney granted in Section 2.4 hereof, (ii) a
counterpart signature page to this Agreement executed by such Person and (iii)
such other documents or instruments as may be required in the sole and absolute
discretion of the General Partner in order to effect such Person's admission as
an Additional Limited Partner.

                  B.       Notwithstanding anything to the contrary in this
Section 12.2, no Person shall be admitted as an Additional Limited Partner
without the consent of the General Partner, which consent may be given or
withheld in the General Partner's sole and absolute discretion. The admission of
any Person as an Additional Limited Partner shall become effective on the date
upon which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such admission.

                  C.       If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items of income, gain, loss,
deduction and credit allocable among Partners and Assignees for such Partnership
Year shall be allocated pro rata among such Additional Limited Partner and all
other Partners and Assignees by taking into account their varying interests
during the Partnership Year in accordance with Code Section 706(d), using the
"interim closing of the books" method or another permissible method selected by
the General Partner. Solely for purposes of making such allocations, each of
such items for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all the Partners and Assignees
including such Additional Limited Partner, in accordance with the principles
described in Section 11.6.C hereof. All distributions of Available Cash with
respect to which the Partnership Record Date is before the date of such

                                       49
<PAGE>

admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash thereafter
shall be made to all the Partners and Assignees including such Additional
Limited Partner.

                  Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership. For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.

                  Section 12.4 Limit on Number of Partners. Unless otherwise
permitted by the General Partner, no Person shall be admitted to the Partnership
as an Additional Limited Partner if the effect of such admission would be to
cause the Partnership to have a number of Partners (including as Partners for
this purpose those Persons indirectly owning an interest in the Partnership
through another partnership, a limited liability company, a subchapter S
corporation or a grantor trust) that would cause the Partnership to become a
reporting company under the Exchange Act.

                                  ARTICLE XIII
                    DISSOLUTION, LIQUIDATION AND TERMINATION

                  Section 13.1 Dissolution. The Partnership shall not be
dissolved by the admission of Additional Limited Partners or by the admission of
a successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership without dissolution. However, the
Partnership shall dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following (each a "Liquidating Event"):

                  A.       an event of withdrawal, as defined in the Act
(including, without limitation, bankruptcy), of the sole General Partner unless,
within ninety (90) days after the withdrawal, a Majority in Interest of the
remaining Limited Partners agree in writing, in their sole and absolute
discretion, to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;

                  B.       an election to dissolve the Partnership made by the
General Partner in its sole and absolute discretion, with or without the Consent
of the Limited Partners;

                  C.       entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;

                  D.       the occurrence of a Terminating Capital Transaction;
or

                  E.       the Redemption (or acquisition by the General
Partner) of all Partnership Units other than Partnership Units held by the
General Partner.

                  Section 13.2 Winding Up.

                  A.       Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets and satisfying the claims of its
creditors and Partners. After the occurrence of a Liquidating Event, no Partner
shall take any action that is inconsistent with, or not necessary to or
appropriate for, the winding up of the Partnership's business and affairs. The
General Partner (or, in the event that there is no remaining General Partner or
the General Partner has dissolved, become bankrupt within the meaning of the Act
or ceased to operate, any Person elected by a Majority in Interest of the
Limited Partners (the General Partner or such other Person being referred to
herein as the "Liquidator")) shall be responsible for overseeing the winding up
and dissolution of the Partnership and

                                       50
<PAGE>

shall take full account of the Partnership's liabilities and property, and the
Partnership property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom (which may, to the
extent determined by the General Partner, include shares of stock in the General
Partner) shall be applied and distributed in the following order:

                                             (1)      First, to the satisfaction
         of all of the Partnership's debts and liabilities to creditors other
         than the Partners and their Assignees (whether by payment or the making
         of reasonable provision for payment thereof);

                                             (2)      Second, to the
         satisfaction of all of the Partnership's debts and liabilities to the
         General Partner (whether by payment or the making of reasonable
         provision for payment thereof), including, but not limited to, amounts
         due as reimbursements under Section 7.4 hereof;

                                             (3)      Third, to the satisfaction
         of all of the Partnership's debts and liabilities to the other Partners
         and any Assignees (whether by payment or the making of reasonable
         provision for payment thereof); and

                                             (4)      Subject to the terms of
         any Partnership Unit Designation, the balance, if any, to the General
         Partner, the Limited Partners and any Assignees in accordance with and
         in proportion to their positive Capital Account balances, after giving
         effect to all contributions, distributions and allocations for all
         periods.

The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.

                  B.       Notwithstanding the provisions of Section 13.2.A
hereof that require liquidation of the assets of the Partnership, but subject to
the order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidator determines that an immediate sale of part or all
of the Partnership's assets would be impractical or would cause undue loss to
the Partners, the Liquidator may, in its sole and absolute discretion, defer for
a reasonable time the liquidation of any assets except those necessary to
satisfy liabilities of the Partnership (including to those Partners as
creditors) and/or distribute to the Partners, in lieu of cash, as tenants in
common and in accordance with the provisions of Section 13.2.A hereof, undivided
interests in such Partnership assets as the Liquidator deems not suitable for
liquidation. Any such distributions in kind shall be made only if, in the good
faith judgment of the Liquidator, such distributions in kind are in the best
interest of the Partners, and shall be subject to such conditions relating to
the disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation of such
properties at such time. The Liquidator shall determine the fair market value of
any property distributed in kind using such reasonable method of valuation as it
may adopt.

                  C.       In the event that the Partnership is "liquidated"
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions
shall be made pursuant to this Article 13 to the Partners and Assignees that
have positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive Capital
Account balances. If the General Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs)
(a "Capital Account Deficit"), the General Partner shall make a contribution to
the capital of the Partnership equal to the amount of such deficit. No Partner
other than the General Partner shall be required to make any contribution to the
capital of the Partnership with respect to a Capital Account Deficit, if any, of
such Partner, and such Capital Account Deficit shall not be considered a debt
owed to the Partnership or any other person for any purpose whatsoever. In the
sole and absolute discretion of the General Partner or the Liquidator, a pro
rata portion of the distributions that would otherwise be made to the Partners
pursuant to this Article 13 may be:

                           1.       distributed to a trust established for the
benefit of the General Partner and the Limited Partners for the purpose of
liquidating Partnership assets, collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or obligations of the
Partnership or of the

                                       51
<PAGE>

General Partner arising out of or in connection with the Partnership and/or
Partnership activities. The assets of any such trust shall be distributed to the
General Partner and the Limited Partners, from time to time, in the reasonable
discretion of the General Partner, in the same proportions and amounts as would
otherwise have been distributed to the General Partner and the Limited Partners
pursuant to this Agreement; or

                           2.       withheld or escrowed to provide a reasonable
reserve for Partnership liabilities (contingent or otherwise) and to reflect the
unrealized portion of any installment obligations owed to the Partnership,
provided that such withheld or escrowed amounts shall be distributed to the
General Partner and Limited Partners in the manner and order of priority set
forth in Section 13.2.A hereof as soon as practicable.

                  Section 13.3 Deemed Distribution and Recontribution.
Notwithstanding any other provision of this Article 13, in the event that the
Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership's
Property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged and the Partnership's affairs shall not be wound up. Instead,
for federal income tax purposes the Partnership shall be deemed to have
contributed all of its assets and liabilities to a new partnership in exchange
for an interest in the new partnership; and, immediately thereafter, distributed
interests in the new partnership to the Partners in accordance with their
respective Capital Accounts in liquidation of the Partnership, and the new
partnership is deemed to continue the business of the Partnership. Nothing in
this Section 13.3 shall be deemed to have constituted any Assignee as a
Substituted Limited Partner without compliance with the provisions of Section
11.4 hereof.

                  Section 13.4 Rights of Limited Partners. Except as otherwise
provided in this Agreement, (a) each Limited Partner shall look solely to the
assets of the Partnership for the return of its Capital Contribution, (b) no
Limited Partner shall have the right or power to demand or receive property
other than cash from the Partnership and (c) no Limited Partner (other than any
Limited Partner who holds Partnership Preferred Units, to the extent
specifically set forth herein and in the applicable Partnership Unit
Designation) shall have priority over any other Limited Partner as to the return
of its Capital Contributions, distributions or allocations.

                  Section 13.5 Notice of Dissolution. In the event that a
Liquidating Event occurs or an event occurs that would, but for an election or
objection by one or more Partners pursuant to Section 13.1 hereof, result in a
dissolution of the Partnership, the General Partner shall, within thirty (30)
days thereafter, provide written notice thereof to each of the Partners and, in
the General Partner's sole and absolute discretion or as required by the Act, to
all other parties with whom the Partnership regularly conducts business (as
determined in the sole and absolute discretion of the General Partner), and the
General Partner may, or, if required by the Act, shall, publish notice thereof
in a newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the sole and absolute discretion
of the General Partner).

                  Section 13.6 Cancellation of Certificate of Limited
Partnership. Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed with the State of
Delaware, all qualifications of the Partnership as a foreign limited partnership
or association in jurisdictions other than the State of Delaware shall be
cancelled, and such other actions as may be necessary to terminate the
Partnership shall be taken.

                  Section 13.7 Reasonable Time for Winding-Up. A reasonable time
shall be allowed for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 13.2 hereof,
in order to minimize any losses otherwise attendant upon such winding-up, and
the provisions of this Agreement shall remain in effect between the Partners
during the period of liquidation.

                                   ARTICLE XIV
      PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS

                                       52
<PAGE>

                  Section 14.1 Procedures for Actions and Consents of Partners.
The actions requiring consent or approval of Limited Partners pursuant to this
Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable
law, are subject to the procedures set forth in this Article 14.

                  Section 14.2 Amendments. Amendments to this Agreement may be
proposed by the General Partner or by a Majority in Interest of the Limited
Partners. Following such proposal, the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
consent of the Limited Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that the General
Partner may deem appropriate. For purposes of obtaining a written consent, the
General Partner may require a response within a reasonable specified time, but
not less than fifteen (15) days, and failure to respond in such time period
shall constitute a consent that is consistent with the General Partner's
recommendation with respect to the proposal; provided, however, that an action
shall become effective at such time as requisite consents are received even if
prior to such specified time.

                  Section 14.3 Meetings of the Partners.

                  A.       Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by a Majority in Interest of the Limited Partners. The call shall state
the nature of the business to be transacted. Notice of any such meeting shall be
given to all Partners not less than seven (7) days nor more than thirty (30)
days prior to the date of such meeting. Partners may vote in person or by proxy
at such meeting. Whenever the vote or Consent of Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section
14.3.B hereof.

                  B.       Any action required or permitted to be taken at a
meeting of the Partners may be taken without a meeting if a written consent
setting forth the action so taken is signed by a majority of the Percentage
Interests of the Partners (or such other percentage as is expressly required by
this Agreement for the action in question). Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of a majority of the Percentage Interests of the Partners (or such
other percentage as is expressly required by this Agreement). Such consent shall
be filed with the General Partner. An action so taken shall be deemed to have
been taken at a meeting held on the effective date so certified.

                  C.       Each Limited Partner may authorize any Person or
Persons to act for it by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner or
its attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy (or
there is receipt of a proxy authorizing a later date). Every proxy shall be
revocable at the pleasure of the Limited Partner executing it, such revocation
to be effective upon the Partnership's receipt of written notice of such
revocation from the Limited Partner executing such proxy. The use of proxies
will be governed in the same manner as in the case of corporations organized
under the General Corporation Law of Delaware (including Section 212 thereof).

                  D.       Each meeting of Partners shall be conducted by the
General Partner or such other Person as the General Partner may appoint pursuant
to such rules for the conduct of the meeting as the General Partner or such
other Person deems appropriate in its sole and absolute discretion. Without
limitation, meetings of Partners may be conducted in the same manner as meetings
of the General Partner's shareholders and may be held at the same time as, and
as part of, the meetings of the General Partner's shareholders.

                                   ARTICLE XV
                               GENERAL PROVISIONS

                  Section 15.1 Addresses and Notice. Any notice, demand, request
or report required or permitted to be given or made to a Partner or Assignee
under this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or by other
means of written communication (including by telecopy, facsimile, or commercial
courier service) to the

                                       53
<PAGE>

Partner or Assignee at the address set forth in Exhibit A or such other address
of which the Partner shall notify the General Partner in writing.

                  Section 15.2 Titles and Captions. All article or section
titles or captions in this Agreement are for convenience only. They shall not be
deemed part of this Agreement and in no way define, limit, extend or describe
the scope or intent of any provisions hereof. Except as specifically provided
otherwise, references to "Articles" or "Sections" are to Articles and Sections
of this Agreement.

                  Section 15.3 Pronouns and Plurals. Whenever the context may
require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.

                  Section 15.4 Further Action. The parties shall execute and
deliver all documents, provide all information and take or refrain from taking
action as may be necessary or appropriate to achieve the purposes of this
Agreement.

                  Section 15.5 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.

                  Section 15.6 Waiver.

                  A.       No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.

                  B.       The restrictions, conditions and other limitations on
the rights and benefits of the Limited Partners contained in this Agreement, and
the duties, covenants and other requirements of performance or notice by the
Limited Partners, are for the benefit of the Partnership and, except for an
obligation to pay money to the Partnership, may be waived or relinquished by the
General Partner, in its sole and absolute discretion, on behalf of the
Partnership in one or more instances from time to time and at any time;
provided, however, that any such waiver or relinquishment may not be made if it
would have the effect of (i) creating liability for any other Limited Partner,
(ii) causing the Partnership to cease to qualify as a limited partnership, (iii)
reducing the amount of cash otherwise distributable to the Limited Partners,
(iv) resulting in the classification of the Partnership as an association or
publicly traded partnership taxable as a corporation or (v) violating the
Securities Act, the Exchange Act or any state "blue sky" or other securities
laws; provided, further, that any waiver relating to compliance with the
Ownership Limit or other restrictions in the Charter shall be made and shall be
effective only as provided in the Charter.

                  Section 15.7 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto.

                  Section 15.8 Applicable Law. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law. In the event of
a conflict between any provision of this Agreement and any non-mandatory
provision of the Act, the provisions of this Agreement shall control and take
precedence.

                  Section 15.9 Entire Agreement. This Agreement contains all of
the understandings and agreements between and among the Partners with respect to
the subject matter of this Agreement and the rights, interests and obligations
of the Partners with respect to the Partnership.

                                       54
<PAGE>

                  Section 15.10 Invalidity of Provisions. If any provision of
this Agreement is or becomes invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.

                  Section 15.11 Limitation to Preserve REIT Status.
Notwithstanding anything else in this Agreement, to the extent that the amount
paid, credited, distributed or reimbursed by the Partnership to any REIT Partner
or its officers, directors, employees or agents, whether as a reimbursement,
fee, expense or indemnity (a "REIT Payment"), would constitute gross income to
the REIT Partner for purposes of Code Section 856(c)(2) or Code Section
856(c)(3), then, notwithstanding any other provision of this Agreement, the
amount of such REIT Payments, as selected by the General Partner in its
discretion from among items of potential distribution, reimbursement, fees,
expenses and indemnities, shall be reduced for any Partnership Year so that the
REIT Payments, as so reduced, for or with respect to such REIT Partner shall not
exceed the lesser of:

                                    (i)      an amount equal to the excess, if
         any, of (a) four and nine-tenths percent (4.9%) of the REIT Partner's
         total gross income (but excluding the amount of any REIT Payments) for
         the Partnership Year that is described in subsections (A) through (H)
         of Code Section 856(c)(2) over (b) the amount of gross income (within
         the meaning of Code Section 856(c)(2)) derived by the REIT Partner from
         sources other than those described in subsections (A) through (H) of
         Code Section 856(c)(2) (but not including the amount of any REIT
         Payments); or

                                    (ii)     an amount equal to the excess, if
         any, of (a) twenty-four percent (24%) of the REIT Partner's total gross
         income (but excluding the amount of any REIT Payments) for the
         Partnership Year that is described in subsections (A) through (I) of
         Code Section 856(c)(3) over (b) the amount of gross income (within the
         meaning of Code Section 856(c)(3)) derived by the REIT Partner from
         sources other than those described in subsections (A) through (I) of
         Code Section 856(c)(3) (but not including the amount of any REIT
         Payments);

provided, however, that REIT Payments in excess of the amounts set forth in
clauses (i) and (ii) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts shall not adversely affect the REIT Partner's ability to qualify as a
REIT. To the extent that REIT Payments may not be made in a Partnership Year as
a consequence of the limitations set forth in this Section 15.11, such REIT
Payments shall carry over and shall be treated as arising in the following
Partnership Year. The purpose of the limitations contained in this Section 15.11
is to prevent any REIT Partner from failing to qualify as a REIT under the Code
by reason of such REIT Partner's share of items, including distributions,
reimbursements, fees, expenses or indemnities, receivable directly or indirectly
from the Partnership, and this Section 15.11 shall be interpreted and applied to
effectuate such purpose.

                  Section 15.12 No Partition. No Partner nor any
successor-in-interest to a Partner shall have the right while this Agreement
remains in effect to have any property of the Partnership partitioned, or to
file a complaint or institute any proceeding at law or in equity to have such
property of the Partnership partitioned, and each Partner, on behalf of itself
and its successors and assigns hereby waives any such right. It is the intention
of the Partners that the rights of the parties hereto and their
successors-in-interest to Partnership property, as among themselves, shall be
governed by the terms of this Agreement, and that the rights of the Partners and
their successors-in-interest shall be subject to the limitations and
restrictions as set forth in this Agreement.

                  Section 15.13 No Third-Party Rights Created Hereby. The
provisions of this Agreement are solely for the purpose of defining the
interests of the Partners, inter se; and no other person, firm or entity (i.e.,
a party who is not a signatory hereto or a permitted successor to such signatory
hereto) shall have any right, power, title or interest by way of subrogation or
otherwise, in and to the rights, powers, title and provisions of this Agreement.
No creditor or other third party having dealings with the Partnership (other
than as expressly set forth herein with respect to Indemnitees) shall have the
right to enforce the right or obligation of any Partner to make Capital
Contributions or loans to the Partnership or to pursue any other right or remedy

                                       55
<PAGE>

hereunder or at law or in equity. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may any such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or any of
the Partners.

                  Section 15.14 No Rights as Stockholders. Nothing contained in
this Agreement shall be construed as conferring upon the Holders of Partnership
Units any rights whatsoever as stockholders of the General Partner, including
without limitation any right to receive dividends or other distributions made to
stockholders of the General Partner or to vote or to consent or receive notice
as stockholders in respect of any meeting of stockholders for the election of
directors of the General Partner or any other matter.

                  Section 15.15 Parent REIT.Parent REIT is the corporate parent
of the General Partner and the Initial Limited Partner, and derives certain
benefits from the structure established by this Agreement and is a party hereto.
Parent REIT shall not, however, have any Capital Account or other direct right
to any allocations or distributions by the Partnership hereunder.

         [the next page is the signature page]

                                       56
<PAGE>

                  IN WITNESS WHEREOF, this Agreement has been executed as of the
date first written above.

                                    GENERAL PARTNER:

                                    ARBOR REALTY GPOP, INC.

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------------
                                        Name: Frederick C. Herbst
                                        Title: Secretary and Treasurer

                                    INITIAL LIMITED PARTNER:

                                    ARBOR REALTY LPOP, INC.

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------------
                                        Name: Frederick C. Herbst
                                        Title: Secretary and Treasurer

                                    LIMITED PARTNER:

                                    ARBOR COMMERCIAL MORTGAGE, LLC

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------------
                                        Name: Frederick C. Herbst
                                        Title: Chief Financial Officer

                                    PARENT REIT:

                                    ARBOR REALTY TRUST, INC.

                                    By: /s/ Frederick C. Herbst
                                       -----------------------------------------
                                       Name: Frederick C. Herbst
                                       Title: Chief Financial Officer, Secretary
                                              and Treasurer

<PAGE>

                                                  As of July 1, 2003

                                    EXHIBIT A
                         PARTNERS AND PARTNERSHIP UNITS

<TABLE>
<CAPTION>
NAME AND ADDRESS OF PARTNERS        PARTNERSHIP UNITS (TYPE AND AMOUNT)         PERCENTAGE INTERESTS
----------------------------------------------------------------------------------------------------
<S>                                 <C>                                         <C>
General Partner:
----------------------------------------------------------------------------------------------------
     ARBOR REALTY GPOP, INC.        11,295 Common Units                             .1%
----------------------------------------------------------------------------------------------------
Limited Partners:
----------------------------------------------------------------------------------------------------
     ARBOR REALTY LPOP, INC.        8,137,105 Common Units                          72.041%
                                    49,167 Restricted Common Units                  N/A
                                    3,146,724 Class A Preferred Units               N/A
----------------------------------------------------------------------------------------------------
     ARBOR COMMERCIAL               3,146,724 Common Units                          27.859%
     MORTGAGE LLC
----------------------------------------------------------------------------------------------------
</TABLE>

                                       A-1
<PAGE>

                                    EXHIBIT B
                      EXAMPLES REGARDING ADJUSTMENT FACTOR

                  For purposes of the following examples, it is assumed that (a)
the Adjustment Factor in effect on December 30, 2002 is 1.0 and (b) on January
1, 2003 (the "Partnership Record Date" for purposes of these examples), prior to
the events described in the examples, there are 100 REIT Shares issued and
outstanding.

                  Example 1

                  On the Partnership Record Date, the Parent REIT declares a
dividend on its outstanding REIT Shares in REIT Shares. The amount of the
dividend is one REIT Share paid in respect of each REIT Share owned. Pursuant to
Paragraph (i) of the definition of "Adjustment Factor," the Adjustment Factor
shall be adjusted on the Partnership Record Date, effective immediately after
the stock dividend is declared, as follows:

                                 1.0 * 200 = 2.0
                                       ---
                                       100

                  Accordingly, the Adjustment Factor after the stock dividend is
declared is 2.0.

                  Example 2

                  On the Partnership Record Date, the Parent REIT distributes
options to purchase REIT Shares to all holders of its REIT Shares. The amount of
the distribution is one option to acquire one REIT Share in respect of each REIT
Share owned. The strike price is $4.00 a share. The Value of a REIT Share on the
Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the
definition of "Adjustment Factor," the Adjustment Factor shall be adjusted on
the Partnership Record Date, effective immediately after the options are
distributed, as follows:

                       1.0 *       {(100+100)}        = 1.1111
                            -------------------------
                             100+ {(100+{100*$4.00}
                                 ------------------
                                    {$5.00})}

                  Accordingly, the Adjustment Factor after the options are
distributed is 1.1111. If the options expire or become no longer exercisable,
then the retroactive adjustment specified in Paragraph (ii) of the definition of
"Adjustment Factor" shall apply.

                  Example 3

                  On the Partnership Record Date, the Parent REIT distributes
assets to all holders of its REIT Shares. The amount of the distribution is one
asset with a fair market value (as determined by the Parent REIT) of $1.00 in
respect of each REIT Share owned. It is also assumed that the assets do not
relate to assets received by the General Partner pursuant to a pro rata
distribution by the Partnership. The Value of a REIT Share on the Partnership
Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of
"Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership
Record Date, effective immediately after the assets are distributed, as follows:

                         1.0*        {$5.00}        = 1.25
                             ----------------------
                                 {$5.00 - $1.00}

                  Accordingly, the Adjustment Factor after the assets are
distributed is 1.25.

                                       B-1
<PAGE>

                                    EXHIBIT C
                              NOTICE OF REDEMPTION

To:      Arbor Realty GPOP, Inc.
         333 Earle Ovington Boulevard
         Suite 900
         Uniondale, New York 11553

                  The undersigned Limited Partner or Assignee hereby irrevocably
tenders for Redemption _______ Partnership Common Units in Arbor Realty Limited
Partnership in accordance with the terms of the Amended and Restated Agreement
of Limited Partnership of Arbor Realty Limited Partnership, dated as of July 1,
2003 (the "Agreement"), and the Redemption rights referred to therein. The
undersigned Limited Partner or Assignee:

                           (a)      undertakes (i) to surrender such Partnership
Common Units and any certificate therefor at the closing of the Redemption and
(ii) to furnish to the General Partner, prior to the Specified Redemption Date,
the documentation, instruments and information required under Section 8.6.G of
the Agreement;

                           (b)      directs that the certified check
representing the Cash Amount, or the REIT Shares Amount, as applicable,
deliverable upon the closing of such Redemption be delivered to the address
specified below;

                           (c)      represents, warrants, certifies and agrees
that:

                                             (i)      the undersigned Limited
         Partner or Assignee is a Qualifying Party,

                                             (ii)     the undersigned Limited
         Partner or Assignee has, and at the closing of the Redemption will
         have, good, marketable and unencumbered title to such Partnership
         Common Units, free and clear of the rights or interests of any other
         person or entity,

                                             (iii)    the undersigned Limited
         Partner or Assignee has, and at the closing of the Redemption will
         have, the full right, power and authority to tender and surrender such
         Partnership Common Units as provided herein, and

                                             (iv)     the undersigned Limited
         Partner or Assignee has obtained the consent or approval of all persons
         and entities, if any, having the right to consent to or approve such
         tender and surrender; and

                           (d)      acknowledges that he will continue to own
such Partnership Common Units until and unless either (1) such Partnership
Common Units are acquired by a REIT Party pursuant to Section 8.6.B of the
Agreement or (2) such redemption transaction closes.

                                       C-1
<PAGE>

                  All capitalized terms used herein and not otherwise defined
shall have the same meaning ascribed to them respectively in the Agreement.

Dated:  __________________
                                    Name of Limited Partner or Assignee:

                                    ____________________________________________

                                    ____________________________________________
                                    (Signature of Limited Partner or Assignee)

                                    ____________________________________________
                                    (Street Address)

                                    ____________________________________________
                                    (City)            (State)         (Zip Code)

                                    Signature Guaranteed by:

                                    ____________________________________________

Issue Check Payable to:             ____________________________________________

Please insert social security
or identifying number:              ____________________________________________

                                       C-2
<PAGE>

                                    EXHIBIT D
                            FORM OF UNIT CERTIFICATE

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ARBOR REALTY
LIMITED PARTNERSHIP, DATED AS OF JULY 1, 2003 A COPY OF WHICH MAY BE OBTAINED
FROM ARBOR REALTY TRUST, INC. AT ITS PRINCIPAL EXECUTIVE OFFICE.

                                                     Certificate Number ________

                        ARBOR REALTY LIMITED PARTNERSHIP
                 FORMED UNDER THE LAWS OF THE STATE OF DELAWARE

This certifies that ____________________________________________________________
is the owner of ________________________________________________________________

                     FULLY PAID PARTNERSHIP COMMON UNITS OF
                        ARBOR REALTY LIMITED PARTNERSHIP

transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Partnership Common Units represented hereby are issued and
shall be held subject to all of the provisions of the Amended and Restated
Agreement of Limited Partnership, as the same may be amended and/or supplemented
from time to time.

IN WITNESS WHEREOF, the undersigned has signed this Certificate.

Dated:

                                             By ________________________________

                                       D-1


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>15
<FILENAME>y90410exv10w5.txt
<DESCRIPTION>WARRANT AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.5

                                WARRANT AGREEMENT

                                  BY AND AMONG

                        ARBOR REALTY LIMITED PARTNERSHIP

                            ARBOR REALTY TRUST, INC.

                                       AND

                         ARBOR COMMERCIAL MORTGAGE, LLC

                       629,345 WARRANTS TO PURCHASE UNITS

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                                   <C>
ARTICLE 1.........................................................................................................     1

DEFINITIONS.......................................................................................................     1

     Section 1.       Definitions.................................................................................     1

ARTICLE 2.........................................................................................................     3

PARTNERSHIP APPOINTMENT; DUTIES; RESIGNATION......................................................................     3

     Section 2.1      Appointment of the Partnership..............................................................     3

     Section 2.2      Duties of Partnership.......................................................................     3

     Section 2.3      Resignation; Appointment of Successor Warrant Agent.........................................     4

ARTICLE 3.........................................................................................................     5

THE WARRANTS......................................................................................................     5

     Section 3.1      Number of Warrants..........................................................................     5

     Section 3.2      Issuance of Warrants........................................................................     5

     Section 3.3      Registration of Transfer and Exchange.......................................................     5

     Section 3.4      Execution And Delivery......................................................................     6

     Section 3.5      Destroyed, Lost, Mutilated Or Stolen Warrant Certificates...................................     7

     Section 3.6      Persons Deemed Owners.......................................................................     7

     Section 3.7      Cancellation Of Warrant Certificates........................................................     8

     Section 3.8      No Rights As Limited Partners...............................................................     8

ARTICLE 4.........................................................................................................     8

EXERCISE OF WARRANTS..............................................................................................     8

     Section 4.1      Exercise Period.............................................................................     8

     Section 4.2      Units Issuable Upon Exercise; Exercise Price................................................     8

     Section 4.3      Method Of Exercise..........................................................................     9

     Section 4.4      Issuance Of Units...........................................................................     9

     Section 4.5      Fractions Of Units..........................................................................    10

     Section 4.6      Adjustment Of Exercise Price................................................................    10

     Section 4.7      Notice Of Certain Corporate Action..........................................................    12

     Section 4.8      Partnership Agreement to Provide for Issuance of Units......................................    13

     Section 4.9      Taxes On Exercises..........................................................................    13
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                                   <C>
     Section 4.10     Covenant As To Units........................................................................    13

     Section 4.11     Provisions In Case Of Consolidation, Merger Or Sale Of Assets...............................    13

     Section 4.12     No Change Of Warrant Necessary..............................................................    14

     Section 4.13     Enforcement Of Rights.......................................................................    14

     Section 4.14     Available Information.......................................................................    14


ARTICLE 5.........................................................................................................    14

     Section 5.1      Purchase of Special Voting Stock; Pairing...................................................    15

ARTICLE 6.........................................................................................................    15

AMENDMENTS........................................................................................................    15

     Section 6.1      Amendment Of Agreement......................................................................    15

     Section 6.2      Record Date.................................................................................    16

ARTICLE 7.........................................................................................................    16

MISCELLANEOUS PROVISIONS..........................................................................................    16

     Section 7.1      Counterparts................................................................................    16

     Section 7.2      Governing Law...............................................................................    16

     Section 7.3      Descriptive Headings........................................................................    16

     Section 7.4      Notices.....................................................................................    16

     Section 7.5      Maintenance Of Office.......................................................................    17

     Section 7.6      Successors And Assigns......................................................................    17

     Section 7.7      Separability................................................................................    17

     Section 7.8      Persons Having Rights Under Agreement.......................................................    17

EXHIBIT A.........................................................................................................     1

FORM OF WARRANT CERTIFICATE.......................................................................................     1

EXHIBIT B.........................................................................................................     1

TRANSFER INSTRUCTION..............................................................................................     1

EXHIBIT C PURCHASE NOTICE.........................................................................................     1
</TABLE>

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                                WARRANT AGREEMENT

         This Agreement, dated as of the date set forth on the signature page,
by and between Arbor Realty Limited Partnership, a Delaware limited partnership
(the "Partnership"), (the "Partnership"), Arbor Realty Trust, Inc., a Maryland
corporation (the "REIT") and Arbor Commercial Mortgage, LLC, a New York limited
liability company ("ACM), as holder.

                                   WITNESSETH

         A.       The Partnership has authorized the issuance of up to 3,146,724
units of limited partnership interests ("Units"), and 629,345 Unit purchase
warrants (each a "Warrant," and collectively, the "Warrants"), each Warrant
initially entitling the holder thereof to purchase one additional Unit to ACM in
exchange for cash, property, securities and other assets contributed to the
Partnership by ACM of the Units and Warrants (the "Holder");

         B.       The Warrants will expire on the date that is two years after
the date of this Agreement;

         C.       At any time that a Holder exercises Warrants and purchases
Units, the REIT shall issue to such Holder the equivalent number of shares of
its Preferred Stock designated as shares of Special Voting Preferred Stock, par
value $0.01 per share (the "Special Voting Stock"), as Units that such Holder
has purchased upon the exercise of the Warrants; and

         D.       The Partnership shall act on behalf of the Holders as set
forth herein, in connection with the issuance, transfer, exchange, replacement
and exercise of the Warrants.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         SECTION 1. DEFINITIONS

         Capitalized terms used herein shall have the following meanings:

         Accredited Investors. Any Person who meets the applicable criteria for
an "accredited investor" as defined in Rule 501(a) under the Securities Act.

         Acquiror. Shall have the meaning set forth in Section 4.11.

                                       1

<PAGE>

         Business Day. Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in the City of New York are
authorized or obligated by federal, state or local law or executive order to
close.

         Consideration. Shall have the meaning set forth in Section 4.11.

         Corporation. A corporation, association, company, joint-stock company
or business trust.

         Definitive Warrant Certificate. A Warrant Certificate that is in the
form set forth in Exhibit A to this Agreement.

         Exchange Period. Shall have the meaning set forth in Section 4.1.

         Exercise Price. Shall have the meaning set forth in Section 4.2.

         Expiration Date. The date that is two years after the date of this
Agreement.

         General Partner. A person who is designated as the general partner of
the Partnership as set forth in the Partnership Agreement.

         Holder. A Person in whose name a Definitive Warrant Certificate is
registered in the Warrant Register kept by the Partnership.

         Limited Partners. The limited partners of the Partnership at any
applicable time.

         Partnership Agreement. The operating partnership agreement, dated July
1, 2003, of the Partnership.

         Partnership. Shall have the meaning set forth in the Recitals.

         Person. An individual, limited or general partnership, Corporation,
joint venture, trust or unincorporated organization, or any other entity,
including a government or agency or political subdivision thereof.

         Purchase Notice. A notice substantially in the form of Exhibit C
hereto.

         Responsible Officers. Shall have the meaning set forth in Section
2.2(c).

         QIB. Qualified Institutional Buyer (as defined in Rule 144A under the
Securities Act).

         Rule 144. Rule 144 promulgated under the Securities Act.

         Rule 144A. Rule 144A promulgated under the Securities Act.

         Securities Act. The Securities Act of 1933, as amended.

                                       2
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         Trading Day. Any day other than a Saturday or Sunday or a day on which
securities are not traded on any national securities exchange.

         Transaction. Shall have the meaning set forth in Section 4.11.

         Transfer Restricted Warrants. Each Warrant until the date on which such
Warrant (i) has been disposed of pursuant to an effective registration statement
under the Securities Act, (ii) is distributed to the public pursuant to Rule 144
or is freely salable pursuant to Rule 144(k) (or any similar provisions then in
force), (iii) is otherwise freely tradable without registration under the
Securities Act or (iv) has been acquired by the Partnership.

         Warrant Agent. The Partnership until a successor Warrant Agent shall
have become such pursuant to the applicable provisions of this Agreement, and
thereafter "Warrant Agent" shall mean such successor Warrant Agent.

         Warrant Certificate. A certificate representing Warrants issued under
this Agreement.

         Warrant Register. Shall have the meaning set forth in Section 3.3(a).

                                    ARTICLE 2

                  PARTNERSHIP APPOINTMENT; DUTIES; RESIGNATION

         SECTION 2.1 APPOINTMENT OF THE PARTNERSHIP.

         The Partnership is hereby appointed as agent of the Holders in respect
of the Warrants and the Warrant Certificates, upon the terms and subject to the
conditions set forth herein, and subject to resignation of the Partnership from
such capacity as provided herein. The Partnership agrees to accept such
appointment, upon the terms and subject to the conditions set forth herein.

         The Partnership shall have the powers and authority granted to it by
this Agreement and such further powers and authority to act on behalf of the
Holders as the Holders may hereafter grant to or confer upon it.

         SECTION 2.2 DUTIES OF PARTNERSHIP.

         The Partnership accepts its obligations set forth herein upon the terms
and conditions hereof, including the following, to all of which the Holder
agrees and to all of which the rights hereunder of the Holders from time to time
of the Warrant Certificates shall be subject:

                  (a)      The Partnership shall act hereunder as agent and in a
         ministerial capacity for the Holder, and its duties shall be determined
         solely by the provisions hereof. In acting

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         under this Agreement and with respect to the Warrant Certificates, the
         Partnership does not assume any obligation or relationship of agency or
         trust for or with any Holder.

                  (b)      The Partnership shall be obligated to perform such
         duties as are specifically set forth herein and in the Warrant
         Certificates and no implied duties or obligations shall be read into
         this Agreement or the Warrant Certificates against the Partnership.

                  (c)      The Partnership shall not be liable for any act or
         omission in connection with this Agreement except for its own
         negligence, willful misconduct or bad faith.

                  (d)      The Partnership may at any time consult with counsel
         satisfactory to it and shall incur no liability or responsibility in
         respect of any action taken, suffered or omitted to be taken by it in
         good faith in accordance with the opinion or advice of such counsel.

                  (e)      The Partnership shall not be under any liability for
         interest on, and shall not be required to invest, any monies at any
         time received by it pursuant to any of the provisions of this Agreement
         or of the Warrant Certificates.

         SECTION 2.3 RESIGNATION; APPOINTMENT OF SUCCESSOR WARRANT AGENT.

         The Partnership may at any time resign as Warrant Agent and be
discharged from all further duties and liabilities hereunder (except liabilities
arising as a result of the Partnership's own negligence or willful misconduct),
by giving written notice to each Holder of Warrants of such resignation,
specifying the date on which such resignation shall be effective; provided, that
such notice shall be given no less than 90 days prior to such effective date.
Upon its resignation, the Partnership shall promptly appoint a Warrant Agent by
written instrument in duplicate signed on behalf of the Partnership by the
General Partner or a Responsible Officer. Such resignation shall become
effective upon the acceptance of the appointment by the Warrant Agent.

         The Partnership may, at any time and for any reason, remove the
then-current Warrant Agent and appoint a successor Warrant Agent by written
instrument in duplicate, specifying such removal and the date on which it is to
become effective, signed by the General Partner or a Responsible Officer of the
Partnership, one copy of which shall be delivered to the Warrant Agent being
removed and one copy to the successor Warrant Agent.

         Upon resignation or removal of the Warrant Agent, if the Partnership
shall fail to appoint a successor Warrant Agent within a period of 90 days after
receipt of such notice of resignation or removal, then any Holder may apply to a
court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Pending appointment of a successor to the Warrant Agent, either
by Partnership or by such court, the duties of the Warrant Agent shall be
carried out by the Partnership.

         Any appointment of a Warrant Agent shall become effective upon
acceptance of appointment by the Warrant Agent as provided in this Section 2.3.
As soon as practicable after the appointment of the Warrant Agent, the
Partnership shall cause written notice of such change to be given to each of
Holder.

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         Any successor Warrant Agent shall execute and deliver to its
predecessor and to the Partnership, the REIT and the Holders, an instrument
accepting such appointment hereunder and all the provisions of this Agreement
(with such modifications as the parties hereto agree) and thereupon such
successor Warrant Agent shall, without any further act, deed or conveyance,
become vested with the same rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if it had been originally named
herein and the Warrant Agent shall thereupon become obligated to transfer,
deliver and pay over, and such successor Warrant Agent shall be entitled to
receive, all moneys, securities, records or other property on deposit with or
held by the Partnership under this Agreement without any further act on the part
of any party.

                                    ARTICLE 3

                                  THE WARRANTS

         SECTION 3.1 NUMBER OF WARRANTS.

         The number of Warrants that may be issued and delivered under this
Agreement is limited to 629,345 Warrants, except for Warrants issued and
delivered in connection with any transfer of, in exchange for, or in lieu of,
other Warrants (which other Warrants shall be canceled) in accordance with the
terms of this Agreement.

         SECTION 3.2 ISSUANCE OF WARRANTS.

         Warrants initially will be issued in the form of a single Definitive
Warrant Certificate.

         SECTION 3.3 REGISTRATION OF TRANSFER AND EXCHANGE.

                  (a)      General. The Partnership shall cause to be kept a
         register (the "Warrant Register") in which the Partnership shall
         provide for the registration of Definitive Warrant Certificates and of
         transfers and exchanges of Warrants.

                  (b)      Transfer and Exchange of Definitive Warrant
         Certificates. A Holder of a Definitive Warrant Certificate may at any
         time transfer such Definitive Warrant Certificate or exchange such
         Definitive Warrant Certificate for Definitive Warrant Certificates
         representing an equal number of Warrants in accordance with this
         subsection (b). Upon receipt by the Partnership of:

                           (i)      a Definitive Warrant Certificate, duly
                  endorsed or accompanied by appropriate instruments of
                  transfer, in form reasonably satisfactory to the Partnership,
                  and

                           (ii)     if such Definitive Warrant Certificate
                  represents Transfer Restricted Warrants, a certificate in
                  substantially the form set forth in Exhibit B to this

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<PAGE>

                  Agreement from the Holder thereof requesting Definitive
                  Warrant Certificates and stating that such Warrants are being:

                                    (1)      delivered to the Partnership for
                           registration in the name of such Holder, without
                           transfer; or

                                    (2)      transferred pursuant to an
                           effective registration statement under the Securities
                           Act; or

                                    (3)      transferred to a QIB in accordance
                           with Rule 144A; or

                                    (4)      transferred in reliance on an
                           exemption from the registration requirements of the
                           Securities Act other than that provided by Rule 144A
                           (in which case the Definitive Warrant Certificate
                           surrendered shall also be accompanied by an opinion
                           of counsel reasonably acceptable to the Partnership
                           to the effect that such transfer is in compliance
                           with the Securities Act),

                  (c)      then the Partnership will (i) cancel the surrendered
         Definitive Warrant Certificate, (ii) execute one or more Definitive
         Warrant Certificates representing the amount of Warrants to be
         transferred or exchanged (iii) countersign and deliver to the
         transferee or Holder such Definitive Warrant Certificates and (iv)
         register such Definitive Warrant Certificates in the name of the
         transferee or Holder in the Warrant Register.

                  (d)      Legends. The Definitive Warrant Certificates shall
         initially bear a legend in substantially the form set forth in Exhibit
         A to this Agreement. A Definitive Warrant Certificate that does not
         bear the legends set forth in Exhibit A to this Agreement will be
         executed and delivered in the case of a transfer of a Warrant that is
         not a Transfer Restricted Warrant.

                  (e)      Taxes. No service charge shall be payable by any
         Holder for any registration of transfer or exchange of Warrant
         Certificates, but the Partnership may require payment of a sum
         sufficient to cover any tax or other governmental charge that may be
         imposed in connection with any registration of transfer or exchange of
         Warrant Certificates other than exchanges not involving any transfer.

         SECTION 3.4 EXECUTION AND DELIVERY.

         The Warrant Certificates shall be executed on behalf of the Partnership
by the General Partner or a Responsible Officer attested by its Secretary or one
of its Assistant Secretaries or a Person holding a position of similar
responsibility of the Partnership. The signature of any of such Persons on the
Warrant Certificates may be manual or facsimile. Warrant Certificates bearing
the manual or facsimile signatures of individuals who were at any time the
proper officers of the Partnership shall bind the Partnership, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the delivery of such Warrant Certificates.

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<PAGE>

         At any time and from time to time after the execution and delivery of
this Agreement, the Partnership shall deliver Warrant Certificates executed by
the Partnership in accordance with this Section 3.4 to the Holder(s).

         SECTION 3.5 DESTROYED, LOST, MUTILATED OR STOLEN WARRANT CERTIFICATES.

         If there shall be delivered to the Partnership evidence to its
satisfaction of the destruction, loss, mutilation or theft of any Warrant
Certificate and such security and indemnity as may be required by it to save it
and any of its agents (including, without limitation, any successor Warrant
Agent) of either of them harmless, then, in the absence of notice to the
Partnership that such Warrant Certificate has been acquired by a bona fide
purchaser, and in the case of mutilation, upon surrender of such Warrant
Certificate to the Partnership for cancellation, the Partnership shall execute,
in lieu of or exchange for any such destroyed, lost, mutilated or stolen Warrant
Certificate, a new Warrant Certificate for a like number of Warrants, bearing a
number not contemporaneously outstanding.

         Upon the issuance of any new Warrant Certificate under this Section
3.5, the Partnership may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith.

         Every substitute Warrant Certificate issued and delivered pursuant to
this Section 3.5 in lieu of any destroyed, lost or stolen Warrant Certificate
shall constitute an original additional contractual obligation of the
Partnership, whether or not the destroyed, lost or stolen Warrant Certificate
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of, and be subject to all the limitations of rights set forth in, this
Agreement equally and proportionately with any and all other Warrant
Certificates duly issued and delivered hereunder.

         The provisions of this Section 3.5 are exclusive and shall preclude (to
the extent lawful) any and all other rights and remedies with respect to the
replacement of destroyed, lost, mutilated or stolen Warrant Certificates
notwithstanding any law or statute existing or hereafter enacted to the
contrary.

         SECTION 3.6 PERSONS DEEMED OWNERS.

         The Partnership, and any agent of the Partnership, may deem and treat
the Person in whose name a Warrant Certificate is registered in the Warrant
Register as the absolute, true and lawful owner of such Warrant Certificate and
the Warrants represented thereby (notwithstanding any notation of ownership or
other writing thereon made by any Person) for all purposes, and neither the
Partnership nor any of its agents shall be affected by any notice or knowledge
to the contrary.

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<PAGE>

         SECTION 3.7 CANCELLATION OF WARRANT CERTIFICATES.

         All Warrant Certificates surrendered for registration of transfer,
exchange or exercise shall be promptly canceled by the Partnership.

         SECTION 3.8 NO RIGHTS AS LIMITED PARTNERS.

         Nothing contained in this Agreement or in the Warrant Certificates
shall be construed as conferring upon the Holders or any transferees any of the
rights of the Limited Partners of the Partnership, including without limitation,
the right to vote or to receive distributions or to receive notice as Limited
Partners in respect of any meeting of Limited Partners for the election of
managers of the Partnership or any other matter. Nothing contained in this
Agreement shall be construed as imposing any liabilities on such holder to
purchase any securities or as a Limited Partner of the Partnership, whether such
liabilities are assumed by the Partnership or by creditors or Limited Partners
of the Partnership or otherwise.

                                    ARTICLE 4

                              EXERCISE OF WARRANTS

         SECTION 4.1 EXERCISE PERIOD.

         Subject to and upon compliance with the provisions of this Agreement,
at the option of the Holder thereof, a Warrant may be exercised at the Exercise
Price in effect at the time of exercise, at any time on any Business Day during
the period (the "Exercise Period") commencing on the date of this Agreement and
ending 5:00 P.M., New York time, on the Expiration Date, unless the Exercise
Period is extended by the Partnership. Following the Expiration Date, any
Warrant not previously exercised shall expire and be null and void, and all
rights of the Holder under the Warrant Certificate evidencing such Warrant and
under this Agreement shall cease.

         SECTION 4.2 UNITS ISSUABLE UPON EXERCISE; EXERCISE PRICE.

         Subject to and upon compliance with the provisions of this Agreement,
each Warrant shall entitle the Holder thereof to purchase from the Partnership
one Unit at an exercise price (the "Exercise Price") of $15.00 per Unit. The
Exercise Price and the number and kind of securities or other property issuable
upon exercise of the Warrants shall be adjusted in certain instances as provided
in Section 4.6 of this Agreement.

                                       8
<PAGE>

         SECTION 4.3 METHOD OF EXERCISE.

         Each Warrant may be exercised in whole or in part. In order to exercise
any Warrants, the Holder thereof shall present and surrender the Warrant
Certificate evidencing the Warrants to the Partnership at the office or agency
of the Partnership maintained for that purpose pursuant to Section 7.5, with the
Notice of Exercise on the Warrant Certificate duly completed and executed by the
Holder or by the Holder's legal representative or attorney duly authorized in
writing to the satisfaction of the Partnership, and accompanied by payment in
full of the aggregate Exercise Price for the number of Units specified in the
Notice of Exercise, and of any other amounts required to be paid in connection
with such exercise, (i) by cash or certified or official bank check, (ii) by
surrendering additional Warrants or Units for cancellation to the extent that
the Partnership may lawfully accept Units in the Partnership, or (iii) by such
other means as is acceptable to the Partnership in the lawful currency of the
United States of America which as of the time of payment is legal tender for
payment of public or private debts. The value per Unit surrendered in accordance
with this Section 4.3 equals the current market price per Unit as defined in
Section 4.6(e) of this Agreement as of the business day next preceding the date
the Warrant Certificates are surrendered for exercise and the value of a Warrant
being equal to the difference between such current market price and the Exercise
Price.

         Warrants shall be deemed to have been exercised immediately prior to
the close of business on the date of surrender of the Warrant Certificate
representing such Warrants for exercise in accordance with the foregoing
provisions, and at such time the Person or Persons entitled to receive the Unit
issuable upon exercise shall be treated for all purposes as the record holder or
holders of such Unit at the close of business on the date of such surrender,
notwithstanding that the transfer books of the Partnership shall then be closed
or that certificates representing such Units shall not then be actually
delivered to such Person or Persons.

         If any Warrant Certificate is surrendered for the exercise of less than
all the Warrants represented thereby, the Partnership shall execute, at the
expense of the Partnership, a new Warrant Certificate, dated the date of such
exercise, evidencing the number of Warrants remaining unexercised unless such
Warrants shall have expired.

         SECTION 4.4 ISSUANCE OF UNITS.

         Within five Business Days of the later of (i) the Partnership's receipt
of the Notice of Exercise together with payment of the purchase price for the
Units and (ii) the REIT's receipt of the Purchase Notice together with payment
of the purchase price for the Special Voting Stock to be paired with the Units
to be issued upon such exercise, the Partnership shall issue and deliver, or
cause to be delivered, to the Holder, a certificate or certificates evidencing
the number of full Units to which such Holder is entitled, paired with a
certificate representing an equal number of shares of Special Voting Stock in
accordance with the Pairing Agreement, registered in such name or names as may
be directed by such Holder in the Notice of Exercise, together with a check for
payment in lieu of any fractional Unit, as provided in Section 4.5 of this
Agreement.

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<PAGE>

         The Partnership shall not issue Units to any Holder who has not
concurrently delivered to the REIT a Purchase Notice together with the full
purchase price for the Special Voting Stock to be paired with the Units to be
issued upon the exercise of the Warrants, as set forth in Section 5 hereof.

         SECTION 4.5 FRACTIONS OF UNITS.

         No fractional Units shall be issued upon exercise of any Warrants. If
more than one Warrant shall be exercised at one time by the same Holder, the
number of full Units which shall be issuable upon exercise thereof shall be
computed on the basis of the aggregate number of Units issuable under the
Warrants so exercised. In lieu of any fractional Unit that would otherwise be
issuable upon exercise of any Warrant or Warrants, the Partnership shall pay a
cash adjustment in respect of such fraction in an amount equal to the same
fraction of the market price per Unit (as determined by the General Partner of
the Partnership or in any manner prescribed by the General Partner at the close
of business on the day such exercise is deemed to have occurred.

         SECTION 4.6 ADJUSTMENT OF EXERCISE PRICE.

                  (a)      In the event the Partnership after the date hereof
         shall (i) pay a distribution or make a distribution in Units of the
         Partnership, (ii) subdivide its outstanding Units, (iii) combine its
         outstanding Units into a smaller number of Units, or (iv) issue by
         reclassification of its Units any securities or interests of the
         Partnership, the exercise right and the Exercise Price in effect
         immediately prior to such action shall be adjusted so that the holder
         of any Warrant thereafter surrendering such Warrant for exercise shall
         be entitled to receive the number of Units or other securities or
         interests of the Partnership that such holder would have owned
         immediately following such action had such Warrant been exercised
         immediately prior to the record date for such action or to such action,
         as appropriate. An adjustment made pursuant to this Section 4.6 shall,
         in the case of a subdivision, combination or reclassification become
         effective retroactively immediately after the record date thereof. If,
         as a result of an adjustment made pursuant to this Section 4.6, the
         holder of any Warrant thereafter surrendered for exercise shall become
         entitled to receive two or more types of securities, the General
         Partner of the Partnership shall in good faith determine the allocation
         of the adjusted Exercise Price between or among such different types of
         securities or interests of the Partnership.

                  (b)      In the event the Partnership after the date hereof
         shall distribute to all the holders of Units any distribution (other
         than a cash distribution) or any evidence of indebtedness or any assets
         in respect of the Units, or rights to subscribe or purchase Units at a
         price per Unit less than the current market price per Unit (as defined
         in Section 4.6(e) of this Agreement) at the record date referenced
         below, then, and thereafter successively upon each such distribution,
         the Exercise Price in effect immediately prior to such distribution
         shall forthwith be reduced to a price determined by multiplying the
         Exercise Price in effect immediately prior to such distribution by a
         fraction the numerator of which shall be the current market price per
         Unit (as defined in Section 4.6(e) of this Agreement) at the record
         date referenced below, less the fair market value (as determined in
         good

                                       10
<PAGE>

         faith by the General Partner of the Partnership) of the portion of such
         evidences of indebtedness or such assets so distributed, or of such
         subscription or purchase rights, applicable to one Unit and the
         denominator of which shall be such current market price per Unit. An
         adjustment made pursuant to Section 4.6(b) shall become effective
         retroactively immediately after the record date for the determination
         of Limited Partners entitled to receive such distribution.

                  (c)      After each adjustment of the Exercise Price pursuant
         to Sections 4.6(a) and 4.6(b), the total number of Units or fractional
         part thereof purchasable upon the exercise of each Warrant shall be
         proportionately adjusted to the product obtained by multiplying the
         number of Units purchasable upon exercise of each Warrant by a
         fraction, (i) the numerator of which shall be the Exercise Price in
         effect immediately prior to the adjustment and (ii) the denominator of
         which shall be the Exercise Price immediately following the adjustment.

                  (d)      The certificate of any independent firm of public
         accountants of recognized national standing selected by the General
         Partner of the Partnership shall be conclusive evidence of the
         correctness of any computations under Sections 4.6(a) and 4.6(b) of
         this Agreement.

                  (e)      For the purposes of Sections 4.3, 4.6(a) and 4.6(b)
         of this Agreement, the current market price per Unit as of any date of
         determination shall be deemed to be the last reported sale price for a
         single Unit for which a sale is officially recorded on the transfer
         books of the Partnership or, if there is no prior reported sale, the
         per Unit book value of the Partnership as determined in good faith by
         the General Partner.

                  (f)      No adjustment of the Exercise Price shall be required
         under Sections 4.6(a) and 4.6(b) of this Agreement if the amount of
         such adjustment is less than 1%; provided, however, that any
         adjustments that by reason of the foregoing are not required at the
         time to be made shall be carried forward and taken into account and
         included in determining the amount of any subsequent adjustment. If the
         Partnership shall take a record of Limited Partners for the purpose of
         entitling them to receive any distribution and thereafter and before
         the distribution to Limited Partners of any such distribution, legally
         abandon its plan to pay or deliver such distribution, then no
         adjustment of the Exercise Price shall be required by reason of the
         taking of such record. All calculations under this Section 4.6 shall be
         made to the nearest cent or to the nearest one-hundredth of a Unit, as
         the case may be.

                  (g)      Whenever the Exercise Price is adjusted pursuant to
         this Section 4.6, the Partnership shall cause to be mailed, first
         class, postage prepaid to the registered Holders of the Warrants at
         their last addressees as they appear on the registry books of the
         Partnership a notice (i) summarizing (a) the events requiring the
         adjustment and (b) the method by which such adjustment was calculated
         and (ii) specifying the Exercise Price and the number or kind or class
         of securities or interests purchasable upon exercise of the Warrants
         after giving effect to such adjustment.

                                       11
<PAGE>

                  (h)      In the event that at any time, as a result of an
         adjustment made pursuant to Section 4.6(a) of this Agreement,
         securities or interests of the Partnership other than Units are
         issuable upon exercise of the Warrants, thereafter the number of such
         other securities or interests of the Partnership so issuable shall be
         subject to adjustment from time to time in a manner and on terms as
         nearly equivalent as practicable to the provisions with respect to the
         Units contained in this Section 4.6, and all other provisions of this
         Agreement with respect to Units shall apply on like terms to any such
         other securities or interests. Subject to the foregoing, and unless the
         context requires otherwise, all references to Units in this Agreement
         and in the Warrant Certificates shall, in the event of an adjustment
         pursuant to this Section 4.6, be deemed to refer also to any other
         securities or property then issuable upon exercise of the Warrants as a
         result of such adjustments.

         SECTION 4.7 NOTICE OF CERTAIN CORPORATE ACTION.

                  In case:

                  (a)      the Partnership shall declare a distribution on the
         Units payable otherwise than exclusively in cash; or

                  (b)      the Partnership shall authorize the granting to the
         Limited Partners of rights, options or warrants to subscribe for or
         purchase any securities or interest of any kind or class or of any
         other rights; or

                  (c)      of any reclassification of the Units of the
         Partnership (other than a merger which is effected solely to change the
         jurisdiction of the Partnership), or of any consolidation or merger to
         which the Partnership is a party and for which approval of any Limited
         Partners of the Partnership is required, or of the sale or transfer of
         all or substantially all of the assets of the Partnership; or

                  (d)      of the voluntary or involuntary dissolution,
         liquidation or winding up of the Partnership;


         then the Partnership shall, if notice of such event is sent to the
Limited Partners generally, and shall cause to be mailed to all Holders at their
last addresses as they shall appear in the Warrant Register, on or prior to the
date information regarding such corporate action is sent to the Limited Partners
generally, a notice stating (i) the date on which a record is to be taken for
the purpose of such distribution, rights, options or warrants, or, if a record
is not to be taken, the date as of which the Limited Partners of record to be
entitled to such distribution, rights, options or warrants are to be determined,
or (ii) the date on which such reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding up (or amendment thereto) is
expected to become effective, and the date as of which it is expected that the
Limited Partners shall be entitled to exchange their Units for securities, cash
or other property deliverable upon such reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding up.

                                       12
<PAGE>

         SECTION 4.8 PARTNERSHIP AGREEMENT TO PROVIDE FOR ISSUANCE OF UNITS.

         The Partnership shall, at all times during the Exercise Period,
maintain in the Partnership Agreement a provision for the issuance of the
maximum number of Units that are issuable to the Holders upon the exercise of
the Warrants that are outstanding at any time.

         SECTION 4.9 TAXES ON EXERCISES.

         The Partnership shall pay any and all taxes that may be payable in
respect of the issue or delivery of Units on exercise of Warrants pursuant
hereto. The Partnership shall not, however, be required to pay any tax which may
be payable in respect of (i) income of the Holder or (ii) any transfer involved
in the issue and delivery of Units in name other than that of the Holder of the
Warrant or Warrants to be exercised, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Partnership
the amount of any such taxes or has established to the satisfaction of the
Partnership that such tax has been paid.

         SECTION 4.10 COVENANT AS TO UNITS.

         The Partnership covenants that all Units that may be issued upon
exercise of any Warrants will, upon issue and payment of the Exercise Price
therefor, be valid units of limited partnership interests in the Partnership and
free and clear from all taxes, liens, charges, security interests, encumbrances
and other restrictions created by or through the Partnership.

         SECTION 4.11 PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF
ASSETS.

         In case of any consolidation of the Partnership with, or merger of the
Partnership into, any other Person, any merger of another Person into the
Partnership (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Units of the Partnership) or
any sale or transfer of all or substantially all of the assets of the
Partnership (each, a "Transaction"), the Person formed by such Transaction or
which acquires such assets, as the case may be (the "Acquiror"), shall execute
and deliver to the Holder prior to the consummation of the Transaction a warrant
agreement (or supplement to this Warrant Agreement) providing that the Holder of
each Warrant then outstanding shall have the right thereafter, during the period
such Warrant shall be exercisable in accordance with this Warrant Agreement, to
exercise such Warrant only into the kind and amount of securities, interests,
cash and other property (collectively, the "Consideration") receivable upon such
Transaction by a Limited Partner into which such Warrant might have been
exercised immediately prior to such Transaction assuming such Limited Partner is
not a Person with which the Partnership consolidated or into which the
Partnership merged or which merged into the Partnership or to which such sale or
transfer was made, as the case may be (a "constituent person"), or an affiliate
of a constituent person. If a Holder is a Limited Partner at the time of the
Transaction and the kind or amount of the Consideration receivable upon such
Transaction is not the same for each Unit held immediately prior to the
Transaction by Limited Partners (other than a constituent

                                       13
<PAGE>

Person or an affiliate thereof), then for purposes of this Section 4.11, the
kind and amount of Consideration receivable by such Holder upon the Transaction
for such Holder's Warrants shall be the kind and amount of Consideration that
such Holder elected as a Limited Partner to receive for its Units in the
Transaction. If such Holder fails to make an election as a Limited Partner in
the Transaction, then for purposes of this Section 4.11, the kind and amount of
Consideration receivable by such Holder upon the Transaction shall be deemed to
be the kind and amount so receivable per Unit by a plurality of Limited Partners
who fail to make an election in the Transaction. Such warrant agreement shall
provide for adjustments upon the occurrence of events with respect to the
Acquiror similar to the events described in Section 4.6(a) and (b) of this
Agreement, which, for events subsequent to the effective date of such warrant
agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 4. The above provisions of this Section
4.11 shall similarly apply to successive Transactions.

         SECTION 4.12 NO CHANGE OF WARRANT NECESSARY.

         Irrespective of any adjustment in the Exercise Price or in the number
or kind of Units or other property issuable upon exercise of the Warrants, the
Warrant Certificates theretofore or thereafter issued may continue to express
the same Exercise Price and number and kind of Units issuable upon exercise per
Warrant as are stated in the Warrant Certificates initially issued pursuant to
this Agreement.

         SECTION 4.13 ENFORCEMENT OF RIGHTS.

         Notwithstanding any of the provisions of this Agreement, any Holder,
without the consent of any other Holder, may enforce, and may institute and
maintain any suit, action or proceeding against the Partnership to enforce, such
Holder's right to exercise the Warrants evidenced by such Holder's Warrant
Certificate in the manner provided in such Warrant Certificate and this
Agreement.

         SECTION 4.14 AVAILABLE INFORMATION.

         The Partnership shall promptly deliver to the Holders copies of its
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) that the Partnership is required to provide to the
Limited Partners pursuant to the Partnership Agreement.

                                    ARTICLE 5

                              SPECIAL VOTING STOCK

                                       14

<PAGE>

         SECTION 5.1 PURCHASE OF SPECIAL VOTING STOCK; PAIRING

         (a) The Holder shall, at the same time it delivers its Notice of
Exercise to the Partnership, deliver to the REIT a Purchase Notice, in the Form
of Exhibit C hereto, together with payment in full of $.01 per share for a
number of shares of Special Voting Stock equal to the number of Units to be
issued by the Partnership to the Holder upon the exercise of such Warrant.

         (b) Upon receipt of such Purchase Notice, the REIT shall issue and sell
to the Holder a number of shares of Special Voting Stock equal to the number of
Units issued by the Partnership to the Holder upon the exercise of such Warrant.

         (c) To effect the concurrent issue of the Special Voting Stock, the
Partnership shall provide the REIT with timely notice of exercise of the
Warrants and the REIT and the Partnership shall make such other additional
provision as they may deem necessary to ensure compliance with the Pairing
Agreement (as defined below).

(d) The REIT shall issue the Special Voting Stock and the Partnership shall
issue the Units in accordance with the terms of the Pairing Agreement of even
date herewith among the REIT, the Holder, the Partnership, Arbor Realty LP OP,
Inc., a Delaware corporation ("LP"), Arbor Realty GP OP, Inc., a Delaware
corporation ("GP") (the "Pairing Agreement"), including, without limitation, the
provisions of Section 3(a) thereof requiring any certificate evidencing the
Units issued upon exercise of the Warrants to be printed "back-to-back" with a
certificate evidencing the Special Voting Preferred and to bear a conspicuous
legend (on the face thereof) referring to the restrictions on transfer set forth
in such Agreement.

                                    ARTICLE 6

AMENDMENTS

         SECTION 6.1 AMENDMENT OF AGREEMENT.

         The Partnership and the REIT may, without the consent of any Holders,
amend this Agreement in such manner as they shall deem appropriate to cure any
ambiguity, to correct any defective or inconsistent provision or manifest
mistake or error herein contained, or in any other manner that they may deem
necessary or desirable and which shall not adversely affect the rights of the
Holders of Warrants. This Agreement shall not otherwise be modified,
supplemented or amended in any respect by the Partnership and the REIT, except
with the consent in writing of the Holders of outstanding Warrants representing
not less than a majority of the Warrants then outstanding; provided, however,
that the consent in writing of each and every Holder shall be required for any
such modification, supplement or amendment which (a) changes the Exercise Period
(except to extend the expiration of the Exercise Period to a later date) or
increases the Exercise Price, or (b) reduces the percentage of Holders of
outstanding Warrants the consent of who is required to modify, supplement or
amend this Agreement.

                                       15
<PAGE>

         Any modification, supplement or amendment pursuant to this Section 5.1
shall be binding upon all present and future Holders, whether or not they have
consented to such modification, supplement or amendment, and whether or not
notation of such modification, supplement or amendment is made upon any Warrant
Certificate issued to such Holder.

         SECTION 6.2 RECORD DATE.

The Partnership may set a record date for purposes of determining the identity
of Holders entitled to consent to any modification, supplement or amendment to
this Agreement. If the Partnership does not set a record date, the record date
shall be 30 days prior to the first solicitation of such consent.

                                    ARTICLE 7

MISCELLANEOUS PROVISIONS

         SECTION 7.1 COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
the same instrument.

         SECTION 7.2 GOVERNING LAW.

         THIS AGREEMENT AND THE WARRANT CERTIFICATES ISSUED HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF.

         SECTION 7.3 DESCRIPTIVE HEADINGS.

         The descriptive headings of this Agreement are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.

         SECTION 7.4 NOTICES.

         Any notice, request or other document permitted or required hereunder
to be given to any Holder shall be sufficiently given if in writing and mailed
first-class postage prepaid, to each Holder affected by such event, at its
address as it appears in the Warrant Register. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holders shall affect the
sufficiency of such notice with respect to other Holders. Any notice required
hereunder to be given to any Holder may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice.

                                       16
<PAGE>

         Any notice, request, waiver, consent or other document provided or
permitted by this Agreement to be given to (i) the Partnership by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid or
sent by facsimile followed by confirmation of receipt by telephone, to the
Partnership at the address or facsimile number of its principal office specified
in the first paragraph of this Agreement or at any other address or facsimile
number previously furnished in writing to the Holder by the Partnership.

         SECTION 7.5 MAINTENANCE OF OFFICE.

         So long as any of the Warrants remain outstanding, the Partnership
shall designate and maintain in the State of New York an office or agency where
Warrant Certificates may be surrendered for registration of transfer or for
exchange, where Warrants may be surrendered for exercise and where notices and
demands to or upon the Partnership in respect of the Warrants and this Warrant
Agreement may be served, initially located at 333 Earle Ovington Boulevard,
Suite 900, Uniondale, NY 11553. The Partnership may from time to time change or
rescind such designation as it may deem desirable or expedient. The Partnership
will give prompt written notice to the Holders of any change in the location, of
such office or agency.

         The Partnership may also from time to time designate one or more other
offices or agencies (in or outside the State of New York) where Warrant
Certificates may be presented or surrendered for any or all such purposes and
may from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Partnership of its
obligation to maintain an office or agency in the State of New York for such
purposes.

         SECTION 7.6 SUCCESSORS AND ASSIGNS.

         All covenants and agreements in this Agreement by the Partnership shall
bind its successors and assigns, whether so expressed or not.

         SECTION 7.7 SEPARABILITY.

         In case any provision in this Agreement or in the Warrant Certificates
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

         SECTION 7.8 PERSONS HAVING RIGHTS UNDER AGREEMENT.

         Nothing in this Agreement or in the Warrant Certificates, expressed or
implied, is intended, or shall be construed, to give any Person, other than the
parties hereto and their successors hereunder, and the Holders of Warrants, any
benefit, right, remedy or claim under or by reason of this Agreement.

                                       17

<PAGE>

                         [Signatures on following page]

                                       18

<PAGE>

         IN WITNESS WHEREOF, the Partnership, the REIT and the Holder have
caused this Agreement to be executed by their duly authorized officers as of the
date set forth below.

                                            ARBOR REALTY LIMITED PARTNERSHIP

                                            By: Arbor Realty GPOP, Inc.,
                                                   its general partner

                                            By: /s/ Frederick C. Herbst
                                                --------------------------
                                                Frederick C. Herbst
                                                Secretary and Treasurer

Witness: Dated: July 1, 2003

By: /s/ Tymour Okasha
    --------------------
Name: Tymour Okasha

                                            ARBOR REALTY TRUST, INC.

                                            By: /s/ Frederick C. Herbst
                                                --------------------------
                                                Frederick C. Herbst
                                                Chief Financial Officer

Witness: Dated: July 1, 2003

By: Tymour Okasha
    --------------------
Name: Tymour Okasha

                                       19
<PAGE>

                                            ARBOR COMMERCIAL MORTGAGE, LLC

                                            By: /s/ Frederick C. Herbst
                                                -------------------------
                                                Frederick C. Herbst
                                                Chief Financial Officer

Witness: Dated: July 1, 2003

By: /s/ Tymour Okasha
    ---------------------------
Name: Tymour Okasha

                                       20
<PAGE>

                                    EXHIBIT A

                           FORM OF WARRANT CERTIFICATE

                Certificate Number                      629,345 Warrants

                VOID AND EXPIRED AFTER 5:00 p.m. on July 1, 2005

                              WARRANTS TO PURCHASE

                 629,345 UNITS OF LIMITED PARTNERSHIP INTERESTS

                        ARBOR REALTY LIMITED PARTNERSHIP

         THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED(1) (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THE SECURITIES EVIDENCED HEREBY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE
HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER ANY SECURITY EVIDENCED HEREBY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF (X) THE
ORIGINAL ISSUE DATE HEREOF AND (Y) THE LAST DATE ON WHICH THE PARTNERSHIP OR ANY
AFFILIATED PERSON OF THE PARTNERSHIP WAS THE OWNER OF SUCH SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE PARTNERSHIP, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER,"
AS SUCH TERM IS DEFINED IN, AND IN COMPLIANCE WITH, RULE 144A PROMULGATED UNDER
THE SECURITIES ACT, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) TO AN

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

(1) Paragraph to be included in a Warrant Certificate representing Transfer
Restricted Warrants.

                                      A-1
<PAGE>

INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1),
(2), (3), (7) OR (8) OF RULE 501 PROMULGATED UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, (E) TO AN INDIVIDUAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (a)(4), (5) OR (6) OF RULE 501 PROMULGATED UNDER THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE PARTNERSHIP'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E),
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

         THE UNITS ISSUED UPON EXERCISE OF THIS WARRANT ARE REQUIRED TO BE
ISSUED BY THE PARTNERSHIP IN THE FORM OF A CERTIFICATE PAIRED AND PRINTED BACK
TO BACK WITH A CERTIFICATE ISSUED BY ARBOR REALTY TRUST, INC. (THE "REIT")
EVIDENCING AN EQUAL NUMBER OF SHARES OF SPECIAL VOTING PREFERRED STOCK OF THE
REIT IN ACCORDANCE WITH, AND SUBJECT TO THE TERMS OF, THE PAIRING AGREEMENT (AS
DEFINED ON THE REVERSE SIDE HEREOF).

         This Warrant Certificate certifies that Arbor Commercial Mortgage, LLC,
or registered assigns, is the Holder of 629,345 Warrants (the "Warrants") to
purchase units of limited partnership interests (the "Unit"), of Arbor Realty
Limited Partnership, a Delaware limited partnership (the "Partnership"). Each
Warrant entitles the Holder, at any time on any Business Day during the Exercise
Period (as defined in the Warrant Agreement), to purchase from the Partnership
one Unit of the Partnership at an Exercise Price of $15.00 per Unit (as such
Exercise Price may be amended in accordance with this Warrant Certificate or the
Warrant Agreement) upon surrender of this Warrant Certificate and payment of the
Exercise Price at any office or agency maintained for that purpose by the
Partnership.

         Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on the Expiration Date shall thereafter be null and void.


         THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW PROVISIONS THEREOF.

         Reference is hereby made to the further provisions of this Warrant
Certificate on the reverse hereof, which provisions shall for all purposes have
the same effect as though fully set forth at this place.

                                      A-2

<PAGE>

         IN WITNESS WHEREOF, the Partnership has caused this Warrant certificate
to be duly executed and a facsimile of its corporate seal to be imprinted
thereon.

                                            Dated:  July 1, 2003

                                            ARBOR REALTY LIMITED PARTNERSHIP

                                            By: ________________________________

                                            Name:

                                            Title:

                                      A-3

<PAGE>

                                 [Reverse Side]

         The Warrants represented by this Warrant Certificate are part of a duly
authorized issue of Warrants of Arbor Realty Limited Partnership (the
"Partnership") expiring 5:00 p.m., New York City time, on the Expiration Date.
The Warrants represented hereby are issued pursuant to and are subject in all
respects to the terms and conditions set forth in the Warrant Agreement (the
"Warrant Agreement"), by and between the Partnership, the REIT and the holder
hereof, which Warrant Agreement and any amendments thereto are hereby
incorporated by reference in and made a part of this instrument, and to which
reference is hereby made for a description of the respective rights, limitations
of rights, obligations, duties and immunities thereunder of the Partnership, the
REIT and the Holders of Warrants. A copy of the Warrant Agreement may be
obtained from the Partnership at 333 Earle Ovington Boulevard, Suite 900,
Uniondale, New York 11553, by a written request from the Holder hereof or which
may be inspected by any Holder or such Holder's agent at the principal office of
the Partnership. Subject to and upon compliance with the provisions of the
Warrant Agreement, each Warrant entitles the Holder, at any time on any Business
Day during the Exercise Period to purchase from the Partnership one Unit, (or
such other number of Units if an adjustment has been made as provided in the
Warrant Agreement), of the Partnership at an Exercise Price of $15.00 per Unit
(or at the current adjusted Exercise Price if an adjustment has been made as
provided in the Warrant Agreement). The Warrants may be exercised upon the
presentation and surrender of this Warrant Certificate to the Partnership at its
office or agency maintained for that purpose, with the form of Notice of
Exercise set forth hereon duly completed and executed, accompanied by payment of
the Exercise Price for each such Warrant exercised and any other amounts
required to be paid, as provided in the Warrant Agreement. The Exercise Price
shall be payable (i) by cash or certified or official bank check, (ii) by
surrendering additional Warrants or Units for cancellation to the extent that
the Partnership may lawfully accept Units in the Partnership, or (iii) by such
other means as is acceptable to the Partnership in the lawful currency of the
United States of America which as of the time of payment is legal tender for
payment of public or private debts. The value per Unit surrendered in accordance
with this provision equals the current market price per Unit as defined in the
Warrant Agreement as of the business day next preceding the date the Warrant is
surrendered for exercise and the value of this Warrant being equal to the
difference between such current market price and the Exercise Price. The
Exercise Price and the number and kind of securities or other property issuable
upon exercise of each Warrant is subject to adjustment as provided in the
Warrant Agreement.

         Within five Business Days of the later of (i) the Partnership's receipt
of the Notice of Exercise together with payment of the purchase price for the
Units and (ii) the REIT's receipt of the Purchase Notice together with payment
of the purchase price for the Special Voting Stock to be paired with the Units
to be issued upon such exercise, the Partnership shall issue and deliver, or
cause to be delivered, to the Holder, a certificate or certificates evidencing
the number of full Units to which such Holder is entitled, paired with a
certificate representing an equal number of shares of Special Voting Stock in
accordance with the Pairing Agreement dated as of July 1,

                                      A-4
<PAGE>

2003, among the REIT, the Partnership, Arbor Realty LP OP, Inc., a Delaware
corporation and Arbor Realty GP OP, Inc., registered in such name or names as
may be directed by such Holder pursuant to the Notice of Exercise set forth on
this Warrant Certificate. No fractional Units will be issued upon exercise of
any Warrant, but instead of any fractional interest, the Partnership shall pay
to the Holder a cash adjustment as provided in the Warrant Agreement.

         In the case of the exercise of less than all the Warrants represented
hereby, this Warrant Certificate shall be canceled upon the surrender hereof and
a new Warrant Certificate or Warrant Certificates shall be issued and delivered
for the balance of such Warrants represented hereby.

         Prior to the exercise of any Warrant represented hereby, the Holder
shall not be entitled to any rights of a Limited Partner of the Partnership by
reason of such Person being a Holder, including, without limitation, the right
to vote or to receive distributions, and shall not be entitled to receive any
notice of any proceedings of the Partnership, except as provided in the Warrant
Agreement.

         The Warrant Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Partnership and the rights of the Holders of Warrants under
the Warrant Agreement at any time by the Partnership with the consent of the
Holders of at least a majority of the Warrants at the time outstanding. Any such
consent shall be conclusive and binding upon the Holder of this Warrant
Certificate and upon all future Holders of any Warrant Certificate issued upon
the registration of transfer of the Warrants evidenced hereby, or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made thereon. Notwithstanding the immediately preceding sentence, the Warrant
Agreement provides that the consent in writing of each and every Holder shall be
required for any such modification, supplement or amendment which (a) changes
the Exercise Period (except to extend the expiration of the Exercise Period to a
later date) or increases the Exercise Price or (b) reduces the percentage of
Holders of outstanding Warrants the consent of who is required to modify,
supplement or amend the Warrant Agreement.

         As provided in the Warrant Agreement and subject to the limitations set
forth therein, transfer of the Warrants represented by this Warrant Certificate
is registrable upon surrender of this Warrant Certificate at the office or
agency of the Partnership maintained for that purpose, and thereupon one or more
new Warrant Certificates representing the Warrants so transferred will be issued
to the designated transferee or transferees. As provided in the Warrant
Agreement and subject to the limitations set forth therein, this Warrant
Certificate is exchangeable for new Warrant Certificates representing a like
number of Warrants, as requested by the Holder surrendering the same.

         No service charge shall be payable by a Holder for any such
registration of transfer or exchange, but the Partnership shall require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

         Prior to due presentment of this Warrant Certificate for registration
of transfer, the Partnership and any agent of the Partnership may treat the
Person in whose name this Warrant Certificate is registered as the absolute,
true and lawful owner hereof and of the Warrants

                                       A-5
<PAGE>

represented hereby (notwithstanding any notation or ownership or other writing
hereon made by any Person) for all purposes, and shall not be affected by any
notice or knowledge to the contrary.

All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

                               NOTICE OF EXERCISE

         The undersigned hereby irrevocably elects to exercise [________] of the
Warrants represented by this Warrant Certificate and purchase the whole number
of Units issuable and deliverable upon exercise of such Warrants, and herewith
tenders payment for such Units in accordance with the terms of the Warrant
Agreement. The undersigned hereby directs that the certificate or certificates
for the Units issuable and deliverable upon exercise, together with any check in
payment for fractional Units and any Warrant Certificate representing any
unexercised Warrants represented by this Warrant Certificate, be issued in the
name of and delivered to the undersigned, unless a different name is indicated
below. The undersigned will pay any transfer taxes or other governmental charge
payable with respect to any such Units to be issued in the name of a person
other than the undersigned.

                     INSTRUCTIONS FOR REGISTRATION OF UNITS

                           (please typewrite or print)

Name: _________________________________________________________________

Address:_______________________________________________________________

Social Security or Other Taxpayer Identification Number: ______________

Dated: ____________________

Signature: ________________

Note: Signature must conform to name of Holder appearing on face hereof)

Signature must be guaranteed by a member of an accepted medallion guarantee
program if Units are to be issued, or Warrant Certificate(s) are to be
delivered, other than to and in the name of the Holder.

       ___________________________________

       Signature Guarantee

                                      A-6

<PAGE>

         Fill in for registration of Units and Warrant Certificate(s) if to be
issued otherwise than to the Holder:

       _______________________________   Social Security or other

        (Name)                           Taxpayer Identification Number:

       _______________________________   _______________________________________

        (Name)

       _______________________________   _______________________________________

        Please print name and address

        (including zip code)

                                      A-7

<PAGE>

                                    EXHIBIT B

                              TRANSFER INSTRUCTION

                  RE: ARBOR REALTY LIMITED PARTNERSHIP WARRANTS

         Reference is made to the Warrant Agreement dated as of July 1, 2003,
relating to the Warrants (the "Agreement"). This Instruction and Certification
relates to Warrants held by ___________________________ (the
"Transferor/Holder"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreement.

                       Instruction of Transfer or Exchange

        (to be completed whether or not the Warrants to be transferred or

                   exchanged are Transfer Restricted Warrants)

         1.       The Transferor/Holder hereby instructs the Partnership to
transfer or exchange one or more Definitive Warrant Certificates in accordance
with Section 3.3(c) of the Agreement

         2.       The Transferor/Holder has requested Definitive Warrant
Certificates above and hereby further instructs the Partnership to issue such
Definitive Warrant Certificates without the restrictive legends referenced in
Section 3.3(d) of the Agreement (check box if applicable): [ ]

                                  CERTIFICATION

 (to be completed for a transfer or exchange of Transfer Restricted Warrants
                                      only)

         3.       In connection with the transfer or exchange requested above,
the Transferor/Holder does hereby certify that (check one box):

                                      B-1

<PAGE>

         [ ] One or more Definitive Warrant Certificates is being obtained by
the Transferor/Holder, without transfer or change in beneficial ownership (in
accordance with Section 3.3(b)(ii)(1) of the Agreement); or

         [ ] one or more Definitive Warrant Certificates is being transferred
pursuant to an effective registration statement under the Securities Act (in
satisfaction of Section 3.3(b)(ii)(2) of the Agreement).

         [ ] one or more Definitive Warrant Certificates is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A) in reliance on Rule
144A (in satisfaction of Section 3.3(b)(ii)(3) of the Agreement); or

         [ ] one or more Definitive Warrant Certificates is being obtained in
reliance on and in compliance with an exemption from the registration
requirements of the Securities Act, other than Rule 144A under the Securities
Act, and an opinion of counsel to the effect that such transfer complies with,
and does not require registration under, the Securities Act accompanies this
Instruction and Certification (in satisfaction of Section 3.3(b)(ii)(4) of the
Agreement).

____________________________________________

[INSERT NAME OF TRANSFEROR/HOLDER]

         Date: ____________________                   By: ______________________

                                      B-2

<PAGE>

                                    EXHIBIT C

                                 PURCHASE NOTICE

                              Dated _____ __, ____

Reference is made to the Warrant Agreement dated as of July 1, 2003, relating to
the Warrants (the "Agreement"). This Purchase Notice relates to Warrants held by
  ___________________________ (the "Holder"). Capitalized terms not otherwise
          defined herein have the meanings set forth in the Agreement.

(A) Concurrently with its delivery of this Purchase Notice Holder to the REIT
has delivered to the Partnership its Notice of Exercise for _________ Warrants,
each exercisable for one Unit along with payment for the purchase price for the
Units being purchased.

(B) The Holder has included with this notice $___________ [MULTIPLY NUMBER OF
WARRANTS SET FORTH ABOVE by $.01] representing the purchase price in full of
________ shares of Special Voting Stock. [THIS NUMBER MUST EQUAL THE NUMBER OF
WARRANTS SET FORTH IN SECTION "(A)" ABOVE], and requests that the REIT issue
such number of Special Voting Stock to the Holder.

(C) The Holder acknowledges that the certificate evidencing such Special Voting
Stock shall be printed "back-to-back" with a certificate evidencing the Units
issued upon exercise of the Warrants and shall bear a conspicuous legend (on the
face thereof) referring to the restrictions on transfer set forth in the Pairing
Agreement.

                                                            ____________________
                                                            [AUTHORIZED PERSON]

                                      B-3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>16
<FILENAME>y90410exv10w6.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.6

                          REGISTRATION RIGHTS AGREEMENT

                                 BY AND BETWEEN

                            ARBOR REALTY TRUST, INC.

                                       AND

                         ARBOR COMMERCIAL MORTGAGE, LLC

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                         <C>
1.     CERTAIN DEFINITIONS...............................................................................    3

2.     DEMAND REGISTRATIONS..............................................................................    5
       (a)    Right to Request Registration..............................................................    5
       (b)    Number of Demand Registrations.............................................................    5
       (c)    Priority on Demand Registrations...........................................................    5
       (d)    Restrictions on Demand Registrations.......................................................    6
       (e)    Selection of Underwriters..................................................................    7
       (f)    Other Registration Rights..................................................................    7
       (g)    Effective Period of Demand Registrations...................................................    7

3.     PIGGYBACK REGISTRATIONS...........................................................................    7
       (a)    Right to Piggyback.........................................................................    7
       (b)    Priority on Primary Registrations..........................................................    8
       (c)    Priority on Secondary Registrations........................................................    8
       (d)    Selection of Underwriters..................................................................    8
       (e)    Other Registrations........................................................................    8

4.     SHELF REGISTRATIONS...............................................................................    8

5.     HOLDBACK AGREEMENT................................................................................    9

6.     REGISTRATION PROCEDURES...........................................................................   10

7.     REGISTRATION EXPENSES.............................................................................   13

8.     INDEMNIFICATION...................................................................................   14

9.     PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.......................................................   16

10.    RULE 144..........................................................................................   16

11.    MISCELLANEOUS.....................................................................................   16
       (a)    Notices....................................................................................   16
       (b)    No Waivers.................................................................................   17
       (c)    Expenses...................................................................................   17
       (d)    Successors and Assigns.....................................................................   17
       (e)    Governing Law..............................................................................   17
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                         <C>
       (f)    Jurisdiction...............................................................................   18
       (g)    Waiver of Jury Trial.......................................................................   18
       (h)    Counterparts; Effectiveness................................................................   18
       (i)    Entire Agreement...........................................................................   18
       (j)    Captions...................................................................................   18
       (k)    Severability...............................................................................   18
       (l)    Amendments.................................................................................   19
       (m)    Aggregation of Stock.......................................................................   19
       (n)    Equitable Relief...........................................................................   19
</TABLE>

                                       ii

<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT is made and entered into as of July
1, 2003, between Arbor Realty Trust, Inc., a Maryland corporation (the
"Company"), and Arbor Commercial Mortgage, LLC, a New York limited liability
company ("ACM").

         In consideration of the mutual covenants and agreements herein
contained and other good and valid consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

1.       CERTAIN DEFINITIONS.

         In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the following meanings:

         "Affiliate" of any Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person. The term "control" (including the
terms "controlled by" and "under common control with") as used with respect to
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.

         "Agreement" means this Registration Rights Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to this Registration Rights Agreement as the
same may be in effect at the time such reference becomes operative.

         "Business Day" means any day on which commercial banks are open for
business in New York, New York.

         "Common Stock" means common stock, par value $.01 per share, of the
Company.

         "Contribution Agreement" means the contribution agreement, dated as of
July 1, 2003, by and among ACM, the Company, and Arbor Realty Limited
Partnership, a Delaware limited partnership (the "Operating Partnership").

         "Conversion Shares" means any of the shares of Common Stock issuable
upon redemption of the Partnership Units.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Holder" means any holder of record of Registrable Common Stock (as
defined below) and any transferees of such Registrable Common Stock from such
Holders. For purposes of this Agreement, the Company may deem and treat the
registered holder of Registrable Common Stock as the Holder and absolute owner
thereof, and the Company shall not be affected by any notice to the contrary.

<PAGE>

         "Partnership Units" means operating partnership units of the Operating
Partnership.

         "Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, incorporated organization,
association, corporation, institution, public benefit corporation, government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof) or any other entity.

         "Prospectus" means the prospectus or prospectuses included in any
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Common Stock covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus or prospectuses.

         "Redemption Date" shall have the meaning set forth in the Operating
Partnership Agreement.

         "Registrable Common Stock" means the Conversion Shares upon original
issuance thereof and at all times subsequent thereto, including upon the
transfer thereof by the original Holder or any subsequent Holder and any
securities issued in respect of such securities by reason of or in connection
with any exchange for or replacement of such securities or any stock dividend,
stock distribution, stock split, purchase in any rights offering or in
connection with any combination of shares, recapitalization, merger or
consolidation, or any other equity securities issued pursuant to any other pro
rata distribution with respect to the Common Stock, until, in the case of any
such securities, the earliest to occur of (i) the date on which it has been
registered effectively pursuant to the Securities Act and disposed of in
accordance with the Registration Statement relating to it or (ii) the date on
which either it is distributed to the public pursuant to Rule 144 or is saleable
pursuant to Rule 144(k) promulgated by the Commission pursuant to the Securities
Act. All references herein to a "Holder" or "Holder of Registrable Common Stock"
shall include the holder or holders of Partnership Units to the extent of the
Conversion Shares then underlying such Partnership Units. For purposes of
determining the number of shares of Registrable Common Stock held by a Holder
and the number of shares of Registrable Common Stock outstanding, for purposes
of this Agreement (including the definition of "Holder") but not for any other
purpose, any holder of record of Partnership Units shall be deemed to be a
Holder of the number of Conversion Shares issuable upon conversion of such
Partnership Units and all such Conversion Shares shall be deemed to be
outstanding shares of Registrable Common Stock.

         "Registration Statement" means any registration statement of the
Company which covers any of the Registrable Common Stock pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all materials incorporated by reference in such Registration
Statement.

                                       4

<PAGE>

         "Rule 415" means Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.

         "SEC" means the Securities and Exchange Commission.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Shelf Registration Statement" shall have the meaning set forth in
Section 4 hereof.

         "underwritten registration or underwritten offering" means a
registration in which securities of the Company are sold to underwriters for
reoffering to the public.

2.       DEMAND REGISTRATIONS.

         (a)      Right to Request Registration. Any time after the Redemption
Date any Holder or Holders who together hold a majority of the Registrable
Common Stock ("Initiating Holders") may request registration under the
Securities Act of all or part of the Registrable Common Stock ("Demand
Registration") provided, that if the Company is eligible to use a Shelf
Registration Statement (as defined in Section 4 hereof), the Holders shall be
required to request that the Company register their Registrable Common Stock on
a Shelf Registration Statement rather than requesting Demand Registrations and
shall not be entitled to request any Demand Registrations while such Shelf
Registration is effective and available for registration of the Registrable
Common Stock.

           Within 10 days after receipt of any such request for Demand
Registration, the Company shall give written notice of such request to all other
Holders of Registrable Common Stock and shall, subject to the provisions of
Section 2(d) hereof, include in such registration all such Registrable Common
Stock with respect to which the Company has received written requests for
inclusion therein within 20 days after the receipt of the Company's notice.

         (b)      Number of Demand Registrations. Subject to the provisions of
Section 2(a), the Initiating Holders of Registrable Common Stock shall be
entitled to request an aggregate of six (6) Demand Registrations. A registration
shall not count as one of the permitted Demand Registrations (i) until it has
become effective, (ii) if the Initiating Holder(s) requesting such registration
is not able to register and sell at least 50% of the Registrable Common Stock
requested by such Initiating Holder(s) to be included in such registration or
(iii) in the case of a Demand Registration that would be the last permitted
Demand Registration requested hereunder, if the Initiating Holder(s) requesting
such registration is not able to register and sell all of the Registrable Common
Stock requested to be included by such Initiating Holder in such registration.

         (c)      Priority on Demand Registrations. If the managing underwriters
of the requested Demand Registration advise the Company in writing that in their
opinion the number of shares of Registrable Common Stock proposed to be included
in any such

                                       5

<PAGE>

registration exceeds the number of securities that can be sold in such offering
and/or that the number of shares of Registrable Common Stock proposed to be
included in any such registration would adversely affect the price per share of
the Company's equity securities to be sold in such offering, the Company shall
include in such registration only the number of shares of Registrable Common
Stock that, in the opinion of such managing underwriters, can be sold. If the
number of shares that can be sold is less than the number of shares of
Registrable Common Stock proposed to be registered, the amount of Registrable
Common Stock to be so sold shall be allocated among the Holders pro rata on the
basis of Registrable Common Stock offered for such registration by each Holder
electing to participate in such registration. If the number of shares that can
be sold exceeds the number of shares of Registrable Common Stock proposed to be
sold, such excess shall be allocated pro rata among the other holders of Common
Stock, if any, desiring to participate in such registration based on the amount
of such Common Stock initially requested to be registered by such holders or as
such holders may otherwise agree.

         (d)      Restrictions on Demand Registrations. The Company shall not be
obligated to effect any Demand Registration within three months after the
effective date of a previous Demand Registration, a previous Shelf Registration
(as hereinafter defined) or a previous registration under which the Initiating
Holders had piggyback rights pursuant to Section 3 hereof wherein the Initiating
Holders were permitted to register, and sold, at least 50% of the shares of
Registrable Common Stock requested to be included therein. In no event shall the
Company be obligated to effect more than two (2) Demand Registrations hereunder
in any single eighteen (18) month period, with the first such period measured
from the date of the first Demand Registration and ending on the same date
during the eighteenth month following such Demand Registration, whether or not a
Business Day. The Company may (i) postpone for up to ninety (90) days the filing
or the effectiveness of a Registration Statement for a Demand Registration if,
based on the good faith judgment of the Company's board of directors, such
postponement or withdrawal is necessary in order to avoid premature disclosure
of a matter the board has determined would not be in the best interest of the
Company to be disclosed at such time or (ii) postpone the filing of a Demand
Registration in the event the Company shall be required to prepare audited
financial statements as of a date other than its fiscal year end (unless the
stockholders requesting such registration agree to pay the expenses of such an
audit); provided, however, that in no event shall the Company withdraw a
Registration Statement under clause (i) after such Registration Statement has
been declared effective; and provided, further, however, that in any of the
events described in clause (i) or (ii) above, the Initiating Holders requesting
such Demand Registration shall be entitled to withdraw such request and, if such
request is withdrawn, such Demand Registration shall not count as one of the
permitted Demand Registrations. The Company shall provide written notice to the
Initiating Holders requesting such Demand Registration of (x) any postponement
or withdrawal of the filing or effectiveness of a Registration Statement
pursuant to this Section 2(d), (y) the Company's decision to file or seek
effectiveness of such Registration Statement following such withdrawal or
postponement and (z) the effectiveness of such Registration Statement. The
Company may defer the filing of a particular Registration Statement pursuant to
this Section 2(d) only once.

                                       6

<PAGE>

         (e)      Selection of Underwriters. If any of the Registrable Common
Stock covered by a Demand Registration or a Shelf Registration pursuant to
Section 4 hereof is to be sold in an underwritten offering, the Initiating
Holders shall have the right to select the managing underwriter(s) to administer
the offering subject to the approval of the Company, which will not be
unreasonably withheld.

         (f)      Other Registration Rights. The Company shall not grant to any
Person the right, other than as set forth herein and to employees of the Company
with respect to registrations on Form S-8 (or any successor forms thereto), to
request the Company to register any securities of the Company except such rights
as are not more favorable than or inconsistent with the rights granted to the
Holders herein. In the event the Company grants rights that are more favorable
other than as permitted under the first sentence of this subsection 2(f), the
Company will make such provisions available to the Holders and will enter into
any amendments necessary to confer such rights on the Holders.

         (g)      Effective Period of Demand Registrations. After any Demand
Registration filed pursuant to this Agreement has become effective, the Company
shall use its best efforts to keep such Demand Registration effective for a
period equal to 180 days from the date on which the SEC declares such Demand
Registration effective (or if such Demand Registration is not effective during
any period within such 180 days, such 180-day period shall be extended by the
number of days during such period when such Demand Registration is not
effective), or such shorter period that shall terminate when all of the
Registrable Common Stock covered by such Demand Registration has been sold
pursuant to such Demand Registration. If the Company shall withdraw any Demand
Registration pursuant to subsection (d) of this Section 2 (a "Withdrawn Demand
Registration"), the Initiating Holders of the Registrable Common Stock remaining
unsold and originally covered by such Withdrawn Demand Registration shall be
entitled to a replacement Demand Registration that (subject to the provisions of
this Section 2) the Company shall use its best efforts to keep effective for a
period commencing on the effective date of such Demand Registration and ending
on the earlier to occur of the date (i) which is 180 days from the effective
date of such Demand Registration and (ii) on which all of the Registrable Common
Stock covered by such Demand Registration has been sold. Such additional Demand
Registration otherwise shall be subject to all of the provisions of this
Agreement.

3.       PIGGYBACK REGISTRATIONS.

         (a)      Right to Piggyback. At any time after the Redemption Date,
whenever the Company proposes to register any of its common equity securities
under the Securities Act (other than a registration statement on Form S-8 or on
Form S-4 or any similar successor forms thereto), whether for its own account or
for the account of one or more stockholders of the Company, and the registration
form to be used may be used for any registration of Registrable Common Stock (a
"Piggyback Registration"), the Company shall give prompt written notice (in any
event within 10 business days after its receipt of notice of any exercise of
other demand registration rights) to all Holders of its intention to effect such
a registration and, subject to Sections 3(b) and 3(c), shall include in such
registration all Registrable Common Stock with respect to which the Company has

                                       7

<PAGE>

received written requests for inclusion therein within 20 days after the receipt
of the Company's notice. The Company may postpone or withdraw the filing or the
effectiveness of a Piggyback Registration at any time in its sole discretion.

         (b)      Priority on Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in such offering and/or that the number of shares of
Registrable Common Stock proposed to be included in any such registration would
adversely affect the price per share of the Company's equity securities to be
sold in such offering, the underwriting shall be allocated among the Company and
all Holders pro rata on the basis of the Common Stock and Registrable Common
Stock offered for such registration by the Company and each Holder,
respectively, electing to participate in such registration.

         (c)      Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of a holder of
the Company's securities other than Registrable Common Stock ("Non-Holder
Securities"), and the managing underwriters advise the Company in writing that
in their opinion the number of securities requested to be included in such
registration exceeds the number that can be sold in such offering and/or that
the number of shares of Registrable Common Stock proposed to be included in any
such registration would adversely affect the price per share of the Company's
equity securities to be sold in such offering, the underwriting shall be
allocated among the holders of Non-Holder Securities and all Holders pro rata on
the basis of the Non-Holder Securities and Registrable Common Stock offered for
such registration by the holder of Non-Holder Securities and each Holder,
respectively, electing to participate in such registration.

         (d)      Selection of Underwriters. If any Piggyback Registration is an
underwritten primary offering, the Company shall have the right to select the
managing underwriter or underwriters to administer any such offering.

         (e)      Other Registrations. If the Company has previously filed a
Registration Statement with respect to Registrable Common Stock pursuant to
Sections 2 or 4 hereof or pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the Company shall not be
obligated to cause to become effective any other registration of any of its
securities under the Securities Act, whether on its own behalf or at the request
of any holder or holders of such securities, until a period of at least three
months has elapsed from the effective date of such previous registration.

4.       SHELF REGISTRATIONS.

         (a)      At the Holders' election (such election to be made if the
Holders may not elect to exercise any Demand Registrations, subject to Section
4(b) below), if at any time that the Company is eligible to use Form S-11, Form
S-3 or any successor thereto then available to the Company providing for the
resale pursuant to Rule 415 from time to time by the Holders of any and all
Registrable Common Stock (a "Shelf Registration

                                       8

<PAGE>

Statement") any Holder or Holders requests that the Company file a Shelf
Registration Statement for a public offering of all or any portion of the
Registrable Common Stock held by such Holders, then the Company shall use its
best efforts to register under the Securities Act pursuant to a Shelf
Registration Statement, for public sale in accordance with the method of
disposition specified in such notice, the number of shares of Registrable Common
Stock specified in such notice. Whenever the Company is required by this Section
4 to use its best efforts to effect the registration of Registrable Common
Stock, each of the procedures and requirements of Section 2 (including but not
limited to the requirement that the Company notify all Holders from whom notice
has not been received and provide them with the opportunity to participate in
the offering) shall apply to such registration. There is no limitation on the
number of registrations pursuant to this Section 4 that the Company is obligated
to effect until the earliest to occur of the date on which all of the
Registrable Common Stock either (i) has been registered effectively pursuant to
the Securities Act and disposed of in accordance with the Registration Statement
relating to it or (ii) distributed to the public pursuant to Rule 144 or is
saleable pursuant to Rule 144(k) promulgated by the Commission pursuant to the
Securities Act.

         (b)      If at any time the Company is not eligible to use a Shelf
Registration Statement, the Holders may during such time exercise Demand
Registration Rights, regardless of any previous exercise of their rights under
Section 4(a).

5.       HOLDBACK AGREEMENT.

         In connection with an underwritten primary or secondary offering to the
public, each Holder agrees not to sell or otherwise transfer or dispose of any
shares of Registrable Common Stock (or other securities) of the Company held by
them (other than Registrable Common Stock included in such offering in
accordance with the terms hereof) for a period equal to the lesser of one
hundred eighty (180) days following the effective date of a registration
statement of the Company filed under the Securities Act or such shorter period
as the managing underwriter shall agree to, provided that all other stockholders
who own more than five percent (5%) of the outstanding Common Stock of the
Company and all officers and directors of the Company enter into similar
agreements. Such agreement shall be in writing in form satisfactory to the
Company and the managing underwriter. The Company may impose stop-transfer
instructions with respect to the shares of Registrable Common Stock (or other
securities) subject to the foregoing restriction until the end of said period.
The foregoing shall not apply to (i) transactions relating to shares of Common
Stock acquired in open market transactions after the effective date of the
underwritten primary or secondary offering to the public, (ii) the exercise of
any warrants or stock options to purchase shares of capital stock of the Company
(provided that such limitation does not affect limitations on any actions
specified in the first sentence of this Section 5 with respect to the shares
issuable upon such exercise), (iii) transfers to Affiliates of a Holder where
the transferee agrees to be bound by the terms hereof, (iv) to any corporation
controlled by a Holder or trust for the direct or indirect benefit of the
undersigned or the immediate family of a Holder, provided that in the case of a
transfer to any such trust that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value other than for the benefit of
the

                                       9

<PAGE>

undersigned's immediate family, (v) charitable dispositions of Securities, or
(vi) as pledges of Registrable Common Stock in connection with the purchase of
such Registrable Common Stock upon the exercise of employee stock options
following termination of employment with the Company, provided that the lender
or lenders to whom such Registrable Common Stock are pledged agree in writing to
be bound by the terms of this restriction.

6.       REGISTRATION PROCEDURES.

         Whenever the Holders request that any Registrable Common Stock be
registered pursuant to this Agreement, the Company shall use its best efforts to
effect the registration and the sale of such Registrable Common Stock in
accordance with the intended methods of disposition thereof, and pursuant
thereto the Company shall as expeditiously as possible:

         (a)      prepare and file with the SEC a Registration Statement with
respect to such Registrable Common Stock and use its best efforts to cause such
Registration Statement to become effective as soon as practicable thereafter;
and before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, furnish to the Holders of Registrable Common Stock covered
by such Registration Statement and the underwriter or underwriters, if any,
copies of all such documents proposed to be filed, including documents
incorporated by reference in the Prospectus and, if requested by such Holders,
the exhibits incorporated by reference, and such Holders shall have the
opportunity to object to any information pertaining to such Holders that is
contained therein and the Company will make the corrections reasonably requested
by such Holders with respect to such information prior to filing any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto;

         (b)      prepare and file with the SEC such amendments and supplements
to such Registration Statement and the Prospectus used in connection therewith
as may be necessary to keep such Registration Statement effective for a period
of not less than 180 days, in the case of a Demand Registration or a Shelf
Registration, or such shorter period as is necessary to complete the
distribution of the securities covered by such Registration Statement and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement;

         (c)      furnish to each seller of Registrable Common Stock such number
of copies of such Registration Statement, each amendment and supplement thereto,
the Prospectus included in such Registration Statement (including each
preliminary Prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Common Stock
owned by such seller;

         (d)      use its best efforts to register or qualify such Registrable
Common Stock under such other securities or blue sky laws of such jurisdictions
as any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or

                                       10

<PAGE>

advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Common Stock owned by such seller (provided,
that the Company will not be required to (i) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this subparagraph (d), (ii) subject itself to taxation in any such jurisdiction
or (iii) consent to general service of process in any such jurisdiction);

         (e)      notify each seller of such Registrable Common Stock, at any
time when a Prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of any event as a result of which the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such Prospectus so that, as thereafter
delivered to the purchasers of such Registrable Common Stock, such Prospectus
shall not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;

         (f)      in the case of an underwritten offering, enter into such
customary agreements (including underwriting agreements in customary form) and
take all such other actions as the Holders of a majority of number of shares of
the Registrable Common Stock being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Common Stock (including, without limitation, effecting a stock split or a
combination of shares and making members of senior management of the Company
available to participate in, and cause them to cooperate with the underwriters
in connection with, "road-show" and other customary marketing activities
(including one-on-one meetings with prospective purchasers of the Registrable
Common Stock)) and cause to be delivered to the underwriters and the sellers, if
any, opinions of counsel to the Company in customary form, covering such matters
as are customarily covered by opinions for an underwritten public offering as
the underwriters may request and addressed to the underwriters and the sellers;

         (g)      make available, for inspection by any seller of Registrable
Common Stock, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such Registration Statement;

         (h)      to use its best efforts to cause all such Registrable Common
Stock to be listed on each securities exchange on which securities of the same
class issued by the Company are then listed or, if no such similar securities
are then listed, on Nasdaq or a national securities exchange selected by the
Company;

         (i)      provide a transfer agent and registrar for all such
Registrable Common Stock not later than the effective date of such Registration
Statement;

                                       11

<PAGE>

         (j)      if requested, cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an underwritten
offering, at the time of delivery of any Registrable Common Stock sold pursuant
thereto), letters from the Company's independent certified public accountants
addressed to each selling Holder (unless such selling Holder does not provide to
such accountants the appropriate representation letter required by rules
governing the accounting profession) and each underwriter, if any, stating that
such accountants are independent public accountants within the meaning of the
Securities Act and the applicable rules and regulations adopted by the SEC
thereunder, and otherwise in customary form and covering such financial and
accounting matters as are customarily covered by letters of the independent
certified public accountants delivered in connection with primary or secondary
underwritten public offerings, as the case may be;

         (k)      make generally available to its stockholders a consolidated
earnings statement (which need not be audited) for the 12 months beginning after
the effective date of a Registration Statement as soon as reasonably practicable
after the end of such period, which earnings statement shall satisfy the
requirements of an earning statement under Section 11(a) of the Securities Act;

         (l)      promptly notify each seller of Registrable Common Stock and
the underwriter or underwriters, if any:

                  (i)      when the Registration Statement, any pre-effective
                           amendment, the Prospectus or any Prospectus
                           supplement or post-effective amendment to the
                           Registration Statement has been filed and, with
                           respect to the Registration Statement or any
                           post-effective amendment, when the same has become
                           effective;

                  (ii)     of any written request by the SEC for amendments or
                           supplements to the Registration Statement or
                           Prospectus;

                  (iii)    of the notification to the Company by the SEC of its
                           initiation of any proceeding with respect to the
                           issuance by the SEC of any stop order suspending the
                           effectiveness of the Registration Statement; and

                  (iv)     of the receipt by the Company of any notification
                           with respect to the suspension of the qualification
                           of any Registrable Common Stock for sale under the
                           applicable securities or blue sky laws of any
                           jurisdiction.

         At all times after the Company has filed a registration statement with
the SEC pursuant to the requirements of either the Securities Act or the
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and take such further action as any Holders may
reasonably request, all to the extent required to

                                       12

<PAGE>

enable such Holders to be eligible to sell Registrable Common Stock pursuant to
Rule 144 (or any similar rule then in effect).

         The Company may require each seller of Registrable Common Stock as to
which any registration is being effected to furnish to the Company any other
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing.

         Each seller of Registrable Common Stock agrees by having its stock
treated as Registrable Common Stock hereunder that, upon notice of the happening
of any event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits any material
fact necessary to make the statements therein not misleading (a "Suspension
Notice"), such seller will forthwith discontinue disposition of Registrable
Common Stock until such seller is advised in writing by the Company that the use
of the Prospectus may be resumed and is furnished with a supplemented or amended
Prospectus as contemplated by Section 6(e) hereof, and, if so directed by the
Company, such seller will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such seller's possession, of
the Prospectus covering such Registrable Common Stock current at the time of
receipt of such notice; provided, however, that such postponement of sales of
Registrable Common Stock by the Holders shall not exceed ninety (90) days in the
aggregate in any one year. If the Company shall give any notice to suspend the
disposition of Registrable Common Stock pursuant to a Prospectus, the Company
shall extend the period of time during which the Company is required to maintain
the Registration Statement effective pursuant to this Agreement by the number of
days during the period from and including the date of the giving of such notice
to and including the date such seller either is advised by the Company that the
use of the Prospectus may be resumed or receives the copies of the supplemented
or amended Prospectus contemplated by Section 6(e). In any event, the Company
shall not be entitled to deliver more than three (3) Suspension Notices in any
one year.

7.       REGISTRATION EXPENSES.

         (a)      All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, listing application fees, printing expenses, transfer agent's and
registrar's fees, cost of distributing Prospectuses in preliminary and final
form as well as any supplements thereto, and fees and disbursements of counsel
for the Company and all independent certified public accountants and other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses") (but not including any underwriting discounts or
commissions attributable to the sale of Registrable Common Stock or fees and
expenses of more than one counsel representing the Holders of Registrable Common
Stock), shall be borne by the Company. In addition, the Company shall pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit or quarterly

                                       13

<PAGE>

review, the expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on which
they are to be listed.

         (b)      In connection with each registration initiated hereunder
(whether a Demand Registration, Shelf Registration or a Piggyback Registration),
the Company shall reimburse the Holders covered by such registration or sale for
the reasonable fees and disbursements of one law firm chosen by the Holders of a
majority of the number of shares of Registrable Common Stock included in such
registration or sale.

         (c)      The obligation of the Company to bear the expenses described
in Section 7(a) and to reimburse the Holders for the expenses described in
Section 7(b) shall apply irrespective of whether a registration, once properly
demanded, if applicable, becomes effective, is withdrawn or suspended, is
converted to another form of registration and irrespective of when any of the
foregoing shall occur; provided, however, that Registration Expenses for any
Registration Statement withdrawn solely at the request of a Holder of
Registrable Common Stock (unless withdrawn following postponement of filing by
the Company in accordance with Section 2(d)(i) or (ii)) or any supplements or
amendments to a Registration Statement or Prospectus resulting from a
misstatement furnished to the Company by a Holder shall be borne by such Holder.

8.       INDEMNIFICATION.

         (a)      The Company shall indemnify, to the fullest extent permitted
by law, each Holder, its officers, directors and Affiliates and each Person who
controls such Holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses arising out of or based upon
any untrue or alleged untrue statement of material fact contained in any
Registration Statement, Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading or any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or applicable "blue sky" laws, except insofar as the same are made
in reliance and in conformity with information relating to such Holder furnished
in writing to the Company by such Holder expressly for use therein or caused by
such Holder's failure to deliver to such Holder's immediate purchaser a copy of
the Registration Statement or Prospectus or any amendments or supplements
thereto (if the same was required by applicable law to be so delivered) after
the Company has furnished such Holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the Holders.

         (b)      In connection with any Registration Statement in which a
Holder of Registrable Common Stock is participating, each such Holder shall
furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such Registration Statement
or Prospectus and, shall indemnify, to the fullest extent permitted by law, the
Company, its officers, directors, Affiliates, and each Person who controls the
Company (within the meaning of the

                                       14

<PAGE>

Securities Act) against all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue or alleged untrue statement of material
fact contained in the Registration Statement, Prospectus or preliminary
Prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that the
same are made in reliance and in conformity with information relating to such
Holder furnished in writing to the Company by such Holder expressly for use
therein or caused by such Holder's failure to deliver to such Holder's immediate
purchaser a copy of the Registration Statement or Prospectus or any amendments
or supplements thereto (if the same was required by applicable law to be so
delivered) after the Company has furnished such Holder with a sufficient number
of copies of the same; provided, however, that the obligation to indemnify shall
be several, not joint and several, among such Holders and the liability of each
such Holder shall be in proportion to and limited to the net amount received by
such Holder from the sale of Registrable Common Stock pursuant to such
Registration Statement.

         (c)      Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party shall not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party there may be one or more legal or equitable defenses
available to such indemnified party which are in addition to or may conflict
with those available to another indemnified party with respect to such claim.
Failure to give prompt written notice shall not release the indemnifying party
from its obligations hereunder.

         (d)      The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities.

         (e)      If the indemnification provided for in or pursuant to this
Section 8 is due in accordance with the terms hereof, but is held by a court to
be unavailable or unenforceable in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified Person as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
which result in such losses, claims, damages, liabilities or expenses as well as

                                       15

<PAGE>

any other relevant equitable considerations. The relative fault of the
indemnifying party on the one hand and of the indemnified Person on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party, and by such party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. In no event shall the liability of any selling Holder be
greater in amount than the amount of net proceeds received by such Holder upon
such sale or the amount for which such indemnifying party would have been
obligated to pay by way of indemnification if the indemnification provided for
under Section 8(a) or 8(b) hereof had been available under the circumstances.

9.       PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.

         No Person may participate in any registration hereunder that is
underwritten unless such Person (a) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

10.      RULE 144.

         The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as any Holder may reasonably request to make available adequate current public
information with respect to the Company meeting the current public information
requirements of Rule 144(c) under the Securities Act (to the extent such
information is available), to the extent required to enable such Holder to sell
Registrable Common Stock without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder, the
Company will deliver to such Holder a written statement as to whether it has
complied with such information and requirements.

11.      MISCELLANEOUS.

         (a)      Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile or similar writing) and
shall be given,

                  If to the Company:

                           Arbor Realty Trust, Inc.
                           333 Earle Ovington Boulevard
                           Suite 900
                           Attention: Frederick C. Herbst

                                       16

<PAGE>
                           Uniondale, New York 11553
                           Facsimile No.: (516) 832-8043

                  with a copy to:

                           Alston & Bird LLP
                           601 Pennsylvania Avenue, N.W.
                           North Building, 10th Floor
                           Washington, D.C. 20004-2601
                           Attention: Jonathan H. Talcott, Esq.
                           Facsimile No.(202) 756-3333

         If to a transferee Holder, to the address of such Holder set forth in
the transfer documentation provided to the Company;

                  in each case with copies to:

                           Skadden, Arps, Slate, Meagher & Flom LLP
                           Four Times Square
                           New York, New York 10036-6522
                           Attention: David Goldschmidt, Esq.
                           Facsimile No.: (212) 735-2000

or such other address or facsimile number as such party (or transferee) may
hereafter specify for the purpose by notice to the other parties. Each such
notice, request or other communication shall be effective (a) if given by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section and the appropriate facsimile confirmation is received or (b) if
given by any other means, when delivered at the address specified in this
Section.

         (b)      No Waivers. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.

         (c)      Expenses. Except as otherwise provided for herein or otherwise
agreed to in writing by the parties, all costs and expenses incurred in
connection with the preparation of this Agreement shall be paid by the Company.

         (d)      Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, it being understood that subsequent Holders
of the Registrable Common Stock are intended third party beneficiaries hereof.

         (e)      Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of New York, without regard to
principles of conflicts of law.

                                       17

<PAGE>

         (f)      Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal or state court located in the County and State of New York, and each
of the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 10(a) shall be deemed
effective service of process on such party.

         (g)      Waiver of Jury Trial.

                  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

         (h)      Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.

         (i)      Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the transactions contemplated
herein. No provision of this Agreement or any other agreement contemplated
hereby is intended to confer on any Person other than the parties hereto any
rights or remedies.

         (j)      Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.

         (k)      Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.

                                       18

<PAGE>

         (l)      Amendments. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the prior written consent of the holders of a majority of the Conversion
Shares (as constituted on the date hereof); provided, further, that the consent
or agreement of the Company shall be required with regard to any termination,
amendment, modification or supplement of, or waivers or consents to departures
from, the terms hereof, which affect the Company's obligations hereunder.

         (m)      Aggregation of Stock. All Registrable Common Stock held by or
acquired by any Affiliated Persons will be aggregated together for the purpose
of determining the availability of any rights under this Agreement.

         (n)      Equitable Relief. The parties hereto agree that legal remedies
may be inadequate to enforce the provisions of this Agreement and that equitable
relief, including specific performance and injunctive relief, may be used to
enforce the provisions of this Agreement.

                            [Execution Page Follows]

                                       19

<PAGE>

         IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed by each of the parties hereto as of the date first written above.

ARBOR REALTY TRUST, INC.

By: /s/ Frederick C. Herbst
    ----------------------------------------
     Name: Frederick C. Herbst

     Title: Chief Financial Officer, Treasurer and Secretary

ARBOR COMMERCIAL MORTGAGE, LLC


By: /s/ Frederick C. Herbst
    ----------------------------------------
     Name: Frederick C. Herbst
     Title: Chief Financial Officer

                                       20

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>17
<FILENAME>y90410exv10w7.txt
<DESCRIPTION>PAIRING AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.7

                                PAIRING AGREEMENT

         THIS PAIRING AGREEMENT (this "Agreement") is made and entered into as
of July 1, 2003, by and among Arbor Realty Trust, Inc., a Maryland corporation
(the "REIT"), Arbor Commercial Mortgage, LLC, a New York limited liability
company ("ACM"), Arbor Realty LPOP, Inc., a Delaware corporation ("LP"), Arbor
Realty GPOP, Inc., a Delaware corporation ("GP"), and Arbor Realty Limited
Partnership, a Delaware limited partnership (the "OP").

         WHEREAS, concurrently with the execution of this Agreement, the REIT
will file Articles Supplementary (the "Articles Supplementary") to its charter
(as supplemented by the Articles Supplementary, the "REIT Charter") with the
State Department of Assessments and Taxation of Maryland whereby the REIT will
reclassify and designate 5,000,000 shares of its Preferred Stock as shares of
Special Voting Preferred Stock, par value $0.01 per share (the "Special Voting
Stock");

         WHEREAS, concurrently with the execution of this Agreement, ACM and the
OP are entering into a Contribution Agreement pursuant to which ACM will
transfer certain assets and related liabilities to the OP and, in exchange
therefor, the OP will issue to ACM (i) 3,146,724 operating partnership units of
the OP (the "Initial OP Units") and (ii) 629,345 warrants (the "ACM Warrants"),
which entitle the holders to purchase additional operating partnership units of
the OP (the "Warrant OP Units" and, together with the Initial OP Units, the
"Paired Common Units");

         WHEREAS, concurrently with the issuance of the Initial OP Units, the
REIT will issue to ACM 3,146,724 shares of Special Voting Stock and, upon the
exercise of each ACM Warrant, the REIT will issue to the holder thereof a number
of shares of Special Voting Stock equal to the number of Warrant OP Units issued
by the OP in connection with the exercise of such ACM Warrant;

         WHEREAS, the REIT Charter provides that the REIT shall not issue or
agree to issue any shares of Special Voting Stock unless effective provision has
been made for the simultaneous issuance by the OP of the same number of
operating partnership units of the OP, and for the pairing of such shares of
Special Voting Stock and operating partnership units;

         WHEREAS, the OP and the REIT wish to enter into this Agreement for the
purpose of further effectuating the pairing of shares of Special Voting Stock
and the

<PAGE>

Paired Common Units (the "Pairing"), including the establishment of the
terms and conditions which will govern the issuance and the transfer of the
shares of Special Voting Stock and the Paired Common Units.

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements contained herein, the parties hereto agree as follows:

1.       Transfer of Shares. Commencing on the date hereof and continuing until
         such time as this Agreement shall have been terminated in the manner
         provided herein:

         a.       No share of Special Voting Stock shall be transferable, and no
                  such share shall be transferred on the stock transfer books of
                  the REIT, unless a simultaneous transfer is made by the same
                  transferor to the same transferee of the same number of Paired
                  Common Units.

         b.       No Paired Common Unit shall be transferable, and no Paired
                  Common Unit shall be transferred on the books of the OP,
                  unless a simultaneous transfer is made by the same transferor
                  to the same transferee of the same number of shares of Special
                  Voting Stock.

         c.       Notwithstanding anything to the contrary contained herein,
                  upon any acquisition by the OP, the LP, the GP or the REIT of
                  any Paired Common Units and any shares of Special Voting Stock
                  (whether pursuant to Section 8.6 of the OP Agreement or
                  otherwise), all restrictions on transfer set forth in this
                  Agreement with respect to such Paired Common Units so acquired
                  shall terminate, and any Paired Common Units acquired by the
                  OP, the LP, the GP or the REIT may be transferred without
                  regard to the restrictions set forth in this Agreement. The
                  shares of Special Voting Stock shall be redeemed and cancelled
                  in accordance with the terms of the Articles Supplementary.

         d.       In the event that any shares of Special Voting Stock are
                  transferred to a trust pursuant to the provisions of Section
                  7.2(b) of the REIT Charter, all of the Paired Common Units
                  paired with such shares shall be

                                       2
<PAGE>

                  automatically transferred to such trust concurrently therewith
                  and shall be subject to all the provisions of Section 7.3 of
                  the REIT Charter to the same extent that the attached shares
                  of Special Voting Stock are so subject.

2.       Issuance of Securities. Commencing on the date hereof and continuing
         until such time as this Agreement shall have been terminated in the
         manner provided herein:

         a.       The REIT shall not issue or agree to issue any shares of
                  Special Voting Stock to any person unless effective provision
                  has been made for the simultaneous issuance or transfer to the
                  same person of the same number of Paired Common Units and for
                  the pairing of such shares of Special Voting Stock and Paired
                  Common Units.

         b.       The OP shall not issue or agree to issue any Paired Common
                  Units to any person unless effective provision has been made
                  for the simultaneous issuance or transfer to the same person
                  of the same number of shares of Special Voting Stock and for
                  the pairing of such Paired Common Units and shares of Special
                  Voting Stock.

         c.       Upon the issuance by the REIT of a share of Special Voting
                  Stock to any person, the REIT shall contribute any cash
                  proceeds or other consideration received from the issuance of
                  such share (the "Per Share REIT Consideration") to the LP,
                  which, in turn, shall contribute such Per Share REIT
                  Consideration to the OP in exchange for one Class A Preferred
                  Unit of the OP (a "Preferred Unit").

3.       Stock Certificates. Commencing on the date hereof and continuing until
         such time as this Agreement shall have been terminated in the manner
         provided herein:

         a.       Each certificate which is issued representing shares of
                  Special Voting Stock shall be printed "back-to-back" with a
                  certificate evidencing the

                                       3
<PAGE>

                  same number of Paired Common Units and shall bear a
                  conspicuous legend (on the face thereof) referring to the
                  restrictions on transfer set forth in Section 5 of the
                  Articles Supplementary and this Agreement.

         b.       Each certificate which is issued evidencing Paired Common
                  Units shall be printed "back-to-back" with a certificate
                  representing the same number of shares of Special Voting Stock
                  and shall bear a conspicuous legend (on the face thereof)
                  referring to the restrictions on transfer set forth in this
                  Agreement.

4.       Redemption by the OP or Acquisition by the REIT of Paired Common Units.
         Commencing on the date hereof and continuing until such time as this
         Agreement shall have been terminated in the manner provided herein:

         a.       Prior to the redemption of any shares of Special Voting Stock
                  pursuant to Section 8 of the Articles Supplementary (the
                  "Shares"):

                  i.       The OP shall redeem a number of Preferred Units equal
                           to the number of Shares for $.01 in cash per
                           Preferred Unit pursuant to Section 4.11 of the
                           partnership agreement of the OP, which amount shall
                           be paid in its entirety in immediately available
                           funds to the LP (the "LP Payment").

                  ii.      Immediately following the completion of the LP
                           Payment, the LP shall distribute the proceeds of such
                           LP Payment to the REIT in immediately available
                           funds, which amount shall be set aside by the REIT,
                           separate and apart from its other funds, to redeem
                           the Shares pursuant to Section 8 of the Articles
                           Supplementary.

                                       4
<PAGE>

         b.       All shares of Special Voting Stock redeemed by the REIT
                  pursuant to Section 8 of the Articles Supplementary shall be
                  cancelled automatically and shall become authorized but
                  unissued shares of Special Voting Stock in accordance with the
                  Articles Supplementary, and all certificates representing such
                  shares held by the OP shall be delivered to the REIT for
                  cancellation promptly following the effectiveness of such
                  redemption.

5.       Stock Dividends, Reclassifications, etc. Commencing on the date hereof
         and continuing until such time as this Agreement shall have been
         terminated in the manner provided herein:

         a.       The REIT shall not (i) declare or pay any dividend in respect
                  of the outstanding shares of Special Voting Stock consisting
                  in whole or in part of shares of Special Voting Stock, or (ii)
                  subdivide, combine or otherwise reclassify the outstanding
                  shares of Special Voting Stock.

         b.       The OP shall not (i) declare or pay any dividend in respect of
                  the outstanding Paired Common Units consisting in whole or in
                  part of operating partnership units paired with shares of
                  Special Voting Stock, or (ii) subdivide, combine or otherwise
                  reclassify the outstanding Paired Common Units.

6.       Termination. This Agreement and the Pairing may be terminated by mutual
         consent of the REIT, GP, LP and the OP.

7.       Transfers. No Transfer of shares of Special Voting Stock or the Paired
         Common Units paired thereto may be made to any person, unless in each
         case prior to such Transfer any such transferee agrees in writing to be
         bound by the terms and conditions of this Agreement pursuant to a
         supplementary agreement reasonably satisfactory in form and substance
         to the REIT and the OP. For purposes of this Section 7, the term
         "Transfer" shall mean any direct or indirect sale, assignment,
         mortgage, transfer, pledge, gift, hypothecation or other disposition or
         transfer of, or any act creating a trust (voting or otherwise) with
         respect to shares of Special Voting Stock or the Paired Common

                                       5
<PAGE>

         Units paired thereto.

8.       No Restrictions on Issuances of Unpaired OP Units. This Agreement shall
         not be deemed to impose any restrictions or limitations on the ability
         of the OP to issue operating partnership units (other than the Paired
         Common Units or Preferred Units) that are not paired to shares of
         Special Voting Stock.

9.       Amendment. This Agreement may be amended by the parties hereto by
         action taken or authorized by the Board of Directors of the REIT, LP
         and GP. This Agreement may not be amended except by an instrument in
         writing signed on behalf of each of the REIT, LP, GP and the OP.

10.      Counterparts. This Agreement may be executed in counterparts, and each
         such counterpart hereof shall be deemed to be an original instrument,
         but all such counterparts together shall constitute but one agreement.

11.      Governing Law. This Agreement shall be governed by, and construed in
         accordance with, the laws of the State of Maryland.

12.      Entire Agreement. This Agreement contains the entire understanding and
         agreement between the parties with respect to its subject matter, and
         any and all conflicting or inconsistent discussions, agreements,
         promises, representations and statements, if any, between the parties
         or their representatives that are not incorporated in this Agreement
         shall be merged into this Agreement.

13.      Headings. The various section headings are inserted for the purposes of
         reference only and shall not affect the meaning or interpretation of
         this Agreement or any provision hereof.

14.      Severability. The provisions of this Agreement shall be severable, and
         any invalidity, unenforceability or illegality of any provision or
         provisions of this Agreement shall not affect any other provision or
         provisions of this Agreement, and each term and provision of this
         Agreement shall be construed to be

                                       6
<PAGE>

         valid and enforceable to the full extent permitted by law.

                                       7
<PAGE>

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first written above.

                               ARBOR REALTY TRUST, INC.

                               By: /s/ Frederick C. Herbst
                                   ---------------------------------------------
                                   Name: Frederick C. Herbst
                                   Title: Chief Financial Officer, Treasurer
                                          and Secretary

                               ARBOR REALTY LIMITED PARTNERSHIP

                               By: Arbor Realty GPOP, Inc., its general
                                        partner

                                        By: /s/ Frederick C. Herbst
                                            ------------------------------------
                                            Name: Frederick C. Herbst
                                            Title: Secretary and Treasurer

                               ARBOR COMMERCIAL MORTGAGE, LLC

                               By: /s/ Frederick C. Herbst
                                   ---------------------------------------------
                                   Name: Frederick C. Herbst
                                   Title: Chief Financial Officer

<PAGE>

                               ARBOR REALTY LPOP, INC.

                               By: /s/ Frederick C. Herbst
                                   ---------------------------------------------
                                   Name: Frederick C. Herbst
                                   Title: Secretary and Treasurer

                               ARBOR REALTY GPOP, INC.

                               By: /s/ Frederick C. Herbst
                                   ---------------------------------------------
                                   Name: Frederick C. Herbst
                                   Title: Secretary and Treasurer

                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>18
<FILENAME>y90410exv10w8.txt
<DESCRIPTION>2003 OMNIBUS STOCK INCENTIVE PLAN
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.8

                            ARBOR REALTY TRUST, INC.

                        2003 OMNIBUS STOCK INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

                  The name of this plan is the Arbor Realty Trust, Inc. 2003
Omnibus Stock Incentive Plan (the "Plan"). The Plan was adopted by the Board
(defined below) on June 25, 2003 and approved by the stockholders of the Company
(defined below) on July 1, 2003. The purpose of the Plan is to enable the
Company to attract and retain highly qualified personnel who will contribute to
the Company's success and to provide incentives to Participants (defined below)
that are linked directly to stockholder value and will therefore inure to the
benefit of all stockholders of the Company.

                  For purposes of the Plan, the following terms shall be defined
as set forth below:

                  (a)      "Administrator" means the Board, or if and to the
extent the Board does not administer the Plan, the Committee in accordance with
Section 2 below.

                  (b)      "Award" means any award under the Plan.

                  (c)      "Award Agreement" means, with respect to each Award,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.

                  (d)      "Board" means the Board of Directors of the Company.

                  (e)      "Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.

                  (f)      "Committee" means any committee the Board may appoint
to administer the Plan. If at any time or to any extent the Board shall not
administer the

<PAGE>

Plan, then the functions of the Board specified in the Plan shall be exercised
by the Committee.

                  (g)      "Common Stock" means the common stock, par value $.01
per share, of the Company.

                  (h)      "Company" means Arbor Realty Trust, Inc., a Maryland
corporation (or any successor corporation).

                  (i)      "Disability" means the inability of a Participant to
perform substantially his or her duties and responsibilities to the Company or
to any Parent or Subsidiary by reason of a physical or mental disability or
infirmity (i) for a continuous period of six months, or (ii) at such earlier
time as the Participant submits medical evidence satisfactory to the
Administrator that the Participant has a physical or mental disability or
infirmity that will likely prevent the Participant from returning to the
performance of the Participant's work duties for six months or longer. The date
of such Disability shall be the last day of such six-month period or the day on
which the Participant submits such satisfactory medical evidence, as the case
may be.

                  (j)      "Eligible Recipient" means an officer, director,
employee, consultant (including employees of the Manager who provide services to
the Company) or advisor of the Company or of any Parent or Subsidiary.

                  (k)      "Fair Market Value" as of a particular date shall
mean the fair market value of a share of Common Stock as determined by the
Administrator in its sole discretion; provided, however, that (i) if the Common
Stock is admitted to trading on a national securities exchange, fair market
value of a share of Common Stock on any date shall be the closing sale price
reported for such share on such exchange on such date or, if no sale was
reported on such date, on the last date preceding such date on which a sale was
reported, (ii) if the Common Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation ("Nasdaq") System or other
comparable quotation system and has been designated as a National Market System
("NMS") security, fair market value of a share of Common Stock on any date shall
be the closing sale price reported for such share on such system on such date
or, if no sale was reported on such date, on the last date preceding such date
on which a sale was reported, or (iii) if the Common Stock is admitted to
quotation on the Nasdaq System but has not been designated as an NMS security,
fair market value of a share of Common Stock on any date shall be the average of
the highest bid and lowest asked prices of such share on such system

                                       2
<PAGE>

on such date or, if no bid and ask prices were reported on such date, on the
last date preceding such date on which both bid and ask prices were reported.

                  (l)      "Manager" means Arbor Commercial Mortgage, LLC, a New
York limited liability company.

                  (m)      "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.

                  (n)      "Participant" means any Eligible Recipient selected
by the Administrator, pursuant to the Administrator's authority in Section 2
below, to receive awards of Restricted Stock.

                  (o)      "Restricted Stock" means Shares subject to certain
restrictions granted pursuant to Section 6 below.

                  (p)      "Shares" means shares of Common Stock reserved for
issuance under the Plan, as adjusted pursuant to Sections 3 and 4, and any
successor security.

                  (q)      "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.

SECTION 2. ADMINISTRATION.

                  The Plan shall be administered by the Board or, at the Board's
sole discretion, by the Committee, which shall be appointed by the Board, and
which shall serve at the pleasure of the Board. Pursuant to the terms of the
Plan, the Administrator shall have the power and authority:

                  (a)      to select those Eligible Recipients who shall be
Participants;

                  (b)      to determine whether and to what extent awards of
Restricted Stock are to be granted hereunder to Participants;

                                       3
<PAGE>

                  (c)      to determine the number of Shares to be covered by
each Award granted hereunder;

                  (d)      to determine the terms and conditions, not
inconsistent with the terms of the Plan, of each Award granted hereunder; and

                  (e)      to determine the terms and conditions, not
inconsistent with the terms of the Plan, which shall govern all written
instruments evidencing awards of Restricted Stock granted hereunder.

                  The Administrator shall have the authority, in its sole
discretion, to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable; to
interpret the terms and provisions of the Plan and any Award issued under the
Plan (and any Award Agreement relating thereto); and to otherwise supervise the
administration of the Plan.

                  All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants.

SECTION 3. SHARES SUBJECT TO PLAN.

                  The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be 185,000 shares. Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.

                  To the extent that any Shares subject to any award of
Restricted Stock are forfeited, such Shares shall again be available for
issuance in connection with future Awards granted under the Plan.

SECTION 4. CORPORATE TRANSACTIONS.

                  In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure
affecting the Common Stock, an equitable substitution or proportionate
adjustment shall be made in (i) the aggregate number of Shares reserved for
issuance under the Plan, and (ii)

                                       4
<PAGE>

the kind, number and purchase price of Shares subject to outstanding awards of
Restricted Stock granted under the Plan, in each case as may be determined by
the Administrator, in its sole discretion. Such other substitutions or
adjustments shall be made as may be determined by the Administrator, in its sole
discretion. In connection with any event described in this paragraph, the
Administrator may provide, in its sole discretion, for the cancellation of any
outstanding awards and payment in cash or other property therefor.

SECTION 5. ELIGIBILITY.

                  Eligible Recipients shall be eligible to be granted awards of
Restricted Stock or other awards. The Participants under the Plan shall be
selected from time to time by the Administrator, in its sole discretion, from
among the Eligible Recipients.

SECTION 6. RESTRICTED STOCK.

                  Awards of Restricted Stock may be issued either alone or in
addition to other Awards granted under the Plan. The Administrator shall
determine the Eligible Recipients to whom, and the time or times at which,
awards of Restricted Stock shall be made; the number of Shares to be awarded;
the price, if any, to be paid by the Participant for the acquisition of
Restricted Stock; the Restricted Period (as defined in Section 6(b)) applicable
to awards of Restricted Stock. The Administrator may also condition the grant of
the award of Restricted Stock upon any such criteria as the Administrator may
determine, in its sole discretion. The provisions of the awards of Restricted
Stock need not be the same with respect to each Participant.

                  (a)      Awards and Certificates. The prospective recipient of
awards of Restricted Stock shall not have any rights with respect to any such
Award, unless and until such recipient has executed an Award Agreement
evidencing the Award (a "Restricted Stock Award Agreement") and delivered a
fully executed copy thereof to the Company, within a period of sixty days (or
such other period as the Administrator may specify) after the award date. Except
as otherwise provided below in Section 6(b), each Participant who is granted an
award of Restricted Stock shall be issued a stock certificate in respect of such
shares of Restricted Stock, which certificate shall be registered in the name of
the Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to any such Award.

                                       5
<PAGE>

                  The Company may require that the stock certificates evidencing
Restricted Stock granted hereunder be held in the custody of the Company until
the restrictions thereon shall have lapsed, and that, as a condition of any
award of Restricted Stock, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Shares covered by such Award.

                  (b)      Restrictions and Conditions. The awards of Restricted
Stock granted pursuant to this Section 6 shall be subject to the following
restrictions and conditions:

                           (i)      Subject to the provisions of the Plan and
         the Restricted Stock Award Agreement governing any such Award, during
         such period as may be set by the Administrator commencing on the date
         of grant (the "Restricted Period"), the Participant shall not be
         permitted to sell, transfer, pledge or assign shares of Restricted
         Stock awarded under the Plan; provided, however, that the Administrator
         may, in its sole discretion, provide for the lapse of such restrictions
         in installments and may accelerate or waive such restrictions in whole
         or in part based on such factors and such circumstances as the
         Administrator may determine, in its sole discretion.

                           (ii)     Except as provided in Section 6(b)(i), the
         Participant shall generally have the rights of a stockholder of the
         Company with respect to Restricted Stock during the Restricted Period.
         Certificates for unrestricted Shares shall be delivered to the
         Participant promptly after, and only after, the Restricted Period shall
         expire without forfeiture in respect of such awards of Restricted Stock
         except as the Administrator, in its sole discretion, shall otherwise
         determine.

                           (iii)    The rights of Participants granted awards of
         Restricted Stock upon termination of employment or service as a
         director, consultant or advisor to the Company or to any Parent or
         Subsidiary terminates for any reason during the Restricted Period shall
         be set forth in the Restricted Stock Award Agreement governing such
         Awards.

SECTION 7. AMENDMENT AND TERMINATION.

                                       6
<PAGE>

                  The Board may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that would impair the
rights of a Participant under any Award theretofore granted without such
Participant's consent. To the extent necessary and desirable, the Board shall
obtain approval of the stockholders (as described below), for any amendment that
would:

                  (a)      except as provided in Sections 3 or 4 of the Plan,
increase the total number of Shares reserved for issuance under the Plan; or

                  (b)      change the class of officers, directors, employees,
consultants and advisors eligible to participate in the Plan.

                  The Administrator may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Section 4 of Plan, no
such amendment shall impair the rights of any Participant without his or her
consent.

SECTION 8. UNFUNDED STATUS OF PLAN.

                  The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.

SECTION 9. GENERAL PROVISIONS.

                  (a)      Shares shall not be issued pursuant to any Award
granted hereunder unless such Award and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and the requirements of any stock exchange
upon which the Common Stock may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.

                  (b)      The Administrator may require each person acquiring
Shares to represent to and agree with the Company in writing that such person is
acquiring the Shares without a view to distribution thereof. The certificates
for such Shares may

                                       7
<PAGE>

include any legend which the Administrator deems appropriate to reflect any
restrictions on transfer.

                  All certificates for Shares delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Administrator may cause a legend or legends to be placed
on any such certificates to make appropriate reference to such restrictions.

                  (c)      Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval, if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any Eligible Recipient any right to continued
employment or service with the Company or any Parent or Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or any
Parent or Subsidiary to terminate the employment or service of any of its
Eligible Recipients at any time.

                  (d)      Each Participant shall, no later than the date as of
which the value of an Award first becomes includible in the gross income of the
Participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such Award. The obligations of the Company under the Plan shall be
conditional on the Participant's making of such payments or arrangements, and
the Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.

                  (e)      No member of the Board or the Administrator, nor any
officer or employee of the Company acting on behalf of the Board or the
Administrator, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Administrator and each and any officer or employee
of the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

SECTION 10. STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.

                                       8
<PAGE>

                  (a)      The grant of any Award hereunder shall be contingent
upon stockholder approval of the Plan being obtained within 12 months before or
after the date the Board adopts the Plan.

                  (b)      Subject to the approval of the Plan by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted by the Board, the Plan shall be effective as of June 25,
2003 (the "Effective Date").

SECTION 11. TERM OF PLAN.

                  No Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the Effective Date, but Awards theretofore granted may
extend beyond that date.

SECTION 12. GOVERNING LAW.

                  This Plan and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of New York,
notwithstanding any New York or other conflict-of-law provisions to the
contrary.

                                       9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>19
<FILENAME>y90410exv10w9.txt
<DESCRIPTION>FORM OF RESTRICTED STOCK AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.9

                                     FORM OF
                           RESTRICTED STOCK AGREEMENT
                                 PURSUANT TO THE
                            ARBOR REALTY TRUST, INC.
                        2003 OMNIBUS STOCK INCENTIVE PLAN

                  THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is made by
and between [Insert Name of Grantee] ("Grantee") and Arbor Realty Trust, Inc., a
Maryland corporation (the "Company"), as of [Insert Date of Agreement].

                  WHEREAS, Grantee is currently [a director of the Company] [an
executive officer of the Company] [an employee of the Company] [an employee of
Arbor Commercial Mortgage, LLC, a New York limited liability company ("ACM"),
who provides consulting services to the Company that are not in connection with
the offer or sale of securities in a capital raising transaction or promoting or
maintaining a market for securities of the Company (a "Consultant") pursuant to
the terms of that certain Management Agreement, dated as of July 1, 2003 (the
"Management Agreement"), by and among the Company, Arbor Realty Limited
Partnership, a Delaware limited partnership and the operating partnership of the
Company ("ARLP") and ACM, which provides for the management of the operations of
the Company and ARLP by ACM]; and

                  WHEREAS, the Company has adopted the Arbor Realty Trust, Inc.
2003 Omnibus Stock Incentive Plan (the "Plan"), which provides for awards of
restricted stock to selected officers, directors, employees, consultants and
advisors; and

                  WHEREAS, on [Insert Date of Agreement] (the "Date of Grant"),
the Board of Directors (the "Board") of the Company awarded the Grantee [Insert
Number of Shares] shares of the Company's common stock, par value $0.01 (the
"Common Stock"), pursuant to, and subject to the terms and provisions of the
Plan.

                  NOW, THEREFORE, in consideration of the Grantee's services to
the Company and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

                  1.       Grant of Restricted Stock. Company hereby grants to
Grantee [Insert Number of Shares] shares of restricted Common Stock and Grantee
hereby accepts such shares, pursuant to and subject to the terms and provisions
of the Plan and the Agreement (the "Restricted Stock").

                  2.       Incorporation by Reference, Etc. The provisions of
the Plan are hereby incorporated herein by reference. Except as otherwise
expressly set forth herein, this Agreement shall be construed in accordance with
the provisions of the Plan and any capitalized terms not otherwise defined in
this Agreement shall have the definitions set forth in the Plan. The
Administrator shall have final authority to interpret and construe the Plan and
this Agreement and to make any and all determinations thereunder, and its

<PAGE>

decision shall be binding and conclusive upon the Grantee and his/her legal
representative in respect of any questions arising under the Plan or this
Agreement.

                  3.       Escrow of Restricted Stock. To insure the
availability for delivery of the Grantee's Restricted Stock, the Grantee hereby
appoints the Secretary of the Company, or any other person designated by the
Company as escrow agent, as its attorney-in-fact to assign and transfer unto the
Company such Restricted Stock, if any, forfeited by the Grantee pursuant to
Section 6 below and shall, upon execution of this Agreement, deliver and deposit
with the Secretary of the Company, or such other person designated by the
Company, the share certificates representing the Restricted Stock, together with
the stock assignment duly endorsed in blank, attached hereto as Exhibit A. The
Restricted Stock and stock assignment shall be held by the Secretary in escrow,
pursuant to the Joint Escrow Instructions of the Company and the Grantee
attached hereto as Exhibit B, until the Restricted Period (as defined below) has
lapsed with respect to the shares of Restricted Stock, or until such time as
this Agreement no longer is in effect. Upon such time as the Restricted Period
has lapsed pursuant to the schedule set forth in Section 4 below and subject to
the forfeiture provisions of Section 6 below, the escrow agent shall promptly
deliver to the Grantee the certificate or certificates representing such shares
of Restricted Stock in the escrow agent's possession belonging to the Grantee in
accordance with the terms of the Joint Escrow Instructions, and the escrow agent
shall be discharged of all further obligations hereunder; provided, however,
that the escrow agent shall nevertheless retain such certificate or certificates
if so required pursuant to other restrictions imposed pursuant to this
Agreement.

                  4.       Restrictions and Restricted Period.

                           a. Restrictions. Shares of Restricted Stock granted
hereunder may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of and shall be subject to a risk of forfeiture as described
in Section 6 below until the lapse of the Restricted Period (as defined below).

                           b. Restricted Period. Unless the Restricted Period is
previously terminated pursuant to Section 6 of this Agreement, the restrictions
set forth above shall lapse and the shares of Restricted Stock shall become
fully and freely transferable (provided, that such transfer is otherwise in
accordance with federal and state securities laws) and non-forfeitable as to
[Insert Vesting Terms] of the shares of Restricted Stock (rounded down to the
nearest whole share) on the Date of Grant and as to an additional [Insert
Vesting Terms] of the shares of Restricted Stock (rounded down to the nearest
whole share) on the [Insert Vesting Dates] anniversary of the Date of Grant (the
"Restricted Period") as set forth below:

<TABLE>
<CAPTION>
Date of Grant or Release            Fraction of Shares Released
 from Restricted Period               from Restricted Period
------------------------            ---------------------------
<S>                                 <C>
[Insert Date of Agreement]             [Insert Vesting Terms]

[Insert Vesting Date]                  [Insert Vesting Terms]
</TABLE>

<PAGE>

<TABLE>
<S>                                    <C>
[Insert Vesting Date]                  [Insert Vesting Terms]

[Insert Vesting Date]                  [Insert Vesting Terms]
</TABLE>

Notwithstanding anything to the contrary, the release of the shares of
Restricted Stock hereunder shall be conditioned upon Grantee making adequate
provision for federal, state or other tax withholding obligations, if any, which
arise upon the release of the shares from the Restricted Period (unless a
Section 83(b) election has been filed), whether by withholding, direct payment
to the Company, or otherwise.

                           c. Change in Control. Notwithstanding anything in
this Agreement to the contrary, in the event of a Change in Control, all
restrictions shall lapse as of the date of the Change in Control. A "Change in
Control" shall occur if:

                                    i.       any "person", as such term is used
         in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
         amended (the "Exchange Act"), is or becomes the "beneficial owner", as
         such term is used in Rule 13d-3 under the Exchange Act, directly or
         indirectly, of securities of the Company (not including in the
         securities beneficially owned by such person any securities acquired
         directly from the Company or its affiliates) representing 25% or more
         of the combined voting power of the Company's then outstanding
         securities, excluding any person who becomes such a beneficial owner in
         connection with a transaction described in clause (A) of paragraph
         (iii) below; or

                                    ii.      the following individuals cease for
         any reason to constitute a majority of the number of directors then
         serving: individuals who, on the date hereof, constitute the Board and
         any new director (other than a director whose initial assumption of
         office is in connection with an actual or threatened election contest,
         including but not limited to a consent solicitation, relating to the
         election of directors of the Company) whose appointment or election by
         the Board or nomination for election by the Company's stockholders was
         approved or recommended by a vote of at least two-thirds (2/3) of the
         directors then still in office who either were directors on the date
         hereof or whose appointment, election or nomination for election was
         previously so approved or recommended; or

                                    iii.     there is consummated a merger or
         consolidation of the Company or any direct or indirect subsidiary of
         the Company with any other corporation, other than (A) a merger or
         consolidation which would result in the voting securities of the
         Company outstanding immediately prior to such merger or consolidation
         continuing to represent (either by remaining outstanding or by being
         converted into voting securities of the surviving entity or any parent
         thereof), at least 60% of the combined voting power of the securities
         of the Company or such surviving entity or any parent thereof
         outstanding immediately after such merger or consolidation, or (B) a
         merger or consolidation effected to

<PAGE>

         implement a recapitalization of the Company (or similar transaction) in
         which no person is or becomes the "beneficial owner", directly or
         indirectly, of securities of the Company (not including in the
         securities "beneficially owned", as such term is used in Rule 13d-3
         under the Exchange Act, by such person any securities acquired directly
         from the Company or its affiliates) representing 25% or more of the
         combined voting power of the Company's then outstanding securities; or

                                    iv.      the stockholders of the Company
         approve a plan of complete liquidation or dissolution of the Company or
         there is consummated an agreement for the sale or disposition by the
         Company of all or substantially all of the Company's assets, other than
         a sale or disposition by the Company of all or substantially all of the
         Company's assets to an entity, at least 60% of the combined voting
         power of the voting securities of which are owned by stockholders of
         the Company in substantially the same proportions as their ownership of
         the Company immediately prior to such sale.

                  5.       Rights of a Stockholder. From and after the Date of
Grant and for so long as the Restricted Stock is held by or for the benefit of
the Grantee, the Grantee shall have all the rights of a stockholder of the
Company with respect to the Restricted Stock, including, but not limited to, the
right to receive dividends and the right to vote such shares of Restricted
Stock.

                  6.       Cessation of Service. In the event of the Cessation
of Service (as defined below), the shares of Restricted Stock and any and all
accrued but unpaid dividends that at that time have not been released from the
Restricted Period, shall be forfeited to the Company without payment of any
consideration by the Company, and neither the Grantee nor any of his successors,
heirs, assigns, or personal representatives shall thereafter have any further
rights or interests in such shares of Restricted Stock or certificates.

         The "Cessation of Service" means the cessation of all services of
Grantee to the Company which shall be deemed to occur [at the time of Grantee's
termination of employment by the Company for any reason.] [at such time that the
Grantee no longer serves as a director of the Company for any reason.] [at such
time that the Grantee no longer serves as an executive officer of the Company
for any reason.] [at such time that the Grantee no longer serves as a Consultant
for any reason. For the avoidance of doubt, the cessation of Grantee's service
as a Consultant shall be deemed to occur upon the earlier of (i) the cessation
of the Grantee's employment with ACM, or (ii) the later of the termination or
regular expiration of (A) the Management Agreement or (B) the Origination Period
(as defined in the Management Agreement).]

         [Insert the following Section 7 in the Restricted Stock Agreement with
each director and executive officer:

                  7.       Representations and Warranties of the Grantee. The
Grantee hereby

<PAGE>

represents and warrants to the Company and to each officer, director,
controlling person and agent of the Company:

                           a. The Grantee is an individual "accredited
investor", as defined in Rule 501(a)(4) under the Securities Act of 1933, as
amended (the "Securities Act"), in that the Grantee is a director, executive
officer or general partner of the Company.

                           b. The Grantee is acquiring the Restricted Stock not
with a view to distribution or resale thereof or with any present intention of
offering or selling the shares of Restricted Stock in violation of the
Securities Act, the Plan, this Agreement or the Articles of Incorporation of the
Company and the Grantee will not sell or offer to sell or otherwise transfer the
shares of Restricted Stock in violation of the Securities Act, the Plan, this
Agreement or the Articles of Incorporation of the Company.

                           c. The Grantee acknowledges that the Grantee has been
provided an opportunity to examine all documents and ask questions of, and has
received answers thereto from the Company and its representatives regarding the
business, management, and financial affairs of the Company and its subsidiaries,
and the Grantee has obtained all information requested by him or her of the
Company and its subsidiaries with respect to the acquisition of the Restricted
Stock.

                           d. The Grantee has reviewed the terms and conditions
of the Plan, provided to the Grantee by the Company, and the Grantee has
conducted his or her own examination of the Company, the offering of the
Restricted Stock and the Plan, including the merits and risks involved, in
making an investment decision with respect to the Restricted Stock. The Grantee
represents that the offering of the Restricted Stock was made only through
direct, personal communication between the Grantee and the Company and its
representatives and not through public solicitation or advertising.

                           e. The Grantee understands that (i) the shares of
Restricted Stock have not been registered under the Securities Act, in reliance
on an exemption from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof; (ii) the Company has no obligation to register
the Restricted Stock under the Securities Act or any state securities laws;
(iii) the shares or Restricted Stock are subject to strict restrictions on
transferability and may only be transferred in accordance with the Plan, this
Agreement, the Articles of Incorporation of the Company and the Securities Act;
(iv) the certificates, if any, representing shares of the Restricted Stock will
bear a legend to such effect, and (v) the Company will make a notation on its
transfer books to such effect.

                           f. The Grantee is able to bear the economic risk of
an investment in the Restricted Stock and has adequate income independent of any
income produced from an investment in the Restricted Stock to sustain a loss of
all of his or her investment in the Restricted Stock without economic hardship
if such loss should occur.

                           g. The Grantee is a bona fide resident and
domiciliary of the state set forth on the signature page hereof and has no
present intention to become a resident of any other state or jurisdiction.

<PAGE>

                           h. The Grantee acknowledges that the Company will
rely upon the Grantee's acknowledgements, representations and warranties set
forth in this Agreement, and the Grantee agrees to notify the Company promptly
if any representation or warranty in this Agreement ceases to be accurate and
complete.]

                  8.       Certificates. Restricted Stock granted herein may be
evidenced in such manner as the Administrator shall determine. If certificates
representing the shares of Restricted Stock are registered in the name of the
Grantee, then the Company shall retain physical possession of the certificate.

                  9.       Legends. All certificates representing any of the
shares of Restricted Stock subject to the provisions of this Agreement shall
have endorsed thereon the following legend:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
                  CERTAIN RESTRICTIONS UPON TRANSFER AS SET FORTH IN A
                  RESTRICTED STOCK AGREEMENT, DATED AS OF [INSERT DATE OF
                  AGREEMENT], BETWEEN THE COMPANY AND THE HOLDER OF THE SHARES,
                  A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
                  COMPANY."

                  10.      Tax Consequences. Set forth below is a brief summary
as of the Date of Grant of certain United States federal tax consequences of the
award of the Restricted Stock. THIS SUMMARY DOES NOT ADDRESS SPECIFIC STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES THAT MAY BE APPLICABLE TO GRANTEE. GRANTEE
UNDERSTANDS THAT THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE.

                  The Grantee shall recognize ordinary income at the time or
times the restrictions lapse with respect to the shares of Restricted Stock that
have been released from the Restricted Period in an amount equal to the Fair
Market Value (as such value is determined in accordance with Section 1(k) of the
Plan) of such shares of Restricted Stock on each such date and the Company shall
be required to collect all the applicable withholding taxes with respect to such
income. The obligations of the Company under the Plan are conditioned on your
making arrangements for the payment of any such taxes.

                  11.      Section 83(b) Election. The Grantee hereby
acknowledges that he has been informed that, with respect to the grant of
Restricted Stock, an election may be filed by the Grantee with the Internal
Revenue Service, within 30 days of the Date of Grant, electing pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended, to be taxed
currently on the Fair Market Value of the Restricted Stock on the Date of Grant.

THE GRANTEE ACKNOWLEDGES THAT IT IS THE GRANTEE'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN
IF THE GRANTEE REQUESTS THE

<PAGE>

COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON THE GRANTEE'S BEHALF.

BY SIGNING THIS AGREEMENT, THE GRANTEE REPRESENTS THAT HE HAS REVIEWED WITH HIS
OWN TAX ADVISORS THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THAT HE IS RELYING SOLELY ON
SUCH ADVISORS AND NOT ON ANY STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY
OF ITS AGENTS. THE GRANTEE UNDERSTANDS AND AGREES THAT HE (AND NOT THE COMPANY)
SHALL BE RESPONSIBLE FOR ANY TAX LIABILITY THAT MAY ARISE AS A RESULT OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

                  12.      Termination of this Agreement. Upon termination of
this Agreement, all rights of the Grantee hereunder shall cease.

                  13.      Miscellaneous.

                           a. Notices. Any notice required or permitted under
this Agreement shall be deemed given when delivered personally, or when
deposited in a United States Post Office, postage prepaid, addressed, as
appropriate, to the Grantee either at his address herein below set forth or such
other address as he may designate in writing to the Company, or to the Company
to the attention of the Secretary, at the Company's address or such other
address as the Company may designate in writing to the Grantee.

                           b. Failure to Enforce Not a Waiver. The failure of
the Company or the Grantee to enforce at any time any provision of this
Agreement shall in no way be construed to be a waiver of such provision or of
any other provision hereof.

                           c. Governing Law. This Agreement shall be governed by
and construed according to the laws of the State of New York without giving
effect to the choice of law principles thereof.

                           d. Amendments. This Agreement may be amended or
modified at any time by an instrument in writing signed by the parties hereto.

                           e. Agreement Not a Contract of Employment. Neither
the grant of Restricted Stock, this Agreement nor any other action taken in
connection herewith shall constitute or be evidence of any agreement or
understanding, express or implied, that the Grantee is an employee of the
Company or any subsidiary of the Company.

                           f. Entire Agreement; Plan Controls. This Agreement
and the Plan contain the entire understanding and agreement of the parties
hereto concerning the subject matter hereof, and supersede all earlier
negotiations and understandings, written or oral, between the parties hereto
with respect thereto. This Agreement is made under and subject to the provisions
of the Plan, and all of the provisions of the Plan are hereby incorporated by
reference into this Agreement. In the event of any conflict between the
provisions of this Agreement and the provisions of the Plan, the provisions of
the Plan shall govern. By
<PAGE>

signing this Agreement, the Grantee confirms that he has received a copy of the
Plan and has had an opportunity to review the contents thereof.

                           g. Captions. The captions and headings of the
sections and subsections of this Agreement are included for convenience only and
are not to be considered in construing or interpreting this Agreement.

                           h. Counterparts. This Agreement may be executed in
counterparts, each of which when signed by the Company or the Grantee will be
deemed an original and all of which together will be deemed the same agreement.

                           i. Assignment. The Company may assign its rights and
delegate its duties under this Agreement. If any such assignment or delegation
requires consent of any state securities authorities, the parties hereto agree
to cooperate in requesting such consent. This Agreement shall inure to the
benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer herein set forth, be binding upon the Grantee, his
heirs, executors, administrators, successors and assigns.

                           j. Severability. This Agreement will be severable,
and the invalidity or unenforceability of any term or provision hereof will not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any invalid or unenforceable term or
provision, the parties hereto intend that there be added as a part of this
Agreement a valid and enforceable provision as similar in terms to such invalid
or unenforceable provision as may be possible.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

                                                  ARBOR REALTY TRUST, INC.

                                                  By:   ________________________
                                                        Name:
                                                        Title:

                  The undersigned hereby accepts and agrees to all the terms and
provisions of the foregoing Agreement.

GRANTEE:

___________________________
[Insert Name of Grantee]

Number of Shares of Restricted Stock: [Insert Number of Shares]

Address: ______________
         ______________
         ______________

State/Province of Residence: _________________

Social Security Number: ______________________

<PAGE>

                                                                       EXHIBIT A

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

         FOR VALUE RECEIVED, [Insert Name of Grantee] (the "Grantee") hereby
assigns and transfers unto Arbor Realty Trust, Inc., a Maryland corporation (the
"Company"), ____________ shares of Company's common stock, par value $0.01 per
share, standing in his name on the books of said corporation represented by
Certificate No. _____ herewith and does hereby irrevocably constitute and
appoint the Secretary to transfer the said stock on the books of the within
named corporation with full power of substitution in the premises.

         This Assignment Separate from Certificate may be used only in
accordance with the Restricted Stock Agreement (the "Agreement") between the
Company and the Grantee dated [Insert Date of Agreement].

Dated: _____________, _____                         ____________________________
                                                    [Insert Name of Grantee]

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this Assignment Separate from Certificate is to return the shares
to the Company in the event the Grantee forfeits any of such shares as set forth
in the Agreement, without requiring additional signatures on the part of the
Grantee. This Assignment Separate from Certificate must be delivered to the
Company with the above Certificate No. _____.

<PAGE>

                                                                       EXHIBIT B

                            JOINT ESCROW INSTRUCTIONS

                                                      [Insert Date of Agreement]

Arbor Realty Trust, Inc.
333 Earle Ovington Boulevard
Uniondale, New York 11553
Attention:

Dear Mr.                 :

         As Escrow Agent for both Arbor Realty Trust, Inc., a Maryland
corporation (the "Company"), and [Insert Name of Grantee] ("Grantee") of a
certain number of shares of the Company's common stock, $0.01 par value per
share (the "Shares") granted by the Company to the Grantee pursuant to the terms
of that certain Restricted Stock Agreement between the Company and Grantee,
dated [Insert Date of Agreement] (the "Agreement") you are hereby authorized and
directed to hold the documents delivered to you pursuant to the terms of the
Agreement, in accordance with the instructions set forth below. Except as
otherwise expressly set forth herein, these instructions shall be construed in
accordance with the provisions of the Agreement and any capitalized terms not
otherwise defined herein shall have the definitions set forth in the Agreement.

                  1. In the event that the Grantee forfeits any Shares pursuant
to the Agreement, you are directed (a) to date the Assignment Separate From
Certificate necessary for the transfer to the Company, (b) to fill in the number
of Shares being transferred, and (c) to deliver same, together with the
certificate evidencing the Shares to be transferred, to the Company or its
assignee.

                  2. Grantee hereby irrevocably authorizes the Company to
deposit with you any certificates evidencing the Shares to be held by you
hereunder and any additions and substitutions to said Shares as set forth in the
Agreement. Grantee does hereby irrevocably constitute and appoint you as
Grantee's attorney-in-fact and agent for the term of this escrow to execute with
respect to such Shares all documents necessary or appropriate to make such
Shares negotiable and to complete any transaction herein contemplated, including
but not limited to, the filing with any applicable state blue sky authority of
any required applications for consent to, or notice of transfer of, the Shares.
Subject to the provisions of this Section 2, Grantee shall exercise all rights
and privileges of a shareholder of the Company while the stock is being held by
you.

                  3. Upon written request of the Grantee, unless the Grantee has
forfeited Shares pursuant to Section 6 of the Agreement, you will deliver to
Grantee a certificate or certificates representing the aggregate number of
Shares that are not then subject to the Restricted Period. Within 60 days after
Grantee's Cessation of Service as defined in

<PAGE>

Section 6 of the Agreement, you will deliver to Grantee, or Grantee's
representative, as the case may be, a certificate or certificates representing
the aggregate number of Shares held or issued pursuant to the Agreement and not
forfeited to the Company or its assignees pursuant to the Agreement.

                  4. If at the time of termination of this escrow you should
have in your possession any documents, securities, or other property belonging
to Grantee, you shall deliver all of the same to Grantee and shall be discharged
of all further obligations hereunder.

                  5. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.

                  6. You shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Grantee while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.

                  7. You are hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree, you
shall not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.

                  8. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.

                  9. You shall not be liable for the outlawing of any rights
under the Statute of Limitations with respect to these Joint Escrow Instructions
or any documents deposited with you.

                  10. You shall be entitled to employ such legal counsel and
other experts as you may deem necessary and proper to advise you in connection
with your obligations hereunder, may rely upon the advice of such counsel, and
may pay such counsel reasonable compensation therefor.

                  11. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be an officer or agent of the Company or if you
shall resign by written notice to each party. In the event of any such
termination, the Company shall appoint a successor Escrow Agent.

<PAGE>

                  12. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

                  13. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

                  14. All notices and other communications under these Joint
Escrow Instructions shall be in writing and shall be given by facsimile or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three days after mailing or 24 hours after
transmission by facsimile to the respective parties named below at the following
addresses or at such other addresses as a party may designate by ten day's
advance written notice to each of the other parties hereto:

If to Company or to the
Escrow Agent:

                           Arbor Realty Trust, Inc.
                           333 Earle Ovington Boulevard
                           Uniondale, New York 11553
                           Attention:  Secretary

                           Facsimile: (516) 832-8043
                           Attention: Secretary

If to the Grantee:         ______________________
                           ______________________
                           ______________________

                           Facsimile: ________

                  15. By signing these Joint Escrow Instructions, you become a
party hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.

                  16. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns.

                  17. These Joint Escrow Instructions shall be governed by the
internal substantive laws, but not the choice of law rules, of the State of New
York.

<PAGE>

GRANTEE:                                    ARBOR REALTY TRUST, INC.

____________________________                By:      ___________________________
[Insert Name of Grantee]                             Name:
                                                     Title:

____________________________
Print Name

____________________________

____________________________
Residence Address

ESCROW AGENT:

__________________________
Secretary

<PAGE>

                                                                       EXHIBIT C

                          ELECTION UNDER SECTION 83(b)
                      OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with taxpayer's receipt of the property described below:

1.       The name address, taxpayer identification number and taxable year of
the undersigned are as follows:

NAME OF TAXPAYER: __________________________________________________

NAME OF SPOUSE: ____________________________________________________

ADDRESS: ___________________________________________________________

IDENTIFICATION NO. OF TAXPAYER: ____________________________________

IDENTIFICATION NO. OF SPOUSE: ______________________________________

TAXABLE YEAR: _________________________________

2.       The property with respect to which the election is made is described as
follows: _______ shares (the "Shares") of the Common Stock of Arbor Realty
Trust, Inc. (the "Company").

3.       The date on which the property was transferred is: _____________, 20__.

4.       The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms
of an agreement between the taxpayer and the Company. These restrictions lapse
upon the satisfaction of certain conditions in such agreement.

5.       The fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its terms will never
lapse, of such property is: $ ______________.

6.       The amount (if any) paid for such property is: $ ______________.

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services

<PAGE>

in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.

Dated: _________________, 20__                             _____________________
                                                           Signature of Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: _________________, 20__                             _____________________
                                                           Signature of Spouse
                                                           of Taxpayer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>20
<FILENAME>y90410exv10w10.txt
<DESCRIPTION>BENEFITS PARTICIPATION AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.10

                        BENEFITS PARTICIPATION AGREEMENT

         This Agreement, dated as of July 1, 2003, is made by and between Arbor
Management, LLC, a New York limited liability company ("ARBOR MANAGEMENT") and
Arbor Realty Trust, Inc., a Maryland corporation (the "REIT").

         WHEREAS, the REIT is a newly organized Maryland corporation formed to
invest in a diversified portfolio of multi-family and commercial real estate
related bridge and mezzanine loans, preferred equity investments and other real
estate related assets ("STRUCTURED FINANCE INVESTMENTS");

         WHEREAS, the REIT is offering 1,400,000 of its units, each of which
consists of five shares of the REIT's common stock and one warrant to purchase a
share of the REIT's common stock (the "UNITS OFFERING"), and the Units Offering
is to be consummated on July 1, 2003;

         WHEREAS, upon consummation of the Units Offering, Arbor Commercial
Mortgage, LLC, a New York limited liability company ("ACM"), will release for
employment by the REIT certain employees with experience in Structured Finance
Investments ("FORMER ACM EMPLOYEES"), and the REIT intends to hire Former ACM
Employees as well as other employees;

         WHEREAS, Arbor Management, the managing member of ACM, currently
maintains employee benefit plans for the benefit of ACM employees (the "ACM
PLANS");

         WHEREAS, the parties have been advised that under Section 414 of the
Internal Revenue Code of 1986, as amended (the "CODE"), ACM, Arbor Management
and the REIT are treated as a single employer for certain purposes under the
Code;

         WHEREAS, it is the intent of the parties that the employees of the REIT
be permitted to participate in the ACM Plans, provided that such participation
does not jeopardize the status of the ACM Plans as single employer plans;

         NOW, THEREFORE, in consideration of the terms and conditions set forth
herein and for other valuable consideration, the parties, intending to be
legally bound, hereby agree as follows:

         1. Term. The term of this Agreement shall commence on July 1, 2003,
upon consummation of the Units Offering, and shall remain in effect for as long
as that certain Management and Advisory Agreement between and among Arbor Reatly
Trust, Inc., Arbor Realty Limited Partnership and Arbor Commercial Mortgage,
LLC, dated July 1, 2003 shall remain in force and effect.

         2. Participation in Benefit Plans. Arbor Management will permit the
REIT employees to participate in each applicable employee benefit plan
maintained by Arbor

<PAGE>

Management, including, for each Former ACM Employee, the plans in which the
Former ACM Employee was a participant while employed by ACM immediately prior to
the consummation of the Units Offering. During the term of this Agreement, the
REIT employees shall have the right to participate in and receive the benefit of
any employee benefit plans that Arbor Management provides to similarly-situated
ACM employees as though the REIT employees were employees of ACM. The REIT shall
not be obligated to maintain any employee benefit plans for the benefit of its
employees.

         3. Invoicing and Payment of Benefit Plans. Arbor Management will charge
the REIT an amount equal to the cost of providing benefits to each REIT
employee, and the REIT shall be permitted to satisfy its obligations by making
contributions, on behalf of its employees, to the benefit plans.

         4. Change in Single Employer Status. If at any time the REIT, ACM and
Arbor Management shall cease to be treated as a single employer under the
provisions of Section 414 of the Code, then (unless at that time the REIT
employees either (i) transfer their employment to ACM with the right of
continued participation in the ACM Plans, or (ii) are terminated from the REIT
without transfer to ACM) the parties shall use their best efforts to establish
an employee benefit program for the REIT employees that (i) in the aggregate is
no less favorable than the employee benefit program in effect immediately prior
to such change, and (ii) does not result in an interruption of employee benefit
coverage for any of the REIT employees.

         5. No Right to Continued Employment. Nothing contained herein shall
confer upon any REIT employee or Former ACM Employee any right to continued
employment with the REIT or ACM, as the case may be, nor shall it interfere in
any way with the right of the REIT or ACM to terminate the employment or service
of any of its employees, consultants or advisors at any time.

         6. Assignment. This Agreement shall not be assigned by either party
without the prior written consent of the other.

         7. Notices. Unless expressly provided otherwise in this Agreement, all
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received when delivered against receipt or upon actual receipt of (a)
personal delivery, (b) delivery by a reputable overnight courier, (c) delivery
by facsimile transmission against answerback, or (d) delivery by registered or
certified mail, postage prepaid, return receipt requested, addressed as set
forth below:

If to the REIT:                          Arbor Realty Trust, Inc.
                                         333 Earle Ovington Boulevard, Suite 900
                                         Uniondale, New York  11553
                                         Attention:  Frederick C. Herbst
                                         Facsimile:  (516) 832-7408

If to Arbor Management:                  Arbor Management, LLC

                                       2
<PAGE>

                                         333 Earle Ovington Boulevard, Suite 900
                                         Uniondale, New York  11553
                                         Attention:  Ivan Kaufman
                                         Facsimile:  (516) 832-8043

                  Either party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions of this Section 6 for the giving of notice.

         8. Binding Nature of Agreement; Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns as
provided in this Agreement.

         9. Entire Agreement. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter of this Agreement. The express
terms of this Agreement control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms of this Agreement. This
Agreement may not be modified or amended other than by an agreement in writing
signed by the parties hereto.

         10. Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
New York, notwithstanding any New York or other conflict-of-law provisions to
the contrary.

         11. Titles Not to Affect Interpretation. The titles of sections,
paragraphs and subparagraphs contained in this Agreement are for convenience
only, and they neither form a part of this Agreement nor are they to be used in
the construction or interpretation of this Agreement.

         12. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts of this Agreement, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.

         13. Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

         14. Principles of Construction. Words used herein regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, as the context requires. All references to
recitals, sections, paragraphs

                                       3
<PAGE>

and schedules are to the recitals, sections, paragraphs and schedules in or to
this Agreement unless otherwise specified.

         15. Amendments. This Agreement may be amended only in a writing signed
by the parties hereto.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.

                                ARBOR REALTY TRUST, INC.

                                By: /s/ Frederick C. Herbst
                                    --------------------------------------------

                                    Name: Frederick C. Herbst

                                    Title: Chief Financial Officer,

                                           Treasurer and Secretary

                               ARBOR MANAGEMENT, LLC

                                By: /s/ Ivan Kaufman
                                    --------------------------------------------

                                    Name: Ivan Kaufman

                                    Title: President and Chief Executive Officer

                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>21
<FILENAME>y90410exv10w11.txt
<DESCRIPTION>FORM OF INDEMNIFICATION AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.11

                            INDEMNIFICATION AGREEMENT

         THIS INDEMNIFICATION AGREEMENT is made and entered into this ____ day
of _______, 2003 ("Agreement"), by and between Arbor Realty Trust, Inc., a
Maryland corporation (the "Company"), and_____________________("Indemnitee").

         WHEREAS, at the request of the Company, Indemnitee currently serves as
a [DIRECTOR] [OFFICER] of the Company and may, therefore, be subjected to
claims, suits or proceedings arising as a result of his service; and

         WHEREAS, as an inducement to Indemnitee to continue to serve as such
[DIRECTOR] [OFFICER], the Company has agreed to indemnify and to advance
expenses and costs incurred by Indemnitee in connection with any such claims,
suits or proceedings, to the fullest extent permitted by law; and

         WHEREAS, the parties by this Agreement desire to set forth their
agreement regarding indemnification and advance of expenses;

         NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

         Section 1. Definitions. For purposes of this Agreement:

                  (a) "Change in Control" means a change in control of the
         Company occurring after the Effective Date of a nature that would be
         required to be reported in response to Item 6(e) of Schedule 14A of
         Regulation 14A (or in response to any similar item on any similar
         schedule or form) promulgated under the Securities Exchange Act of 1934
         (the "Act"), whether or not the Company is then subject to such
         reporting requirement; provided, however, that, without limitation,
         such a Change in Control shall be deemed to have occurred if after the
         Effective Date (i) any "person" (as such term is used in Sections 13(d)
         and 14(d) of the Act) is or becomes the "beneficial owner" (as defined
         in Rule 13d-3 under the Act), directly or indirectly, of securities of
         the Company representing 15% or more of the combined voting power of
         the Company's then outstanding securities without the prior approval of
         at least two-thirds of the members of the Board of Directors in office
         immediately prior to such person attaining such percentage interest;
         (ii) there occurs a proxy contest, or the Company is a party to a
         merger, consolidation, sale of assets, plan of liquidation or other
         reorganization not approved by at least two-thirds of the members of
         the Board of Directors then in office, as a consequence of which
         members of the Board of Directors in office immediately prior to such
         transaction or event constitute less than a majority of the Board of
         Directors thereafter; or (iii) during any period of two consecutive
         years, other than as a result of an event described in clause (a)(ii)
         of this Section 1, individuals who at the beginning of such period
         constituted the Board of Directors (including for this purpose any new
         director whose election or

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         nomination for election by the Company's stockholders was approved by a
         vote of at least two-thirds of the directors then still in office who
         were directors at the beginning of such period) cease for any reason to
         constitute at least a majority of the Board of Directors.

                  (b) "Corporate Status" means the status of a person who is or
         was a director, trustee, officer, employee or agent of the Company or
         of any other corporation, partnership, joint venture, trust, employee
         benefit plan or other enterprise which such person is or was serving at
         the request of the Company.

                  (c) "Disinterested Director" means a director of the Company
         who is not and was not a party to the Proceeding in respect of which
         indemnification is sought by Indemnitee.

                  (d) "Effective Date" means the date set forth in the first
         paragraph of this Agreement.

                  (e) "Expenses" shall include all reasonable attorneys' fees,
         retainers, court costs, transcript costs, fees of experts, witness
         fees, travel expenses, duplicating costs, printing and binding costs,
         telephone charges, postage, delivery service fees, and all other
         disbursements or expenses of the types customarily incurred, in the
         geographic region in which the expenses are incurred or the services
         are provided, in connection with prosecuting, defending, preparing to
         prosecute or defend, investigating, or being or preparing to be a
         witness in a Proceeding.

                  (f) "Independent Counsel" means a law firm, or a member of a
         law firm, selected by the board of directors by vote as set forth in
         Section 9(b), that is experienced in matters of corporation law and
         neither presently is, nor in the past five years has been, retained to
         represent: (i) the Company or Indemnitee in any matter material to
         either such party, or (ii) any other party to the Proceeding giving
         rise to a claim for indemnification hereunder. Notwithstanding the
         foregoing, the term "Independent Counsel" shall not include any person
         who, under the applicable standards of professional conduct then
         prevailing, would have a conflict of interest in representing either
         the Company or Indemnitee in an action to determine Indemnitee's rights
         under this Agreement. If a Change of Control has not occurred,
         Independent Counsel shall be selected by the Board of Directors, with
         the approval of Indemnitee, which approval will not be unreasonably
         withheld. If a Change of Control has occurred, Independent Counsel
         shall be selected by Indemnitee, with the approval of the Board of
         Directors, which approval will not be unreasonably withheld.

                  (g) "Proceeding" includes any threatened, pending or completed
         action, suit, arbitration, alternate dispute resolution mechanism,
         investigation, administrative hearing or any other proceeding, whether
         civil, criminal, administrative or investigative (including on appeal),
         except one (i) initiated by an Indemnitee pursuant to Section 11 of
         this Agreement to enforce his rights under this Agreement or (ii)
         pending or completed on or before the Effective Date, unless otherwise
         specifically agreed in writing by the Company and Indemnitee.

         Section 2. Services by Indemnitee. Indemnitee will serve as a
[DIRECTOR] [OFFICER] of the Company. However, this Agreement shall not impose
any obligation on Indemnitee or the Company to continue Indemnitee's service to
the Company beyond any period otherwise required by law or by other agreements
or commitments of the parties, if any.

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         Section 3. Indemnification - General. The Company shall indemnify, and
advance Expenses to, Indemnitee (a) as provided in this Agreement and (b)
otherwise to the fullest extent permitted by Maryland law in effect on the date
hereof and as amended from time to time; provided, however, that no change in
Maryland law shall have the effect of reducing the benefits available to
Indemnitee hereunder based on Maryland law as in effect on the date hereof. The
rights of Indemnitee provided in this Section 3 shall include, without
limitation, the rights set forth in the other sections of this Agreement,
including any additional indemnification permitted by Section 2-418(g) of the
Maryland General Corporation Law ("MGCL").

         Section 4. Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the rights of indemnification provided
in this Section 4 if, by reason of his Corporate Status, he is, or is threatened
to be, made a party to or a witness in any threatened, pending, or completed
Proceeding, other than a Proceeding by or in the right of the Company. Pursuant
to this Section 4, Indemnitee shall be indemnified against all judgments,
penalties, fines, amounts paid in settlement and all Expenses actually and
reasonably incurred by him or on his behalf in connection with a Proceeding by
reason of his Corporate Status unless it is established that (i) the act or
omission of Indemnitee was material to the matter giving rise to the Proceeding
and (a) was committed in bad faith or (b) was the result of active and
deliberate dishonesty, (ii) Indemnitee actually received an improper personal
benefit in money, property or services, or (iii) in the case of any criminal
Proceeding, Indemnitee had reasonable cause to believe that his conduct was
unlawful.

         Section 5. Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 5
if, by reason of his Corporate Status, he is, or is threatened to be, made a
party to or a witness in any threatened, pending or completed Proceeding brought
by or in the right of the Company to procure a judgment in its favor. Pursuant
to this Section 5, Indemnitee shall be indemnified against all amounts paid in
settlement and all Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding unless it is established that (i) the
act or omission of Indemnitee was material to the matter giving rise to such a
Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty or (ii) Indemnitee actually received an improper
personal benefit in money, property or services.

         Section 6. Court-Ordered Indemnification. Notwithstanding any other
provision of this Agreement, a court of appropriate jurisdiction, upon
application of a [DIRECTOR] [OFFICER] and such notice as the court shall
require, may order indemnification in the following circumstances:

                  (a) if it determines a [DIRECTOR] [OFFICER] is entitled to
         reimbursement under Section 2-418(d)(1) of the MGCL, the court shall
         order indemnification, in which case the [DIRECTOR] [OFFICER] shall be
         entitled to recover the expenses of securing such reimbursement; or

                  (b) if it determines that the [DIRECTOR] [OFFICER] is fairly
         and reasonably entitled to indemnification in view of all the relevant
         circumstances, whether or not the [DIRECTOR]

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         [OFFICER] (i) has met the standards of conduct set forth in Section
         2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an
         improper personal benefit under Section 2-418(c) of the MGCL, the court
         may order such indemnification as the court shall deem proper. However,
         indemnification with respect to any Proceeding by or in the right of
         the Company or in which liability shall have been adjudged in the
         circumstances described in Section 2-418(c) of the MGCL shall be
         limited to Expenses.

         Section 7. Indemnification for Expenses of a Party Who is Wholly or
Partly Successful. Notwithstanding any other provision of this Agreement, and
without limiting any such provision, to the extent that Indemnitee is, by reason
of his Corporate Status, made a party to and is successful, on the merits or
otherwise, in the defense of any Proceeding, he shall be indemnified for all
Expenses actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee under this Section 7 for all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.

         Section 8. Advance of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding to which Indemnitee is, or is threatened to be, made a party or a
witness, within ten days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by a written
affirmation by Indemnitee of Indemnitee's good faith belief that the standard of
conduct necessary for indemnification by the Company as authorized by law and by
this Agreement has been met and a written undertaking by or on behalf of
Indemnitee, in substantially the form attached hereto as Exhibit A or in such
form as may be required under applicable law as in effect at the time of the
execution thereof, to reimburse any Expenses advanced to Indemnitee if it shall
ultimately be determined that such standard of conduct has not been met or as
required by Section 7 if Indemnitee is wholly or partly unsuccessful. The
undertaking required by this Section 8 shall be an unlimited general obligation
by or on behalf of Indemnitee and shall be accepted without reference to
Indemnitee's financial ability to repay such advanced Expenses.

         Section 9. Procedure for Determination of Entitlement to
Indemnification.

                  (a) To obtain indemnification under this Agreement, Indemnitee
         shall submit to the Company a written request, including therein or
         therewith such documentation and information as is reasonably available
         to Indemnitee and is reasonably necessary to determine whether and to
         what extent Indemnitee is entitled to indemnification. The Secretary of
         the Company shall, promptly upon receipt of such a request for

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         indemnification, advise the Board of Directors in writing that
         Indemnitee has requested indemnification.

                  (b) Upon written request by Indemnitee for indemnification
         pursuant to the first sentence of Section 9(a) hereof, a determination,
         if required by applicable law, with respect to Indemnitee's entitlement
         thereto shall promptly be made in the specific case: (i) if a Change in
         Control shall have occurred, by Independent Counsel in a written
         opinion to the Board of Directors, a copy of which shall be delivered
         to Indemnitee; or (ii) if a Change of Control shall not have occurred,
         (A) by the Board of Directors (or a duly authorized committee thereof)
         by a majority vote of a quorum consisting of Disinterested Directors
         (as hereinafter defined), or (B) if a quorum of the Board of Directors
         consisting of Disinterested Directors is not obtainable or, even if
         obtainable, such quorum of Disinterested Directors so directs, by
         Independent Counsel in a written opinion to the Board of Directors, a
         copy of which shall be delivered to Indemnitee, or (C) if so directed
         by a majority of the members of the Board of Directors, by the
         stockholders of the Company; and, if it is so determined that
         Indemnitee is entitled to indemnification, payment to Indemnitee shall
         be made within ten days after such determination. Indemnitee shall
         cooperate with the person, persons or entity making such determination
         with respect to Indemnitee's entitlement to indemnification, including
         providing to such person, persons or entity upon reasonable advance
         request any documentation or information which is not privileged or
         otherwise protected from disclosure and which is reasonably available
         to Indemnitee and reasonably necessary to such determination. Any costs
         or Expenses (including reasonable attorneys' fees and disbursements)
         incurred by Indemnitee in so cooperating with the person, persons or
         entity making such determination shall be borne by the Company
         (irrespective of the determination as to Indemnitee's entitlement to
         indemnification) and the Company hereby agrees to indemnify and hold
         Indemnitee harmless therefrom.

         Section 10. Presumptions and Effect of Certain Proceedings.

                  (a) In making a determination with respect to entitlement to
         indemnification hereunder, the person or persons or entity making such
         determination shall presume that Indemnitee is entitled to
         indemnification under this Agreement if Indemnitee has submitted a
         request for indemnification in accordance with Section 9(a) of this
         Agreement, and the Company shall have the burden of proof to overcome
         that presumption in connection with the making of any determination
         contrary to that presumption.

                  (b) The termination of any Proceeding by judgment, order,
         settlement, conviction, a plea of nolo contendere or its equivalent, or
         an entry of an order of probation prior to judgment, does not create a
         presumption that Indemnitee did not meet the requisite standard of
         conduct described herein for indemnification.

         Section 11. Remedies of Indemnitee.

                  (a) If (i) a determination is made pursuant to Section 9 of
         this Agreement that Indemnitee is not entitled to indemnification under
         this Agreement, (ii) advance of

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         Expenses is not timely made pursuant to Section 8 of this Agreement,
         (iii) no determination of entitlement to indemnification shall have
         been made pursuant to Section 9(b) of this Agreement within 30 days
         after receipt by the Company of the request for indemnification, (iv)
         payment of indemnification is not made pursuant to Section 7 of this
         Agreement within ten days after receipt by the Company of a written
         request therefor, or (v) payment of indemnification is not made within
         ten days after a determination has been made that Indemnitee is
         entitled to indemnification, Indemnitee shall be entitled to an
         adjudication in an appropriate court of the State of Maryland, or in
         any other court of competent jurisdiction, of his entitlement to such
         indemnification or advance of Expenses. Alternatively, Indemnitee, at
         his option, may seek an award in arbitration to be conducted by a
         single arbitrator pursuant to the commercial Arbitration Rules of the
         American Arbitration Association. Indemnitee shall commence such
         proceeding seeking an adjudication or an award in arbitration within
         180 days following the date on which Indemnitee first has the right to
         commence such proceeding pursuant to this Section 11(a); provided,
         however, that the foregoing clause shall not apply in respect of a
         proceeding brought by Indemnitee to enforce his rights under Section 7
         of this Agreement.

                  (b) In any judicial proceeding or arbitration commenced
         pursuant to this Section 11 the Company shall have the burden of
         proving that Indemnitee is not entitled to indemnification or advance
         of Expenses, as the case may be.

                  (c) If a determination shall have been made pursuant to
         Section 9(b) of this Agreement that Indemnitee is entitled to
         indemnification, the Company shall be bound by such determination in
         any judicial proceeding or arbitration commenced pursuant to this
         Section 11, absent a misstatement by Indemnitee of a material fact, or
         an omission of a material fact necessary to make Indemnitee's statement
         not materially misleading, in connection with the request for
         indemnification.

                  (d) In the event that Indemnitee, pursuant to this Section 11,
         seeks a judicial adjudication of or an award in arbitration to enforce
         his rights under, or to recover damages for breach of, this Agreement,
         Indemnitee shall be entitled to recover from the Company, and shall be
         indemnified by the Company for, any and all Expenses actually and
         reasonably incurred by him in such judicial adjudication or
         arbitration. If it shall be determined in such judicial adjudication or
         arbitration that Indemnitee is entitled to receive part but not all of
         the indemnification or advance of Expenses sought, the Expenses
         incurred by Indemnitee in connection with such judicial adjudication or
         arbitration shall be appropriately prorated.

         Section 12. Defense of the Underlying Proceeding.

                  (a) Indemnitee shall notify the Company promptly upon being
         served with or receiving any summons, citation, subpoena, complaint,
         indictment, information, notice, request or other document relating to
         any Proceeding which may result in the right to indemnification or the
         advance of Expenses hereunder; provided, however, that the failure to
         give any such notice shall not disqualify Indemnitee from the right, or
         otherwise affect in any manner any right of Indemnitee, to
         indemnification or the advance

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         of Expenses under this Agreement unless the Company's ability to defend
         in such Proceeding or to obtain proceeds under any insurance policy is
         materially and adversely prejudiced thereby, and then only to the
         extent the Company is thereby actually so prejudiced.

                  (b) Subject to the provisions of the last sentence of this
         Section 12(b) and of Section 12(c) below, the Company shall have the
         right to defend Indemnitee in any Proceeding which may give rise to
         indemnification hereunder; provided, however, that the Company shall
         notify Indemnitee of any such decision to defend within 15 calendar
         days following receipt of notice of any such Proceeding under Section
         12(a) above. The Company shall not, without the prior written consent
         of Indemnitee, which shall not be unreasonably withheld or delayed,
         consent to the entry of any judgment against Indemnitee or enter into
         any settlement or compromise which (i) includes an admission of fault
         of Indemnitee or (ii) does not include, as an unconditional term
         thereof, the full release of Indemnitee from all liability in respect
         of such Proceeding, which release shall be in form and substance
         reasonably satisfactory to Indemnitee. This Section 12(b) shall not
         apply to a Proceeding brought by Indemnitee under Section 11 above or
         Section 18 below.

                  (c) Notwithstanding the provisions of Section 12(b) above, if
         in a Proceeding to which Indemnitee is a party by reason of
         Indemnitee's Corporate Status, (i) Indemnitee reasonably concludes,
         based upon the advice of counsel approved by the Company, which
         approval of counsel shall not be unreasonably withheld, that he may
         have separate defenses or counterclaims to assert with respect to any
         issue which may not be consistent with other defendants in such
         Proceeding, (ii) Indemnitee reasonably concludes, based upon the advice
         of counsel approved by the Company, which approval of counsel shall not
         be unreasonably withheld, that an actual or apparent conflict of
         interest or potential conflict of interest exists between Indemnitee
         and the Company, or (iii) if the Company fails to assume the defense of
         such Proceeding in a timely manner, Indemnitee shall be entitled to be
         represented by separate legal counsel of Indemnitee's choice, subject
         to the prior approval of the Company, which shall not be unreasonably
         withheld, at the expense of the Company. In addition, if the Company
         fails to comply with any of its obligations under this Agreement or in
         the event that the Company or any other person takes any action to
         declare this Agreement void or unenforceable, or institutes any
         Proceeding to deny or to recover from Indemnitee the benefits intended
         to be provided to Indemnitee hereunder, Indemnitee shall have the right
         to retain counsel of Indemnitee's choice, subject to the prior approval
         of the Company, which shall not be unreasonably withheld, at the
         expense of the Company, to represent Indemnitee in connection with any
         such matter.

         Section 13. Non-Exclusivity; Survival of Rights; Insurance;
Subrogation.

                  (a) The rights of indemnification and advance of Expenses as
         provided by this Agreement shall not be deemed exclusive of any other
         rights to which Indemnitee may at any time be entitled under applicable
         law, the Charter or Bylaws of the Company, any agreement or a
         resolution of the stockholders entitled to vote generally in the
         election of directors or of the Board of Directors, or otherwise. No
         amendment, alteration or repeal of this Agreement or of any provision
         hereof shall limit or restrict any right of Indemnitee

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         under this Agreement in respect of any action taken or omitted by such
         Indemnitee in his Corporate Status prior to such amendment, alteration
         or repeal.

                  (b) In the event of any payment under this Agreement, the
         Company shall be subrogated to the extent of such payment to all of the
         rights of recovery of Indemnitee, who shall execute all papers required
         and take all action necessary to secure such rights, including
         execution of such documents as are necessary to enable the Company to
         bring suit to enforce such rights.

                  (c) The Company shall not be liable under this Agreement to
         make any payment of amounts otherwise indemnifiable hereunder if and to
         the extent that Indemnitee has otherwise actually received such payment
         under any insurance policy, contract, agreement or otherwise.

         Section 14. Insurance. The Company will use its reasonable best efforts
to acquire directors and officers liability insurance, on terms and conditions
deemed appropriate by the Board of Directors of the Company, with the advice of
counsel, covering Indemnitee or any claim made against Indemnitee for service as
a director or officer of the Company and covering the Company for any
indemnification or advance of expenses made by the Company to Indemnitee for any
claims made against Indemnitee for service as a director or officer of the
Company. Without in any way limiting any other obligation under this Agreement,
the Company shall indemnify Indemnitee for any payment by Indemnitee arising out
of the amount of any deductible or retention and the amount of any excess of the
aggregate of all judgments, penalties, fines, settlements and reasonable
expenses incurred by Indemnitee in connection with a Proceeding over the
coverage of any insurance referred to in the previous sentence.

         Section 15. Indemnification for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding, whether instituted
by the Company or any other party, and to which Indemnitee is not a party, he
shall be advanced all reasonable Expenses and indemnified against all Expenses
actually and reasonably incurred by him or on his behalf in connection
therewith.

         Section 16. Duration of Agreement; Binding Effect.

                  (a) This Agreement shall continue until and terminate ten
         years after the date that Indemnitee shall have ceased to serve as a
         director, trustee, officer, employee, or agent of the Company or of any
         other corporation, partnership, joint venture, trust, employee benefit
         plan or other enterprise which Indemnitee served at the request of the
         Company; provided, that the rights of Indemnitee hereunder shall
         continue until the final termination of any Proceeding then pending in
         respect of which Indemnitee is granted rights of indemnification or
         advance of Expenses hereunder and of any proceeding commenced by
         Indemnitee pursuant to Section 11 of this Agreement relating thereto.

                  (b) The indemnification and advance of Expenses provided by,
         or granted pursuant to, this Agreement shall be binding upon and be
         enforceable by the parties

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         hereto and their respective successors and assigns (including any
         direct or indirect successor by purchase, merger, consolidation or
         otherwise to all or substantially all of the business or assets of the
         Company), shall continue as to an Indemnitee who has ceased to be a
         director, trustee, officer, employee or agent of the Company or of any
         other corporation, partnership, joint venture, trust, employee benefit
         plan or other enterprise which such person is or was serving at the
         request of the Company, and shall inure to the benefit of Indemnitee
         and his or her spouse, assigns, heirs, devisees, executors and
         administrators and other legal representatives.

                  (c) The Company shall require and cause any successor (whether
         direct or indirect by purchase, merger, consolidation or otherwise) to
         all, substantially all or a substantial part, of the business and/or
         assets of the Company, by written agreement in form and substance
         satisfactory to Indemnitee, expressly to assume and agree to perform
         this Agreement in the same manner and to the same extent that the
         Company would be required to perform if no such succession had taken
         place.

         Section 17. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

         Section 18. Exception to Right of Indemnification or Advance of
Expenses. Notwithstanding any other provision of this Agreement, Indemnitee
shall not be entitled to indemnification or advance of Expenses under this
Agreement with respect to any Proceeding brought by Indemnitee, unless (a) the
Proceeding is brought to enforce indemnification under this Agreement or
otherwise or (b) the Company's Bylaws, as amended, the Charter, a resolution of
the stockholders entitled to vote generally in the election of directors or of
the Board of Directors or an agreement approved by the Board of Directors to
which the Company is a party expressly provide otherwise.

         Section 19. Identical Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. One such counterpart signed by the party against whom enforceability
is sought shall be sufficient to evidence the existence of this Agreement.

         Section 20. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

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         Section 21. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

         Section 22. Notice by Indemnitee. Indemnitee shall promptly notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advance of Expenses covered
hereunder.

         Section 23. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

                  (a) If to Indemnitee, to: The address set forth on the
         signature page hereto.

                  (b) If to the Company to:

                           Arbor Realty Trust, Inc.
                           Suite 900
                           333 Earle Ovington Boulevard
                           Uniondale, New York 11553
                           Attn: Corporate Secretary

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

         Section 24. Governing Law. The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Maryland, without regard to its conflicts of laws rules.

         Section 25. Miscellaneous. Use of the masculine pronoun shall be deemed
to include usage of the feminine pronoun where appropriate.

                            [SIGNATURE PAGE FOLLOWS]

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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

ATTEST:                             ARBOR REALTY TRUST, INC.

_________________________           By: ___________________________ (SEAL)
                                    Name: __________________________________
                                    Title: _________________________________

WITNESS:                            INDEMNITEE

_________________________           _________________________________________
                                    Name: ___________________________________
                                    Address: ________________________________
                                    _________________________________________

                                       11

<PAGE>

                                    EXHIBIT A

                 FORM OF UNDERTAKING TO REPAY EXPENSES ADVANCED

The Board of Directors of Arbor Realty Trust, Inc.

Re:  Undertaking to Repay Expenses Advanced

Ladies and Gentlemen:

         This undertaking is being provided pursuant to that certain
Indemnification Agreement dated the ___ day of ________, 2003, by and between
Arbor Realty Trust, Inc. (the "Company") and the undersigned Indemnitee (the
"Indemnification Agreement"), pursuant to which I am entitled to advance of
expenses in connection with [DESCRIPTION OF PROCEEDING] (the "Proceeding").

         Terms used herein and not otherwise defined shall have the meanings
specified in the Indemnification Agreement.

         I am subject to the Proceeding by reason of my Corporate Status or by
reason of alleged actions or omissions by me in such capacity. I hereby affirm
that at all times, insofar as I was involved as [A DIRECTOR] [AN OFFICER] of the
Company, in any of the facts or events giving rise to the Proceeding, I (1)
acted in good faith and honestly, (2) did not receive any improper personal
benefit in money, property or services and (3) in the case of any criminal
proceeding, had no reasonable cause to believe that any act or omission by me
was unlawful.

         In consideration of the advance of expenses by the Company for
reasonable attorney's fees and related expenses incurred by me in connection
with the Proceeding (the "Advanced Expenses"), I hereby agree that if, in
connection with the Proceeding, it is established that (1) an act or omission by
me was material to the matter giving rise to the Proceeding and (a) was
committed in bad faith or (b) was the result of active and deliberate dishonesty
or (2) I actually received an improper personal benefit in money, property or
services or (3) in the case of any criminal proceeding, I had reasonable cause
to believe that the act or omission was unlawful, then I shall promptly
reimburse the Advanced Expenses to the Company.

         IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on
this ___ day of ____________________, 200__.

WITNESS:                                    INDEMNITEE:

____________________________                _____________________________(SEAL)
                                            Name: ________________________

                                       12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>22
<FILENAME>y90410exv21w1.txt
<DESCRIPTION>SUBSIDIARIES
<TEXT>
<PAGE>
                                                                EXHIBIT 21.1






                   Subsidiaries of Arbor Realty Trust, Inc.
                   ----------------------------------------


        Arbor Realty GPOP, Inc., a Delaware corporation
        Arbor Realty LPOP, Inc., a Delaware corporation
        Arbor Realty Limited Partnership, a Delaware limited partnership
        ANMB Holdings LLC, a a New York limited liability company
        ACM Gateway LLC, a Delaware limited liability company
        Arbor Texas CDS, LLC, a New York limited liability company
        ANMB Holdings II, LLC, a New York limited liability company
        ACM Dutch Village, LLC, a Delaware limited liability company
        ACM Evergreen, LLC, a New York limited liability company


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>23
<FILENAME>y90410exv23w1.txt
<DESCRIPTION>CONSENT OF GRANT THORNTON LLP
<TEXT>
<PAGE>
                                                                   Exhibit 23.1




             CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


We have issued our report dated October 23, 2003, accompanying the consolidated
financial statements of the Structured Finance Business of Arbor Commercial
Mortgage, LLC and Subsidiaries and our report dated February 2, 2001,
accompanying the financial statements of Mezzobridge Funding LLC contained in
the S-11 Registration Statement of Arbor Realty Trust,Inc.  We consent to the
use of the aforementioned reports in the Registration Statement and to the use
of our name as it appears under the caption "Experts."

 /s/ Grant Thornton LLP

New York, New York
November 13, 2003



</TEXT>
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