RAIT Financial Trust Announces Third Quarter 2009 Financial Results

Summary

--
Net loss allocable to common shares of $24.7 million, or $0.38
total loss per share - diluted for the three months ended September
30, 2009 and $456.8 million, or $7.03 total loss per share - diluted
for the nine months ended September 30, 2009

--
Estimated REIT taxable income, a non-GAAP financial measure of $44.8
million, or $0.69 per share - diluted for the three months ended
September 30, 2009 and estimated REIT taxable loss of $26.2 million,
or $0.40 per share - diluted for the nine months ended September 30,
2009

--
Debt to equity ratio improved to 3.3 times at September 30, 2009 as
compared to 5.4 times at December 31, 2008

--
Launched fixed income securities and commercial real estate advisory
businesses

--
Book value was $8.57 per common share at September 30, 2009

Third Quarter 2009 Results

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

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

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

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

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

Balance Sheet

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

Assets Under Management and Gross Cash Flow Summary

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

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

Investment Portfolio Description      Assets Under        Gross Cash     Gross Cash
                                      Management          Flow for the   Flow for the
                                      As of September     Three-Month    Nine-Month
                                      30,                 Period         Period
                                      2009                Ended          Ended
                                                          September 30,  September 30,
                                                          2009 (1)       2009 (1)
Commercial real estate portfolio (2)  $       2,103,792   $      16,322  $      55,778
Residential mortgage portfolio (3)            -                  1,433          10,406
European portfolio                            1,862,785          876            3,472
U.S. TruPS portfolio (4)                      6,407,137          2,699          9,250
Other investments                             777                144            479
Total                                 $       10,374,491  $      21,474  $      79,385
Investment Portfolio Description      Assets Under        Gross Cash     Gross Cash
                                      Management          Flow for the   Flow for the
                                      As of               Three-Month    Nine-Month
                                      September           Period         Period
                                      30,                 Ended          Ended
                                      2008                September 30,  September
                                                          2008 (1)       30, 2008 (1)
Commercial real estate portfolio (2)  $       2,104,833   $      23,137  $      76,034
Residential mortgage portfolio (3)            3,694,875          4,778          14,840
European portfolio                            1,945,487          4,264          11,331
U.S. TruPS portfolio (4)                      6,512,275          11,952         32,975
Other investments                             720                210            811
Total                                 $       14,258,190  $      44,341  $      135,991

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

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

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

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

Liquidity

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

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

Description                                     Unpaid          Carrying        Weighted-      Contractual
                                                Principal       Amount          Average        Maturity
                                                Balance                         Interest Rate
Recourse indebtedness:
Convertible senior notes (1)                    $    280,363    $    279,638    6.9    %       2027
Secured credit facilities                            51,494          51,494     3.9    %       Dec. 2009 to Feb. 2011
Senior secured notes                                 43,000          43,000     12.5   %       Apr. 2014
Junior subordinated notes, at fair value (2)         38,052          17,004     8.7    %       Mar. 2015 to Mar. 2035
Junior subordinated notes, at amortized cost         25,100          25,100     7.7    %       Apr. 2037
Total recourse indebtedness                          438,009         416,236    7.3    %
Non-recourse indebtedness:
CDO notes payable--amortized cost (3)(4)             1,399,250       1,399,250  0.7    %       2036 to 2045
CDO notes payable--fair value (2)(3)(5)              1,186,887       143,054    1.1    %       2035 to 2038
Loans payable on real estate interests               84,446          84,446     5.4    %       Aug. 2010 to Aug. 2016
Trust preferred obligations, at fair value (2)       70,621          70,621     1.9    %       2036
Other indebtedness                                   55              55         5.4    %       Nov. 2009
Total non-recourse indebtedness                      2,741,259       1,697,426  1.0    %
Total indebtedness                              $    3,179,268  $    2,113,662  1.9    %

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

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

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

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

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

Investment Portfolio Summary

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

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

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

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

Credit Summary

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

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

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

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

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

Portfolio Statistics

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

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

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

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

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

Investments in Real Estate Interests

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

                                                 As of              As of
                                                 September 30,      December 31,
                                                 2009               2008
                                                                    (As revised)
Multi-family real estate properties              $    467,612       $    225,054
Office real estate properties                         139,345            131,285
Retail real estate property                           36,402             -
Parcels of land                                       22,208             614
Subtotal                                              665,567            356,953
Plus: Escrows and reserves                            535                4,091
Less: Accumulated depreciation and amortization       (20,618 )          (10,557 )
Investments in real estate interests             $    645,484       $    350,487

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

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

Property Type  Percent      U.S. Geographic Region  Percent
Multi-family   49.1  %      Central                 34.1  %
Office         29.7  %      West                    25.7  %
Retail         16.0  %      Southeast               17.9  %
Other          5.2   %      Mid-Atlantic            14.1  %
                            Northeast               8.2   %
Total          100.0 %      Total                   100.0 %

TruPS and Subordinated Debentures

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

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

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

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

Dividends

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

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

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

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

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

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

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

Recent Accounting Pronouncements

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

Conference Call

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

About RAIT Financial Trust

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

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

Forward-Looking Statements

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

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

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

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

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

RAIT Financial Trust
Consolidated Balance Sheets
(Dollars in thousands, except share and per share information)
(unaudited)
                                                                      As of               As of
                                                                      September 30,       December 31,
                                                                      2009                2008
Assets                                                                                    (As revised)
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred      $      1,574,631    $      2,041,112
equity interests
Residential mortgages and mortgage-related receivables                       -                   3,598,925
Allowance for losses                                                         (85,620   )         (171,973  )
Total investments in mortgages and loans                                     1,489,011           5,468,064
Investments in securities and security-related receivables, at fair          684,836             1,920,883
value
Investments in real estate interests                                         645,484             350,487
Cash and cash equivalents                                                    39,906              27,463
Restricted cash                                                              163,250             197,366
Accrued interest receivable                                                  38,853              99,609
Other assets                                                                 32,579              46,716
Deferred financing costs, net of accumulated amortization of $6,603          25,181              30,875
and $5,781, respectively
Intangible assets, net of accumulated amortization of $82,560 and            10,547              9,987
$81,522, respectively
Total assets                                                          $      3,129,647    $      8,151,450
Liabilities and Equity
Indebtedness ($230,679 and $755,021 at fair value, respectively)      $      2,113,662    $      6,102,890
Accrued interest payable                                                     22,010              80,035
Accounts payable and accrued expenses                                        22,656              19,446
Derivative liabilities                                                       223,140             613,852
Deferred taxes, borrowers' escrows and other liabilities                     22,638              65,886
Total liabilities                                                            2,404,106           6,882,109
Equity:
Shareholders' equity:
Preferred shares, $0.01 par value per share, 25,000,000 shares               28                  28
authorized;
7.75% Series A cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 2,760,000 shares issued and
outstanding
8.375% Series B cumulative redeemable preferred shares, liquidation          23                  23
preference $25.00 per share, 2,258,300 shares issued and outstanding
8.875% Series C cumulative redeemable preferred shares, liquidation          16                  16
preference $25.00 per share, 1,600,000 shares issued and outstanding
Common shares, $0.01 par value per share, 200,000,000 shares                 650                 648
authorized, 64,963,850 and 64,842,571 issued and outstanding,
including 27,731 and 76,690 unvested restricted share awards,
respectively
Additional paid in capital                                                   1,616,757           1,613,853
Accumulated other comprehensive income (loss)                                (134,521  )         (231,425  )
Retained earnings (deficit)                                                  (760,850  )         (304,059  )
Total shareholders' equity                                                   722,103             1,079,084
Noncontrolling interests                                                     3,438               190,257
Total equity                                                                 725,541             1,269,341
Total liabilities and equity                                          $      3,129,647    $      8,151,450

RAIT Financial Trust
Reconciliation of Net Income (Loss) Allocable to Common Shares and
Total Taxable Income (Loss) and
Estimated REIT Taxable Income (Loss) (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)
                                                                     For the Three-Month                  For the Nine-Month
                                                                     Periods Ended September 30           Periods Ended September 30
                                                                     2009             2008                2009                2008
Net income (loss) allocable to common shares, as reported            $ (24,692   )    $   (181,781   )    $   (456,791   )    $   62,606
Add (deduct):
Provision for losses                                                 18,467               14,992              204,067             50,575
Charge-offs on allowance for losses                                  (2,757      )        (4,701     )        (122,013   )        (10,862    )
Domestic TRS book-to-total taxable income differences:
Income tax (benefit) provision                                       (216        )        173                 441                 (2,261     )
Fees received and deferred in consolidation                          --                   --                  --                  307
Stock compensation and other temporary tax differences               1,107                953                 173                 1,820
Capital losses not offsetting capital gains and other temporary tax  --                   --                  --                  32,059
differences
Asset impairments                                                    --                   18,038              46,015              38,361
Capital losses not offsetting capital gains                          61,841               --                  375,649             --
Change in fair value of financial instruments, net of allocation to  3,808                183,942             (10,002    )        (78,409    )
noncontrolling interests (2)
Amortization of intangible assets                                    371                  2,883               1,038               16,048
CDO investments aggregate book-to-taxable income differences (3)     (12,705     )        (17,509    )        (62,657    )        (52,012    )
Accretion of (premiums) discounts                                    --                   972                 (211       )        3,243
Other book to tax differences                                        85                   307                 142                 6
Total taxable income (loss)                                          45,309               18,269              (24,149    )        61,481
Less: Taxable income attributable to domestic TRS entities           (473        )        (3,143     )        (7,114     )        (907       )
Plus: Dividends paid by domestic TRS entities                        13                   --                  5,038               12,000
Estimated REIT taxable income (loss), prior to deduction for         $ 44,849         $   15,126          $   (26,225    )    $   72,574
dividends paid
Estimated REIT taxable income (loss) per diluted share               $     0.69  $ 0.23                   $   (0.40      )    $   1.15
Weighted-average shares outstanding--Diluted                         65,025,946           64,523,681          64,990,708          62,878,007

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

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

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

SOURCE: RAIT Financial Trust

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

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