EX-99.1

PHILADELPHIA, PA — November 5, 2008 — RAIT Financial Trust (“RAIT”) (NYSE: RAS), a diversified real estate finance company, today reported results for the third quarter ended September 30, 2008.

RAIT reported adjusted earnings, a non-GAAP financial measure, for the three-month period ended September 30, 2008 of $29.6 million, or $0.46 per diluted share based on 64.2 million weighted-average shares outstanding – diluted, as compared to adjusted earnings for the three-month period ended September 30, 2007 of $40.6 million, or $0.67 per diluted share based on 60.7 million weighted-average shares outstanding – diluted. RAIT reported adjusted earnings for the nine-month period ended September 30, 2008 of $94.9 million, or $1.52 per diluted share based on 62.5 million weighted-average shares outstanding – diluted, as compared to adjusted earnings for the nine-month period ended September 30, 2007 of $148.6 million, or $2.45 per diluted share based on 60.6 million weighted-average shares outstanding – diluted.

RAIT reported GAAP net loss available to common shares for the three-month period ended September 30, 2008 of $181.7 million, or total loss per share – diluted of $2.83 based on 64.2 million weighted-average shares outstanding – diluted, as compared to GAAP net loss available to common shares for the three-month period ended September 30, 2007 of $243.6 million, or total loss per share – diluted of $4.02 based on 60.7 million weighted-average shares outstanding – diluted. RAIT reported GAAP net income available to common shares for the nine-month period ended September 30, 2008 of $62.9 million, or $1.01 per diluted share based on 62.5 million weighted-average shares outstanding – diluted, as compared to GAAP net loss available to common shares for the nine-month period ended September 30, 2007 of $195.9 million, or total loss per share – diluted of $3.23 based on 60.6 million weighted-average shares outstanding – diluted.

Our reported GAAP net loss available to common shares for the three-month period ended September 30, 2008 of $181.7 million was primarily due to the non-cash change in fair value of financial instruments, net of minority interest, of $183.9 million on our domestic trust preferred securities (TruPS) portfolio. The change in fair value does not impact our adjusted earnings or gross cash flow during the quarter ended September 30, 2008.

A reconciliation of RAIT’s reported GAAP net income (loss) available to common shares to adjusted earnings, including management’s rationale for the usefulness of this non-GAAP measure, is included as Schedule I to this release.

RAIT’s gross cash flow is comprised of net investment income, net rental income and asset management fees we received from $14.3 billion of assets under management as of September 30, 2008. 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, after consideration of estimated loan loss reserve requirements.

The following chart summarizes RAIT’s total assets under management at September 30, 2008 and quarterly gross cash flow by portfolio (excluding origination fees) for the three-month periods ended March 31, 2008, June 30, 2008 and September 30, 2008 and for the nine-month period ended September 30, 2008 (dollars in thousands):


			Gross Cash Flow
	Assets Under		Three-Month Period		Three-Month Period		Three-Month		Nine-Month
	Management at		Ended March 31,		Ended June 30,		Period Ended		Period Ended
	September 30, 2008		2008⁽¹⁾		2008⁽¹⁾		September 30,		September 30,
							2008⁽¹⁾		2008⁽¹⁾
Commercial real estate portfolio (2)	$	2,104,833	$	25,137	$	27,760	$	23,137	$	76,034
Residential mortgage portfolio		3,694,875		5,104		4,958		4,778		14,840
European portfolio (3)		1,945,487		3,461		3,606		4,264		11,331
U.S. TruPS portfolio (4)		6,512,275		11,850		9,173		11,952		32,975
Other investments		720		349		252		210		811

Total	$	14,258,190	$	45,901	$	45,749	$	44,341	$	135,991

(1)

Quarterly cash flows may not be indicative of cash flows for subsequent quarterly or annual periods. See “Forward-Looking Statements” below for risks and uncertainties that could cause our gross cash flow for subsequent quarterly or annual periods to differ materially from these amounts.

(2)

Our commercial real estate portfolio is comprised of $1.6 billion of assets collateralizing our commercial real estate securitizations (the “CRE Securitizations”), $311.2 million of investments in real estate interests and $240.3 million of commercial mortgages and mezzanine loans all of which are included on our consolidated balance sheet as of September 30, 2008.

(3)

Our European portfolio is comprised of residual interests in our unconsolidated European securitizations.

(4)

Our U.S. TruPS portfolio is comprised of assets collateralizing our consolidated securitizations (other than CRE Securitizations) and interests in our unconsolidated securitizations (other than our European securitizations) and includes TruPS and subordinated debentures, unsecured REIT note receivables, CMBS receivables, other securities, commercial mortgages and mezzanine loans.

As of September 30, 2008, RAIT had $38.4 million of cash and cash equivalents, $55.6 million of unused capacity in our two CRE securitizations to invest in commercial real estate loans and $36.5 million of availability under three secured credit facilities with a total capacity of $90.0 million.

During the third quarter, RAIT repaid $47.1 million under our short-term repurchase agreements and terminated these agreements. As of September 30, 2008, RAIT had $206.0 million outstanding under our secured credit facilities and other indebtedness and $404.0 million in convertible senior notes outstanding.

Total fees generated, a non-GAAP financial measure, were $9.6 million for the quarter ended September 30, 2008 as follows:

Reported GAAP fee and other income of $5.1 million for the quarter ended September 30, 2008.

A reconciliation of fee and other income reported in GAAP earnings to total fees generated, including management’s rationale for the usefulness of this non-GAAP measure, is included as Schedule II to this release.

RAIT’s economic book value per common share outstanding, a non-GAAP financial measure, was $13.80 as of September 30, 2008 and $10.52 as of December 31, 2007. Economic book value is computed by adding or subtracting from book value unamortized intangible assets and any unrealized losses or gains recognized in shareholders’ equity or through earnings that are in excess of RAIT’s value at risk, or RAIT’s retained investment. Under GAAP, RAIT absorbs unrealized losses or gains on investments held by certain of our consolidated entities, primarily RAIT’s consolidated securitizations, even if those unrealized losses or gains are in excess of RAIT’s retained investment in those securitizations.

RAIT’s GAAP book value per common share outstanding was $23.40 as of September 30, 2008 and $6.78 as of December 31, 2007. GAAP book value is computed by subtracting the liquidation value of RAIT’s cumulative redeemable preferred shares from total shareholders’ equity and dividing the result by the number of common shares outstanding at the end of the period.

A reconciliation of RAIT’s shareholders’ equity to economic book value as of September 30, 2008 and December 31, 2007, including management’s rationale for the usefulness of this non-GAAP financial measure, is included as Schedule III to this release.

The following chart summarizes RAIT’s investment portfolio at September 30, 2008 (dollars in thousands):


					Percentage			Weighted-
	Amortized		Estimated		of Total			Average
	Cost⁽¹⁾		Fair Value⁽²⁾		Portfolio⁽³⁾			Coupon⁽⁴⁾

Investments in Mortgages and Loans
Commercial mortgages, mezzanine loans and other loans	$	2,101,183	$	2,098,058		26.9	%		8.2	%
Residential mortgages and mortgage-related receivables⁽⁵⁾		3,680,672		2,860,373		36.8	%		5.6	%

Total investments in mortgages and loans		5,781,855		4,958,431		63.7	%		6.7	%
Investments in Securities
TruPS and subordinated debentures		3,416,389		2,075,432		26.6	%		7.4	%
Unsecured REIT note receivables		370,889		305,801		3.9	%		6.0	%
CMBS receivables		213,921		104,651		1.3	%		5.8	%
Other securities		118,204		38,811		0.5	%		7.1	%

Total investments in securities		4,119,403		2,524,695		32.3	%		7.2	%
Investments in real estate interests		311,214		311,214		4.0	%		N/A

Total Portfolio/Weighted Average	$	10,212,472	$	7,794,340		100.0	%		6.9	%

(1)

Amortized cost reflects the cost incurred by us to acquire or originate the asset, net of origination discount.

(2)

The fair value of RAIT’s investments represents management’s estimate of the price that a willing buyer would pay a willing seller for such assets. Management bases this estimate on the underlying interest rates and credit spreads and, to the extent available, quoted market prices.

(4)

Weighted average coupon is calculated on the unpaid principal amount of the underlying instruments which does not necessarily correspond to amortized cost or estimated fair value.

(5)

RAIT’s investments in residential mortgages and mortgage-related receivables at September 30, 2008 consisted of investments in adjustable rate residential mortgages. These mortgages bear interest rates that are fixed for three, five, seven and ten year periods, respectively, and reset annually thereafter. RAIT has financed its investment in these assets through long-term securitizations.

The following chart summarizes RAIT’s non-accrual status investments and loan loss reserve at September 30, 2008 (dollars in thousands):

Carrying Value of

# of Non- Accrual

Non-Accrual

Percentage of Asset

Loan Loss Reserves

Investments (1)

Investments

Class(es)

9/30/2008

Commercial mortgages, mezzanine loans, investments in real estate interests and other loans

2,412,397

146,315

6.1

46,250⁽²⁾

Residential mortgages and mortgage-related receivables

3,680,672

435

169,734⁽³⁾

4.6

19,515

Investments in securities (4)

2,524,695

37,281

1.5

N/A⁽⁵⁾

Total

8,617,764

460

353,330

4.1

65,765

(1) Carrying value represents the value at which the respective asset class is recorded on our balance sheet in accordance with GAAP.

(2) Pertains to 13 loans with a $182.0 million aggregate unpaid principal balance.

(3) Includes loans delinquent over 60 days, in foreclosure, bankrupt or real estate owned as of September 30, 2008.

(4) Investments in securities 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, 2008 is $4.3 billion. The unpaid principal balance of the non-accrual investments in this category is $475.6 million, or 11.1%

of the total unpaid principal balance.

(5) Loan loss reserves are not applicable for investments in securities and security related receivables, including our investments in European, U.S. TruPS or

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. The estimated fair value adjustments for our investments in European securitizations and other

securities are recorded as a component of accumulated other comprehensive income within shareholders’ equity. A charge to GAAP net income is recorded only if

an other than temporary impairment is identified within our European portfolio or other investments. While RAIT believes the estimated fair values of these

asset classes are affected by any related credit quality issues, under GAAP, no separate loan loss reserve is established.

The following chart summarizes RAIT’s commercial mortgages, mezzanine loans & other loans

The geographic and property type breakdown is as follows (based on amortized cost):

At September 30, 2008, RAIT’s residential mortgage loan portfolio consisted of 7,737 residential mortgage loans with a weighted average coupon of 5.6%. The portfolio had an average FICO score of 738 at origination, primarily in 2005 and 2006, and has an amortized cost balance of $3.7 billion at September 30, 2008. Since the portfolio was originated, it has experienced $9.4 million in cumulative cash losses.

As of September 30, 2008, RAIT maintained investments of $2.1 billion (at estimated fair value) in TruPS and subordinated debentures. RAIT’s portfolio had a weighted average coupon of 7.4%. The issuers of these investments had a weighted average debt to total capitalization ratio of 77.3% and a weighted average interest coverage ratio of 1.8 times based on information available as of September 30, 2008. The following table provides a sector breakdown of these issuers as of September 30, 2008 based on estimated fair value:

Prior to January 1, 2008, we recorded certain of our investments in securities and derivatives at fair value. Effective January 1, 2008, RAIT adopted Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Liabilities” or “SFAS No. 159”. Upon adoption on January 1, 2008, RAIT adjusted the carrying amounts of certain investments in securities, certain CDO notes payable, certain derivative instruments and other assets and liabilities to fair value resulting in a one-time increase in shareholders equity of $1.1 billion. Each quarter, we reflect these financial assets and liabilities at their estimated fair value in our balance sheet, with all changes in fair value recorded in earnings.

The following table summarizes the cumulative net fair value adjustments through September 30, 2008 for the specific financial assets and liabilities elected for the fair value option under SFAS No. 159 (dollars in thousands):


							SFAS No. 159 Fair
							Value Adjustments			Cumulative Fair
	Fair Value			SFAS No. 159 Fair			during Nine-Month			Value Adjustments
	Adjustments as of			Value Adjustment on			Period Ended			as of September 30,
	December 31, 2007			January 1, 2008			September 30, 2008			2008

Assets:
Investments in securities	$	(494,765	)	$	(99,991	)	$	(1,152,385	)	$	(1,747,141	)
Deferred financing costs, net of accumulated amortization.		—			(18,047	)		—			(18,047	)
Liabilities:
Trust preferred obligations		—			52,070			101,514			153,584
CDO notes payable		—			1,520,616			1,180,426			2,701,042
Derivative liabilities		(155,080	)		—			(78,928	)		(234,008	)
Other liabilities		—			6,103			34			6,137

Fair value adjustments before allocation to minority interest		(649,845	)		1,460,751			50,661			861,567
Allocation of fair value adjustments to minority interest		123,881			(373,357	)		27,748			(221,728	)

Cumulative effect on shareholders’ equity	$	(525,964	)	$	1,087,394		$	78,409		$	639,839

Through September 30, 2008, the cumulative effect of the fair value adjustments recorded on each financial asset and liability selected for the fair value option under SFAS No. 159 had a net increase in shareholders’ equity of $639.8 million. This net increase in shareholders’ equity may reverse through a net charge to earnings in the future as we continue to record our financial assets and liabilities at fair value. Given the challenging market conditions, volatility in interest rates and the credit performance of our underlying collateral, we cannot assure investors that there will not be further significant fluctuations in the fair value of our assets and liabilities subject to SFAS 159, which could have a material effect on our financial performance.

On October 10, 2008, RAIT declared a dividend of $0.35 per common share to shareholders of record on October 31, 2008 to be paid on December 5, 2008. On September 30, 2008, RAIT paid a quarterly 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 2, 2008.

Interested parties can listen to the LIVE audio webcast of RAIT’s earnings conference call at 9:30 AM EST on Wednesday, November 5, 2008 by clicking on the Webcast link on RAIT’s homepage at www.raitft.com. The conference call may also be listened to by dialing 800.510.9661 Domestic or 617.614.3452 International, using passcode 73681832. For those who are able 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 12, 2008 by dialing 888.286.8010, access code 85629845.

RAIT, a real estate investment trust (“REIT”), provides a comprehensive set of debt financing options to the real estate industry, including investors in commercial real estate, REITs and real estate operating companies and their intermediaries, throughout the United States and Europe. RAIT manages and invests in commercial mortgages, including whole and mezzanine loans, commercial real estate investments, preferred equity interests, residential mortgage loans, trust preferred securities and subordinated debentures. RAIT generates income for distribution from our portfolio of investments and assets under management. For more information, please visit www.raitft.com or call Investor Relations at 215-243-9000.

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, 2007.

These risks and uncertainties also include the following factors: adverse market developments and credit losses have reduced, and may continue to reduce, the value of trust preferred securities, or TruPS, subordinated debentures and other debt instruments directly or indirectly held by RAIT; adverse market developments have reduced, and may continue to reduce, the value of other assets in RAIT’s investment portfolio; RAIT’s liquidity may be impaired by the reduced availability of short-term and long-term financing, including a reduction in the market for securities issued in securitizations and in the availability of repurchase agreements and warehouse facilities; RAIT’s liquidity may be adversely affected by margin calls; RAIT may be unable to obtain adequate capital at attractive rates or otherwise; payment delinquencies or failure to meet other collateral performance criteria in collateral underlying RAIT’s securitizations have restricted, and may continue to restrict, RAIT’s ability to receive cash distributions from RAIT’s securitizations and have reduced, and may continue to reduce, the value of RAIT’s interests in these securitizations; failure of credit rating agencies to confirm their previously issued credit ratings for debt securities issued in RAIT’s securitizations seeking to go effective may restrict RAIT’s ability to receive cash distributions from those securitizations; covenants in RAIT’s financing arrangements may restrict RAIT’s business operations; fluctuations in interest rates and related hedging activities against such interest rates may affect RAIT’s earnings and the value of RAIT’s assets; borrowing costs may increase relative to the interest received on RAIT’s investments; RAIT may be unable to sponsor and sell securities issued in securitizations, and, even if RAIT is able to do so, RAIT may be unable to acquire eligible securities for securitization transactions on favorable economic terms; RAIT may experience unexpected results arising from litigation that is currently pending or may arise in the future; RAIT and RAIT’s subsidiary, Taberna Realty Finance Trust, may fail to maintain qualification as real estate investment trusts, or REITs; RAIT may fail to maintain exemptions under the Investment Company Act of 1940; geographic concentrations in investment portfolios of residential mortgage loans could be adversely affected by economic factors unique to such concentrations; the market value of real estate that secures mortgage loans could diminish further due to factors outside of RAIT’s control; adverse governmental or regulatory policies may be enacted; management and other key personnel may be lost; competition from other REITs and other specialty finance companies may increase; and general business and economic conditions could impair the credit quality of our investments and reduce our ability to originate loans.

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
	2008			2007			2008			2007
Revenue:
Investment interest income	$	168,387		$	232,987		$	530,995		$	672,053
Investment interest expense		(116,005	)		(186,926	)		(368,853	)		(526,827	)
Provision for losses		(14,992	)		(6,099	)		(50,575	)		(10,662	)
Net investment income		37,390			39,962			111,567			134,564
Rental income		4,721			3,059			12,429			8,083
Fee and other income		5,128			11,325			17,131			20,889

Total revenue		47,239			54,346			141,127			163,536
Expenses:
Compensation expense		7,085			10,187			23,690			24,359
Real estate operating expense		4,064			3,433			11,424			8,711
General and administrative expense		4,733			7,008			16,456			19,077
Depreciation expense		1,665			1,945			4,431			3,816
Amortization of intangible assets		2,883			17,473			16,048			46,051

Total expenses		20,430			40,046			72,049			102,014
Income before other income (expense), taxes and discontinued operations		26,809			14,300			69,078			61,522
Interest and other income (expense)		(87	)		6,004			1,085			15,360
Gains (losses) on sale of assets		912			(7,569	)		770			(10,329	)
Gains on extinguishment of debt		—			—			8,662			—
Change in fair value of free-standing derivatives		—			1,673			(37,203	)		6,715
Change in fair value of financial instruments		(302,245	)		—			50,661			—
Unrealized gains (losses) on interest rate hedges		(290	)		(3,122	)		(275	)		(2,605	)
Equity in income (loss) of equity method investments		(9	)		(49	)		935			(57	)
Asset impairments		(18,038	)		(342,954	)		(38,361	)		(342,954	)
(Income) loss allocated to minority interest		114,837			93,357			15,490			81,482

Income (loss) before taxes and discontinued operations		(178,111	)		(238,360	)		70,842			(190,866	)
Income tax benefit (provision)		(173	)		(1,534	)		2,261			3,546

Income (loss) from continuing operations		(178,284	)		(239,894	)		73,103			(187,320	)
Income (loss) from discontinued operations		—			(340	)		—			(132	)

Net income (loss)		(178,284	)		(240,234	)		73,103			(187,452	)
Income allocated to preferred shares		(3,406	)		(3,357	)		(10,227	)		(8,403	)

Net income (loss) available to common shares	$	(181,690	)	$	(243,591	)	$	62,876		$	(195,855	)

Earnings (loss) per share—Basic:
Continuing operations	$	(2.83	)	$	(4.01	)	$	1.01		$	(3.23	)
Discontinued operations		—			(0.01	)		—			—

Total earnings (loss) per share—Basic	$	(2.83	)	$	(4.02	)	$	1.01		$	(3.23	)

Weighted-average shares outstanding—Basic		64,176,083			60,664,698			62,460,319			60,581,559
Earnings (loss) per share—Diluted:
Continuing operations	$	(2.83	)	$	(4.01	)	$	1.01		$	(3.23	)
Discontinued operations		—			(0.01	)		—			—

Total earnings (loss) per share—Diluted	$	(2.83	)	$	(4.02	)	$	1.01		$	(3.23	)

Weighted-average shares outstanding—Diluted		64,176,083			60,664,698			62,492,475			60,581,559
Distributions declared per common share	$	—		$	0.46		$	0.92		$	2.10

RAIT Financial Trust
Consolidated Balance Sheets
(Dollars in thousands, except share and per share information)
(unaudited)


	As of
	September 30,			As of
	2008			December 31, 2007
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans and other loans	$	2,091,366		$	2,189,939
Residential mortgages and mortgage-related receivables		3,680,672			4,065,083
Allowance for losses		(65,765	)		(26,389	)

Total investments in mortgages and loans		5,706,273			6,228,633
Investments in securities and security-related receivables ($2,524,695 and $2,776,833, respectively, at fair value)		2,524,695			3,827,800
Investments in real estate interests		311,214			284,252
Cash and cash equivalents		38,389			127,987
Restricted cash		196,671			298,433
Accrued interest receivable		102,190			110,287
Other assets		39,269			70,725
Deferred financing costs, net of accumulated amortization of $5,017 and $3,800, respectively		32,676			53,340
Intangible assets, net of accumulated amortization of $80,492 and $64,444, respectively		22,037			56,123
Total assets	$	8,973,414		$	11,057,580

Liabilities and Shareholders’ equity
Indebtedness:
Repurchase agreements	$	—		$	138,788
Secured credit facilities and other indebtedness		205,966			146,916
Mortgage-backed securities issued		3,438,431			3,801,959
Trust preferred obligations ($208,916 at fair value as of September 30, 2008)		208,916			450,625
CDO notes payable ($841,546 at fair value as of September 30, 2008)		2,272,796			5,093,833
Convertible senior notes		404,000			425,000

Total indebtedness		6,530,109			10,057,121
Accrued interest payable		82,517			65,947
Accounts payable and accrued expenses		17,516			19,197
Derivative liabilities		233,513			201,581
Deferred taxes, borrowers’ escrows and other liabilities		66,432			104,821
Distributions payable		—			28,068

Total liabilities		6,930,087			10,476,735
Minority interest		361,875			1,602
Shareholders’ equity
Preferred shares, $0.01 par value per share, 25,000,000 shares authorized; 7.75% Series A cumulative redeemable preferred shares, liquidation preference $25.00 per share, 2,760,000 shares issued and outstanding		28			28
8.375% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share, 2,258,300 shares issued and outstanding		23			23
8.875% Series C cumulative redeemable preferred shares, liquidation preference $25.00 per share, 1,600,000 shares issued and outstanding		16			16
Common shares, $0.01 par value per share, 200,000,000 shares authorized, 64,783,126 and 61,018,231 issued and outstanding, including 99,721 and 225,440 unvested restricted share awards, respectively		648			607
Additional paid in capital		1,610,435			1,575,979
Accumulated other comprehensive income (loss)		(154,644	)		(440,039	)
Retained earnings (deficit)		224,946			(557,371	)

Total shareholders’ equity		1,681,452			579,243
Total liabilities and shareholders’ equity	$	8,973,414		$	11,057,580

Schedule I
RAIT Financial Trust
Reconciliation of GAAP Net Income (Loss) Available to Common Shares to Adjusted Earnings (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)


	For the Three-Month						For the Nine-Month Periods
	Periods Ended September 30						Ended September 30
	2008			2007			2008			2007
Net income (loss) available to common shares, as reported	$	(181,690	)	$	(243,591	)	$	62,876		$	(195,855	)
Add (deduct):
Provision for losses		14,992			6,099			50,575			10,662
Depreciation expense		1,665			1,945			4,431			3,816
Amortization of intangible assets		2,883			17,473			16,048			46,051
(Gains) losses on sale of assets (2)		(770	)		7,569			(770	)		10,329
(Gains) losses on extinguishment of debt		—			—			(8,662	)		—
Change in fair value of financial instruments, net of allocation to minority interest of $(118,303) and $(27,748) for the three-month and nine-month periods ended September 30, 2008, respectively		183,942			—			(78,409	)		—
Unrealized (gains) losses on interest rate hedges		290			3,122			275			2,605
Interest cost of hedges, net of allocation to minority interest of $3,850 and $10,201 for the three-month and nine-month periods ended September 30, 2008, respectively		(11,238	)		—			(29,144	)		—
Capital losses (3)		—			—			32,059			—
Asset impairments, net of allocation to minority interest of $95,986 for the three-month and nine-month periods ended September 30, 2007		18,038			246,968			38,361			246,968
Share-based compensation		1,237			3,016			5,535			8,753
Write-off of unamortized deferred financing costs		—			—			—			2,985
Fee income deferred (recognized)		257			(5,263	)		446			27,732
Deferred tax provision (benefit)		17			3,245			1,240			(15,445	)

Adjusted earnings	$	29,623		$	40,583		$	94,861		$	148,601

Weighted-average shares outstanding—Diluted		64,176,083			60,664,698			62,492,475			60,581,559

Adjusted earnings per diluted share	$	0.46		$	0.67		$	1.52		$	2.45

(1)

We measure our performance using adjusted earnings in addition to GAAP net income (loss). Adjusted earnings represents net income (loss) available to common shares, computed in accordance with GAAP, before provision for losses, depreciation expense, amortization of intangible assets, (gains) losses on sale of assets, (gains) losses on extinguishment of debt, change in fair value of financial instruments, net of allocation to minority interest, unrealized (gains) losses on interest rate hedges, interest cost of hedges, net of allocation to minority interest, capital (gains) losses, asset impairments, net of allocation to minority interest, net (gains) losses on deconsolidation of VIEs, share-based compensation, write-off of unamortized deferred financing costs, fee income deferred (recognized) and our deferred tax provision (benefit). These items are recorded in accordance with GAAP and are typically non-cash items that do not impact our operating performance or dividend paying ability.

Management views adjusted earnings as a useful and appropriate supplement to GAAP net income (loss) because it helps us evaluate our performance without the effects of certain GAAP adjustments that may not have a direct financial impact on our current operating performance and our dividend paying ability. We use adjusted earnings to evaluate the performance of our investment portfolios, our ability to generate fees, our ability to manage our expenses and our dividend paying ability before the impact of non-cash adjustments recorded in accordance with GAAP. We believe this is a useful performance measure for investors to evaluate these aspects of our business as well. The most significant adjustments we exclude in determining adjusted earnings are provision for losses, amortization of intangible assets, change in fair value of financial instruments, capital (gains) losses, asset impairments and share-based compensation. Management excludes all such items from its calculation of adjusted earnings because these items are not charges or losses which would impact our current operating performance or dividend paying ability. By excluding these significant items, adjusted earnings reduces an investor’s understanding of our operating performance by excluding: (i) management’s expectation of possible losses from our investment portfolio or non-performing assets that may impact future operating performance or dividend paying ability, (ii) the allocation of non-cash costs of generating fee revenue during the periods in which we are receiving such revenue, and (iii) share-based compensation required to retain and incentivize our management team.

Adjusted earnings, as a non-GAAP financial measurement, does not purport to be an alternative to net income (loss) determined in accordance with GAAP, or a measure of operating performance or cash flows from operating activities determined in accordance with GAAP as a measure of liquidity. Instead, adjusted earnings should be reviewed in connection with net income (loss) and cash flows from operating, investing and financing activities in our consolidated financial statements to help analyze management’s expectation of potential future losses from our investment portfolio and other non-cash matters that impact our financial results. Adjusted earnings and other supplemental performance measures are defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our adjusted earnings to these other REITs.

(2)

During the nine-month period ended September 30, 2008, we revised our definition of adjusted earnings to exclude capital (gains) losses and gains (losses) on sale of assets. Capital (gains) losses and gains (losses) on sale of assets, while economic gains or losses, do not currently impact operating performance or dividend paying ability. This revision resulted in an increase of $7.6 million and $10.3 million to the computation of adjusted earnings for the three-month and nine-month periods ended September 30, 2007, respectively.

(3)

During the nine-month period ended September 30, 2008, certain of our warehouse arrangements were terminated. We have recorded the estimated loss of our warehouse deposits as a component of the change in fair value of free-standing derivatives in our consolidated statement of operations.

Schedule II
RAIT Financial Trust
Reconciliation of Fee and Other Income to Total Fees Generated (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)

(1)

Total Fees Generated represents the total fees generated, without consideration for the deferral of fees, as yield adjustments, in accordance with GAAP. Total fees generated, as a non-GAAP financial measurement, does not purport to be an alternative to fee and other income determined in accordance with GAAP, or a measure of operating performance or cash flows from operating activities determined in accordance with GAAP as a measure of liquidity. Instead, total fees generated is useful to management as a gauge of our cash revenue as it drives earnings at our taxable REIT subsidiaries for distribution to us and ultimately to our shareholders.

Schedule III
RAIT Financial Trust
Reconciliation of Shareholders’ Equity to Economic Book Value (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)


	As of						As of
	September 30, 2008						December 31, 2007
	Amount			Per Share (2)			Amount			Per Share (2)
Shareholders’ equity, as reported	$	1,681,452		$	25.95		$	579,243		$	9.49
Add (deduct):
Liquidation value of preferred shares (3)		(165,458	)		(2.55	)		(165,458	)		(2.71	)

Book Value		1,515,994			23.40			413,785			6.78
Unamortized intangible assets		(22,037	)		(0.34	)		(56,123	)		(0.92	)

Tangible Book Value (4)		1,493,957			23.06			357,662			5.86
Unrealized (gains) losses recognized in excess of value at risk.		(600,032	)		(9.26	)		284,002			4.66

Economic Book Value	$	893,925		$	13.80		$	641,664		$	10.52

(1)

Management views economic book value as a useful and appropriate supplement to shareholders’ equity, book value and tangible book value per share. The measure serves as an additional measure of our value because it facilitates evaluation of us without the effects of realized or unrealized (gains) losses on investments in excess of our total investment in that securitization, which is our maximum value at risk. Under GAAP, we record certain of our assets, liabilities and derivatives of our consolidated entities, primarily our consolidated securitizations, at fair value. The net fair value adjustments recognized in our financial statements that reduced our total investment below zero are added back to shareholders’ equity in arriving at economic book value and the net fair value adjustments recognized in our financial statements that are in excess of our total investment are deducted from shareholders’ equity in arriving at economic book value. In performing these computations, we exclude the impact of unrealized fair value adjustments associated with derivatives on economic book value.

Economic book value is a non-GAAP financial measurement, and does not purport to be an alternative to reported shareholders’ equity, determined in accordance with GAAP, as a measure of book value. Economic book value should be reviewed in connection with shareholders’ equity as set forth in our consolidated balance sheets, to help analyze our value to investors. Economic book value is defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our economic book value to that of other REITs. We do not intend economic book value to represent the fair value of our retained interests in our securitizations or the fair value of our shareholders’ equity available to common shareholders.

(2)

Based on 64,783,126 and 61,018,231 common shares outstanding as of September 30, 2008 and December 31, 2007, respectively.

(3)

Based on 2,760,000 Series A preferred shares, 2,258,300 Series B preferred shares, and 1,600,000 Series C preferred shares, all of which have a liquidation preference of $25.00 per share.

(4)

Tangible book value per share is calculated by subtracting the liquidation value of RAIT’s cumulative redeemable preferred shares and net intangible assets from total shareholders’ equity and dividing the result by the number of common shares outstanding at the end of the period.


Property Type	Percent				Percent
				U.S. Geographic Region
Multi-family		51.9	%	Central...............		32.0	%
Office		23.5	%	West..................		26.9	%
Retail		18.7	%	Southeast.............		19.9	%
Industrial		0.2	%	Mid-Atlantic..........		15.1	%
Other		5.7	%	Northeast.............		6.1	%


Total		100.0	%	Total.................		100.0	%


TruPS and Subordinated Debt Industry Sector	Percent
Commercial Mortgage		31.9	%
Office		20.9	%
Specialty Finance		14.6	%
Homebuilders		11.0	%
Retail		7.0	%
Residential Mortgage		6.4	%
Hospitality		4.9	%
Storage		3.3	%
Total		100.0	%


- - - -		Adjusted earnings per diluted share of $0.46 for the quarter ended September 30, 2008 Total GAAP loss per share – diluted of $2.83 for the quarter ended September 30, 2008 Economic book value of $13.80 per share at September 30, 2008 Book value of $23.40 per share at September 30, 2008


-		Asset management fees of $7.1 million for the quarter ended September 30, 2008 on assets under management of $14.3 billion as of September 30, 2008. A total of $4.2 million of asset management fees received from consolidated securitizations are eliminated for GAAP reporting.
-		Origination fee income of $2.2 million for the quarter ended September 30, 2008 generated in our commercial real estate and European portfolios. $1.9 million is included in fee and other income for GAAP reporting and $0.3 million is deferred and will be recognized in future income.


	Amortized Cost		Weighted-Average			Number of Loans		% of Total Loan
			Coupon					Portfolio
Commercial mortgages	$	1,424		7.7	%		118		67.8	%
Mezzanine loans		502		10.4	%		154		23.9	%
Other loans		175		6.1	%		11		8.3	%

Total	$	2,101		8.2	%		283		100.0	%


	For the Three-Month					For the Nine-Month
	Periods Ended September					Periods Ended September
	30					30
	2008		2007			2008		2007
Fees and other income, as reported	$	5,128	$	11,325		$	17,131	$	20,889
Add (deduct):
Asset management fees eliminated		4,208		6,300			12,769		16,538
Deferred structuring fees		—		—			—		11,413
Deferred (recognized) origination fees, net of amortization		257		(5,263	)		446		16,319
Total Fees Generated	$	9,593	$	12,362		$	30,346	$	65,159