NOTE 9: SERIES D PREFERRED SHARES

On October 1, 2012, we entered into a Securities Purchase Agreement, or the purchase agreement, with ARS VI Investor I, LLC, or the Investor, an affiliate of Almanac Realty Investors, LLC, or Almanac. During the period from the effective date of the purchase agreement through March 2014, we sold to the Investor on a private placement basis in four separate sales for an aggregate purchase price of $100,000, or the total commitment, the following securities: (i) 4,000,000 of our Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share, or the Series D preferred shares, (ii) common share purchase warrants, or the warrants, exercisable for 9,931,000 of our common shares, or the common shares (which had subsequently adjusted to 11,035,875 shares), and (iii) common share appreciation rights, or the Investor SARs, with respect to up to 6,735,667 common shares (which had subsequently adjusted to 7,485,045 shares).

All transactions involving the issuance, repurchase, redemption and/or exchange of the Series D preferred shares discussed herein also involved the corresponding preferred units of RAIT IV, and with respect to the redemption on June 27, 2018 in connection with the below referenced Redemption and Exchange Agreement, resulted from the redemption of the linked preferred units of RAIT IV.

In September 2015, we amended the purchase agreement with Almanac related to the Series D preferred shares. This amendment changed two of the covenants therein. As consideration for this amendment, we paid the Investor $450. We accounted for this amendment as a modification of the Series D preferred shares.

On December 7, 2016, we entered into a securities repurchase agreement with the Investor pursuant to which we repurchased and cancelled 464,000 Series D preferred shares at par for a purchase price of $11,600 which resulted in a decrease from 4,000,000 Series D preferred shares issued and outstanding to 3,536,000 Series D preferred shares issued and outstanding.

On June 22, 2017, we entered into a securities repurchase agreement with the Investor pursuant to which we repurchased and cancelled 402,280 Series D preferred shares at par for a purchase price of $10,057 which resulted in a decrease from 3,536,000 Series D preferred shares issued and outstanding to 3,133,720 Series D preferred shares issued and outstanding.

On March 19, 2018, we redeemed and cancelled 194,530 Series D preferred shares at par for a purchase price of $4,863 which resulted in a decrease from 3,133,720 Series D preferred shares issued and outstanding to 2,939,190 Series D preferred shares issued and outstanding.

As discussed in Note 1: The Company, on June 27, 2018, we entered into a Redemption and Exchange Agreement with the Investor whereby we redeemed and cancelled the remaining 2,939,190 preferred units of RAIT IV and RAIT’s corresponding Series D preferred shares for $56,765 of cash using the proceeds from the sale of RAIT IV’s FL5 Interests and FL6 Interests and defined available cash held by RAIT IV and $16,715 of liquidation preference of RAIT’s publicly traded Series A preferred shares, Series B preferred shares and Series C preferred shares. Accordingly, the Investor received 383,147 of RAIT’s Series A preferred shares, 167,828 of RAIT’s Series B preferred shares, and 117,605 of RAIT’s Series C preferred shares. In addition, RAIT paid the Investor an exchange fee of $418. The Redemption and Exchange Agreement also provided for the termination of the Securities Purchase Agreement and mutual releases between RAIT and the Investor of the previously reported dispute between the two parties.

This transaction is accounted for as an extinguishment of Series D preferred shares of RAIT and issuance of Series A, Series B and Series C preferred shares, in each case, of RAIT. Accordingly, the difference between the fair value of the consideration transferred to the Investor (i.e., cash and RAIT’s Series A, Series B and Series C preferred shares) and the carrying amount of the Series D preferred shares that were redeemed and exchanged represents a return from the Investor. The following table summarizes the transaction:

Liquidation preference of Series D preferred shares of RAIT prior to June 27, 2018					$	73,480

Cash received for sale of RAIT IV's interests in Holdings 2016 and Holdings 2017	$	54,632
Defined available cash held by RAIT IV		2,133
Total par amount of Series D preferred shares of RAIT redeemed	$	56,765

Fair value of Series A preferred shares of RAIT issued in exchange		2,498	(1	)
Fair value of Series B preferred shares of RAIT issued in exchange		1,091	(2	)
Fair value of Series C preferred shares of RAIT issued in exchange		776	(3	)
Total fair value of Series A, Series B and Series C preferred shares exchanged	$	4,365

Cash exchange fee	$	418

Total consideration transferred in redemption and exchange					$	61,548

Net increase to equity as a result of redemption					$	11,932

(1)

Represents the fair value of 383,147 shares of Series A preferred that were issued to the Investor. The fair value is based upon $6.52 per share, which was the closing price of the Series A preferred shares on June 27, 2018.

(2)

Represents the fair value of 167,828 shares of Series B preferred that were issued to the Investor. The fair value is based upon $6.50 per share, which was the closing price of the Series B preferred shares on June 27, 2018.

(3)

Represents the fair value of 117,605 shares of Series C preferred that were issued to the Investor. The fair value is based upon $6.60 per share, which was the closing price of the Series C preferred shares on June 27, 2018.

On October 11, 2017, we received a put right notice from the Investor exercising the Investor’s right to require us to purchase for $20,500 all the previous warrants and Investor SARs. On October 17, 2017, RAIT purchased all of the warrants and Investor SARs. As a result, RAIT had no further obligations beyond October 17, 2017 relating to the warrants and Investor SARs and none remain outstanding, respectively, as of that date.