8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 26, 2010

CAPITAL TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland	1-14788	94-6181186
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

410 Park Avenue, 14th Floor, New York, NY	10022
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 655-0220

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On October 26, 2010, Capital Trust, Inc. (the “Company”) issued a press release reporting the financial results for its fiscal quarter ended September 30, 2010. A copy of the press release is attached to this Current Report on Form 8-K (this “Current Report”) as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure.

On October 27, 2010, the Company held a conference call to discuss the financial results of the Company for its fiscal quarter ended September 30, 2010. A copy of the transcript of the call is attached to this Current Report as Exhibit 99.2 and is incorporated herein solely for purposes of this Item 2.02 disclosure. The transcript has been selectively edited to facilitate the understanding of the information communicated during the conference call.

The information in this Current Report, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act, regardless of any incorporation by reference language in any such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number		Description
	99.1	Press release dated October 26, 2010
	99.2	Transcript from third quarter earnings conference call held on October 27, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name:	Geoffrey G. Jervis
	Title:	Chief Financial Officer

Date: November 1, 2010

Exhibit Index

Exhibit Number		Description
	99.1	Press release dated October 26, 2010
	99.2	Transcript from third quarter earnings conference call held on October 27, 2010

EX-99.1

Exhibit 99.1

Contact:	Douglas Armer
	(212) 655-0220

Capital Trust Reports Third Quarter 2010 Results

NEW YORK, NY — October 26, 2010 — Capital Trust, Inc. (NYSE: CT) today reported results for the quarter ended September 30, 2010.

• Operating Results:

• Reported net loss of $134.7 million or $6.02 per share for the third quarter.

• The quarter’s results were driven primarily by provisions for loan losses, credit impairments on securities, valuation allowances on loans held-for-sale and impairments of real estate held-for-sale totaling $141.8 million, offset by $5.9 million of operating income and $1.2 million of other income.

• Portfolio Performance:

• At quarter end, the Company’s loan portfolio consisted of 129 assets with an aggregate net book value of $3.6 billion. During the third quarter, performance related activity included:

• $95.9 million of net loan loss provisions. Provisions in the third quarter included $98.4 million of loss provisions against seven loans offset by a $2.5 million recovery on one loan.

• $6.0 million of valuation allowances on loans held-for-sale and a $4.0 million impairment of real estate held-for-sale, to reflect these investments at approximate fair value.

• The addition of one loan with an outstanding principal balance of $11.5 million to the watch list and the removal of two loans with an aggregate principal balance of $41.4 million from the watch list.

• At quarter end, the Company’s securities portfolio was comprised of 64 securities with an aggregate net book value of $534.7 million. During the third quarter, performance related activity included:

• $35.9 million of credit impairments recorded on eight securities.

• The addition of one security with a book value of $3.5 million to the watch list.

• Originations/Repayments/Dispositions:

• During the quarter, the Company did not originate any new balance sheet investments.

• Full and partial repayments during the third quarter totaled $139.1 million, and fundings pursuant to previously existing loan commitments totaled $0.7 million.

• Recourse Debt Obligations:

• During the third quarter, the Company reduced the aggregate outstanding principal balance under its three repurchase agreements by $20.7 million, including net interest income redirection of $3.5 million, net collateral principal proceeds of $17.0 million and other payments pursuant to the terms of the Company’s March 2009 restructuring of $0.2 million.

• The Company’s senior credit facility balance was reduced by $0.3 million; the result of $1.3 million of amortization payments offset by $1.0 million of deferred interest accrual.

• Cash/Liquidity:

• At quarter end, cash balances at the Company were $24.1 million, down $2.3 million from the prior period.

Assets

Total assets were $4.2 billion at September 30, 2010. The Company’s Interest Earning Assets, defined as Loans receivable and Securities on the Company’s balance sheet, are summarized below:

Interest Earning Assets

• Interest earning assets totaled $4.1 billion of book value and had a weighted average yield of 3.17%.

• $3.5 billion (87%) of the portfolio was comprised of loan investments with a weighted average yield of 2.55%.

• $534.7 million (13%) of the portfolio was comprised of securities investments with a weighted average yield of 7.12%.

Total loan specific reserves were $675.5 million against 24 loans with an aggregate gross book value of $1.1 billion. 11 of the loans against which the Company booked reserves were non-performing and 13 of the loans were performing. The Company does not accrue interest on loans against which it has provisions unless collection of interest is expected.

23 loans with an aggregate book balance of $671.3 million were categorized as watch list loans. Watch list loans are performing loans (with no credit loss provisions) that the Company aggressively monitors and manages due to increased risk of potential future non-performance and/or loss.

Page 2 of 10

Net credit impairments and mark-to-market adjustments in the securities portfolio totaled $111.2 million against 16 bonds with a gross book value of $127.1 million. Of the total, $91.5 million were credit related impairments and $19.7 million were mark-to-market adjustments on impaired securities charged through other comprehensive income. The Company periodically updates its income amortization schedules to reflect changes in expected cash flows as a result of securities impairments.

11 securities with an aggregate book value of $73.5 million were identified as watch list securities. Watch list securities are securities (with no credit impairments) that the Company aggressively monitors and manages due to increased risk of potential future impairments and/or loss.

Valuation allowances on loans held-for-sale stood at $16.7 million against two loans with an aggregate gross book value of $76.6 million. In addition, $7.0 million of impairments have been recorded against one real estate held-for-sale asset with a gross book value of $15.1 million. These held-for-sale assets are reported at their approximate fair value.

The Company had one equity investment in an unconsolidated subsidiary with a book value of $7.6 million, which is a co-investment in a fund sponsored and managed by the Company.

Liabilities

On March 16, 2009, the Company entered into a restructuring of substantially all of its recourse liabilities. Under the terms of the restructuring, as extended by exercise of the extension option, $506.5 million of the Company’s recourse debt (substantially all of its secured, recourse liabilities) matures in March 2011. Detailed disclosure of the terms of the debt restructuring is available in the Company’s SEC filings. The Company has no further right to extend the maturity, any further extension is within the discretion of the lenders.

Total liabilities were $4.7 billion at September 30, 2010. The Company’s Interest Bearing Liabilities, which include repurchase agreements, a senior credit facility, junior subordinated notes, and the non-recourse, securitized debt obligations on the Company’s balance sheet, are summarized below.

The Company’s Interest Bearing Liabilities had a total book value of $4.3 billion at September 30, 2010 and were comprised of $3.7 billion of non-recourse, securitized debt obligations (85%) and recourse obligations comprised of $407.9 million of repurchase obligations (10%), $98.4 million of borrowings under its senior credit facility (2%) and $131.1 million of junior subordinated notes (3%). At quarter end, the Company’s $4.3 billion of Interest Bearing Liabilities carried a weighted average cash cost of 1.42% and a weighted average all-in cost of 1.64%.

Page 3 of 10

Cash/Liquidity

Current and prospective sources of liquidity, as of September 30, 2010, include unrestricted cash ($24.1 million), net operating cash flow, as well as principal payments and asset disposition proceeds. Prospective uses of liquidity include operating expenses, interest expense, debt repayments, unfunded loan commitments ($0.8 million), and capital commitments to the Company’s managed funds ($14.9 million).

Other Items

At September 30, 2010, the Company’s GAAP shareholders’ deficit was $426.7 million. Based on 22.4 million shares outstanding (fully diluted basis) at quarter end, book value per share was $(19.03).

In light of the credit reserve activity at the Company, and available tax-basis net operating losses from prior periods, it is not expected that the Company will have taxable income for 2010 and, therefore, will likely not be required to pay a dividend to continue to maintain its REIT status. Furthermore, any dividend payment is subject to the terms of the debt restructuring and would be payable, to the maximum extent possible, in stock (in lieu of cash).

Investment Management

All of the Company’s investment management activities are conducted through its wholly-owned, taxable, investment management subsidiary, CT Investment Management Co., LLC (“CTIMCO”). CTIMCO’s management activities include: (i) managing its parent, Capital Trust, Inc., (ii) CDO collateral management (CTIMCO is the collateral manager for five CDOs, which are all consolidated on the Company’s balance sheet as variable interest entities), (iii) special servicing (CTIMCO is the named special servicer on $2.4 billion of loans), and (iv) private equity fund management (at September 30, 2010, CTIMCO managed three private equity funds and one separate account with total investments of $1.3 billion and undeployed equity commitments of approximately $528.8 million). One of these funds and the separate account have ended their investment periods and are liquidating in the ordinary course of business. The other funds, CT Opportunity Partners I (“CTOPI”) and CT High Grade Partners II (“High Grade II”), are currently investing and capitalized with $540 million and $667 million of total equity commitments, respectively. Capital Trust, Inc. has committed to invest $25.0 million as a limited partner in CTOPI, of which $10.1 million has already been funded and $14.9 million remains undrawn. The Company does not have a co-investment in High Grade II.

Revenues from third party investment management fees totaled $3.8 million in the third quarter of 2010 on a gross basis, of which inter-company fees of $1.0 million were eliminated in the consolidation of CTIMCO.

During the quarter, CTIMCO originated five new investments ($168.3 million face value; $157.5 million purchase price) for its investment management vehicles.

Page 4 of 10

Comparison of Results of Operations: Three Months Ended September 30, 2010 vs. September 30, 2009
(in thousands, except per share data)

	2010			2009			$ Change			% Change
Income from loans and other investments:
Interest and related income	$	40,125		$	29,527		$	10,598			35.9	%
Less: Interest and related expenses		31,557			19,604			11,953			61.0	%
Income from loans and other investments, net		8,568			9,923			(1,355	)		(13.7	%)
Other revenues:
Management fees from affiliates		2,050			2,959			(909	)		(30.7	%)
Incentive management fees from affiliates		733			—			733			N/A
Servicing fees		84			168			(84	)		(50.0	%)
Other interest income		155			16			139			N/A
Total other revenues		3,022			3,143			(121	)		(3.8	%)
Other expenses:
General and administrative		5,143			5,492			(349	)		(6.4	%)
Depreciation and amortization		5			51			(46	)		(90.2	%)
Total other expenses		5,148			5,543			(395	)		(7.1	%)
Total other-than-temporary impairments of securities		(29,963	)		(77,883	)		47,920			(61.5	%)
Portion of other-than-temporary impairments of securities recognized in other comprehensive income		(5,921	)		11,987			(17,908	)		(149.4	%)
Impairment of real estate held-for-sale		(4,000	)		—			(4,000	)		N/A
Net impairments recognized in earnings		(39,884	)		(65,896	)		26,012			(39.5	%)
Provision for loan losses		(95,916	)		(47,222	)		(48,694	)		103.1	%
Valuation allowance on loans held-for-sale		(6,036	)		—			(6,036	)		N/A
Gain on extinguishment of debt		185			—			185			N/A
Income (loss) from equity investments		1,056			(862	)		1,918			N/A
Loss before income taxes		(134,153	)		(106,457	)		(27,696	)		26.0	%
Income tax provision		556			—			556			N/A
Net loss	$	(134,709	)	$	(106,457	)	$	(28,252	)		N/A
Net loss per share — diluted	$	(6.02	)	$	(4.75	)	$	(1.27	)		26.7	%
Dividend per share	$	0.00		$	0.00		$	0.00			N/A
Average LIBOR		0.29	%		0.27	%		0.02	%		7.1	%

Income from loans and other investments, net

As discussed in Note 2 to the Company’s consolidated financial statements, recent accounting guidance entitled Statement of Financial Accounting Standards No. 167, “Amendments to FASB Interpretation No. 46(R),” requires the Company to consolidate additional Variable Interest Entities (“VIEs”), primarily CMBS and CDO trusts, beginning January 1, 2010. As a result, the Company’s interest earning assets increased by $1.8 billion from September 30, 2009 to September 30, 2010. This increase resulted in a material increase in interest income for the third quarter of 2010 compared to the third quarter of 2009. Similarly, an increase in interest bearing liabilities of $2.5 billion resulted in a material increase in interest expense for the third quarter of 2010 compared to the third quarter of 2009. In addition, an increase in non-performing loans contributed to an offsetting decrease in net interest income during the third quarter of 2010 compared to the third quarter of 2009.

Management fees from affiliates

Base management fees from the Company’s investment management business decreased $909,000, or 31%, during the third quarter of 2010 compared to the third quarter of 2009. The decrease was attributed primarily to a decrease of $1.1 million in fees from CTOPI due to an amendment to the fund’s management agreement, which reduced management fees and extended the fund’s investment period. This decrease was offset by increased fees at High Grade II due to additional investment activity.

Page 5 of 10

Incentive management fees from affiliates

The Company recorded $733,000 of incentive management fees during the third quarter of 2010 in conjunction with the liquidation of CT Mezzanine Partners III, Inc. (“Fund III”). The Company recorded no such fees during the third quarter of 2009.

Servicing fees

Servicing fees decreased $84,000 during the third quarter of 2010 compared to the third quarter of 2009. The decrease in fees was primarily due to a one-time modification fee recorded in the third quarter of 2009.

General and administrative expenses

General and administrative expenses include personnel costs, operating expenses, professional fees and, for the third quarter of 2010, $323,000 of expenses associated with newly consolidated VIEs, as described in Note 2 to the Company’s consolidated financial statements. Excluding expenses from newly consolidated VIEs, general and administrative expenses decreased 12% between the third quarter of 2010 and the third quarter of 2009 due to lower personnel costs, and lower professional fees and other operating costs. This overall decrease was partially offset by $166,000 of incentive compensation paid during the third quarter of 2010 to employees and former employees as a result of incentive management fees received from Fund III.

Net impairments recognized in earnings

During the third quarter of 2010, the Company recorded a gross other-than-temporary impairment of $30.0 million on seven Securities that had an adverse change in cash flow expectations, all of which was included in earnings. The Company also reclassified $5.9 million of impairments that were previously included in other comprehensive income into earnings due to revised cash flow expectations. In addition, a $4.0 million impairment was recorded on Real Estate Held-for-Sale to reflect the property at fair value.

During the third quarter of 2009, the Company recorded a gross other-than-temporary impairment of $77.9 million on three securities that had an adverse change in cash flow expectations. Of this amount, $12.0 million (the amount considered fair value adjustments in excess of credit impairment) was included in other comprehensive income, resulting in a net $65.9 million impairment (the amount considered credit impairment) included in earnings.

Provision for loan losses

During the third quarter of 2010, the Company recorded an aggregate $95.9 million provision for loan losses. This net provision included $98.4 million of provisions against six loans, offset by a $2.5 million recovery of one loan that had previously been impaired. During the third quarter of 2009, the Company recorded an aggregate $47.2 million provision for loan losses against six loans.

Valuation allowance on loans held-for-sale

During the three months ended September 30, 2010, the Company recorded $6.0 million of valuation allowances on two loans that were classified as held-for-sale to reflect these assets at fair value. The Company did not record a valuation allowance on loans held-for-sale in the third quarter of 2009.

Page 6 of 10

Gain on extinguishment of debt

During the third quarter of 2010, the Company recorded a $185,000 gain on the extinguishment of debt due to realized losses from collateral assets held by consolidated securitization trusts. The Company recorded no such gains in 2009.

Income (loss) from equity investments

The income from equity investments during the third quarter of 2010 was primarily $1.2 million from the Company’s co-investment in CTOPI. CTOPI’s income for the quarter was largely the result of fair value adjustments on its investment portfolio. The loss from equity investments during the third quarter of 2009 resulted primarily from the Company’s share of losses from CTOPI, also largely derived from fair value adjustments on the underlying investments.

Income tax provision

During the third quarter of 2010, the Company recorded an income tax provision of $556,000 which was primarily due to differences between GAAP and tax recognition methodologies associated with certain revenue and expense items. The Company did not record a tax provision in the third quarter of 2009.

Dividends

The Company did not pay any dividends in the third quarter of 2010 or 2009.

Page 7 of 10

******

The Company will conduct a management conference call at 10:00 a.m. Eastern Time on Wednesday, October 27, 2010 to discuss third quarter 2010 results. Interested parties can access the call toll free by dialing (800) 862-9098 or 785-424-1051 for international participants. The conference ID is “CAPITAL.” A recorded replay will be available from noon on Wednesday, October 27, 2010 through midnight on Wednesday, November 10, 2010. The replay call number is (800) 283-8486 or (402) 220-0869 for international callers.

Forward-Looking Statements

This news release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to future financial results and business prospects. The forward-looking statements contained in this news release are subject to certain risks and uncertainties including, but not limited to, the success of the Company’s debt restructuring and its ability to meet the amortization required thereby, uncertainty as to any extension or refinancing of its maturing restructured debt obligations, demands on liquidity, the impact of the current turmoil in the financial markets, the continued deterioration in the commercial real estate market, the continued credit performance of the Company’s loan and CMBS investments, its asset/liability mix, the effectiveness of the Company’s hedging strategy and the rate of repayment of the Company’s portfolio assets and the impact of these events, conditions and uncertainties on the Company’s cash flow, as well as other risks indicated from time to time in the Company’s Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events or circumstances.

About Capital Trust

Capital Trust, Inc. is a fully integrated, self-managed real estate finance and investment management company that specializes in credit sensitive structured financial products. To date, the Company’s investment programs have focused primarily on loans and securities backed by commercial real estate assets, investing both for its balance sheet and for third party vehicles. Capital Trust is a real estate investment trust traded on the New York Stock Exchange under the symbol “CT.” The Company is headquartered in New York City.

Page 8 of 10

Capital Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2010 and December 31, 2009
(in thousands, except per share data)

	September 30,			December 31,
	2010			2009
	(unaudited)
Assets
Cash and cash equivalents	$	24,149		$	27,954
Securities held-to-maturity		3,345			17,332
Loans receivable, net		610,633			766,745
Loans held-for-sale, net		59,953			—
Equity investments in unconsolidated subsidiaries		7,597			2,351
Accrued interest receivable		2,600			3,274
Deferred income taxes		1,155			2,032
Prepaid expenses and other assets		5,976			8,391
Subtotal		715,408			828,079
Assets of Consolidated Variable Interest Entities (“VIEs”)
Securities held-to-maturity		531,349			697,864
Loans receivable, net		2,962,597			391,499
Loans held-for-sale, net		—			17,548
Real estate held-for-sale		8,055			—
Accrued interest receivable and other assets		18,442			1,645
Subtotal		3,520,443			1,108,556
Total assets	$	4,235,851		$	1,936,635
Liabilities & Shareholders’ Deficit
Liabilities:
Accounts payable and accrued expenses	$	7,325		$	8,228
Repurchase obligations		407,921			450,137
Senior credit facility		98,393			99,188
Junior subordinated notes		131,145			128,077
Participations sold		288,127			289,144
Interest rate hedge liabilities		5,900			4,184
Subtotal		938,811			978,958
Non-Recourse Liabilities of Consolidated VIEs
Accounts payable and accrued expenses		4,588			1,798
Securitized debt obligations		3,683,774			1,098,280
Interest rate hedge liabilities		35,329			26,766
Subtotal		3,723,691			1,126,844
Total liabilities		4,662,502			2,105,802
Shareholders’ deficit:
Class A common stock, $0.01 par value, 100,000 shares authorized, 21,912 and 21,796 shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively (“class A common stock”)		219			218
Restricted class A common stock, $0.01 par value, 51 and 79 shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively (“restricted class A common stock” and together with class A common stock, “common stock”)		1			1
Additional paid-in capital		559,339			559,145
Accumulated other comprehensive loss		(55,940	)		(39,135	)
Accumulated deficit		(930,270	)		(689,396	)
Total shareholders’ deficit		(426,651	)		(169,167	)
Total liabilities and shareholders’ deficit	$	4,235,851		$	1,936,635

Page 9 of 10

Capital Trust, Inc. and Subsidiaries
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2010 and 2009
(in thousands, except share and per share data)
(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Income from loans and other investments:
Interest and related income	$	40,125		$	29,527		$	119,523		$	93,341
Less: Interest and related expenses		31,557			19,604			94,462			61,116
Income from loans and other investments, net		8,568			9,923			25,061			32,225
Other revenues:
Management fees from affiliates		2,050			2,959			5,990			8,768
Incentive management fees from affiliates		733			—			733			—
Servicing fees		84			168			2,821			1,502
Other interest income		155			16			260			153
Total other revenues		3,022			3,143			9,804			10,423
Other expenses:
General and administrative		5,143			5,492			14,383			18,450
Depreciation and amortization		5			51			15			65
Total other expenses		5,148			5,543			14,398			18,515
Total other-than-temporary impairments of securities		(29,963	)		(77,883	)		(69,798	)		(96,529	)
Portion of other-than-temporary impairments of securities recognized in other comprehensive income		(5,921	)		11,987			12,094			17,612
Impairment of goodwill		—			—			—			(2,235	)
Impairment of real estate held-for-sale		(4,000	)		—			(4,000	)		(2,233	)
Net impairments recognized in earnings		(39,884	)		(65,896	)		(61,704	)		(83,385	)
Provision for loan losses		(95,916	)		(47,222	)		(150,143	)		(113,716	)
Valuation allowance on loans held-for-sale		(6,036	)		—			(6,036	)		(10,363	)
Gain on extinguishment of debt		185			—			648			—
Income (loss) from equity investments		1,056			(862	)		2,358			(3,074	)
Loss before income taxes		(134,153	)		(106,457	)		(194,410	)		(186,405	)
Income tax provision (benefit)		556			—			849			(408	)
Net loss	$	(134,709	)	$	(106,457	)	$	(195,259	)	$	(185,997	)
Per share information:
Net loss per share of common stock:
Basic	$	(6.02	)	$	(4.75	)	$	(8.73	)	$	(8.32	)
Diluted	$	(6.02	)	$	(4.75	)	$	(8.73	)	$	(8.32	)
Weighted average shares of common stock outstanding:
Basic		22,389,901			22,426,623			22,356,857			22,361,541
Diluted		22,389,901			22,426,623			22,356,857			22,361,541

Page 10 of 10

EX-99.2

Exhibit 99.2

Capital Trust Q3 ’10 Earnings Call
October 27, 2010
10:00 AM ET

Operator:	Hello and welcome to the Capital Trust third quarter 2010 results conference call. Before we begin, please be advised that the forward-looking statements contained in this news release are subject to certain risks and uncertainties including, but not limited to, the success of the Company’s debt restructuring, the continued credit performance of the Company’s loan and CMBS investments, its asset/liability mix, the effectiveness of the Company’s hedging strategy, the rate of repayment of the Company’s portfolio assets and the impact of these events on the Company’s cash flow, as well as other risks indicated from time to time in the Company’s Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events or circumstances.
	There will be a Q&A session following the conclusion of this presentation. At that time, I will provide instructions for submitting a question to management. I will now turn the call over to Steve Plavin, CEO of Capital Trust. Please go ahead.
Steve Plavin:	Thank you. Good morning everyone. Thank you for joining us and for your interest in Capital Trust.
	With me are Geoff Jervis, our Chief Financial Officer and Tom Ruffing our Chief Credit Officer and Head of Asset Management.
	Last night we reported our results for the third quarter and filed our 10Q. CT reported a net loss of $134.7 million or $6.02 per share. This loss was driven by $141.8 million of reserves and impairments, offset by operating and other income.

During the quarter, we recorded $102 million of net loss provisions and valuation allowances in our loan portfolio and $40 million of impairments on securities and REO. We also added one loan with a book value of $11 million and one security with a book value of $3 million to our loan and security watch list. Geoff will run you through the detailed numbers, but lower property valuations were the primary driver behind the increase in provisions while projected underlying loan losses on junior classes of CMBS and CDOs led to the increased impairments.

We are operating in a bifurcated market. For primary assets in major cities, values are up significantly. In these markets, tenant demand has already begun or is anticipated to improve in the near term. For secondary properties and markets, weak local economies provide little near term hope. New demand generators for space have yet to emerge and there is little clarity as to what will catalyze these markets and when it will occur.

In general, property cash flows remain under intense pressure, substantially below the levels projected at loan origination in 2006 and 2007. Very significant cash flow improvement remains necessary for the full repayment of financings based on those cash flow projections. Many loans from those vintages are being kept afloat by low Libor and many will be unable to sufficiently recover in order to avoid a restructure or foreclosure as final maturity dates approach in 2011 and 2012.

These difficult current market conditions continue to create opportunities for our CT Investment Management subsidiary. During the quarter, we originated five new investments totaling $157.5 million for funds managed by CTIMCO. Real estate loans and securities managed by CTIMCO exceed $6 billion and several of our opportunistic investments have been sourced as a result of our portfolio management activities. CTIMCO also remains an active special servicer of loans in CMBS pools. With over $500 million of equity remaining to invest in CT Opportunity Partners and CT High Grade Partners II, CTIMCO remains an active investor in the market.

	Our third quarter results continue to reflect the challenges of CT balance sheet loans and securities originated at or near the peak of the market. We expect challenging market conditions to persist for the next several quarters as highly leveraged loans approach final maturity.
	Our repurchase obligations and syndicated credit facilities totaling $507 million mature in March 2011. We are currently working to address these maturities, but can provide no assurance at this time that we will be successful.
	And now Geoff will run you through the third quarter financials
Geoffrey Jervis:	Thank you Steve and good morning everyone.
	As Steve mentioned, last night we reported results for the third quarter, recording a net loss of $134.7 million or $6.02 per share.
	The net loss for the quarter was primarily the result of $141.8 million of credit impairments to the Company’s investment portfolio comprised of $95.9 million of net loan loss provisions on seven loans, $35.9 million of security impairments on 8 securities, $6.0 million of valuation allowances on our 2 Loans Held for Sale and $4 million of impairments on our one Real Estate Held for Sale asset. Excluding these impairments and $1.2 million of other items, net operating income was $5.9 million or $0.26 per share for the period.
	Apart from the impairment activity, the major component of net income was net interest margin on our portfolio of $8.6 million, up $790,000 from last quarter on a series of one-time events offset by the continued negative impact of asset level non-performance in our portfolio.

...other components of operating income were...

Other revenues of $3.0 million, up $780,000 from last quarter on a combination of new, stabilized base management fee revenue from CT Opportunity Partners, increased base management fee income from CT High Grade Partners II as we continued to invest that vehicle, and a one-time incentive management fee from CT Mezzanine Partners III, or Fund III, as we wrapped up the 2003 vintage fund during the third quarter. These increased revenues were offset by special servicing fees — that, despite increased special servicing activity, were down period to period as the realization of this income is inherently inconsistent.

Other expenses, primarily G&A, were $5.1 million, up $640,000 from the prior quarter, driven in part by the distribution to employees and former employees of their share of incentive management fees collected from Fund III and increased professional fees.

A final item of note is income from equity investments, representing the income we record as a co-investor in CT Opportunity Partners. Income for the quarter was $1.1 million, up $120,000 from last quarter as the fund, that carries its investments at fair value and records changes in fair value through its income statement, continued to experience increases in the fair value of its portfolio — a non cash item income item.

Turning to the investment management business, our wholly owned subsidiary, CTIMCO, recorded total third party revenues of $3.8 million for the quarter on a gross basis, or $2.8 million after the GAAP elimination of intercompany activity. In addition to managing its parent, Capital Trust, CTIMCO manages 4 third party private equity vehicles, two of which, CT Opportunity Partners and CT High Grade Partners II, are currently investing and have over $500 million of uncalled equity capital available for investment. CTIMCO also earns revenue as a CDO collateral manager, and as a special servicer. As mentioned earlier, one of our private equity funds, CT Mezzanine Partners III, was wrapped up during the quarter as its final remaining asset was satisfied. The fund, a $425 million vehicle raised in 2003 and invested from 2003 to 2005, made 35 investments aggregating over $1.2 billion and, upon the final distribution, net returns to our investors were 12%.

Over to the balance sheet,

As we mentioned in the first quarter of this year, on January 1st we adopted FAS 167, requiring us to consolidate seven CMBS trusts and materially change the presentation of our financial statements. Specifically, the company’s assets and liabilities are now segregated into those held directly and those representing the assets and liabilities of certain CMBS and CDO trusts, or variable interest entities (referred to as VIEs). At year-end 2009, the aforementioned seven CMBS trusts were carried, as securities, at $79 million, and at September 30, under the new FAS 167 regime, these securities were recorded as $2.61 billion of loans and securitized debt obligations of $2.67 billion. In the past, the only VIEs that we consolidated were the 4 CDOs that were issued by CT. Now, with the consolidation of the 7 new VIEs, our total VIE assets are $3.5 billion and our total VIE liabilities are $3.7 billion.

Starting at the top of the balance sheet...

Cash at quarter end was $24.1 million, down $2.3 million from last quarter. Under the terms of our March debt restructuring, our only “financial” covenant requires maintenance of a minimum cash balance of $5 million, a test that we complied with this quarter... Uses of cash during the quarter included the funding of $680,000 under our one remaining loan commitment and the funding of a $1.4 million capital call to CT Opportunity Partners. Cash represents the primary source of CT’s liquidity and is earmarked to meet the Company’s unfunded commitments that include an additional $780,000 on its one loan commitment and $15 million to its private equity fund co-investment. Despite positive operating income and cash flow shown in our financial statements, due to cash flow redirection provisions in our CDOs and repurchase agreements, as well as scheduled amortization under our senior credit facility, much of this cash flow is not available to us. When combined with the decline in performance of the portfolio, cash flow available to us is expected to be negative going forward. Therefore, the Company will likely be required to use its existing cash balances not only to fund its loan and private equity commitments, but also to fund a portion of operating expenses.

At quarter end, our Securities portfolio was comprised of 64 securities with a total net book value of $535 million (7 securities with a carrying value of $3.3 million held directly and the balance in VIEs). Activity for the quarter included $24.6 million of principal repayments, and $35.9 million of credit impairments. In total, we have 16 impaired securities in the portfolio (25% in number) with total gross book value of $127 million and impairments of $111 million. In addition, we have 11 securities (17% by number) with a total book value of $73 million on our watch list. The directly held, non VIE portfolio has 6 impaired securities with total gross book value of $32.8 million and total impairments of $30.7 million. In addition, the one remaining security in the direct portfolio is on our watch list.

Over to Loans, at quarter end, we held 129 loans with a total carrying value of $3.6 billion. Significant non credit related activity for the quarter included $114.4 million of loan satisfactions and principal repayments and one loan with a book balance of $60.5 million being reclassified as held-for-sale. During the quarter, we recorded $98.4 million of provisions for loan losses against seven loans and experienced $2.5 million in recoveries of previously recorded reserves. In total, 26 of the Company’s loans (20% by number) totaling $1.1 billion of gross book value have recorded reserves of $692 million. In addition to the loans with reserves, the Company maintains a “loan watch list” that is comprised of performing loans of concern that do not carry credit reserves, this watch list contains 23 loans (18% by number) with a total book balance of $671 million. Looking only at the directly held/non VIE portfolio, the Company held 33 loans with a carrying value of $671 million and the net reserve activity for the quarter was $36 million on this portfolio. In the direct portfolio, 12 loans (36% by number) with $544 million of gross book value have recorded reserves of $410 million and 8 loans (24% by number) with carrying values of $156 million are on the watch list.

Equity investments in unconsolidated subsidiaries reflects our co-investments in certain of our investment management funds. The balance is comprised of $10.1 million of capital contributions that we have made to date under our $25 million co-investment commitment to CT Opportunity Partners. Differences between our contributions and the $7.6 million carrying value of this account are almost exclusively due to our recognition of non cash fair value adjustments at the fund.

On the liability side, our total liabilities were $4.7 billion at quarter end. Total liabilities were comprised of $939 million of direct liabilities and $3.7 billion of securitized/VIE liabilities. Recourse, direct liabilities, include the three repurchase agreements, our senior credit facility and the junior subordinated notes. None of the securitized/VIE liabilities are recourse obligations of CT.

During the quarter, we continued to reduce borrowings under our repurchase agreements through principal and net interest margin sweeps, with total outstanding principal balances at quarter end of $408 million, down $21 million from the prior quarter. These facilities, pursuant to our March 2009 restructuring, all mature in March of 2011. Given that financing of this nature is no longer available in the market, there can be no assurances that we will be able to find replacement financing before these liabilities mature.

Our senior credit facility balance declined slightly during the quarter, as scheduled amortization payments slightly exceeded capitalized interest provisions. This facility is co-terminus with our repurchase agreements and, like the repurchase agreements, there can be no assurances that we will be able to find replacement financing.

	Our junior subordinated notes, the most subordinate part of our debt capital structure, also restructured in 2009, continue to accrete to their restructured face balance of $144 million. These debentures carry an interest rate of 1% through 2012, when they revert back to their prior coupon of 7.2%, and ultimately mature in 2036.
	Looking at our securitized debt, this account represents the liabilities of our consolidated VIEs, comprised of our 4 CT CDOs and the 7 newly consolidated VIE trusts. During the quarter, this account decreased by $117 million, a result of $113 million from repayments due to the application of collateral principal proceeds and $4 million in interest income redirection.
	Finally, our shareholders equity account ended the quarter at a deficit of $427 million, a decrease of $133 million from June 30th due primarily to the net loss for the period. On a per share basis, based upon 22.4 million shares outstanding, book value per share stood at negative $19.03 at September 30th.
	With that, I will turn it back to Steve.
Steve Plavin:	Thank you. Tony will you open the call for questions.
Operator:	At this time, if you would like to ask a question, please press the “star” and “one” on your touchtone phone. If your question has been answered or you wish to withdraw yourself from the queue you may do so at any time by pressing the “pound” key. Once again, it’s “star” and “one” to ask a question. We’ll pause momentarily to allow questions to enter the queue.

Operator:	Our first question comes from Darryl Kasper with Madison International. Please go ahead.
Darryl Kasper:	Hi this is Darryl. Could you talk through the process of how the replacement financing works or are a lot of these conversations coming down to the last month or last couple of weeks or is it possible to secure financing at a time like today or is it just not feasible to negotiate today for something that’s so far out?
Geoffrey Jervis:	Well these conversations have been occurring since 2008 around the beginning of this crisis. I would say that our March 2009 restructuring represented the first act of a restructuring and we continue to talk to all of our lenders. We have a long road obviously with the situation of the company, but there is no commitment from anybody to do so, there is no obvious replacement financing. Much of our time is being spent on trying to find a solution to our March 2011 refinancing.
Daryl Kasper:	Thank you
Operator:	Thank you. Our next question will come from Evan Dreyfuss with Talon Asset Management. Please go ahead, your line is open.
Evan Dreyfuss:	Yes, I just have a quick question, a little bit of a follow-on to the first question. The way I look at this at the moment, your non-VIE assets have been marked down, it looks like to $0.40 to $0.45 on the dollar. When we get to March 2011 and you’re working with all the lenders, is there a mechanism to try to assess what the value really is and is there a covenant level where if you come up with valuation of $0.50 or $0.55 you need to be higher? What’s the mechanism other than the maturity? Is there enough assets and time to maybe have those assets come back up in value and for them to extend. Other than maturity, is there any other thing that they can say to you in terms of what those assets are marked at?

Geoffrey Jervis:	At maturity in March of 2011 we have no agreement with our lenders. There is no provision necessarily that if the value is at a certain level based upon reserved value or fair value or any other measure of value that we can require our lenders to do anything. I think that any conversation with any lender whether it be our existing lender or new lenders will be based upon where the asset sits on all senses, fair value on a liquidation basis as well as where one might deem the range of ultimate collectability.
Evan Dreyfuss:	And then if you get to a point where they say we don’t want to extend, we’d like this collateral and then you deliver the collateral. Has Capital Trust guaranteed the senior secured loan and the repo agreements? Is all the cash and the equity in your CDOs and the equity in your management business secured by that as well? Can they basically take your entire company to satisfy those loans? If they say, we think the assets are worth $300 million and you owe us $410 million or $500 million, can they take it all then?
Geoffrey Jervis:	It’s a tiered conversation obviously because you have three tiers of recourse debt. The repurchase agreements which are secured, the senior credit facility which is partially secured and then the junior subordinated notes that you own, that are not collateralized and the most subordinate piece of the capital structure. I think that the way it would play out legally is unclear and I don’t want to speculate too much, but the repo lenders have their collateral and we have a right to repurchase that collateral at a certain price in March of 2011. If we don’t come up with the proceeds necessary to repurchase that collateral then in theory that collateral belongs to them. That represents almost the entire value of the company. The second tier of debt being the senior credit facility has some collateral which belongs to that syndicate. Other than that there really is only a de minimis amount of unencumbered collateral that would be available to service any deficiencies at the repos and whatever the deficient claim would be at the unsecured level as well.

Evan Dreyfuss:	But then is the cash and the equity in the other parts of your business pledged to the secured line or if you had done unravel it, does CT get to keep the cash and keep the investment management business?
Geoffrey Jervis:	Well I would say that you should delineate between CT and the investment management business, which is CTIMCO, our wholly-owned subsidiary. That entity has roughly half the cash in the company. That entity has management contracts and is also the home for all the employees and it is separate and distinct. CTIMCO is not pledged as collateral for any liability.
Evan Dreyfuss:	Perfect, that’s it. Thank you, that answer’s the question. Thank you and good luck.
Geoffrey Jervis:	Thank you
Operator:	Thank you. At this time we have no further questions.
Steve Plavin:	Thank you everyone for joining
Operator:	That concludes today’s conference. You may disconnect at this time.

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