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®

Investor PresentationInvestor PresentationFourth Quarter & Full Year 2007Fourth Quarter & Full Year 2007

February 21, 2008February 21, 2008

Investor PresentationFourth Quarter 2007

2

®Legal NoticesLegal Notices

This presentation contains “forward-looking statements” within the meaning of the Private SecuritiesLitigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which aresubject to numerous assumptions, risks, and uncertainties. All statements contained in thispresentation that are not clearly historical in nature are forward-looking, and the words “project,”“anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended toidentify forward-looking statements. All forward-looking statements (including statements regardingfuture financial and operating results, market conditions, business opportunities, dividendprojections, operating expenses, growth, competition, liquidity and credit performance) involve risks,uncertainties and contingencies, many of which are beyond our control which may cause actualresults, performance, or achievements to differ materially from anticipated results, performance orachievements. Actual results could differ materially from those contained or implied by suchstatements for a variety of factors, including without limitation: changes in economic conditions;continued disruptions in credit and other markets; movements in interest rates; competitivepressures on product pricing and services; success and timing of other business strategies; thenature, extent, and timing of governmental actions and reforms; extended disruption of vitalinfrastructure; and other factors described in reports filed by CapitalSource with the Securities andExchange Commission. All forward-looking statements included in this presentation are based oninformation available at the time of the release. We are under no obligation to (and expresslydisclaim any such obligation to) update or alter our forward-looking statements, whether as a resultof new information, future events or otherwise.


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®Presentation IndexPresentation Index

FY 2007 and 4Q 2007 highlightsFY 2007 and 4Q 2007 highlights

CEO and CFO key pointsCEO and CFO key points

Credit PerformanceCredit Performance

4Q Asset Growth4Q Asset Growth

Key MetricsKey Metrics Commercial Finance Segment

Healthcare Net Lease Segment

4Q Consolidated4Q Consolidated –– Other IncomeOther Income

Funding and LiquidityFunding and Liquidity

DividendsDividends

What Investors Should Expect in 2008What Investors Should Expect in 2008

Supplemental InformationSupplemental Information


4

®FY 2007 HighlightsFY 2007 Highlights

Full year Adjusted Earnings of $448.2 millionFull year Adjusted Earnings of $448.2 million

5% higher than 2006

Assets Under Management at year end of $20.9 billionAssets Under Management at year end of $20.9 billion

Up 23% for the year

Commercial loans at year end of $9.9 billionCommercial loans at year end of $9.9 billion

Up $2 billion or 26% for the year

Direct Real Estate investments at $1.0 billionDirect Real Estate investments at $1.0 billion

Up $295 million or 41% for the year

New loans being originated at higher spreadsNew loans being originated at higher spreads

Competitors leaving the middle marketCompetitors leaving the middle market

Credit stable throughout 2007 and improved from year endCredit stable throughout 2007 and improved from year end20062006


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®4Q 2007 Highlights4Q 2007 Highlights

Regular cash dividend of $0.60 paid in 4Q 2007Regular cash dividend of $0.60 paid in 4Q 2007

Strong and stable credit performanceStrong and stable credit performance

Charge-offs significantly lower than 3Q

Other-key credit metrics in-line with historic ranges

No funding issues throughout capital markets disruptionNo funding issues throughout capital markets disruption

Increased Liquidity by $500 million: $3.4 billion of undrawn committed creditfacility capacity as of December 31, 2007

Completed two term financings, totaling $835 million

Prepayment related fee income of $12.4 million (49bps of Yield)Prepayment related fee income of $12.4 million (49bps of Yield)

Consolidated adjusted ROE increased to 16.35%Consolidated adjusted ROE increased to 16.35%


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®

Continued strong credit performanceContinued strong credit performance

No funding or financing issues, throughout capital marketsNo funding or financing issues, throughout capital marketsdisruptiondisruption

Expect to pay $0.60 per share quarterly cash dividend in 2008Expect to pay $0.60 per share quarterly cash dividend in 2008

Attractive new lending opportunitiesAttractive new lending opportunities –– price, terms andprice, terms andstructurestructure –– in current market conditionsin current market conditions

Nearly 60% of business (Healthcare, Security Finance andNearly 60% of business (Healthcare, Security Finance andRediscount Finance) expected to be relatively unaffected inRediscount Finance) expected to be relatively unaffected ineconomic downturneconomic downturn

Return to broad distribution model securitization marketReturn to broad distribution model securitization marketplannedplanned

CEOCEO’’s Key Pointss Key Points


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®CFOCFO’’s Key Pointss Key Points

Business performed very well against back drop of difficult markBusiness performed very well against back drop of difficult marketetconditionsconditions

Modest growth shows disciplineModest growth shows discipline

$238.3 M in Commercial Finance

Flat Healthcare Net Lease

Average coupon as spread to LIBOR increased 6bpsAverage coupon as spread to LIBOR increased 6bps

Cost of Funds higher as a spread to LIBOR was up 55bps from 3QCost of Funds higher as a spread to LIBOR was up 55bps from 3Q

Higher costs on new financings

Volatile short term market (LIBOR, Prime, CP) negatively impacted margin

Wider spreads on new assets to offset impact of higher spreads oWider spreads on new assets to offset impact of higher spreads on newn newfinancings over timefinancings over time

Running the business at lower leverageRunning the business at lower leverage

8.5% higher share count in 4Q

Residential Mortgage Investment segment performed wellResidential Mortgage Investment segment performed well –– no fundingno fundingissuesissues


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®

Portfolio Credit Trends Since 2Q06:

2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07

Delinquent Loans (60+ Days)as a % of commerical loans 1.31% 0.84% 1.12% 0.85% 1.09% 0.74% 0.75%as a % of commerical assets 1.27% 0.81% 1.03% 0.77% 0.97% 0.67% 0.68%

Loans on Non-accrualas a % of commerical loans 2.01% 2.39% 2.34% 1.78% 1.97% 1.76% 1.73%as a % of commerical assets 1.94% 2.31% 2.14% 1.63% 1.77% 1.59% 1.57%

Allowance for Loan Lossas a % of commerical loans 1.41% 1.40% 1.54% 1.45% 1.43% 1.16% 1.41%as a % of commerical assets 1.36% 1.35% 1.41% 1.33% 1.28% 1.05% 1.28%

Net Charge Offs (Annualized)as a % of commerical loans 0.74% 1.22% 0.66% 0.51% 0.63% 1.15% 0.25%as a % of commerical assets 0.72% 1.18% 0.63% 0.47% 0.57% 1.04% 0.22%

Credit PerformanceCredit Performance

NonNon--accruals declined 3bps from 3Q to 1.57% of commercialaccruals declined 3bps from 3Q to 1.57% of commercialassetsassets Lowest level since 1Q’05

ChargeCharge--offs declined to 22bps of commercial assetsoffs declined to 22bps of commercial assets

ChargeCharge--offs for the full year 2007 were 0.58% of commercialoffs for the full year 2007 were 0.58% of commercialassetsassets 5 bps lower than full year 2006

Note: Commercial Assets includes commercial loans, loans held for sale, receivables under reverse-repurchase agreements anddirect real estate investments.


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®4Q Asset Growth / Interest & Investment Income4Q Asset Growth / Interest & Investment Income

Assets under management $20.9 billionAssets under management $20.9 billion

+184.3 M from 3Q

Total commercial loans at $9.9 billionTotal commercial loans at $9.9 billion

+ $238.3 M from 3Q

Total commercial assets under management at $14.8 billionTotal commercial assets under management at $14.8 billion

+ $340.5 M from 3Q

Commercial Finance Interest Income of $242.5 millionCommercial Finance Interest Income of $242.5 million

- $6.9 M from 3Q

Commercial Finance Net investment income of $146.1 millionCommercial Finance Net investment income of $146.1 million

- $0.1 M from 3Q


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®

$2.0$2.4

$2.8$3.3

$3.8$4.3

$4.7$5.1

$5.5$6.0

$6.4

$7.2 $7.3$7.9

$8.9$9.6 $9.9$1.1

$1.1 $1.1

$8.6

$0.8

$0.7$0.3$0.2

$0.2

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

$10.0

$11.0

$12.0

3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07

Portfolio GrowthPortfolio Growth

Note: Data As of December 31, 2007(1) Includes loans, loans held for sale and receivables under repurchase agreements.(2) Includes Direct Real Estate investments, and excludes related accumulated depreciation.

$in

Billi

ons

Loans – Commercial Finance Segment (1) Gross Assets - Healthcare Net Lease Segment(2)


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®4Q Commercial Finance Segment4Q Commercial Finance Segment –– Key MetricsKey Metrics

11.12% yield on average interest earnings assets11.12% yield on average interest earnings assets

Down 19 bps from 3Q

Lower LIBOR, offset by greater prepayment fee income

6.44% cost of funds6.44% cost of funds

Up 3 bps from 3Q

Higher borrowing spread to LIBOR due to short-term market “noise” and wider credit spreads

Borrowing spread to average 1 month LIBOR at 1.53% (+55 bps from 3Q)

Provision for loan loss at $33.3 millionProvision for loan loss at $33.3 million

Up $21.4 million from 3Q

4.39x leverage (total debt to equity ratio)4.39x leverage (total debt to equity ratio)

Down from 4.48x in 3Q

5.79% net finance margin5.79% net finance margin

Down 32 bps from 3Q

The Commercial Finance segment contributed $88.5 million to adjuThe Commercial Finance segment contributed $88.5 million to adjustedstedearnings in 4Qearnings in 4Q(1)(1)

(1) See the last slide for a reconciliation of GAAP Net Income to Adjusted Earnings


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®Healthcare Net Lease SegmentHealthcare Net Lease Segment

CapitalSource begins reporting the Healthcare Net Lease segmentCapitalSource begins reporting the Healthcare Net Lease segmentseparatelyseparately Due to the significant growth and development of the business.

The Healthcare Net Lease segment is similar to other publicly traded healthcareproperty REITs and is in the business of investing in income-producing healthcarefacilities, principally long-term care facilities.

Direct Real Estate investments totaling $1.0 billion for 4QDirect Real Estate investments totaling $1.0 billion for 4Q Down $14.3 million from 3Q

Primarily due to depreciation and the sale of one property

Direct Real Estate investments increased $295.3 millionDirect Real Estate investments increased $295.3 million Up 40.9% in 2007

Operating Lease Income of $27.1 million for 4QOperating Lease Income of $27.1 million for 4Q Down $0.4 million from 3Q

Operating Lease Income more than tripled in 2007 to $97.0 millioOperating Lease Income more than tripled in 2007 to $97.0 millionn(from $30.7 million in 2006)(from $30.7 million in 2006)

The Healthcare Net Lease segment contributed $11.6 to adjustedThe Healthcare Net Lease segment contributed $11.6 to adjustedearnings in 4Qearnings in 4Q


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®4Q Consolidated4Q Consolidated -- Other IncomeOther Income

Net gain (loss) on investments was a loss of ($0.2) million, comNet gain (loss) on investments was a loss of ($0.2) million, compared to a losspared to a lossof ($2.0) million in 3Qof ($2.0) million in 3Q Due to write-downs in certain cost-based investments, partially offset by dividends

received and realized gains on cost-based investments

Other Income net of Expenses was $4.3 million, compared to a losOther Income net of Expenses was $4.3 million, compared to a losssof ($3.4) in 3Qof ($3.4) in 3Q Primarily due to increases in income relating to equity interests in certain non-

consolidated entities and an increase in fees arising from HUD mortgage originatingservices, partially offset by increased foreign currency exchange losses

Gain (loss) on residential mortgage investment portfolio of ($25Gain (loss) on residential mortgage investment portfolio of ($25.4) million,.4) million,compared to a loss of ($30.2) M in 3Qcompared to a loss of ($30.2) M in 3Q Primarily due to the net change in the fair value of Agency MBS and related derivatives

Gain (loss) on derivatives of ($31.6) million, compared to a losGain (loss) on derivatives of ($31.6) million, compared to a losssof ($15.5 M) in 3Qof ($15.5 M) in 3Q Primarily due to the unrealized net change in the fair value of swaps used in hedging

certain assets and liabilities to minimize the Company’s exposure to interest ratemovements. The Company does not apply hedge accounting to these swaps. As aresult, movements in the net fair value of hedging instruments are reported in OtherIncome (Expense), while changes in the fair value of hedged exposures are not


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®4Q and FY 20074Q and FY 2007 -- Funding and LiquidityFunding and Liquidity

DRIP 4QDRIP 4Q -- $207.0 million raised / 12.1 million shares issued$207.0 million raised / 12.1 million shares issued

DRIP Full Year 2007DRIP Full Year 2007 -- $714.5 million raised / 37.1 million shares issued$714.5 million raised / 37.1 million shares issued

$400 million term financing of loans from the Company$400 million term financing of loans from the Company’’s portfolios portfoliocompleted on October 11, 2007.completed on October 11, 2007.

Completed as a single tranche in a private placement and rated A by Fitch Ratings andA2 by Moody’s Investor Service.

One-year replenishment period during which principal collected can be invested inadditional loan collateral.

The note bears interest (excluding fees) at a floating commercial paper rate plus 1.10%and is pre-payable by the Company at any time

$435 million term financing of loans from the Company$435 million term financing of loans from the Company’’s portfolios portfoliocompleted on November 16, 2007completed on November 16, 2007

Private placement of multiple tranches rated AAA through A by Fitch Ratings and Aaathrough A2 by Moody’s Investor Service.

Tranches were priced at a weighted average interest rate (excluding fees) ofone-month LIBOR plus 1.05%.


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®Funding OverviewFunding Overview

Funding StrategyFunding Strategy Manage the business with low leverage Do not fund illiquid assets with short term liabilities Diversify funding sources

Funding SourcesFunding Sources

Committed credit facilities(1):

$5.6 Billion capacity for core business, with $3.4 Billion undrawn to fund growth

Match funded term securitizations(1):

$5.2 Billion for commercial finance business

$2.0 Billion for mortgage – related receivables

Unsecured debt(1):

$1.9 Billion

Supported by BBB- Investment Grade ratings by S&P and Fitch

Equity and subordinate capital(1):

$3.6 Billion

Senior Debt-to-Subordinate Capital Leverage in “core” lending business ofapproximately 2.2x

Repurchase agreements:

Fund a liquid portfolio of Fannie/Freddie guaranteed securities(1) Data as of December 31, 2007.


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®DividendsDividends

$0.60 $0.60$0.60$0.60$0.58

$0.49 $0.49 $0.49$0.55

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

1Q'06 2Q'06 3Q'06 4Q'06 1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 (1)

(1) Dividend declared February 20, 2008. Payable on or about March 31, 2008.


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®What Investors Should Expect in 2008What Investors Should Expect in 2008

CapitalSource is entering 2008 with a strong market positionCapitalSource is entering 2008 with a strong market positionand positive outlook on the yearand positive outlook on the year

Disciplined and focused loan growth, especially with keyDisciplined and focused loan growth, especially with keycompetitors continuing to exit the marketcompetitors continuing to exit the market

Cash dividend of $0.60 per share declared for the first quarterCash dividend of $0.60 per share declared for the first quarterand projecting a quarterly cash dividend of $0.60 per share forand projecting a quarterly cash dividend of $0.60 per share forthe balance of 2008the balance of 2008

Continued credit stability in line with historical rangesContinued credit stability in line with historical ranges

Ongoing focus on maintaining strong liquidity and balance sheetOngoing focus on maintaining strong liquidity and balance sheet

Quarterly variation, consistent with historical patters, inQuarterly variation, consistent with historical patters, inPrepayment Related Fee Income, Equity Gains and OtherPrepayment Related Fee Income, Equity Gains and OtherIncomeIncome

®

Supplemental InformationSupplemental Information


19

®CapitalSource OverviewCapitalSource Overview

Commercial Finance Business Focused on the Middle MarketCommercial Finance Business Focused on the Middle Market

Large Scale, BroadLarge Scale, Broad--Based Lending PlatformBased Lending Platform Approximately 560 employees, including approximately 370 investment

professionals(1)(2)

National scale with 24 offices in the U.S.

Large, Diverse Commercial PortfolioLarge, Diverse Commercial Portfolio $14.8 Billion in commercial assets under management; 1,214 loans to 759 borrowers(1)

Direct origination platform

Market Leadership Position in Three Major Business LinesMarket Leadership Position in Three Major Business Lines Corporate Finance Healthcare & Specialty Finance

Structured Finance

Seasoned, Proven Management TeamSeasoned, Proven Management Team

Balanced, Diversified, Tax Advantaged EnterpriseBalanced, Diversified, Tax Advantaged Enterprise “Hybrid REIT” structure blending asset based loans, corporate loans, commercial &

healthcare real estate loans and investments

(1) As of December 31, 2007(2) Investment professionals include Credit Committee, Development Officers, Investment

Officers, Loan Officers, Underwriting Officers, Loan Analysts, Attorneys and relatedsupport staff


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®Key Business AttributesKey Business Attributes

Focused Asset StrategyFocused Asset Strategy Multiple lending groups compete on service, expertise and industry insight Non-commodity products Superior risk adjusted returns and credit outcomes

““InIn--SourcedSourced”” Business ModelBusiness Model Origination Forensic accounting/underwriting Credit approval Syndication Servicing Audit Asset management

Operational Scale and ExpertiseOperational Scale and Expertise Focused direct origination teams with deep experience Multiple resources applied to each loan (e.g., in-house lending team,

legal, credit committee)(1) Data as of September 30, 2007(2) Commercial Lending & Investment Segment only.(3) Consolidated results.(4) See the last slide for a reconciliation of GAAP Net Income to Adjusted Earnings

“End-to-End” control ofthe credit process


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®Key Business Attributes (Continued)Key Business Attributes (Continued)

Diversified Funding PlatformDiversified Funding Platform Multiple sources Focus on committed and matched funding Investment grade ratings

Strong Shareholder AlignmentStrong Shareholder Alignment Management, Directors and certain of their Affiliates beneficially own

more than 35% of outstanding shares (1)

Farallon and Madison Dearborn Partners have recently added to theirpositions, further demonstrating their confidence in the firm

Compelling Financial ModelCompelling Financial Model High asset quality - 88% of loan assets are senior loans (1)

Modest leverage – 4.39x debt-to-equity ratio (1)(2)

High risk-adjusted returns – 18.8% Adjusted ROE full year 2007 (1)(3)(4)

(1) Data as of December 31, 2007(2) Commercial Finance segment only.(3) Consolidated results.(4) See the last slide for a reconciliation of GAAP Net Income to Adjusted Earnings


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®

Captive In-House Audit,Due Diligence and Loan

Approval Functions

CapitalAnalyticsCapitalAnalyticsFee BusinessesFee Businesses

Asset Management Businessand Servicing Businesses to

Lever Platform Expertise

Asset-Based & CorporateLending to Security,

Homeland Defense & PublicSafety Companies

Security FinanceSecurity Finance

First Mortgage DebtSecured by All Real Estate

Asset Types

Commercial Real EstateCommercial Real Estate

Asset-Based Lending toMiddle Market Finance

Companies

Rediscount FinanceRediscount Finance

Senior Secured Debtto Finance Leveraged

Buy-Outs

Corporate Finance Healthcare CreditHealthcare Credit

Asset-Based & CorporateLending to

Healthcare Companies

First Mortgage Debt,Mezzanine Debt,

& Sale Leasebacks onHealthcare Properties

Healthcare Real EstateHealthcare Real Estate

Diversified Commercial Finance PlatformDiversified Commercial Finance Platform


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®

52%

28%

11%

9%

28%

36%

36%

Commercial Finance and Healthcare Net Lease PortfolioCommercial Finance and Healthcare Net Lease Portfolio

PortfolioPortfolio(1)(1) by Product Mixby Product MixPortfolioPortfolio(1)(1) by Lending Groupsby Lending Groups

CorporateFinance

StructuredFinance

Healthcare&

SpecialtyFinance

Senior SecuredLoans

First Mortgage

Mezzanine

Note: Data As of December 31, 2007(1) Commercial Finance and Healthcare Net Lease segments. Commercial Finance segment includes loans, loans held for sale and receivables

under repurchase agreements.

DirectReal

Estate

True Diversification Across Products and BusinessesTrue Diversification Across Products and Businesses……..


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®Adjusted Earnings ReconciliationsAdjusted Earnings Reconciliations

December 31,2007

September 30,2007

December 31,2006

December31, 2007

December31, 2006

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,034.00)$ 28,265.00$ 60,340.00$ 176,287$ 279,276$Add:Real estate depreciation and amortization (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8,557 8,570 4,118 31,785 10,323Amortization of deferred financing fees (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9,961 7,491 9,012 29,783 30,842Non-cash equity compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,581 11,336 8,301 44,488 33,294Net realized and unrealized losses on residential mortgage investment

portfolio including related derivatives (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25,571 32,425 1,749 81,022 5,862Unrealized loss (gain) on derivatives and foreign currencies, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35,728 16,464 (1,274) 51,233 (1,470)Unrealized loss on investments, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,946 8,452 2,014 12,615 7,524Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33,952 12,353 30,529 78,641 81,662Recoveries

(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - -

Less:Charge offs (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,008 27,796 5,234 57,679 16,510Non-recurring items (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- - - - 4,725Cumulative effect of accounting change, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- - - - 370

Adjusted earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,254$ 97,560$ 109,555$ 448,175$ 425,708$

Net income per share:Basic - as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.07)$ 0.15$ 0.35$ 0.92$ 1.68$Diluted - as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.07)$ 0.15$ 0.34$ 0.91$ 1.65$

Average shares outstanding:Basic - as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210,021,621 191,976,931 174,862,656 191,697,254 166,273,730Diluted - as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210,021,621 193,607,986 178,691,422 193,282,656 169,220,007

Adjusted earnings per share:Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.52$ 0.51$ 0.63$ 2.34$ 2.56$Diluted (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.51$ 0.50$ 0.61$ 2.32$ 2.51$

Average shares outstanding:Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210,021,621 191,976,931 174,862,656 191,697,254 166,273,730Diluted (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211,609,633 193,607,986 181,202,240 194,792,918 171,551,972

Three Months Ended Year Ended

($ in thousands, except per share data)

(5) To the extent we experience losses on loans for which we specifically provided a reserve prior to January 1, 2006, there will be no adjustment to earnings. Allcharge offs incremental to previously established allocated reserves will be deducted from net income.

(6) Represents the write-off of a $4.7 million net deferred tax liability recorded in connection with our conversion to a REIT for the year ended December 31, 2006.

(7) Adjusted to reflect the impact of adding back noncontrolling interests expense of $1.4 million for the three months ended December 31, 2006 and $3.1 million and$4.7 million for the years ended December 31, 2007 and 2006, respectively, to adjusted earnings due to the application of the if-converted method on non-managingmember units, which are considered dilutive to adjusted earnings per share, but are antidilutive to GAAP net income per share for these periods.

(8) Adjusted to include average non-managing member units of 2,510,818 for the three months ended December 31, 2006 and 1,113,259 and 2,331,965 for theyears ended December 31, 2007 and 2006, respectively, which are considered dilutive to adjusted earnings per share, but are antidilutive to GAAP net income pershare for these periods.

(1) Depreciation and amortization for direct real estate investments only. Excludes depreciation for corporate leasehold improvements, fixed assets and other non-real estate items.(2) Includes amortization of deferred financing fees and other non-cash interest expense.

(3) Includes adjustments to reflect the realized gains and losses and the period change in fair value of residential mortgage-backed securities and related derivativeinstruments.(4) Includes all recoveries on loans during the period.

CommercialFinance

HealthcareNet Lease

CommercialFinance

HealthcareNet Lease

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 706$ 4,245$ 52,050$ 3,286$Add:

Real estate depreciation and amortization (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 8,557 - 8,570

Amortization of deferred financing fees (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9,007 172 6,474 (198)

Non-cash equity compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,581 - 11,336 -

Net realized and unrealized losses on residential mortgageinvestmentportfolio including related derivatives (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- - - -

Unrealized loss (gain) on derivatives and foreign currencies, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35,728 - 16,464 -

Unrealized loss on investments, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,946 - 8,452 -

Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33,302 - 11,938 -

Recoveries (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - -

Less:

Charge offs (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,818 - 27,796 -

Non-recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- - - -

Cumulative effect of accounting change, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- - - -

Adjusted earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88,451$ 12,975$ 78,917$ 11,658$

Net income per share:

Basic - as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.00$ 0.02$ 0.27$ 0.02$Diluted - as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.00$ 0.02$ 0.27$ 0.02$

Average shares outstanding:

Basic - as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210,021,621 210,021,621 191,976,931 191,976,931

Diluted - as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210,021,621 210,021,621 193,607,986 193,607,986

Adjusted earnings per share:

Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.42$ 0.06$ 0.41$ 0.06$Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.42$ 0.06$ 0.41$ 0.06$

Average shares outstanding:

Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210,021,621 210,021,621 191,976,931 191,976,931

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211,609,633 211,609,633 193,607,986 193,607,986

Three Months EndedDecember 31, 2007

Three Months EndedSeptember 30, 2007

($ in thousands, except per share data)

(4) Includes all recoveries on loans during the period.(5) To the extent we experience losses on loans for which we specifically provided a reserve prior to January 1, 2006, there will be noadjustment to earnings. All charge offs incremental to previously established allocated reserves will be deducted from net income.

(1) Depreciation and amortization for direct real estate investments only. Excludes depreciation for corporate leasehold improvements, fixedassets and other non-real estate items.(2) Includes amortization of deferred financing fees and other non-cash interest expense.(3) Includes adjustments to reflect the realized gains and losses and the period change in fair value of residential mortgage-backed securitiesand related derivative instruments.

®

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