First Quarter Highlights:

-- Liquidity: At March 31, 2008, we had $12.7 million in unrestricted cash plus an additional $1.1 million of restricted cash. As of May 8, 2008, unrestricted cash increased $20.1 million to $32.8 million primarily as a result of proceeds from the sale of the remaining 50% interest in the Charter School joint venture, proceeds from real estate loan repayments and net operating cash flow aggregating $5.8 million, offset, in part, by margin calls of $17.4 million, and payment of our first quarter 2008 dividend of $7.7 million.

-- Credit Performance: As of March 31, 2008, delinquency rates on collateral for our CMBS portfolio in which we own the first-loss position remain at low levels with a 60 day delinquency rate of approximately 32 basis points compared to 27 basis points at December 31, 2007. Overall, CMBS portfolio cash flow projections generally continue to be in line with original underwriting. There were no delinquencies, impairment charges or loss reserves established related to real estate loans and assets as of and during the three months ended March 31, 2008.

-- Adjusted Funds from Operations: Generated Adjusted Funds from Operations ("AFFO") of $10.6 million, or $0.41 per diluted common share for the three months ended March 31, 2008. AFFO excludes the impact on GAAP operating results of depreciation of real estate assets, non-cash other than temporary impairment charges on CMBS investments, unrealized gains and losses on our CDO related financial assets and liabilities for which we have elected the fair value option pursuant to adopting SFAS No. 159 effective January 1, 2008, unrealized losses on real estate loans held for sale, and unrealized losses related to hedge ineffectiveness. At the end of this earnings release is a reconciliation of GAAP net income (loss) to AFFO.

-- GAAP Operating Results: Incurred a net loss of $66.8 million, or $(2.60) per diluted common share, primarily driven by unrealized losses on CDO related financial assets of $179.7 million, non-cash other than temporary impairment charges on CMBS investments not financed by CDO's of $99.6 million, unrealized losses on non-CDO interest rate swap agreements of $15.6 million related to discontinuation of hedge accounting on our non-CDO related interest rate swaps, and unrealized losses on loans held for sale of $28.4 million, which were offset, in part, by unrealized gains, net, on CDO related financial liabilities of $246.6 million and AFFO of $10.6 million during the three months ended March 31, 2008. The non-cash impairment charge on our CMBS not financed by CDO's includes a $2.1 million charge related to declines in the projected net present value of future cash flows on certain of CMBS investments pursuant to EITF 99-20. The remaining non-cash CMBS impairment charge of $97.5 million relates to other than temporary declines in fair value which is due to widening credit spreads for CMBS investments which began in the first half of 2007 and continued through the first quarter of 2008.

-- Stockholders' Equity: Stockholders' equity at March 31, 2008 is $256.0 million ($9.88 per share) compared to $10.8 million ($0.42 per share) at December 31, 2007. The increase is primarily due to the adoption of SFAS No. 159, effective January 1, 2008, where we elected the fair value option for all financial assets and liabilities related to our CDO's. The impact of adopting SFAS No. 159 increased stockholders' equity by $246.1 million to $256.9 million or $9.92 per share as of January 1, 2008. Additionally, if all assets and liabilities were carried at fair value at March 31, 2008, we estimate that stockholders' equity would increase to approximately $285.3 million or $11.02 per share. At the end of this earnings release is a proforma calculation of the March 31, 2008 Fair Value Balance Sheet and Stockholders' Equity.

-- Subsequent Events:

* In April 2008, we sold our remaining 50% interest in the Joint Venture which owns twelve net leased real estate assets which resulted in net cash proceeds of approximately $39.4 million.

* During April 2008, we paid down our repurchase agreement facilities by approximately $17.4 million.

* In April 2008, we received a final payment of $3.2 million on one of our mezzanine real estate loans.

* In April 2008, we declared a first quarter 2008 regular cash dividend of $0.30 per share of common stock and on May 6, 2008, we paid dividends of $7.7 million.

Operating Results

The net loss was $66.8 million, or $(2.60) per diluted common share, for the three months ended March 31, 2008, compared to net income of $9.8 million, or $0.38 per diluted common share, for the three months ended March 31, 2007. AFFO was $10.6 million, or $0.41 per diluted share, for the three months ended March 31, 2008, compared to $10.0 million, or $0.39 per diluted share, for the three months ended March 31, 2007. At the end of this earnings release is a reconciliation of GAAP net income (loss) to AFFO for the three months ended March 31, 2008 and 2007.

Total revenues were $31.8 million for the three months ended March 31, 2008 compared to $29.9 million for the three months ended March 31, 2007, respectively. The increase in revenues is due to increased balances of interest-bearing assets due primarily to acquisitions of CMBS and real estate loans, offset, in part, by lower cash balances, on average, as well as the impact of lower LIBOR levels.

Interest expense for the three months ended March 31, 2008 was $15.4 million compared to $15.6 million for the three months ended March 31, 2007. Due to the adoption of SFAS No. 159, effective January 1, 2008, as well as discontinuation of hedge accounting on our non-CDO interest rate swaps, interest expense in the three months ended March 31, 2008 does not include the impact of interest rate swaps. During the three months ended March 31, 2007, interest expense includes $0.4 million related to interest rate swaps. After adjusting for these classification differences, the $0.2 million increase in interest expense for the three months ended March 31, 2008 compared to the same period in 2007 is primarily related to increased average balances outstanding on repurchase agreements in the three months ended March 31, 2008 and our April 2007 issuance of trust preferred securities, offset in part, by lower LIBOR rates in 2008 compared to 2007.

Total management fees were $1.8 million for the three months ended March 31, 2008 compared to $2.0 million three months ended March 31, 2007. Base management fees were $1.8 million for each of the three months ended March 31, 2008 and 2007. We incurred incentive management fees of $0 and $0.2 million during the three months ended March 31, 2008 and 2007.

General and administrative expenses were $2.0 million for the three months ended March 31, 2008 compared to $2.3 million for the same period in 2007. The decrease in general and administrative expenses is primarily due to decreased due diligence expense related to lower acquisition volume. -- JER Investors Trust Inc.