1057689--3/16/2006--CAPITAL_LEASE_FUNDING

related topics

{loan, real, estate}

{investment, property, distribution}

{loss, insurance, financial}

{debt, indebtedness, cash}

{tax, income, asset}

{acquisition, growth, future}

{stock, price, share}

{provision, law, control}

{system, service, information}

{personnel, key, retain}

{stock, price, operating}

{cost, regulation, environmental}

We may fail to continue to invest in net lease assets. We may fail to invest in profitable assets. We conduct a significant part of our business with Wachovia Bank, N.A. and its affiliates, and their continued business with us is not guaranteed. If we lower our dividend, the market value of our common stock may decline. An interruption in or breach of our information systems could impair our ability to acquire assets on a timely basis and may result in lost business. Risks Related to Net Lease Assets An adverse change in the financial condition of one or more tenants underlying our net lease investments could have a material adverse impact on us. We are subject to tenant credit concentrations that make us more susceptible to adverse events with respect to certain tenants. We are subject to tenant industry concentrations that make us more susceptible to adverse events with respect to certain industries. We are subject to geographic concentrations that make us more susceptible to adverse events in these areas. Our investments in assets backed by below investment grade credits have a greater risk of default. Our investments in assets where we obtain private credit ratings expose us to certain risks. Risks Related to Ownership of Real Estate Single tenant leases involve significant risks of tenant default. Bankruptcy laws will limit our remedies if a tenant becomes bankrupt and rejects our lease. The success of our owned properties business will depend on our ability to obtain third-party management for the real properties we purchase. Operating expenses of our properties could reduce our cash flow and funds available for future dividends. We have greater exposure to operating costs when we invest in owned properties leased to the United States Government. We may not be able to renew our leases or re-lease our properties. It may be difficult for us to buy and sell real estate quickly. An uninsured loss or a loss that exceeds the insurance policy limits on our owned properties could subject us to lost capital or revenue on those properties. Noncompliance with environmental laws could adversely affect our financial condition and operating results. Our real estate investments are subject to risks particular to real property. Risks Related to Debt Assets Our investments in commercial mortgage-backed securities may be subordinated. We may experience losses on our mortgage loans. We could be subject to the risks incident to ownership of real property if the tenants underlying our net lease loans fail to make their lease payments. Our collateral rights under our 10-year credit tenant loan program are limited. Our mezzanine investments have a greater risk of loss than mortgage loans. Development loans involve greater risk of loss than loans secured by income producing properties. Fluctuating interest rates may adversely affect the quantity of net lease loan assets we can originate. Unscheduled principal payments on our loans could adversely affect our financial condition and operating results. We may be required to repurchase assets that we have sold or to indemnify holders of our CDOs. The success of our net lease loan business will depend upon our ability to service effectively, or to obtain effective third-party servicing for, the loans we invest in. Maintenance of our Investment Company Act of 1940 exemption imposes limits on our operations. Risks Related to Lease Enhancements Our lease enhancement mechanisms may fail. We depend on our insurance carriers to provide and honor lease enhancements. We may fail to analyze leases adequately or apply appropriate lease enhancement mechanisms. Leveraging our portfolio is an important component of our strategy and subjects us to increased risk of loss. We may not be able to secure long-term financing for our assets. Hedging transactions may not effectively protect us against anticipated risks and may subject us to certain other risks and costs. We may fail to qualify for hedge accounting treatment. Our existing short-term borrowing facilities may be unavailable to us. Our short-term financings may expose us to interest rate risks and margin calls. The use of CDO financings with coverage tests may have a negative impact on our operating results and cash flows. Risks Related to Business Strategy and Policies We face significant competition that could harm our business. Our network of independent mortgage brokers and investment sale brokers may sell investment opportunities to our competitors. Our ability to grow our business will be limited by our ability to attract debt or equity financing, and we may have difficulty accessing capital on attractive terms. Future offerings of debt and equity may adversely affect the market price of our common stock. We may fail to manage our anticipated growth. Temporary investment in short-term investments may adversely affect our results. The concentration of our company s common stock could have an adverse impact on the value of your investment. Our board of directors may change our investment and operational policies without stockholder consent. The federal income tax laws governing REITs are complex, and our failure to qualify as a REIT under the federal tax laws will result in adverse tax consequences. Our ownership limitations may restrict or prevent you from engaging in certain transfers of our stock. Provisions of our charter and Maryland law may limit the ability of a third-party to acquire control of our company. Increased market interest rates may reduce the value of our stock. The market price of our stock may vary substantially. We depend on our key personnel.

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1057689--3/16/2006--CAPITAL_LEASE_FUNDING_INC