1277406--3/1/2007--SPIRIT_FINANCE

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{loan, real, estate}

{stock, price, share}

{investment, property, distribution}

{tax, income, asset}

{provision, law, control}

{acquisition, growth, future}

{debt, indebtedness, cash}

{stock, price, operating}

{regulation, change, law}

{personnel, key, retain}

{cost, contract, operation}

{cost, regulation, environmental}

{gas, price, oil}

{operation, international, foreign}

{interest, director, officer}

Risks Related to Our Business We rely on key personnel with long-standing business relationships, the loss of whom could materially impair our ability to operate successfully. A substantial amount of our investment portfolio consists of properties operated by two customers under common control, which may result in increased risk due to tenant and industry concentrations. Our investments are currently concentrated in a relatively small number of customers and we may be unable to adequately continue to diversify our real estate portfolio, which may result in increased risk due to industry, borrower or tenant concentration. Our use of debt to finance acquisitions could restrict our operations, inhibit our ability to grow our business and our revenues, and adversely affect our cash flow. Our ability to realize future rent increases will vary depending on changes in the Consumer Price Index. Failure to hedge effectively against interest rate changes may adversely affect our results of operations. We compete for customers and the acquisition or refinancing of properties which could reduce the yields we are able to negotiate on our investments. We may not have adequate access to funding to successfully execute our growth strategy. The loss of a tenant or the failure of a tenant to pay rent, or our inability to re-lease a property, will reduce our revenues, which could lead to losses on our investments and reduced returns to our stockholders. The loss of a borrower or the failure of a borrower to make loan payments on a timely basis will reduce our revenues, which could lead to losses on our investments and reduced returns to our stockholders. The risk of default on our real estate investment portfolio may be higher because, as of December 31, 2006, most of our properties were operated by non-investment grade companies. We invest in real estate in industries in which we have limited investment and underwriting experience, which could adversely affect our results of operations. Insurance on our real estate collateral may not adequately cover all losses which could reduce stockholder returns if a material uninsured loss occurs. The costs of compliance with or liabilities under environmental laws may harm our operating results. Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediation of the problem. Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unintended expenditures that adversely impact our ability to pay dividends. Construction loans are riskier than loans on developed properties because the underlying property may not generate income and could encounter problems associated with construction. We may make loans that are not secured by any assets, which could lead to losses if borrowers default on those loans. We may not be able to effectively manage a rapidly growing portfolio which could lead to losses. Risks Related to Ownership of Our Common Stock The market price and trading volume of our common stock may fluctuate. We may not be able to maintain our current level of distributions and we may not have the ability to pay distributions in the future. Future sales of shares of our common stock, including sales of our common stock by our senior management, may depress the price of our shares. Our board of directors may authorize the issuance of additional shares of stock that may cause dilution. Future offerings of debt, preferred securities or other equity, which could be senior to our common stock in liquidation or for the purposes of dividend distributions, may harm the value of our common stock. An investment in our common stock may not be suitable for pension or profit sharing trusts, Keoghs or IRAs. An increase in market interest rates may have an adverse effect on the price of our common stock. Risks Related to Our Organization and Structure Our organizational documents and Maryland law contain provisions that may inhibit potential acquisition bids that may be in our stockholders best interests. Our rights and the rights of our stockholders to take action against our directors and officers are limited. Our executive officers have agreements that provide them with benefits in the event their employment is terminated following a change of control of our company which could discourage a takeover that could be in the best interests of our stockholders. Risks Related to Our REIT Status Failure to qualify as a REIT would adversely affect our operations and ability to make distributions. Complying with REIT requirements may cause us to forego otherwise attractive opportunities. Complying with REIT requirements may force us to borrow funds or sell properties on disadvantageous terms in order to make distributions to our stockholders and those distributions may represent a return of capital to investors. The IRS may treat sale-leaseback transactions as loans, which could jeopardize our REIT status.

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1277406--3/1/2007--SPIRIT_FINANCE_CORP