1294017--3/16/2007--JER_Investors_Trust

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Risks Relating to Our Management and our Relationship with Our Manager and J.E. Robert Company and its Affiliates We are dependent upon our manager and certain key personnel of J.E. Robert Company provided to us through our manager and may not find a suitable replacement if our manager terminates the management agreement or such key personnel are no longer available to us. There are conflicts of interest in our relationship with J.E. Robert Company and its affiliates, including with our manager, which could result in decisions that are not in the best interests of our stockholders. The base management fee along with other reimbursements and fees payable to our manager are payable regardless of our performance. The incentive fee may cause our manager to invest in more risky investments to increase Funds From Operations and thereby increase the incentive fee earned by our manager. Termination of our management agreement would be costly. The conflicts of interest policy developed by J.E. Robert Company for us and the JER Funds may limit the type of investments we make and may impact our ability to comply with REIT requirements and restrictions and with the Investment Company Act. We may invest in mortgage loans, mezzanine loans or B-Notes where a JER Fund owns all or a portion of the equity in the underlying borrower, and as a result, we will not have the typical control, approval, consent or other rights we generally obtain in such investments. Mr. Joseph E. Robert, Jr. has significant control over our company and will influence decisions regarding our operations and our business. Our board of directors has approved very broad investment guidelines for our manager and does not approve each investment decision made by our manager. We may change our investment strategy without stockholder consent, which may result in riskier investments. We may change our operational policies without stockholder consent, which may adversely affect the market price of our common stock and our ability to make distributions to our stockholders. Risks Relating to Our Business Strategy We have limited experience operating as a REIT or a public company and may not operate successfully. We expect to incur significant debt to finance our investments, which may subject us to increased risk of loss and reduce cash available for distributions to our stockholders. We may not be able to access financing on favorable terms, or at all, which could adversely affect our ability to execute our business plan. Interest rate fluctuations could reduce our ability to generate income on our investments and may cause losses. Estimated Increase (Decrease) in Net Income Over 12 Months at December 31, 2006 If credit spreads widen before we obtain long-term financing for our assets, the value of our assets may suffer. We may not be able to acquire eligible securities and/or loans for future CDO issuances, or may not be able to issue CDO securities on attractive terms that closely match fund the duration of our assets and liabilities, which may require us to seek more costly financing for our investments or to liquidate assets. The use of CDO financings with over-collateralization requirements may have a negative impact on our cash flow. The significant cash proceeds as a result of CDO financings may have a negative impact on our earnings and cash flow. We may be required to repurchase loans that we have sold to indemnify holders of our CDOs. An increase in prepayment rates could adversely affect yields on our investments. Our hedging transactions may limit our gains or result in losses. Hedging instruments often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any U.S. or foreign governmental authorities and involve risks and costs. We are subject to significant competition and we may not compete successfully. Risks Related to Our Investments Our real estate investments are subject to risks particular to real property. The mortgage loans in which we invest and the mortgage loans underlying the mortgage backed securities in which we invest will be subject to risks of delinquency, foreclosure and loss, which could result in losses to us. Our investments in subordinated mortgage backed securities could subject us to increased risk of losses. Investments in mezzanine loans involve greater risks of loss than senior loans secured by income producing properties. The B-Notes in which we invest may be subject to additional risks relating to the privately negotiated structure and terms of the transaction, which may result in losses to us. Bridge loans involve a greater risk of loss than traditional mortgage loans. Preferred equity investments involve a greater risk of loss than traditional debt financing. Investments in REIT debt securities are subject to specific risks relating to the particular REIT issuer of the securities and to the general risks of investing in subordinated real estate securities, which may result in losses to us. Investments in net lease properties may generate losses. We may make investments in non-U.S. dollar denominated securities, which subject us to currency rate exposure and the uncertainty of foreign laws and markets. Investment in non-conforming and non-investment grade loans may involve increased risk of loss. Credit ratings assigned to our investments are subject to ongoing evaluations and we cannot assure you that the ratings currently assigned to our investments will not be downgraded. Insurance on mortgage loans and real estate securities collateral may not cover all losses. Many of our investments are illiquid and we may not be able to vary our portfolio in response to changes in economic and other conditions. Lack of diversification in number of investments increases our dependence on individual investments. Liability relating to environmental matters may impact the value of our properties or the properties underlying our investments. Our targeted investment properties and the properties underlying our investments are required to comply with the Americans with Disabilities Act and fire, safety and other regulations, which may require us or them to make unintended expenditures that adversely impact their ability to make interest payments to us and our ability to pay dividends to stockholders. We may be adversely affected by unfavorable economic changes in geographic areas where the properties underlying our investments may be concentrated. A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could harm our operations. Risks Related to Our Organization and Structure Maryland takeover statutes may prevent or make difficult a change of control of our company that could be in the interests of our stockholders. Our authorized but unissued common and preferred stock may prevent a change in our control. The requirements of the Investment Company Act impose limits on our operations. Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interests. Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management. Risks Related to Our Taxation as a REIT Our failure to qualify as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders. Dividends payable by REITs do not qualify for the reduced tax rates under recently enacted tax legislation. REIT distribution requirements could adversely affect our ability to execute our business plan. The stock ownership limit imposed by the Internal Revenue Code for REITs and our charter may restrict our business combination opportunities. Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. Complying with REIT requirements may cause us to forego otherwise attractive opportunities. Complying with REIT requirements may force us to liquidate otherwise attractive investments. Liquidation of assets may jeopardize our REIT status. Complying with REIT requirements may limit our ability to hedge effectively. The taxable mortgage pool rules may increase the taxes that we or our stockholders may incur, and may limit the manner in which we effect future securitizations. The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of securitizing mortgage loans, which would be treated as sales for federal income tax purposes. Risks Related to Trading of our Common Stock The market price and trading volume of our common stock may be volatile. Broad market fluctuations could negatively impact the market price of our common stock. Future offerings of debt securities, which would rank senior to our common stock upon our liquidation, and future offerings of equity securities, which would dilute our existing stockholders and may be senior to our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our common stock. Future sales of shares of our common stock may depress the price of our shares. We have not established a minimum distribution payment level and we cannot assure you of our ability to make distributions in the future. An increase in market interest rates may have an adverse effect on the market price of our common stock.

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1294017--3/16/2007--JER_Investors_Trust_Inc