83402--12/14/2006--RESOURCE_AMERICA

related topics

{loan, real, estate}

{investment, property, distribution}

{operation, international, foreign}

{acquisition, growth, future}

{debt, indebtedness, cash}

{competitive, industry, competition}

{interest, director, officer}

{personnel, key, retain}

Risks Related to Our Business Generally Our business depends upon our ability to sponsor and raise investor capital for our investment funds. Our revenues depend to a significant extent upon the performance of the assets we manage. Our revenues depend to a significant extent upon the performance of the assets we manage. Increases in interest rates may increase our operating costs. Our revenues depend to a significant extent upon the performance of the assets we manage. If we cannot generate sufficient cash to fund our participations in our investment funds, our ability to maintain and increase our revenues may be impaired. Termination of management arrangements with one or more of our investment funds could harm our business. We may have difficulty managing our growth which may divert resources and limit our ability to expand our operations successfully. Our business will be harmed if we are unable to locate and retain key personnel. We are subject to substantial competition in all aspects of our business. There are few economic barriers to entry in the asset management business. Risks Relating to Particular Aspects of Our Financial Fund Management, Real Estate and Commercial Finance Operations We depend upon CDO issuances as the principal source of term financing for assets we acquire for our account and for the account of investment entities we sponsor. If we are unable to access the CDO market, or are able to do so only on unattractive terms, our ability to acquire assets and sponsor investment vehicles may be limited. We arrange for warehouse and other short term financing for assets we accumulate for CDOs for our own account and for the account of investment vehicles we sponsor. We typically guarantee some portion of amounts drawn on these facilities which exposes us to loss. Our income from our interests in CDOs may be volatile. Real estate loans in our portfolio are subject to higher risk of default than first mortgage loans. Real estate loans in our portfolio require large lump sum payments at maturity, increasing the risk of default. The value of our portfolio of real estate loans and property interests depends upon the value of the underlying real properties which may decline due to factors beyond our control. Our portfolio of real estate loans principally consists of junior mortgage loans, which are subject to higher default risks than senior financing. Our real estate loan loss reserve may not be sufficient to cover future losses. Our real estate loans are illiquid, and we may not be able to divest them in response to changing economic, financial and investment conditions. Hazardous or toxic substances on properties underlying our loans may subject us to environmental liabilities. We may be required to repurchase up to $3.5 million of real estate loan participations we have sold. Our equipment leases and commercial notes may have greater risks of default than senior secured loans.

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83402--12/14/2006--RESOURCE_AMERICA_INC