Interest expense includes costs related to $2.4 billion of non-recourse long-term notes issued by the three CDOs that are consolidated on the Company’s balance sheet. Interest expense was $20.4 million for the three months ended March 31, 2012, compared to $20.3 million for the three months ended March 31, 2011.

Management, general and administrative expenses were $6.7 million for the three months ended March 31, 2012, as compared to $12.5 million in the prior quarter and $6.4 million for the same period in the prior year. The decrease in management, general and administrative expenses is primarily attributable to a reduction in professional fees related to loan enforcement costs within the 2005-1 CDO as compared to the prior quarter. Loan enforcement costs for assets financed in our CDOs are typically advanced by the Company and reimbursed as servicing advances once the loan is resolved.

In January 2012, the Company sold a three-building commercial office complex for $34.0 million generating approximately $16.1 million in incremental unrestricted corporate cash. The operating results for this complex and the gain on sale of $9.9 million have been recorded in the Condensed Consolidated Statements of Comprehensive Income.

GRAMERCY FINANCE

Interest income is generated on the Company’s whole loans, subordinate interests in whole loans, mezzanine loans, preferred equity interests and CMBS within the Company’s Gramercy Finance division. For the three months ended March 31, 2012, $27.2 million was earned on fixed rate investments and $11.4 million was earned on floating rate investments.

Other income of $2.4 million for the three months ended March 31, 2012 is primarily composed of operating revenues from properties the Company owns through foreclosure.

The Company recorded a net provision for loan losses of approximately $2.5 million, or $0.05 per diluted common share, for the quarter ended March 31, 2012. By comparison, the Company’s provision for loan loss was approximately $1.7 million, or $0.03 per fully diluted common share, for the preceding quarter and approximately $17.5 million, or $0.35 per fully diluted common share, for the same quarter of the prior year. The Company’s reserve for loan losses at March 31, 2012 was approximately $213.3 million, or approximately 42.6% of the unpaid principal balance, in connection with 14 separate loans with an aggregate carrying value of approximately $290.7 million. In addition, the Company recorded non-cash impairment charges of approximately $21.1 million for the three months ended March 31, 2012, related to six CMBS investments with an aggregate carrying value of $57.0 million, deemed to be other-than-temporarily impaired.

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