This report contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "could," "estimate," "expects," "intend," "may," "plan," "potential," "project," "should," "will" and "would" or the negative of these terms or other comparable terminology. Such statements are subject to the risks and uncertainties more particularly described in Item 1A, under the caption "Risk Factors," in our Annual Report on Form 10-K for the period ended September 30, 2008. These risks and uncertainties could cause actual results to differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this report, except as may be required under applicable law.

Overview of the Three and Nine Months Ended June 30, 2009 and 2008

We are a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through the commercial finance, real estate and financial fund management sectors. As a specialized asset manager, we seek to develop investment funds for outside investors for which we provide asset management services, typically under long-term management arrangements either through a contract with, or as the manager or general partner of, our sponsored investment funds. We typically maintain an investment in the funds we sponsor. As of June 30, 2009, we managed $14.3 billion of assets.

We limit our fund development and management services to asset classes in which we have specific expertise. We believe this strategy enhances the return on investment we can achieve for our funds. In our commercial finance operations, we focus on originating small and middle-ticket equipment leases and commercial loans secured by business-essential equipment, including technology, commercial and industrial equipment and medical equipment. In our real estate operations, we concentrate on the ownership, operation and management of multifamily and commercial real estate and the ownership of real estate loans including whole mortgage loans, first priority interests in commercial mortgage loans, known as A notes, subordinated interests in first mortgage loans, known as B notes, mezzanine loans, investments in discounted and distressed real estate loans, and investments in "value-added" properties (properties which, although not distressed, need substantial improvements to reach their full investment potential). In our financial fund management operations, we manage trust preferred securities of banks, bank holding companies, insurance companies and other financial companies, bank loans, and asset-backed securities, or ABS.

As a specialized asset manager, we are affected by conditions in the financial markets and, in particular, the continued volatility and reduced liquidity in the global credit markets which have reduced our revenues from, and the values of, many of the types of financial assets which we manage or own and reduced our ability to access debt financing for our operations. For the balance of fiscal 2009, given the constraints imposed by current economic and market conditions, we expect to focus on (i) managing our existing assets which provides us with substantial fee income and (ii) raising funds through our retail broker channel for investment programs in our commercial finance and real estate businesses. We also expect to continue to realize the cost savings primarily resulting from our reductions in force which we initiated in prior quarters. In our commercial finance segment, we have scaled back our originations to accommodate the limited availability of debt financing. In our real estate segment, we expect to continue to acquire multifamily apartments through our investment partnerships and additionally, are focusing efforts towards acquiring distressed assets where we possess significant experience in managing and resolving such assets using our existing real estate platform of highly skilled professionals. In financial fund management, we continue to manage and receive fees from the collateralized debt obligation, or CDO, issuers that we had previously formed and sponsored, but do not expect to sponsor any new CDO issuers.

For the first three fiscal quarters of 2009, the effect of the current economic conditions resulted in us recording the following charges:

· a $7.2 million charge, net of tax, from the sale of our interest in Apidos CDO VI;

· a $3.9 million charge, net of minority interest and tax, to reflect the other-than-temporary impairment of certain investments in CDO issuers with investments in bank loans ($3.0 million, including $1.3 million in Europe) and financial institutions ($877,000);

· a $3.5 million provision for credit losses, net of tax, which impacted our business segments as follows: commercial finance ($2.1 million), real estate ($282,000) and financial fund management ($1.1 million); and

· a $859,000 million charge, net of tax, to reflect our equity losses in the unrealized depreciation in the book value of securities held by our investment partnerships.

Principally as a result of these charges, we recorded a net loss of $15.1 million for the nine months ended June 30, 2009.

We have reduced the amount of assets and borrowings reflected on our balance sheet. As of June 30, 2009, total assets decreased by $390.9 million to $367.5 million and borrowings decreased by $372.4 million to $181.6 million from comparable balances at September 30, 2008. This reduction results largely from the sale of all or part of our interests in two entities that we had previously consolidated. In March 2009, we entered into an agreement to sell our equity interest in Apidos CDO VI and thereby removed from our balance sheet $219.7 million of loans it held for investment and $213.3 million of its senior notes, net. We also sold a portion of our interest in a LEAF subsidiary, LEAF Commercial Finance Fund, LLC, or LCFF, and accordingly, our balance sheet no longer consolidates $195.0 million of commercial finance assets together with $187.6 million of debt financing ($143.8 million outstanding at September 30, 2008). In both cases, the debt removed had been non-recourse to us. Additionally, we reduced outstanding borrowings on our TD Bank revolving credit facility by $9.7 million and our Sovereign revolving line of credit by $6.4 million.

Assets Under Management

Our assets under management decreased by $4.4 billion to $14.3 billion at June
30, 2009 from $18.8 billion at June 30, 2008. The following table sets forth
information relating to our assets under management by operating segment (in
millions): (1)

                               As of June 30,              Increase (Decrease)
                              2009         2008        Amount           Percentage
Financial fund management   $ 11,202     $ 15,375     $ (4,173 ) (2)        (27%)
Real estate                    1,675        1,750          (75 )            (4%)
Commercial finance             1,450        1,630         (180 ) (3)        (11%)
                            $ 14,327     $ 18,755     $ (4,428 )            (24%)

(2) Reduction primarily due to the following: (a) sale of Apidos CDO VI ($226.5 million), (b) liquidation of two of our CDO issuers invested primarily in real estate ABS ($1.6 billion) and (c) a decrease in the collateral base of our ABS portfolio resulting from defaults ($1.7 billion).

(3) Reduction primarily reflects the reduction in new originations.

Our assets under management are primarily managed through various investment vehicles including CDOs, public and private limited partnerships, tenant-in-common, or TIC, property interest programs, a real estate investment trust, or REIT, and other investment funds. All of our operating segments manage assets on behalf of Resource Capital Corp., or RCC, a REIT we sponsored and manage. The following table sets forth the number of entities we manage by operating segment:

                                                            Limited           TIC Property               Other
                                             CDOs        Partnerships       Interest Programs      Investment Funds
As of June 30, 2009
Financial fund management                      32               12                       -                     1
Real estate                                      2                8                      7                     5
Commercial finance                               -                4                      -                     1
                                               34               24                       7                     7
As of June 30, 2008
Financial fund management                      35               13                       -                     -
Real estate                                      2                6                      7                     5
Commercial finance                               -                3                      -                     -
                                               37               22                       7                     5

As of June 30, 2009 and 2008, we managed $14.3 billion and $18.8 billion of assets, respectively, for the accounts of institutional and individual investors and RCC and for our own account in the following asset classes (in millions):

                                                                                                          As of
                                                       As of June 30, 2009                            June 30, 2008
                                   Institutional and
                                      Individual
                                       Investors             RCC         Company         Total            Total
Trust preferred securities (1)    $             4,631     $       -     $        -     $   4,631     $         5,032
Bank loans (1)                                  3,018           931              -         3,949               4,399
Asset-backed securities (1)                     2,293           262              -         2,555               5,874
Real properties (2)                               649             -              -           649                 613
Mortgage and other real
estate-related loans (2)                            6           855            165         1,026               1,137
Commercial finance assets (3)                   1,303             2            145         1,450               1,630
Private equity and hedge fund
assets (1)                                         67             -              -            67                  70
                                  $            11,967     $   2,050     $      310     $  14,327     $        18,755

(1) We value financial fund management assets at their amortized cost.

(2) We value real estate assets as the sum of (a) the amortized cost of our commercial real estate loans; (b) the book value of real estate and other assets held by our real estate investment partnerships and TIC property interest programs; (c) the amount of our outstanding legacy loan portfolio; and (d) the book value of our interests in real estate.

(3) We value commercial finance assets as the sum of the book value of the equipment, leases and loans and future payment card receivables financed by us.

Employees

As of June 30, 2009, excluding our property management team, we employed 497
full-time workers, a decrease of 93, or 16%, from 590 employees at June 30,
2008. The following table summarizes all of our employees by operating segment:

                                                  Financial Fund                         Commercial        Corporate/
                                    Total           Management         Real Estate         Finance           Other
June 30, 2009
Investment professionals               126                  35                27                62                2
Other                                  371                  15                15               304               37
                                       497                  50                42               366               39
Property management                    312                   -               312                 -                -
Total                                  809                  50               354               366               39

June 30, 2008
Investment professionals               192                  41                27               119                5
Other                                  398                  18                16               325               39
                                       590                  59                43               444               44
Property management                    227                   -               227                  -               -
Total                                  817                  59               270               444               44

Revenues

We generate revenues in each of our reporting segments by the fees we earn for
structuring and managing the investment vehicles we sponsor on behalf of
individual and institutional investors, RCC and the income produced by the
assets and investments we manage for our own account. The following table sets
forth certain information related to the revenues we have recognized in each of
these revenue categories (in thousands):

                                              Three Months Ended           Nine Months Ended
                                                   June 30,                    June 30,
                                              2009          2008          2009          2008
Fund management revenues
(1)                                        $   14,480     $  10,361     $  43,932     $  44,539
Finance and rental revenues (2)                 6,223        16,564        32,068        67,383
RCC management fees                               926         1,162         3,403         4,107
Gain on resolution of loans and other
property
interests (3)                                     298             -           976         1,633
Net gain on the sale of TIC property
interests (4)                                       -             -             -           373
Other (5)                                         702         1,358         1,648         5,849
                                           $   22,629     $  29,445     $  82,027     $ 123,884

(2) Includes interest and rental income from our commercial finance operations, interest income on bank loans from our financial fund management operations, interest and accreted discount income from our real estate operations and revenues from certain real estate assets.

(3) Includes the resolution of loans we hold in our real estate segment.

(4) Reflects gains, net of losses, recognized by our real estate segment on the sale of TIC property interests to outside investors.

(5) Includes the equity compensation earned in connection with the formation of RCC and the disposition of leases and loans as well as other charges in our commercial finance operations.

A detailed description of the revenues generated by each of our business segments can be found under "Results of Operations: Commercial Finance," ":Real Estate" and ":Financial Fund Management."

Results of Operations: Commercial Finance

As of June 30, 2009, our commercial finance assets under management decreased $180.0 million (11%) to $1.5 billion as compared to $1.6 billion at June 30, 2008. Originations of new equipment financing for the three and nine months ended June 30, 2009 were $90.9 million and $328.7 million, respectively, as compared to $147.9 million and $1.0 billion for the three and nine months ended June 30, 2008, a decrease of $57.0 million (39%) and $718.2 million (69%), respectively. Originations for the nine months ended June 30, 2008 included $581.5 million related to our November 2007 acquisitions of the Dolphin Capital Corp. and NetBank portfolios of leases and loans. Excluding these acquisitions, originations for the nine months ended June 30, 2009 decreased by $136.7 million as compared to the nine months ended June 30, 2008. Our originations have been and we expect they will continue to be impacted by the state of the credit markets and the ability of our funds to obtain financing to acquire portfolios of leases and loans from us.

During fiscal 2009, we have focused our efforts on improving our financial condition by monetizing investments and reducing borrowings. In March 2009, two of our investment partnerships, LEAF Equipment Leasing Income Fund III, L.P., or LEAF III, and LEAF Equipment Finance Fund 4, L.P., or LEAF 4, two public equipment leasing partnerships we sponsored and manage, formed a joint venture, LEAF Funds Joint Venture 2, LLC, or JV2. LEAF III and LEAF 4 invested $10.0 million into JV2, which in turn acquired a portion of our interest in LEAF Commercial Finance Fund, LLC, or LCFF, an investment fund that we formed to acquire and finance leases and loans we originate, and repaid us for amounts due to us from LCFF. We continue to maintain voting control of LCFF. As a result of the transaction, LCFF became a VIE for which JV2 was determined to be the primary beneficiary and, therefore, we no longer consolidated LCFF as of March 1, 2009. Accordingly, a total of $195.0 million of commercial finance assets and $187.6 million of debt financing were transferred to JV2. As a result of this deleveraging and the reduction in our warehouse borrowings, the commercial finance assets we managed for our own account at June 30, 2009 decreased $161.0 million (53%) to $145.0 million as compared to $306.0 million at June 30, 2008. The assets we managed for others remained approximately at the same level at $1.3 billion at June 30, 2009 and 2008.

In August 2008, we commenced a $200.0 million public offering of limited partnership interests in LEAF 4, which broke escrow and commenced operations in September 2008. Through August 4, 2009, we have raised $87.9 million in LEAF
4. In addition, through February 2009, we sold subordinated notes in LCFF. This offering closed in February 2009 having raised $9.4 million.

As of June 30, 2009, we managed approximately 103,000 leases and loans that had an average original finance value of $27,000 with an average term of 52 months as compared to approximately 96,000 leases and loans that had an average original finance value of $24,000 with an average term of 50 months as of June 30, 2008.

The following table sets forth information related to commercial finance assets we manage (1) (in millions):

                                            As of June 30,
                                           2009        2008
LEAF                                      $   145     $   163
LCFF (2)                                        -         143
Managed for our own account                   145         306

Lease Equity Appreciation Fund I, L.P.         79         109
Lease Equity Appreciation Fund II, L.P.       219         320
LEAF III                                      592         803
LEAF 4                                        180           -
LCFF (2)                                      197           -
RCC                                             3          92
Other                                          35           -
Managed for others                          1,305       1,324
                                          $ 1,450     $ 1,630

(2) As of March 1, 2009, LCFF is no longer a consolidated entity.

The revenues from our commercial finance operations consist primarily of (a) finance revenues from leases and loans held by us prior to being sold, (b) acquisition fees which we earn when we sell commercial finance assets to one of our investment partnerships, and (c) asset management fees earned over the life of the lease or loan after we sell it. The following table sets forth certain information relating to the revenues recognized and costs and expenses incurred in our commercial finance operations (in thousands):

                                     Three Months Ended          Nine Months Ended
                                          June 30,                    June 30,
                                      2009          2008         2009          2008
        Revenues: (1)
        Finance revenues           $    3,764     $ 10,040     $  18,891     $ 45,805
        Acquisition fees                  771        5,249         3,957       16,702
        Fund management fees            5,311        5,242        14,909       14,059
        Other                             701        1,271         1,595        5,866
                                   $   10,547     $ 21,802     $  39,352     $ 82,432

        Costs and expenses:
        Wage and benefit costs          2,940        5,474        10,040       18,144
        Other costs and expenses        2,901        5,277        10,024       14,069
                                   $    5,841     $ 10,751     $  20,064     $ 32,213

Revenues - Three and Nine Months Ended June 30, 2009 as Compared to the Three and Nine Months Ended June 30, 2008

Revenues decreased $11.3 million (52%) and $43.1 million (52%) for the three and nine months ended June 30, 2009, respectively, as compared to three and nine months ended June 30, 2008. We attribute these decreases primarily to the following:

· a $6.3 million and $26.9 million decrease in commercial finance revenues, respectively. In fiscal 2008, we held a significantly higher than normal portfolio of leases and loans as a result of the $412.5 million NetBank portfolio acquired in November 2007 and held by us until being completely sold to LEAF III in April 2008. In addition, as of March 2009 we no longer consolidated LCFF, a $195.0 million portfolio. As a result of these transactions, our finance revenues decreased significantly; however, since these assets are now owned by our investment funds, we are earning ongoing asset management fees. We have a $150.0 million warehouse line of credit that allows us to originate and hold equipment financings prior to selling them to our investment entities. This line of credit, which was to expire on July 31, 2009, has been extended until September 30, 2009 while we negotiate a longer-term renewal. We expect that the terms of our renewed line of credit may reduce the amount available on the line, which would require us to reduce the size of the portfolio we can hold, and accordingly, would lower our commercial finance revenues;

· a $4.5 million and $12.7 million decrease, respectively, in acquisition fees resulting from the decrease in leases sold to our funds and RCC by $369.9 million and $956.2 million to $40.1 million and $220.8 million, respectively. These decreases reflect the assets sold to our investment entities in fiscal 2008 related to the NetBank and Dolphin Capital Corp. portfolio acquisitions. Additionally, the difficulty in obtaining debt financing by our investment funds has decreased their ability to acquire equipment financings from us. Consequently, we have reduced our commercial finance originations to match the asset acquisition capabilities of our funds;

· a $69,000 and $850,000 increase in fund management fees, respectively. Our management fees include fees we receive to service the commercial finance assets we manage, offering fees earned for raising capital in our investment entities as well as fees received on originating loans for those entities. For the three months ended June 30, 2009, servicing fees for leases decreased by $350,000 due to the decrease in assets managed for our investment entities, in part due to the May 2009 discontinuance of fees from LEAF I (which enters its liquidation stage beginning in August 2009). These decreases were offset, in part, by a $271,000 increase in net loan origination fees and a $148,000 increase in offering fees related to the timing of the closing of LEAF III (April 2008) and the commencement of LEAF 4 (August 2008). For the nine months ended June 30, 2009, management fees earned to service leases increased by $1.2 million due to the sale of the NetBank portfolio to LEAF III, from which we are earning ongoing management fees. In addition, net capitalized loan origination costs increased by $142,000. These increases were offset, in part, by decreased offering fees of $472,000 related to the time between the closing of LEAF III and the commencement of the LEAF 4 offering; and

· a $570,000 and $4.3 million decrease in other income, respectively, primarily reflecting reduced gains on equipment finance dispositions, which typically vary widely from period to period, but decreased as a result of our sales in fiscal 2008 of the NetBank portfolio to LEAF III.

Costs and Expenses - Three and Nine Months Ended June 30, 2009 as Compared to the Three and Nine Months Ended June 30, 2008

. . .