<PAGE>




  As filed with the Securities and Exchange Commission on September 26, 2003
                              Registration No. 333-

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-8
                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933

                              RAIT INVESTMENT TRUST
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)



                          Maryland                         23-2919819
                   --------------------                -----------------
                (State or other jurisdiction           (I.R.S. Employer
              of incorporation or organization)       Identification No.)


                    c/o RAIT Partnership, L.P.
                1818 Market Street, Philadelphia, PA            19103
                -------------------------------------         ---------
             (Address of Principal Executive Offices)        (Zip Code)


                RAIT INVESTMENT TRUST 401(k) PROFIT SHARING PLAN
                ------------------------------------------------
                            (Full title of the plan)

                               Ellen J. DiStefano
                              RAIT Investment Trust
                           c/o RAIT Partnership, L.P.
                         1818 Market Street, 28th Floor
                             Philadelphia, PA 19103
                      -------------------------------------
                     (Name and address of agent for service)

                                 (215) 861-7900
           -----------------------------------------------------------
          (Telephone number, including area code, of agent for service)

                                    Copy to:
                              Anders Laren, Esquire
                            Ledgewood Law Firm, P.C.
                        1521 Locust Street - Eighth Floor
                             Philadelphia, PA 19102
                                 (215) 731-9450
<PAGE>
                         CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
                                                           PROPOSED         PROPOSED
          TITLE OF                                          MAXIMUM          MAXIMUM
         SECURITIES                       AMOUNT           OFFERING         AGGREGATE           AMOUNT OF
            TO BE                          TO BE           PRICE PER        OFFERING          REGISTRATION
        REGISTERED(1)                  REGISTERED(2)       SHARE(3)           PRICE                FEE
        -------------                  -------------       --------           -----                ---
<S>                               <C>                     <C>             <C>                <C>
 Common shares of beneficial
 interest, par value $.01 per
 share                                    134,784           $23.90         $3,221,338             $261

</TABLE>



(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein. This
registration statement also registers additional securities to be offered or
issued upon adjustment or changes made to the registered securities by reason of
any stock splits, stock dividends or similar transactions as permitted by Rule
416.

(2) Included in these shares are 34,784 common shares that constitute
restricted securities being registered for reoffer and resale which have been
acquired by the selling security holders prior to the filing of this
registration statement pursuant to the employee benefit plan described herein.

(3) Estimated solely for purposes of determining the registration fee in
accordance with Rule 457(h) under the Securities Act of 1933 based upon the
average of the high and low sales prices of the registrant's common shares as
reported on the New York Stock Exchange - Composite Transactions System on
September 19, 2003.

                                EXPLANATORY NOTE

      This registration statement relates to common shares of beneficial
interest, par value $0.01 per share, of RAIT Investment Trust, a Maryland real
estate investment trust, that may be acquired by our employees under the RAIT
Investment Trust 401(k) Profit Sharing Plan. The plan administrator obtains
common shares for this plan through open market purchases at prevailing market
prices. These transactions do not involve our original issuance of any new
common shares or result in a change in the number of our outstanding common
shares. This registration statement also relates to the registration for reoffer
and resale of 34,784 of our common shares which were acquired by the
selling security holders under this plan prior to the filing of this
registration statement which constitute "restricted securities" as defined in
General Instruction C.1(b) of Form S-8. The resale prospectus filed together
with this registration statement relates to the reoffer and resale of these
restricted shares and may also be used for reoffers and resales of "control
securities" as defined in General Instruction C.1(a) of Form S-8 acquired by the
selling security holders under this plan.

                                       II
<PAGE>
                                     PART I

                INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS

ITEM 1. PLAN INFORMATION.

      Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this registration statement in accordance with the
Explanatory Note to Part I of Form S-8.

ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.

      Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this registration statement in accordance with the
Explanatory Note to Part I of Form S-8.




                                       III
<PAGE>
RESALE PROSPECTUS

                              RAIT INVESTMENT TRUST

              UP TO 134,784 COMMON SHARES OF BENEFICIAL INTEREST

      This prospectus is part of a registration statement that we filed with the
SEC on Form S-8. On Form S-8 we registered the offer and sale of common shares
of beneficial interest to be acquired by our employees under our RAIT Investment
Trust 401(k) Profit Sharing Plan, the reoffer and resale of certain common
shares acquired or to be acquired by our employees under this plan and the offer
and sale of interests in this plan. We sometimes refer to this plan as our
"401(k) plan".

      This prospectus may be used by certain of our employees to sell a maximum
of 34,784 common shares which have been acquired by them pursuant to our 401(k)
plan prior to the filing of this registration statement and which constitute
"restricted securities" under applicable securities laws. These persons include
those of our employees who are listed on page 27 below as "selling
shareholders." This prospectus may also be used by certain of our employees who
may be deemed to be our affiliates under applicable securities laws to sell
common shares which are acquired by them pursuant to our 401(k) plan and
constitute "control securities" under applicable securities laws. We encourage
our employees to invest in our company through our 401(k) plan. We believe that
this prospectus and the registration statement of which it is a part, which
permits resales of shares acquired by our employees through our 401(k) plan,
encourages this investment by providing liquidity for their investment.
Accordingly, while the selling shareholders may sell up to the number of common
shares listed in the "Common Shares Registered Under This Prospectus" column
opposite their names at any time or from time to time until the termination of
this offering, they are not required to sell any shares.

      We will not receive any of the proceeds from the sale of these common
shares. We will pay all of the expenses associated with the registration of
these common shares and this prospectus. The selling shareholders will pay the
other costs, if any, associated with any sale of the common shares.

      The common shares of RAIT Investment Trust are listed for trading on the
New York Stock Exchange under the symbol "RAS." For more information on how the
selling shareholders may sell these shares, please read the section of the
prospectus entitled "Plan of Distribution."

      YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE
3 FOR A DISCUSSION OF FACTORS YOU SHOULD CONSIDER BEFORE BUYING OUR COMMON
SHARES.

      NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                 This prospectus is dated September 26, 2003
<PAGE>
                                   OUR COMPANY

GENERAL

      RAIT Investment Trust is a real estate investment trust, or REIT, formed
under Maryland law. We conduct our operations through RAIT Partnership, L.P., a
limited partnership that owns substantially all of our assets. Our wholly-owned
subsidiaries, RAIT General, Inc. and RAIT Limited, Inc., are the sole general
partner and sole limited partner, respectively, of RAIT Partnership. We
sometimes refer to RAIT Investment Trust and RAIT Partnership, along with RAIT
General and RAIT Limited, using the words "we," "our" and "us." We make
investments in real estate primarily by:

      -     making real estate loans;

      -     acquiring real estate loans; and

      -     acquiring interests in real estate.

      We seek to generate income for distribution to our shareholders from a
combination of interest and fees on loans, rents and other income from our
interests in real estate and proceeds from the sale of our investments.

      Our address is c/o RAIT Partnership, L.P., 1818 Market Street, 28th Floor,
Philadelphia, Pennsylvania 19103. Our telephone number is (215) 861-7900.



                                       2
<PAGE>
                                  RISK FACTORS

GENERAL

      Transactions with our affiliates may result in conflicts of interest. We
have relationships with Resource America, Inc., Brandywine Construction &
Management, Inc. and The Bancorp, Inc. which may give rise to conflicts of
interest.

      Resource America has had the right to nominate one person to serve as
trustee on our board of trustees for so long as it owned at least 5% of our
outstanding common shares. In June 2003, Resource America's holdings fell below
5%. Jonathan Z. Cohen, the chief operating officer and a director of Resource
America, has served as Resource America's representative on our board of
trustees. Mr. Cohen, whose service as a trustee continues, is the son of Edward
E. Cohen, the chairman, chief executive officer, president and a principal
shareholder of Resource America, and Betsy Z. Cohen, our chairman and chief
executive officer. Mrs. Cohen is the spouse of Edward E. Cohen. Scott F.
Schaeffer, our president and chief operating officer, was a director of Resource
America until October 2002.

      We have in the past purchased investments from and sold investments to
Resource America and we anticipate that we will do so in the future, subject to
a limitation contained in our declaration of trust. We also have made loans to
affiliates of Resource America in the past and we anticipate that we and
Resource America may in the future hold various interests in the same
properties, subject to this limitation.

      Brandywine Construction & Management, an affiliate of Resource America,
provides real estate management services to us.

      Most of our demand deposit and checking accounts are with The Bancorp
Bank, the wholly-owned banking subsidiary of The Bancorp. Betsy Z. Cohen is the
chief executive officer and a director of The Bancorp. and her son, Daniel G.
Cohen, is its chairman. Daniel G. Cohen was a director of Resource America until
October 2002.

                            INVESTMENT ACTIVITY RISKS

FINANCING CONSIDERATIONS

      The value of our investments depends on conditions beyond our control. Our
investments either are loans secured or backed by real estate, interests in
entities whose principal or sole assets are real estate or direct ownership of
real estate. As a result, the value of our investments depends principally upon
the value of the real estate underlying our investments which is affected by
numerous factors beyond our control including general and local economic
conditions, neighborhood values, competitive overbuilding, weather, casualty
losses, occupancy rates and other factors beyond our control. The value of this
underlying real estate may also be affected by factors such as the costs of
compliance with use, occupancy and similar regulations, potential or actual
liabilities under applicable environmental laws, changes in interest rates and
the availability of financing. Income from a property will be adversely affected
if a significant number of tenants are unable to pay rent or if available space
cannot be rented on favorable terms. Operating and other expenses of this
underlying real estate, particularly significant expenses such as mortgage
payments, insurance, real estate taxes and maintenance costs, generally do no
decrease when income decreases and, even if revenues increase, operating and
other expenses may increase faster than revenues.

      Any investments may also be affected by a borrower's failure to perform
the terms of a loan or borrower's bankruptcy or insolvency which may require us
to become involved in expensive and time-consuming bankruptcy, reorganization or
foreclosure proceedings. Where the structure of our loan defers payment of some
portion of accruing interest or defers repayment of principal until loan
maturity, the borrower's ability to satisfy this obligation may depend upon its
ability to obtain suitable refinancing or otherwise to raise a substantial cash
amount, which we do not control and which may be subject to the same
considerations we describe in this "Investment Activity Risks" section. In
addition, mortgage lenders can lose lien priority in many jurisdictions,
including those in which real estate securing or underlying our loans is
located, to persons who supply labor and materials to a property. For these and
other reasons, the total amount that we may recover from one of our loans may be
less than the total amount of that loan or our cost of an acquisition.

      Longer term, subordinate and non-traditional loans may be illiquid and
their value may decrease. Our loans generally have maturities between two and
five years, are subordinated and typically do not conform to traditional loan




                                       3
<PAGE>
underwriting criteria. As a result, our loans are relatively illiquid
investments. We may be unable to vary our portfolio promptly in response to
changing economic, financial and investment conditions. As a result, the fair
market value of our portfolio may decrease in the future.

      Investment in subordinate loans may involve increased risk of loss. We
emphasize junior lien loans and other forms of subordinated financing. Because
of their subordinate position, junior lien loans carry a greater credit risk
than senior lien financing, including a substantially greater risk of
non-payment of interest or principal. Where, as part of a financing structure,
we take an equity or other unsecured position, our risk of loss may be
materially increased. A decline in the real estate market could adversely affect
the value of the property so that the aggregate outstanding balances of senior
liens may exceed the value of the underlying property. In the event of a default
on a senior loan, we may elect to make payments, if we have the right to do so,
in order to prevent foreclosure on the senior loans. In the event of
foreclosure, as a junior lienor we will be entitled to share in foreclosure
proceeds only after satisfaction of the amounts due to senior lienors, which may
result in our being unable to recover the full amount, or any, of our
investment. It is also possible that, in some cases, a "due on sale" clause
included in a senior mortgage, which accelerates the amount due under the senior
mortgage in case of the sale of the property, may apply to the sale of the
property if we foreclose, increasing our risk of loss.

      When we originate or acquire a junior loan, we may not have the right to
service senior loans. The servicers of the senior loans are responsible to the
holders of those loans, whose interests will likely not coincide with ours,
particularly in the event of a default. Accordingly, the senior loans may not be
serviced in a manner advantageous to us.

      We currently have loans that are not collateralized by recorded or
perfected liens. Some of the loans not collateralized by liens are secured
instead by deeds-in-lieu of foreclosure, also known as "pocket deeds." A
deed-in-lieu of foreclosure is a deed executed in blank that the holder is
entitled to record immediately upon a default in the loan. Loans that are not
collateralized by recorded or perfected liens are subordinate not only to
existing liens encumbering the underlying property, but also to future judgment
or other liens that may arise as well as to the claims of general creditors of
the borrower. Moreover, filing a deed-in-lieu of foreclosure with respect to
these loans will usually constitute an event of default under any related senior
debt. Any such default would require us to acquire or pay off the senior debt in
order to protect our investment. Furthermore, in a bankruptcy, we will have
materially fewer rights than secured creditors and, if our loan is secured by
equity interests in the borrower, than the borrower's general creditors. Our
rights also will be subordinate to the lien-like rights of the bankruptcy
trustee. Moreover, enforcement of our loans against the underlying properties
will involve a longer, more complex, and likely, more expensive legal process
than enforcement of a mortgage loan.

      Loans secured by equity interests in entities owning real estate may
involve increased risk of loss. We may originate or acquire loans secured by
interests in entities owning real estate rather than by a direct security
interest in the underlying properties. These loans may be illiquid or otherwise
have features that may make it difficult for us to obtain a return of our
investment in the event of a default. Loans secured by these interests will be
subordinate not only to existing liens encumbering the underlying property but
also to future judgment or other liens that may arise and to the claims of
general creditors of the borrower.

      Acquisitions of loans may involve increased risk of loss. When we acquire
existing loans, we generally do so at a discount from both the outstanding
balances of the loans and the appraised value of the properties underlying the
loans. Typically, discounted loans are in default under the original loan terms
or other requirements and are subject to forbearance agreements. A forbearance
agreement typically requires a borrower to pay to the lender all revenue from a
property after payment of the property's operating expenses in return for the
lender's agreement to withhold exercising its rights under the loan documents.
Acquiring loans at a discount involves a substantially higher degree of risk of
non-collection than loans that conform to institutional underwriting criteria.
We do not acquire a loan unless material steps have been taken toward resolving
problems with the loan, or its underlying property. However, previously existing
problems may recur or other problems may arise.

      Financing with high loan-to-value ratios may involve increased risk of
loss. Most of our financings have loan-to-value ratios in excess of 80% and many
have loan-to-value ratios in excess of 90%. We expect to continue making loans
with high loan-to-value ratios. A loan-to-value ratio is the ratio of the amount
of our financing, plus the amount of any senior indebtedness, to the appraised
value of the property underlying the loan. By reducing the margin available to
cover fluctuations in property value, a high loan-to-value ratio increases the
risk that, upon default, the amount obtainable from the sale of the underlying
property may be insufficient to repay the financing.



                                       4
<PAGE>
      Interest rate changes may adversely affect our investments. Changes in
interest rates affect the market value of our loan portfolio. In general, the
market value of a loan will change in inverse relation to an interest rate
change where a loan has a fixed interest rate or only limited interest rate
adjustments. Accordingly, in a period of rising interest rates, the market value
of such a loan will decrease. Moreover, in a period of declining interest rates,
real estate loans with rates that are fixed or variable only to a limited extent
may have less value than other income-producing securities due to possible
prepayments. Interest rate changes will also affect the return we obtain on new
loans. In particular, during a period of declining rates, our reinvestment of
loan repayments may be at lower rates than we obtained in prior investments or
on the repaid loans. Also, increases in interest on debt we incur may not be
reflected in increased rates of return on the investments funded through such
debt, which would adversely affect our return on those investments. Accordingly,
interest rate changes may materially affect the total return on our investment
portfolio, which in turn will affect the amount available for distribution to
shareholders.

      We may not obtain appreciation interests at the rate we seek, or at all;
we may not benefit from appreciation interests we do obtain. In addition to an
agreed upon interest rate, we seek to obtain appreciation interests from our
borrowers. Appreciation interests require a borrower to pay us additional
amounts based upon a property's increase in value, increase in revenues, or
both. While we seek appreciation interests at rates of at least 25%, we may not
be able to obtain these rates. Moreover, we may not be able to negotiate
appreciation interest provisions in any of our loans. In addition, while we have
sought to structure the interest rates on our existing loans to maximize our
current yield, we may in the future accept a lower interest rate to obtain an
appreciation interest. The value of any appreciation interest depends on the
performance and value of the property underlying the loan and, thus, is subject
to real estate investment risks. Accordingly, we may not realize any benefits
from our appreciation interests. We do not anticipate receiving significant
amounts from our appreciation interests in the early years of our loans.

      Appreciation interests may cause us to lose our lien priority. Because
appreciation interests allow us to participate in the increase in a property's
value or revenue, courts, including a court in a bankruptcy arrangement or
similar proceeding, may determine that we should be treated as a partner of, or
joint venturer with, the borrower. If a court makes that determination, we could
lose our lien priority in the property or lose any benefit of our lien.

      The competition for making investments in real estate may limit our
ability to achieve our objectives. We may encounter significant competition from
banks, insurance companies, savings and loan associations, mortgage bankers,
pension funds, investment bankers and others, including public or private REITs.
This competition could reduce our yields and make it more difficult to obtain
appreciation interests. It may also increase the price, and thus reduce
potential yields, on discounted loans we acquire. Most of our competitors have
substantially greater assets than we do. As such, they have the ability to make
larger loans and to reduce the risk of loss from any one loan by having a more
diversified loan portfolio. An increase in the general availability of funds to
lenders, or a decrease in the amount of borrowing activity, may increase
competition for making loans and may reduce obtainable yields or increase the
credit risk inherent in the available loans.

      Usury statutes may impose interest ceilings and substantial penalties for
violations. Interest we charge on our loans, which may include amounts received
from appreciation interests, may be subject to state usury laws. These laws
impose maximum interest rates that may be charged on loans and penalties for
violation, including repayment of excess interest and unenforceability of debt.
We seek to structure our loans so that we do not violate applicable usury laws,
but uncertainties in determining the legality of interest rates and other
borrowing charges under some statutes may result in inadvertent violations.

REAL ESTATE CONSIDERATIONS

      For a discussion of how the value of our interests in real estate may
depend on conditions beyond our control, see "Financing Considerations - The
value of our investments depends on conditions beyond our control" above.

Our interests in real estate are illiquid and their value may decrease. Real
estate investments are relatively illiquid. Therefore, we may have only a
limited ability to vary our portfolio of interests in real estate quickly in
response to changes in economic or other conditions. As a consequence, the fair
market value of some or all of our interests in real estate may decrease in the
future. In addition, provisions in the Internal Revenue Code and related
regulations impose a 100% tax on gain realized by a REIT like us from property
held primarily for sale to customers in the ordinary course of business. These
provisions may materially adversely affect our ability to sell our interests in
real estate. For a more complete discussion of the 100% tax, you should read
"Risk Factors - Legal and Tax Risks - Gain on disposition of assets deemed held
for sale in ordinary course subject to 100% tax" and "Federal Income Tax
Consequences of Our Status as a REIT-Income Tests."



                                       5
<PAGE>
      Uninsured and underinsured losses may affect the value of, or our return
from, our interests in real estate. Our properties, and the properties
underlying our loans, have comprehensive insurance in amounts we believe are
sufficient to permit the replacement of the properties in the event of a total
loss, subject to applicable deductibles. There are, however, certain types of
losses, such as earthquakes, floods, hurricanes and terrorism that may be
uninsurable or not economically insurable. Also, inflation, changes in building
codes and ordinances, environmental considerations and other factors might make
it impractical to use insurance proceeds to replace a damaged or destroyed
property. If any of these or similar events occurs, it may reduce our return
from an affected property and the value of our investment.

      We may have less control of our investment when we own less than 100% of
the equity interests in joint ventures, partnerships, limited liability
companies or other entities that own real estate. Our acquisition of equity
interests in joint ventures, partnerships, limited liability companies or other
entities that own real estate, especially when we hold less than a controlling
equity interest, may expose us to greater risk than situations where we own real
estate through our wholly-owned subsidiaries. For example, the other equity
owners in the entity holding the property might have economic or business
interests or goals which are inconsistent with our business interests or goals
and may be in a position to take action contrary to our instructions or to our
policies and objectives. Moreover, if we are a limited partner in a limited
partnership and have rights allowing us control over the partnership or its
property, we may be deemed to be a general partner and liable for the debts of
the partnership beyond the amount of our investment.

      Real estate with environmental problems may create liability for us. The
existence of hazardous or toxic substances on a property will adversely affect
its value and our ability to sell or borrow against the property. Contamination
of real estate by hazardous substances or toxic wastes not only may give rise to
a lien on that property to assure payment of the cost of remediation, but also
can result in liability to us as owner, operator or lender for that cost. Many
environmental laws can impose liability whether we know of, or are responsible
for, the contamination. In addition, if we arrange for the disposal of hazardous
or toxic substances at another site, we may be liable for the costs of cleaning
up and removing those substances from the site, even if we neither own nor
operate the disposal site. Environmental laws may require us to incur
substantial expenses, and may materially limit our use of our properties and may
adversely affect our ability to make distributions to our shareholders. In
addition, future or amended laws, or more stringent interpretations or
enforcement policies with respect to existing environmental requirements, may
increase our exposure to environmental liability.

      Compliance with Americans with Disabilities Act may adversely affect our
financial condition. Under the Americans with Disabilities Act of 1990, all
public accommodations must meet federal requirements for access and use by
disabled persons. A determination that real estate relating to one of our
investments does not comply with the Americans with Disabilities Act could
result in liability for both governmental fines and damages to private parties.
This could reduce the revenues from that real estate that otherwise would be
available to our borrower to pay interest on our loans or reduce the income to
us from our interest in that real estate. As a result, if we or our borrowers
were required to make unanticipated major modifications to comply with the
Americans with Disabilities Act, the resulting expense could adversely affect
our ability to make distributions to our shareholders.

OTHER INVESTMENT ACTIVITY CONSIDERATIONS

      Lack of geographic diversification exposes our investments to a higher
risk of loss from regional economic factors. We generally invest in real estate
located in the Mid-Atlantic and Southeast regions of the United States. Although
we anticipate that we will continue to focus on these regions for the
foreseeable future, we are not, however, subject to any geographic limitations
in our organizational documents regarding where we may invest and, accordingly,
may make investments in other areas that do not readily fit our targeted
characteristics, as appropriate opportunities are identified. This lack of
geographic diversification may make our investment portfolio more sensitive to
economic developments of a primarily regional nature, which may result in
reduced rates of return or higher rates of default than might be incurred with a
more geographically diverse investment portfolio.

      Leverage can reduce income available for distribution and cause losses.
Our organizational documents do not limit the amount of indebtedness we may
incur. Using leverage, whether with recourse to us generally or only with
respect to a particular property, to acquire investments creates an opportunity
for increased net income, but at the same time creates risks. For example,
leverage can reduce the net income available for distributions to shareholders
in periods of rising interest rates where interest rate increases are greater
than increases in the rates of return on our investments. We use leverage to
acquire



                                       6
<PAGE>
investments only when we believe it will enhance our returns. However, we cannot
be sure that our use of leverage will prove to be beneficial. Moreover, when our
assets secure our debt, we can lose some or all of our assets through
foreclosure if we do not meet our debt service obligations.

      Concentration of our investments increases our dependence on individual
investments. Although we generally invest between $2.0 million and $30.0 million
in a loan or interest in real estate, our organizational documents do not limit
the size of our investments. If we make larger investments, our portfolio will
be concentrated in a smaller number of assets, increasing the risk of loss to
shareholders if a default or other problem arises with respect to any one
investment. If we make investments that, in the aggregate, comprise a material
portion of our assets or generate a material portion of our revenue or net
income, to any single borrower or group of affiliated borrowers, the failure of
that borrower or group to perform their obligations under the terms of one or
more of our investments in them could increase the risk of loss to our
shareholders.

LEGAL AND TAX RISKS

      We will be taxed as a regular corporation if we fail to maintain our REIT
status. We have operated and intend to continue to operate in a manner that
permits us to qualify as a REIT for federal income tax purposes. However, the
federal income tax laws governing REITs are complex, and we have not obtained a
ruling from the Internal Revenue Service about our status as a REIT. We have
received an opinion of counsel that we qualify as a REIT based on our current
operations and on certain assumptions and representations concerning future
operations. Opinions of counsel are not binding on the Internal Revenue Service
or any court. The opinion only represents the view of counsel based on counsel's
review and analysis of existing law. Furthermore, our continued qualification as
a REIT will depend on our satisfaction of the asset, income, organizational,
distribution and shareholder ownership requirements of the Internal Revenue Code
on a continuing basis.

      If we fail to qualify as a REIT in any taxable year, we will be subject to
federal income tax, including any applicable alternative minimum tax, on our
taxable income at regular corporate rates, and distributions to shareholders
will not be deductible in computing our taxable income. Corporate tax liability
would reduce the amount of cash available for distribution to our shareholders
which, in turn, may reduce the trading prices of our common shares. Unless
entitled to relief under certain Internal Revenue Code provisions, we also would
be disqualified from taxation as a REIT for the four taxable years following the
year during which we ceased to qualify as a REIT.

      "Phantom income" may require us to borrow or sell assets to meet REIT
distribution requirements. We must distribute at least 90% of our annual net
taxable income, excluding any net capital gain or retained capital gain, in
order to maintain our REIT status. For years before 2001, we were required to
distribute 95% of this income. In addition, we will be subject to a 4%
nondeductible excise tax on the amount, if any, by which our distributions in
any calendar year are less than the sum of:

      -     85% of our ordinary income for that year,

      -     95% of our capital gain net income for that year, and

      -     100% of our undistributed taxable income from prior years.

      We have complied and intend to continue to comply with these distribution
requirements. However, in some instances, the structure of our loans may require
us to recognize income for federal income tax purposes even though we do not
receive corresponding cash payments. This income recognition, in turn, increases
the amount that we must distribute in order to avoid corporate income tax for
that year unless there is an equivalent amount of deductions that do not require
expenditures of cash, such as depreciation on owned real estate. The four
principal ways in which this "phantom income" may arise for us are:

      -     Origination or acquisition of loans, including loans with
            appreciation interests, that may be deemed to have original issue
            discount for federal income tax purposes. Original issue discount is
            generally equal to the difference between an obligation's issue
            price and its stated redemption price at maturity. We must recognize
            as income in each year the portion of the original issue discount
            that accrues during that year, even though we do not receive cash in
            that year in the amount of the original issue discount.



                                       7
<PAGE>
      -     Accruing interest with respect to a loan at a rate greater than the
            rate at which we receive interest. In particular, this may happen
            where the rate at which interest is paid on a loan is less than the
            stated rate.

      -     Origination or acquisition of wraparound loans under which we
            receive payments of principal and interest that do not coincide with
            the payments of principal and interest on underlying senior loans.
            Even if, as expected, we obtain positive cash flow from the
            transaction, the amount of principal we pay on the senior
            obligations may exceed the amount of principal we receive from the
            obligor on the wraparound loan, and the amount of interest we may
            receive from the obligor may exceed the amount of interest we pay on
            the senior obligations. This could create a situation where our
            taxable income exceeds our cash flow from the wraparound loan.

      -     REIT taxable income in excess of cash received may also arise in
            connection with some property sales and where a significant
            modification is made to a loan. In addition, we may purchase loans
            relating to our property interests. To the extent we purchase these
            loans at a discount, the purchase may give rise to phantom income
            without any related receipt of cash.

If any of the above circumstances occurs, it could require us, in order to avoid
corporate income tax and the nondeductible excise tax, to borrow funds, sell
assets at times which may not be advantageous to us, distribute amounts that
represent a return of capital, or distribute amounts that would otherwise be
spent on future acquisitions, unanticipated capital expenditures or repayment of
debt. To offset these risks, we have invested and intend to continue to invest,
as appropriate, in property interests so that the non-cash depreciation
deductions associated with these investments may help offset our non-cash
income.

      Origination fees we receive will not be REIT qualifying income. Any
origination fees we receive will not be qualifying income for purposes of the
75% or 95% gross income tests applicable to REITs under the Internal Revenue
Code. For a description of these tests, see "Federal Income Tax Consequences of
Our Status as a REIT - Income Tests." We typically receive initial payments, or
"points," from borrowers as commitment fees or additional interest. So long as
the payment is for the use of money, rather than for services provided by us, we
believe that this income should not be classified as non-qualifying origination
fees. However, the Internal Revenue Service may seek to reclassify this income
as origination fees instead of commitment fees or interest. If we cannot satisfy
the Internal Revenue Code's income tests as a result of a successful challenge
of our classification of this income, we may not qualify as a REIT.

      Income from certain loans may not be REIT qualifying income. We have
purchased and originated loans that are only indirectly secured by real property
and may do so in the future. If a senior loan prevents us from recording a
mortgage against the property, the junior note held by us may be collateralized
by an unrecorded mortgage, a deed-in-lieu of foreclosure, a pledge of equity
interests of the borrower, a purchase option or some other arrangement. In these
situations, the Internal Revenue Service may conclude that interest on our loans
does not constitute interest from obligations "secured by mortgages on real
property or on interests in real property." As a result, interest from these
sources would not qualify for purposes of the 75% gross income test. For a
description of this test, see "Federal Income Tax Consequences of Our Status as
a REIT - Income Tests."

      Gain on disposition of assets deemed held for sale in ordinary course
subject to 100% tax. If we sell any of our assets, the Internal Revenue Service
may determine that the sale is a disposition of an asset held primarily for sale
to customers in the ordinary course of a trade or business. Gain from this kind
of sale generally will be subject to a 100% tax. Whether an asset is held
"primarily for sale to customers in the ordinary course of a trade or business"
depends on the particular facts and circumstances of the sale. Although we will
attempt to comply with the terms of safe-harbor provisions in the Internal
Revenue Code prescribing when asset sales will not be so characterized, we
cannot assure you that we will be able to do so.

      Loss of our Investment Company Act exemption would affect us adversely. We
believe that we are not an investment company under the Investment Company Act
and intend to conduct our operations so that we do not become an investment
company. The Investment Company Act exempts from its registration requirements
entities that, directly or through majority-owned subsidiaries, are "primarily
engaged in the business of purchasing or otherwise acquiring mortgages and other
liens on and interests in real estate." Under current SEC interpretations, in
order to qualify for a "no-action" position from the SEC with respect to the
availability of this exemption, at least 55% of our assets must be invested in
these liens and interests and we may be required to invest an additional 25% in
these types of liens and interests or in other "real estate type" assets.



                                       8
<PAGE>
      We believe that, generally, a loan will be considered to be a mortgage or
other lien on real estate if we obtain foreclosure rights. We typically seek to
obtain these rights in our loans. We have not, however, obtained an exemptive
order, no-action letter or other form of interpretive guidance from the SEC on
this position. If the SEC takes a different position, our portfolio may not have
a composition that allows us to qualify under the exemption we claim. If we do
not qualify, we must either change our operations and our asset composition to
claim the exemption or register as an investment company. Either alternative
could adversely affect us and the market price of our shares.

      Our board of trustees may change our policies without shareholder consent.
Our board of trustees determines our policies and, in particular, our investment
policies. Our board of trustees may amend our policies or approve transactions
that deviate from these policies without a vote of or notice to our
shareholders. Policy changes could adversely affect the market price of our
shares and our ability to make distributions. Our board of trustees cannot take
any action to disqualify us as a REIT or to otherwise revoke our election to be
taxed as a REIT without the approval of a majority of our outstanding voting
shares.

      Our ownership limitation may restrict business combination opportunities.
To qualify as a REIT under the Internal Revenue Code, no more than 50% in value
of our outstanding capital shares may be owned, directly or indirectly, by five
or fewer individuals during the last half of each taxable year. To preserve our
REIT qualification, our declaration of trust generally prohibits any person from
owning more than 8.3% or, with respect to Resource America, 15%, of our
outstanding common shares and provides that:

      -     A transfer that violates the limitation is void.

      -     A transferee gets no rights to the shares that violate the
            limitation.

      -     Shares acquired that violate the limitation transfer automatically
            to a trust whose trustee has all voting and other rights.

      -     Shares in the trust will be sold and the record holder will receive
            the net proceeds of the sale.

The ownership limitation may discourage a takeover or other transaction that our
shareholders believe to be desirable.

      Preferred shares may prevent change in control. Our declaration of trust
authorizes our board of trustees to issue preferred shares, to establish the
preferences and rights of any preferred shares issued, to classify any unissued
preferred shares and reclassify any previously classified but unissued preferred
shares, without shareholder approval. The issuance of preferred shares could
delay or prevent a change in control, apart from the ownership limitation, even
if a majority of our shareholders want control to change.

      Maryland anti-takeover statutes may restrict business combination
opportunities. As a Maryland REIT, we are subject to various provisions of
Maryland law which impose restrictions and require that specified procedures be
followed with respect to the acquisition of "control shares" representing at
least ten percent of our aggregate voting power and certain takeover offers and
business combinations, including, but not limited to, combinations with persons
who own one-tenth or more of our outstanding shares. While we have elected to
"opt out" of the control share acquisition statute, our board of trustees has
the right to rescind the election at any time without notice to our
shareholders.




                                       9
<PAGE>
  CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR DECLARATION OF TRUST AND BYLAWS

BOARD OF TRUSTEES

      Our declaration of trust requires us to have no fewer than three nor more
than nine trustees. A majority of our trustees must be "independent trustees."
The declaration of trust defines an independent trustee as one who, during the
preceding two years, has not:

      -     been an affiliate of Resource America, Brandywine Construction &
            Management or their affiliates,

      -     been one of our officers, or

      -     had a material business or professional relationship with us,
            Resource America, Brandywine Construction & Management or their
            affiliates.

      We currently have six trustees, of whom four have been determined by our
board of trustees to be independent trustees. The trustees may increase or
decrease the number of trustees by a majority vote; however, the number of
trustees may be increased above nine or decreased below three only by a vote of
at least 75% of the trustees then in office, and the term of office of a trustee
may not be affected by a decrease in the authorized number of trustees. Any
vacancy, including one created by an increase in the number of trustees, may be
filled by a majority of the remaining trustees, except that independent trustees
must nominate replacements for vacancies in independent trustee positions.

      Our declaration of trust provides that a trustee may be removed by a
two-thirds vote of our outstanding voting shares. This provision may operate to
make it impractical for shareholders to remove incumbent trustees and fill the
vacancies created by such removal with their own nominees.

BUSINESS COMBINATIONS

      Under Maryland law, certain "business combinations" between us and any
person who beneficially owns, directly or indirectly, 10% or more of the voting
power of our shares, an affiliate of ours who, at any time within the previous
two years was the beneficial owner of 10% or more of the voting power of our
shares, whom the statute terms an "interested shareholder," or an affiliate of
an interested shareholder, are prohibited for five years after the most recent
date on which an "interested shareholder" became an interested shareholder. The
business combinations subject to this law include principally mergers,
consolidations, share exchanges or, in certain circumstances, asset transfers or
issuances or reclassifications of equity securities. After the five year period
has elapsed, a proposed business combination must be recommended by the board of
trustees and approved by the affirmative vote of at least

      -     80% of our outstanding voting shares, and

      -     two-thirds of our outstanding voting shares, excluding shares held
            by the interested shareholder

unless, among other conditions, the shareholders receive a minimum price, as
defined by Maryland law, for their shares and the consideration is in cash or in
the same form as previously paid by the interested shareholder for its shares.
These provisions do not apply, however, to business combinations that our board
of trustees approves or exempts prior to the time that the interested
shareholder becomes an interested shareholder.

CONTROL SHARE ACQUISITIONS

      Maryland law provides that "control shares" acquired in a "control share
acquisition" have no voting rights unless approved by a vote of two-thirds of
our outstanding voting shares, excluding shares owned by the acquiror or by
officers or trustees who are employees of ours. "Control shares" are voting
shares which, if aggregated with all other shares previously acquired by the
acquiring person, or in respect of which the acquiring person is able to
exercise or direct the exercise of voting power, except solely by virtue of a
revocable proxy, would entitle the acquiring person to exercise voting power in
electing trustees within one of the following ranges of voting power:



                                       10
<PAGE>
      -     one-tenth or more but less than one-third,

      -     one-third or more but less than a majority, or

      -     a majority of all voting power.

Control shares do not include shares the acquiring person is then entitled to
vote as a result of having previously obtained shareholder approval. A "control
share acquisition" means the acquisition of control shares, subject to certain
exceptions.

      A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions, including an undertaking to pay
expenses, may compel our board of trustees to call a special meeting of
shareholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, we may present the question
at any shareholders' meeting.

      If voting rights are not approved at the shareholders' meeting or if the
acquiring person does not deliver an acquiring person statement as required by
Maryland law, then, subject to certain conditions and limitations, we may redeem
any or all of the control shares, except those for which voting rights have
previously been approved, for fair value. Fair value is determined without
regard to the absence of voting rights for the control shares and as of the date
of the last control share acquisition or of any meeting of shareholders at which
the voting rights of such shares were considered and not approved. If voting
rights for control shares are approved at a shareholders' meeting, and the
acquiror may then vote a majority of the shares entitled to vote, all other
shareholders may exercise appraisal rights. The fair value of the shares for
purposes of these appraisal rights may not be less than the highest price per
share paid by the acquiror in the control share acquisition. The control share
acquisition statute does not apply to shares acquired in a merger, consolidation
or share exchange if we are a party to the transaction, nor does it apply to
acquisitions approved or exempted by our declaration of trust or bylaws from the
Maryland control share acquisition statute.

      Our bylaws exempt from the Maryland control share acquisition statute any
and all acquisitions of our common or preferred shares by any person. The board
of trustees has the right, however, to amend or eliminate this exemption at any
time in the future.

AMENDMENT OF OUR DECLARATION OF TRUST AND BYLAWS

      Our declaration of trust may be amended by a majority vote of our
outstanding voting shares except that provisions relating to the trustees, the
ownership limitation, amendments to the declaration of trust and our dissolution
and termination may only be amended by a two-thirds vote of our outstanding
voting shares. The board of trustees may amend the declaration of trust by a
two-thirds vote, without any action by our shareholders, to allow us to qualify,
or continue our qualification, as a REIT and, by a majority vote, to increase or
decrease the aggregate number of our authorized shares, to establish any series
of our shares or to decrease or increase the number of shares in any class that
we have authority to issue. Our bylaws may be amended only by the board of
trustees.

MEETINGS OF SHAREHOLDERS

      Our declaration of trust provides for annual shareholder meetings to elect
trustees. Special shareholder meetings may be called by our chairman, chief
executive officer, president or board of trustees and must be called at the
written request of persons holding 50% or more of our outstanding voting shares.

ADVANCE NOTICE OF NOMINATIONS OF TRUSTEES AND NEW BUSINESS

      At any annual meeting of shareholders, the nomination of trustees for
election and business proposed to be considered may be made only by the board of
trustees or by a shareholder who has complied with the advance notice procedures
set forth in our bylaws. At any special meeting of shareholders, only the
business specified in the notice of meeting may be brought before the meeting.





                                       11
<PAGE>
DISSOLUTION

      Shareholders may elect to dissolve our company by a vote of two-thirds of
our outstanding voting shares.

INDEMNIFICATION; LIMITATIONS OF TRUSTEES' AND OFFICERS' LIABILITY

      Our declaration of trust limits the liability of our trustees and officers
for money damages, except for liability resulting from:

      -     actual receipt of an improper benefit or profit in money, property
            or services, or

      -     a final judgment based upon a finding of active and deliberate
            dishonesty by the trustee that was material to the cause of action
            adjudicated.

      Our declaration of trust authorizes us, to the maximum extent permitted by
Maryland law, to indemnify, and to pay or reimburse reasonable expenses to, any
of our present or former shareholders, trustees or officers or any individual
who, while a trustee, and at our request, serves or has served another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a trustee, director, officer, partner or otherwise. The
indemnification covers any claim or liability against the person.

      Maryland law permits a Maryland REIT to indemnify and advance expenses to
its trustees, officers, employees and agents to the same extent Maryland law
permits corporations to indemnify and reimburse the expenses of their directors
and officers. Maryland law permits a corporation to indemnify its present and
former directors and officers against liabilities and reasonable expenses
actually incurred by them in any proceeding unless

      -     the act or omission of the director or officer was material to the
            matter giving rise to the proceeding, and

      -     was committed in bad faith, or

      -     was the result of active and deliberate dishonesty, or

      -     in a criminal proceeding, the director or officer had reasonable
            cause to believe that the act or omission was unlawful.

      However, a Maryland corporation may not indemnify for an adverse judgment
in a derivative action. Our bylaws require us, as a condition to advancing
expenses, to obtain:

      -     a written affirmation by the trustee or officer of his or her good
            faith belief that he or she has met the standard of conduct
            necessary for indemnification, and

      -     a written undertaking to repay the amount reimbursed if the standard
            of conduct was not met.

INDEMNIFICATION AGREEMENTS

      We have indemnification agreements with each of our executive officers and
trustees. The indemnification agreements require us to indemnify our executive
officers and trustees to the fullest extent permitted by law and to advance all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. Under the agreements, we must also indemnify
and advance all expenses incurred by executive officers and trustees seeking to
enforce their rights under the indemnification agreements and may cover
executive officers and trustees under any trustees' and officers' liability
insurance. Although the form of indemnification agreement offers substantially
the same scope of coverage afforded by the declaration of trust, bylaws and
Maryland law, it provides greater assurance to trustees and executive officers
that indemnification will be available because, as a contract, it cannot be
modified unilaterally in the future by the board of trustees or the shareholders
to eliminate the rights it provides.




                                       12
<PAGE>
   POSSIBLE ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF
                      OUR DECLARATION OF TRUST AND BYLAWS

      The provisions of our declaration of trust regarding the removal of
trustees and the restrictions on the transfer of shares, the advance notice
provisions of the bylaws and the business combination provisions of Maryland
law, could have the effect of delaying, deferring or preventing a transaction or
a change in control that might involve a premium price for shareholders or that
they otherwise may believe to be desirable. Also, if the board of trustees
rescinds the provisions of the bylaws electing not to be governed by the control
share acquisition statute, that statute could have a similar effect.





                                       13

<PAGE>
             FEDERAL INCOME TAX CONSEQUENCES OF OUR STATUS AS A REIT

         This section summarizes the federal income tax issues that an investor
in our common shares may consider relevant. Because this section is a summary,
it does not address all of the tax issues that may be important to you. In
addition, except to the extent discussed in "--Taxation of Tax-Exempt
Shareholders," and "--Taxation of Non-U.S. Shareholders," below, this section
does not address tax issues that may be important to certain types of investors
that are subject to special treatment under the federal income tax laws, such as
insurance companies, tax-exempt organizations, financial institutions or
broker-dealers, and non-U.S. individuals and foreign corporations.

         The statements in this section are based on current federal income tax
laws governing qualification as a REIT. We cannot assure you that new laws,
interpretations of law or court decisions, any of which may take effect
retroactively, will not cause any statement in this section to be inaccurate.

         We urge you to consult your own tax advisor regarding the specific tax
consequences to you of investing in our common shares and of our election to be
taxed as a REIT. Specifically, you should consult your own tax advisor regarding
the federal, state, local, foreign, and other tax consequences of an investment
and our election, and regarding potential changes in applicable tax laws.

TAXATION

         We elected to be taxed as a REIT under the federal income tax laws
commencing with our short taxable year ended December 31, 1998. We believe that
we have operated in a manner qualifying us as a REIT since our election to be a
REIT and we intend to continue so to operate. This section discusses the laws
governing the federal income tax treatment of a REIT and its shareholders. These
laws are highly technical and complex.

         Our qualification as a REIT depends on our ability to meet on a
continuing basis qualification tests set forth in the federal tax laws. Those
qualification tests involve the percentage of income that we earn from specified
sources, the percentages of our assets that fall within specified categories,
the diversity of our share ownership, and the percentage of our earnings that we
distribute. We describe the REIT qualification tests in more detail below. For a
discussion of our tax treatment and the tax treatment of our shareholders if we
fail to qualify as a REIT, see "--Failure to Qualify."

    If we qualify as a REIT, we generally will not be subject to federal income
tax on the taxable income that we distribute to our shareholders. The benefit of
that tax treatment is that it avoids the "double taxation," or taxation at both
the corporate and stockholder levels, that generally results from owning stock
in a corporation. However, we will be subject to federal tax in the following
circumstances:

         -        We will pay federal income tax on taxable income, including
                  net capital gain, that we do not distribute to our
                  shareholders during, or within a specified time period after,
                  the calendar year in which the income is earned.

         -        We may be subject to the "alternative minimum tax" on any
                  items of tax preference that we do not distribute or allocate
                  to our shareholders.

         -        We will pay income tax at the highest corporate rate on

                  -        net income from the sale or other disposition of
                           property acquired through foreclosure ("foreclosure
                           property") that we hold primarily for sale to
                           customers in the ordinary course of business, and

                  -        other non-qualifying income from foreclosure
                           property.

         -        We will pay a 100% tax on net income from sales or other
                  dispositions of property, other than foreclosure property,
                  that we hold primarily for sale to customers in the ordinary
                  course of business.

         -        If we fail to satisfy the 75% gross income test or the 95%
                  gross income test, as described below under "--Requirements
                  for Qualification--Income Tests," and nonetheless continue to
                  qualify as a REIT because we meet other requirements, we will
                  pay a 100% tax on:


                                       14
<PAGE>
                  -        the gross income attributable to the greater of the
                           amounts by which we fail the 75% and 95% gross income
                           tests, multiplied by

                  -        a fraction intended to reflect our profitability.

         -        If we fail to distribute during a calendar year at least the
                  sum of

                  -        85% of our REIT ordinary income for such year,

                  -        95% of our REIT capital gain net income for such
                           year, and

                  -        any undistributed taxable income from prior periods,

we will pay a 4% excise tax on the excess of such required distribution over the
amount we actually distributed.

         -        We may elect to retain and pay income tax on our net long-term
                  capital gain.

         -        If we acquire any asset from a C corporation, or a corporation
                  that generally is subject to full corporate-level tax, in a
                  merger or other transaction in which we acquire a basis in the
                  asset that is determined by reference either to the C
                  corporation's basis in the asset or to another asset, we will
                  pay tax at the highest regular corporate rate applicable if we
                  recognize gain on the sale or disposition of the asset during
                  the 10-year period after we acquire the asset. The amount of
                  gain on which we will pay tax is the lesser of:

                  -        the amount of gain that we recognize at the time of
                           the sale or disposition, and

                  -        the amount of gain that we would have recognized if
                           we had sold the asset at the time we acquired it.

REQUIREMENTS FOR QUALIFICATION

    A REIT is a corporation, trust or association that meets the following
requirements:

         -        It is managed by one or more trustees or directors.

         -        Its beneficial ownership is evidenced by transferable shares,
                  or by transferable certificates of beneficial interest.

         -        It would be taxable as a domestic corporation, but for the
                  REIT provisions of the federal income tax laws.

         -        It is neither a financial institution nor an insurance company
                  subject to special provisions of the federal income tax laws.

         -        At least 100 persons are beneficial owners of its shares or
                  ownership certificates.

         -        Not more than 50% in value of its outstanding shares or
                  ownership certificates is owned, directly or indirectly, by
                  five or fewer individuals, which the federal income tax laws
                  define to include certain entities, during the last half of
                  any taxable year.

         -        It elects to be a REIT, or has made such election for a
                  previous taxable year, and satisfies all relevant filing and
                  other administrative requirements established by the Internal
                  Revenue Service that must be met to elect and maintain REIT
                  status.

         -        It uses a calendar year for federal income tax purposes and
                  complies with the record keeping requirements of the federal
                  income tax laws.

         -        It meets certain other qualification tests, described below,
                  regarding the nature of its income and assets.


                                       15
<PAGE>
         We must meet the first four requirements during our entire taxable year
and must meet the fifth requirement during at least 335 days of a taxable year
of 12 months, or during a proportionate part of a taxable year of less than 12
months. If we comply with all the requirements for ascertaining the ownership of
our outstanding shares in a taxable year and have no reason to know that we
violated the sixth requirement, we will be deemed to have satisfied the sixth
requirement for that taxable year. For purposes of determining share ownership
under the sixth requirement, an "individual" generally includes a supplemental
unemployment compensation benefits plan, a private foundation, or a portion of a
trust permanently set aside or used exclusively for charitable purposes. An
"individual," however, generally does not include a trust that is a qualified
employee pension or profit sharing trust under the federal income tax laws, and
beneficiaries of such a trust will be treated as holding our shares in
proportion to their actuarial interests in the trust for purposes of the sixth
requirement.

         We have issued sufficient common shares with sufficient diversity of
ownership to satisfy the fifth and sixth requirements. In addition, our
declaration of trust restricts the ownership and transfer of our common shares
so that we should continue to satisfy the fifth and sixth requirements.

         A corporation that is a "qualified REIT subsidiary" is not treated as a
corporation separate from its parent REIT. All assets, liabilities and items of
income, deduction and credit of a "qualified REIT subsidiary" are treated as
assets, liabilities, and items of income, deduction and credit of the REIT. A
"qualified REIT subsidiary" is a corporation, all of the capital stock of which
is owned by the REIT. We have two direct subsidiaries, RAIT General and RAIT
Limited, and we own all of their capital stock. RAIT General is the sole general
partner of RAIT Partnership and RAIT Limited is the sole limited partner of RAIT
Partnership. As of the date of this prospectus, RAIT Partnership owns all of the
capital stock in 17 other corporations involved in the ownership of certain of
our portfolio assets. Thus, RAIT General, RAIT Limited and the other 17
subsidiaries will be ignored as separate entities, and all of their assets,
liabilities, and items of income, deduction, and credit will be treated as our
assets, liabilities and items of income, deduction and credit.

         An unincorporated entity that is beneficially owned by a single parent
entity is not treated as an entity separate from its parent. As of the date of
this prospectus, we own all of RAIT General and RAIT Limited which, in turn, own
all of RAIT Partnership. As of the date of this prospectus, we beneficially own
all of the membership interests in thirteen limited liability companies and all
of the partnership interests in three limited partnerships involved in the
ownership of certain of our portfolio assets. These limited liability companies
are treated as partnerships for federal income tax purposes. Thus, RAIT
Partnership and the limited liability companies and limited partnerships we
beneficially own will not be treated as entities separate from us for so long
as RAIT Partnership's only partners are RAIT General and RAIT Limited, we own
all of their capital stock, and we beneficially own all of the membership
interests and partnership interests of these limited liability companies and
limited partnerships.

         In the case of a REIT that is a partner in a partnership that has other
partners, the REIT is treated as owning its proportionate share of the assets of
the partnership and as earning its allocable share of the gross income of the
partnership for purposes of the applicable REIT qualification tests. Thus, when
RAIT Partnership admits a partner other than us, or a qualified REIT subsidiary
of us, our proportionate share of the assets, liabilities and items of income of
RAIT Partnership, and those of any other partnership, joint venture or limited
liability company that is treated as a partnership for federal income tax
purposes in which we have acquired or will acquire an interest, directly or
indirectly (a "subsidiary partnership") will be treated as our assets and gross
income for purposes of applying the various REIT qualification requirements.

         A REIT is allowed to own up to 100% of the stock of a "taxable REIT
subsidiary," or TRS. A TRS may earn income that would not be qualifying income
if earned directly by the parent REIT. Both the subsidiary and the REIT must
jointly elect to treat the subsidiary as a TRS. A TRS will pay income tax at
regular corporate rates on any income that it earns. In addition, the new rules
limit the deductibility of interest paid or accrued by a TRS to its parent REIT
to assure that the TRS is subject to an appropriate level of corporate taxation.
Further, the rules impose a 100% excise tax on transactions between a TRS and
its parent REIT or the REIT's tenants that are not conducted on an arm's-length
basis. We do not currently have any TRSs, but may form one or more TRSs in the
future.

INCOME TESTS

         We must satisfy two gross income tests annually to maintain
qualification as a REIT. First, at least 75% of our gross income for each
taxable year must consist of defined types of income that we derive, directly or
indirectly, from investments

                                       16
<PAGE>
relating to real property or mortgages on real property or temporary investment
income. Qualifying income for purposes of that 75% gross income test generally
includes:

         -        rents from real property,

         -        interest on debt secured by mortgages on real property or on
                  interests in real property, and

         -        dividends or other distributions on and gain from the sale of
                  shares in other REITs.

         Second, in general, at least 95% of our gross income for each taxable
year must consist of income that is qualifying income for purposes of the 75%
gross income test, dividends, other types of interest, gain from the sale or
disposition of stock or securities, income from certain interest rate hedging
contracts, or any combination of the foregoing. Gross income from any
origination fees we obtain or from our sale of property that we hold primarily
for sale to customers in the ordinary course of business is excluded from both
income tests. The following paragraphs discuss the specific application of the
gross income tests to us.

         Where the principal amount of mortgages on a property exceeds the
property's fair market value, the Internal Revenue Service may contend that the
lender is actually the owner of the property for tax purposes. Since we have
acquired and may continue to acquire loans whose principal amount exceeds the
fair market value of the underlying property, a recharacterization may occur
although the existence of forbearance or other workout arrangements would make
it less likely. If we are found to be the owner of real property rather than a
mortgagee, our income would consist of the rent from the property rather than
interest on our loan. We would generally be entitled to deductions for operating
expenses of the property as well as for depreciation. Consequently, as long as
the rent qualifies as "rents from real property," it is unlikely that such
recharacterization would adversely affect our qualification under the asset
tests, income tests or distribution requirements, except as discussed below.

         The term "interest," generally does not include any amount that depends
in whole or in part on the income or profits of any person. However, an amount
generally will not be excluded from the term "interest" solely because it is
based on a fixed percentage or percentages of receipts or sales. In addition, an
amount generally will not be excluded from the term "interest" solely because it
is based on the income or profits of a debtor if substantially all of the
debtor's gross income from the property qualifies as rents from real property if
received by a REIT. Furthermore, interest from an appreciation interest based on
the sale price of a property will be treated as gain from the sale of the
property, which generally is qualifying income for purposes of the 75% and 95%
gross income tests.

         Interest, original issue discount and market discount income from our
loans generally will be qualifying interest income for purposes of both the 75%
and 95% gross income tests. However, if the highest principal amount of a loan
outstanding during a taxable year exceeds the value of the property securing the
loan on the date we originated or acquired the loan, the portion of the income
from the loan derived from the excess principal amount will be qualifying income
for purposes of the 95% gross income test, but not for purposes of the 75% gross
income test. In addition, if interest income from a loan is based in part on the
borrower's profits or net income, it generally will be disqualified for purposes
of both the 75% and 95% gross income tests.

         We have purchased and originated loans that are only indirectly secured
by real property and may do so in the future. If a senior loan prevents us from
recording a mortgage against the property, the junior note held by us may be
collateralized by an unrecorded mortgage, a deed-in-lieu of foreclosure, a
pledge of equity interests of the borrower, a purchase option or some other
arrangement. Interest as well as any original issue discount and market discount
income derived from such loans should be qualifying interest income for purposes
of both the 75% and 95% gross income tests. It is possible, however, that the
Internal Revenue Service would conclude that interest on these loans does not
constitute interest from a loan "secured by mortgages on real property or on
interests in real property," so that such interest would not qualify for
purposes of the 75% gross income test. In that event, we believe, as of the date
of this prospectus, that the amount of our income from these loans is a low
enough percentage of our gross income so that compliance with the 75% gross
income test would nevertheless be maintained.

         In the case of wraparound loans, there is authority for the position
that only the interest attributable to the amounts advanced by the REIT or a
person from whom it acquired the loan will constitute income to the REIT. Under
this interpretation, amounts we receive from the borrower that are used to pay
debt service on the underlying senior debt would be

                                       17
<PAGE>
treated as having been paid directly by the borrower to the senior lender and
thus excluded from our gross income. We believe that we have satisfied the
income tests regardless of whether all of the interest on our wraparound loans
is treated as income or only the interest attributable to the amounts advanced
by us is treated as income.

         We may originate or acquire mortgage loans that have appreciation
interests. We may be required to recognize income from an appreciation interest
over the term of the related loan using a method that generally will result in
our recognizing at least some taxable income in advance of the related cash
flow.

         A REIT will incur a 100% tax on the net income derived from any sale or
other disposition of property, other than foreclosure property, that the REIT
holds primarily for sale to customers in the ordinary course of a trade or
business. We believe that none of our assets is held for sale to customers and
that a sale of any of our assets would not be in the ordinary course of our
business. Whether a REIT holds an asset "primarily for sale to customers in the
ordinary course of a trade or business" depends, however, on the facts and
circumstances in effect from time to time, including those related to a
particular asset. Nevertheless, we will attempt to comply with the terms of
safe-harbor provisions in the federal income tax laws prescribing when an asset
sale will not be characterized as a prohibited transaction. We cannot assure
you, however, that we can comply with the safe-harbor provisions or that we will
avoid owning property that may be characterized as property that we hold
"primarily for sale to customers in the ordinary course of a trade or business."

         We will be subject to tax at the maximum corporate rate on any income
from foreclosure property, other than income that would be qualifying income for
purposes of the 75% gross income test, less expenses directly connected with the
production of such income. However, gross income from a foreclosure property
will qualify under the 75% and 95% gross income tests. "Foreclosure property" is
any real property, including interests in real property, and any personal
property incident to such real property:

         -        that is acquired by a REIT as the result of the REIT having
                  bid in such property at foreclosure, or having otherwise
                  reduced such property to ownership or possession by agreement
                  or process of law, after there was a default or default was
                  imminent on a lease of such property or on an indebtedness
                  that such property secured;

         -        for which the related loan was acquired by the REIT at a time
                  when the default was not imminent or anticipated; and

         -        for which such REIT makes a proper election to treat such
                  property as foreclosure property.

         We have no foreclosure property as of the date of this prospectus.

         However, a REIT will not be considered to have foreclosed on a property
where the REIT takes control of the property as a mortgagee-in-possession and
cannot receive any profit or sustain any loss except as a creditor of the
mortgagor. Property generally ceases to be foreclosure property with respect to
a REIT at the end of the third taxable year following the taxable year in which
the REIT acquired such property, or longer if an extension is granted by the
Secretary of the Treasury. The foregoing grace period is terminated and
foreclosure property ceases to be foreclosure property on the first day:

         -        on which a lease is entered into with respect to the property
                  that, by its terms, will give rise to income that does not
                  qualify for purposes of the 75% gross income test or any
                  amount is received or accrued, directly or indirectly,
                  pursuant to a lease entered into on or after such day that
                  will give rise to income that does not qualify for purposes of
                  the 75% gross income test;

         -        on which any construction takes place on the property, other
                  than completion of a building or other improvement, where more
                  than 10% of the construction of such building or other
                  improvement was completed before default became imminent; or

         -        which is more than 90 days after the day on which such
                  property was acquired by the REIT and the property is used in
                  a trade or business which is conducted by the REIT, other than
                  through an independent contractor from whom the REIT itself
                  does not derive or receive any income.


                                       18
<PAGE>
         Rent that we receive from real property that we own and lease to
tenants will qualify as "rents from real property," which is qualifying income
for purposes of the 75% and 95% gross income tests, only if we meet each of the
following conditions:

         -        The rent must not be based, in whole or in part, on the income
                  or profits of any person, but may be based on a fixed
                  percentage or percentages of receipts or sales.

         -        Neither we nor a direct or indirect owner of 10% or more of
                  our shares may own, actually or constructively, 10% or more of
                  a tenant from whom we receive rent, other than a TRS. Rent we
                  receive from a TRS will qualify as "rents from real property"
                  if at least 90% of the leased space of the property is rented
                  to persons other than TRSs and 10%-owned tenants and the
                  amount of rent paid by the TRS is substantially comparable to
                  rent paid by the other tenants of the property for comparable
                  space.

         -        All of the rent received under a lease of real property will
                  not qualify as "rents from real property" unless the rent
                  attributable to the personal property leased in connection
                  with such lease is no more than 15% of the total rent received
                  under the lease. The allocation of rent between real and
                  personal property is based on the relative fair market values
                  of the real and personal property.

         -        We generally must not operate or manage our real property or
                  furnish or render services to our tenants other than through
                  an independent contractor who is adequately compensated and
                  from whom we do not derive revenue. However, we need not
                  provide services through an independent contractor, but
                  instead may provide services directly, if the services are
                  "usually or customarily rendered" in connection with the
                  rental of space for occupancy only and are not considered to
                  be provided for the tenants' convenience. In addition, we may
                  provide a minimal amount of "non-customary" services to the
                  tenants of a property, other than through an independent
                  contractor, as long as our income from the services does not
                  exceed 1% of our income from the related property. Further, a
                  TRS can provide customary and noncustomary services to our
                  tenants without tainting our rental income.

We believe that the rents we receive meet all of these conditions.

         If we fail to satisfy one or both of the gross income tests for any
taxable year, we nevertheless may qualify as a REIT for such year if we qualify
for relief under certain provisions of the federal income tax laws. Those relief
provisions generally will be available if:

         -        our failure to meet such tests is due to reasonable cause and
                  not due to willful neglect,

         -        we attach a schedule of the sources of our income to our tax
                  return, and

         -        any incorrect information on the schedule was not due to fraud
                  with intent to evade tax.

         We cannot predict, however, whether in all circumstances we would
qualify for the relief provisions. In addition, as discussed above in
"--Taxation" even if the relief provisions apply, we would incur a 100% tax on
the gross income attributable to the greater of the amounts by which we fail the
75% and 95% gross income tests, multiplied by a fraction intended to reflect our
profitability.

ASSET TESTS

         To maintain our qualification as a REIT, we also must satisfy two asset
tests at the end of each quarter of each taxable year. First, at least 75% of
the value of our total assets must consist of:

         -        cash or cash items, including certain receivables;

         -        government securities;

         -        interests in real property, including leaseholds and options
                  to acquire real property and leaseholds;


                                       19
<PAGE>
         -        interests in mortgages on real property;

         -        stock in other REITs; and

         -        investments in stock or debt instruments during the one-year
                  period following our receipt of new capital that we raise
                  through equity offerings or offerings of debt with at least a
                  five-year term.

         Under the second asset test, except for securities in the 75% asset
class, securities in a TRS or qualified REIT subsidiary, and certain partnership
interests (including all interests in subsidiary partnerships) and debt
obligations:

         -        not more than 5% of the value of our total assets may be
                  represented by the securities of any one issuer,

         -        we may not own securities that possess more than 10% of the
                  total voting power of outstanding voting securities of any one
                  issuer, and

         -        we may not own securities that have a value of more than 10%
                  of the total value of the outstanding securities of any one
                  issuer (the "10% value test").

         In addition, not more than 20% of the value of our total assets may be
represented by securities of one or more TRSs.

         Under a special transaction provision, the 10% value test described
above will not apply to securities we held on July 12, 1999, provided that the
issuer of those securities does not engage in a substantial new line of business
or acquire substantial new assets after that date, and provided that we do not
acquire additional securities of the issuer after that date. Existing taxable
subsidiaries can be converted into TRSs on a tax-free basis at any time before
January 1, 2004.

         If the fair market value of the real property securing a mortgage loan
equals or exceeds the outstanding principal balance of the loan, the loan will
be a qualifying asset. However, if the outstanding principal balance of a
mortgage loan exceeds the fair market value of the real property securing the
loan, the excess amount may not be a qualifying asset, although the matter is
not free from doubt. An "interest" in real property also generally includes an
interest in mortgage loans secured by controlling equity interests in
partnerships or limited liability companies that are taxed as partnerships that
own real property, to the extent that the principal balance of the mortgage does
not exceed the fair market value of the real property that is allocable to the
equity interest. We have purchased and originated loans that are only indirectly
secured by real estate, and we may continue to do so in the future.

         We expect that any loans, real properties and temporary investments
that we acquire generally will be qualifying assets for purposes of the 75%
asset test, except to the extent that the principal balance of any loan exceeds
the value of the associated real property, or to the extent the asset is a loan
that is not deemed to be an interest in real property. In the case of wraparound
loans, it is uncertain whether the entire wraparound mortgage amount or only the
amount of our investment that is in excess of the principal amount of the
underlying loans will be considered our asset. We will monitor the status of our
acquired assets for purposes of the various asset tests and will manage our
portfolio in order to comply at all times with such tests. If we fail to satisfy
the asset tests at the end of a calendar quarter, we would not lose our REIT
status if:

         -        we satisfied the asset tests at the close of the preceding
                  calendar quarter and

         -        the discrepancy between the value of our assets and the asset
                  test requirements arose from changes in the market values of
                  our assets and was not wholly or partly caused by the
                  acquisition of one or more non-qualifying assets.

         If we did not satisfy the condition described in the first item, above,
we still may avoid disqualification by eliminating any discrepancy within 30
days after the close of the calendar quarter in which it arose.

         As described above, we may own up to 100% of the stock of TRSs. TRSs
can perform activities unrelated to our tenants, such as third-party management,
development, and other independent business activities, as well as provide
services

                                       20
<PAGE>
to our tenants. We and a taxable subsidiary must elect for the subsidiary to be
treated as a TRS. A corporation of which a TRS directly or indirectly owns more
than 35% of the voting power or value of the stock will automatically be treated
as a TRS. The deductibility of interest paid or accrued by a TRS to us is
limited to assure that the TRS is subject to an appropriate level of corporate
taxation. Further, there is a 100% excise tax on transactions between a TRS and
us or our tenants that are not conducted on an arm's-length basis. We may not
own more than 10% of the voting power or value of the stock of a taxable
subsidiary that is not treated as a TRS. Overall, no more than 20% of our assets
can consist of securities of TRSs. We do not currently have any TRSs, but may
form one or more TRSs in the future.

DISTRIBUTION REQUIREMENTS

         Each taxable year, we must distribute dividends, other than capital
gain dividends and deemed distributions of retained capital gain, to our
shareholders in an aggregate amount at least equal to:

         -        the sum of

                  -        90% of our "REIT taxable income," computed without
                           regard to the dividends paid deduction and our net
                           capital gain or loss, and

                  -        90% of our after-tax net income, if any, from
                           foreclosure property; minus

         -        the sum of certain items of non-cash income.

         We must pay such distributions in the taxable year to which they
relate, or in the following taxable year if we declare the distribution before
we timely file our federal income tax return for the year and pay the
distribution on or before the first regular dividend payment date after such
declaration. Although the distribution requirement was reduced from 95% to 90%
for taxable years beginning after December 31, 2000, we intend to continue to
attempt to distribute 100% of our REIT taxable income.

         We will pay federal income tax on taxable income, including net capital
gain, that we do not distribute to shareholders. Furthermore, if we fail to
distribute during a calendar year, or by the end of January following such
calendar year in the case of distributions with declaration and record dates
falling in the last three months of the calendar year, at least the sum of:

         -        85% of our REIT ordinary income for such year,

         -        95% of our REIT capital gain income for such year, and

         -        any undistributed taxable income from prior periods,

we will incur a 4% nondeductible excise tax on the excess of such required
distribution over the amounts we actually distribute. We may elect to retain and
pay income tax on the net long-term capital gain we receive in a taxable year.
See "--Taxation of Taxable U.S. Shareholders." If we so elect, we will be
treated as having distributed any such retained amount for purposes of the 4%
excise tax described above. We have made, and we intend to continue to make,
timely distributions sufficient to satisfy the annual distribution requirements.

         It is possible that, from time to time, we may experience timing
differences between:

         -        the actual receipt of income and actual payment of deductible
                  expenses, and

         -        the inclusion of that income and deduction of those expenses
                  in arriving at our REIT taxable income.

For example, we will recognize taxable income in excess of our cash receipts
when original issue discount accrues with respect to a loan. Original issue
discount generally will accrue taking into account projected prepayments, such
as those arising from appreciation interests, but not allowing credit losses to
be reflected until they are actually incurred. Also, we may recognize as income
taxable market discount income from the proceeds of the sale of, or principal
payments from, loans

                                       21
<PAGE>
that are "market discount bonds," although such proceeds often will be used to
make non-deductible principal payments on related borrowings. "Market discount
bonds" are obligations with a stated redemption price at maturity that is
greater than our tax basis in such obligations. We also may recognize income in
excess of cash receipts if we make wraparound loans where the payments of
nondeductible principal we must make on the underlying loans exceed the amount
of nontaxable principal we receive from the borrower. There is authority,
however, for the position that only the interest on the amount advanced by the
wraparound lender is included in the income of a REIT making such a loan; this
would reduce or limit the possibility of mismatching. In addition, we may
recognize net capital gain attributable to the sale of depreciated property that
exceeds our cash receipts from the sale. We also may recognize taxable income
without receiving a corresponding cash distribution if we foreclose on or make a
"significant modification" to a loan, to the extent that the fair market value
of the underlying property or the principal amount of the modified loan, as
applicable, exceeds our basis in the original loan. Finally, we cannot deduct
from our REIT taxable income capital losses recognized by us. As a result of
these considerations, we may have less cash than is necessary to distribute all
of our taxable income and thereby avoid corporate income tax and the excise tax
imposed on certain undistributed income. In such a situation, we may need to
borrow funds or issue preferred stock or additional common shares.

         Under certain circumstances, we may be able to correct a failure to
meet the distribution requirement for a year by paying "deficiency dividends" to
our shareholders in a later year. We may include such deficiency dividends in
our deduction for dividends paid for the earlier year. Although we may be able
to avoid income tax on amounts distributed as deficiency dividends, we will be
required to pay interest to the Internal Revenue Service based upon the amount
of any deduction we take for deficiency dividends.

RECORDKEEPING REQUIREMENTS

         We must maintain certain records in order to qualify as a REIT. In
addition, to avoid a monetary penalty, we must request on an annual basis
information from our shareholders designed to disclose the actual ownership of
our outstanding shares. We have complied, and we intend to continue to comply,
with such requirements.

FAILURE TO QUALIFY

         If we fail to qualify as a REIT in any taxable year, and no relief
provision applies, we will be subject to federal income tax and any applicable
alternative minimum tax on our taxable income at regular corporate rates. In
calculating our taxable income in a year in which we failed to qualify as a
REIT, we would not be able to deduct amounts paid out to shareholders. In fact,
we would not be required to distribute any amounts to shareholders in such year.
In such event, to the extent of our current and accumulated earnings and
profits, all distributions to shareholders would be taxable as ordinary income.
Subject to certain limitations of the federal income tax laws, corporate
shareholders might be eligible for the dividends received deduction. Unless we
qualified for relief under specific statutory provisions, we also would be
disqualified from taxation as a REIT for the four taxable years following the
year during which we ceased to qualify as a REIT. We cannot predict whether in
all circumstances we would qualify for such statutory relief.

TAXATION OF TAXABLE U.S. SHAREHOLDERS

         As long as we qualify as a REIT, a taxable "U.S. shareholder" must take
into account as ordinary income distributions made out of our current or
accumulated earnings and profits that we do not designate as capital gain
dividends or retained long-term capital gain. On May 28, 2003, President Bush
signed into law the Jobs and Growth Tax Relief Reconciliation Act of 2003, which
we refer to as the 2003 tax act. Under the 2003 tax act, the highest federal
income tax rate on capital gains and dividends was lowered to 15% for 2003-08,
with taxpayers in lower income brackets paying 5%, on capital gains and
dividends in 2003-07 and no taxes on such income in 2008. However, dividends
received from a REIT generally do not qualify as dividends for this purpose.
Instead, they are taxable as ordinary income subject to a maximum rate of 35%
(reduced pursuant to the 2003 tax act from the previous maximum rate of 38.6%).
REIT dividends would qualify for the reduced rate only to the extent the REIT
makes a capital gains distribution, distributes dividends received from a
taxable REIT subsidiary or other corporation or, to the extent permitted, a REIT
pays corporate income taxes and retains earnings. None of the dividends we have
paid in the past would have qualified for the reduced rate. In addition, a U.S.
shareholder will not qualify for the dividends received deduction generally
available to corporations. The term "U.S. shareholder" means a holder of common
shares that for United States federal income tax purposes is:

         -        a citizen or resident of the United States;


                                       22
<PAGE>
         -        a corporation, partnership, or other entity created or
                  organized in or under the laws of the United States or of any
                  political subdivision thereof;

         -        an estate whose income from sources without the United States
                  is includible in gross income for United States federal income
                  tax purposes regardless of its connection with the conduct of
                  a trade or business within the United States; or

         -        any trust with respect to which

                  -        a United States court is able to exercise primary
                           supervision over its administration, and

                  -        one or more United States persons have the authority
                           to control all of its substantial decisions.

         A U.S. shareholder generally will recognize distributions that we
designate as capital gain dividends as long-term capital gain without regard to
the period for which the U.S. shareholder has held our common shares. A
corporate U.S. shareholder, however, may be required to treat up to 20% of
certain capital gain dividends as ordinary income.

         We may elect to retain and pay income tax on the net long-term capital
gain that we receive in a taxable year. In that case, a U.S. shareholder would
be taxed on his or her proportionate share of our undistributed long-term
capital gain. The U.S. shareholder would receive a credit or refund for his or
her proportionate share of the tax we paid. The U.S. shareholder would increase
his or her basis in our shares by the amount of his or her proportionate share
of our undistributed long-term capital gain, minus his or her share of the tax
we paid.

         A U.S. shareholder will not incur tax on a distribution in excess of
our current and accumulated earnings and profits if such distribution does not
exceed the adjusted basis of the U.S. shareholder's common shares. Instead, such
distribution will reduce the adjusted basis of such common shares. A U.S.
shareholder will recognize a distribution in excess of both our current and
accumulated earnings and profits and the U.S. shareholder's adjusted basis in
his or her common shares as long-term capital gain, or short-term capital gain
if the common shares have been held for one year or less, assuming the common
shares are a capital asset in the hands of the U.S. shareholder. In addition, if
we declare a distribution in October, November, or December of any year that is
payable to a U.S. shareholder of record on a specified date in any of these
months, the distribution will be treated as both paid by us and received by the
U.S. shareholder on December 31 of such year, provided that we actually pay the
distribution during January of the following calendar year.

         Shareholders may not include in their individual income tax returns any
of our net operating losses or capital losses. Instead, these losses are
generally carried over by us for potential offset against our future income.
Taxable distributions from us and gain from the disposition of the common shares
will not be treated as passive activity income and, therefore, shareholders
generally will not be able to apply any "passive activity losses," such as
losses from certain types of limited partnerships in which the shareholder is a
limited partner, against such income. In addition, taxable distributions from us
and gain from the disposition of common shares generally will be treated as
investment income for purposes of the investment interest limitations. We will
notify shareholders after the close of our taxable year as to the portions of
the distributions attributable to that year that constitute ordinary income,
return of capital, and capital gain.

         We may recognize taxable income in excess of our economic income, known
as "phantom income," in the first years we hold certain investments, and
experience an offsetting excess of economic income over our taxable income in
later years. As a result, shareholders at times may pay federal income tax on
distributions that economically represent a return of capital, rather than a
dividend. These distributions would be offset in later years by distributions
representing economic income that would be treated as returns of capital for
federal income tax purposes. Taking into account the time value of money, this
acceleration of federal income tax liabilities may reduce a shareholder's
after-tax return on his or her investment in us to an amount less than the
after-tax return on an investment with an identical before-tax rate of return
that did not generate phantom income. For example, if an investor with a 30% tax
rate purchases a taxable bond with an annual interest rate of 10% on its face
value, the investor's before-tax return on the investment would be 10% and the
investor's after-tax return would be 7%. However, if the same investor purchased
our shares at a time when the before-tax rate of return was 10%, the investor's
after-tax rate of return on the shares might be somewhat less than 7% as a
result of our phantom income. In general, as the ratio of our phantom income to
our total income increases, the after-tax rate of return received by a taxable
shareholder

                                       23
<PAGE>
will decrease. We will consider the potential effects of phantom income on our
taxable shareholders in managing our investments.

TAXATION OF U.S. SHAREHOLDERS ON THE DISPOSITION OF SHARES

         In general, a U.S. shareholder who is not a dealer in securities must
treat any gain or loss realized upon a taxable disposition of his or her common
shares as long-term capital gain or loss if the U.S. shareholder has held the
common shares for more than one year. However, a U.S. shareholder must treat any
loss upon a sale or exchange of common shares held by such shareholder for six
months or less as a long-term capital loss to the extent of capital gain
dividends and other distributions from us that such U.S. shareholder treats as
long-term capital gain. All or a portion of any loss that a U.S. shareholder
realizes upon a taxable disposition of the common shares may be disallowed if
the U.S. shareholder purchases other common shares within 30 days before or
after the disposition.

CAPITAL GAINS AND LOSSES

         The tax rate differential between capital gain and ordinary income for
non-corporate taxpayers may be significant. A taxpayer generally must hold a
capital asset for more than one year for gain or loss derived from its sale or
exchange to be treated as long-term capital gain or loss. Under the 2003 tax
act, the maximum marginal individual income tax rate is 35% for 2003 and all
subsequent years. The maximum tax rate on long-term capital gain applicable to
non-corporate taxpayers was reduced by the 2003 tax act from 20% to 15%, with
taxpayers in lower income brackets paying 5%, for sales and exchanges of assets
held for more than one year. The maximum tax rate on long-term capital gain from
the sale or exchange of "section 1250 property," or depreciable real property,
is 25% to the extent that such gain would have been treated as ordinary income
if the property were "section 1245 property." With respect to distributions that
we designate as capital gain dividends and any retained capital gain that we are
deemed to distribute, we generally may designate whether such a distribution is
taxable to our non-corporate shareholders at a 15% or 25% rate. In addition, the
characterization of income as capital gain or ordinary income may affect the
deductibility of capital losses. A non-corporate taxpayer may deduct capital
losses not offset by capital gains against its ordinary income only up to a
maximum annual amount of $3,000. A non-corporate taxpayer may carry forward
unused capital losses indefinitely. A corporate taxpayer must pay tax on its net
capital gain at ordinary corporate rates. A corporate taxpayer can deduct
capital losses only to the extent of capital gains, with unused losses being
carried back three years and forward five years.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

         We will report to our shareholders and to the Internal Revenue Service
the amount of distributions we pay during each calendar year, and the amount of
tax we withhold, if any. Under the backup withholding rules, a shareholder may
be subject to backup withholding at the rate of 28% with respect to
distributions unless the holder:

         -        is a corporation or comes within certain other exempt
                  categories and, when required, demonstrates this fact, or

         -        provides a taxpayer identification number, certifies as to no
                  loss of exemption from backup withholding and otherwise
                  complies with the applicable requirements of the backup
                  withholding rules.

         A shareholder who does not provide us with his or her correct taxpayer
identification number also may be subject to penalties imposed by the Internal
Revenue Service. Any amount paid as backup withholding will be creditable
against the shareholder's income tax liability. In addition, we may be required
to withhold a portion of capital gain distributions to any shareholders who fail
to certify their non-foreign status to us. For a discussion of the backup
withholding rules as applied to non-U.S. shareholders, see "--Taxation of
Non-U.S. Shareholders."

TAXATION OF TAX-EXEMPT SHAREHOLDERS

         Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts, generally are exempt from
federal income taxation. However, they are subject to taxation on their
unrelated business taxable income. While many investments in real estate
generate unrelated business taxable income, the Internal Revenue Service has
issued a published ruling that dividend distributions from a REIT to an exempt
employee pension trust do not constitute unrelated business taxable income, so
long as the exempt employee pension trust does not otherwise use the shares of
the REIT in an unrelated trade or business of the pension trust. Based on that
ruling, amounts that we distribute to

                                       24
<PAGE>
tax-exempt shareholders generally should not constitute unrelated business
taxable income. However, if a tax-exempt shareholder were to finance its
acquisition of our common shares with debt, a portion of the income that it
receives from us would constitute unrelated business taxable income pursuant to
the "debt-financed property" rules. Furthermore, social clubs, voluntary
employee benefit associations, supplemental unemployment benefit trusts, and
qualified group legal services plans that are exempt from taxation under special
provisions of the federal income tax laws are subject to different unrelated
business taxable income rules, which generally will require them to characterize
distributions that they receive from us as unrelated business taxable income.
Finally, in certain circumstances, a qualified employee pension or profit
sharing trust that owns more than 10% of our shares must treat a percentage of
the dividends that it receives from us as unrelated business taxable income.
Such percentage is equal to the gross income we derive from an unrelated trade
or business, determined as if we were a pension trust, divided by our total
gross income for the year in which we pay the dividends. That rule applies to a
pension trust holding more than 10% of our shares only if:

         -        the percentage of our dividends that the tax-exempt trust must
                  treat as unrelated business taxable income is at least 5%;

         -        we qualify as a REIT by reason of the modification of the rule
                  requiring that no more than 50% of our shares be owned by five
                  or fewer individuals that allows the beneficiaries of the
                  pension trust to be treated as holding our shares in
                  proportion to their actuarial interests in the pension trust;
                  and either:

                  -        one pension trust owns more than 25% of the value of
                           our shares or

                  -        a group of pension trusts individually holding more
                           than 10% of the value of our shares collectively owns
                           more than 50% of the value of our shares.

TAXATION OF NON-U.S. SHAREHOLDERS

         The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
shareholders are complex. This section is only a summary of such rules. We urge
non-U.S. shareholders to consult their own tax advisors to determine the impact
of federal, state and local income tax laws on ownership of our common shares,
including any reporting requirements.

         A non-U.S. shareholder that receives a distribution that is not
attributable to gain from our sale or exchange of U.S. real property interests,
as defined below, and that we do not designate as a capital gain dividend or
retained capital gain will recognize ordinary income to the extent that we pay
such distribution out of our current or accumulated earnings and profits. A
withholding tax equal to 30% of the gross amount of the distribution ordinarily
will apply to such distribution unless an applicable tax treaty reduces or
eliminates the tax. However, if a distribution is treated as effectively
connected with the non-U.S. shareholder's conduct of a U.S. trade or business,
the non-U.S. shareholder generally will be subject to federal income tax on the
distribution at graduated rates, in the same manner as U.S. shareholders are
taxed with respect to such distributions and also may be subject to the 30%
branch profits tax in the case of a non-U.S. shareholder that is a non-U.S.
corporation. We plan to withhold U.S. income tax at the rate of 30% on the gross
amount of any such distribution paid to a non-U.S. shareholder unless either:

         -        a lower treaty rate applies and the non-U.S. shareholder files
                  the required form evidencing eligibility for that reduced rate
                  with us; or

         -        the non-U.S. shareholder files an IRS Form W-8ECI with us
                  claiming that the distribution is effectively connected
                  income.

         A non-U.S. shareholder will not incur tax on a distribution in excess
of our current and accumulated earnings and profits if such distribution does
not exceed the adjusted basis of our common shares. Instead, such a distribution
will reduce the adjusted basis of those common shares. A non-U.S. shareholder
will be subject to tax on a distribution that exceeds both our current and
accumulated earnings and profits and the adjusted basis of our common shares, if
the non-U.S. shareholder otherwise would be subject to tax on gain from the sale
or disposition of our common shares, as described below. Because we generally
cannot determine at the time we make a distribution whether or not the
distribution will exceed our current and accumulated earnings and profits, we
normally will withhold tax on the entire amount of any distribution at the same
rate as

                                       25
<PAGE>
we would withhold on a dividend. However, a non-U.S. shareholder may obtain a
refund of amounts that we withhold if we later determine that a distribution in
fact exceeded our current and accumulated earnings and profits.

         We must withhold 10% of any distribution that exceeds our current and
accumulated earnings and profits. Consequently, although we intend to withhold
at a rate of 30% on the entire amount of any distribution, to the extent that we
do not do so, we will withhold at a rate of 10% on any portion of a distribution
not subject to withholding at a rate of 30%.

         For any year in which we qualify as a REIT, a non-U.S. shareholder will
incur tax on distributions that are attributable to gain from the sale or
exchange of "U.S. real property interests" under special provisions of the
federal income tax laws known as "FIRPTA." The term "U.S. real property
interests" includes certain interests in real property and shares in
corporations at least 50% of whose assets consist of interests in real property.
Under those rules, a non-U.S. shareholder is taxed on distributions attributable
to gain from sales of U.S. real property interests as if such gain were
effectively connected with a U.S. business of the non-U.S. shareholder. A
non-U.S. shareholder thus would be taxed on such a distribution at the normal
capital gain rates applicable to U.S. shareholders, subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of a
nonresident alien individual. A non-U.S. corporate shareholder not entitled to
treaty relief or exemption also may be subject to the 30% branch profits tax on
such a distribution. We must withhold 35% of any distribution that we could
designate as a capital gain dividend. A non-U.S. shareholder may receive a
credit against its tax liability for the amount we withhold.

         A non-U.S. shareholder generally will not incur tax under FIRPTA as
long as at all times non-U.S. persons hold, directly or indirectly, less than
50% in value of our shares. We cannot assure you that this test will be met.
However, a non-U.S. shareholder that owned, actually or constructively, 5% or
less of the common shares at all times during a specified testing period will
not incur tax under FIRPTA if the common shares are "regularly traded" on an
established securities market. If the gain on the sale of the shares were taxed
under FIRPTA, a non-U.S. shareholder would be taxed in the same manner as U.S.
shareholders with respect to such gain, subject to applicable alternative
minimum tax, a special alternative minimum tax in the case of nonresident alien
individuals, and the possible application of the 30% branch profits tax in the
case of non-U.S. corporations. Furthermore, a non-U.S. shareholder will incur
tax on gain not subject to FIRPTA if:

         -        the gain is effectively connected with the non-U.S.
                  shareholder's U.S. trade or business, in which case the
                  non-U.S. shareholder will be subject to the same treatment as
                  U.S. shareholders with respect to such gain, or

         -        the non-U.S. shareholder is a nonresident alien individual who
                  was present in the U.S. for 183 days or more during the
                  taxable year and has a "tax home" in the United States, in
                  which case the non-U.S. shareholder will incur a 30% tax on
                  his capital gains.

STATE AND LOCAL TAXES

         We and/or our shareholders may be subject to taxation by various states
and localities, including those in which we or such shareholders transact
business, own property or reside. The state and local tax treatment may differ
from the federal income tax treatment described above. Consequently,
shareholders should consult their own tax advisors regarding the effect of state
and local tax laws upon an investment in our common shares.




                                       26
<PAGE>
                              SELLING SHAREHOLDERS

         The selling shareholders listed below acquired the shares listed in the
column "Common shares registered under this prospectus" under the RAIT
Investment Trust 401(k) Profit Sharing Plan before we filed the registration
statement of which this prospectus is part and constitute "restricted
securities" under applicable securities laws. We encourage our employees to
invest in our company through our 401(k) plan. We believe that this prospectus
and the registration statement of which it is a part, which permit resales of
shares acquired by our employees through our 401(k) plan, encourages this
investment by providing liquidity for their investment. Accordingly, while the
number of shares set forth in the column "Common Shares to be owned after the
offering" assumes that all common shares acquired by a selling shareholder under
our 401(k) plan will be offered or sold, the selling shareholders are not
required to sell any shares. Certain other persons who acquired "restricted
securities" under our 401(k) plan prior to such filing, who are not our
"affiliates" under applicable securities laws and who hold less than the lesser
of 1,000 common shares or 1% of the common shares issuable under our 401(k) plan
may use this prospectus for reoffers and resales of those restricted securities.
As permitted by applicable securities laws, we do not intend to name these
persons in this prospectus or any supplement. This prospectus may also be used
by certain of our employees who may be deemed to be our "affiliates" under
applicable securities laws to sell common shares which are acquired by them
pursuant to our 401(k) plan which constitute "control securities" under
applicable securities laws. We will supplement this prospectus with the names of
these persons and the amounts of control securities to be reoffered or resold by
them pursuant to this prospectus when, and if, these persons elect to make an
offer or sale of their shares. Employees, their family members, trusts for their
benefit, or entities that they own, that acquire common shares under our 401(k)
plan may be added to the selling shareholder list below by a prospectus
supplement filed with the SEC. The number of common shares to be sold by any
selling shareholder under this prospectus also may be increased or decreased by
a prospectus supplement. Although a person's name is included in the table
below, neither that person nor we are making an admission that the named person
is our "affiliate."

         The table shows, as of September 15, 2003, certain information
regarding the selling shareholders' ownership of our common shares.

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                     AMOUNT AND NATURE  COMMON SHARES   COMMON SHARES   CLASS TO BE
                      OF SHARES OWNED     REGISTERED     TO BE OWNED    BENEFICIALLY
                         PRIOR TO         UNDER THIS      AFTER THE     OWNED AFTER
        NAME            OFFERING(1)     PROSPECTUS(1)    OFFERING(2)    OFFERING(3)
        ----            -----------     --------------   ------------   -----------
<S>                  <C>                <C>             <C>            <C>
Michael D. Beatty         9,766(4)           1,216           8,550            *
Betsy Z. Cohen          472,345(5)           6,182         466,163          2.2%
Jay R. Cohen            102,723(6)           7,903          94,820            *
Jonathan Z. Cohen        32,443(7)             666          31,777            *
Ellen J. DiStefano       74,337(8)           4,203          70,134            *
Kenneth R. Frappier      18,003(9)             378          17,625            *
Sam J. Greenblatt        28,323(10)          3,323          25,000            *
Gregory Marks            13,208(11)          1,158          12,050            *
Scott F. Schaeffer       93,777(12)          3,277          90,500            *
Andres Viroslav           1,933(13)          1,533             400            *
                        -------            -------         -------
                        846,858             29,839         817,019
                        =======            =======         =======
</TABLE>

 *       Less than 1%.

(1)      Includes all common shares acquired and not previously sold by the
         relevant selling shareholder pursuant to our 401(k) plan which
         constitute "restricted securities" under applicable securities laws,
         whether or not such selling shareholders' rights to such common shares
         have vested or will vest within 60 days after the date hereof.

(2)      Assumes all common shares registered pursuant to the registration
         statement of which this prospectus is a part will be sold, although
         there can be no assurance that any of the selling shareholders will
         offer for sale or sell any or all of the common shares offered by them
         pursuant to this prospectus. Also assumes that a selling shareholder
         acquires no other common shares.


                                       27
<PAGE>
(3)      Based on 20,853,875 common shares outstanding as of September 15, 2003.
         Common shares issuable upon the exercise of options exercisable by the
         relevant selling shareholder within 60 days are deemed to be
         outstanding with respect to the calculation of that selling
         shareholder's percent of class.

(4)      Based on 1,050 common shares directly held by Mr. Beatty, 1,216 common
         shares held in our 401(k) plan for the benefit of Mr. Beatty, and 7,500
         common shares issuable upon exercise of options.

(5)      Includes 46,626 common shares directly held by Mrs. Cohen; 6,182 common
         shares held in our 401(k) plan for the benefit of Mrs. Cohen; 30,446
         common shares held by an individual retirement account ("IRA") for the
         benefit of Mrs. Cohen; 126,801 common shares held by a charitable
         foundation of which Mrs. Cohen serves as trustee; 37,290 common shares
         held in an IRA account for the benefit of Mrs. Cohen's spouse, Edward
         E. Cohen, and 225,000 common shares issuable upon exercise of options
         granted under our Amended and Restated RAIT Investment Trust 1997 Stock
         Option Plan, which we refer to sometimes as our "stock option plan".
         Excludes 58,912 common shares deposited in a "rabbi" trust established
         in connection with the supplemental executive retirement plan
         established pursuant to Mrs. Cohen's employment agreement with us.
         Excludes common shares held by Resource America, of which Edward E.
         Cohen is Chairman, Chief Executive Officer and President. Mrs. Cohen
         has served as our Chairman, Chief Executive Officer and one of our
         trustees since our founding in August 1997.

(6)      Includes 6,000 common shares held directly by Mr. Jay R. Cohen; 4,208
         common shares held in an IRA account for the benefit of Mr. Cohen;
         26,271 common shares held jointly by Mr. Cohen and his spouse; 8,341
         common shares held in an IRA account for the benefit of Mr. Cohen's
         spouse; 7,903 common shares held in our 401(k) plan for the benefit of
         Mr. Cohen; and 50,000 common shares issuable upon exercise of options
         granted under the stock option plan. Mr. Cohen was elected in October
         1997 to serve as one of our Executive Vice Presidents.

(7)      Includes 31,277 common shares held directly by Mr. Jonathan Z. Cohen,
         666 common shares held in our 401(k) plan for his benefit and 500
         common shares issuable upon exercise of options granted under the stock
         option plan (the options exercisable for all these 500 common shares
         are vested). Excludes common shares held by Resource America of which
         Mr. Cohen is Chief Operating Officer. Mr. Cohen has served as our
         Secretary since February 1998 and as one of our trustees since
         September 1997.

(8)      Includes 6,000 common shares directly held by Mrs. DiStefano, 1,002
         common shares held by Mrs. DiStefano jointly with her spouse; 1,196
         common shares held in an IRA account for the benefit of Mrs. DiStefano,
         1,190 common shares held in an IRA account for the benefit of Mrs.
         DiStefano's spouse, 64 common shares held in education IRA's for the
         benefit of Mrs. DiStefano's children, 4,203 common shares held in our
         401(k) plan for the benefit of Mrs. DiStefano; and 60,682 common shares
         issuable upon exercise of options granted under the stock option plan.
         Mrs. DiStefano was elected in October 1997 to serve as our Chief
         Financial Officer and also has served as one of our Executive Vice
         Presidents since December 1998.

(9)      Includes 12,000 common shares directly held by Mr. Frappier, 378 common
         shares held in our 401(k) plan for the benefit of Mr. Frappier, and
         5,625 common shares issuable upon exercise of options granted under the
         stock option plan. Of these options, 3,750 are fully vested and 1,875
         are subject to early exercise rights but will not vest within sixty
         days. Mr. Frappier was elected in April 2002 to serve as our Senior
         Vice President-Portfolio and Risk Management.

(10)     Includes 25,000 common shares directly held by Mr. Greenblatt and 3,323
         common shares held in our 401(k) plan for the benefit of Mr.
         Greenblatt.

(11)     Includes 4,550 common shares directly held by Mr. Marks, 1,158 common
         shares held in our 401(l) plan for the benefit of Mr. Marks, and 7,500
         common shares issuable upon exercise of options granted under the stock
         option plan.

(12)     Includes 50,000 common shares directly held by Mr. Schaeffer, 3,277
         common shares held in our 401(k) plan for the benefit of Mr. Schaeffer,
         3,000 common shares held in an IRA account for the benefit of Mr.
         Schaeffer, and 37,500 common shares issuable upon exercise of options
         granted under the stock option plan. Mr. Schaeffer was elected in
         September 2000 to serve as our President and Chief Operating Officer.


                                       28
<PAGE>
(13)     Includes 400 common shares directly held by Mr. Viroslav and 1,533
         common shares held in our 401(k) plan for the benefit of Mr. Viroslav.




                                       29
<PAGE>


                              PLAN OF DISTRIBUTION

      The plan administrator for our 401(k) plan, on behalf of the relevant
selling shareholder and subject to the terms of our 401(k) plan, may sell the
common shares for the account of that selling shareholder from time to time, in
one or more transactions on the New York Stock Exchange or otherwise, in special
offerings, secondary distributions pursuant to and in accordance with applicable
rules and regulations of the SEC and the New York Stock Exchange, in negotiated
transactions or otherwise, at market prices prevailing at the time of the sale,
at prices related to such market prices or at negotiated prices. The plan
administrator may effect such transactions by selling shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling shareholders
and/or purchasers of the common shares for whom they may act as agent, which
broker-dealer compensation may be in excess of customary commissions.

      We have no basis for estimating either the number of common shares, if
any, that will ultimately be sold by the plan administrator on behalf of the
selling shareholders or the prices at which the plan administrator on behalf of
the selling shareholders may sell shares. All selling and other expenses
incurred by individual plan administrator on behalf of the selling shareholders
will be borne by those selling shareholders.

                                 USE OF PROCEEDS

      We will not realize any proceeds from the sale of the common shares which
may be sold pursuant to this prospectus. We will pay all of the expenses
associated with the registration of these common shares and this prospectus. The
selling shareholders will pay the other costs, if any, associated with any sale
of the common shares, including compensation to underwriters and participating
broker-dealers.

                                     EXPERTS

      Our consolidated financial statements as of December 31, 2002 and 2001 and
for each of the three years ended December 31, 2002 appearing in our Annual
Report on Form 10-K for the year ended December 31, 2002, which are incorporated
by reference in this prospectus, have been audited by Grant Thornton LLP, whose
report is incorporated by such reference in this prospectus and given upon their
authority as experts in accounting and auditing.

      With respect to the unaudited interim financial information for the
periods ended March 31, 2003 and 2002 and June 30, 2003 and 2002 and
incorporated by reference in this prospectus, our independent public accountants
have reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
reports included in our quarterly reports on Form 10-Q for the quarters ended
March 31, 2003 and June 30, 2003 and incorporated by reference herein, state
that they did not audit and they do not express any opinion on that interim
financial information. Accordingly, the degree of your reliance on their report
on such information should be restricted in light of the limited nature of the
review procedures they applied. The accountants are not subject to the liability
provisions of Section 11 of the Securities Act for their reports on the
unaudited interim financial information because the report is not a "report" or
a "part" of any registration statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Securities Act.



                                       30
<PAGE>
                       WHERE YOU CAN FIND MORE INFORMATION

      We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information that we filed with the SEC at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may request copies of these
documents, upon payment of a copying fee, by writing to the SEC. Please call the
SEC at 1-800-SEC-0330 for information on the operation of the Public Reference
Room. Our SEC filings are also available to the public on the SEC internet site
at http://www.sec.gov.

      The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to documents we have filed with the SEC but we do not include in
this prospectus. The information incorporated by reference is considered part of
this prospectus, and later information that we file with the SEC will
automatically update and replace this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act:

      -     Annual Report on Form 10-K for the year ended December 31, 2002.

      -     Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003
            and June 30, 2003.

      -     Current Reports on Form 8-K filed January 24, 2003, February 11,
            2003, April 24, 2003 and July 24, 2003 (only with respect to items
            filed with the SEC).

      -     The description of our common shares contained in Form 8-A/A dated
            January 2, 1998.

      You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:

                              RAIT Investment Trust
                            ATTN: Ellen J. DiStefano
              Executive Vice President and Chief Financial Officer
                           c/o RAIT Partnership, L.P.
                         1818 Market Street, 28th Floor
                        Philadelphia, Pennsylvania 19103
                            Telephone: (215) 861-7900

      You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to this prospectus. We have not
authorized anyone else to provide you with different information. We are not
making an offer of our securities in any state where the offer or solicitation
is not authorized. You should not assume that the information in this prospectus
or any supplement is accurate as of any date other than the date on the front of
those documents.

      The statements that we make in this prospectus about the contents of any
other documents are not necessarily complete, and are qualified in their
entirety by referring you to the copy of that document, which is filed as an
exhibit to the registration statement. You can obtain copies of these documents
from the SEC or from us, as described above.



                                       31
<PAGE>
                           FORWARD-LOOKING STATEMENTS

      This prospectus and any prospectus supplement accompanying this prospectus
contain or incorporate by reference certain forward-looking statements. When
used, statements which are not historical in nature, including those prefaced by
the words "anticipate," "estimate," "should," "expect," "believe," "intend" and
similar expressions, are intended to identify forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties,
including, among other things:

      -     business and economic conditions, especially as they affect interest
            rates and the value of real estate;

      -     defaults by borrowers in paying debt service on our loans,
            particularly our subordinated loans;

      -     illiquidity of our portfolio of loans and property interests;

      -     our possible inability to originate or acquire loans or property
            interests on favorable terms; and

      -     our possible inability to maintain our qualification as a real
            estate investment trust or our exemption from registration under the
            Investment Company Act.

Other risks, uncertainties, and factors that could cause actual results to
differ materially from those projected are discussed in the "Risk Factors"
section of the prospectus, as well as in reports filed by us from time to time
with the Securities and Exchange Commission, including Forms 10-K, 10-Q and 8-K.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as required by law. In light of these risks, uncertainties, and
assumptions, the forward-looking events discussed in or incorporated by
reference into this prospectus and any prospectus supplement accompanying this
prospectus might not occur.



                                       32
<PAGE>
No person is authorized to give any information or to represent anything not
contained in this prospectus. You must not rely on any unauthorized
representations or information. This prospectus is an offer to sell only the
common shares offered hereby, and only under circumstances and in jurisdictions
where it is lawful to do so. The information contained in this prospectus is
current only as of its date.

                                TABLE OF CONTENTS
<TABLE>
<S>                                                                               <C>
OUR COMPANY .................................................................      2
RISK FACTORS ................................................................      3
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR DECLARATION OF TRUST AND BYLAWS     10
FEDERAL INCOME TAX CONSEQUENCES OF OUR STATUS AS A REIT .....................     14
SELLING SHAREHOLDERS ........................................................     27
PLAN OF DISTRIBUTION ........................................................     30
USE OF PROCEEDS .............................................................     30
EXPERTS .....................................................................     30
WHERE YOU CAN FIND MORE INFORMATION .........................................     31
FORWARD-LOOKING STATEMENTS ..................................................     32
</TABLE>


                                   [RAIT LOGO]

                                  COMMON SHARES

                                 ---------------

                                RESALE PROSPECTUS

                                 ---------------

                               September 26, 2003


                                       33
<PAGE>
                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

      The following documents of the registrant filed with the Securities and
Exchange Commission (the "SEC"), are also incorporated by reference in this
registration statement:

      -     Annual Report on Form 10-K for the year ended December 31, 2002.

      -     Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003
            and June 30, 2003.

      -     Current Reports on Form 8-K filed January 24, 2003, February 11,
            2003, April 24, 2003 and July 24, 2003 (only with respect to items
            filed with the SEC).

      -     The description of the registrant's common shares contained in Form
            8-A/A dated January 2, 1998.

      -     The Annual Report on Form 11-K of the RAIT Investment Trust 401(k)
            Profit Sharing Plan for the fiscal year ended December 31, 2002.

      All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment to this registration statement which
indicates that all securities offered pursuant to this registration statement
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be part hereof from the
date of filing of such documents.

ITEM 4. DESCRIPTION OF SECURITIES.

      Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

      Not applicable.

ITEM 6. INDEMNIFICATION OF TRUSTEES AND OFFICERS.

      Maryland law permits a Maryland REIT to include in its trust agreement a
provision limiting the liability of its trustees and officers to the trust and
its shareholders for money damages except for liability resulting from (a)
actual receipt of an improper benefit or profit in money, property or services
or (b) active and deliberate dishonesty established by a final judgment as being
material to the cause of action. The Declaration of Trust of RAIT Investment
Trust ("RAIT") contains such a provision which eliminates such liability to the
maximum extent permitted by Maryland law.

      The Declaration of Trust of RAIT authorizes RAIT, to the maximum extent
permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(1) any present or former trustee or officer or (2) any individual who, while a
trustee of RAIT and at the request of RAIT, serves or has served as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
from and against any claim or liability to which such person may become subject
or which such person may incur by reason of his status as a present or former
trustee or officer of RAIT. RAIT's Declaration of Trust permits RAIT, to the
maximum extent permitted by Maryland law, to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (1) any
present or former trustee or officer who is made a party to the proceeding by
reason of his service in that capacity or (2) any individual who, while a
trustee of RAIT, and at the request of RAIT, serves or has served as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise and
who is made a party to the proceeding by reason of his service in that capacity.



                                       34
<PAGE>
      Maryland law permits a Maryland REIT to indemnify its present and former
trustees and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (1) the act or omission
of the trustee or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (2) the trustee or officer actually received an
improper personal benefit in money, property or services, or (3) in the case of
any criminal proceeding, the trustee or officer had reasonable cause to believe
that the act or omission was unlawful. However, a Maryland REIT may not
indemnify for an adverse judgment in a suit by or in the right of the trust or
for a judgment of liability on the basis that personal benefit was improperly
received, unless in either case a court orders indemnification and then only for
expenses. In addition, Maryland law requires a Maryland REIT, as a condition to
advancing expenses, to obtain (1) a written affirmation by the trustee or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by a Maryland REIT, and (2) a written statement by
or on his behalf to repay the amount paid or reimbursed by a Maryland REIT if it
shall ultimately be determined that the standard of conduct was not met. In
addition, RAIT has entered into Indemnity Agreements with its executive officers
and trustees.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

      Certain restricted securities to be reoffered and resold pursuant to this
registration statement were issued under the RAIT Investment Trust 401(k) Profit
Sharing Plan in transactions exempt from registration pursuant to Section 4(2)
of the Securities Act of 1933, as amended.

ITEM 8. EXHIBITS.

      The Exhibits furnished as part of this registration statement on Form S-8
are identified in the Exhibit Index immediately following the signature pages of
this registration statement. Such Exhibit Index is incorporated herein by
reference.

      RAIT undertakes that it will submit or has submitted the RAIT Investment
Trust 401(k) Profit Sharing Plan (the "Plan") and any amendment thereto to the
Internal Revenue Service ("IRS") in a timely manner and has made or will make
all changes required by the IRS in order to qualify the Plan.

ITEM 9. UNDERTAKINGS.

Undertakings required by Item 512(a)of Regulation S-K

      The undersigned registrant hereby undertakes:

(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;

(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;

(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;



                                       35
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.

(2) that, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.

Undertakings required by Item 512(b) of Regulation S-K

      The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be deemed to the
initial bona fide offering thereof.

Undertakings required by Item 512(h) of Regulation S-K

      Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted for trustees, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a trustee, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.



                                       36
<PAGE>
                                   SIGNATURES

The Registrant. Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on
September 22, 2003.

                                        RAIT INVESTMENT TRUST

                                        By:  /s/ Betsy Z. Cohen
                                             -----------------------------------
                                             Betsy Z. Cohen
                                             Chairman, Chief Executive Officer
                                             and Trustee (Chief Executive
                                             Officer)



                                       37
<PAGE>
                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Betsy Z. Cohen, Scott F. Schaeffer and Ellen J.
DiStefano, or any of them, as his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place, and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or of his or her substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.

                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>

<S>                                                    <C>
          /s/ Betsy Z. Cohen                           Date: September 22, 2003
          ---------------------------------------
          BETSY Z. COHEN, Chairman, Chief
          Executive Officer and Trustee

          /s/ Scott F. Schaeffer                       Date: September 22, 2003
          ---------------------------------------
          SCOTT F. SCHAEFFER, President and
          Chief Operating Officer

          /s/ Ellen J. DiStefano                       Date: September 22, 2003
          ---------------------------------------
          ELLEN J. DISTEFANO, Executive Vice
          President and Chief Financial Officer

          /s/ Jonathan Z. Cohen                        Date: September 22, 2003
          ---------------------------------------
          JONATHAN Z. COHEN, Secretary and
          Trustee

          /s/ Edward Brown                             Date: September 22, 2003
          ---------------------------------------
          EDWARD BROWN, Trustee

          /s/ Arthur Makadon                           Date: September 22, 2003
          ---------------------------------------
          ARTHUR MAKADON, Trustee

          /s/ Joel R. Mesznik                          Date: September 22, 2003
          ---------------------------------------
          JOEL R. MESZNIK, Trustee

          /s/ Daniel Promislo                          Date: September 22, 2003
          ---------------------------------------
          DANIEL PROMISLO, Trustee


</TABLE>


                                       38
<PAGE>
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Philadelphia,
Commonwealth of Pennsylvania, on September 22, 2003.

<TABLE>
<S>                                                          <C>
     RAIT INVESTMENT TRUST 401(k) PROFIT SHARING PLAN



     By:      /s/ Ellen J. DiStefano                         Dated: September 22, 2003
              -------------------------------------------
              ELLEN J. DISTEFANO, as Trustee of the
              RAIT Investment Trust 401(k) Profit Sharing
              Plan


     By:      /s/ Jonathan Z. Cohen                          Dated: September 22, 2003
              -------------------------------------------
              JONATHAN Z. COHEN, as Trustee of the
              RAIT Investment Trust 401(k) Profit Sharing
              Plan


</TABLE>



                                       39
<PAGE>
                                  EXHIBIT INDEX

The following exhibits are filed herewith:


 EXHIBIT   DOCUMENT
 -------   --------

 4.1(1)    Amended and Restated Declaration of Trust
 4.2(2)    Articles of Amendment to Amended and Restated Declaration of Trust
 4.3(3)    Articles of Amendment of Amended and Restated Declaration of Trust
 4.4(4)    Certificate of Correction to the Amended and Restated Declaration
           of Trust
 4.5(1)    Bylaws, as amended
 5.1       Internal Revenue Service determination letter
 15.1      Awareness Letter from Independent Accountants
 23.1      Consent of Grant Thornton LLP
 24.1      Power of Attorney (included as part of signature pages to this
           registration statement)


(1)   Incorporated herein by reference to RAIT Investment Trust's registration
      statement on Form S-11 (File No. 333-35077), as amended.

(2)   Incorporated herein by reference to RAIT Investment Trust's registration
      statement on Form S-11 (File No. 333-53067), as amended.

(3)   Incorporated herein by reference to RAIT Investment Trust's registration
      statement on Form S-2 (File No. 333-55518), as amended.

(4)   Incorporated herein by reference to RAIT Investment Trust's Form 10-Q for
      the Quarterly Period ended March 31, 2002 (File No. 1-14760).



                                       40
[{"type": "S-8", "sequence": "1", "filename": "w90034sv8.txt", "description": "FORM S-8 RAIT INVESTMENT TRUST", "secsgml_size_bytes": 158856}]
{"company-data": {"conformed-name": "RAIT INVESTMENT TRUST", "cik": "0001045425", "assigned-sic": "6798", "irs-number": "232919819", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-109158", "film-number": "03912579"}, "business-address": {"street1": "1818 MARKET ST", "street2": "28TH FL", "city": "PHILADELPHIA", "state": "PA", "zip": "19103", "phone": "2155465119"}, "mail-address": {"street1": "1521 LOCUST ST", "street2": "6TH FL", "city": "PHILADELPHIA", "state": "PA", "zip": "19102"}, "former-company": {"former-conformed-name": "RESOURCE ASSET INVESTMENT TRUST", "date-changed": "19970904"}}
As filed with the Securities and Exchange Commission on September 26, 2003
                              Registration No. 333-

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-8
                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933

                              RAIT INVESTMENT TRUST
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

                          Maryland                         23-2919819
                   --------------------                -----------------
                (State or other jurisdiction           (I.R.S. Employer
              of incorporation or organization)       Identification No.)

                    c/o RAIT Partnership, L.P.
                1818 Market Street, Philadelphia, PA            19103
                -------------------------------------         ---------
             (Address of Principal Executive Offices)        (Zip Code)

                RAIT INVESTMENT TRUST 401(k) PROFIT SHARING PLAN
                ------------------------------------------------
                            (Full title of the plan)

                               Ellen J. DiStefano
                              RAIT Investment Trust
                           c/o RAIT Partnership, L.P.
                         1818 Market Street, 28th Floor
                             Philadelphia, PA 19103
                      -------------------------------------
                     (Name and address of agent for service)

                                 (215) 861-7900
           -----------------------------------------------------------
          (Telephone number, including area code, of agent for service)

                                    Copy to:
                              Anders Laren, Esquire
                            Ledgewood Law Firm, P.C.
                        1521 Locust Street - Eighth Floor
                             Philadelphia, PA 19102
                                 (215) 731-9450
CALCULATION OF REGISTRATION FEE
PROPOSED         PROPOSED
          TITLE OF                                          MAXIMUM          MAXIMUM
         SECURITIES                       AMOUNT           OFFERING         AGGREGATE           AMOUNT OF
            TO BE                          TO BE           PRICE PER        OFFERING          REGISTRATION
        REGISTERED(1)                  REGISTERED(2)       SHARE(3)           PRICE                FEE
        -------------                  -------------       --------           -----                ---
Common shares of beneficial
 interest, par value $.01 per
 share                                    134,784           $23.90         $3,221,338             $261
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein. This
registration statement also registers additional securities to be offered or
issued upon adjustment or changes made to the registered securities by reason of
any stock splits, stock dividends or similar transactions as permitted by Rule
416.

(2) Included in these shares are 34,784 common shares that constitute
restricted securities being registered for reoffer and resale which have been
acquired by the selling security holders prior to the filing of this
registration statement pursuant to the employee benefit plan described herein.

(3) Estimated solely for purposes of determining the registration fee in
accordance with Rule 457(h) under the Securities Act of 1933 based upon the
average of the high and low sales prices of the registrant's common shares as
reported on the New York Stock Exchange - Composite Transactions System on
September 19, 2003.

                                EXPLANATORY NOTE

      This registration statement relates to common shares of beneficial
interest, par value $0.01 per share, of RAIT Investment Trust, a Maryland real
estate investment trust, that may be acquired by our employees under the RAIT
Investment Trust 401(k) Profit Sharing Plan. The plan administrator obtains
common shares for this plan through open market purchases at prevailing market
prices. These transactions do not involve our original issuance of any new
common shares or result in a change in the number of our outstanding common
shares. This registration statement also relates to the registration for reoffer
and resale of 34,784 of our common shares which were acquired by the
selling security holders under this plan prior to the filing of this
registration statement which constitute "restricted securities" as defined in
General Instruction C.1(b) of Form S-8. The resale prospectus filed together
with this registration statement relates to the reoffer and resale of these
restricted shares and may also be used for reoffers and resales of "control
securities" as defined in General Instruction C.1(a) of Form S-8 acquired by the
selling security holders under this plan.

                                       II
PART I

                INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS

ITEM 1. PLAN INFORMATION.

      Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this registration statement in accordance with the
Explanatory Note to Part I of Form S-8.

ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.

      Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this registration statement in accordance with the
Explanatory Note to Part I of Form S-8.

                                       III
RESALE PROSPECTUS

                              RAIT INVESTMENT TRUST

              UP TO 134,784 COMMON SHARES OF BENEFICIAL INTEREST

      This prospectus is part of a registration statement that we filed with the
SEC on Form S-8. On Form S-8 we registered the offer and sale of common shares
of beneficial interest to be acquired by our employees under our RAIT Investment
Trust 401(k) Profit Sharing Plan, the reoffer and resale of certain common
shares acquired or to be acquired by our employees under this plan and the offer
and sale of interests in this plan. We sometimes refer to this plan as our
"401(k) plan".

      This prospectus may be used by certain of our employees to sell a maximum
of 34,784 common shares which have been acquired by them pursuant to our 401(k)
plan prior to the filing of this registration statement and which constitute
"restricted securities" under applicable securities laws. These persons include
those of our employees who are listed on page 27 below as "selling
shareholders." This prospectus may also be used by certain of our employees who
may be deemed to be our affiliates under applicable securities laws to sell
common shares which are acquired by them pursuant to our 401(k) plan and
constitute "control securities" under applicable securities laws. We encourage
our employees to invest in our company through our 401(k) plan. We believe that
this prospectus and the registration statement of which it is a part, which
permits resales of shares acquired by our employees through our 401(k) plan,
encourages this investment by providing liquidity for their investment.
Accordingly, while the selling shareholders may sell up to the number of common
shares listed in the "Common Shares Registered Under This Prospectus" column
opposite their names at any time or from time to time until the termination of
this offering, they are not required to sell any shares.

      We will not receive any of the proceeds from the sale of these common
shares. We will pay all of the expenses associated with the registration of
these common shares and this prospectus. The selling shareholders will pay the
other costs, if any, associated with any sale of the common shares.

      The common shares of RAIT Investment Trust are listed for trading on the
New York Stock Exchange under the symbol "RAS." For more information on how the
selling shareholders may sell these shares, please read the section of the
prospectus entitled "Plan of Distribution."

      YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE
3 FOR A DISCUSSION OF FACTORS YOU SHOULD CONSIDER BEFORE BUYING OUR COMMON
SHARES.

      NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                 This prospectus is dated September 26, 2003
OUR COMPANY

GENERAL

      RAIT Investment Trust is a real estate investment trust, or REIT, formed
under Maryland law. We conduct our operations through RAIT Partnership, L.P., a
limited partnership that owns substantially all of our assets. Our wholly-owned
subsidiaries, RAIT General, Inc. and RAIT Limited, Inc., are the sole general
partner and sole limited partner, respectively, of RAIT Partnership. We
sometimes refer to RAIT Investment Trust and RAIT Partnership, along with RAIT
General and RAIT Limited, using the words "we," "our" and "us." We make
investments in real estate primarily by:

      -     making real estate loans;

      -     acquiring real estate loans; and

      -     acquiring interests in real estate.

      We seek to generate income for distribution to our shareholders from a
combination of interest and fees on loans, rents and other income from our
interests in real estate and proceeds from the sale of our investments.

      Our address is c/o RAIT Partnership, L.P., 1818 Market Street, 28th Floor,
Philadelphia, Pennsylvania 19103. Our telephone number is (215) 861-7900.

                                       2
RISK FACTORS

GENERAL

      Transactions with our affiliates may result in conflicts of interest. We
have relationships with Resource America, Inc., Brandywine Construction &
Management, Inc. and The Bancorp, Inc. which may give rise to conflicts of
interest.

      Resource America has had the right to nominate one person to serve as
trustee on our board of trustees for so long as it owned at least 5% of our
outstanding common shares. In June 2003, Resource America's holdings fell below
5%. Jonathan Z. Cohen, the chief operating officer and a director of Resource
America, has served as Resource America's representative on our board of
trustees. Mr. Cohen, whose service as a trustee continues, is the son of Edward
E. Cohen, the chairman, chief executive officer, president and a principal
shareholder of Resource America, and Betsy Z. Cohen, our chairman and chief
executive officer. Mrs. Cohen is the spouse of Edward E. Cohen. Scott F.
Schaeffer, our president and chief operating officer, was a director of Resource
America until October 2002.

      We have in the past purchased investments from and sold investments to
Resource America and we anticipate that we will do so in the future, subject to
a limitation contained in our declaration of trust. We also have made loans to
affiliates of Resource America in the past and we anticipate that we and
Resource America may in the future hold various interests in the same
properties, subject to this limitation.

      Brandywine Construction & Management, an affiliate of Resource America,
provides real estate management services to us.

      Most of our demand deposit and checking accounts are with The Bancorp
Bank, the wholly-owned banking subsidiary of The Bancorp. Betsy Z. Cohen is the
chief executive officer and a director of The Bancorp. and her son, Daniel G.
Cohen, is its chairman. Daniel G. Cohen was a director of Resource America until
October 2002.

                            INVESTMENT ACTIVITY RISKS

FINANCING CONSIDERATIONS

      The value of our investments depends on conditions beyond our control. Our
investments either are loans secured or backed by real estate, interests in
entities whose principal or sole assets are real estate or direct ownership of
real estate. As a result, the value of our investments depends principally upon
the value of the real estate underlying our investments which is affected by
numerous factors beyond our control including general and local economic
conditions, neighborhood values, competitive overbuilding, weather, casualty
losses, occupancy rates and other factors beyond our control. The value of this
underlying real estate may also be affected by factors such as the costs of
compliance with use, occupancy and similar regulations, potential or actual
liabilities under applicable environmental laws, changes in interest rates and
the availability of financing. Income from a property will be adversely affected
if a significant number of tenants are unable to pay rent or if available space
cannot be rented on favorable terms. Operating and other expenses of this
underlying real estate, particularly significant expenses such as mortgage
payments, insurance, real estate taxes and maintenance costs, generally do no
decrease when income decreases and, even if revenues increase, operating and
other expenses may increase faster than revenues.

      Any investments may also be affected by a borrower's failure to perform
the terms of a loan or borrower's bankruptcy or insolvency which may require us
to become involved in expensive and time-consuming bankruptcy, reorganization or
foreclosure proceedings. Where the structure of our loan defers payment of some
portion of accruing interest or defers repayment of principal until loan
maturity, the borrower's ability to satisfy this obligation may depend upon its
ability to obtain suitable refinancing or otherwise to raise a substantial cash
amount, which we do not control and which may be subject to the same
considerations we describe in this "Investment Activity Risks" section. In
addition, mortgage lenders can lose lien priority in many jurisdictions,
including those in which real estate securing or underlying our loans is
located, to persons who supply labor and materials to a property. For these and
other reasons, the total amount that we may recover from one of our loans may be
less than the total amount of that loan or our cost of an acquisition.

      Longer term, subordinate and non-traditional loans may be illiquid and
their value may decrease. Our loans generally have maturities between two and
five years, are subordinated and typically do not conform to traditional loan

                                       3
underwriting criteria. As a result, our loans are relatively illiquid
investments. We may be unable to vary our portfolio promptly in response to
changing economic, financial and investment conditions. As a result, the fair
market value of our portfolio may decrease in the future.

      Investment in subordinate loans may involve increased risk of loss. We
emphasize junior lien loans and other forms of subordinated financing. Because
of their subordinate position, junior lien loans carry a greater credit risk
than senior lien financing, including a substantially greater risk of
non-payment of interest or principal. Where, as part of a financing structure,
we take an equity or other unsecured position, our risk of loss may be
materially increased. A decline in the real estate market could adversely affect
the value of the property so that the aggregate outstanding balances of senior
liens may exceed the value of the underlying property. In the event of a default
on a senior loan, we may elect to make payments, if we have the right to do so,
in order to prevent foreclosure on the senior loans. In the event of
foreclosure, as a junior lienor we will be entitled to share in foreclosure
proceeds only after satisfaction of the amounts due to senior lienors, which may
result in our being unable to recover the full amount, or any, of our
investment. It is also possible that, in some cases, a "due on sale" clause
included in a senior mortgage, which accelerates the amount due under the senior
mortgage in case of the sale of the property, may apply to the sale of the
property if we foreclose, increasing our risk of loss.

      When we originate or acquire a junior loan, we may not have the right to
service senior loans. The servicers of the senior loans are responsible to the
holders of those loans, whose interests will likely not coincide with ours,
particularly in the event of a default. Accordingly, the senior loans may not be
serviced in a manner advantageous to us.

      We currently have loans that are not collateralized by recorded or
perfected liens. Some of the loans not collateralized by liens are secured
instead by deeds-in-lieu of foreclosure, also known as "pocket deeds." A
deed-in-lieu of foreclosure is a deed executed in blank that the holder is
entitled to record immediately upon a default in the loan. Loans that are not
collateralized by recorded or perfected liens are subordinate not only to
existing liens encumbering the underlying property, but also to future judgment
or other liens that may arise as well as to the claims of general creditors of
the borrower. Moreover, filing a deed-in-lieu of foreclosure with respect to
these loans will usually constitute an event of default under any related senior
debt. Any such default would require us to acquire or pay off the senior debt in
order to protect our investment. Furthermore, in a bankruptcy, we will have
materially fewer rights than secured creditors and, if our loan is secured by
equity interests in the borrower, than the borrower's general creditors. Our
rights also will be subordinate to the lien-like rights of the bankruptcy
trustee. Moreover, enforcement of our loans against the underlying properties
will involve a longer, more complex, and likely, more expensive legal process
than enforcement of a mortgage loan.

      Loans secured by equity interests in entities owning real estate may
involve increased risk of loss. We may originate or acquire loans secured by
interests in entities owning real estate rather than by a direct security
interest in the underlying properties. These loans may be illiquid or otherwise
have features that may make it difficult for us to obtain a return of our
investment in the event of a default. Loans secured by these interests will be
subordinate not only to existing liens encumbering the underlying property but
also to future judgment or other liens that may arise and to the claims of
general creditors of the borrower.

      Acquisitions of loans may involve increased risk of loss. When we acquire
existing loans, we generally do so at a discount from both the outstanding
balances of the loans and the appraised value of the properties underlying the
loans. Typically, discounted loans are in default under the original loan terms
or other requirements and are subject to forbearance agreements. A forbearance
agreement typically requires a borrower to pay to the lender all revenue from a
property after payment of the property's operating expenses in return for the
lender's agreement to withhold exercising its rights under the loan documents.
Acquiring loans at a discount involves a substantially higher degree of risk of
non-collection than loans that conform to institutional underwriting criteria.
We do not acquire a loan unless material steps have been taken toward resolving
problems with the loan, or its underlying property. However, previously existing
problems may recur or other problems may arise.

      Financing with high loan-to-value ratios may involve increased risk of
loss. Most of our financings have loan-to-value ratios in excess of 80% and many
have loan-to-value ratios in excess of 90%. We expect to continue making loans
with high loan-to-value ratios. A loan-to-value ratio is the ratio of the amount
of our financing, plus the amount of any senior indebtedness, to the appraised
value of the property underlying the loan. By reducing the margin available to
cover fluctuations in property value, a high loan-to-value ratio increases the
risk that, upon default, the amount obtainable from the sale of the underlying
property may be insufficient to repay the financing.

                                       4
Interest rate changes may adversely affect our investments. Changes in
interest rates affect the market value of our loan portfolio. In general, the
market value of a loan will change in inverse relation to an interest rate
change where a loan has a fixed interest rate or only limited interest rate
adjustments. Accordingly, in a period of rising interest rates, the market value
of such a loan will decrease. Moreover, in a period of declining interest rates,
real estate loans with rates that are fixed or variable only to a limited extent
may have less value than other income-producing securities due to possible
prepayments. Interest rate changes will also affect the return we obtain on new
loans. In particular, during a period of declining rates, our reinvestment of
loan repayments may be at lower rates than we obtained in prior investments or
on the repaid loans. Also, increases in interest on debt we incur may not be
reflected in increased rates of return on the investments funded through such
debt, which would adversely affect our return on those investments. Accordingly,
interest rate changes may materially affect the total return on our investment
portfolio, which in turn will affect the amount available for distribution to
shareholders.

      We may not obtain appreciation interests at the rate we seek, or at all;
we may not benefit from appreciation interests we do obtain. In addition to an
agreed upon interest rate, we seek to obtain appreciation interests from our
borrowers. Appreciation interests require a borrower to pay us additional
amounts based upon a property's increase in value, increase in revenues, or
both. While we seek appreciation interests at rates of at least 25%, we may not
be able to obtain these rates. Moreover, we may not be able to negotiate
appreciation interest provisions in any of our loans. In addition, while we have
sought to structure the interest rates on our existing loans to maximize our
current yield, we may in the future accept a lower interest rate to obtain an
appreciation interest. The value of any appreciation interest depends on the
performance and value of the property underlying the loan and, thus, is subject
to real estate investment risks. Accordingly, we may not realize any benefits
from our appreciation interests. We do not anticipate receiving significant
amounts from our appreciation interests in the early years of our loans.

      Appreciation interests may cause us to lose our lien priority. Because
appreciation interests allow us to participate in the increase in a property's
value or revenue, courts, including a court in a bankruptcy arrangement or
similar proceeding, may determine that we should be treated as a partner of, or
joint venturer with, the borrower. If a court makes that determination, we could
lose our lien priority in the property or lose any benefit of our lien.

      The competition for making investments in real estate may limit our
ability to achieve our objectives. We may encounter significant competition from
banks, insurance companies, savings and loan associations, mortgage bankers,
pension funds, investment bankers and others, including public or private REITs.
This competition could reduce our yields and make it more difficult to obtain
appreciation interests. It may also increase the price, and thus reduce
potential yields, on discounted loans we acquire. Most of our competitors have
substantially greater assets than we do. As such, they have the ability to make
larger loans and to reduce the risk of loss from any one loan by having a more
diversified loan portfolio. An increase in the general availability of funds to
lenders, or a decrease in the amount of borrowing activity, may increase
competition for making loans and may reduce obtainable yields or increase the
credit risk inherent in the available loans.

      Usury statutes may impose interest ceilings and substantial penalties for
violations. Interest we charge on our loans, which may include amounts received
from appreciation interests, may be subject to state usury laws. These laws
impose maximum interest rates that may be charged on loans and penalties for
violation, including repayment of excess interest and unenforceability of debt.
We seek to structure our loans so that we do not violate applicable usury laws,
but uncertainties in determining the legality of interest rates and other
borrowing charges under some statutes may result in inadvertent violations.

REAL ESTATE CONSIDERATIONS

      For a discussion of how the value of our interests in real estate may
depend on conditions beyond our control, see "Financing Considerations - The
value of our investments depends on conditions beyond our control" above.

Our interests in real estate are illiquid and their value may decrease. Real
estate investments are relatively illiquid. Therefore, we may have only a
limited ability to vary our portfolio of interests in real estate quickly in
response to changes in economic or other conditions. As a consequence, the fair
market value of some or all of our interests in real estate may decrease in the
future. In addition, provisions in the Internal Revenue Code and related
regulations impose a 100% tax on gain realized by a REIT like us from property
held primarily for sale to customers in the ordinary course of business. These
provisions may materially adversely affect our ability to sell our interests in
real estate. For a more complete discussion of the 100% tax, you should read
"Risk Factors - Legal and Tax Risks - Gain on disposition of assets deemed held
for sale in ordinary course subject to 100% tax" and "Federal Income Tax
Consequences of Our Status as a REIT-Income Tests."

                                       5
Uninsured and underinsured losses may affect the value of, or our return
from, our interests in real estate. Our properties, and the properties
underlying our loans, have comprehensive insurance in amounts we believe are
sufficient to permit the replacement of the properties in the event of a total
loss, subject to applicable deductibles. There are, however, certain types of
losses, such as earthquakes, floods, hurricanes and terrorism that may be
uninsurable or not economically insurable. Also, inflation, changes in building
codes and ordinances, environmental considerations and other factors might make
it impractical to use insurance proceeds to replace a damaged or destroyed
property. If any of these or similar events occurs, it may reduce our return
from an affected property and the value of our investment.

      We may have less control of our investment when we own less than 100% of
the equity interests in joint ventures, partnerships, limited liability
companies or other entities that own real estate. Our acquisition of equity
interests in joint ventures, partnerships, limited liability companies or other
entities that own real estate, especially when we hold less than a controlling
equity interest, may expose us to greater risk than situations where we own real
estate through our wholly-owned subsidiaries. For example, the other equity
owners in the entity holding the property might have economic or business
interests or goals which are inconsistent with our business interests or goals
and may be in a position to take action contrary to our instructions or to our
policies and objectives. Moreover, if we are a limited partner in a limited
partnership and have rights allowing us control over the partnership or its
property, we may be deemed to be a general partner and liable for the debts of
the partnership beyond the amount of our investment.

      Real estate with environmental problems may create liability for us. The
existence of hazardous or toxic substances on a property will adversely affect
its value and our ability to sell or borrow against the property. Contamination
of real estate by hazardous substances or toxic wastes not only may give rise to
a lien on that property to assure payment of the cost of remediation, but also
can result in liability to us as owner, operator or lender for that cost. Many
environmental laws can impose liability whether we know of, or are responsible
for, the contamination. In addition, if we arrange for the disposal of hazardous
or toxic substances at another site, we may be liable for the costs of cleaning
up and removing those substances from the site, even if we neither own nor
operate the disposal site. Environmental laws may require us to incur
substantial expenses, and may materially limit our use of our properties and may
adversely affect our ability to make distributions to our shareholders. In
addition, future or amended laws, or more stringent interpretations or
enforcement policies with respect to existing environmental requirements, may
increase our exposure to environmental liability.

      Compliance with Americans with Disabilities Act may adversely affect our
financial condition. Under the Americans with Disabilities Act of 1990, all
public accommodations must meet federal requirements for access and use by
disabled persons. A determination that real estate relating to one of our
investments does not comply with the Americans with Disabilities Act could
result in liability for both governmental fines and damages to private parties.
This could reduce the revenues from that real estate that otherwise would be
available to our borrower to pay interest on our loans or reduce the income to
us from our interest in that real estate. As a result, if we or our borrowers
were required to make unanticipated major modifications to comply with the
Americans with Disabilities Act, the resulting expense could adversely affect
our ability to make distributions to our shareholders.

OTHER INVESTMENT ACTIVITY CONSIDERATIONS

      Lack of geographic diversification exposes our investments to a higher
risk of loss from regional economic factors. We generally invest in real estate
located in the Mid-Atlantic and Southeast regions of the United States. Although
we anticipate that we will continue to focus on these regions for the
foreseeable future, we are not, however, subject to any geographic limitations
in our organizational documents regarding where we may invest and, accordingly,
may make investments in other areas that do not readily fit our targeted
characteristics, as appropriate opportunities are identified. This lack of
geographic diversification may make our investment portfolio more sensitive to
economic developments of a primarily regional nature, which may result in
reduced rates of return or higher rates of default than might be incurred with a
more geographically diverse investment portfolio.

      Leverage can reduce income available for distribution and cause losses.
Our organizational documents do not limit the amount of indebtedness we may
incur. Using leverage, whether with recourse to us generally or only with
respect to a particular property, to acquire investments creates an opportunity
for increased net income, but at the same time creates risks. For example,
leverage can reduce the net income available for distributions to shareholders
in periods of rising interest rates where interest rate increases are greater
than increases in the rates of return on our investments. We use leverage to
acquire

                                       6
investments only when we believe it will enhance our returns. However, we cannot
be sure that our use of leverage will prove to be beneficial. Moreover, when our
assets secure our debt, we can lose some or all of our assets through
foreclosure if we do not meet our debt service obligations.

      Concentration of our investments increases our dependence on individual
investments. Although we generally invest between $2.0 million and $30.0 million
in a loan or interest in real estate, our organizational documents do not limit
the size of our investments. If we make larger investments, our portfolio will
be concentrated in a smaller number of assets, increasing the risk of loss to
shareholders if a default or other problem arises with respect to any one
investment. If we make investments that, in the aggregate, comprise a material
portion of our assets or generate a material portion of our revenue or net
income, to any single borrower or group of affiliated borrowers, the failure of
that borrower or group to perform their obligations under the terms of one or
more of our investments in them could increase the risk of loss to our
shareholders.

LEGAL AND TAX RISKS

      We will be taxed as a regular corporation if we fail to maintain our REIT
status. We have operated and intend to continue to operate in a manner that
permits us to qualify as a REIT for federal income tax purposes. However, the
federal income tax laws governing REITs are complex, and we have not obtained a
ruling from the Internal Revenue Service about our status as a REIT. We have
received an opinion of counsel that we qualify as a REIT based on our current
operations and on certain assumptions and representations concerning future
operations. Opinions of counsel are not binding on the Internal Revenue Service
or any court. The opinion only represents the view of counsel based on counsel's
review and analysis of existing law. Furthermore, our continued qualification as
a REIT will depend on our satisfaction of the asset, income, organizational,
distribution and shareholder ownership requirements of the Internal Revenue Code
on a continuing basis.

      If we fail to qualify as a REIT in any taxable year, we will be subject to
federal income tax, including any applicable alternative minimum tax, on our
taxable income at regular corporate rates, and distributions to shareholders
will not be deductible in computing our taxable income. Corporate tax liability
would reduce the amount of cash available for distribution to our shareholders
which, in turn, may reduce the trading prices of our common shares. Unless
entitled to relief under certain Internal Revenue Code provisions, we also would
be disqualified from taxation as a REIT for the four taxable years following the
year during which we ceased to qualify as a REIT.

      "Phantom income" may require us to borrow or sell assets to meet REIT
distribution requirements. We must distribute at least 90% of our annual net
taxable income, excluding any net capital gain or retained capital gain, in
order to maintain our REIT status. For years before 2001, we were required to
distribute 95% of this income. In addition, we will be subject to a 4%
nondeductible excise tax on the amount, if any, by which our distributions in
any calendar year are less than the sum of:

      -     85% of our ordinary income for that year,

      -     95% of our capital gain net income for that year, and

      -     100% of our undistributed taxable income from prior years.

      We have complied and intend to continue to comply with these distribution
requirements. However, in some instances, the structure of our loans may require
us to recognize income for federal income tax purposes even though we do not
receive corresponding cash payments. This income recognition, in turn, increases
the amount that we must distribute in order to avoid corporate income tax for
that year unless there is an equivalent amount of deductions that do not require
expenditures of cash, such as depreciation on owned real estate. The four
principal ways in which this "phantom income" may arise for us are:

      -     Origination or acquisition of loans, including loans with
            appreciation interests, that may be deemed to have original issue
            discount for federal income tax purposes. Original issue discount is
            generally equal to the difference between an obligation's issue
            price and its stated redemption price at maturity. We must recognize
            as income in each year the portion of the original issue discount
            that accrues during that year, even though we do not receive cash in
            that year in the amount of the original issue discount.

                                       7
-     Accruing interest with respect to a loan at a rate greater than the
            rate at which we receive interest. In particular, this may happen
            where the rate at which interest is paid on a loan is less than the
            stated rate.

      -     Origination or acquisition of wraparound loans under which we
            receive payments of principal and interest that do not coincide with
            the payments of principal and interest on underlying senior loans.
            Even if, as expected, we obtain positive cash flow from the
            transaction, the amount of principal we pay on the senior
            obligations may exceed the amount of principal we receive from the
            obligor on the wraparound loan, and the amount of interest we may
            receive from the obligor may exceed the amount of interest we pay on
            the senior obligations. This could create a situation where our
            taxable income exceeds our cash flow from the wraparound loan.

      -     REIT taxable income in excess of cash received may also arise in
            connection with some property sales and where a significant
            modification is made to a loan. In addition, we may purchase loans
            relating to our property interests. To the extent we purchase these
            loans at a discount, the purchase may give rise to phantom income
            without any related receipt of cash.

If any of the above circumstances occurs, it could require us, in order to avoid
corporate income tax and the nondeductible excise tax, to borrow funds, sell
assets at times which may not be advantageous to us, distribute amounts that
represent a return of capital, or distribute amounts that would otherwise be
spent on future acquisitions, unanticipated capital expenditures or repayment of
debt. To offset these risks, we have invested and intend to continue to invest,
as appropriate, in property interests so that the non-cash depreciation
deductions associated with these investments may help offset our non-cash
income.

      Origination fees we receive will not be REIT qualifying income. Any
origination fees we receive will not be qualifying income for purposes of the
75% or 95% gross income tests applicable to REITs under the Internal Revenue
Code. For a description of these tests, see "Federal Income Tax Consequences of
Our Status as a REIT - Income Tests." We typically receive initial payments, or
"points," from borrowers as commitment fees or additional interest. So long as
the payment is for the use of money, rather than for services provided by us, we
believe that this income should not be classified as non-qualifying origination
fees. However, the Internal Revenue Service may seek to reclassify this income
as origination fees instead of commitment fees or interest. If we cannot satisfy
the Internal Revenue Code's income tests as a result of a successful challenge
of our classification of this income, we may not qualify as a REIT.

      Income from certain loans may not be REIT qualifying income. We have
purchased and originated loans that are only indirectly secured by real property
and may do so in the future. If a senior loan prevents us from recording a
mortgage against the property, the junior note held by us may be collateralized
by an unrecorded mortgage, a deed-in-lieu of foreclosure, a pledge of equity
interests of the borrower, a purchase option or some other arrangement. In these
situations, the Internal Revenue Service may conclude that interest on our loans
does not constitute interest from obligations "secured by mortgages on real
property or on interests in real property." As a result, interest from these
sources would not qualify for purposes of the 75% gross income test. For a
description of this test, see "Federal Income Tax Consequences of Our Status as
a REIT - Income Tests."

      Gain on disposition of assets deemed held for sale in ordinary course
subject to 100% tax. If we sell any of our assets, the Internal Revenue Service
may determine that the sale is a disposition of an asset held primarily for sale
to customers in the ordinary course of a trade or business. Gain from this kind
of sale generally will be subject to a 100% tax. Whether an asset is held
"primarily for sale to customers in the ordinary course of a trade or business"
depends on the particular facts and circumstances of the sale. Although we will
attempt to comply with the terms of safe-harbor provisions in the Internal
Revenue Code prescribing when asset sales will not be so characterized, we
cannot assure you that we will be able to do so.

      Loss of our Investment Company Act exemption would affect us adversely. We
believe that we are not an investment company under the Investment Company Act
and intend to conduct our operations so that we do not become an investment
company. The Investment Company Act exempts from its registration requirements
entities that, directly or through majority-owned subsidiaries, are "primarily
engaged in the business of purchasing or otherwise acquiring mortgages and other
liens on and interests in real estate." Under current SEC interpretations, in
order to qualify for a "no-action" position from the SEC with respect to the
availability of this exemption, at least 55% of our assets must be invested in
these liens and interests and we may be required to invest an additional 25% in
these types of liens and interests or in other "real estate type" assets.

                                       8
We believe that, generally, a loan will be considered to be a mortgage or
other lien on real estate if we obtain foreclosure rights. We typically seek to
obtain these rights in our loans. We have not, however, obtained an exemptive
order, no-action letter or other form of interpretive guidance from the SEC on
this position. If the SEC takes a different position, our portfolio may not have
a composition that allows us to qualify under the exemption we claim. If we do
not qualify, we must either change our operations and our asset composition to
claim the exemption or register as an investment company. Either alternative
could adversely affect us and the market price of our shares.

      Our board of trustees may change our policies without shareholder consent.
Our board of trustees determines our policies and, in particular, our investment
policies. Our board of trustees may amend our policies or approve transactions
that deviate from these policies without a vote of or notice to our
shareholders. Policy changes could adversely affect the market price of our
shares and our ability to make distributions. Our board of trustees cannot take
any action to disqualify us as a REIT or to otherwise revoke our election to be
taxed as a REIT without the approval of a majority of our outstanding voting
shares.

      Our ownership limitation may restrict business combination opportunities.
To qualify as a REIT under the Internal Revenue Code, no more than 50% in value
of our outstanding capital shares may be owned, directly or indirectly, by five
or fewer individuals during the last half of each taxable year. To preserve our
REIT qualification, our declaration of trust generally prohibits any person from
owning more than 8.3% or, with respect to Resource America, 15%, of our
outstanding common shares and provides that:

      -     A transfer that violates the limitation is void.

      -     A transferee gets no rights to the shares that violate the
            limitation.

      -     Shares acquired that violate the limitation transfer automatically
            to a trust whose trustee has all voting and other rights.

      -     Shares in the trust will be sold and the record holder will receive
            the net proceeds of the sale.

The ownership limitation may discourage a takeover or other transaction that our
shareholders believe to be desirable.

      Preferred shares may prevent change in control. Our declaration of trust
authorizes our board of trustees to issue preferred shares, to establish the
preferences and rights of any preferred shares issued, to classify any unissued
preferred shares and reclassify any previously classified but unissued preferred
shares, without shareholder approval. The issuance of preferred shares could
delay or prevent a change in control, apart from the ownership limitation, even
if a majority of our shareholders want control to change.

      Maryland anti-takeover statutes may restrict business combination
opportunities. As a Maryland REIT, we are subject to various provisions of
Maryland law which impose restrictions and require that specified procedures be
followed with respect to the acquisition of "control shares" representing at
least ten percent of our aggregate voting power and certain takeover offers and
business combinations, including, but not limited to, combinations with persons
who own one-tenth or more of our outstanding shares. While we have elected to
"opt out" of the control share acquisition statute, our board of trustees has
the right to rescind the election at any time without notice to our
shareholders.

                                       9
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR DECLARATION OF TRUST AND BYLAWS

BOARD OF TRUSTEES

      Our declaration of trust requires us to have no fewer than three nor more
than nine trustees. A majority of our trustees must be "independent trustees."
The declaration of trust defines an independent trustee as one who, during the
preceding two years, has not:

      -     been an affiliate of Resource America, Brandywine Construction &
            Management or their affiliates,

      -     been one of our officers, or

      -     had a material business or professional relationship with us,
            Resource America, Brandywine Construction & Management or their
            affiliates.

      We currently have six trustees, of whom four have been determined by our
board of trustees to be independent trustees. The trustees may increase or
decrease the number of trustees by a majority vote; however, the number of
trustees may be increased above nine or decreased below three only by a vote of
at least 75% of the trustees then in office, and the term of office of a trustee
may not be affected by a decrease in the authorized number of trustees. Any
vacancy, including one created by an increase in the number of trustees, may be
filled by a majority of the remaining trustees, except that independent trustees
must nominate replacements for vacancies in independent trustee positions.

      Our declaration of trust provides that a trustee may be removed by a
two-thirds vote of our outstanding voting shares. This provision may operate to
make it impractical for shareholders to remove incumbent trustees and fill the
vacancies created by such removal with their own nominees.

BUSINESS COMBINATIONS

      Under Maryland law, certain "business combinations" between us and any
person who beneficially owns, directly or indirectly, 10% or more of the voting
power of our shares, an affiliate of ours who, at any time within the previous
two years was the beneficial owner of 10% or more of the voting power of our
shares, whom the statute terms an "interested shareholder," or an affiliate of
an interested shareholder, are prohibited for five years after the most recent
date on which an "interested shareholder" became an interested shareholder. The
business combinations subject to this law include principally mergers,
consolidations, share exchanges or, in certain circumstances, asset transfers or
issuances or reclassifications of equity securities. After the five year period
has elapsed, a proposed business combination must be recommended by the board of
trustees and approved by the affirmative vote of at least

      -     80% of our outstanding voting shares, and

      -     two-thirds of our outstanding voting shares, excluding shares held
            by the interested shareholder

unless, among other conditions, the shareholders receive a minimum price, as
defined by Maryland law, for their shares and the consideration is in cash or in
the same form as previously paid by the interested shareholder for its shares.
These provisions do not apply, however, to business combinations that our board
of trustees approves or exempts prior to the time that the interested
shareholder becomes an interested shareholder.

CONTROL SHARE ACQUISITIONS

      Maryland law provides that "control shares" acquired in a "control share
acquisition" have no voting rights unless approved by a vote of two-thirds of
our outstanding voting shares, excluding shares owned by the acquiror or by
officers or trustees who are employees of ours. "Control shares" are voting
shares which, if aggregated with all other shares previously acquired by the
acquiring person, or in respect of which the acquiring person is able to
exercise or direct the exercise of voting power, except solely by virtue of a
revocable proxy, would entitle the acquiring person to exercise voting power in
electing trustees within one of the following ranges of voting power:

                                       10
-     one-tenth or more but less than one-third,

      -     one-third or more but less than a majority, or

      -     a majority of all voting power.

Control shares do not include shares the acquiring person is then entitled to
vote as a result of having previously obtained shareholder approval. A "control
share acquisition" means the acquisition of control shares, subject to certain
exceptions.

      A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions, including an undertaking to pay
expenses, may compel our board of trustees to call a special meeting of
shareholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, we may present the question
at any shareholders' meeting.

      If voting rights are not approved at the shareholders' meeting or if the
acquiring person does not deliver an acquiring person statement as required by
Maryland law, then, subject to certain conditions and limitations, we may redeem
any or all of the control shares, except those for which voting rights have
previously been approved, for fair value. Fair value is determined without
regard to the absence of voting rights for the control shares and as of the date
of the last control share acquisition or of any meeting of shareholders at which
the voting rights of such shares were considered and not approved. If voting
rights for control shares are approved at a shareholders' meeting, and the
acquiror may then vote a majority of the shares entitled to vote, all other
shareholders may exercise appraisal rights. The fair value of the shares for
purposes of these appraisal rights may not be less than the highest price per
share paid by the acquiror in the control share acquisition. The control share
acquisition statute does not apply to shares acquired in a merger, consolidation
or share exchange if we are a party to the transaction, nor does it apply to
acquisitions approved or exempted by our declaration of trust or bylaws from the
Maryland control share acquisition statute.

      Our bylaws exempt from the Maryland control share acquisition statute any
and all acquisitions of our common or preferred shares by any person. The board
of trustees has the right, however, to amend or eliminate this exemption at any
time in the future.

AMENDMENT OF OUR DECLARATION OF TRUST AND BYLAWS

      Our declaration of trust may be amended by a majority vote of our
outstanding voting shares except that provisions relating to the trustees, the
ownership limitation, amendments to the declaration of trust and our dissolution
and termination may only be amended by a two-thirds vote of our outstanding
voting shares. The board of trustees may amend the declaration of trust by a
two-thirds vote, without any action by our shareholders, to allow us to qualify,
or continue our qualification, as a REIT and, by a majority vote, to increase or
decrease the aggregate number of our authorized shares, to establish any series
of our shares or to decrease or increase the number of shares in any class that
we have authority to issue. Our bylaws may be amended only by the board of
trustees.

MEETINGS OF SHAREHOLDERS

      Our declaration of trust provides for annual shareholder meetings to elect
trustees. Special shareholder meetings may be called by our chairman, chief
executive officer, president or board of trustees and must be called at the
written request of persons holding 50% or more of our outstanding voting shares.

ADVANCE NOTICE OF NOMINATIONS OF TRUSTEES AND NEW BUSINESS

      At any annual meeting of shareholders, the nomination of trustees for
election and business proposed to be considered may be made only by the board of
trustees or by a shareholder who has complied with the advance notice procedures
set forth in our bylaws. At any special meeting of shareholders, only the
business specified in the notice of meeting may be brought before the meeting.

                                       11
DISSOLUTION

      Shareholders may elect to dissolve our company by a vote of two-thirds of
our outstanding voting shares.

INDEMNIFICATION; LIMITATIONS OF TRUSTEES' AND OFFICERS' LIABILITY

      Our declaration of trust limits the liability of our trustees and officers
for money damages, except for liability resulting from:

      -     actual receipt of an improper benefit or profit in money, property
            or services, or

      -     a final judgment based upon a finding of active and deliberate
            dishonesty by the trustee that was material to the cause of action
            adjudicated.

      Our declaration of trust authorizes us, to the maximum extent permitted by
Maryland law, to indemnify, and to pay or reimburse reasonable expenses to, any
of our present or former shareholders, trustees or officers or any individual
who, while a trustee, and at our request, serves or has served another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a trustee, director, officer, partner or otherwise. The
indemnification covers any claim or liability against the person.

      Maryland law permits a Maryland REIT to indemnify and advance expenses to
its trustees, officers, employees and agents to the same extent Maryland law
permits corporations to indemnify and reimburse the expenses of their directors
and officers. Maryland law permits a corporation to indemnify its present and
former directors and officers against liabilities and reasonable expenses
actually incurred by them in any proceeding unless

      -     the act or omission of the director or officer was material to the
            matter giving rise to the proceeding, and

      -     was committed in bad faith, or

      -     was the result of active and deliberate dishonesty, or

      -     in a criminal proceeding, the director or officer had reasonable
            cause to believe that the act or omission was unlawful.

      However, a Maryland corporation may not indemnify for an adverse judgment
in a derivative action. Our bylaws require us, as a condition to advancing
expenses, to obtain:

      -     a written affirmation by the trustee or officer of his or her good
            faith belief that he or she has met the standard of conduct
            necessary for indemnification, and

      -     a written undertaking to repay the amount reimbursed if the standard
            of conduct was not met.

INDEMNIFICATION AGREEMENTS

      We have indemnification agreements with each of our executive officers and
trustees. The indemnification agreements require us to indemnify our executive
officers and trustees to the fullest extent permitted by law and to advance all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. Under the agreements, we must also indemnify
and advance all expenses incurred by executive officers and trustees seeking to
enforce their rights under the indemnification agreements and may cover
executive officers and trustees under any trustees' and officers' liability
insurance. Although the form of indemnification agreement offers substantially
the same scope of coverage afforded by the declaration of trust, bylaws and
Maryland law, it provides greater assurance to trustees and executive officers
that indemnification will be available because, as a contract, it cannot be
modified unilaterally in the future by the board of trustees or the shareholders
to eliminate the rights it provides.

                                       12
POSSIBLE ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF
                      OUR DECLARATION OF TRUST AND BYLAWS

      The provisions of our declaration of trust regarding the removal of
trustees and the restrictions on the transfer of shares, the advance notice
provisions of the bylaws and the business combination provisions of Maryland
law, could have the effect of delaying, deferring or preventing a transaction or
a change in control that might involve a premium price for shareholders or that
they otherwise may believe to be desirable. Also, if the board of trustees
rescinds the provisions of the bylaws electing not to be governed by the control
share acquisition statute, that statute could have a similar effect.

                                       13
FEDERAL INCOME TAX CONSEQUENCES OF OUR STATUS AS A REIT

         This section summarizes the federal income tax issues that an investor
in our common shares may consider relevant. Because this section is a summary,
it does not address all of the tax issues that may be important to you. In
addition, except to the extent discussed in "--Taxation of Tax-Exempt
Shareholders," and "--Taxation of Non-U.S. Shareholders," below, this section
does not address tax issues that may be important to certain types of investors
that are subject to special treatment under the federal income tax laws, such as
insurance companies, tax-exempt organizations, financial institutions or
broker-dealers, and non-U.S. individuals and foreign corporations.

         The statements in this section are based on current federal income tax
laws governing qualification as a REIT. We cannot assure you that new laws,
interpretations of law or court decisions, any of which may take effect
retroactively, will not cause any statement in this section to be inaccurate.

         We urge you to consult your own tax advisor regarding the specific tax
consequences to you of investing in our common shares and of our election to be
taxed as a REIT. Specifically, you should consult your own tax advisor regarding
the federal, state, local, foreign, and other tax consequences of an investment
and our election, and regarding potential changes in applicable tax laws.

TAXATION

         We elected to be taxed as a REIT under the federal income tax laws
commencing with our short taxable year ended December 31, 1998. We believe that
we have operated in a manner qualifying us as a REIT since our election to be a
REIT and we intend to continue so to operate. This section discusses the laws
governing the federal income tax treatment of a REIT and its shareholders. These
laws are highly technical and complex.

         Our qualification as a REIT depends on our ability to meet on a
continuing basis qualification tests set forth in the federal tax laws. Those
qualification tests involve the percentage of income that we earn from specified
sources, the percentages of our assets that fall within specified categories,
the diversity of our share ownership, and the percentage of our earnings that we
distribute. We describe the REIT qualification tests in more detail below. For a
discussion of our tax treatment and the tax treatment of our shareholders if we
fail to qualify as a REIT, see "--Failure to Qualify."

    If we qualify as a REIT, we generally will not be subject to federal income
tax on the taxable income that we distribute to our shareholders. The benefit of
that tax treatment is that it avoids the "double taxation," or taxation at both
the corporate and stockholder levels, that generally results from owning stock
in a corporation. However, we will be subject to federal tax in the following
circumstances:

         -        We will pay federal income tax on taxable income, including
                  net capital gain, that we do not distribute to our
                  shareholders during, or within a specified time period after,
                  the calendar year in which the income is earned.

         -        We may be subject to the "alternative minimum tax" on any
                  items of tax preference that we do not distribute or allocate
                  to our shareholders.

         -        We will pay income tax at the highest corporate rate on

                  -        net income from the sale or other disposition of
                           property acquired through foreclosure ("foreclosure
                           property") that we hold primarily for sale to
                           customers in the ordinary course of business, and

                  -        other non-qualifying income from foreclosure
                           property.

         -        We will pay a 100% tax on net income from sales or other
                  dispositions of property, other than foreclosure property,
                  that we hold primarily for sale to customers in the ordinary
                  course of business.

         -        If we fail to satisfy the 75% gross income test or the 95%
                  gross income test, as described below under "--Requirements
                  for Qualification--Income Tests," and nonetheless continue to
                  qualify as a REIT because we meet other requirements, we will
                  pay a 100% tax on:

                                       14
-        the gross income attributable to the greater of the
                           amounts by which we fail the 75% and 95% gross income
                           tests, multiplied by

                  -        a fraction intended to reflect our profitability.

         -        If we fail to distribute during a calendar year at least the
                  sum of

                  -        85% of our REIT ordinary income for such year,

                  -        95% of our REIT capital gain net income for such
                           year, and

                  -        any undistributed taxable income from prior periods,

we will pay a 4% excise tax on the excess of such required distribution over the
amount we actually distributed.

         -        We may elect to retain and pay income tax on our net long-term
                  capital gain.

         -        If we acquire any asset from a C corporation, or a corporation
                  that generally is subject to full corporate-level tax, in a
                  merger or other transaction in which we acquire a basis in the
                  asset that is determined by reference either to the C
                  corporation's basis in the asset or to another asset, we will
                  pay tax at the highest regular corporate rate applicable if we
                  recognize gain on the sale or disposition of the asset during
                  the 10-year period after we acquire the asset. The amount of
                  gain on which we will pay tax is the lesser of:

                  -        the amount of gain that we recognize at the time of
                           the sale or disposition, and

                  -        the amount of gain that we would have recognized if
                           we had sold the asset at the time we acquired it.

REQUIREMENTS FOR QUALIFICATION

    A REIT is a corporation, trust or association that meets the following
requirements:

         -        It is managed by one or more trustees or directors.

         -        Its beneficial ownership is evidenced by transferable shares,
                  or by transferable certificates of beneficial interest.

         -        It would be taxable as a domestic corporation, but for the
                  REIT provisions of the federal income tax laws.

         -        It is neither a financial institution nor an insurance company
                  subject to special provisions of the federal income tax laws.

         -        At least 100 persons are beneficial owners of its shares or
                  ownership certificates.

         -        Not more than 50% in value of its outstanding shares or
                  ownership certificates is owned, directly or indirectly, by
                  five or fewer individuals, which the federal income tax laws
                  define to include certain entities, during the last half of
                  any taxable year.

         -        It elects to be a REIT, or has made such election for a
                  previous taxable year, and satisfies all relevant filing and
                  other administrative requirements established by the Internal
                  Revenue Service that must be met to elect and maintain REIT
                  status.

         -        It uses a calendar year for federal income tax purposes and
                  complies with the record keeping requirements of the federal
                  income tax laws.

         -        It meets certain other qualification tests, described below,
                  regarding the nature of its income and assets.

                                       15
We must meet the first four requirements during our entire taxable year
and must meet the fifth requirement during at least 335 days of a taxable year
of 12 months, or during a proportionate part of a taxable year of less than 12
months. If we comply with all the requirements for ascertaining the ownership of
our outstanding shares in a taxable year and have no reason to know that we
violated the sixth requirement, we will be deemed to have satisfied the sixth
requirement for that taxable year. For purposes of determining share ownership
under the sixth requirement, an "individual" generally includes a supplemental
unemployment compensation benefits plan, a private foundation, or a portion of a
trust permanently set aside or used exclusively for charitable purposes. An
"individual," however, generally does not include a trust that is a qualified
employee pension or profit sharing trust under the federal income tax laws, and
beneficiaries of such a trust will be treated as holding our shares in
proportion to their actuarial interests in the trust for purposes of the sixth
requirement.

         We have issued sufficient common shares with sufficient diversity of
ownership to satisfy the fifth and sixth requirements. In addition, our
declaration of trust restricts the ownership and transfer of our common shares
so that we should continue to satisfy the fifth and sixth requirements.

         A corporation that is a "qualified REIT subsidiary" is not treated as a
corporation separate from its parent REIT. All assets, liabilities and items of
income, deduction and credit of a "qualified REIT subsidiary" are treated as
assets, liabilities, and items of income, deduction and credit of the REIT. A
"qualified REIT subsidiary" is a corporation, all of the capital stock of which
is owned by the REIT. We have two direct subsidiaries, RAIT General and RAIT
Limited, and we own all of their capital stock. RAIT General is the sole general
partner of RAIT Partnership and RAIT Limited is the sole limited partner of RAIT
Partnership. As of the date of this prospectus, RAIT Partnership owns all of the
capital stock in 17 other corporations involved in the ownership of certain of
our portfolio assets. Thus, RAIT General, RAIT Limited and the other 17
subsidiaries will be ignored as separate entities, and all of their assets,
liabilities, and items of income, deduction, and credit will be treated as our
assets, liabilities and items of income, deduction and credit.

         An unincorporated entity that is beneficially owned by a single parent
entity is not treated as an entity separate from its parent. As of the date of
this prospectus, we own all of RAIT General and RAIT Limited which, in turn, own
all of RAIT Partnership. As of the date of this prospectus, we beneficially own
all of the membership interests in thirteen limited liability companies and all
of the partnership interests in three limited partnerships involved in the
ownership of certain of our portfolio assets. These limited liability companies
are treated as partnerships for federal income tax purposes. Thus, RAIT
Partnership and the limited liability companies and limited partnerships we
beneficially own will not be treated as entities separate from us for so long
as RAIT Partnership's only partners are RAIT General and RAIT Limited, we own
all of their capital stock, and we beneficially own all of the membership
interests and partnership interests of these limited liability companies and
limited partnerships.

         In the case of a REIT that is a partner in a partnership that has other
partners, the REIT is treated as owning its proportionate share of the assets of
the partnership and as earning its allocable share of the gross income of the
partnership for purposes of the applicable REIT qualification tests. Thus, when
RAIT Partnership admits a partner other than us, or a qualified REIT subsidiary
of us, our proportionate share of the assets, liabilities and items of income of
RAIT Partnership, and those of any other partnership, joint venture or limited
liability company that is treated as a partnership for federal income tax
purposes in which we have acquired or will acquire an interest, directly or
indirectly (a "subsidiary partnership") will be treated as our assets and gross
income for purposes of applying the various REIT qualification requirements.

         A REIT is allowed to own up to 100% of the stock of a "taxable REIT
subsidiary," or TRS. A TRS may earn income that would not be qualifying income
if earned directly by the parent REIT. Both the subsidiary and the REIT must
jointly elect to treat the subsidiary as a TRS. A TRS will pay income tax at
regular corporate rates on any income that it earns. In addition, the new rules
limit the deductibility of interest paid or accrued by a TRS to its parent REIT
to assure that the TRS is subject to an appropriate level of corporate taxation.
Further, the rules impose a 100% excise tax on transactions between a TRS and
its parent REIT or the REIT's tenants that are not conducted on an arm's-length
basis. We do not currently have any TRSs, but may form one or more TRSs in the
future.

INCOME TESTS

         We must satisfy two gross income tests annually to maintain
qualification as a REIT. First, at least 75% of our gross income for each
taxable year must consist of defined types of income that we derive, directly or
indirectly, from investments

                                       16
relating to real property or mortgages on real property or temporary investment
income. Qualifying income for purposes of that 75% gross income test generally
includes:

         -        rents from real property,

         -        interest on debt secured by mortgages on real property or on
                  interests in real property, and

         -        dividends or other distributions on and gain from the sale of
                  shares in other REITs.

         Second, in general, at least 95% of our gross income for each taxable
year must consist of income that is qualifying income for purposes of the 75%
gross income test, dividends, other types of interest, gain from the sale or
disposition of stock or securities, income from certain interest rate hedging
contracts, or any combination of the foregoing. Gross income from any
origination fees we obtain or from our sale of property that we hold primarily
for sale to customers in the ordinary course of business is excluded from both
income tests. The following paragraphs discuss the specific application of the
gross income tests to us.

         Where the principal amount of mortgages on a property exceeds the
property's fair market value, the Internal Revenue Service may contend that the
lender is actually the owner of the property for tax purposes. Since we have
acquired and may continue to acquire loans whose principal amount exceeds the
fair market value of the underlying property, a recharacterization may occur
although the existence of forbearance or other workout arrangements would make
it less likely. If we are found to be the owner of real property rather than a
mortgagee, our income would consist of the rent from the property rather than
interest on our loan. We would generally be entitled to deductions for operating
expenses of the property as well as for depreciation. Consequently, as long as
the rent qualifies as "rents from real property," it is unlikely that such
recharacterization would adversely affect our qualification under the asset
tests, income tests or distribution requirements, except as discussed below.

         The term "interest," generally does not include any amount that depends
in whole or in part on the income or profits of any person. However, an amount
generally will not be excluded from the term "interest" solely because it is
based on a fixed percentage or percentages of receipts or sales. In addition, an
amount generally will not be excluded from the term "interest" solely because it
is based on the income or profits of a debtor if substantially all of the
debtor's gross income from the property qualifies as rents from real property if
received by a REIT. Furthermore, interest from an appreciation interest based on
the sale price of a property will be treated as gain from the sale of the
property, which generally is qualifying income for purposes of the 75% and 95%
gross income tests.

         Interest, original issue discount and market discount income from our
loans generally will be qualifying interest income for purposes of both the 75%
and 95% gross income tests. However, if the highest principal amount of a loan
outstanding during a taxable year exceeds the value of the property securing the
loan on the date we originated or acquired the loan, the portion of the income
from the loan derived from the excess principal amount will be qualifying income
for purposes of the 95% gross income test, but not for purposes of the 75% gross
income test. In addition, if interest income from a loan is based in part on the
borrower's profits or net income, it generally will be disqualified for purposes
of both the 75% and 95% gross income tests.

         We have purchased and originated loans that are only indirectly secured
by real property and may do so in the future. If a senior loan prevents us from
recording a mortgage against the property, the junior note held by us may be
collateralized by an unrecorded mortgage, a deed-in-lieu of foreclosure, a
pledge of equity interests of the borrower, a purchase option or some other
arrangement. Interest as well as any original issue discount and market discount
income derived from such loans should be qualifying interest income for purposes
of both the 75% and 95% gross income tests. It is possible, however, that the
Internal Revenue Service would conclude that interest on these loans does not
constitute interest from a loan "secured by mortgages on real property or on
interests in real property," so that such interest would not qualify for
purposes of the 75% gross income test. In that event, we believe, as of the date
of this prospectus, that the amount of our income from these loans is a low
enough percentage of our gross income so that compliance with the 75% gross
income test would nevertheless be maintained.

         In the case of wraparound loans, there is authority for the position
that only the interest attributable to the amounts advanced by the REIT or a
person from whom it acquired the loan will constitute income to the REIT. Under
this interpretation, amounts we receive from the borrower that are used to pay
debt service on the underlying senior debt would be

                                       17
treated as having been paid directly by the borrower to the senior lender and
thus excluded from our gross income. We believe that we have satisfied the
income tests regardless of whether all of the interest on our wraparound loans
is treated as income or only the interest attributable to the amounts advanced
by us is treated as income.

         We may originate or acquire mortgage loans that have appreciation
interests. We may be required to recognize income from an appreciation interest
over the term of the related loan using a method that generally will result in
our recognizing at least some taxable income in advance of the related cash
flow.

         A REIT will incur a 100% tax on the net income derived from any sale or
other disposition of property, other than foreclosure property, that the REIT
holds primarily for sale to customers in the ordinary course of a trade or
business. We believe that none of our assets is held for sale to customers and
that a sale of any of our assets would not be in the ordinary course of our
business. Whether a REIT holds an asset "primarily for sale to customers in the
ordinary course of a trade or business" depends, however, on the facts and
circumstances in effect from time to time, including those related to a
particular asset. Nevertheless, we will attempt to comply with the terms of
safe-harbor provisions in the federal income tax laws prescribing when an asset
sale will not be characterized as a prohibited transaction. We cannot assure
you, however, that we can comply with the safe-harbor provisions or that we will
avoid owning property that may be characterized as property that we hold
"primarily for sale to customers in the ordinary course of a trade or business."

         We will be subject to tax at the maximum corporate rate on any income
from foreclosure property, other than income that would be qualifying income for
purposes of the 75% gross income test, less expenses directly connected with the
production of such income. However, gross income from a foreclosure property
will qualify under the 75% and 95% gross income tests. "Foreclosure property" is
any real property, including interests in real property, and any personal
property incident to such real property:

         -        that is acquired by a REIT as the result of the REIT having
                  bid in such property at foreclosure, or having otherwise
                  reduced such property to ownership or possession by agreement
                  or process of law, after there was a default or default was
                  imminent on a lease of such property or on an indebtedness
                  that such property secured;

         -        for which the related loan was acquired by the REIT at a time
                  when the default was not imminent or anticipated; and

         -        for which such REIT makes a proper election to treat such
                  property as foreclosure property.

         We have no foreclosure property as of the date of this prospectus.

         However, a REIT will not be considered to have foreclosed on a property
where the REIT takes control of the property as a mortgagee-in-possession and
cannot receive any profit or sustain any loss except as a creditor of the
mortgagor. Property generally ceases to be foreclosure property with respect to
a REIT at the end of the third taxable year following the taxable year in which
the REIT acquired such property, or longer if an extension is granted by the
Secretary of the Treasury. The foregoing grace period is terminated and
foreclosure property ceases to be foreclosure property on the first day:

         -        on which a lease is entered into with respect to the property
                  that, by its terms, will give rise to income that does not
                  qualify for purposes of the 75% gross income test or any
                  amount is received or accrued, directly or indirectly,
                  pursuant to a lease entered into on or after such day that
                  will give rise to income that does not qualify for purposes of
                  the 75% gross income test;

         -        on which any construction takes place on the property, other
                  than completion of a building or other improvement, where more
                  than 10% of the construction of such building or other
                  improvement was completed before default became imminent; or

         -        which is more than 90 days after the day on which such
                  property was acquired by the REIT and the property is used in
                  a trade or business which is conducted by the REIT, other than
                  through an independent contractor from whom the REIT itself
                  does not derive or receive any income.

                                       18
Rent that we receive from real property that we own and lease to
tenants will qualify as "rents from real property," which is qualifying income
for purposes of the 75% and 95% gross income tests, only if we meet each of the
following conditions:

         -        The rent must not be based, in whole or in part, on the income
                  or profits of any person, but may be based on a fixed
                  percentage or percentages of receipts or sales.

         -        Neither we nor a direct or indirect owner of 10% or more of
                  our shares may own, actually or constructively, 10% or more of
                  a tenant from whom we receive rent, other than a TRS. Rent we
                  receive from a TRS will qualify as "rents from real property"
                  if at least 90% of the leased space of the property is rented
                  to persons other than TRSs and 10%-owned tenants and the
                  amount of rent paid by the TRS is substantially comparable to
                  rent paid by the other tenants of the property for comparable
                  space.

         -        All of the rent received under a lease of real property will
                  not qualify as "rents from real property" unless the rent
                  attributable to the personal property leased in connection
                  with such lease is no more than 15% of the total rent received
                  under the lease. The allocation of rent between real and
                  personal property is based on the relative fair market values
                  of the real and personal property.

         -        We generally must not operate or manage our real property or
                  furnish or render services to our tenants other than through
                  an independent contractor who is adequately compensated and
                  from whom we do not derive revenue. However, we need not
                  provide services through an independent contractor, but
                  instead may provide services directly, if the services are
                  "usually or customarily rendered" in connection with the
                  rental of space for occupancy only and are not considered to
                  be provided for the tenants' convenience. In addition, we may
                  provide a minimal amount of "non-customary" services to the
                  tenants of a property, other than through an independent
                  contractor, as long as our income from the services does not
                  exceed 1% of our income from the related property. Further, a
                  TRS can provide customary and noncustomary services to our
                  tenants without tainting our rental income.

We believe that the rents we receive meet all of these conditions.

         If we fail to satisfy one or both of the gross income tests for any
taxable year, we nevertheless may qualify as a REIT for such year if we qualify
for relief under certain provisions of the federal income tax laws. Those relief
provisions generally will be available if:

         -        our failure to meet such tests is due to reasonable cause and
                  not due to willful neglect,

         -        we attach a schedule of the sources of our income to our tax
                  return, and

         -        any incorrect information on the schedule was not due to fraud
                  with intent to evade tax.

         We cannot predict, however, whether in all circumstances we would
qualify for the relief provisions. In addition, as discussed above in
"--Taxation" even if the relief provisions apply, we would incur a 100% tax on
the gross income attributable to the greater of the amounts by which we fail the
75% and 95% gross income tests, multiplied by a fraction intended to reflect our
profitability.

ASSET TESTS

         To maintain our qualification as a REIT, we also must satisfy two asset
tests at the end of each quarter of each taxable year. First, at least 75% of
the value of our total assets must consist of:

         -        cash or cash items, including certain receivables;

         -        government securities;

         -        interests in real property, including leaseholds and options
                  to acquire real property and leaseholds;

                                       19
-        interests in mortgages on real property;

         -        stock in other REITs; and

         -        investments in stock or debt instruments during the one-year
                  period following our receipt of new capital that we raise
                  through equity offerings or offerings of debt with at least a
                  five-year term.

         Under the second asset test, except for securities in the 75% asset
class, securities in a TRS or qualified REIT subsidiary, and certain partnership
interests (including all interests in subsidiary partnerships) and debt
obligations:

         -        not more than 5% of the value of our total assets may be
                  represented by the securities of any one issuer,

         -        we may not own securities that possess more than 10% of the
                  total voting power of outstanding voting securities of any one
                  issuer, and

         -        we may not own securities that have a value of more than 10%
                  of the total value of the outstanding securities of any one
                  issuer (the "10% value test").

         In addition, not more than 20% of the value of our total assets may be
represented by securities of one or more TRSs.

         Under a special transaction provision, the 10% value test described
above will not apply to securities we held on July 12, 1999, provided that the
issuer of those securities does not engage in a substantial new line of business
or acquire substantial new assets after that date, and provided that we do not
acquire additional securities of the issuer after that date. Existing taxable
subsidiaries can be converted into TRSs on a tax-free basis at any time before
January 1, 2004.

         If the fair market value of the real property securing a mortgage loan
equals or exceeds the outstanding principal balance of the loan, the loan will
be a qualifying asset. However, if the outstanding principal balance of a
mortgage loan exceeds the fair market value of the real property securing the
loan, the excess amount may not be a qualifying asset, although the matter is
not free from doubt. An "interest" in real property also generally includes an
interest in mortgage loans secured by controlling equity interests in
partnerships or limited liability companies that are taxed as partnerships that
own real property, to the extent that the principal balance of the mortgage does
not exceed the fair market value of the real property that is allocable to the
equity interest. We have purchased and originated loans that are only indirectly
secured by real estate, and we may continue to do so in the future.

         We expect that any loans, real properties and temporary investments
that we acquire generally will be qualifying assets for purposes of the 75%
asset test, except to the extent that the principal balance of any loan exceeds
the value of the associated real property, or to the extent the asset is a loan
that is not deemed to be an interest in real property. In the case of wraparound
loans, it is uncertain whether the entire wraparound mortgage amount or only the
amount of our investment that is in excess of the principal amount of the
underlying loans will be considered our asset. We will monitor the status of our
acquired assets for purposes of the various asset tests and will manage our
portfolio in order to comply at all times with such tests. If we fail to satisfy
the asset tests at the end of a calendar quarter, we would not lose our REIT
status if:

         -        we satisfied the asset tests at the close of the preceding
                  calendar quarter and

         -        the discrepancy between the value of our assets and the asset
                  test requirements arose from changes in the market values of
                  our assets and was not wholly or partly caused by the
                  acquisition of one or more non-qualifying assets.

         If we did not satisfy the condition described in the first item, above,
we still may avoid disqualification by eliminating any discrepancy within 30
days after the close of the calendar quarter in which it arose.

         As described above, we may own up to 100% of the stock of TRSs. TRSs
can perform activities unrelated to our tenants, such as third-party management,
development, and other independent business activities, as well as provide
services

                                       20
to our tenants. We and a taxable subsidiary must elect for the subsidiary to be
treated as a TRS. A corporation of which a TRS directly or indirectly owns more
than 35% of the voting power or value of the stock will automatically be treated
as a TRS. The deductibility of interest paid or accrued by a TRS to us is
limited to assure that the TRS is subject to an appropriate level of corporate
taxation. Further, there is a 100% excise tax on transactions between a TRS and
us or our tenants that are not conducted on an arm's-length basis. We may not
own more than 10% of the voting power or value of the stock of a taxable
subsidiary that is not treated as a TRS. Overall, no more than 20% of our assets
can consist of securities of TRSs. We do not currently have any TRSs, but may
form one or more TRSs in the future.

DISTRIBUTION REQUIREMENTS

         Each taxable year, we must distribute dividends, other than capital
gain dividends and deemed distributions of retained capital gain, to our
shareholders in an aggregate amount at least equal to:

         -        the sum of

                  -        90% of our "REIT taxable income," computed without
                           regard to the dividends paid deduction and our net
                           capital gain or loss, and

                  -        90% of our after-tax net income, if any, from
                           foreclosure property; minus

         -        the sum of certain items of non-cash income.

         We must pay such distributions in the taxable year to which they
relate, or in the following taxable year if we declare the distribution before
we timely file our federal income tax return for the year and pay the
distribution on or before the first regular dividend payment date after such
declaration. Although the distribution requirement was reduced from 95% to 90%
for taxable years beginning after December 31, 2000, we intend to continue to
attempt to distribute 100% of our REIT taxable income.

         We will pay federal income tax on taxable income, including net capital
gain, that we do not distribute to shareholders. Furthermore, if we fail to
distribute during a calendar year, or by the end of January following such
calendar year in the case of distributions with declaration and record dates
falling in the last three months of the calendar year, at least the sum of:

         -        85% of our REIT ordinary income for such year,

         -        95% of our REIT capital gain income for such year, and

         -        any undistributed taxable income from prior periods,

we will incur a 4% nondeductible excise tax on the excess of such required
distribution over the amounts we actually distribute. We may elect to retain and
pay income tax on the net long-term capital gain we receive in a taxable year.
See "--Taxation of Taxable U.S. Shareholders." If we so elect, we will be
treated as having distributed any such retained amount for purposes of the 4%
excise tax described above. We have made, and we intend to continue to make,
timely distributions sufficient to satisfy the annual distribution requirements.

         It is possible that, from time to time, we may experience timing
differences between:

         -        the actual receipt of income and actual payment of deductible
                  expenses, and

         -        the inclusion of that income and deduction of those expenses
                  in arriving at our REIT taxable income.

For example, we will recognize taxable income in excess of our cash receipts
when original issue discount accrues with respect to a loan. Original issue
discount generally will accrue taking into account projected prepayments, such
as those arising from appreciation interests, but not allowing credit losses to
be reflected until they are actually incurred. Also, we may recognize as income
taxable market discount income from the proceeds of the sale of, or principal
payments from, loans

                                       21
that are "market discount bonds," although such proceeds often will be used to
make non-deductible principal payments on related borrowings. "Market discount
bonds" are obligations with a stated redemption price at maturity that is
greater than our tax basis in such obligations. We also may recognize income in
excess of cash receipts if we make wraparound loans where the payments of
nondeductible principal we must make on the underlying loans exceed the amount
of nontaxable principal we receive from the borrower. There is authority,
however, for the position that only the interest on the amount advanced by the
wraparound lender is included in the income of a REIT making such a loan; this
would reduce or limit the possibility of mismatching. In addition, we may
recognize net capital gain attributable to the sale of depreciated property that
exceeds our cash receipts from the sale. We also may recognize taxable income
without receiving a corresponding cash distribution if we foreclose on or make a
"significant modification" to a loan, to the extent that the fair market value
of the underlying property or the principal amount of the modified loan, as
applicable, exceeds our basis in the original loan. Finally, we cannot deduct
from our REIT taxable income capital losses recognized by us. As a result of
these considerations, we may have less cash than is necessary to distribute all
of our taxable income and thereby avoid corporate income tax and the excise tax
imposed on certain undistributed income. In such a situation, we may need to
borrow funds or issue preferred stock or additional common shares.

         Under certain circumstances, we may be able to correct a failure to
meet the distribution requirement for a year by paying "deficiency dividends" to
our shareholders in a later year. We may include such deficiency dividends in
our deduction for dividends paid for the earlier year. Although we may be able
to avoid income tax on amounts distributed as deficiency dividends, we will be
required to pay interest to the Internal Revenue Service based upon the amount
of any deduction we take for deficiency dividends.

RECORDKEEPING REQUIREMENTS

         We must maintain certain records in order to qualify as a REIT. In
addition, to avoid a monetary penalty, we must request on an annual basis
information from our shareholders designed to disclose the actual ownership of
our outstanding shares. We have complied, and we intend to continue to comply,
with such requirements.

FAILURE TO QUALIFY

         If we fail to qualify as a REIT in any taxable year, and no relief
provision applies, we will be subject to federal income tax and any applicable
alternative minimum tax on our taxable income at regular corporate rates. In
calculating our taxable income in a year in which we failed to qualify as a
REIT, we would not be able to deduct amounts paid out to shareholders. In fact,
we would not be required to distribute any amounts to shareholders in such year.
In such event, to the extent of our current and accumulated earnings and
profits, all distributions to shareholders would be taxable as ordinary income.
Subject to certain limitations of the federal income tax laws, corporate
shareholders might be eligible for the dividends received deduction. Unless we
qualified for relief under specific statutory provisions, we also would be
disqualified from taxation as a REIT for the four taxable years following the
year during which we ceased to qualify as a REIT. We cannot predict whether in
all circumstances we would qualify for such statutory relief.

TAXATION OF TAXABLE U.S. SHAREHOLDERS

         As long as we qualify as a REIT, a taxable "U.S. shareholder" must take
into account as ordinary income distributions made out of our current or
accumulated earnings and profits that we do not designate as capital gain
dividends or retained long-term capital gain. On May 28, 2003, President Bush
signed into law the Jobs and Growth Tax Relief Reconciliation Act of 2003, which
we refer to as the 2003 tax act. Under the 2003 tax act, the highest federal
income tax rate on capital gains and dividends was lowered to 15% for 2003-08,
with taxpayers in lower income brackets paying 5%, on capital gains and
dividends in 2003-07 and no taxes on such income in 2008. However, dividends
received from a REIT generally do not qualify as dividends for this purpose.
Instead, they are taxable as ordinary income subject to a maximum rate of 35%
(reduced pursuant to the 2003 tax act from the previous maximum rate of 38.6%).
REIT dividends would qualify for the reduced rate only to the extent the REIT
makes a capital gains distribution, distributes dividends received from a
taxable REIT subsidiary or other corporation or, to the extent permitted, a REIT
pays corporate income taxes and retains earnings. None of the dividends we have
paid in the past would have qualified for the reduced rate. In addition, a U.S.
shareholder will not qualify for the dividends received deduction generally
available to corporations. The term "U.S. shareholder" means a holder of common
shares that for United States federal income tax purposes is:

         -        a citizen or resident of the United States;

                                       22
-        a corporation, partnership, or other entity created or
                  organized in or under the laws of the United States or of any
                  political subdivision thereof;

         -        an estate whose income from sources without the United States
                  is includible in gross income for United States federal income
                  tax purposes regardless of its connection with the conduct of
                  a trade or business within the United States; or

         -        any trust with respect to which

                  -        a United States court is able to exercise primary
                           supervision over its administration, and

                  -        one or more United States persons have the authority
                           to control all of its substantial decisions.

         A U.S. shareholder generally will recognize distributions that we
designate as capital gain dividends as long-term capital gain without regard to
the period for which the U.S. shareholder has held our common shares. A
corporate U.S. shareholder, however, may be required to treat up to 20% of
certain capital gain dividends as ordinary income.

         We may elect to retain and pay income tax on the net long-term capital
gain that we receive in a taxable year. In that case, a U.S. shareholder would
be taxed on his or her proportionate share of our undistributed long-term
capital gain. The U.S. shareholder would receive a credit or refund for his or
her proportionate share of the tax we paid. The U.S. shareholder would increase
his or her basis in our shares by the amount of his or her proportionate share
of our undistributed long-term capital gain, minus his or her share of the tax
we paid.

         A U.S. shareholder will not incur tax on a distribution in excess of
our current and accumulated earnings and profits if such distribution does not
exceed the adjusted basis of the U.S. shareholder's common shares. Instead, such
distribution will reduce the adjusted basis of such common shares. A U.S.
shareholder will recognize a distribution in excess of both our current and
accumulated earnings and profits and the U.S. shareholder's adjusted basis in
his or her common shares as long-term capital gain, or short-term capital gain
if the common shares have been held for one year or less, assuming the common
shares are a capital asset in the hands of the U.S. shareholder. In addition, if
we declare a distribution in October, November, or December of any year that is
payable to a U.S. shareholder of record on a specified date in any of these
months, the distribution will be treated as both paid by us and received by the
U.S. shareholder on December 31 of such year, provided that we actually pay the
distribution during January of the following calendar year.

         Shareholders may not include in their individual income tax returns any
of our net operating losses or capital losses. Instead, these losses are
generally carried over by us for potential offset against our future income.
Taxable distributions from us and gain from the disposition of the common shares
will not be treated as passive activity income and, therefore, shareholders
generally will not be able to apply any "passive activity losses," such as
losses from certain types of limited partnerships in which the shareholder is a
limited partner, against such income. In addition, taxable distributions from us
and gain from the disposition of common shares generally will be treated as
investment income for purposes of the investment interest limitations. We will
notify shareholders after the close of our taxable year as to the portions of
the distributions attributable to that year that constitute ordinary income,
return of capital, and capital gain.

         We may recognize taxable income in excess of our economic income, known
as "phantom income," in the first years we hold certain investments, and
experience an offsetting excess of economic income over our taxable income in
later years. As a result, shareholders at times may pay federal income tax on
distributions that economically represent a return of capital, rather than a
dividend. These distributions would be offset in later years by distributions
representing economic income that would be treated as returns of capital for
federal income tax purposes. Taking into account the time value of money, this
acceleration of federal income tax liabilities may reduce a shareholder's
after-tax return on his or her investment in us to an amount less than the
after-tax return on an investment with an identical before-tax rate of return
that did not generate phantom income. For example, if an investor with a 30% tax
rate purchases a taxable bond with an annual interest rate of 10% on its face
value, the investor's before-tax return on the investment would be 10% and the
investor's after-tax return would be 7%. However, if the same investor purchased
our shares at a time when the before-tax rate of return was 10%, the investor's
after-tax rate of return on the shares might be somewhat less than 7% as a
result of our phantom income. In general, as the ratio of our phantom income to
our total income increases, the after-tax rate of return received by a taxable
shareholder

                                       23
will decrease. We will consider the potential effects of phantom income on our
taxable shareholders in managing our investments.

TAXATION OF U.S. SHAREHOLDERS ON THE DISPOSITION OF SHARES

         In general, a U.S. shareholder who is not a dealer in securities must
treat any gain or loss realized upon a taxable disposition of his or her common
shares as long-term capital gain or loss if the U.S. shareholder has held the
common shares for more than one year. However, a U.S. shareholder must treat any
loss upon a sale or exchange of common shares held by such shareholder for six
months or less as a long-term capital loss to the extent of capital gain
dividends and other distributions from us that such U.S. shareholder treats as
long-term capital gain. All or a portion of any loss that a U.S. shareholder
realizes upon a taxable disposition of the common shares may be disallowed if
the U.S. shareholder purchases other common shares within 30 days before or
after the disposition.

CAPITAL GAINS AND LOSSES

         The tax rate differential between capital gain and ordinary income for
non-corporate taxpayers may be significant. A taxpayer generally must hold a
capital asset for more than one year for gain or loss derived from its sale or
exchange to be treated as long-term capital gain or loss. Under the 2003 tax
act, the maximum marginal individual income tax rate is 35% for 2003 and all
subsequent years. The maximum tax rate on long-term capital gain applicable to
non-corporate taxpayers was reduced by the 2003 tax act from 20% to 15%, with
taxpayers in lower income brackets paying 5%, for sales and exchanges of assets
held for more than one year. The maximum tax rate on long-term capital gain from
the sale or exchange of "section 1250 property," or depreciable real property,
is 25% to the extent that such gain would have been treated as ordinary income
if the property were "section 1245 property." With respect to distributions that
we designate as capital gain dividends and any retained capital gain that we are
deemed to distribute, we generally may designate whether such a distribution is
taxable to our non-corporate shareholders at a 15% or 25% rate. In addition, the
characterization of income as capital gain or ordinary income may affect the
deductibility of capital losses. A non-corporate taxpayer may deduct capital
losses not offset by capital gains against its ordinary income only up to a
maximum annual amount of $3,000. A non-corporate taxpayer may carry forward
unused capital losses indefinitely. A corporate taxpayer must pay tax on its net
capital gain at ordinary corporate rates. A corporate taxpayer can deduct
capital losses only to the extent of capital gains, with unused losses being
carried back three years and forward five years.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

         We will report to our shareholders and to the Internal Revenue Service
the amount of distributions we pay during each calendar year, and the amount of
tax we withhold, if any. Under the backup withholding rules, a shareholder may
be subject to backup withholding at the rate of 28% with respect to
distributions unless the holder:

         -        is a corporation or comes within certain other exempt
                  categories and, when required, demonstrates this fact, or

         -        provides a taxpayer identification number, certifies as to no
                  loss of exemption from backup withholding and otherwise
                  complies with the applicable requirements of the backup
                  withholding rules.

         A shareholder who does not provide us with his or her correct taxpayer
identification number also may be subject to penalties imposed by the Internal
Revenue Service. Any amount paid as backup withholding will be creditable
against the shareholder's income tax liability. In addition, we may be required
to withhold a portion of capital gain distributions to any shareholders who fail
to certify their non-foreign status to us. For a discussion of the backup
withholding rules as applied to non-U.S. shareholders, see "--Taxation of
Non-U.S. Shareholders."

TAXATION OF TAX-EXEMPT SHAREHOLDERS

         Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts, generally are exempt from
federal income taxation. However, they are subject to taxation on their
unrelated business taxable income. While many investments in real estate
generate unrelated business taxable income, the Internal Revenue Service has
issued a published ruling that dividend distributions from a REIT to an exempt
employee pension trust do not constitute unrelated business taxable income, so
long as the exempt employee pension trust does not otherwise use the shares of
the REIT in an unrelated trade or business of the pension trust. Based on that
ruling, amounts that we distribute to

                                       24
tax-exempt shareholders generally should not constitute unrelated business
taxable income. However, if a tax-exempt shareholder were to finance its
acquisition of our common shares with debt, a portion of the income that it
receives from us would constitute unrelated business taxable income pursuant to
the "debt-financed property" rules. Furthermore, social clubs, voluntary
employee benefit associations, supplemental unemployment benefit trusts, and
qualified group legal services plans that are exempt from taxation under special
provisions of the federal income tax laws are subject to different unrelated
business taxable income rules, which generally will require them to characterize
distributions that they receive from us as unrelated business taxable income.
Finally, in certain circumstances, a qualified employee pension or profit
sharing trust that owns more than 10% of our shares must treat a percentage of
the dividends that it receives from us as unrelated business taxable income.
Such percentage is equal to the gross income we derive from an unrelated trade
or business, determined as if we were a pension trust, divided by our total
gross income for the year in which we pay the dividends. That rule applies to a
pension trust holding more than 10% of our shares only if:

         -        the percentage of our dividends that the tax-exempt trust must
                  treat as unrelated business taxable income is at least 5%;

         -        we qualify as a REIT by reason of the modification of the rule
                  requiring that no more than 50% of our shares be owned by five
                  or fewer individuals that allows the beneficiaries of the
                  pension trust to be treated as holding our shares in
                  proportion to their actuarial interests in the pension trust;
                  and either:

                  -        one pension trust owns more than 25% of the value of
                           our shares or

                  -        a group of pension trusts individually holding more
                           than 10% of the value of our shares collectively owns
                           more than 50% of the value of our shares.

TAXATION OF NON-U.S. SHAREHOLDERS

         The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
shareholders are complex. This section is only a summary of such rules. We urge
non-U.S. shareholders to consult their own tax advisors to determine the impact
of federal, state and local income tax laws on ownership of our common shares,
including any reporting requirements.

         A non-U.S. shareholder that receives a distribution that is not
attributable to gain from our sale or exchange of U.S. real property interests,
as defined below, and that we do not designate as a capital gain dividend or
retained capital gain will recognize ordinary income to the extent that we pay
such distribution out of our current or accumulated earnings and profits. A
withholding tax equal to 30% of the gross amount of the distribution ordinarily
will apply to such distribution unless an applicable tax treaty reduces or
eliminates the tax. However, if a distribution is treated as effectively
connected with the non-U.S. shareholder's conduct of a U.S. trade or business,
the non-U.S. shareholder generally will be subject to federal income tax on the
distribution at graduated rates, in the same manner as U.S. shareholders are
taxed with respect to such distributions and also may be subject to the 30%
branch profits tax in the case of a non-U.S. shareholder that is a non-U.S.
corporation. We plan to withhold U.S. income tax at the rate of 30% on the gross
amount of any such distribution paid to a non-U.S. shareholder unless either:

         -        a lower treaty rate applies and the non-U.S. shareholder files
                  the required form evidencing eligibility for that reduced rate
                  with us; or

         -        the non-U.S. shareholder files an IRS Form W-8ECI with us
                  claiming that the distribution is effectively connected
                  income.

         A non-U.S. shareholder will not incur tax on a distribution in excess
of our current and accumulated earnings and profits if such distribution does
not exceed the adjusted basis of our common shares. Instead, such a distribution
will reduce the adjusted basis of those common shares. A non-U.S. shareholder
will be subject to tax on a distribution that exceeds both our current and
accumulated earnings and profits and the adjusted basis of our common shares, if
the non-U.S. shareholder otherwise would be subject to tax on gain from the sale
or disposition of our common shares, as described below. Because we generally
cannot determine at the time we make a distribution whether or not the
distribution will exceed our current and accumulated earnings and profits, we
normally will withhold tax on the entire amount of any distribution at the same
rate as

                                       25
we would withhold on a dividend. However, a non-U.S. shareholder may obtain a
refund of amounts that we withhold if we later determine that a distribution in
fact exceeded our current and accumulated earnings and profits.

         We must withhold 10% of any distribution that exceeds our current and
accumulated earnings and profits. Consequently, although we intend to withhold
at a rate of 30% on the entire amount of any distribution, to the extent that we
do not do so, we will withhold at a rate of 10% on any portion of a distribution
not subject to withholding at a rate of 30%.

         For any year in which we qualify as a REIT, a non-U.S. shareholder will
incur tax on distributions that are attributable to gain from the sale or
exchange of "U.S. real property interests" under special provisions of the
federal income tax laws known as "FIRPTA." The term "U.S. real property
interests" includes certain interests in real property and shares in
corporations at least 50% of whose assets consist of interests in real property.
Under those rules, a non-U.S. shareholder is taxed on distributions attributable
to gain from sales of U.S. real property interests as if such gain were
effectively connected with a U.S. business of the non-U.S. shareholder. A
non-U.S. shareholder thus would be taxed on such a distribution at the normal
capital gain rates applicable to U.S. shareholders, subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of a
nonresident alien individual. A non-U.S. corporate shareholder not entitled to
treaty relief or exemption also may be subject to the 30% branch profits tax on
such a distribution. We must withhold 35% of any distribution that we could
designate as a capital gain dividend. A non-U.S. shareholder may receive a
credit against its tax liability for the amount we withhold.

         A non-U.S. shareholder generally will not incur tax under FIRPTA as
long as at all times non-U.S. persons hold, directly or indirectly, less than
50% in value of our shares. We cannot assure you that this test will be met.
However, a non-U.S. shareholder that owned, actually or constructively, 5% or
less of the common shares at all times during a specified testing period will
not incur tax under FIRPTA if the common shares are "regularly traded" on an
established securities market. If the gain on the sale of the shares were taxed
under FIRPTA, a non-U.S. shareholder would be taxed in the same manner as U.S.
shareholders with respect to such gain, subject to applicable alternative
minimum tax, a special alternative minimum tax in the case of nonresident alien
individuals, and the possible application of the 30% branch profits tax in the
case of non-U.S. corporations. Furthermore, a non-U.S. shareholder will incur
tax on gain not subject to FIRPTA if:

         -        the gain is effectively connected with the non-U.S.
                  shareholder's U.S. trade or business, in which case the
                  non-U.S. shareholder will be subject to the same treatment as
                  U.S. shareholders with respect to such gain, or

         -        the non-U.S. shareholder is a nonresident alien individual who
                  was present in the U.S. for 183 days or more during the
                  taxable year and has a "tax home" in the United States, in
                  which case the non-U.S. shareholder will incur a 30% tax on
                  his capital gains.

STATE AND LOCAL TAXES

         We and/or our shareholders may be subject to taxation by various states
and localities, including those in which we or such shareholders transact
business, own property or reside. The state and local tax treatment may differ
from the federal income tax treatment described above. Consequently,
shareholders should consult their own tax advisors regarding the effect of state
and local tax laws upon an investment in our common shares.

                                       26
SELLING SHAREHOLDERS

         The selling shareholders listed below acquired the shares listed in the
column "Common shares registered under this prospectus" under the RAIT
Investment Trust 401(k) Profit Sharing Plan before we filed the registration
statement of which this prospectus is part and constitute "restricted
securities" under applicable securities laws. We encourage our employees to
invest in our company through our 401(k) plan. We believe that this prospectus
and the registration statement of which it is a part, which permit resales of
shares acquired by our employees through our 401(k) plan, encourages this
investment by providing liquidity for their investment. Accordingly, while the
number of shares set forth in the column "Common Shares to be owned after the
offering" assumes that all common shares acquired by a selling shareholder under
our 401(k) plan will be offered or sold, the selling shareholders are not
required to sell any shares. Certain other persons who acquired "restricted
securities" under our 401(k) plan prior to such filing, who are not our
"affiliates" under applicable securities laws and who hold less than the lesser
of 1,000 common shares or 1% of the common shares issuable under our 401(k) plan
may use this prospectus for reoffers and resales of those restricted securities.
As permitted by applicable securities laws, we do not intend to name these
persons in this prospectus or any supplement. This prospectus may also be used
by certain of our employees who may be deemed to be our "affiliates" under
applicable securities laws to sell common shares which are acquired by them
pursuant to our 401(k) plan which constitute "control securities" under
applicable securities laws. We will supplement this prospectus with the names of
these persons and the amounts of control securities to be reoffered or resold by
them pursuant to this prospectus when, and if, these persons elect to make an
offer or sale of their shares. Employees, their family members, trusts for their
benefit, or entities that they own, that acquire common shares under our 401(k)
plan may be added to the selling shareholder list below by a prospectus
supplement filed with the SEC. The number of common shares to be sold by any
selling shareholder under this prospectus also may be increased or decreased by
a prospectus supplement. Although a person's name is included in the table
below, neither that person nor we are making an admission that the named person
is our "affiliate."

         The table shows, as of September 15, 2003, certain information
regarding the selling shareholders' ownership of our common shares.
PERCENTAGE OF
                     AMOUNT AND NATURE  COMMON SHARES   COMMON SHARES   CLASS TO BE
                      OF SHARES OWNED     REGISTERED     TO BE OWNED    BENEFICIALLY
                         PRIOR TO         UNDER THIS      AFTER THE     OWNED AFTER
        NAME            OFFERING(1)     PROSPECTUS(1)    OFFERING(2)    OFFERING(3)
        ----            -----------     --------------   ------------   -----------
Michael D. Beatty         9,766(4)           1,216           8,550            *
Betsy Z. Cohen          472,345(5)           6,182         466,163          2.2%
Jay R. Cohen            102,723(6)           7,903          94,820            *
Jonathan Z. Cohen        32,443(7)             666          31,777            *
Ellen J. DiStefano       74,337(8)           4,203          70,134            *
Kenneth R. Frappier      18,003(9)             378          17,625            *
Sam J. Greenblatt        28,323(10)          3,323          25,000            *
Gregory Marks            13,208(11)          1,158          12,050            *
Scott F. Schaeffer       93,777(12)          3,277          90,500            *
Andres Viroslav           1,933(13)          1,533             400            *
                        -------            -------         -------
                        846,858             29,839         817,019
                        =======            =======         =======
*       Less than 1%.

(1)      Includes all common shares acquired and not previously sold by the
         relevant selling shareholder pursuant to our 401(k) plan which
         constitute "restricted securities" under applicable securities laws,
         whether or not such selling shareholders' rights to such common shares
         have vested or will vest within 60 days after the date hereof.

(2)      Assumes all common shares registered pursuant to the registration
         statement of which this prospectus is a part will be sold, although
         there can be no assurance that any of the selling shareholders will
         offer for sale or sell any or all of the common shares offered by them
         pursuant to this prospectus. Also assumes that a selling shareholder
         acquires no other common shares.

                                       27
(3)      Based on 20,853,875 common shares outstanding as of September 15, 2003.
         Common shares issuable upon the exercise of options exercisable by the
         relevant selling shareholder within 60 days are deemed to be
         outstanding with respect to the calculation of that selling
         shareholder's percent of class.

(4)      Based on 1,050 common shares directly held by Mr. Beatty, 1,216 common
         shares held in our 401(k) plan for the benefit of Mr. Beatty, and 7,500
         common shares issuable upon exercise of options.

(5)      Includes 46,626 common shares directly held by Mrs. Cohen; 6,182 common
         shares held in our 401(k) plan for the benefit of Mrs. Cohen; 30,446
         common shares held by an individual retirement account ("IRA") for the
         benefit of Mrs. Cohen; 126,801 common shares held by a charitable
         foundation of which Mrs. Cohen serves as trustee; 37,290 common shares
         held in an IRA account for the benefit of Mrs. Cohen's spouse, Edward
         E. Cohen, and 225,000 common shares issuable upon exercise of options
         granted under our Amended and Restated RAIT Investment Trust 1997 Stock
         Option Plan, which we refer to sometimes as our "stock option plan".
         Excludes 58,912 common shares deposited in a "rabbi" trust established
         in connection with the supplemental executive retirement plan
         established pursuant to Mrs. Cohen's employment agreement with us.
         Excludes common shares held by Resource America, of which Edward E.
         Cohen is Chairman, Chief Executive Officer and President. Mrs. Cohen
         has served as our Chairman, Chief Executive Officer and one of our
         trustees since our founding in August 1997.

(6)      Includes 6,000 common shares held directly by Mr. Jay R. Cohen; 4,208
         common shares held in an IRA account for the benefit of Mr. Cohen;
         26,271 common shares held jointly by Mr. Cohen and his spouse; 8,341
         common shares held in an IRA account for the benefit of Mr. Cohen's
         spouse; 7,903 common shares held in our 401(k) plan for the benefit of
         Mr. Cohen; and 50,000 common shares issuable upon exercise of options
         granted under the stock option plan. Mr. Cohen was elected in October
         1997 to serve as one of our Executive Vice Presidents.

(7)      Includes 31,277 common shares held directly by Mr. Jonathan Z. Cohen,
         666 common shares held in our 401(k) plan for his benefit and 500
         common shares issuable upon exercise of options granted under the stock
         option plan (the options exercisable for all these 500 common shares
         are vested). Excludes common shares held by Resource America of which
         Mr. Cohen is Chief Operating Officer. Mr. Cohen has served as our
         Secretary since February 1998 and as one of our trustees since
         September 1997.

(8)      Includes 6,000 common shares directly held by Mrs. DiStefano, 1,002
         common shares held by Mrs. DiStefano jointly with her spouse; 1,196
         common shares held in an IRA account for the benefit of Mrs. DiStefano,
         1,190 common shares held in an IRA account for the benefit of Mrs.
         DiStefano's spouse, 64 common shares held in education IRA's for the
         benefit of Mrs. DiStefano's children, 4,203 common shares held in our
         401(k) plan for the benefit of Mrs. DiStefano; and 60,682 common shares
         issuable upon exercise of options granted under the stock option plan.
         Mrs. DiStefano was elected in October 1997 to serve as our Chief
         Financial Officer and also has served as one of our Executive Vice
         Presidents since December 1998.

(9)      Includes 12,000 common shares directly held by Mr. Frappier, 378 common
         shares held in our 401(k) plan for the benefit of Mr. Frappier, and
         5,625 common shares issuable upon exercise of options granted under the
         stock option plan. Of these options, 3,750 are fully vested and 1,875
         are subject to early exercise rights but will not vest within sixty
         days. Mr. Frappier was elected in April 2002 to serve as our Senior
         Vice President-Portfolio and Risk Management.

(10)     Includes 25,000 common shares directly held by Mr. Greenblatt and 3,323
         common shares held in our 401(k) plan for the benefit of Mr.
         Greenblatt.

(11)     Includes 4,550 common shares directly held by Mr. Marks, 1,158 common
         shares held in our 401(l) plan for the benefit of Mr. Marks, and 7,500
         common shares issuable upon exercise of options granted under the stock
         option plan.

(12)     Includes 50,000 common shares directly held by Mr. Schaeffer, 3,277
         common shares held in our 401(k) plan for the benefit of Mr. Schaeffer,
         3,000 common shares held in an IRA account for the benefit of Mr.
         Schaeffer, and 37,500 common shares issuable upon exercise of options
         granted under the stock option plan. Mr. Schaeffer was elected in
         September 2000 to serve as our President and Chief Operating Officer.

                                       28
(13)     Includes 400 common shares directly held by Mr. Viroslav and 1,533
         common shares held in our 401(k) plan for the benefit of Mr. Viroslav.

                                       29
PLAN OF DISTRIBUTION

      The plan administrator for our 401(k) plan, on behalf of the relevant
selling shareholder and subject to the terms of our 401(k) plan, may sell the
common shares for the account of that selling shareholder from time to time, in
one or more transactions on the New York Stock Exchange or otherwise, in special
offerings, secondary distributions pursuant to and in accordance with applicable
rules and regulations of the SEC and the New York Stock Exchange, in negotiated
transactions or otherwise, at market prices prevailing at the time of the sale,
at prices related to such market prices or at negotiated prices. The plan
administrator may effect such transactions by selling shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling shareholders
and/or purchasers of the common shares for whom they may act as agent, which
broker-dealer compensation may be in excess of customary commissions.

      We have no basis for estimating either the number of common shares, if
any, that will ultimately be sold by the plan administrator on behalf of the
selling shareholders or the prices at which the plan administrator on behalf of
the selling shareholders may sell shares. All selling and other expenses
incurred by individual plan administrator on behalf of the selling shareholders
will be borne by those selling shareholders.

                                 USE OF PROCEEDS

      We will not realize any proceeds from the sale of the common shares which
may be sold pursuant to this prospectus. We will pay all of the expenses
associated with the registration of these common shares and this prospectus. The
selling shareholders will pay the other costs, if any, associated with any sale
of the common shares, including compensation to underwriters and participating
broker-dealers.

                                     EXPERTS

      Our consolidated financial statements as of December 31, 2002 and 2001 and
for each of the three years ended December 31, 2002 appearing in our Annual
Report on Form 10-K for the year ended December 31, 2002, which are incorporated
by reference in this prospectus, have been audited by Grant Thornton LLP, whose
report is incorporated by such reference in this prospectus and given upon their
authority as experts in accounting and auditing.

      With respect to the unaudited interim financial information for the
periods ended March 31, 2003 and 2002 and June 30, 2003 and 2002 and
incorporated by reference in this prospectus, our independent public accountants
have reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
reports included in our quarterly reports on Form 10-Q for the quarters ended
March 31, 2003 and June 30, 2003 and incorporated by reference herein, state
that they did not audit and they do not express any opinion on that interim
financial information. Accordingly, the degree of your reliance on their report
on such information should be restricted in light of the limited nature of the
review procedures they applied. The accountants are not subject to the liability
provisions of Section 11 of the Securities Act for their reports on the
unaudited interim financial information because the report is not a "report" or
a "part" of any registration statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Securities Act.

                                       30
WHERE YOU CAN FIND MORE INFORMATION

      We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information that we filed with the SEC at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may request copies of these
documents, upon payment of a copying fee, by writing to the SEC. Please call the
SEC at 1-800-SEC-0330 for information on the operation of the Public Reference
Room. Our SEC filings are also available to the public on the SEC internet site
at http://www.sec.gov.

      The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to documents we have filed with the SEC but we do not include in
this prospectus. The information incorporated by reference is considered part of
this prospectus, and later information that we file with the SEC will
automatically update and replace this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act:

      -     Annual Report on Form 10-K for the year ended December 31, 2002.

      -     Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003
            and June 30, 2003.

      -     Current Reports on Form 8-K filed January 24, 2003, February 11,
            2003, April 24, 2003 and July 24, 2003 (only with respect to items
            filed with the SEC).

      -     The description of our common shares contained in Form 8-A/A dated
            January 2, 1998.

      You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:

                              RAIT Investment Trust
                            ATTN: Ellen J. DiStefano
              Executive Vice President and Chief Financial Officer
                           c/o RAIT Partnership, L.P.
                         1818 Market Street, 28th Floor
                        Philadelphia, Pennsylvania 19103
                            Telephone: (215) 861-7900

      You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to this prospectus. We have not
authorized anyone else to provide you with different information. We are not
making an offer of our securities in any state where the offer or solicitation
is not authorized. You should not assume that the information in this prospectus
or any supplement is accurate as of any date other than the date on the front of
those documents.

      The statements that we make in this prospectus about the contents of any
other documents are not necessarily complete, and are qualified in their
entirety by referring you to the copy of that document, which is filed as an
exhibit to the registration statement. You can obtain copies of these documents
from the SEC or from us, as described above.

                                       31
FORWARD-LOOKING STATEMENTS

      This prospectus and any prospectus supplement accompanying this prospectus
contain or incorporate by reference certain forward-looking statements. When
used, statements which are not historical in nature, including those prefaced by
the words "anticipate," "estimate," "should," "expect," "believe," "intend" and
similar expressions, are intended to identify forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties,
including, among other things:

      -     business and economic conditions, especially as they affect interest
            rates and the value of real estate;

      -     defaults by borrowers in paying debt service on our loans,
            particularly our subordinated loans;

      -     illiquidity of our portfolio of loans and property interests;

      -     our possible inability to originate or acquire loans or property
            interests on favorable terms; and

      -     our possible inability to maintain our qualification as a real
            estate investment trust or our exemption from registration under the
            Investment Company Act.

Other risks, uncertainties, and factors that could cause actual results to
differ materially from those projected are discussed in the "Risk Factors"
section of the prospectus, as well as in reports filed by us from time to time
with the Securities and Exchange Commission, including Forms 10-K, 10-Q and 8-K.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as required by law. In light of these risks, uncertainties, and
assumptions, the forward-looking events discussed in or incorporated by
reference into this prospectus and any prospectus supplement accompanying this
prospectus might not occur.

                                       32
No person is authorized to give any information or to represent anything not
contained in this prospectus. You must not rely on any unauthorized
representations or information. This prospectus is an offer to sell only the
common shares offered hereby, and only under circumstances and in jurisdictions
where it is lawful to do so. The information contained in this prospectus is
current only as of its date.

                                TABLE OF CONTENTS
OUR COMPANY .................................................................      2
RISK FACTORS ................................................................      3
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR DECLARATION OF TRUST AND BYLAWS     10
FEDERAL INCOME TAX CONSEQUENCES OF OUR STATUS AS A REIT .....................     14
SELLING SHAREHOLDERS ........................................................     27
PLAN OF DISTRIBUTION ........................................................     30
USE OF PROCEEDS .............................................................     30
EXPERTS .....................................................................     30
WHERE YOU CAN FIND MORE INFORMATION .........................................     31
FORWARD-LOOKING STATEMENTS ..................................................     32
[RAIT LOGO]

                                  COMMON SHARES

                                 ---------------

                                RESALE PROSPECTUS

                                 ---------------

                               September 26, 2003

                                       33
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

      The following documents of the registrant filed with the Securities and
Exchange Commission (the "SEC"), are also incorporated by reference in this
registration statement:

      -     Annual Report on Form 10-K for the year ended December 31, 2002.

      -     Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003
            and June 30, 2003.

      -     Current Reports on Form 8-K filed January 24, 2003, February 11,
            2003, April 24, 2003 and July 24, 2003 (only with respect to items
            filed with the SEC).

      -     The description of the registrant's common shares contained in Form
            8-A/A dated January 2, 1998.

      -     The Annual Report on Form 11-K of the RAIT Investment Trust 401(k)
            Profit Sharing Plan for the fiscal year ended December 31, 2002.

      All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment to this registration statement which
indicates that all securities offered pursuant to this registration statement
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be part hereof from the
date of filing of such documents.

ITEM 4. DESCRIPTION OF SECURITIES.

      Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

      Not applicable.

ITEM 6. INDEMNIFICATION OF TRUSTEES AND OFFICERS.

      Maryland law permits a Maryland REIT to include in its trust agreement a
provision limiting the liability of its trustees and officers to the trust and
its shareholders for money damages except for liability resulting from (a)
actual receipt of an improper benefit or profit in money, property or services
or (b) active and deliberate dishonesty established by a final judgment as being
material to the cause of action. The Declaration of Trust of RAIT Investment
Trust ("RAIT") contains such a provision which eliminates such liability to the
maximum extent permitted by Maryland law.

      The Declaration of Trust of RAIT authorizes RAIT, to the maximum extent
permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(1) any present or former trustee or officer or (2) any individual who, while a
trustee of RAIT and at the request of RAIT, serves or has served as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
from and against any claim or liability to which such person may become subject
or which such person may incur by reason of his status as a present or former
trustee or officer of RAIT. RAIT's Declaration of Trust permits RAIT, to the
maximum extent permitted by Maryland law, to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (1) any
present or former trustee or officer who is made a party to the proceeding by
reason of his service in that capacity or (2) any individual who, while a
trustee of RAIT, and at the request of RAIT, serves or has served as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise and
who is made a party to the proceeding by reason of his service in that capacity.

                                       34
Maryland law permits a Maryland REIT to indemnify its present and former
trustees and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (1) the act or omission
of the trustee or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (2) the trustee or officer actually received an
improper personal benefit in money, property or services, or (3) in the case of
any criminal proceeding, the trustee or officer had reasonable cause to believe
that the act or omission was unlawful. However, a Maryland REIT may not
indemnify for an adverse judgment in a suit by or in the right of the trust or
for a judgment of liability on the basis that personal benefit was improperly
received, unless in either case a court orders indemnification and then only for
expenses. In addition, Maryland law requires a Maryland REIT, as a condition to
advancing expenses, to obtain (1) a written affirmation by the trustee or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by a Maryland REIT, and (2) a written statement by
or on his behalf to repay the amount paid or reimbursed by a Maryland REIT if it
shall ultimately be determined that the standard of conduct was not met. In
addition, RAIT has entered into Indemnity Agreements with its executive officers
and trustees.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

      Certain restricted securities to be reoffered and resold pursuant to this
registration statement were issued under the RAIT Investment Trust 401(k) Profit
Sharing Plan in transactions exempt from registration pursuant to Section 4(2)
of the Securities Act of 1933, as amended.

ITEM 8. EXHIBITS.

      The Exhibits furnished as part of this registration statement on Form S-8
are identified in the Exhibit Index immediately following the signature pages of
this registration statement. Such Exhibit Index is incorporated herein by
reference.

      RAIT undertakes that it will submit or has submitted the RAIT Investment
Trust 401(k) Profit Sharing Plan (the "Plan") and any amendment thereto to the
Internal Revenue Service ("IRS") in a timely manner and has made or will make
all changes required by the IRS in order to qualify the Plan.

ITEM 9. UNDERTAKINGS.

Undertakings required by Item 512(a)of Regulation S-K

      The undersigned registrant hereby undertakes:

(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;

(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;

(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

                                       35
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.

(2) that, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.

Undertakings required by Item 512(b) of Regulation S-K

      The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be deemed to the
initial bona fide offering thereof.

Undertakings required by Item 512(h) of Regulation S-K

      Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted for trustees, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a trustee, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

                                       36
SIGNATURES

The Registrant. Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on
September 22, 2003.

                                        RAIT INVESTMENT TRUST

                                        By:  /s/ Betsy Z. Cohen
                                             -----------------------------------
                                             Betsy Z. Cohen
                                             Chairman, Chief Executive Officer
                                             and Trustee (Chief Executive
                                             Officer)

                                       37
POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Betsy Z. Cohen, Scott F. Schaeffer and Ellen J.
DiStefano, or any of them, as his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place, and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or of his or her substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.

                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
/s/ Betsy Z. Cohen                           Date: September 22, 2003
          ---------------------------------------
          BETSY Z. COHEN, Chairman, Chief
          Executive Officer and Trustee

          /s/ Scott F. Schaeffer                       Date: September 22, 2003
          ---------------------------------------
          SCOTT F. SCHAEFFER, President and
          Chief Operating Officer

          /s/ Ellen J. DiStefano                       Date: September 22, 2003
          ---------------------------------------
          ELLEN J. DISTEFANO, Executive Vice
          President and Chief Financial Officer

          /s/ Jonathan Z. Cohen                        Date: September 22, 2003
          ---------------------------------------
          JONATHAN Z. COHEN, Secretary and
          Trustee

          /s/ Edward Brown                             Date: September 22, 2003
          ---------------------------------------
          EDWARD BROWN, Trustee

          /s/ Arthur Makadon                           Date: September 22, 2003
          ---------------------------------------
          ARTHUR MAKADON, Trustee

          /s/ Joel R. Mesznik                          Date: September 22, 2003
          ---------------------------------------
          JOEL R. MESZNIK, Trustee

          /s/ Daniel Promislo                          Date: September 22, 2003
          ---------------------------------------
          DANIEL PROMISLO, Trustee
38
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Philadelphia,
Commonwealth of Pennsylvania, on September 22, 2003.
RAIT INVESTMENT TRUST 401(k) PROFIT SHARING PLAN

     By:      /s/ Ellen J. DiStefano                         Dated: September 22, 2003
              -------------------------------------------
              ELLEN J. DISTEFANO, as Trustee of the
              RAIT Investment Trust 401(k) Profit Sharing
              Plan

     By:      /s/ Jonathan Z. Cohen                          Dated: September 22, 2003
              -------------------------------------------
              JONATHAN Z. COHEN, as Trustee of the
              RAIT Investment Trust 401(k) Profit Sharing
              Plan
39
EXHIBIT INDEX

The following exhibits are filed herewith:

 EXHIBIT   DOCUMENT
 -------   --------

 4.1(1)    Amended and Restated Declaration of Trust
 4.2(2)    Articles of Amendment to Amended and Restated Declaration of Trust
 4.3(3)    Articles of Amendment of Amended and Restated Declaration of Trust
 4.4(4)    Certificate of Correction to the Amended and Restated Declaration
           of Trust
 4.5(1)    Bylaws, as amended
 5.1       Internal Revenue Service determination letter
 15.1      Awareness Letter from Independent Accountants
 23.1      Consent of Grant Thornton LLP
 24.1      Power of Attorney (included as part of signature pages to this
           registration statement)

(1)   Incorporated herein by reference to RAIT Investment Trust's registration
      statement on Form S-11 (File No. 333-35077), as amended.

(2)   Incorporated herein by reference to RAIT Investment Trust's registration
      statement on Form S-11 (File No. 333-53067), as amended.

(3)   Incorporated herein by reference to RAIT Investment Trust's registration
      statement on Form S-2 (File No. 333-55518), as amended.

(4)   Incorporated herein by reference to RAIT Investment Trust's Form 10-Q for
      the Quarterly Period ended March 31, 2002 (File No. 1-14760).

                                       40