As Filed With the Securities and Exchange Commission on August 26, 2004

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-8

                        REGISTRATION STATEMENT UNDER THE
                             SECURITIES ACT OF 1933


                      AMERICAN MORTGAGE ACCEPTANCE COMPANY
             (Exact Name of Registrant as Specified in Its Charter)

                  Massachusetts                            13-6972380
          (State or Other Jurisdiction                  (I.R.S. Employer
        of Incorporation or Organization)            Identification Number)



                               625 Madison Avenue
                            New York, New York 10022
                                 (212) 317-5700
    (Address, Including Zip Code, and Telephone Number, Including Area Code,
                  of Registrant's Principal Executive Offices)

                           Incentive Share Option Plan
                                Share Agreements
                            (Full Title of the Plans)

<TABLE>
<CAPTION>
<S>                                                      <C>

                 Stuart J. Boesky                                   With copies to:
      President and Chief Executive Officer                      Mark Schonberger, Esq.
                625 Madison Avenue                       Paul, Hastings, Janofsky & Walker LLP
             New York, New York 10022                             75 East 55th Street
                  (212) 317-5700                                New York, New York 10022
(Name, Address, Including Zip Code, and Telephone                    (212) 318-6000
Number, Including Area Code, of Agent For Service)
</TABLE>

<TABLE>
<CAPTION>

                                       CALCULATION OF REGISTRATION FEE
============================================================================================================
                                                        Proposed maximum  Proposed maximum
            Title of securities           Amount to be    offering price     aggregate        Amount of
             to be registered              registered       per share      offering price   registration fee
------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>            <C>               <C>
Common Shares of Beneficial Interest      1,459 shares(1) $ 13.72        $     20,017      $     2.54
------------------------------------------------------------------------------------------------------------
Common Shares of Beneficial Interest    853,818 shares(2) $ 15.16 (3)    $ 12,943,880 (3)  $ 1,639.98
------------------------------------------------------------------------------------------------------------
Total                                   855,277 shares                                     $ 1,642.52
------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Represents  1,459  common  shares  which were issued to  affiliates  of the
Registrant  ("Affiliates") as defined in Rule 405 of the Securities Act of 1933,
as  amended,  pursuant  to share  agreements  between  the  Registrant  and each
Affiliate.

(2) Represents  853,818 common shares of beneficial  interest (i) reserved under
the  Registrant's  Incentive  Share  Option Plan and (ii) which may be issued to
Affiliates of the Registrant pursuant to share agreements between the Registrant
and each Affiliate.  Pursuant to this Registration Statement,  the Registrant is
also  registering  an  indeterminate  amount of additional  common shares as may
become  issuable  pursuant  to the  anti-dilution  provisions  contained  in the
Incentive Share Option Plan.

(3)  Estimated  solely  for  the  purpose  of  calculating  the  amount  of  the
registration  fee pursuant to Rule 457(h) of the Securities Act, on the basis of
the  average  of the high and low  prices  of the  Company's  common  shares  as
reported by the American Stock Exchange on August 25, 2004.


<PAGE>


                                Explanatory Note

         American  Mortgage  Acceptance  Company  ("AMAC" or the  "Company") has
prepared this Registration Statement in accordance with the requirements of Form
S-8 under the Securities Act of 1933, as amended (the  "Securities  Act").  This
Registration  Statement  registers  855,277 of the  Company's  common  shares of
beneficial interest for two purposes: (1) to register common shares which may be
issued  from  time to time to  participants  under  the  Company's  Amended  and
Restated  Incentive Share Option Plan (the "Incentive Plan") and (2) to register
common shares for re-offer  and/or re-sale by the  individuals  listed under the
Selling   Securityholder   section  of  this   re-offer   prospectus   ("Selling
Securityholders").  Of the 855,277  common  shares being  registered,  (i) up to
833,818 common shares may be acquired under the Incentive Plan, which, if issued
to the Selling  Securityholder's,  shall constitute "control  securities" within
the meaning of Instruction C of the General Instructions to Form S-8; (ii) 1,459
common shares were granted to certain of the Selling Securityholders pursuant to
the terms of share agreements ("Share  Agreements")  between the Company and the
Selling  Securityholders for compensation for serving as independent trustees of
the Company,  which  constitute  "restricted  securities"  within the meaning of
Instruction  C of the General  Instructions  to Form S-8; and (iii) up to 20,000
common  shares which may be issued in the future to the Selling  Securityholders
pursuant to the terms of the Share Agreements,  which shall constitute  "control
securities"  within the meaning of Instruction C of the General  Instructions to
Form S-8.

         This Registration Statement contains two parts. The first part contains
a re-offer  prospectus  prepared in accordance with Part I of S-3 (in accordance
with  Instruction  C of the  General  Instructions  to Form  S-8),  including  a
re-offer  prospectus  that may be used for  re-offerings  and re-sales of common
shares acquired by the Selling Securityholders listed on page 28 of the re-offer
prospectus.  These Selling  Securityholders are or may become affiliates of AMAC
as  defined  in  Rule  405 of the  Securities  Act.  The  second  part  contains
information  required in the Registration  Statement pursuant to Part II of Form
S-8.

                                     PART I

              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

Item 1.  Plan Information.

         The documents  containing the information for the Company  specified in
this Item 1 will be sent or given to  individuals  who receive  awards under the
Incentive Plan or common shares under the Share  Agreements.  In accordance with
Section 10(a) of the Securities Act, and Rules 424 and 428 promulgated under the
Securities  Act by the Securities and Exchange  Commission  (the  "Commission"),
such  documents  are not being filed with,  or  included  in, this  Registration
Statement.

Item 2.  Registrant Information and Employee Plan Annual Information.

         The documents containing the information  specified in this Item 2 will
be sent or given to  individuals  who have  received  awards under the Incentive
Plan or common shares under the Share  Agreements.  In  accordance  with Section
10(a) of the Securities Act and Rules 424 and 428 thereunder, such documents are
not being filed with, or included in, this Registration Statement.


<PAGE>


                               RE-OFFER PROSPECTUS

                              855,277 COMMON SHARES

         We are American Mortgage  Acceptance Company ("AMAC" or the "Company"),
a business trust formed under the laws of the Commonwealth of Massachusetts.

         This  re-offer  prospectus is being used for the offering and sale from
time  to  time  by the  selling  securityholders  identified  on page 28 of this
re-offer prospectus (the "Selling  Securityholders")  of (i) 1,459 common shares
of   beneficial   interest   which  were  granted  to  certain  of  the  Selling
Securityholders  pursuant to the terms of share  agreements  between the Company
and the Selling  Securityholders  for  compensation  for serving as  independent
trustees  of the  Company  ("Share  Agreements")  and (ii) up to 853,818  common
shares of beneficial  interest that hereafter may be acquired by persons who may
be  considered  "affiliates"  of the  Company  as  defined by Rule 405 under the
Securities  Act of 1933,  as  amended  (the  "Securities  Act")  (a)  under  the
Company's  Incentive Share Option Plan ("the "Incentive  Plan") and (b) pursuant
to the terms of the Share Agreements.

         The Selling  Securityholders  may sell their common shares  directly or
indirectly in one or more  transactions on any stock exchange or stock market on
which the  common  shares  may be listed at the time of the sale,  in  privately
negotiated  transactions,  or through a combination of such methods. These sales
may be at fixed prices (which may be changed),  at market  prices  prevailing at
the time of sale,  at prices  related  to such  prevailing  market  prices or at
negotiated prices.

         AMAC's common shares are listed on the American  Stock  Exchange  under
the symbol  AMC. On August 25,  2004,  the last  reported  sale price for AMAC's
common shares was $15.07 per share.

         This  re-offer   prospectus  has  been  prepared  for  the  purpose  of
registering the common shares which are the subject of this re-offer  prospectus
under  the   Securities   Act  to  allow  for  future   sales  by  the   Selling
Securityholders  to the  public.  The  Selling  Securityholders  may sell common
shares through one or more agents, brokers or dealers or directly to purchasers.
Such  brokers or dealers may receive  compensation  in the form of  commissions,
discounts or concessions from the Selling  Securityholders  and/or purchasers of
the common  shares,  or both (which  compensation  as to a particular  broker or
dealer  may be in excess of  customary  commissions).  In  connection  with such
sales, the Selling Securityholders and any participating broker or dealer may be
deemed to be  "underwriters"  within the meaning of the Securities  Act, and any
commissions  they receive and the  proceeds of any sale of common  shares may be
deemed to be underwriting  discounts and  commissions  under the Securities Act.
AMAC will not receive  any  proceeds  from the sale of the common  shares by the
Selling Securityholders.

         This  investment  involves  a high  degree  of risk.  Please  see "Risk
Factors" beginning on page 6 of this re-offer prospectus.

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

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS RE-OFFER  PROSPECTUS  IS TRUTHFUL OR COMPLETE.  ANY  REPRESENTATION  TO THE
CONTRARY IS A CRIMINAL OFFENCE.

         This  re-offer   prospectus  does  not  constitute  an  offer  to  sell
securities  in any state to any person to whom it is unlawful to make such offer
in such state.


            The date of this re-offer prospectus is August 26, 2004.


<PAGE>


You should rely only on the  information  contained or incorporated by reference
in this re-offer prospectus.  We have not authorized any other person to provide
you  with  information  different  from  or  additional  to  that  contained  or
incorporated   by   reference   in  this   re-offer   prospectus.   The  Selling
Securityholders  are offering to sell common shares only in jurisdictions  where
offers and sales are permitted. You should assume that the information appearing
in this re-offer  prospectus and the documents  incorporated by reference herein
and  therein is  accurate  only as of its  respective  date or as of other dates
which are  specified in these  documents.  Our  business,  financial  condition,
results of operations and prospects may have changed since these dates.

                             ADDITIONAL INFORMATION

         We have filed with the United States Securities and Exchange Commission
(the "Commission") a registration statement on Form S-8 under the Securities Act
to register the common shares offered hereby.  This re-offer  prospectus is part
of the registration statement. This re-offer prospectus does not contain all the
information  contained  in the  registration  statement  because we have omitted
certain parts of the  registration  statement in  accordance  with the rules and
regulations of the Commission.  Statements contained in this re-offer prospectus
regarding the contents of any contract or any other document to which  reference
is made are not necessarily complete, and, in each instance where a copy of such
contract  or other  document  has been filed as an  exhibit to the  registration
statement,  reference is made to the copy so filed,  each statement is qualified
in all respects by such reference. For further information,  we refer you to the
registration  statement,  which  you may read and copy at the  public  reference
facilities  maintained by the Commission at Judiciary  Plaza,  450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at the Commission's Regional Offices
at  Citicorp  Center,  500 W.  Madison  Street,  Suite 1400,  Chicago,  Illinois
60661-2511.  You may  obtain  copies at the  prescribed  rates  from the  Public
Reference Section of the Commission at its principal office in Washington,  D.C.
You may call the Commission at 1-800-SEC-0330 for further  information about the
public  reference  rooms.  The  Commission  maintains  a web site that  contains
reports,  proxy and information statements and other information regarding AMAC.
You may access the Commission's web site at http://www.sec.gov.

         We are  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934, as amended.  As a result, we are required to file reports,
proxy statements and other information with the Commission.  These materials can
be copied and inspected at the locations  described  above at prescribed  rates.
Our common  shares are listed on the American  Stock  Exchange  under the symbol
"AMC."

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The Commission  allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring you to those documents.  The information  incorporated by reference
is considered to be part of this re-offer  prospectus,  and information  that we
file later with the  Commission  will  automatically  update and supersede  this
information.  We  incorporate  by reference the  documents  listed below and any
future filings we will make with the Commission  under Section 13(a),  13(c), 14
or 15(d) of the Securities Exchange Act of 1934:

         o Our Annual  Report on Form 10-K and Form  10-K/A for the fiscal  year
           ended December 31, 2003,  filed with the Commission on March 15, 2004
           and May 7, 2004, respectively (Commission File No. 001-14583);

         o Our Quarterly Report on Form 10-Q for the period ended June 30, 2004,
           filed  with the  Commission  on August 9, 2004  (Commission  File No.
           001-14583);

         o Our  Quarterly  Report on Form 10-Q for the  period  ended  March 31,
           2004,  filed with the Commission on May 10, 2004 (Commission File No.
           001-14583);


<PAGE>


         o Our Definitive  Proxy  Statement dated April 30, 2004 on Schedule 14A
           prepared in connection with our Annual Meeting of  Shareholders  held
           on June 9, 2004 (Commission File No. 001-14583); and

         o The  description of the Company's  Shares  contained in the Company's
           Form 10  Registration  Statement  under the caption  "Description  of
           Registrant's  Securities  to  be  Registered",   as  filed  with  the
           Commission on August 1, 1997 (Commission File No. 001-13237).

You may request a copy of these  filings  (not  including  the  exhibits to such
documents unless the exhibits are specifically  incorporated by reference in the
information  contained in this re-offer  prospectus),  at no cost, by writing or
telephoning us at the following address:

                      American Mortgage Acceptance Company
                               625 Madison Avenue
                            New York, New York 10022
                               Attn: Brenda Abuaf
              Telephone requests may be directed to (212) 317-5700

         This re-offer  prospectus is part of a registration  statement we filed
with the Commission.  You should rely only on the information or representations
provided in this re-offer  prospectus.  We have authorized no one to provide you
with different  information.  We are not making an offer of these  securities in
any state  where the offer is not  permitted.  You should  not  assume  that the
information  in this  re-offer  prospectus is accurate as of any date other than
the date on the front of the document.

         Statements  contained in this re-offer prospectus as to the contents of
any  contract or document  are not  necessarily  complete  and in each  instance
reference is made to the copy of that  contract or document  filed as an exhibit
to the  registration  statement  or as an exhibit to another  filing,  each such
statement being qualified in all respects by such reference and the exhibits and
schedules thereto.


                                     - 3 -
<PAGE>


                           RE-OFFER PROSPECTUS SUMMARY

         This  summary   highlights   information   included   elsewhere  in  or
incorporated by reference in this re-offer prospectus. It may not contain all of
the information that is important to you. You should read the following  summary
together  with  the  more  detailed  information  included  or  incorporated  by
reference in this  re-offer  prospectus,  including  risk factors  regarding our
business and the common shares being offered hereby.

Our Company

     Overview

         We are American Mortgage Acceptance Company, a business trust formed in
June 1991 under the laws of the Commonwealth of  Massachusetts.  We have elected
to be treated as a real estate  investment  trust  ("REIT")  under the  Internal
Revenue Code (the "Code").

         We specialize in  multifamily  finance and seek asset  diversification,
capital  appreciation  and income for  distributions  to our  shareholders.  Our
business  plan  focuses  on  originating  and  acquiring  mortgages  secured  by
multifamily  properties,  which may take the form of  government  insured  first
mortgages, insured mortgage pass-through certificates or insured mortgage backed
securities, and uninsured mezzanine loans, construction loans, and bridge loans.
Additionally,   we  have   indirectly   invested   in   subordinate   commercial
mortgage-backed  securities ("CMBS") and may invest in other real estate assets,
including  non-multifamily  mortgages.  We also issue guarantees of construction
and permanent financing and make standby loan commitments.

         We finance the acquisition of our assets primarily through borrowing at
short term rates using demand repurchase  agreements and through the issuance of
equity.  Under our declaration of trust, we may incur permanent  indebtedness of
up to 50% of our total market value calculated at the time the debt is incurred.
Permanent  indebtedness and working capital  indebtedness may not exceed 100% of
our total market value. Our declaration of trust provides that we may not change
our policy regarding  indebtedness without the consent of a majority in interest
of our shareholders.

         Our common shares trade on the American Stock Exchange under the symbol
"AMC".

     Our Advisor

         We have engaged Related AMI Associates,  Inc., which we refer to as our
"Advisor," to manage our day-to-day  affairs.  Our Advisor has subcontracted its
management  obligations  to its  affiliate,  Related  Capital  Company,  LLC,  a
subsidiary of CharterMac, an American Stock Exchange listed company which trades
under the symbol  "CHC",  to provide  the  services  contemplated.  Through  our
Advisor,  Related  Capital  offers  us a core  group of  experienced  staff  and
executive  management who provide us with services on both a full- and part-time
basis.  These  services  include,  among other things,  acquisition,  financial,
accounting,  tax,  capital  markets,  asset  monitoring,  portfolio  management,
investor   relations  and  public  relations   services.   The  management  team
responsible for our day-to-day  affairs has an average of 17 years of experience
with Related  Capital and an average of 22 years  experience  in the real estate
industry.

     Tax Status

         We  have  elected  to be  treated  as a REIT  for  federal  income  tax
purposes.  This treatment  permits us to deduct  dividend  distributions  to our
shareholders for federal income tax purposes,  thus effectively  eliminating the
"double  taxation"  that generally  results when a corporation  earns income and
distributes


                                     - 4 -
<PAGE>


that income to its  shareholders  by way of dividends.  In order to maintain our
status as a REIT,  we must comply with a number of  requirements  under  federal
income tax law.  See "Risk  Factors"  and  "Federal  Income Tax  Considerations"
herein.

     Our Offices

         Our principal  executive offices are located at 625 Madison Avenue, New
York, New York 10022. Our phone number is (212) 317-5700.

Securities That May Be Offered

         This  re-offer  prospectus  relates  to the offer and sale from time to
time by the persons  listed under the "Selling  Securityholder"  section of this
re-offer  prospectus of up to 855,277  common  shares.  We are  registering  the
common shares covered by this re-offer prospectus.

         We will not  receive  any  cash  proceeds  from the sale of our  common
shares by the Selling Securityholders.

Risk Factors

         Investing in our common shares  involves  various risks. In considering
whether to purchase our common shares, you should carefully consider the matters
discussed under "Risk Factors" beginning on page 6 of this re-offer prospectus.


                                     - 5 -
<PAGE>


                                  RISK FACTORS

         An investment in our common shares  involves a number of risks.  Before
making an investment  decision,  you should carefully  consider all of the risks
described in this  re-offer  prospectus.  If any of the risks  discussed in this
re-offer  prospectus  actually  occur,  our  business,  financial  condition and
results of operations could be materially  adversely  affected.  If this were to
occur, the trading price of our common shares could decline and you may lose all
or part of your investment.

Mortgage   investments  that  are  not  United  States  government  insured  and
non-investment grade mortgage assets involve risk of loss

         General.  We intend to continue to originate and acquire  uninsured and
non-investment  grade  mortgage  loans  and  mortgage  assets  as  part  of  our
investment  strategy.  Such loans and assets may include mezzanine loans, bridge
loans and CMBS.  While  holding such  interests,  we will be subject to risks of
borrower defaults, bankruptcies, fraud and losses and special hazard losses that
are not covered by standard hazard  insurance.  Also, the costs of financing the
mortgage  loans could exceed the return on the mortgage  loans.  In the event of
any default  under  mortgage  loans held by us, we will bear the risk of loss of
principal and  non-payment  of interest and fees to the extent of any deficiency
between the value of the mortgage  collateral  and the  principal  amount of the
mortgage  loan.  To the  extent  we  suffer  such  losses  with  respect  to our
investments  in  mortgage  loans,  the value of our company and the price of our
common shares may be adversely affected.

         Limited  recourse  loans  may limit  our  recovery  to the value of the
mortgaged  property.  Our  loans  are  generally  non-recourse,  except  for our
mezzanine loans, which typically have limited recourse  provisions for the first
three years from the date of the permanent loan. In addition,  limited  recourse
against the borrower may be further limited by applicable provisions of the laws
of the  jurisdictions  in which the mortgaged  properties  are located or by the
selection  of  remedies  and the  impact of those laws on that  selection.  With
respect to our non-recourse  mortgage loans, in the event of a borrower default,
the value of the specific  mortgaged  property and other assets, if any, pledged
to secure the relevant mortgage loan, may be less than the amount owed under the
mortgage loan. As to those mortgage loans that provide for recourse  against the
borrower and its assets generally,  there can be no assurance that such recourse
will provide a recovery in respect of a defaulted mortgage loan greater than the
liquidation value of the mortgaged property securing that mortgage loan.

Competition in acquiring  desirable  investments  may limit the  availability of
desirable  investments  which could, in turn,  negatively  affect our ability to
maintain our dividend distribution

         We compete for loan  investments  with numerous public and private real
estate  investment  vehicles,  such as mortgage  banks,  pension  funds,  REITs,
institutional  investors and individuals.  Mortgages,  subordinated interests in
CMBS and other  investments  are often  obtained  through a competitive  bidding
process. In addition,  competitors may seek to establish  relationships with the
financial  institutions  and other firms from which we intend to  purchase  such
assets.  Many of our  competitors are larger than us, may have access to greater
capital and other resources,  may have management personnel with more experience
than our officers or our Advisor and may have other  advantages  over us and our
Advisor  in  conducting   certain  business  and  providing   certain  services.
Competition may result in higher prices for mortgage assets,  lower yields and a
narrower  spread of yields over our borrowing  costs.  There can be no assurance
that we will achieve  investment  results that will allow any specified level of
cash distribution.


                                     - 6 -
<PAGE>


Interest rate fluctuations  will affect the value of our assets,  net income and
the common shares

         General. Interest rates are highly sensitive to many factors, including
governmental monetary and tax policies,  domestic and international economic and
political  considerations  and other factors  beyond our control.  Interest rate
fluctuations  can adversely affect our income and the value of our common shares
in many ways and  present a variety of risks,  including  the risk of a mismatch
between  asset  yields and  borrowing  rates,  variances  in the yield curve and
changing prepayment rates.

         Interest rate  mismatch  could occur between asset yields and borrowing
rates resulting in decreased yield.  Our operating  results will depend in large
part on  differences  between the income from our assets (net of credit  losses)
and  our  borrowing  costs.  We  fund  the  origination  and  acquisition  of  a
significant portion of our assets with borrowings which have interest rates that
reset relatively rapidly,  such as monthly or quarterly.  We anticipate that, in
most cases,  the income from our  fixed-rate  assets will respond more slowly to
interest rate fluctuations than the cost of our borrowings,  creating a mismatch
between  asset yields and  borrowing  rates.  Consequently,  changes in interest
rates, particularly short-term interest rates, may influence our net income.

         Effective February 15, 2000, we entered into a repurchase facility with
Nomura Securities International Inc. (the "Nomura Facility").  Nomura Securities
notified us in January 2004 that it intended to terminate  the Nomura  Facility.
In  February  2004,  we  executed   repurchase   agreements   (the   "Repurchase
Facilities") with three other parties (the "Counterparties") and, in March 2004,
we received  new funding  and repaid the amounts due to Nomura  Securities.  The
terms of the Repurchase Facilities, which have no expiration date, offer advance
rates  between  94% and 97% of the  fair  market  value  of GNMA  and  FNMA  DUS
certificates  and  borrowing  rates from 30-day  LIBOR  minus 3 basis  points to
30-day LIBOR plus 10 basis points,  which terms may change at the  discretion of
the  Counterparties.  The borrowings are typically  subject to 30-day settlement
terms and are subject to  repricing at the option of the  Counterparties.  As of
June 30, 2004, $142.4 million was outstanding under these Repurchase Facilities,
at a weighted average interest rate of 1.68%.

         In October  2002, we entered into a warehouse  line of credit  facility
with  Fleet  National  Bank  (the  "Warehouse  Facility")  in the  amount of $40
million.  This facility,  which matures on August 27, 2005,  bears interest at a
rate of 30,  60, 90 or  180-day  LIBOR + 200 basis  points,  at our  discretion,
payable  monthly on advances.  As of June 30, 2004, we had  approximately  $30.9
million in loans outstanding under the Warehouse Facility, at a weighted average
interest rate of 3.22%.

         To mitigate  the impact of  interest  rate  fluctuations,  on March 24,
2003,  we entered  into a  five-year  LIBOR  interest  rate swap with a notional
amount of $30 million. The annual fixed interest rate payable by us on this swap
is 3.48%.  Based on the $146.3 million unhedged portion of the $176.3 million of
borrowings  outstanding  at June 30, 2004, a 1% change in LIBOR would impact our
annual net income and cash flows by approximately $1.5 million.  However, as the
interest  income from loans made under the Warehouse  Facility are also based on
LIBOR,  a 1%  increase in LIBOR  would  increase  our annual net income and cash
flows from such loans by approximately  $284,000.  Increases in these rates will
tend to decrease  our net income and market  value of our net  assets.  Interest
rate fluctuations that result in our interest expense exceeding  interest income
would result in our incurring operating losses.

         Prepayment rates can increase,  thus adversely  affecting  yields.  The
value  of our  assets  may be  affected  by  prepayment  rates  on  investments.
Prepayment  rates are  influenced  by changes in  current  interest  rates and a
variety of  economic,  geographic  and other  factors  beyond our  control,  and
consequently,  such prepayment rates cannot be predicted with certainty.  To the
extent we originate mortgage loans, we expect that such mortgage loans will have
a measure of  protection  from  prepayment  in the form of  prepayment  lock-out
periods or prepayment  penalties.  However, such protection may not be available
with respect to investments which we acquire,  but do not originate.  In periods
of declining


                                     - 7 -
<PAGE>


mortgage interest rates, prepayments on mortgages generally increase. If general
interest rates decline as well, the proceeds of such prepayments received during
such periods are likely to be reinvested by us in assets  yielding less than the
yields on the investments  that were prepaid.  In addition,  the market value of
mortgage  investments may, because of the risk of prepayment,  benefit less from
declining interest rates than from other fixed-income securities. Conversely, in
periods of rising interest rates,  prepayments on mortgages  generally decrease,
in which case we would not have the prepayment  proceeds  available to invest in
assets with higher yields.  Under certain interest rate and prepayment scenarios
we may fail to recoup fully our cost of acquisition of certain investments.

We are  dependent  on our  Advisor and if our Advisor  terminates  the  Advisory
Agreement, we may not be able to find an adequate replacement advisor

         We have no  employees,  although  for  administrative  purposes we have
appointed officers.  We have entered into an Advisory Agreement with our Advisor
under  which  our  Advisor  provides  us with all of the  services  vital to our
operations.   We  are   dependent  on  our  Advisor  for  the   management   and
administration  of our business and  investments.  The results of our operations
will be  dependent  upon the  availability  of,  and our  Advisor's  ability  to
identify and  capitalize  on,  investment  opportunities.  The  agreement may be
terminated  (i) without  cause by our Advisor or (ii) with or without cause by a
majority of our  independent  trustees,  each  without  penalty and each upon 60
days'  prior  written  notice  to the  non-terminating  party.  If  our  Advisor
terminates  our  agreement,  we may not be able to find an adequate  replacement
advisor.

Conflicts of interest could arise among our Advisor, Related Capital and us with
respect to investment opportunities

         Our Advisor has  subcontracted  to Related  Capital the  obligation  to
provide the services which our Advisor is required to provide under the Advisory
Agreement.  There are risks involved with this  arrangement.  Under the Advisory
Agreement,  our Advisor and Related  Capital are  permitted to act as advisor to
any other person or entity having investment policies similar to ours, including
other REITs. Generally, in conflict situations with non-affiliated entities, our
Advisor must  present an  investment  opportunity  to us if the  opportunity  is
within our investment objectives and policies, the opportunity is of a character
that could be taken by us, and we have the financial resources to take advantage
of the opportunity.  However,  to the extent that other companies  advised by or
affiliated  with  our  Advisor  or  Related  Capital  have  similar   investment
objectives to ours and have funds  available for  investment at the same time as
we do or to the extent that an investment is potentially  suitable for us and at
least one such  entity,  conflicts  of interest  could arise as to which  entity
should acquire the investment.

         Related Capital effectively controls and manages a closed-end, publicly
held limited  partnership with similar investment  objectives that may invest in
mortgages suitable for investment by us (although this entity has fully invested
its  available  funds and is not  permitted  to raise  additional  capital).  In
addition,  Related Capital is a subsidiary and the manager of CharterMac,  which
invests  primarily in tax-exempt  mortgage  investments but has in the past, and
may in the future,  invest in taxable mortgage  investments  similar to those in
which we invest.

         To the  extent  that these  existing  entities,  as well as  affiliated
entities which may be formed by affiliates of CharterMac and Related  Capital in
the future,  have funds available for investment at the same time as we do and a
potentially suitable investment is offered to us or the affiliated entities, our
Advisor will review the affiliated  entities' and our investment  portfolios and
will  determine  whether  or not  the  investment  should  be made by one of the
affiliated  entities  or by us based  upon  factors  such as the amount of funds
available for investment, yield and portfolio diversification.  If the making of
a mortgage loan or other mortgage  investment appears equally appropriate for us
and these affiliated  entities,  the mortgage loan or other mortgage  investment
will either be made by a joint venture between two or more of such


                                     - 8 -
<PAGE>


entities (which may include us), or will be allocated to one of such entities on
a basis of rotation with the initial  order of priority  determined by the dates
of formation of the entities.

         In addition, The Related Companies,  LP ("TRCLP"),  the principal owner
of which is Stephen M. Ross, the Non-Executive Chairman and major shareholder of
CharterMac,  currently engages in businesses which compete with our Company.  In
connection  with  CharterMac's  acquisition of Related Capital in December 2003,
CharterMac and TRCLP entered into an agreement  which  prohibited  TRCLP and its
affiliates  from  competing  with any business  currently  engaged in by Related
Capital other than in specified areas,  including originating mezzanine loans to
multifamily  housing  properties  similar to those which secure our loans. There
can be no  assurance  that we and TRCLP and its  affiliates  would not  directly
compete for similar products and opportunities in these areas in the future.

Conflicts  of interest  could arise in  transactions  where we lend to or borrow
from affiliates of Related Capital

         Every  transaction  entered  into  between  us  and a  Related  Capital
affiliate  raises a potential  conflict of interest.  In addition to the initial
determination to invest in mortgage investments secured by properties owned by a
Related  Capital  affiliate,  such  conflicts of interest  with respect to these
mortgage investments include,  among others,  decisions regarding (i) whether to
waive defaults of such Related Capital affiliate, (ii) whether to foreclose on a
loan,  and  (iii)  whether  to permit  additional  financing  on the  properties
securing our investments other than financing provided by us.

         We  have  invested  in,  and  may in the  future  invest  in,  mortgage
investments  secured by properties in which either direct or indirect affiliates
of Related  Capital own equity  interests in the borrower.  Our  declaration  of
trust requires that any transaction between our Advisor,  Related Capital or any
of their  affiliates  and us be approved by a majority of trustees,  including a
majority  of  the  independent   trustees,   not  otherwise  interested  in  the
transaction,  as being fair and reasonable and on terms not less favorable to us
than those available from  unaffiliated  third parties.  As of June 30, 2004, we
had six bridge loans with a total carrying value of approximately $6.75 million,
two first mortgages with a total carrying value of approximately  $2.25 million,
and seven taxable multifamily housing first mortgage bonds with a total carrying
value of approximately $6.79 million to borrowers that are affiliates of Related
Capital. Typically, these affiliate borrowers are limited partnerships where the
general  partner is either an  affiliate of Related  Capital or an  unaffiliated
third party with a 1% general partnership interest,  and the 99% limited partner
is a limited  partnership  in which an  affiliate  of Related  Capital owns a 1%
general  partnership  interest and one or more Fortune 500  companies  own a 99%
limited partnership interest.

         In  June  2004,  we  entered  into a  revolving  credit  facility  (the
"Revolving  Facility")  with  CharterMac,  which provides up to $20.0 million in
borrowings  and bears  interest at LIBOR plus 300 basis  points.  The  Revolving
Facility  is for a term of one  year  with a  one-year  optional  extension  and
contains  customary  restrictions/covenants  that are  similar to our  Warehouse
Facility.

We may not accurately assess investment yields,  which may negatively affect our
earnings

         Before  making any  investment,  our Advisor will consider the expected
yield of the  investment  and the factors that may influence the yield  actually
obtained  on  such  investment.  These  considerations  will  affect  our or our
Advisor's  decision whether to purchase such an investment and the price offered
for such an  investment.  No assurances  can be given that we or our Advisor can
make an accurate  assessment of the yield to be produced by an investment.  Many
factors  beyond our and our Advisor's  control are likely to influence the yield
on the investments, including, but not limited to, competitive conditions in the
local real estate market,  local and general economic conditions and the quality
of management of the underlying property.  Our Advisor's inability to accurately
assess investment yields may result in our purchasing assets that do not perform
as well as expected, which may negatively affect our earnings.


                                     - 9 -
<PAGE>


We are subject to risks due to volatility of values of properties

         Multifamily  and commercial  property  values and net operating  income
derived  from such  properties  are  subject to  volatility  and may be affected
adversely  by a number of factors,  including,  but not  limited  to,  national,
regional  and local  economic  conditions  (which may be  adversely  affected by
industry slowdowns and other factors);  local real estate conditions (such as an
oversupply of housing,  retail,  industrial,  office or other commercial space);
changes or  continued  weakness  in  specific  industry  segments;  construction
quality, age and design; demographic factors; retroactive changes to building or
similar codes;  and increases in operating  expenses (such as energy costs).  In
the event net operating income decreases,  a borrower may have difficulty paying
our mortgage loan, which could result in losses to us. In addition, decreases in
property  values reduce the value of the collateral  and the potential  proceeds
available to a borrower to repay our mortgage  loans,  which could also cause us
to suffer losses.

         We also own several  properties as a result of defaults by borrowers in
2003. As of June 30, 2004, the aggregate  carrying value of these properties was
approximately  $77.7 million.  While we are acting to improve the performance of
these properties and are actively seeking buyers for them, there is no assurance
that we will realize the full carrying amounts when the properties are sold.

We are subject to construction completion risks

         Some of our loans are secured by multifamily  housing  properties which
are still in various stages of  construction.  Construction  of such  properties
generally  takes  approximately  12 to 24 months.  The principal risk associated
with construction lending is the risk of noncompletion of construction which may
arise as a result of: (i) underestimated  initial  construction costs, (ii) cost
overruns  during  construction,  (iii) delays in  construction,  (iv) failure to
obtain governmental  approvals,  and (v) adverse weather and other unpredictable
contingencies beyond the control of the developer.  If a mortgage loan is called
due to  construction  not being  completed  as  required  in the  mortgage  loan
documents,  we may determine to expend  additional  capital in order to preserve
our investment.

         In  order  to  minimize  certain  risks  which  may  occur  during  the
construction  phase of a  property,  our  Advisor  endeavors  to  obtain in most
instances  one or more  types  of  security  during  such  period,  including  a
construction  completion  guarantee from the  principals of the property  owner,
personal  recourse to the property owner and payment and performance  bonding of
the  general  contractor,  if any,  with  respect  to a  property  securing  our
investment.  In  addition,  our Advisor may require  principals  of the property
owner to provide us with an  operating  deficit  guarantee,  covering  operating
deficits of a property securing an investment  during an agreed-upon  period. We
may not be able,  however,  to obtain  such  security  with  respect  to certain
properties.  In other cases,  we may decide to forego certain types of available
security if we determine  that the security is not necessary or is too expensive
to obtain in relation to the risks covered.

Bridge and  mezzanine  loans  involve  greater  risks of loss than senior  loans
secured by income-producing properties

         We have acquired and expect to continue to acquire bridge and mezzanine
loans.  These types of loans are  considered  to involve a higher degree of risk
than long-term senior mortgage lending secured by income-producing real property
due to a variety of factors,  including the loan becoming  unsecured as a result
of  foreclosure  by the senior  lender.  We may not  recover  some or all of our
investment in such loans. In addition, bridge loans and mezzanine loans may have
higher loan to value ratios than conventional mortgage loans,  resulting in less
equity in the property and increasing the risk of loss of principal.


                                     - 10 -
<PAGE>


Subordinated   interests  are  subject  to  increased  risk  of  first  loss  or
non-investment grade subordinated interests

         We have invested  indirectly in subordinated CMBS through our ownership
of a preferred  membership  interest in ARCap.  Subordinated CMBS of the type in
which ARCap invests include "first loss" and  non-investment  grade subordinated
interests.  A first loss security is the most  subordinate  class in a structure
and accordingly is the first to bear the loss upon a default on restructuring or
liquidation  of the  underlying  collateral  and the last to receive  payment of
interest and principal.  Such classes are subject to special risks,  including a
greater risk of loss of principal and  non-payment of interest than more senior,
rated  classes.  The market values of  subordinated  interests in CMBS and other
subordinated  securities  tend to be  more  sensitive  to  changes  in  economic
conditions  than  more  senior,  rated  classes.  As a result of these and other
factors,  subordinated  interests  generally are not actively traded and may not
provide holders with liquidity of investment.  With respect to our investment in
ARCap,  our  ability to  transfer  our  membership  interest in ARCap is further
limited by the terms of ARCap's operating agreement.

Participating interests in mortgages may not be available and, even if obtained,
may not be realized

         In connection with the  acquisition  and  origination of mortgages,  we
have  obtained  and may  continue  to obtain  participating  interests  that may
entitle us to  payments  based upon a  development's  cash flow,  profits or any
increase  in  the  value  of the  development  that  would  be  realized  upon a
refinancing or sale of the development.  Competition for participating interests
is dependent to a large degree upon market conditions.  Participating  interests
are more difficult to obtain when mortgage  financing is available at relatively
low  interest  rates.  In the current  interest  rate  environment,  we may have
greater difficulty obtaining  participating  interests.  Participating interests
are not  government  insured  or  guaranteed  and are  therefore  subject to the
general risks  inherent in real estate  investments.  Therefore,  even if we are
successful in investing in mortgage  investments which provide for participating
interests,  there  can be no  assurance  that  such  interests  will  result  in
additional payments to us.

Short-term repurchase agreements involve risk of loss

         We  finance  and  expect to  continue  to  finance,  a  portion  of our
investments  through   collateralized   borrowing  in  the  form  of  repurchase
agreements,  which  involve  the  sale  by us of  assets  concurrently  with  an
agreement  by us to  repurchase  such  assets at a later date at a fixed  price.
During the repurchase  agreement  period,  we continue to receive  principal and
interest payments on the assets. The use of borrowing, or "leverage," to finance
our assets involves a number of risks, including the following:

         If we are unable to renew our borrowings at favorable  rates, we may be
forced to sell assets, and our profitability may be adversely affected.  We rely
on  short-term  repurchase  agreements  to finance a portion of our assets.  Our
ability to achieve our  investment  objectives  depends on our ability to borrow
money in sufficient  amounts and on favorable  terms and our ability to renew or
replace these short-term  borrowings on a continuous basis as they mature. If we
are not able to renew or replace maturing borrowings, we would be forced to sell
some of our assets under possibly adverse market conditions, which may adversely
affect  our   profitability.   As  of  June  30,  2004,  we  had  borrowings  of
approximately $142.4 million outstanding under the Repurchase Facilities, all of
which typically have 30 day settlement terms.

         A decline in the market  value of our assets may result in margin calls
that may force us to sell assets under  adverse  market  conditions.  Repurchase
agreements  involve the risk that the market value of the securities  sold by us
may decline and that we will be required to post additional  collateral,  reduce
the amount  borrowed or suffer forced sales of the  collateral.  If forced sales
were made at prices lower than the carrying  value of the  collateral,  we would
experience additional losses. If we are forced to


                                     - 11 -
<PAGE>


liquidate our assets to repay borrowings, there can be no assurance that we will
be able to  maintain  compliance  with the  REIT  asset  and  source  of  income
requirements.

         Our use of  repurchase  agreements to borrow money may give our lenders
greater  rights  in  the  event  of  bankruptcy.  Of  our  total  borrowings  of
approximately  $176.3 million as of June 30, 2004,  approximately $142.4 million
were made using repurchase  agreements which require us to pledge certain of our
assets to the lender to secure our obligations thereunder. Borrowings made under
repurchase  agreements  may qualify for special  treatment  under the Bankruptcy
Code,  which may make it  difficult  for us to recover our  pledged  assets if a
lender files for  bankruptcy.  In addition,  if we were to file for  bankruptcy,
lenders under our repurchase  agreements may be able to avoid the automatic stay
provisions of the Bankruptcy  Code and take  possession  of, and liquidate,  the
assets we pledged under these agreements without delay.

Our debt  obligations  may  reduce  our  operating  performance  and put us at a
competitive disadvantage

         In  addition to the risks  associated  with the  short-term  repurchase
agreements described above, we are subject to the risks normally associated with
debt  financing,  including the risk that our cash flow will be  insufficient to
meet required  payments of principal and interest under the Warehouse  Facility,
and the  risk  that  indebtedness  under  the  Warehouse  Facility  will  not be
refinanced  at  maturity  or that the terms of such  refinancing  will not be as
favorable as the terms of the Warehouse Facility.

         A portion of the outstanding  principal under the Warehouse Facility is
due at the maturity or prepayment of each of the underlying loans. We anticipate
repaying  the  indebtedness   through  refinancing  or  sales  proceeds  of  the
properties securing the mortgage loans. In the event that the proceeds from such
sales  or  refinancings  do  not  generate   sufficient  amounts  to  repay  our
obligations  under the  Warehouse  Facility,  we will be required to pay off the
remaining borrowings under the Warehouse Facility through cash, other borrowings
or  equity  offerings.  If we were  unable  to  refinance  our  indebtedness  on
acceptable  terms,  we might be forced to sell  assets  under  possibly  adverse
market conditions,  which may adversely affect our profitability.  If prevailing
interest  rates,  financing  spreads or other factors at the time of refinancing
the Warehouse  Facility result in higher interest  rates,  our interest  expense
would increase, which would adversely affect our results of operations.

         We intend to incur  additional debt in connection with new acquisitions
and/or  originations.  We may also  borrow  funds if  necessary  to satisfy  the
requirement  that we distribute to shareholders as dividends at least 90% of our
annual REIT taxable income,  or otherwise as is necessary or advisable to ensure
that we maintain our qualification as a REIT for federal income tax purposes.

         Our debt  may  harm  our  business  and  operating  results,  including
requiring us to use a substantial  portion of our cash generated to pay interest
and  required  principal  payments,  which  reduces  the  amount  available  for
dividends.

         As of June 30, 2004, we had  borrowings  of $30.9  million  outstanding
under the Warehouse Facility.

Liquidation of collateral may jeopardize our REIT status

         To  continue to qualify as a REIT,  we must  comply  with  requirements
regarding our assets and our sources of income. If we are compelled to liquidate
our mortgage  investments to satisfy our  obligations to our lenders,  we may be
unable to comply with these requirements,  ultimately jeopardizing our status as
a REIT.  For further  discussion of the asset and source of income  requirements
and the


                                     - 12 -
<PAGE>


consequences  of our  failure  to  continue  to  qualify  as a REIT,  please see
"Federal Income Tax Considerations" herein.

Hedging transactions can limit gains and increase exposure to losses

         Hedging   involves  risk  and  typically   involves  costs,   including
transaction  costs.  Such costs  increase  as the period  covered by the hedging
increases and during periods of rising and volatile interest rates and generally
limits the amount of cash available for  distributions to shareholders.  Hedging
activities  also may not have the  desired  beneficial  impact on our results of
operations or financial condition.  Moreover, no hedging activity can completely
insulate  us from the  risks  associated  with  changes  in  interest  rates and
prepayment rates.

         We intend  generally to hedge as much of the interest  rate risk as our
Advisor  determines  is in our best  interests  given  the cost of such  hedging
transactions.  REIT  provisions  of the Code may limit our  ability to hedge our
assets and related  borrowings.  Any limitation on our use of hedging techniques
may result in greater interest rate risk.

There are risks related to loans secured by properties that benefit from LIHTCs

         The success of our  investments  in loans  secured by  properties  that
benefit from using LIHTCs will be based in part on the results of  operations of
the  underlying  properties.  The  value of such  loans and the  quality  of the
underlying  properties  as  collateral  for such loans may be  affected by other
factors, such as property re-sale and other restrictive terms.

         Regulations  may have the effect of limiting  the  realizable  value of
underlying properties. The law governing LIHTCs generally requires properties to
be leased,  for restricted  rents, to low-income  tenants for at least 15 years,
and in many cases for 30 years or more.  The  properties  are  expected to be at
least 15 years old when they are sold and may not sell for the same price as new
properties.  The continuing  application of low-income  restrictions and factors
outside  the  owner's  control,  such as demand for  apartments  and real estate
values  generally,  will  determine  whether the properties can be sold for more
than the owner invested in them or the amount of our mortgage loan.

         Terms of  government  financings  could limit  revenues.  If a property
receives  government  assistance  or  financing,  the  terms  of the  government
assistance or financing (e.g., tenant eligibility, approvals for rent increases,
limitations on the percentage of income which low- and  moderate-income  tenants
may pay as rent) could limit the revenue from the property and depress its value
and thereby jeopardize the owner's ability to repay our mortgage loan. There can
be no  assurance  that  government  assistance  programs  which are  intended to
benefit a property will be continued by the assistance provider and that if such
assistance  is  not  continued  that  the  property  will  generate   sufficient
additional revenue to substitute for the discontinued  government  assistance so
as to meet its mortgage or operating obligations.

Geographic  concentration  and the  credit  quality of  borrowers  may result in
losses

         We have not established any limit upon the geographic  concentration of
properties  securing  mortgage  loans acquired or originated by us or the credit
quality of borrowers of uninsured  mortgage assets acquired or originated by us.
As a result,  properties  securing our mortgage loans may be overly concentrated
in  certain  geographic  areas and the  underlying  borrowers  of our  uninsured
mortgage  assets may have low credit  quality.  We may experience  losses due to
geographic  concentration or low credit quality.  As of June 30, 2004, 50.55% of
our  investments  in bridge and  mezzanine  loans were secured by  properties in
Texas.  Bridge  and  mezzanine  loans  comprised  approximately  15.52%  of  our
portfolio of investments as of June 30, 2004.


                                     - 13 -
<PAGE>


Changes in mortgage loan programs could adversely affect us

         We could be hindered in making  investments  by adverse  changes in the
FHA  insurance,  Ginnie  Mae or  Fannie  Mae  guarantee  programs  or  rules  or
regulations relating to them.  Generally,  once a mortgage has been endorsed for
insurance or guaranteed, subsequent amendments to the rules or regulations would
not apply  retroactively  to affect  preexisting  investments,  but could affect
prospective  investments.  Changes to the  guarantee  programs  could  adversely
affect our ability to originate or acquire attractive investments.

There are a number of risks associated with being taxed as a REIT

         Our REIT status subjects us and our  shareholders to a number of risks,
including the following:

         Failure to qualify as a REIT would have  adverse tax  consequences  for
us. In order to maintain our REIT status we must meet a number of  requirements.
These  requirements  are  highly  technical  and  complex  and often  require an
analysis of various  factual matters and  circumstances  that may not be totally
within our control. Even a technical or inadvertent mistake could jeopardize our
REIT status. Furthermore,  Congress and the IRS may make changes to the tax laws
and  regulations,  and the  courts  may  issue  new  rulings,  that make it more
difficult or  impossible  for us to remain  qualified  as a REIT.  If we fail to
qualify  as a REIT,  we  would be  subject  to  federal  income  tax at  regular
corporate rates.  Therefore,  we would have less money available for investments
and for distributions to our shareholders.  This may also have an adverse effect
on the market value of our common  shares.  In general,  we would not be able to
elect REIT status for four years after a year in which we lose our REIT status.

         As a REIT,  our income can only come from limited types of sources.  To
qualify as a REIT,  at least 75% of our gross  income  must come from  qualified
real  estate  sources and 95% of our gross  income must come from other  sources
that are  itemized  in the  REIT  tax  laws.  Therefore,  we may have to  forego
opportunities to invest in potentially  profitable  businesses or assets because
they would produce income that could jeopardize our status as a REIT.

         We  have  certain  distribution  requirements.   As  a  REIT,  we  must
distribute to  shareholders  at least 90% of our REIT taxable income  (excluding
capital gains).  The required  distribution  limits the amount we have available
for other business purposes,  including amounts to fund our growth.  Also, it is
possible that because of the  differences  between the time we actually  receive
revenue (such as original issue discount  interest  income  attributable  to our
investment  in ARCap) or pay  expenses  and the period we report those items for
distribution purposes, we may have to borrow funds on a short-term basis to meet
the 90% distribution requirement.

         We are also  subject  to other tax  liabilities.  As a REIT,  we may be
subject to certain  federal,  state and local taxes on our income and  property.
Any of these taxes would reduce our operating cash flow.

         For further  discussion  of the risks  associated  with REIT  taxation,
please see "Federal Income Tax Considerations" herein.

Loss of Investment Company Act exemption would adversely affect us

         We intend to conduct our  business so as not to become  regulated as an
investment  company  under the  Investment  Company  Act of 1940.  If we fail to
qualify for this exemption  then we would be regulated as an investment  company
and our business  would be materially  adversely  affected.  Investment  company
regulations  would prevent us from  conducting our business as described in this
re-offer  prospectus by, among other  restrictions,  reducing our ability to use
borrowings. The Investment Company Act exempts


                                     - 14 -
<PAGE>


entities that are  primarily  engaged in the business of purchasing or otherwise
acquiring  mortgages and other liens on and interests in real estate.  Under the
current  interpretation  of Securities  Exchange  Commission  staff, in order to
qualify for this exemption, we must maintain at least 55% of our assets directly
in these qualifying real estate  interests.  Mortgage-backed  securities that do
not represent all the certificates  issued with respect to an underlying pool of
mortgages may be treated as securities  separate  from the  underlying  mortgage
loans and, thus, may not qualify for purposes of the 55% requirement. Therefore,
our ownership of these  mortgage-backed  securities is limited by the provisions
of the  Investment  Company  Act.  In  meeting  the 55%  requirement  under  the
Investment  Company  Act,  we  treat  as  qualifying  interests  mortgage-backed
securities  issued with  respect to an  underlying  pool as to which we hold all
issued  certificates.   If  the  Commission  or  its  staff  adopts  a  contrary
interpretation,  we  could  be  required  to sell a  substantial  amount  of our
mortgage-backed securities under potentially adverse market conditions. Further,
in order to  insure  that we at all times  qualify  for the  exemption  from the
Investment  Company  Act, we may be  precluded  from  acquiring  mortgage-backed
securities  whose  yield is somewhat  higher  than the yield on  mortgage-backed
securities  that could be purchased in a manner  consistent  with the exemption.
The net effect of these factors may be to lower our net income.

Restrictions on share accumulation in REITs could discourage a change of control
of our company

         In order for us to qualify  as a REIT,  not more than 50% of the number
or value of the outstanding shares may be owned, directly or indirectly, by five
or  fewer  individuals  during  the  last  half of a  taxable  year or  during a
proportionate part of a shorter taxable year.

         In order to prevent five or fewer  individuals from acquiring more than
50% of our outstanding  shares and a resulting failure to qualify as a REIT, our
declaration of trust provides that, subject to certain exceptions, no person may
own, or be deemed to own by virtue of the  attribution  provisions  of the Code,
more than 9.8% of the outstanding shares. The shares most recently acquired by a
person that are in excess of the 9.8% limit will not have any voting  rights and
be deemed to have been  offered  for sale to us for a period  subsequent  to the
acquisition.  Any  person  who  acquires  shares in excess of the 9.8%  limit is
obliged  to  immediately  give  written  notice  to us and  provide  us with any
information  we may request in order to determine the effect of the  acquisition
on our status as a REIT.

         While these  restrictions  are designed to prevent any five individuals
from  owning  more  than 50% of our  shares,  they also  discourage  a change in
control of our company. These restrictions may also deter tender offers that may
be attractive to  shareholders  or limit the  opportunity  for  shareholders  to
receive a premium for their shares if an investor  makes  purchases of shares to
acquire a block of shares.

Supermajority  voting requirements for acquisitions and mergers could discourage
a change of control of our company

         Our declaration of trust requires that 80% of our  shareholders and all
of our independent trustees approve exchange offers, mergers,  consolidations or
similar  transactions  involving us in which our shareholders receive securities
in a surviving  entity having  materially  different  investment  objectives and
policies,  or that is anticipated to provide  significantly greater compensation
to management, except for transactions affected because of changes in applicable
law,  or  to  preserve  tax  advantages  for  a  majority  in  interest  of  our
shareholders.

Issuances of large  amounts of our common  shares could cause our share price to
decline

         As of June 30, 2004,  there were 8,335,639  common shares  outstanding.
This  re-offer  prospectus  relates to the sale of up to an  additional  855,277
common shares. Furthermore, in connection with the issuance of any common shares
in the future, our Advisor is entitled to receive as compensation  common shares
equal to 1% of the issuance,  which common shares vest over a three-year  period
and are restricted


                                     - 15 -
<PAGE>


as to their  transferability  until they vest. In addition,  our  declaration of
trust  permits our trustees to issue an unlimited  number of shares  (subject to
the consent of  shareholders  if required  pursuant to the rules of the American
Stock  Exchange).  The  issuance of common  shares  could cause  dilution of our
existing common shares and a decrease in the market price.

Our shareholders may have personal liability for our acts and obligations

         It is  possible  that  certain  states may not  recognize  the  limited
liability of  shareholders,  although our declaration of trust provides that our
shareholders  shall not be subject  to any  personal  liability  for our acts or
obligations. Our declaration of trust also provides that every written agreement
entered  into by us shall  contain  a  provision  that our  obligations  are not
enforceable  against our shareholders  personally.  No personal liability should
attach  to our  shareholders  under any  agreement  containing  such  provision;
however,  not  every  written  agreement  entered  into  by us  contains  such a
provision. In certain states, our shareholders may be held personally liable for
contract  claims where the underlying  agreement does not  specifically  exclude
shareholder  liability.  Our shareholders may also be held personally liable for
other  claims  against  us,  such as tort  claims,  claims for taxes and certain
statutory  liability.   Upon  payment  of  any  such  liability,   however,  the
shareholder  will,  in the absence of willful  misconduct  on the  shareholder's
part, be entitled to reimbursement  from our general assets,  to the extent such
assets are sufficient to satisfy the claim.

Liability  relating  to  environmental  matters  may  impact  the  value  of the
underlying properties

         Under  various  federal,  state and local laws, an owner or operator of
real  property may become  liable for the costs of removal of certain  hazardous
substances  released on its property.  Such laws often impose liability  without
regard to whether the owner or operator  knew of, or was  responsible  for,  the
release of such hazardous  substances.  The presence of hazardous substances may
adversely  affect an owner's  ability to sell real  estate or borrow  using real
estate as  collateral.  To the extent  that an owner of an  underlying  property
becomes liable for removal costs, the ability of the owner to make debt payments
may be reduced,  which in turn may  adversely  affect the value of the  relevant
mortgage asset held by us.

We may  incur  costs in  connection  with  the  compliance  requirements  of the
Americans with Disabilities Act and fire and safety regulations

         Certain  underlying  properties  may be  required  to  comply  with the
Americans with Disabilities Act, which has separate compliance  requirements for
"public accommodations" and "commercial facilities," but generally requires that
buildings be made accessible to disabled  people.  Compliance with the Americans
with Disabilities Act could require removal of access barriers and noncompliance
could  result  in  imposition  of fines by the  U.S.  government  or an award of
damages to private litigants.

         In addition,  owners are required to operate  properties  in compliance
with  fire  and  safety   regulations,   building  codes,  and  other  land  use
regulations.  Compliance  with  such  requirements  may  require  owners to make
substantial  capital  expenditures and these  expenditures may impair an owner's
ability to make debt payments,  which in turn may adversely  affect the value of
the relevant mortgage asset held by us.

Recent tax legislation may have negative consequences for REITs

         Recent tax  legislation  allows  corporations to pay dividends that are
taxable to shareholders  at reduced rates.  These reduced rates generally do not
apply to dividends paid by REITs.  Although the  legislation  does not adversely
affect  the tax  treatment  of  REITs,  it may  cause  investments  in  non-REIT
corporations  to become  relatively  more  desirable.  As a result,  the capital
markets may be less  favorable to


                                     - 16 -
<PAGE>


REITs  when they seek to raise  equity  capital,  and the  prices at which  REIT
equity securities trade may underperform non-REIT corporations.


                                     - 17 -
<PAGE>


                        FEDERAL INCOME TAX CONSIDERATIONS

         The following  discussion  summarizes  the material  federal income tax
considerations  to  you  as  a  prospective  holder  of  shares.  The  following
discussion is for general  information  purposes  only, is not exhaustive of all
possible  tax  considerations  and  is not  intended  to be  and  should  not be
construed  as tax advice.  For  example,  this  summary does not give a detailed
discussion of any state, local or foreign tax considerations.  In addition, this
discussion is intended to address only those federal  income tax  considerations
that are generally  applicable to all our shareholders.  It does not discuss all
of the aspects of federal  income  taxation that may be relevant to you in light
of your particular  circumstances  or to certain types of  shareholders  who are
subject to  special  treatment  under the  federal  income  tax laws  including,
without  limitation,   insurance  companies,   tax-exempt  entities,   financial
institutions or  broker-dealers,  foreign  corporations  and persons who are not
citizens or residents of the United States.

         The  information in this section is based on the Internal  Revenue Code
of 1986, as amended,  which is referred to as the Code, existing,  temporary and
proposed  regulations  under  the Code,  the  legislative  history  of the Code,
current administrative rulings and practices of the IRS and court decisions, all
as of the date  hereof.  No  assurance  can be given  that  future  legislation,
regulations,   administrative  interpretations  and  court  decisions  will  not
significantly change current law or adversely affect existing interpretations of
current law. Any such change could apply retroactively to transactions preceding
the date of the change.  In addition,  we have not received,  and do not plan to
request,  any  rulings  from  the  IRS  concerning  our tax  treatment.  Thus no
assurance  can be provided  that the  statements  set forth herein (which do not
bind the IRS or the  courts)  will  not be  challenged  by the IRS or that  such
statements will be sustained by a court if so challenged.

         EACH PROSPECTIVE  PURCHASER OF SHARES IS ADVISED TO CONSULT WITH HIS OR
HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE
PURCHASE,  OWNERSHIP  AND SALE OF SHARES OF AN ENTITY  ELECTING TO BE TAXED AS A
REIT, INCLUDING THE FEDERAL, STATE, LOCAL AND FOREIGN AND OTHER TAX CONSEQUENCES
OF SUCH  PURCHASE,  OWNERSHIP,  SALE AND ELECTION  AND OF  POTENTIAL  CHANGES IN
APPLICABLE TAX LAWS.

Taxation of our Company

         General.  We elected to be taxed as a REIT under  Sections  856 through
860 of the Code,  commencing  with our taxable year ended  December 31, 1991. We
believe that we have been organized,  and have operated,  in such a manner so as
to qualify  for  taxation  as a REIT  under the Code and  intend to conduct  our
operations  so as to continue to qualify for taxation as a REIT.  No  assurance,
however, can be given that we have operated in a manner so as to qualify or will
be able to  operate  in  such a  manner  so as to  remain  qualified  as a REIT.
Qualification  and  taxation  as a REIT  depend  upon our  ability  to meet on a
continuing  basis,   through  actual  annual  operating  results,  the  required
distribution levels,  diversity of share ownership and the various qualification
tests imposed under the Code discussed  below,  the results of which will not be
reviewed  by counsel.  Given the highly  complex  nature of the rules  governing
REITs, the ongoing importance of factual determinations,  and the possibility of
future changes in our  circumstances,  no assurance can be given that the actual
results  of our  operations  for any one  taxable  year have  satisfied  or will
continue to satisfy such requirements.

The  following  is a general  summary  of the Code  provisions  that  govern the
federal income tax treatment of a REIT and its shareholders. These provisions of
the Code are highly  technical  and  complex.  This  summary is qualified in its
entirety  by  the  applicable   Code   provisions,   Treasury   Regulations  and
administrative and judicial interpretations thereof, all of which are subject to
change prospectively or retroactively.


                                     - 18 -
<PAGE>


         If we qualify for taxation as a REIT, we generally  will not be subject
to  federal  corporate  income  taxes  on  our  net  income  that  is  currently
distributed to shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder  levels) that generally results from
investment in a corporation.  However,  we will be subject to federal income tax
as  follows:  first,  we  will  be  taxed  at  regular  corporate  rates  on any
undistributed  REIT taxable income,  including  undistributed net capital gains.
Second,  under  certain  circumstances,  we may be subject  to the  "alternative
minimum tax" on our items of tax  preference.  Third,  if we have (a) net income
from the sale or other  disposition  of  "foreclosure  property",  which  is, in
general,  property  acquired on  foreclosure  or  otherwise on default on a loan
secured  by such  real  property  or a lease  of such  property,  which  is held
primarily for sale to customers in the ordinary  course of business or (b) other
nonqualifying income from foreclosure property, we will be subject to tax at the
highest  corporate  rate on such  income.  Fourth,  if we have net  income  from
prohibited  transactions  such income will be subject to a 100% tax.  Prohibited
transactions  are, in general,  certain sales or other  dispositions of property
held  primarily for sale to customers in the ordinary  course of business  other
than  foreclosure  property.  Fifth,  if we should fail to satisfy the 75% gross
income test or the 95% gross income test (as discussed  below),  but nonetheless
maintain our  qualification  as a REIT because certain other  requirements  have
been met,  we will be subject to a 100% tax on an amount  equal to (a) the gross
income attributable to the greater of the amount by which we fail the 75% or 95%
test multiplied by (b) a fraction intended to reflect our profitability.  Sixth,
if we should fail to  distribute  during each  calendar year at least the sum of
(a) 85% of our REIT ordinary  income for such year,  (b) 95% of our REIT capital
gain net income for such year,  and (c) any  undistributed  taxable  income from
prior  periods,  we would be  subject  to a 4% excise  tax on the excess of such
required  distribution  over the amounts actually  distributed.  Seventh,  if we
acquire any asset from a C corporation (i.e., a corporation generally subject to
full  corporate  level tax) in a transaction  in which the basis of the asset in
our hands is  determined  by  reference  to the basis of the asset (or any other
property) in the hands of the C corporation, the "built-in gain" associated with
the asset would generally be subject to tax at the highest  corporate rate if we
dispose of such asset  during the 10 year period  beginning  on the date that we
acquired  that  asset,  to the extent of such  property's  "built-in  gain" (the
excess of the fair market value of such property at the time of our  acquisition
over the  adjusted  basis of such  property at such time).  We also will incur a
100% excise tax on  transactions  with a taxable  REIT  subsidiary  that are not
conducted on an arm's-length basis.

         Requirements  for  Qualification.  A REIT is a  corporation,  trust  or
association  (1) which is managed by one or more trustees or directors,  (2) the
beneficial  ownership  of which  is  evidenced  by  transferable  shares,  or by
transferable  certificates of beneficial interest, (3) which would be taxable as
a domestic corporation,  but for Sections 856 through 859 of the Code, (4) which
is neither a financial  institution nor an insurance  company subject to certain
provisions of the Code,  (5) that has the calendar year as its taxable year, (6)
the beneficial ownership of which is held by 100 or more persons, (7) during the
last half of each  taxable  year not more  than 50% in value of the  outstanding
stock of which is owned,  directly or indirectly,  by five or fewer  individuals
(as  defined  in the Code to  include  certain  entities),  and (8) which  meets
certain  other tests,  described  below,  regarding the nature of its income and
assets.  The Code provides that conditions (1) through (5),  inclusive,  must be
met during the entire  taxable year and that condition (6) must be met 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.

         We may redeem, at our option, a sufficient number of shares or restrict
the  transfer  thereof  to bring or  maintain  the  ownership  of the  shares in
conformity with the  requirements  of the Code. In addition,  our declaration of
trust  includes  restrictions  regarding  the  transfer  of our  stock  that are
intended  to  assist  us in  continuing  to  satisfy  requirements  (6) and (7).
Moreover,  if we comply with regulatory  rules pursuant to which we are required
to send annual  letters to holders of our capital stock  requesting  information
regarding  the actual  ownership of our capital  stock,  and we do not know,  or
exercising  reasonable diligence would not have known, whether we failed to meet
requirement (7) above, we will be treated as having met the requirement.


                                     - 19 -
<PAGE>


         The  Code  allows a REIT to own  wholly-owned  subsidiaries  which  are
"qualified  REIT   subsidiaries."  The  Code  provides  that  a  qualified  REIT
subsidiary  is not  treated as a separate  corporation,  and all of its  assets,
liabilities  and items of income,  deduction  and credit are  treated as assets,
liabilities  and items of income,  deduction  and credit of the REIT.  Thus,  in
applying the requirements described herein, our qualified REIT subsidiaries will
be  ignored,  and all assets,  liabilities  and items of income,  deduction  and
credit of such subsidiaries will be treated as our assets, liabilities and items
of income, deduction and credit.

         A REIT may also hold any direct or indirect  interest in a  corporation
that qualifies as a "taxable REIT  subsidiary",  as long as the REIT's aggregate
holdings of taxable REIT subsidiary securities do not exceed 20% of the value of
the  REIT's  total  assets.  A  taxable  REIT  subsidiary  is  a  fully  taxable
corporation that generally is permitted to engage in businesses, own assets, and
earn income that, if engaged in, owned, or earned by the REIT,  might jeopardize
REIT status or result in the imposition of penalty taxes on the REIT. To qualify
as a taxable  REIT  subsidiary,  the  subsidiary  and the REIT must make a joint
election to treat the  subsidiary as a taxable REIT  subsidiary.  A taxable REIT
subsidiary also includes any corporation  (other than a REIT or a qualified REIT
subsidiary) in which a taxable REIT subsidiary  directly or indirectly owns more
than 35% of the total voting power or value. A taxable REIT  subsidiary will pay
tax at regular corporate income rates on any taxable income it earns.  Moreover,
the Code contains rules,  including rules requiring the imposition of taxes on a
REIT at the rate of 100% on certain  reallocated income and expenses,  to ensure
that contractual  arrangements  between a taxable REIT subsidiary and its parent
REIT are at arm's-length.

         In the case of a REIT  which is a partner  in a  partnership,  Treasury
Regulations  provide that the REIT will be deemed to own its proportionate share
of each of the assets of the  partnership  and will be deemed to be  entitled to
the income of the  partnership  attributable  to such share.  In  addition,  the
character of the assets and items of gross income of the partnership will retain
the same  character  in the hands of the REIT for purposes of Section 856 of the
Code,  including  satisfying  the gross  income and assets  tests (as  discussed
below). Thus, our proportionate share of the assets,  liabilities,  and items of
gross income of any  partnerships in which we own an interest are treated as our
assets,  liabilities  and items of gross  income for  purposes of  applying  the
requirements described herein.

         Income  Tests.  In order to maintain  qualification  as a REIT, we must
satisfy annually certain gross income  requirements.  First, at least 75% of our
gross income  (excluding  gross income from  prohibited  transactions)  for each
taxable year must be derived directly or indirectly from investments relating to
real  property  or  mortgages  on real  property  (including  "rents  from  real
property"  and, in certain  circumstances,  interest) or from  certain  types of
qualified  temporary  investments.  Second,  at least  95% of our  gross  income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real  property  investments,  dividends,  interest and gain
from the sale or disposition of stock or securities.

         Interest will qualify as interest on  obligations  secured by mortgages
on real property or on interests in real property in satisfying the gross income
requirements  for a REIT  described  above only if several  conditions  are met.
Interest on obligations secured by mortgages on real property or on interests in
real property  will be treated as qualifying  income to the extent that the fair
market value of the property  that secures the loan has a value  greater than or
equal to the highest principal amount,  including accrued interest, of such loan
outstanding during the REIT taxable year. To the extent the fair market value of
such property at the time of issuance and when the loan is acquired is less than
the  highest  principal  amount,   including  accrued  interest,  of  such  loan
outstanding  during the REIT  taxable  year,  only a  proportionate  part of the
interest on such loan shall be treated as qualifying income. For purposes of the
gross  income  requirements,  interest  includes  only  amounts  that  represent
compensation  for the use or forbearance of money, and does not include a charge
for services.  Interest includes income from a REMIC, as long as at least 95% of
the assets of the REMIC are interests in real property.  If less than 95%


                                     - 20 -
<PAGE>


of the assets of a REMIC consist of real estate, income accrued by the REIT will
be treated as interest from a mortgage in the  proportion in which assets of the
REMIC consist of real estate  assets.  Subject to certain  exceptions,  interest
does not include  amounts  received or accrued,  directly or indirectly,  if the
amount depends, in whole or in part, on the income or profits of any person. One
exception  to this rule is that  amounts  may be based on the gross  receipts or
sales of a person, and still constitute interest for these purposes.  The second
exception  would be available if the REIT receives or accrues amounts that would
be excluded  from  interest  because the borrower  receives or accrues an amount
based on the income or profits of any person; in such case, only a proportionate
part of the  amount  received  or  accrued  by the REIT is  excluded  from being
treated as interest.  Third, if the borrower  derives  substantially  all of its
gross  income with  respect to the  property  subject to the  mortgage  from the
leasing of its property to tenants, an amount based on the net income or profits
of the borrower  may be treated as interest if the borrower  receives or accrues
amounts  that would  qualify as rents from real  property  had such amounts been
received by the REIT.

         Rents  received  by us will  qualify as "rents from real  property"  in
satisfying  the gross income  requirements  for a REIT  described  above only if
several conditions are met.

         We  believe  that  substantially  all of our  interest  income  will be
qualifying income under the gross income tests.

         If we fail to satisfy one or both of the 75% or 95% gross  income tests
for any taxable  year,  we may  nevertheless  qualify as a REIT for such year if
such failure was due to reasonable cause and not willful  neglect,  we disclosed
the nature and  amounts of our items of gross  income in a schedule  attached to
our return,  and any incorrect  information on the schedule was not due to fraud
with intent to evade tax. It is not possible,  however,  to state whether in all
circumstances we would be entitled to the benefit of this relief provision. Even
if this relief  provision  applied,  a 100%  penalty tax would be imposed on the
amount by which we failed  the 75% or 95% test  (whichever  amount is  greater),
less an amount which  generally  reflects  expenses  attributable to earning the
nonqualified income.

Subject to certain safe harbor  exceptions,  any gain realized by us on the sale
of any property held as inventory or other  property held  primarily for sale to
customers  in the ordinary  course of business  will be treated as income from a
prohibited  transaction  that is subject to a 100% penalty tax. Such  prohibited
transaction  income may also have an adverse  effect upon our ability to satisfy
the income  tests for  qualification  as a REIT.  Under  existing  law,  whether
property is held as inventory or primarily for sale to customers in the ordinary
course of a trade or  business  is a  question  of fact that  depends on all the
facts and circumstances with respect to the particular transaction.

         Asset Tests.  At the close of each quarter of our taxable year, we must
also satisfy the following tests relating to the nature of our assets.  At least
75% of the value of our total assets must be  represented by real estate assets,
including (1) our allocable  share of mortgage and other real estate assets held
by  partnerships  in  which we own an  interest  or held by our  qualified  REIT
subsidiaries  and (2) stock or debt  instruments held for not more than one year
purchased  with the proceeds of an offering of equity  securities or a long-term
(at least five  years)  debt  offering by us,  cash,  cash items and  government
securities.  In  addition,  not  more  than  25%  of  our  total  assets  may be
represented by securities other than those in the 75% asset class. Not more than
20% of the value of our total assets may be  represented by securities of one or
more taxable REIT subsidiaries. Except for investments included in the 75% asset
class,  securities in a taxable REIT subsidiary or qualified REIT subsidiary and
certain partnership interests and debt obligations,  (1) not more than 5% of the
value of our total assets may be  represented  by  securities of any one issuer,
(2) we may not hold  securities  that  possess more than 10% of the total voting
power of the  outstanding  securities of a single issuer and (3) we may not hold
securities  that  have a value  of  more  than  10% of the  total  value  of the
outstanding securities of any one issuer.


                                     - 21 -
<PAGE>


         We believe that  substantially all of our assets consist and, after the
offering, will consist of (1) mortgages, (2) stock or debt investments that earn
qualified  temporary  investment income, (3) other qualified real estate assets,
and (4)  cash,  cash  items and  government  securities.  We may also  invest in
securities of other entities, provided that such investments will not prevent us
from  satisfying  the asset and income  tests for REIT  qualification  set forth
above.

         After initially meeting the asset tests at the close of any quarter, we
will not lose our status as a REIT for failure to satisfy the asset tests at the
end of a later  quarter  solely by  reason of  changes  in asset  values.  If we
inadvertently  fail  one or more of the  asset  tests  at the end of a  calendar
quarter because we acquire  securities or other property during the quarter,  we
can cure this failure by disposing of sufficient  nonqualifying assets within 30
days after the close of the calendar quarter in which it arose.

         Annual Distribution Requirement.  With respect to each taxable year, we
must  distribute  to our  shareholders  as  dividends  (other than  capital gain
dividends) at least 90% of our taxable income. Specifically,  we must distribute
an amount equal to (1) 90% of the sum of our "REIT taxable  income"  (determined
without  regard to the  deduction  for  dividends  paid and by excluding any net
capital gain), and any after-tax net income from foreclosure property, minus (2)
the sum of certain items of "excess noncash income" such as income  attributable
to leveled  stepped  rents,  cancellation  of  indebtedness  and original  issue
discount.  REIT  taxable  income is  generally  computed  in the same  manner as
taxable income of ordinary  corporations,  with several  adjustments,  such as a
deduction allowed for dividends paid, but not for dividends received.

         We will be subject to tax on amounts not  distributed at regular United
States federal  corporate  income tax rates.  In addition,  a  nondeductible  4%
excise tax is imposed  on the excess of (1) 85% of our  ordinary  income for the
year plus 95% of  capital  gain net  income  for the year and the  undistributed
portion  of the  required  distribution  for the prior  year over (2) the actual
distribution  to  shareholders  during the year (if any).  Net operating  losses
generated  by us may be carried  forward but not carried back and used by us for
20 years to reduce REIT  taxable  income and the amount that we will be required
to distribute in order to remain qualified as a REIT. As a REIT, our net capital
losses may be carried  forward for five years (but not carried back) and used to
reduce capital gains.

         In general,  a  distribution  must be made  during the taxable  year to
which  it  relates  to  satisfy  the  distribution  test and to be  deducted  in
computing  REIT  taxable  income.  However,  we may  elect to  treat a  dividend
declared and paid after the end of the year (a "subsequent  declared  dividend")
as paid during such year for purposes of complying  with the  distribution  test
and computing REIT taxable  income,  if the dividend is (1) declared  before the
regular  or  extended  due date of our tax return for such year and (2) paid not
later  than the date of the  first  regular  dividend  payment  made  after  the
declaration,  but in no case later than 12 months after the end of the year. For
purposes of  computing  the 4% excise  tax, a  subsequent  declared  dividend is
considered  paid when actually  distributed.  Furthermore,  any dividend that is
declared by us in October,  November or December of a calendar year, and payable
to  shareholders  of record as of a specified  date in such quarter of such year
will be  deemed  to have  been  paid by us (and  received  by  shareholders)  on
December 31 of such calendar year, but only if such dividend is actually paid by
us in January of the following calendar year.

         For purposes of complying with the distribution test for a taxable year
as a  result  of an  adjustment  in  certain  of our  items of  income,  gain or
deduction  by the IRS, we may be  permitted  to remedy such  failure by paying a
"deficiency dividend" in a later year together with interest and a penalty. Such
deficiency  dividend may be included in our deduction of dividends  paid for the
earlier year for purposes of satisfying the  distribution  test. For purposes of
the 4% excise tax, the deficiency  dividend is taken into account when paid, and
any income giving rise to the  deficiency  adjustment is treated as arising when
the deficiency dividend is paid.


                                     - 22 -
<PAGE>


         We  believe  that  we  have  distributed  and  intend  to  continue  to
distribute to our  shareholders  in a timely  manner such amounts  sufficient to
satisfy the annual  distribution  requirements.  However,  it is  possible  that
timing differences between the accrual of income and its actual collection,  and
the need to make  non-deductible  expenditures  (such as  principal  payments on
debt)  may  cause us to  recognize  taxable  income  in  excess  of our net cash
receipts,  thus  increasing the difficulty of compliance  with the  distribution
requirement.  In order to meet the  distribution  requirement,  we might find it
necessary to arrange for short-term, or possibly long-term, borrowings.

         Failure to  Qualify.  If we fail to  qualify as a REIT for any  taxable
year,  and if certain  relief  provisions of the Code do not apply,  we would be
subject to federal income tax (including applicable  alternative minimum tax) on
our taxable income at regular corporate rates.  Distributions to shareholders in
any year in which we fail to qualify will not be  deductible by us nor will they
be  required  to be made.  As a result,  our  failure to qualify as a REIT would
reduce  the  cash  available  for  distribution  by us to our  shareholders.  In
addition,  if we fail to qualify as a REIT, all  distributions  to  shareholders
will be taxable as ordinary income, to the extent of our current and accumulated
earnings  and profits.  Subject to certain  limitations  of the Code,  corporate
distributees may be eligible for the dividends-received deduction.

         If our failure to qualify as a REIT is not due to reasonable  cause but
results from willful neglect, we would not be permitted to elect REIT status for
the four taxable years after the taxable year for which such disqualification is
effective.  In the  event we were to fail to  qualify  as a REIT in one year and
subsequently  requalify in a later year, we may be taxed on the net appreciation
in  value  of our  assets  if we sell  assets  within  ten  years of the date we
requalify as a REIT under federal income tax laws.

Taxation of Taxable U.S. Shareholders

         As used herein,  the term "U.S.  shareholder"  means a holder of shares
who (for United States federal income tax purposes) (1) is a citizen or resident
of the United States, (2) is a corporation, partnership, or other entity treated
as a  corporation  or  partnership  for federal  income tax purposes  created or
organized  in or  under  the  laws  of the  United  States  or of any  political
subdivision thereof (unless, in the case of a partnership,  Treasury regulations
are adopted  that  provide  otherwise),  (3) is an estate the income of which is
subject to United States federal income taxation regardless of its source or (4)
is a trust  whose  administration  is subject to the  primary  supervision  of a
United States court and which has one or more United States persons who have the
authority to control all substantial  decisions of the trust or a trust that has
a valid election to be treated as a U.S. person in effect.

         As  long  as we  qualify  as a REIT,  distributions  made  to our  U.S.
shareholders  out of  current  or  accumulated  earnings  and  profits  (and not
designated  as capital  gain  dividends)  will be taken into  account by them as
ordinary  income  and  corporate  shareholders  will  not be  eligible  for  the
dividends-received deduction as to such amounts.

         Distributions  that are properly  designated as capital gain  dividends
will be taxed as gains  from the sale or  exchange  of a capital  asset held for
more than one year (to the extent they do not exceed our actual net capital gain
for the taxable year) without regard to the period for which the shareholder has
held its shares. However,  corporate shareholders may be required to treat up to
20% of certain capital gain dividends as ordinary income under the Code.

         Distributions  in excess of our current and  accumulated  earnings  and
profits will constitute a non-taxable  return of capital to a shareholder to the
extent  that  such  distributions  do  not  exceed  the  adjusted  basis  of the
shareholder's  shares,  and will  result  in a  corresponding  reduction  in the
shareholder's  basis in the shares.  Any reduction in a shareholder's  tax basis
for its  shares  will  increase  the  amount of  taxable  gain or  decrease  the
deductible  loss that will be  realized  upon the  eventual  disposition  of the
shares.  We will notify  shareholders at the end of each year as to the portions
of the distributions which constitute


                                     - 23 -
<PAGE>


ordinary  income,  capital  gain or a return of  capital.  Any  portion  of such
distributions that exceed the adjusted basis of a U.S. shareholder's shares will
be taxed as  capital  gain from the  disposition  of shares,  provided  that the
shares are held as capital assets in the hands of the U.S. shareholder.

         Aside from the different income tax rates applicable to ordinary income
and capital gain  dividends,  regular and capital gain dividends from us will be
treated as dividend income for most other federal income tax purposes.  However,
dividends paid by REITs generally do not qualify for the residual tax rates that
are available for dividends  paid by most  corporations  that are not REITS.  In
particular, such dividends will be treated as "portfolio" income for purposes of
the  passive   activity  loss  limitation   (including  all   individuals)   and
shareholders  generally will not be able to offset any "passive  losses" against
such dividends.  Dividends will be treated as investment  income for purposes of
the  investment  interest  limitation  contained in Section  163(d) of the Code,
which limits the  deductibility  of interest  expense  incurred by  noncorporate
taxpayers  with  respect to  indebtedness  attributable  to  certain  investment
assets.

         In general, dividends paid by us will be taxable to shareholders in the
year in which they are received, except in the case of dividends declared at the
end of the year, but paid in the following January, as discussed above.

         In general, a domestic shareholder will realize capital gain or loss on
the disposition of shares equal to the difference between (1) the amount of cash
and the fair market value of any property  received on such  disposition and (2)
the  shareholder's  adjusted  basis  of such  shares.  Such  gain  or loss  will
generally be  short-term  capital gain or loss if the  shareholder  has not held
such shares for more than one year and will be long-term capital gain or loss if
such  shares  have  been  held for more  than one  year.  Loss  upon the sale or
exchange of shares by a  shareholder  who has held such shares for six months or
less (after applying  certain holding period rules) will be treated as long-term
capital  loss to the extent of  distributions  from us required to be treated by
such shareholder as long-term capital gain.

         We may elect to retain  and pay  income  tax on net  long-term  capital
gains. If we make such an election, you, as a holder of shares, will (1) include
in your  income as  long-term  capital  gains your  proportionate  share of such
undistributed  capital  gains and (2) be deemed to have paid your  proportionate
share of the tax paid by us on such  undistributed  capital  gains  and  thereby
receive a credit  or  refund  for such  amount.  As a holder of shares  you will
increase  the  basis in your  shares by the  difference  between  the  amount of
capital  gain  included  in your  income and the amount of tax you are deemed to
have paid. Our earnings and profits will be adjusted appropriately.

Backup Withholding

         We will report to our domestic  shareholders  and the IRS the amount of
dividends  paid during each calendar  year,  and the amount of tax withheld,  if
any, with respect thereto. Under the backup withholding rules, a shareholder may
be subject to backup  withholding  with  respect to  dividends  paid unless such
holder (a) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or (b) 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.  Amounts withheld 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  made to any  shareholders  who fail to
certify their  non-foreign  status to us. Additional issues may arise pertaining
to  information  reporting  and backup  withholding  with  respect  to  Non-U.S.
Shareholders  (persons other than U.S.  shareholders,  further described below).
Non-U.S. Shareholders should consult their tax advisors with respect to any such
information and backup withholding requirements.


                                     - 24 -
<PAGE>


Taxation of Non-U.S. Shareholders

         The  following  discussion  is only a summary  of the  rules  governing
United  States  federal  income  taxation  of  Non-U.S.   Shareholders  such  as
nonresident alien individuals,  foreign  corporations,  foreign  partnerships or
other  foreign  estates  or trusts.  Prospective  Non-U.S.  Shareholders  should
consult with their own tax advisors to  determine  the impact of federal,  state
and local income tax laws with regard to an investment in shares,  including any
reporting requirements.

         Distributions that are not attributable to gain from sales or exchanges
by us of United  States real  property  interests  and not  designated  by us as
capital gains  dividends will be treated as dividends of ordinary  income to the
extent  that  they are made  out of our  current  or  accumulated  earnings  and
profits.  Such  distributions  ordinarily  will be subject to a withholding  tax
equal to 30% of the gross amount of the  distribution  unless an applicable  tax
treaty reduces or eliminates that tax.  Certain tax treaties limit the extent to
which  dividends  paid by a REIT can qualify for a reduction of the  withholding
tax on  dividends.  Distributions  in  excess  of our  current  and  accumulated
earnings and profits will not be taxable to a Non-U.S. Shareholder to the extent
that they do not exceed the  adjusted  basis of the  shareholder's  shares,  but
rather will reduce the adjusted  basis of such  shares.  To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Shareholder's shares, they
will give rise to tax liability if the Non-U.S.  Shareholder  would otherwise be
subject  to tax on any gain  from  the sale or  disposition  of his  shares,  as
described below.

         For  withholding tax purposes,  we are currently  required to treat all
distributions as if made out of our current or accumulated  earnings and profits
and thus  intend to  withhold  at the rate of 30% (or a reduced  treaty  rate if
applicable)  on  the  amount  of  any  distribution  (other  than  distributions
designated  as capital gain  dividends)  made to a Non-U.S.  Shareholder.  Under
regulations,  we  would  not  be  required  to  withhold  at  the  30%  rate  on
distributions  we  reasonably  estimate  to be in  excess  of  our  current  and
accumulated  earnings  and  profits.  If it cannot be  determined  at the time a
distribution is made whether such  distribution will be in excess of current and
accumulated   earnings  and  profits,   the  distribution  will  be  subject  to
withholding at the rate applicable to ordinary dividends.  However, the Non-U.S.
Shareholder may seek from the IRS a refund of such amounts from the IRS if it is
subsequently  determined that such  distribution  was, in fact, in excess of our
current or accumulated  earnings and profits,  and the amount withheld  exceeded
the Non-U.S.  Shareholder's United States tax liability, if any, with respect to
the distribution.

         For any year in  which we  qualify  as a REIT,  distributions  that are
attributable  to gain  from  sales or  exchanges  by us of  United  States  real
property interests will be taxed to a Non-U.S.  Shareholder under the provisions
of the Foreign  Investment  in Real Property Tax Act of 1980  ("FIRPTA").  Under
FIRPTA,  a  Non-U.S.  Shareholder  is taxed  as if such  gain  were  effectively
connected with a United States  business.  Non-U.S.  Shareholders  would thus be
taxed 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 non-resident  alien  individuals).  Also,  distributions  subject to
FIRPTA may be subject to a 30% branch  profits  tax in the hands of a  corporate
Non-U.S. Shareholder not entitled to treaty relief or exemption. We are required
by  applicable  regulations  to withhold 35% of any  distribution  that could be
designated by us as a capital gains dividend  regardless of the amount  actually
designated as a capital gain  dividend.  This amount is  creditable  against the
Non-U.S. Shareholder's FIRPTA tax liability.

         Gain  recognized  by a  Non-U.S.  Shareholder  upon  a sale  of  shares
generally  will not be taxed under FIRPTA if we are a  "domestically  controlled
REIT,"  defined  generally  as a REIT in which at all times  during a  specified
testing  period  less  than 50% in  value of the  shares  was held  directly  or
indirectly by foreign  persons.  It is anticipated that we will continue to be a
"domestically controlled REIT" after the offering. Therefore, the sale of shares
will not be subject to taxation  under FIRPTA.  However,  because our shares are
publicly traded, no assurance can be given that we will continue to qualify as a


                                     - 25 -
<PAGE>


"domestically  controlled  REIT." If the gain on the sale of  shares  were to be
subject to taxation under FIRPTA,  the Non-U.S.  Shareholder would be subject to
the same  treatment as U.S.  Shareholders  with respect to such gain (subject to
applicable  alternative minimum tax, special alternative minimum tax in the case
of  nonresident  alien  individuals  and possible  application of the 30% branch
profits  tax in the case of foreign  corporations)  and the  purchaser  would be
required  to  withhold  and remit to the  Internal  Revenue  Service  10% of the
purchase  price.  Gain not  subject  to FIRPTA  will be  taxable  to a  Non-U.S.
Shareholder if (1)  investment in the shares is  effectively  connected with the
Non-U.S.  Shareholder's  United  States  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 (2) the  Non-U.S.  Shareholder  is a  nonresident
alien  individual  who was  present  in the  United  States for 183 days or more
during the taxable year and such  nonresident  alien individual has a "tax home"
in the United States,  in which case the  nonresident  alien  individual will be
subject to a 30% tax on the individual's capital gain.

Taxation of Tax-Exempt Shareholders

         Tax-exempt  entities,  including  qualified employee pension and profit
sharing  trusts and individual  retirement  accounts  ("Exempt  Organizations"),
generally are exempt from federal income taxation.  However, they are subject to
taxation on their unrelated business taxable income ("UBTI").  While investments
in real estate may generate UBTI,  the Service has issued a published  ruling to
the effect that dividend  distributions  by a REIT to an exempt employee pension
trust do not  constitute  UBTI,  provided  that the  shares  of the REIT are not
otherwise used in an unrelated trade or business of the exempt employee  pension
trust. Based on that ruling,  amounts distributed by us to Exempt  Organizations
generally  should  not  constitute  UBTI.  However,  if an  Exempt  Organization
finances its  acquisition  of our shares with debt, a portion of its income from
us, if any, will constitute UBTI 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 paragraphs (7), (9), (17), and (20), respectively, of
Code Section  501(c) are subject to different UBTI rules,  which  generally will
require them to characterize distributions from us as UBTI.

         In addition,  a pension  trust that owns more than 10% of our shares is
required  to treat a  percentage  of the  dividends  from us as UBTI (the  "UBTI
Percentage") in certain  circumstances.  The UBTI Percentage is our gross income
derived 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 the dividends are
paid. The UBTI rule applies only if (i) the UBTI  Percentage is at least 5% (ii)
we qualify as a REIT by reason of the  modification of the 5/50 Rule 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 (iii) either
(A) one  pension  trust  owns more than 25% of the value of our  shares or (B) 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.

         While an investment in our shares by an Exempt  Organization  generally
is not expected to result in UBTI except in the  circumstances  described in the
preceding paragraph, any gross UBTI that does arise from such an investment will
be combined with all other gross UBTI of the Exempt  Organization  for a taxable
year  and  reduced  by the sum of all  deductions  attributable  to the UBTI and
$1,000.  Any amount  then  remaining  will  constitute  UBTI on which the Exempt
Organization  will be subject to tax. If the gross  income taken into account in
computing UBTI exceeds  $1,000,  the Exempt  Organization is obligated to file a
tax return for such year on IRS Form 990-T.  We, our board of trustees,  and any
of our or their  affiliates do not intend to undertake the preparation or filing
of IRS Form 990-T for any Exempt  Organization  in connection with an investment
by such Exempt  Organization  in the shares.  Generally,  IRS Form 990-T must be
filed with the  Service by April 15 of the year  following  the year in which it
relates.


                                     - 26 -
<PAGE>


Other Tax Considerations

         Entity  Classification.  Certain of our  investments  are held  through
ARCap  Investors,  L.L.C.,  a limited  liability  company that has elected to be
taxed as a  partnership.  If such limited  liability  company were treated as an
association, the entity would be taxable as a corporation and therefore would be
subject to an entity level tax on its income. In such a situation, the character
of our assets and items of gross income would change and might  preclude us from
qualifying as a REIT.

         We believe  that  ARCap  Investors,  L.L.C.  is  properly  treated as a
partnership  for  tax  purposes  (and  not  as  an  association   taxable  as  a
corporation).

         Tax  Shelter   Reporting   Regulations.   Under  recently   promulgated
regulations,  if a  shareholder  recognizes  a loss with respect to shares of $2
million  or more for an  individual  shareholder  or $10  million  or more for a
corporate  shareholder,  the  shareholder  must file  with the IRS a  disclosure
statement on Form 8886. Direct shareholders of portfolio  securities are in many
cases  excepted from this  reporting  requirement,  but under current  guidance,
shareholders  of a REIT are not  excepted.  The fact  that a loss is  reportable
under these  regulations does not affect the legal  determination of whether the
taxpayer's  treatment of the loss is proper.  Shareholders  should consult their
tax advisors to determine the  applicability  of these  regulations  in light of
their individual circumstances.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This re-offer  prospectus and the  information  incorporated  herein by
reference  contain  certain  statements  and  other  written  material  and oral
statements  made from time to time by us do not relate strictly to historical or
current facts. As such, they are considered "forward-looking  statements" within
the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.  These
forward-looking statements are not historical facts, but rather are based on our
current expectations,  estimates and projections about our industry, beliefs and
assumptions.   Words  such  as  "anticipates,"  "expects,"  "intends,"  "plans,"
"believes,"  "seeks,"  "estimates"  and  similar  expressions  are  intended  to
identify  forward-looking  statements.  These  statements  are not guarantees of
future  performance and are subject to risks,  uncertainties  and other factors,
some of which are beyond our control,  are  difficult to predict and could cause
actual results to differ  materially  from those  expressed or forecasted in the
forward-looking statements. These risks and uncertainties are described in "Risk
Factors" and elsewhere in this re-offer prospectus.  We caution you not to place
undue reliance on these forward-looking statements,  which reflect our view only
as of the respective  date of this re-offer  prospectus or other dates which are
specified herein.

                                 USE OF PROCEEDS

         We will not receive  any  proceeds  from the sale of the common  shares
which may be sold pursuant to this re-offer  prospectus  for the accounts of the
Selling  Securityholders.  All such proceeds, net of brokerage  commissions,  if
any,   will  be   received  by  the  Selling   Securityholders.   See   "Selling
Securityholders" and "Plan of Distribution."

                             SELLING SECURITYHOLDERS

         This re-offer  prospectus  covers offers and sales from time to time by
the  Selling  Securityholders  of up to 855,277  common  shares  issued or to be
issued to the Selling  Securityholders  pursuant  to the terms of the  Incentive
Plan and/or Share Agreements.  Under Rule 416 of the Securities Act, the Selling
Securityholders  may also offer and sell  common  shares  issued to the  Selling
Securityholders  as a  result  of,  among  other  events,  stock  splits,  stock
dividends and similar events that affect the number of common shares held by the
Selling   Securityholders.   The  Selling  Securityholders  are  or  may  become
affiliates of the Company pursuant to Rule 144 of the Securities Act.


                                     - 27 -
<PAGE>


         The following table sets forth certain information as to the beneficial
ownership   of  common   shares  as  of  August  25,   2004  for  each   Selling
Securityholder:

<TABLE>
<CAPTION>


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

                     Name                         Common Shares     Common Shares    Common Shares     Percentage of
                                                  Beneficially        Offered        Beneficially     Common Shares
                                                  Owned Before                       Owned After       to be Owned
                                                  Offering (1)                       Offering (1)    After Offering
---------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                  <C>             <C>               <C>
Stuart J. Boesky                                   119,971(2)           (3)            119,971            1.4%
---------------------------------------------------------------------------------------------------------------------
Alan P. Hirmes                                     106,471(2)           (3)            106,471            1.3%
---------------------------------------------------------------------------------------------------------------------
Denise L. Kiley                                    94,471(2)            (3)             94,471            1.1%
---------------------------------------------------------------------------------------------------------------------
Marc D. Schnitzer                                  94,471(2)            (3)             94,471            1.1%
---------------------------------------------------------------------------------------------------------------------
Richard M. Rosan                                      365               (4)              -0-                *
---------------------------------------------------------------------------------------------------------------------
Scott M. Mannes                                       365               (4)              -0-                *
---------------------------------------------------------------------------------------------------------------------
Stanley R. Perla                                      729               (4)              -0-                *
---------------------------------------------------------------------------------------------------------------------
John A. Garth                                        2,000              (3)             2,000               *
---------------------------------------------------------------------------------------------------------------------
Other trustees and executive officers of              (5)               (6)              (5)               (5)
the Company
---------------------------------------------------------------------------------------------------------------------
</TABLE>

* Less than 1%.


(1)   The  number  of  shares  beneficially  owned  is  determined  under  rules
      promulgated by the Commission and includes  outstanding  common shares and
      options for common shares that have vested or will vest within 60 days.


(2)   92,858 of such common shares are owned directly by Relcap Holding Company,
      LLC, of which Mr. Boesky indirectly owns 9.69%, Mr. Hirmes indirectly owns
      9.69%, Mr.  Schnitzer  indirectly owns 9.69% and Ms. Kiley indirectly owns
      5.93%.


(3)   Cannot be determined at this time.  Selling  Securityholder  may offer and
      sell up to an aggregate of 833,818 common shares that may be issued in the
      future under the Company's Incentive Plan. If required by applicable rules
      and regulations,  we will file a supplement to this re-offer prospectus to
      update this Selling  Securityholder table with each additional issuance of
      common shares under the Incentive Plan.


(4)   Cannot be determined at this time. Mr. Rosan and Mr. Mannes may each offer
      and sell 365  common  shares  and Mr.  Perla may offer and sell 729 common
      shares,  plus an  additional  aggregate  amount of up to (x) 20,000 common
      shares  that  may be  issued  to  them in the  future  pursuant  to  Share
      Agreements and (y) 833,818 common shares that may be issued to them in the
      future under the Company's Incentive Plan. If required by applicable rules
      and regulations,  we will file a supplement to this re-offer prospectus to
      update this Selling  Securityholder table with each additional issuance of
      common shares pursuant to the Share Agreements and/or Incentive Plan.


                                     - 28 -
<PAGE>


(5)   Cannot be determined at this time.


(6)   Cannot be determined at this time. The trustees and executive  officers of
      the  Company  may offer and sell an  aggregate  amount of up to (x) 20,000
      common  shares that may be issued to them in the future  pursuant to Share
      Agreements and (y) 833,818 common shares that may be issued to them in the
      future under the Company's Incentive Plan. If required by applicable rules
      and regulations,  we will file a supplement to this re-offer prospectus to
      update this Selling  Securityholder table with each additional issuance of
      common shares pursuant to the Share Agreements and/or Incentive Plan.



                                     - 29 -
<PAGE>


                              PLAN OF DISTRIBUTION

         This  re-offer  prospectus  relates  to the offer and sale from time to
time by the persons listed under the "Selling  Securityholders"  section of this
re-offer  prospectus of up to 855,277 common shares.  As used in this section of
the re-offer prospectus, the term "Selling Securityholders" includes the Selling
Securityholders  named in the  table  above and any of their  donees,  pledgees,
transferees  or other  successors in interest who receive  shares offered hereby
from a Selling  Securityholder  as a gift,  pledge,  or other  non-sale  related
transfer  and who  subsequently  sell any of such shares  after the date of this
re-offer  prospectus.  We have  registered the Selling  Securityholders'  common
shares for re-sale to provide the Selling  Securityholders with freely tradeable
common shares.  However,  registration  of the Selling  Securityholders'  common
shares does not necessarily mean that the Selling  Securityholders will offer or
sell any of their shares.  We will not receive any proceeds from the offering or
sale of the Selling Securityholders' shares.

         The Selling  Securityholders  may sell our common  shares to which this
re-offer  prospectus  relates from time to time on the American Stock  Exchange,
where our  common  shares are listed for  trading,  in other  markets  where our
common shares may be traded, in negotiated transactions, through underwriters or
dealers, directly to one or more purchasers,  through agents or in a combination
of such methods of sale. The Selling  Securityholders may sell our common shares
at prices  which are  current  when the sales take  place or at other  prices to
which  they  agree.  All  costs,  expenses  and  fees  in  connection  with  the
registration of the common shares offered hereby will be borne by us.  Brokerage
commissions and similar selling  expenses,  if any,  attributable to the sale of
common shares offered hereby will be borne by the Selling Securityholders.

         The Selling Securityholders may effect such transactions by selling the
common shares offered hereby  directly to purchasers or through  broker-dealers,
which may act as agents or principals,  or pursuant to a distribution  by one or
more  underwriters on a firm commitment or  best-efforts  basis.  The methods by
which the common shares which are the subject of this re-offer prospectus may be
sold include:  (a) a block trade in which the broker-dealer will attempt to sell
shares as agent but may  position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker-dealer as principal and
re-sale  by  the   broker-dealer  for  its  account;   (c)  ordinary   brokerage
transactions  and transactions in which the broker solicits  purchasers;  (d) an
exchange  distribution  in  accordance  with  the  rules of the  American  Stock
Exchange;   (e)  privately   negotiated   transactions;   and  (f)  underwritten
transactions.

         The Selling  Securityholders  may enter into hedging  transactions with
broker-dealers  or  other  financial  institutions.  In  connection  with  those
transactions,  broker-dealers  and other  financial  institutions  may engage in
short sales of our common shares in the course of hedging the related  positions
they assume. The Selling  Securityholders  may also sell our common shares short
and redeliver the common shares covered by this re-offer prospectus to close out
the short positions.  In addition,  the Selling  Securityholders  may enter into
option or other transactions with broker-dealers or other financial institutions
which require the delivery to the broker-dealers or other financial institutions
of  common  shares  offered  by  this  re-offer  prospectus,  which  shares  the
broker-dealers  or other  financial  institutions  may resell  pursuant  to this
re-offer prospectus (as supplemented or amended to reflect the transaction).

         Broker-dealers  may  receive  compensation  in the  form of  discounts,
concessions,   or  commissions  from  the  Selling  Securityholders  and/or  the
purchasers of the common shares offered hereby for whom such  broker-dealers may
act as agents or to whom they sell as principal,  or both (which compensation as
to a particular  broker-dealer might be in excess of customary commissions).  In
connection  with an  underwritten  offering,  underwriters or agents may receive
compensation  in the form of  discounts,  concessions  or  commissions  from the
Selling  Securityholders  or from purchasers of the shares which are the subject
of this re-offer  prospectus for whom they may act as agents,  and  underwriters
may sell the


                                     - 30 -
<PAGE>


shares which are the subject of this re-offer  prospectus to or through dealers,
and such dealers may receive compensation in the form of discounts,  concessions
or commissions from the underwriters  and/or commissions from the purchasers for
whom they may act as agents.

         We will file a supplement  to this  re-offer  prospectus,  if required,
pursuant  to Rule  424(b)  under the  Securities  Act upon being  notified  by a
Selling  Securityholder  that any material  arrangements  have been entered into
with a  broker-dealer  for the sale of  shares  through a block  trade,  special
offering, exchange or secondary distribution or a purchase by a broker-dealer.

         In addition, upon receiving notice from a Selling Securityholder that a
donee, pledgee or transferee or other successor in interest intends to sell more
than 500 shares covered by this re-offer  prospectus,  we will file a supplement
to this re-offer  prospectus pursuant to Rule 424(b) under the Securities Act to
identify the non-sale  transferee  who may sell the shares which are the subject
of this re-offer prospectus.

         The Selling  Securityholders  and any  underwriters,  dealers or agents
participating  in the  distribution  of the shares which are the subject of this
re-offer prospectus may be deemed to be "underwriters" within the meaning of the
Securities  Act,  and any  profit  on the  sale of such  shares  by the  Selling
Securityholders  and any commissions  received by any such broker-dealers may be
deemed to be underwriting commissions under the Securities Act.

         The Selling  Securityholders  have not informed us as to their plans of
distribution.

                                  LEGAL MATTERS

         Certain legal  matters have been passed upon for us by Paul,  Hastings,
Janofsky & Walker LLP, New York,  New York.  The  validity of the common  shares
have been passed upon for us by Goodwin Procter LLP, Boston, Massachusetts.

                                     EXPERTS

         The consolidated  financial statements as of December 31, 2003 and 2002
and for each of the three years in the period  ended  December  31, 2003 of AMAC
and the related financial schedule  incorporated in this re-offer  prospectus by
reference  from our  annual  report on Form 10-K and Form  10-K/A for the fiscal
year ended  December  31,  2003 have been  audited by  Deloitte & Touche LLP, an
independent  registered public accounting firm, as stated in their reports which
are incorporated  herein by reference,  and has been so incorporated in reliance
upon the  reports  of such  firm  given  upon  their  authority  as  experts  in
accounting and auditing.



       DISCLOSURE OF SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT
                                  LIABILITIES

         Insofar as the provisions  described below in Item 6 of Part II of this
registration statement permit indemnification of directors,  officers or persons
controlling  the Company,  the Company has been  informed that in the opinion of
the Securities and Exchange  Commission,  this indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.


                                     - 31 -
<PAGE>


                            855,277 COMMON SHARES OF

                      AMERICAN MORTGAGE ACCEPTANCE COMPANY



                               RE-OFFER PROSPECTUS



                                 AUGUST 26, 2004


                                     - 32 -
<PAGE>


                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference

         The following documents and information  previously filed by Registrant
with the Commission are hereby  incorporated  by reference in this  Registration
Statement:

                  (a) The  Company's  Annual Report on Form 10-K and Form 10-K/A
         for the fiscal year ended December 31, 2003,  filed with the Commission
         on March 15, 2004 and May 7, 2004,  respectively  (Commission  File No.
         001-14583);

                  (b) The Company's Quarterly Report on Form 10-Q for the period
         ended  June 30,  2004,  filed  with the  Commission  on  August 9, 2004
         (Commission File No. 001-14583);

                  (c) The Company's Quarterly Report on Form 10-Q for the period
         ended  March  31,  2004,  filed  with the  Commission  on May 10,  2004
         (Commission File No. 001-14583);

                  (d) The Company's  Definitive  Proxy Statement dated April 30,
         2004 on Schedule 14A prepared in connection  with our Annual Meeting of
         Shareholders held on June 9, 2004 (Commission File No. 001-14583); and

                  (e) The description of the Company's  Shares  contained in the
         Company's Form 10 Registration Statement under the caption "Description
         of  Registrant's  Securities  to be  Registered",  as  filed  with  the
         Commission on August 1, 1997 (Commission File No. 001-13237).

All  documents  subsequently  filed by the Company  pursuant to Sections  13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment that  indicates  that all  securities  offered have been sold or which
deregisters  all  securities  then  remaining  unsold,  shall  be  deemed  to be
incorporated by reference in this Registration Statement and to be a part hereof
from the respective dates of the filing of those documents.

Any  statement  contained  herein  or  in a  document  incorporated,  or  deemed
incorporated,  by reference  herein or therein shall be deemed to be modified or
superseded  for  purposes  of the  Registration  Statement  to the extent that a
statement  contained  herein  or  therein  or in any  other  subsequently  filed
document which also is deemed to be incorporated by reference  herein or therein
modifies or supersedes such statement. Any such statement shall not be deemed to
constitute a part of this Registration  Statement or the Prospectus except as so
modified or replaced.

Item 4.  Description of Securities

         Not Applicable.

Item 5.  Interests of Named Experts and Counsel

         Not Applicable.

Item 6.  Indemnification of Trustees and Officers

         Our Company has purchased  and maintains  insurance on behalf of all of
its  trustees and  executive  officers  against  liability  asserted  against or
incurred by them in their official capacities with our


                                     - 33 -
<PAGE>


Company,  whether or not our Company is  required or has the power to  indemnify
them against the same liability.

Item 7.  Exemption from Registration Claimed

         Not Applicable

Item 8.  Exhibits.

 Exhibit     Description
   No.
--------     -----------

3.1          Second Amended and Restated Declaration of Trust, dated as of April
             6,  1999  (incorporated  by  reference  to  Exhibit  3.4(c)  in the
             Company's March 31, 1999 Quarterly Report on Form 10-Q).

3.2          Amendment  to Second  Amended and  Restated  Declaration  of Trust,
             dated as of August 20, 2004.*

4.1          Specimen  Share  Certificate  (incorporated  by  reference  to  the
             Company's   Amendment   No.  1  on  Form  10/A  to  the   Company's
             Registration Statement on Form 10, File No. 001-13237).

5.1          Opinion  of Goodwin  Procter  LLP  regarding  the  legality  of the
             restricted Common Shares being registered*

23.1         Consent of Deloitte & Touche LLP*

23.2         Consent of Goodwin Procter LLP (included in Exhibit 5.1)*

24.1         Power of Attorney (included on signature page hereto)*

99.1         Amended and Restated Incentive Share Plan*

99.2         Amendment to Amended and Restated Incentive Share Plan*

99.3         Share Agreements*

* Filed Herewith


                                     - 34 -
<PAGE>


Item 9.  Undertakings

         The Company hereby undertakes:

         A        (1)  To file,  during  any  period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to;

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

         (ii)     Reflect   in  the   prospectus  any  facts  or  events  which,
individually or together,  represent a fundamental  change in the information 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 percent  change in the maximum  aggregate  offering price set forth in
the  "Calculation  of  Registration  Fee"  table in the  effective  Registration
Statement; and

         (iii)    Include  any additional or changed material information on the
plan of  distribution;  provided,  however,  that the  statements  in paragraphs
(A)(1)(i)  and  (A)(1)(ii)  do  not  apply  if  the  information  required  in a
post-effective  amendment is  incorporated  by reference  from periodic  reports
filed by the Company under the Securities  Exchange Act of 1934, as amended (the
"Exchange Act").

                  (2)  That, for determining liability under the Securities Act,
treat each such post-effective  amendment as a new registration statement of the
securities  offered,  and the offering of the  securities at that time to be the
initial bona fide offering.

                  (3)  To  file  a  post-effective   amendment  to  remove  from
registration  any  of the  securities  that  remain  unsold  at  the  end of the
offering.

         (B)      That  insofar as indemnification for liabilities arising under
the  Securities  Act may be  permitted to  trustees,  officers  and  controlling
persons of the Company pursuant to the foregoing provisions,  or otherwise,  the
Company  has  been  advised  that  in  the  opinion  of  the   Commission   such
indemnification  is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

         In the event that a claim for indemnification  against such liabilities
(other  than the  payment  by the  Company  of  expenses  incurred  or paid by a
director, officer or controlling person of the Company 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
Company  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 Securities  Act and will be governed by the final  adjudication
of such issue.


                                     - 35 -
<PAGE>


                                   SIGNATURES

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 New  York,  State of New  York,  on this 26th day of
August, 2004.

                                     AMERICAN MORTGAGE
                                        ACCEPTANCE COMPANY
                                     A Massachusetts business trust (registrant)


                                     By: /s/ Stuart J. Boesky
                                         ---------------------------------------
                                         Stuart J. Boesky
                                         President and
                                         Chief Executive Officer


                                POWER OF ATTORNEY

         Each person  whose  signature  appears  below  hereby  constitutes  and
appoints  Stuart J. Boesky and Alan P. Hirmes,  and each or either of them,  his
true  and  lawful   attorney-in-fact   with  full  power  of  substitution   and
resubstitution,  for  him  and in his  name,  place  and  stead,  in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this  Registration  Statement  (or any  registration  statement  for the same
offering that is to be effective  upon filing  pursuant to Rule 462(b) under the
Securities  Act of 1933),  and to cause the same to be filed,  with all exhibits
thereto and other  documents in connection  therewith,  with the  Securities and
Exchange Commission,  hereby granting to said  attorneys-in-fact and agents, and
each of them,  full power and authority to do and perform each and every act and
thing whatsoever requisite or desirable to be done in and about the premises, as
fully  to all  intents  and  purposes  as the  undersigned  might or could do in
person,   hereby  ratifying  and  confirming  all  acts  and  things  that  said
attorneys-in-fact  and  agents,  or  either  of them,  or their  substitutes  or
substitute, may lawfully do or cause to be done by virtue hereof.

         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 dates indicated.

<TABLE>
<CAPTION>

                 Signature                                       Title                               Date

<S>                                                     <C>                                    <C>
/s/ Stuart J. Boesky                                    Chairman, President and                August 26, 2004
----------------------------------------                Chief Executive Officer
             Stuart J. Boesky

/s/ Alan P. Hirmes                                       Managing Trustee and                  August 26, 2004
----------------------------------------                Chief Financial Officer
              Alan P. Hirmes

/s/ Scott M. Mannes                                        Managing Trustee                    August 26, 2004
----------------------------------------
              Scott M. Mannes

/s/ Stanley R. Perla                                       Managing Trustee                    August 26, 2004
----------------------------------------
             Stanley R. Perla

/s/ Richard M. Rosan                                       Managing Trustee                    August 26, 2004
----------------------------------------
             Richard M. Rosan
</TABLE>


                                     - 36 -
<PAGE>


                                     - 37 -
[{"type": "S-8", "sequence": "1", "filename": "s8.txt", "secsgml_size_bytes": 143804}]
{"company-data": {"conformed-name": "AMERICAN MORTGAGE ACCEPTANCE CO", "cik": "0000878774", "assigned-sic": "6798", "irs-number": "136972380", "state-of-incorporation": "MA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-118572", "film-number": "04998124"}, "business-address": {"street1": "625 MADISON AVE", "city": "NEW YORK", "state": "NY", "zip": "10022", "phone": "2124215333"}, "mail-address": {"street1": "625 MADISON AVENUE", "city": "NEW YORK", "state": "NY", "zip": "10022"}, "former-company": {"former-conformed-name": "AMERICAN MORTGAGE INVESTORS TRUST", "date-changed": "19931013"}}
As Filed With the Securities and Exchange Commission on August 26, 2004

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-8

                        REGISTRATION STATEMENT UNDER THE
                             SECURITIES ACT OF 1933

                      AMERICAN MORTGAGE ACCEPTANCE COMPANY
             (Exact Name of Registrant as Specified in Its Charter)

                  Massachusetts                            13-6972380
          (State or Other Jurisdiction                  (I.R.S. Employer
        of Incorporation or Organization)            Identification Number)

                               625 Madison Avenue
                            New York, New York 10022
                                 (212) 317-5700
    (Address, Including Zip Code, and Telephone Number, Including Area Code,
                  of Registrant's Principal Executive Offices)

                           Incentive Share Option Plan
                                Share Agreements
                            (Full Title of the Plans)
Stuart J. Boesky                                   With copies to:
      President and Chief Executive Officer                      Mark Schonberger, Esq.
                625 Madison Avenue                       Paul, Hastings, Janofsky & Walker LLP
             New York, New York 10022                             75 East 55th Street
                  (212) 317-5700                                New York, New York 10022
(Name, Address, Including Zip Code, and Telephone                    (212) 318-6000
Number, Including Area Code, of Agent For Service)
CALCULATION OF REGISTRATION FEE
============================================================================================================
                                                        Proposed maximum  Proposed maximum
            Title of securities           Amount to be    offering price     aggregate        Amount of
             to be registered              registered       per share      offering price   registration fee
------------------------------------------------------------------------------------------------------------
Common Shares of Beneficial Interest      1,459 shares(1) $ 13.72        $     20,017      $     2.54
------------------------------------------------------------------------------------------------------------
Common Shares of Beneficial Interest    853,818 shares(2) $ 15.16 (3)    $ 12,943,880 (3)  $ 1,639.98
------------------------------------------------------------------------------------------------------------
Total                                   855,277 shares                                     $ 1,642.52
------------------------------------------------------------------------------------------------------------
(1)  Represents  1,459  common  shares  which were issued to  affiliates  of the
Registrant  ("Affiliates") as defined in Rule 405 of the Securities Act of 1933,
as  amended,  pursuant  to share  agreements  between  the  Registrant  and each
Affiliate.

(2) Represents  853,818 common shares of beneficial  interest (i) reserved under
the  Registrant's  Incentive  Share  Option Plan and (ii) which may be issued to
Affiliates of the Registrant pursuant to share agreements between the Registrant
and each Affiliate.  Pursuant to this Registration Statement,  the Registrant is
also  registering  an  indeterminate  amount of additional  common shares as may
become  issuable  pursuant  to the  anti-dilution  provisions  contained  in the
Incentive Share Option Plan.

(3)  Estimated  solely  for  the  purpose  of  calculating  the  amount  of  the
registration  fee pursuant to Rule 457(h) of the Securities Act, on the basis of
the  average  of the high and low  prices  of the  Company's  common  shares  as
reported by the American Stock Exchange on August 25, 2004.
Explanatory Note

         American  Mortgage  Acceptance  Company  ("AMAC" or the  "Company") has
prepared this Registration Statement in accordance with the requirements of Form
S-8 under the Securities Act of 1933, as amended (the  "Securities  Act").  This
Registration  Statement  registers  855,277 of the  Company's  common  shares of
beneficial interest for two purposes: (1) to register common shares which may be
issued  from  time to time to  participants  under  the  Company's  Amended  and
Restated  Incentive Share Option Plan (the "Incentive Plan") and (2) to register
common shares for re-offer  and/or re-sale by the  individuals  listed under the
Selling   Securityholder   section  of  this   re-offer   prospectus   ("Selling
Securityholders").  Of the 855,277  common  shares being  registered,  (i) up to
833,818 common shares may be acquired under the Incentive Plan, which, if issued
to the Selling  Securityholder's,  shall constitute "control  securities" within
the meaning of Instruction C of the General Instructions to Form S-8; (ii) 1,459
common shares were granted to certain of the Selling Securityholders pursuant to
the terms of share agreements ("Share  Agreements")  between the Company and the
Selling  Securityholders for compensation for serving as independent trustees of
the Company,  which  constitute  "restricted  securities"  within the meaning of
Instruction  C of the General  Instructions  to Form S-8; and (iii) up to 20,000
common  shares which may be issued in the future to the Selling  Securityholders
pursuant to the terms of the Share Agreements,  which shall constitute  "control
securities"  within the meaning of Instruction C of the General  Instructions to
Form S-8.

         This Registration Statement contains two parts. The first part contains
a re-offer  prospectus  prepared in accordance with Part I of S-3 (in accordance
with  Instruction  C of the  General  Instructions  to Form  S-8),  including  a
re-offer  prospectus  that may be used for  re-offerings  and re-sales of common
shares acquired by the Selling Securityholders listed on page 28 of the re-offer
prospectus.  These Selling  Securityholders are or may become affiliates of AMAC
as  defined  in  Rule  405 of the  Securities  Act.  The  second  part  contains
information  required in the Registration  Statement pursuant to Part II of Form
S-8.

                                     PART I

              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

Item 1.  Plan Information.

         The documents  containing the information for the Company  specified in
this Item 1 will be sent or given to  individuals  who receive  awards under the
Incentive Plan or common shares under the Share  Agreements.  In accordance with
Section 10(a) of the Securities Act, and Rules 424 and 428 promulgated under the
Securities  Act by the Securities and Exchange  Commission  (the  "Commission"),
such  documents  are not being filed with,  or  included  in, this  Registration
Statement.

Item 2.  Registrant Information and Employee Plan Annual Information.

         The documents containing the information  specified in this Item 2 will
be sent or given to  individuals  who have  received  awards under the Incentive
Plan or common shares under the Share  Agreements.  In  accordance  with Section
10(a) of the Securities Act and Rules 424 and 428 thereunder, such documents are
not being filed with, or included in, this Registration Statement.
RE-OFFER PROSPECTUS

                              855,277 COMMON SHARES

         We are American Mortgage  Acceptance Company ("AMAC" or the "Company"),
a business trust formed under the laws of the Commonwealth of Massachusetts.

         This  re-offer  prospectus is being used for the offering and sale from
time  to  time  by the  selling  securityholders  identified  on page 28 of this
re-offer prospectus (the "Selling  Securityholders")  of (i) 1,459 common shares
of   beneficial   interest   which  were  granted  to  certain  of  the  Selling
Securityholders  pursuant to the terms of share  agreements  between the Company
and the Selling  Securityholders  for  compensation  for serving as  independent
trustees  of the  Company  ("Share  Agreements")  and (ii) up to 853,818  common
shares of beneficial  interest that hereafter may be acquired by persons who may
be  considered  "affiliates"  of the  Company  as  defined by Rule 405 under the
Securities  Act of 1933,  as  amended  (the  "Securities  Act")  (a)  under  the
Company's  Incentive Share Option Plan ("the "Incentive  Plan") and (b) pursuant
to the terms of the Share Agreements.

         The Selling  Securityholders  may sell their common shares  directly or
indirectly in one or more  transactions on any stock exchange or stock market on
which the  common  shares  may be listed at the time of the sale,  in  privately
negotiated  transactions,  or through a combination of such methods. These sales
may be at fixed prices (which may be changed),  at market  prices  prevailing at
the time of sale,  at prices  related  to such  prevailing  market  prices or at
negotiated prices.

         AMAC's common shares are listed on the American  Stock  Exchange  under
the symbol  AMC. On August 25,  2004,  the last  reported  sale price for AMAC's
common shares was $15.07 per share.

         This  re-offer   prospectus  has  been  prepared  for  the  purpose  of
registering the common shares which are the subject of this re-offer  prospectus
under  the   Securities   Act  to  allow  for  future   sales  by  the   Selling
Securityholders  to the  public.  The  Selling  Securityholders  may sell common
shares through one or more agents, brokers or dealers or directly to purchasers.
Such  brokers or dealers may receive  compensation  in the form of  commissions,
discounts or concessions from the Selling  Securityholders  and/or purchasers of
the common  shares,  or both (which  compensation  as to a particular  broker or
dealer  may be in excess of  customary  commissions).  In  connection  with such
sales, the Selling Securityholders and any participating broker or dealer may be
deemed to be  "underwriters"  within the meaning of the Securities  Act, and any
commissions  they receive and the  proceeds of any sale of common  shares may be
deemed to be underwriting  discounts and  commissions  under the Securities Act.
AMAC will not receive  any  proceeds  from the sale of the common  shares by the
Selling Securityholders.

         This  investment  involves  a high  degree  of risk.  Please  see "Risk
Factors" beginning on page 6 of this re-offer prospectus.

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

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS RE-OFFER  PROSPECTUS  IS TRUTHFUL OR COMPLETE.  ANY  REPRESENTATION  TO THE
CONTRARY IS A CRIMINAL OFFENCE.

         This  re-offer   prospectus  does  not  constitute  an  offer  to  sell
securities  in any state to any person to whom it is unlawful to make such offer
in such state.

            The date of this re-offer prospectus is August 26, 2004.
You should rely only on the  information  contained or incorporated by reference
in this re-offer prospectus.  We have not authorized any other person to provide
you  with  information  different  from  or  additional  to  that  contained  or
incorporated   by   reference   in  this   re-offer   prospectus.   The  Selling
Securityholders  are offering to sell common shares only in jurisdictions  where
offers and sales are permitted. You should assume that the information appearing
in this re-offer  prospectus and the documents  incorporated by reference herein
and  therein is  accurate  only as of its  respective  date or as of other dates
which are  specified in these  documents.  Our  business,  financial  condition,
results of operations and prospects may have changed since these dates.

                             ADDITIONAL INFORMATION

         We have filed with the United States Securities and Exchange Commission
(the "Commission") a registration statement on Form S-8 under the Securities Act
to register the common shares offered hereby.  This re-offer  prospectus is part
of the registration statement. This re-offer prospectus does not contain all the
information  contained  in the  registration  statement  because we have omitted
certain parts of the  registration  statement in  accordance  with the rules and
regulations of the Commission.  Statements contained in this re-offer prospectus
regarding the contents of any contract or any other document to which  reference
is made are not necessarily complete, and, in each instance where a copy of such
contract  or other  document  has been filed as an  exhibit to the  registration
statement,  reference is made to the copy so filed,  each statement is qualified
in all respects by such reference. For further information,  we refer you to the
registration  statement,  which  you may read and copy at the  public  reference
facilities  maintained by the Commission at Judiciary  Plaza,  450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at the Commission's Regional Offices
at  Citicorp  Center,  500 W.  Madison  Street,  Suite 1400,  Chicago,  Illinois
60661-2511.  You may  obtain  copies at the  prescribed  rates  from the  Public
Reference Section of the Commission at its principal office in Washington,  D.C.
You may call the Commission at 1-800-SEC-0330 for further  information about the
public  reference  rooms.  The  Commission  maintains  a web site that  contains
reports,  proxy and information statements and other information regarding AMAC.
You may access the Commission's web site at http://www.sec.gov.

         We are  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934, as amended.  As a result, we are required to file reports,
proxy statements and other information with the Commission.  These materials can
be copied and inspected at the locations  described  above at prescribed  rates.
Our common  shares are listed on the American  Stock  Exchange  under the symbol
"AMC."

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The Commission  allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring you to those documents.  The information  incorporated by reference
is considered to be part of this re-offer  prospectus,  and information  that we
file later with the  Commission  will  automatically  update and supersede  this
information.  We  incorporate  by reference the  documents  listed below and any
future filings we will make with the Commission  under Section 13(a),  13(c), 14
or 15(d) of the Securities Exchange Act of 1934:

         o Our Annual  Report on Form 10-K and Form  10-K/A for the fiscal  year
           ended December 31, 2003,  filed with the Commission on March 15, 2004
           and May 7, 2004, respectively (Commission File No. 001-14583);

         o Our Quarterly Report on Form 10-Q for the period ended June 30, 2004,
           filed  with the  Commission  on August 9, 2004  (Commission  File No.
           001-14583);

         o Our  Quarterly  Report on Form 10-Q for the  period  ended  March 31,
           2004,  filed with the Commission on May 10, 2004 (Commission File No.
           001-14583);
o Our Definitive  Proxy  Statement dated April 30, 2004 on Schedule 14A
           prepared in connection with our Annual Meeting of  Shareholders  held
           on June 9, 2004 (Commission File No. 001-14583); and

         o The  description of the Company's  Shares  contained in the Company's
           Form 10  Registration  Statement  under the caption  "Description  of
           Registrant's  Securities  to  be  Registered",   as  filed  with  the
           Commission on August 1, 1997 (Commission File No. 001-13237).

You may request a copy of these  filings  (not  including  the  exhibits to such
documents unless the exhibits are specifically  incorporated by reference in the
information  contained in this re-offer  prospectus),  at no cost, by writing or
telephoning us at the following address:

                      American Mortgage Acceptance Company
                               625 Madison Avenue
                            New York, New York 10022
                               Attn: Brenda Abuaf
              Telephone requests may be directed to (212) 317-5700

         This re-offer  prospectus is part of a registration  statement we filed
with the Commission.  You should rely only on the information or representations
provided in this re-offer  prospectus.  We have authorized no one to provide you
with different  information.  We are not making an offer of these  securities in
any state  where the offer is not  permitted.  You should  not  assume  that the
information  in this  re-offer  prospectus is accurate as of any date other than
the date on the front of the document.

         Statements  contained in this re-offer prospectus as to the contents of
any  contract or document  are not  necessarily  complete  and in each  instance
reference is made to the copy of that  contract or document  filed as an exhibit
to the  registration  statement  or as an exhibit to another  filing,  each such
statement being qualified in all respects by such reference and the exhibits and
schedules thereto.

                                     - 3 -
RE-OFFER PROSPECTUS SUMMARY

         This  summary   highlights   information   included   elsewhere  in  or
incorporated by reference in this re-offer prospectus. It may not contain all of
the information that is important to you. You should read the following  summary
together  with  the  more  detailed  information  included  or  incorporated  by
reference in this  re-offer  prospectus,  including  risk factors  regarding our
business and the common shares being offered hereby.

Our Company

     Overview

         We are American Mortgage Acceptance Company, a business trust formed in
June 1991 under the laws of the Commonwealth of  Massachusetts.  We have elected
to be treated as a real estate  investment  trust  ("REIT")  under the  Internal
Revenue Code (the "Code").

         We specialize in  multifamily  finance and seek asset  diversification,
capital  appreciation  and income for  distributions  to our  shareholders.  Our
business  plan  focuses  on  originating  and  acquiring  mortgages  secured  by
multifamily  properties,  which may take the form of  government  insured  first
mortgages, insured mortgage pass-through certificates or insured mortgage backed
securities, and uninsured mezzanine loans, construction loans, and bridge loans.
Additionally,   we  have   indirectly   invested   in   subordinate   commercial
mortgage-backed  securities ("CMBS") and may invest in other real estate assets,
including  non-multifamily  mortgages.  We also issue guarantees of construction
and permanent financing and make standby loan commitments.

         We finance the acquisition of our assets primarily through borrowing at
short term rates using demand repurchase  agreements and through the issuance of
equity.  Under our declaration of trust, we may incur permanent  indebtedness of
up to 50% of our total market value calculated at the time the debt is incurred.
Permanent  indebtedness and working capital  indebtedness may not exceed 100% of
our total market value. Our declaration of trust provides that we may not change
our policy regarding  indebtedness without the consent of a majority in interest
of our shareholders.

         Our common shares trade on the American Stock Exchange under the symbol
"AMC".

     Our Advisor

         We have engaged Related AMI Associates,  Inc., which we refer to as our
"Advisor," to manage our day-to-day  affairs.  Our Advisor has subcontracted its
management  obligations  to its  affiliate,  Related  Capital  Company,  LLC,  a
subsidiary of CharterMac, an American Stock Exchange listed company which trades
under the symbol  "CHC",  to provide  the  services  contemplated.  Through  our
Advisor,  Related  Capital  offers  us a core  group of  experienced  staff  and
executive  management who provide us with services on both a full- and part-time
basis.  These  services  include,  among other things,  acquisition,  financial,
accounting,  tax,  capital  markets,  asset  monitoring,  portfolio  management,
investor   relations  and  public  relations   services.   The  management  team
responsible for our day-to-day  affairs has an average of 17 years of experience
with Related  Capital and an average of 22 years  experience  in the real estate
industry.

     Tax Status

         We  have  elected  to be  treated  as a REIT  for  federal  income  tax
purposes.  This treatment  permits us to deduct  dividend  distributions  to our
shareholders for federal income tax purposes,  thus effectively  eliminating the
"double  taxation"  that generally  results when a corporation  earns income and
distributes

                                     - 4 -
that income to its  shareholders  by way of dividends.  In order to maintain our
status as a REIT,  we must comply with a number of  requirements  under  federal
income tax law.  See "Risk  Factors"  and  "Federal  Income Tax  Considerations"
herein.

     Our Offices

         Our principal  executive offices are located at 625 Madison Avenue, New
York, New York 10022. Our phone number is (212) 317-5700.

Securities That May Be Offered

         This  re-offer  prospectus  relates  to the offer and sale from time to
time by the persons  listed under the "Selling  Securityholder"  section of this
re-offer  prospectus of up to 855,277  common  shares.  We are  registering  the
common shares covered by this re-offer prospectus.

         We will not  receive  any  cash  proceeds  from the sale of our  common
shares by the Selling Securityholders.

Risk Factors

         Investing in our common shares  involves  various risks. In considering
whether to purchase our common shares, you should carefully consider the matters
discussed under "Risk Factors" beginning on page 6 of this re-offer prospectus.

                                     - 5 -
RISK FACTORS

         An investment in our common shares  involves a number of risks.  Before
making an investment  decision,  you should carefully  consider all of the risks
described in this  re-offer  prospectus.  If any of the risks  discussed in this
re-offer  prospectus  actually  occur,  our  business,  financial  condition and
results of operations could be materially  adversely  affected.  If this were to
occur, the trading price of our common shares could decline and you may lose all
or part of your investment.

Mortgage   investments  that  are  not  United  States  government  insured  and
non-investment grade mortgage assets involve risk of loss

         General.  We intend to continue to originate and acquire  uninsured and
non-investment  grade  mortgage  loans  and  mortgage  assets  as  part  of  our
investment  strategy.  Such loans and assets may include mezzanine loans, bridge
loans and CMBS.  While  holding such  interests,  we will be subject to risks of
borrower defaults, bankruptcies, fraud and losses and special hazard losses that
are not covered by standard hazard  insurance.  Also, the costs of financing the
mortgage  loans could exceed the return on the mortgage  loans.  In the event of
any default  under  mortgage  loans held by us, we will bear the risk of loss of
principal and  non-payment  of interest and fees to the extent of any deficiency
between the value of the mortgage  collateral  and the  principal  amount of the
mortgage  loan.  To the  extent  we  suffer  such  losses  with  respect  to our
investments  in  mortgage  loans,  the value of our company and the price of our
common shares may be adversely affected.

         Limited  recourse  loans  may limit  our  recovery  to the value of the
mortgaged  property.  Our  loans  are  generally  non-recourse,  except  for our
mezzanine loans, which typically have limited recourse  provisions for the first
three years from the date of the permanent loan. In addition,  limited  recourse
against the borrower may be further limited by applicable provisions of the laws
of the  jurisdictions  in which the mortgaged  properties  are located or by the
selection  of  remedies  and the  impact of those laws on that  selection.  With
respect to our non-recourse  mortgage loans, in the event of a borrower default,
the value of the specific  mortgaged  property and other assets, if any, pledged
to secure the relevant mortgage loan, may be less than the amount owed under the
mortgage loan. As to those mortgage loans that provide for recourse  against the
borrower and its assets generally,  there can be no assurance that such recourse
will provide a recovery in respect of a defaulted mortgage loan greater than the
liquidation value of the mortgaged property securing that mortgage loan.

Competition in acquiring  desirable  investments  may limit the  availability of
desirable  investments  which could, in turn,  negatively  affect our ability to
maintain our dividend distribution

         We compete for loan  investments  with numerous public and private real
estate  investment  vehicles,  such as mortgage  banks,  pension  funds,  REITs,
institutional  investors and individuals.  Mortgages,  subordinated interests in
CMBS and other  investments  are often  obtained  through a competitive  bidding
process. In addition,  competitors may seek to establish  relationships with the
financial  institutions  and other firms from which we intend to  purchase  such
assets.  Many of our  competitors are larger than us, may have access to greater
capital and other resources,  may have management personnel with more experience
than our officers or our Advisor and may have other  advantages  over us and our
Advisor  in  conducting   certain  business  and  providing   certain  services.
Competition may result in higher prices for mortgage assets,  lower yields and a
narrower  spread of yields over our borrowing  costs.  There can be no assurance
that we will achieve  investment  results that will allow any specified level of
cash distribution.

                                     - 6 -
Interest rate fluctuations  will affect the value of our assets,  net income and
the common shares

         General. Interest rates are highly sensitive to many factors, including
governmental monetary and tax policies,  domestic and international economic and
political  considerations  and other factors  beyond our control.  Interest rate
fluctuations  can adversely affect our income and the value of our common shares
in many ways and  present a variety of risks,  including  the risk of a mismatch
between  asset  yields and  borrowing  rates,  variances  in the yield curve and
changing prepayment rates.

         Interest rate  mismatch  could occur between asset yields and borrowing
rates resulting in decreased yield.  Our operating  results will depend in large
part on  differences  between the income from our assets (net of credit  losses)
and  our  borrowing  costs.  We  fund  the  origination  and  acquisition  of  a
significant portion of our assets with borrowings which have interest rates that
reset relatively rapidly,  such as monthly or quarterly.  We anticipate that, in
most cases,  the income from our  fixed-rate  assets will respond more slowly to
interest rate fluctuations than the cost of our borrowings,  creating a mismatch
between  asset yields and  borrowing  rates.  Consequently,  changes in interest
rates, particularly short-term interest rates, may influence our net income.

         Effective February 15, 2000, we entered into a repurchase facility with
Nomura Securities International Inc. (the "Nomura Facility").  Nomura Securities
notified us in January 2004 that it intended to terminate  the Nomura  Facility.
In  February  2004,  we  executed   repurchase   agreements   (the   "Repurchase
Facilities") with three other parties (the "Counterparties") and, in March 2004,
we received  new funding  and repaid the amounts due to Nomura  Securities.  The
terms of the Repurchase Facilities, which have no expiration date, offer advance
rates  between  94% and 97% of the  fair  market  value  of GNMA  and  FNMA  DUS
certificates  and  borrowing  rates from 30-day  LIBOR  minus 3 basis  points to
30-day LIBOR plus 10 basis points,  which terms may change at the  discretion of
the  Counterparties.  The borrowings are typically  subject to 30-day settlement
terms and are subject to  repricing at the option of the  Counterparties.  As of
June 30, 2004, $142.4 million was outstanding under these Repurchase Facilities,
at a weighted average interest rate of 1.68%.

         In October  2002, we entered into a warehouse  line of credit  facility
with  Fleet  National  Bank  (the  "Warehouse  Facility")  in the  amount of $40
million.  This facility,  which matures on August 27, 2005,  bears interest at a
rate of 30,  60, 90 or  180-day  LIBOR + 200 basis  points,  at our  discretion,
payable  monthly on advances.  As of June 30, 2004, we had  approximately  $30.9
million in loans outstanding under the Warehouse Facility, at a weighted average
interest rate of 3.22%.

         To mitigate  the impact of  interest  rate  fluctuations,  on March 24,
2003,  we entered  into a  five-year  LIBOR  interest  rate swap with a notional
amount of $30 million. The annual fixed interest rate payable by us on this swap
is 3.48%.  Based on the $146.3 million unhedged portion of the $176.3 million of
borrowings  outstanding  at June 30, 2004, a 1% change in LIBOR would impact our
annual net income and cash flows by approximately $1.5 million.  However, as the
interest  income from loans made under the Warehouse  Facility are also based on
LIBOR,  a 1%  increase in LIBOR  would  increase  our annual net income and cash
flows from such loans by approximately  $284,000.  Increases in these rates will
tend to decrease  our net income and market  value of our net  assets.  Interest
rate fluctuations that result in our interest expense exceeding  interest income
would result in our incurring operating losses.

         Prepayment rates can increase,  thus adversely  affecting  yields.  The
value  of our  assets  may be  affected  by  prepayment  rates  on  investments.
Prepayment  rates are  influenced  by changes in  current  interest  rates and a
variety of  economic,  geographic  and other  factors  beyond our  control,  and
consequently,  such prepayment rates cannot be predicted with certainty.  To the
extent we originate mortgage loans, we expect that such mortgage loans will have
a measure of  protection  from  prepayment  in the form of  prepayment  lock-out
periods or prepayment  penalties.  However, such protection may not be available
with respect to investments which we acquire,  but do not originate.  In periods
of declining

                                     - 7 -
mortgage interest rates, prepayments on mortgages generally increase. If general
interest rates decline as well, the proceeds of such prepayments received during
such periods are likely to be reinvested by us in assets  yielding less than the
yields on the investments  that were prepaid.  In addition,  the market value of
mortgage  investments may, because of the risk of prepayment,  benefit less from
declining interest rates than from other fixed-income securities. Conversely, in
periods of rising interest rates,  prepayments on mortgages  generally decrease,
in which case we would not have the prepayment  proceeds  available to invest in
assets with higher yields.  Under certain interest rate and prepayment scenarios
we may fail to recoup fully our cost of acquisition of certain investments.

We are  dependent  on our  Advisor and if our Advisor  terminates  the  Advisory
Agreement, we may not be able to find an adequate replacement advisor

         We have no  employees,  although  for  administrative  purposes we have
appointed officers.  We have entered into an Advisory Agreement with our Advisor
under  which  our  Advisor  provides  us with all of the  services  vital to our
operations.   We  are   dependent  on  our  Advisor  for  the   management   and
administration  of our business and  investments.  The results of our operations
will be  dependent  upon the  availability  of,  and our  Advisor's  ability  to
identify and  capitalize  on,  investment  opportunities.  The  agreement may be
terminated  (i) without  cause by our Advisor or (ii) with or without cause by a
majority of our  independent  trustees,  each  without  penalty and each upon 60
days'  prior  written  notice  to the  non-terminating  party.  If  our  Advisor
terminates  our  agreement,  we may not be able to find an adequate  replacement
advisor.

Conflicts of interest could arise among our Advisor, Related Capital and us with
respect to investment opportunities

         Our Advisor has  subcontracted  to Related  Capital the  obligation  to
provide the services which our Advisor is required to provide under the Advisory
Agreement.  There are risks involved with this  arrangement.  Under the Advisory
Agreement,  our Advisor and Related  Capital are  permitted to act as advisor to
any other person or entity having investment policies similar to ours, including
other REITs. Generally, in conflict situations with non-affiliated entities, our
Advisor must  present an  investment  opportunity  to us if the  opportunity  is
within our investment objectives and policies, the opportunity is of a character
that could be taken by us, and we have the financial resources to take advantage
of the opportunity.  However,  to the extent that other companies  advised by or
affiliated  with  our  Advisor  or  Related  Capital  have  similar   investment
objectives to ours and have funds  available for  investment at the same time as
we do or to the extent that an investment is potentially  suitable for us and at
least one such  entity,  conflicts  of interest  could arise as to which  entity
should acquire the investment.

         Related Capital effectively controls and manages a closed-end, publicly
held limited  partnership with similar investment  objectives that may invest in
mortgages suitable for investment by us (although this entity has fully invested
its  available  funds and is not  permitted  to raise  additional  capital).  In
addition,  Related Capital is a subsidiary and the manager of CharterMac,  which
invests  primarily in tax-exempt  mortgage  investments but has in the past, and
may in the future,  invest in taxable mortgage  investments  similar to those in
which we invest.

         To the  extent  that these  existing  entities,  as well as  affiliated
entities which may be formed by affiliates of CharterMac and Related  Capital in
the future,  have funds available for investment at the same time as we do and a
potentially suitable investment is offered to us or the affiliated entities, our
Advisor will review the affiliated  entities' and our investment  portfolios and
will  determine  whether  or not  the  investment  should  be made by one of the
affiliated  entities  or by us based  upon  factors  such as the amount of funds
available for investment, yield and portfolio diversification.  If the making of
a mortgage loan or other mortgage  investment appears equally appropriate for us
and these affiliated  entities,  the mortgage loan or other mortgage  investment
will either be made by a joint venture between two or more of such

                                     - 8 -
entities (which may include us), or will be allocated to one of such entities on
a basis of rotation with the initial  order of priority  determined by the dates
of formation of the entities.

         In addition, The Related Companies,  LP ("TRCLP"),  the principal owner
of which is Stephen M. Ross, the Non-Executive Chairman and major shareholder of
CharterMac,  currently engages in businesses which compete with our Company.  In
connection  with  CharterMac's  acquisition of Related Capital in December 2003,
CharterMac and TRCLP entered into an agreement  which  prohibited  TRCLP and its
affiliates  from  competing  with any business  currently  engaged in by Related
Capital other than in specified areas,  including originating mezzanine loans to
multifamily  housing  properties  similar to those which secure our loans. There
can be no  assurance  that we and TRCLP and its  affiliates  would not  directly
compete for similar products and opportunities in these areas in the future.

Conflicts  of interest  could arise in  transactions  where we lend to or borrow
from affiliates of Related Capital

         Every  transaction  entered  into  between  us  and a  Related  Capital
affiliate  raises a potential  conflict of interest.  In addition to the initial
determination to invest in mortgage investments secured by properties owned by a
Related  Capital  affiliate,  such  conflicts of interest  with respect to these
mortgage investments include,  among others,  decisions regarding (i) whether to
waive defaults of such Related Capital affiliate, (ii) whether to foreclose on a
loan,  and  (iii)  whether  to permit  additional  financing  on the  properties
securing our investments other than financing provided by us.

         We  have  invested  in,  and  may in the  future  invest  in,  mortgage
investments  secured by properties in which either direct or indirect affiliates
of Related  Capital own equity  interests in the borrower.  Our  declaration  of
trust requires that any transaction between our Advisor,  Related Capital or any
of their  affiliates  and us be approved by a majority of trustees,  including a
majority  of  the  independent   trustees,   not  otherwise  interested  in  the
transaction,  as being fair and reasonable and on terms not less favorable to us
than those available from  unaffiliated  third parties.  As of June 30, 2004, we
had six bridge loans with a total carrying value of approximately $6.75 million,
two first mortgages with a total carrying value of approximately  $2.25 million,
and seven taxable multifamily housing first mortgage bonds with a total carrying
value of approximately $6.79 million to borrowers that are affiliates of Related
Capital. Typically, these affiliate borrowers are limited partnerships where the
general  partner is either an  affiliate of Related  Capital or an  unaffiliated
third party with a 1% general partnership interest,  and the 99% limited partner
is a limited  partnership  in which an  affiliate  of Related  Capital owns a 1%
general  partnership  interest and one or more Fortune 500  companies  own a 99%
limited partnership interest.

         In  June  2004,  we  entered  into a  revolving  credit  facility  (the
"Revolving  Facility")  with  CharterMac,  which provides up to $20.0 million in
borrowings  and bears  interest at LIBOR plus 300 basis  points.  The  Revolving
Facility  is for a term of one  year  with a  one-year  optional  extension  and
contains  customary  restrictions/covenants  that are  similar to our  Warehouse
Facility.

We may not accurately assess investment yields,  which may negatively affect our
earnings

         Before  making any  investment,  our Advisor will consider the expected
yield of the  investment  and the factors that may influence the yield  actually
obtained  on  such  investment.  These  considerations  will  affect  our or our
Advisor's  decision whether to purchase such an investment and the price offered
for such an  investment.  No assurances  can be given that we or our Advisor can
make an accurate  assessment of the yield to be produced by an investment.  Many
factors  beyond our and our Advisor's  control are likely to influence the yield
on the investments, including, but not limited to, competitive conditions in the
local real estate market,  local and general economic conditions and the quality
of management of the underlying property.  Our Advisor's inability to accurately
assess investment yields may result in our purchasing assets that do not perform
as well as expected, which may negatively affect our earnings.

                                     - 9 -
We are subject to risks due to volatility of values of properties

         Multifamily  and commercial  property  values and net operating  income
derived  from such  properties  are  subject to  volatility  and may be affected
adversely  by a number of factors,  including,  but not  limited  to,  national,
regional  and local  economic  conditions  (which may be  adversely  affected by
industry slowdowns and other factors);  local real estate conditions (such as an
oversupply of housing,  retail,  industrial,  office or other commercial space);
changes or  continued  weakness  in  specific  industry  segments;  construction
quality, age and design; demographic factors; retroactive changes to building or
similar codes;  and increases in operating  expenses (such as energy costs).  In
the event net operating income decreases,  a borrower may have difficulty paying
our mortgage loan, which could result in losses to us. In addition, decreases in
property  values reduce the value of the collateral  and the potential  proceeds
available to a borrower to repay our mortgage  loans,  which could also cause us
to suffer losses.

         We also own several  properties as a result of defaults by borrowers in
2003. As of June 30, 2004, the aggregate  carrying value of these properties was
approximately  $77.7 million.  While we are acting to improve the performance of
these properties and are actively seeking buyers for them, there is no assurance
that we will realize the full carrying amounts when the properties are sold.

We are subject to construction completion risks

         Some of our loans are secured by multifamily  housing  properties which
are still in various stages of  construction.  Construction  of such  properties
generally  takes  approximately  12 to 24 months.  The principal risk associated
with construction lending is the risk of noncompletion of construction which may
arise as a result of: (i) underestimated  initial  construction costs, (ii) cost
overruns  during  construction,  (iii) delays in  construction,  (iv) failure to
obtain governmental  approvals,  and (v) adverse weather and other unpredictable
contingencies beyond the control of the developer.  If a mortgage loan is called
due to  construction  not being  completed  as  required  in the  mortgage  loan
documents,  we may determine to expend  additional  capital in order to preserve
our investment.

         In  order  to  minimize  certain  risks  which  may  occur  during  the
construction  phase of a  property,  our  Advisor  endeavors  to  obtain in most
instances  one or more  types  of  security  during  such  period,  including  a
construction  completion  guarantee from the  principals of the property  owner,
personal  recourse to the property owner and payment and performance  bonding of
the  general  contractor,  if any,  with  respect  to a  property  securing  our
investment.  In  addition,  our Advisor may require  principals  of the property
owner to provide us with an  operating  deficit  guarantee,  covering  operating
deficits of a property securing an investment  during an agreed-upon  period. We
may not be able,  however,  to obtain  such  security  with  respect  to certain
properties.  In other cases,  we may decide to forego certain types of available
security if we determine  that the security is not necessary or is too expensive
to obtain in relation to the risks covered.

Bridge and  mezzanine  loans  involve  greater  risks of loss than senior  loans
secured by income-producing properties

         We have acquired and expect to continue to acquire bridge and mezzanine
loans.  These types of loans are  considered  to involve a higher degree of risk
than long-term senior mortgage lending secured by income-producing real property
due to a variety of factors,  including the loan becoming  unsecured as a result
of  foreclosure  by the senior  lender.  We may not  recover  some or all of our
investment in such loans. In addition, bridge loans and mezzanine loans may have
higher loan to value ratios than conventional mortgage loans,  resulting in less
equity in the property and increasing the risk of loss of principal.

                                     - 10 -
Subordinated   interests  are  subject  to  increased  risk  of  first  loss  or
non-investment grade subordinated interests

         We have invested  indirectly in subordinated CMBS through our ownership
of a preferred  membership  interest in ARCap.  Subordinated CMBS of the type in
which ARCap invests include "first loss" and  non-investment  grade subordinated
interests.  A first loss security is the most  subordinate  class in a structure
and accordingly is the first to bear the loss upon a default on restructuring or
liquidation  of the  underlying  collateral  and the last to receive  payment of
interest and principal.  Such classes are subject to special risks,  including a
greater risk of loss of principal and  non-payment of interest than more senior,
rated  classes.  The market values of  subordinated  interests in CMBS and other
subordinated  securities  tend to be  more  sensitive  to  changes  in  economic
conditions  than  more  senior,  rated  classes.  As a result of these and other
factors,  subordinated  interests  generally are not actively traded and may not
provide holders with liquidity of investment.  With respect to our investment in
ARCap,  our  ability to  transfer  our  membership  interest in ARCap is further
limited by the terms of ARCap's operating agreement.

Participating interests in mortgages may not be available and, even if obtained,
may not be realized

         In connection with the  acquisition  and  origination of mortgages,  we
have  obtained  and may  continue  to obtain  participating  interests  that may
entitle us to  payments  based upon a  development's  cash flow,  profits or any
increase  in  the  value  of the  development  that  would  be  realized  upon a
refinancing or sale of the development.  Competition for participating interests
is dependent to a large degree upon market conditions.  Participating  interests
are more difficult to obtain when mortgage  financing is available at relatively
low  interest  rates.  In the current  interest  rate  environment,  we may have
greater difficulty obtaining  participating  interests.  Participating interests
are not  government  insured  or  guaranteed  and are  therefore  subject to the
general risks  inherent in real estate  investments.  Therefore,  even if we are
successful in investing in mortgage  investments which provide for participating
interests,  there  can be no  assurance  that  such  interests  will  result  in
additional payments to us.

Short-term repurchase agreements involve risk of loss

         We  finance  and  expect to  continue  to  finance,  a  portion  of our
investments  through   collateralized   borrowing  in  the  form  of  repurchase
agreements,  which  involve  the  sale  by us of  assets  concurrently  with  an
agreement  by us to  repurchase  such  assets at a later date at a fixed  price.
During the repurchase  agreement  period,  we continue to receive  principal and
interest payments on the assets. The use of borrowing, or "leverage," to finance
our assets involves a number of risks, including the following:

         If we are unable to renew our borrowings at favorable  rates, we may be
forced to sell assets, and our profitability may be adversely affected.  We rely
on  short-term  repurchase  agreements  to finance a portion of our assets.  Our
ability to achieve our  investment  objectives  depends on our ability to borrow
money in sufficient  amounts and on favorable  terms and our ability to renew or
replace these short-term  borrowings on a continuous basis as they mature. If we
are not able to renew or replace maturing borrowings, we would be forced to sell
some of our assets under possibly adverse market conditions, which may adversely
affect  our   profitability.   As  of  June  30,  2004,  we  had  borrowings  of
approximately $142.4 million outstanding under the Repurchase Facilities, all of
which typically have 30 day settlement terms.

         A decline in the market  value of our assets may result in margin calls
that may force us to sell assets under  adverse  market  conditions.  Repurchase
agreements  involve the risk that the market value of the securities  sold by us
may decline and that we will be required to post additional  collateral,  reduce
the amount  borrowed or suffer forced sales of the  collateral.  If forced sales
were made at prices lower than the carrying  value of the  collateral,  we would
experience additional losses. If we are forced to

                                     - 11 -
liquidate our assets to repay borrowings, there can be no assurance that we will
be able to  maintain  compliance  with the  REIT  asset  and  source  of  income
requirements.

         Our use of  repurchase  agreements to borrow money may give our lenders
greater  rights  in  the  event  of  bankruptcy.  Of  our  total  borrowings  of
approximately  $176.3 million as of June 30, 2004,  approximately $142.4 million
were made using repurchase  agreements which require us to pledge certain of our
assets to the lender to secure our obligations thereunder. Borrowings made under
repurchase  agreements  may qualify for special  treatment  under the Bankruptcy
Code,  which may make it  difficult  for us to recover our  pledged  assets if a
lender files for  bankruptcy.  In addition,  if we were to file for  bankruptcy,
lenders under our repurchase  agreements may be able to avoid the automatic stay
provisions of the Bankruptcy  Code and take  possession  of, and liquidate,  the
assets we pledged under these agreements without delay.

Our debt  obligations  may  reduce  our  operating  performance  and put us at a
competitive disadvantage

         In  addition to the risks  associated  with the  short-term  repurchase
agreements described above, we are subject to the risks normally associated with
debt  financing,  including the risk that our cash flow will be  insufficient to
meet required  payments of principal and interest under the Warehouse  Facility,
and the  risk  that  indebtedness  under  the  Warehouse  Facility  will  not be
refinanced  at  maturity  or that the terms of such  refinancing  will not be as
favorable as the terms of the Warehouse Facility.

         A portion of the outstanding  principal under the Warehouse Facility is
due at the maturity or prepayment of each of the underlying loans. We anticipate
repaying  the  indebtedness   through  refinancing  or  sales  proceeds  of  the
properties securing the mortgage loans. In the event that the proceeds from such
sales  or  refinancings  do  not  generate   sufficient  amounts  to  repay  our
obligations  under the  Warehouse  Facility,  we will be required to pay off the
remaining borrowings under the Warehouse Facility through cash, other borrowings
or  equity  offerings.  If we were  unable  to  refinance  our  indebtedness  on
acceptable  terms,  we might be forced to sell  assets  under  possibly  adverse
market conditions,  which may adversely affect our profitability.  If prevailing
interest  rates,  financing  spreads or other factors at the time of refinancing
the Warehouse  Facility result in higher interest  rates,  our interest  expense
would increase, which would adversely affect our results of operations.

         We intend to incur  additional debt in connection with new acquisitions
and/or  originations.  We may also  borrow  funds if  necessary  to satisfy  the
requirement  that we distribute to shareholders as dividends at least 90% of our
annual REIT taxable income,  or otherwise as is necessary or advisable to ensure
that we maintain our qualification as a REIT for federal income tax purposes.

         Our debt  may  harm  our  business  and  operating  results,  including
requiring us to use a substantial  portion of our cash generated to pay interest
and  required  principal  payments,  which  reduces  the  amount  available  for
dividends.

         As of June 30, 2004, we had  borrowings  of $30.9  million  outstanding
under the Warehouse Facility.

Liquidation of collateral may jeopardize our REIT status

         To  continue to qualify as a REIT,  we must  comply  with  requirements
regarding our assets and our sources of income. If we are compelled to liquidate
our mortgage  investments to satisfy our  obligations to our lenders,  we may be
unable to comply with these requirements,  ultimately jeopardizing our status as
a REIT.  For further  discussion of the asset and source of income  requirements
and the

                                     - 12 -
consequences  of our  failure  to  continue  to  qualify  as a REIT,  please see
"Federal Income Tax Considerations" herein.

Hedging transactions can limit gains and increase exposure to losses

         Hedging   involves  risk  and  typically   involves  costs,   including
transaction  costs.  Such costs  increase  as the period  covered by the hedging
increases and during periods of rising and volatile interest rates and generally
limits the amount of cash available for  distributions to shareholders.  Hedging
activities  also may not have the  desired  beneficial  impact on our results of
operations or financial condition.  Moreover, no hedging activity can completely
insulate  us from the  risks  associated  with  changes  in  interest  rates and
prepayment rates.

         We intend  generally to hedge as much of the interest  rate risk as our
Advisor  determines  is in our best  interests  given  the cost of such  hedging
transactions.  REIT  provisions  of the Code may limit our  ability to hedge our
assets and related  borrowings.  Any limitation on our use of hedging techniques
may result in greater interest rate risk.

There are risks related to loans secured by properties that benefit from LIHTCs

         The success of our  investments  in loans  secured by  properties  that
benefit from using LIHTCs will be based in part on the results of  operations of
the  underlying  properties.  The  value of such  loans and the  quality  of the
underlying  properties  as  collateral  for such loans may be  affected by other
factors, such as property re-sale and other restrictive terms.

         Regulations  may have the effect of limiting  the  realizable  value of
underlying properties. The law governing LIHTCs generally requires properties to
be leased,  for restricted  rents, to low-income  tenants for at least 15 years,
and in many cases for 30 years or more.  The  properties  are  expected to be at
least 15 years old when they are sold and may not sell for the same price as new
properties.  The continuing  application of low-income  restrictions and factors
outside  the  owner's  control,  such as demand for  apartments  and real estate
values  generally,  will  determine  whether the properties can be sold for more
than the owner invested in them or the amount of our mortgage loan.

         Terms of  government  financings  could limit  revenues.  If a property
receives  government  assistance  or  financing,  the  terms  of the  government
assistance or financing (e.g., tenant eligibility, approvals for rent increases,
limitations on the percentage of income which low- and  moderate-income  tenants
may pay as rent) could limit the revenue from the property and depress its value
and thereby jeopardize the owner's ability to repay our mortgage loan. There can
be no  assurance  that  government  assistance  programs  which are  intended to
benefit a property will be continued by the assistance provider and that if such
assistance  is  not  continued  that  the  property  will  generate   sufficient
additional revenue to substitute for the discontinued  government  assistance so
as to meet its mortgage or operating obligations.

Geographic  concentration  and the  credit  quality of  borrowers  may result in
losses

         We have not established any limit upon the geographic  concentration of
properties  securing  mortgage  loans acquired or originated by us or the credit
quality of borrowers of uninsured  mortgage assets acquired or originated by us.
As a result,  properties  securing our mortgage loans may be overly concentrated
in  certain  geographic  areas and the  underlying  borrowers  of our  uninsured
mortgage  assets may have low credit  quality.  We may experience  losses due to
geographic  concentration or low credit quality.  As of June 30, 2004, 50.55% of
our  investments  in bridge and  mezzanine  loans were secured by  properties in
Texas.  Bridge  and  mezzanine  loans  comprised  approximately  15.52%  of  our
portfolio of investments as of June 30, 2004.

                                     - 13 -
Changes in mortgage loan programs could adversely affect us

         We could be hindered in making  investments  by adverse  changes in the
FHA  insurance,  Ginnie  Mae or  Fannie  Mae  guarantee  programs  or  rules  or
regulations relating to them.  Generally,  once a mortgage has been endorsed for
insurance or guaranteed, subsequent amendments to the rules or regulations would
not apply  retroactively  to affect  preexisting  investments,  but could affect
prospective  investments.  Changes to the  guarantee  programs  could  adversely
affect our ability to originate or acquire attractive investments.

There are a number of risks associated with being taxed as a REIT

         Our REIT status subjects us and our  shareholders to a number of risks,
including the following:

         Failure to qualify as a REIT would have  adverse tax  consequences  for
us. In order to maintain our REIT status we must meet a number of  requirements.
These  requirements  are  highly  technical  and  complex  and often  require an
analysis of various  factual matters and  circumstances  that may not be totally
within our control. Even a technical or inadvertent mistake could jeopardize our
REIT status. Furthermore,  Congress and the IRS may make changes to the tax laws
and  regulations,  and the  courts  may  issue  new  rulings,  that make it more
difficult or  impossible  for us to remain  qualified  as a REIT.  If we fail to
qualify  as a REIT,  we  would be  subject  to  federal  income  tax at  regular
corporate rates.  Therefore,  we would have less money available for investments
and for distributions to our shareholders.  This may also have an adverse effect
on the market value of our common  shares.  In general,  we would not be able to
elect REIT status for four years after a year in which we lose our REIT status.

         As a REIT,  our income can only come from limited types of sources.  To
qualify as a REIT,  at least 75% of our gross  income  must come from  qualified
real  estate  sources and 95% of our gross  income must come from other  sources
that are  itemized  in the  REIT  tax  laws.  Therefore,  we may have to  forego
opportunities to invest in potentially  profitable  businesses or assets because
they would produce income that could jeopardize our status as a REIT.

         We  have  certain  distribution  requirements.   As  a  REIT,  we  must
distribute to  shareholders  at least 90% of our REIT taxable income  (excluding
capital gains).  The required  distribution  limits the amount we have available
for other business purposes,  including amounts to fund our growth.  Also, it is
possible that because of the  differences  between the time we actually  receive
revenue (such as original issue discount  interest  income  attributable  to our
investment  in ARCap) or pay  expenses  and the period we report those items for
distribution purposes, we may have to borrow funds on a short-term basis to meet
the 90% distribution requirement.

         We are also  subject  to other tax  liabilities.  As a REIT,  we may be
subject to certain  federal,  state and local taxes on our income and  property.
Any of these taxes would reduce our operating cash flow.

         For further  discussion  of the risks  associated  with REIT  taxation,
please see "Federal Income Tax Considerations" herein.

Loss of Investment Company Act exemption would adversely affect us

         We intend to conduct our  business so as not to become  regulated as an
investment  company  under the  Investment  Company  Act of 1940.  If we fail to
qualify for this exemption  then we would be regulated as an investment  company
and our business  would be materially  adversely  affected.  Investment  company
regulations  would prevent us from  conducting our business as described in this
re-offer  prospectus by, among other  restrictions,  reducing our ability to use
borrowings. The Investment Company Act exempts

                                     - 14 -
entities that are  primarily  engaged in the business of purchasing or otherwise
acquiring  mortgages and other liens on and interests in real estate.  Under the
current  interpretation  of Securities  Exchange  Commission  staff, in order to
qualify for this exemption, we must maintain at least 55% of our assets directly
in these qualifying real estate  interests.  Mortgage-backed  securities that do
not represent all the certificates  issued with respect to an underlying pool of
mortgages may be treated as securities  separate  from the  underlying  mortgage
loans and, thus, may not qualify for purposes of the 55% requirement. Therefore,
our ownership of these  mortgage-backed  securities is limited by the provisions
of the  Investment  Company  Act.  In  meeting  the 55%  requirement  under  the
Investment  Company  Act,  we  treat  as  qualifying  interests  mortgage-backed
securities  issued with  respect to an  underlying  pool as to which we hold all
issued  certificates.   If  the  Commission  or  its  staff  adopts  a  contrary
interpretation,  we  could  be  required  to sell a  substantial  amount  of our
mortgage-backed securities under potentially adverse market conditions. Further,
in order to  insure  that we at all times  qualify  for the  exemption  from the
Investment  Company  Act, we may be  precluded  from  acquiring  mortgage-backed
securities  whose  yield is somewhat  higher  than the yield on  mortgage-backed
securities  that could be purchased in a manner  consistent  with the exemption.
The net effect of these factors may be to lower our net income.

Restrictions on share accumulation in REITs could discourage a change of control
of our company

         In order for us to qualify  as a REIT,  not more than 50% of the number
or value of the outstanding shares may be owned, directly or indirectly, by five
or  fewer  individuals  during  the  last  half of a  taxable  year or  during a
proportionate part of a shorter taxable year.

         In order to prevent five or fewer  individuals from acquiring more than
50% of our outstanding  shares and a resulting failure to qualify as a REIT, our
declaration of trust provides that, subject to certain exceptions, no person may
own, or be deemed to own by virtue of the  attribution  provisions  of the Code,
more than 9.8% of the outstanding shares. The shares most recently acquired by a
person that are in excess of the 9.8% limit will not have any voting  rights and
be deemed to have been  offered  for sale to us for a period  subsequent  to the
acquisition.  Any  person  who  acquires  shares in excess of the 9.8%  limit is
obliged  to  immediately  give  written  notice  to us and  provide  us with any
information  we may request in order to determine the effect of the  acquisition
on our status as a REIT.

         While these  restrictions  are designed to prevent any five individuals
from  owning  more  than 50% of our  shares,  they also  discourage  a change in
control of our company. These restrictions may also deter tender offers that may
be attractive to  shareholders  or limit the  opportunity  for  shareholders  to
receive a premium for their shares if an investor  makes  purchases of shares to
acquire a block of shares.

Supermajority  voting requirements for acquisitions and mergers could discourage
a change of control of our company

         Our declaration of trust requires that 80% of our  shareholders and all
of our independent trustees approve exchange offers, mergers,  consolidations or
similar  transactions  involving us in which our shareholders receive securities
in a surviving  entity having  materially  different  investment  objectives and
policies,  or that is anticipated to provide  significantly greater compensation
to management, except for transactions affected because of changes in applicable
law,  or  to  preserve  tax  advantages  for  a  majority  in  interest  of  our
shareholders.

Issuances of large  amounts of our common  shares could cause our share price to
decline

         As of June 30, 2004,  there were 8,335,639  common shares  outstanding.
This  re-offer  prospectus  relates to the sale of up to an  additional  855,277
common shares. Furthermore, in connection with the issuance of any common shares
in the future, our Advisor is entitled to receive as compensation  common shares
equal to 1% of the issuance,  which common shares vest over a three-year  period
and are restricted

                                     - 15 -
as to their  transferability  until they vest. In addition,  our  declaration of
trust  permits our trustees to issue an unlimited  number of shares  (subject to
the consent of  shareholders  if required  pursuant to the rules of the American
Stock  Exchange).  The  issuance of common  shares  could cause  dilution of our
existing common shares and a decrease in the market price.

Our shareholders may have personal liability for our acts and obligations

         It is  possible  that  certain  states may not  recognize  the  limited
liability of  shareholders,  although our declaration of trust provides that our
shareholders  shall not be subject  to any  personal  liability  for our acts or
obligations. Our declaration of trust also provides that every written agreement
entered  into by us shall  contain  a  provision  that our  obligations  are not
enforceable  against our shareholders  personally.  No personal liability should
attach  to our  shareholders  under any  agreement  containing  such  provision;
however,  not  every  written  agreement  entered  into  by us  contains  such a
provision. In certain states, our shareholders may be held personally liable for
contract  claims where the underlying  agreement does not  specifically  exclude
shareholder  liability.  Our shareholders may also be held personally liable for
other  claims  against  us,  such as tort  claims,  claims for taxes and certain
statutory  liability.   Upon  payment  of  any  such  liability,   however,  the
shareholder  will,  in the absence of willful  misconduct  on the  shareholder's
part, be entitled to reimbursement  from our general assets,  to the extent such
assets are sufficient to satisfy the claim.

Liability  relating  to  environmental  matters  may  impact  the  value  of the
underlying properties

         Under  various  federal,  state and local laws, an owner or operator of
real  property may become  liable for the costs of removal of certain  hazardous
substances  released on its property.  Such laws often impose liability  without
regard to whether the owner or operator  knew of, or was  responsible  for,  the
release of such hazardous  substances.  The presence of hazardous substances may
adversely  affect an owner's  ability to sell real  estate or borrow  using real
estate as  collateral.  To the extent  that an owner of an  underlying  property
becomes liable for removal costs, the ability of the owner to make debt payments
may be reduced,  which in turn may  adversely  affect the value of the  relevant
mortgage asset held by us.

We may  incur  costs in  connection  with  the  compliance  requirements  of the
Americans with Disabilities Act and fire and safety regulations

         Certain  underlying  properties  may be  required  to  comply  with the
Americans with Disabilities Act, which has separate compliance  requirements for
"public accommodations" and "commercial facilities," but generally requires that
buildings be made accessible to disabled  people.  Compliance with the Americans
with Disabilities Act could require removal of access barriers and noncompliance
could  result  in  imposition  of fines by the  U.S.  government  or an award of
damages to private litigants.

         In addition,  owners are required to operate  properties  in compliance
with  fire  and  safety   regulations,   building  codes,  and  other  land  use
regulations.  Compliance  with  such  requirements  may  require  owners to make
substantial  capital  expenditures and these  expenditures may impair an owner's
ability to make debt payments,  which in turn may adversely  affect the value of
the relevant mortgage asset held by us.

Recent tax legislation may have negative consequences for REITs

         Recent tax  legislation  allows  corporations to pay dividends that are
taxable to shareholders  at reduced rates.  These reduced rates generally do not
apply to dividends paid by REITs.  Although the  legislation  does not adversely
affect  the tax  treatment  of  REITs,  it may  cause  investments  in  non-REIT
corporations  to become  relatively  more  desirable.  As a result,  the capital
markets may be less  favorable to

                                     - 16 -
REITs  when they seek to raise  equity  capital,  and the  prices at which  REIT
equity securities trade may underperform non-REIT corporations.

                                     - 17 -
FEDERAL INCOME TAX CONSIDERATIONS

         The following  discussion  summarizes  the material  federal income tax
considerations  to  you  as  a  prospective  holder  of  shares.  The  following
discussion is for general  information  purposes  only, is not exhaustive of all
possible  tax  considerations  and  is not  intended  to be  and  should  not be
construed  as tax advice.  For  example,  this  summary does not give a detailed
discussion of any state, local or foreign tax considerations.  In addition, this
discussion is intended to address only those federal  income tax  considerations
that are generally  applicable to all our shareholders.  It does not discuss all
of the aspects of federal  income  taxation that may be relevant to you in light
of your particular  circumstances  or to certain types of  shareholders  who are
subject to  special  treatment  under the  federal  income  tax laws  including,
without  limitation,   insurance  companies,   tax-exempt  entities,   financial
institutions or  broker-dealers,  foreign  corporations  and persons who are not
citizens or residents of the United States.

         The  information in this section is based on the Internal  Revenue Code
of 1986, as amended,  which is referred to as the Code, existing,  temporary and
proposed  regulations  under  the Code,  the  legislative  history  of the Code,
current administrative rulings and practices of the IRS and court decisions, all
as of the date  hereof.  No  assurance  can be given  that  future  legislation,
regulations,   administrative  interpretations  and  court  decisions  will  not
significantly change current law or adversely affect existing interpretations of
current law. Any such change could apply retroactively to transactions preceding
the date of the change.  In addition,  we have not received,  and do not plan to
request,  any  rulings  from  the  IRS  concerning  our tax  treatment.  Thus no
assurance  can be provided  that the  statements  set forth herein (which do not
bind the IRS or the  courts)  will  not be  challenged  by the IRS or that  such
statements will be sustained by a court if so challenged.

         EACH PROSPECTIVE  PURCHASER OF SHARES IS ADVISED TO CONSULT WITH HIS OR
HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE
PURCHASE,  OWNERSHIP  AND SALE OF SHARES OF AN ENTITY  ELECTING TO BE TAXED AS A
REIT, INCLUDING THE FEDERAL, STATE, LOCAL AND FOREIGN AND OTHER TAX CONSEQUENCES
OF SUCH  PURCHASE,  OWNERSHIP,  SALE AND ELECTION  AND OF  POTENTIAL  CHANGES IN
APPLICABLE TAX LAWS.

Taxation of our Company

         General.  We elected to be taxed as a REIT under  Sections  856 through
860 of the Code,  commencing  with our taxable year ended  December 31, 1991. We
believe that we have been organized,  and have operated,  in such a manner so as
to qualify  for  taxation  as a REIT  under the Code and  intend to conduct  our
operations  so as to continue to qualify for taxation as a REIT.  No  assurance,
however, can be given that we have operated in a manner so as to qualify or will
be able to  operate  in  such a  manner  so as to  remain  qualified  as a REIT.
Qualification  and  taxation  as a REIT  depend  upon our  ability  to meet on a
continuing  basis,   through  actual  annual  operating  results,  the  required
distribution levels,  diversity of share ownership and the various qualification
tests imposed under the Code discussed  below,  the results of which will not be
reviewed  by counsel.  Given the highly  complex  nature of the rules  governing
REITs, the ongoing importance of factual determinations,  and the possibility of
future changes in our  circumstances,  no assurance can be given that the actual
results  of our  operations  for any one  taxable  year have  satisfied  or will
continue to satisfy such requirements.

The  following  is a general  summary  of the Code  provisions  that  govern the
federal income tax treatment of a REIT and its shareholders. These provisions of
the Code are highly  technical  and  complex.  This  summary is qualified in its
entirety  by  the  applicable   Code   provisions,   Treasury   Regulations  and
administrative and judicial interpretations thereof, all of which are subject to
change prospectively or retroactively.

                                     - 18 -
If we qualify for taxation as a REIT, we generally  will not be subject
to  federal  corporate  income  taxes  on  our  net  income  that  is  currently
distributed to shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder  levels) that generally results from
investment in a corporation.  However,  we will be subject to federal income tax
as  follows:  first,  we  will  be  taxed  at  regular  corporate  rates  on any
undistributed  REIT taxable income,  including  undistributed net capital gains.
Second,  under  certain  circumstances,  we may be subject  to the  "alternative
minimum tax" on our items of tax  preference.  Third,  if we have (a) net income
from the sale or other  disposition  of  "foreclosure  property",  which  is, in
general,  property  acquired on  foreclosure  or  otherwise on default on a loan
secured  by such  real  property  or a lease  of such  property,  which  is held
primarily for sale to customers in the ordinary  course of business or (b) other
nonqualifying income from foreclosure property, we will be subject to tax at the
highest  corporate  rate on such  income.  Fourth,  if we have net  income  from
prohibited  transactions  such income will be subject to a 100% tax.  Prohibited
transactions  are, in general,  certain sales or other  dispositions of property
held  primarily for sale to customers in the ordinary  course of business  other
than  foreclosure  property.  Fifth,  if we should fail to satisfy the 75% gross
income test or the 95% gross income test (as discussed  below),  but nonetheless
maintain our  qualification  as a REIT because certain other  requirements  have
been met,  we will be subject to a 100% tax on an amount  equal to (a) the gross
income attributable to the greater of the amount by which we fail the 75% or 95%
test multiplied by (b) a fraction intended to reflect our profitability.  Sixth,
if we should fail to  distribute  during each  calendar year at least the sum of
(a) 85% of our REIT ordinary  income for such year,  (b) 95% of our REIT capital
gain net income for such year,  and (c) any  undistributed  taxable  income from
prior  periods,  we would be  subject  to a 4% excise  tax on the excess of such
required  distribution  over the amounts actually  distributed.  Seventh,  if we
acquire any asset from a C corporation (i.e., a corporation generally subject to
full  corporate  level tax) in a transaction  in which the basis of the asset in
our hands is  determined  by  reference  to the basis of the asset (or any other
property) in the hands of the C corporation, the "built-in gain" associated with
the asset would generally be subject to tax at the highest  corporate rate if we
dispose of such asset  during the 10 year period  beginning  on the date that we
acquired  that  asset,  to the extent of such  property's  "built-in  gain" (the
excess of the fair market value of such property at the time of our  acquisition
over the  adjusted  basis of such  property at such time).  We also will incur a
100% excise tax on  transactions  with a taxable  REIT  subsidiary  that are not
conducted on an arm's-length basis.

         Requirements  for  Qualification.  A REIT is a  corporation,  trust  or
association  (1) which is managed by one or more trustees or directors,  (2) the
beneficial  ownership  of which  is  evidenced  by  transferable  shares,  or by
transferable  certificates of beneficial interest, (3) which would be taxable as
a domestic corporation,  but for Sections 856 through 859 of the Code, (4) which
is neither a financial  institution nor an insurance  company subject to certain
provisions of the Code,  (5) that has the calendar year as its taxable year, (6)
the beneficial ownership of which is held by 100 or more persons, (7) during the
last half of each  taxable  year not more  than 50% in value of the  outstanding
stock of which is owned,  directly or indirectly,  by five or fewer  individuals
(as  defined  in the Code to  include  certain  entities),  and (8) which  meets
certain  other tests,  described  below,  regarding the nature of its income and
assets.  The Code provides that conditions (1) through (5),  inclusive,  must be
met during the entire  taxable year and that condition (6) must be met 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.

         We may redeem, at our option, a sufficient number of shares or restrict
the  transfer  thereof  to bring or  maintain  the  ownership  of the  shares in
conformity with the  requirements  of the Code. In addition,  our declaration of
trust  includes  restrictions  regarding  the  transfer  of our  stock  that are
intended  to  assist  us in  continuing  to  satisfy  requirements  (6) and (7).
Moreover,  if we comply with regulatory  rules pursuant to which we are required
to send annual  letters to holders of our capital stock  requesting  information
regarding  the actual  ownership of our capital  stock,  and we do not know,  or
exercising  reasonable diligence would not have known, whether we failed to meet
requirement (7) above, we will be treated as having met the requirement.

                                     - 19 -
The  Code  allows a REIT to own  wholly-owned  subsidiaries  which  are
"qualified  REIT   subsidiaries."  The  Code  provides  that  a  qualified  REIT
subsidiary  is not  treated as a separate  corporation,  and all of its  assets,
liabilities  and items of income,  deduction  and credit are  treated as assets,
liabilities  and items of income,  deduction  and credit of the REIT.  Thus,  in
applying the requirements described herein, our qualified REIT subsidiaries will
be  ignored,  and all assets,  liabilities  and items of income,  deduction  and
credit of such subsidiaries will be treated as our assets, liabilities and items
of income, deduction and credit.

         A REIT may also hold any direct or indirect  interest in a  corporation
that qualifies as a "taxable REIT  subsidiary",  as long as the REIT's aggregate
holdings of taxable REIT subsidiary securities do not exceed 20% of the value of
the  REIT's  total  assets.  A  taxable  REIT  subsidiary  is  a  fully  taxable
corporation that generally is permitted to engage in businesses, own assets, and
earn income that, if engaged in, owned, or earned by the REIT,  might jeopardize
REIT status or result in the imposition of penalty taxes on the REIT. To qualify
as a taxable  REIT  subsidiary,  the  subsidiary  and the REIT must make a joint
election to treat the  subsidiary as a taxable REIT  subsidiary.  A taxable REIT
subsidiary also includes any corporation  (other than a REIT or a qualified REIT
subsidiary) in which a taxable REIT subsidiary  directly or indirectly owns more
than 35% of the total voting power or value. A taxable REIT  subsidiary will pay
tax at regular corporate income rates on any taxable income it earns.  Moreover,
the Code contains rules,  including rules requiring the imposition of taxes on a
REIT at the rate of 100% on certain  reallocated income and expenses,  to ensure
that contractual  arrangements  between a taxable REIT subsidiary and its parent
REIT are at arm's-length.

         In the case of a REIT  which is a partner  in a  partnership,  Treasury
Regulations  provide that the REIT will be deemed to own its proportionate share
of each of the assets of the  partnership  and will be deemed to be  entitled to
the income of the  partnership  attributable  to such share.  In  addition,  the
character of the assets and items of gross income of the partnership will retain
the same  character  in the hands of the REIT for purposes of Section 856 of the
Code,  including  satisfying  the gross  income and assets  tests (as  discussed
below). Thus, our proportionate share of the assets,  liabilities,  and items of
gross income of any  partnerships in which we own an interest are treated as our
assets,  liabilities  and items of gross  income for  purposes of  applying  the
requirements described herein.

         Income  Tests.  In order to maintain  qualification  as a REIT, we must
satisfy annually certain gross income  requirements.  First, at least 75% of our
gross income  (excluding  gross income from  prohibited  transactions)  for each
taxable year must be derived directly or indirectly from investments relating to
real  property  or  mortgages  on real  property  (including  "rents  from  real
property"  and, in certain  circumstances,  interest) or from  certain  types of
qualified  temporary  investments.  Second,  at least  95% of our  gross  income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real  property  investments,  dividends,  interest and gain
from the sale or disposition of stock or securities.

         Interest will qualify as interest on  obligations  secured by mortgages
on real property or on interests in real property in satisfying the gross income
requirements  for a REIT  described  above only if several  conditions  are met.
Interest on obligations secured by mortgages on real property or on interests in
real property  will be treated as qualifying  income to the extent that the fair
market value of the property  that secures the loan has a value  greater than or
equal to the highest principal amount,  including accrued interest, of such loan
outstanding during the REIT taxable year. To the extent the fair market value of
such property at the time of issuance and when the loan is acquired is less than
the  highest  principal  amount,   including  accrued  interest,  of  such  loan
outstanding  during the REIT  taxable  year,  only a  proportionate  part of the
interest on such loan shall be treated as qualifying income. For purposes of the
gross  income  requirements,  interest  includes  only  amounts  that  represent
compensation  for the use or forbearance of money, and does not include a charge
for services.  Interest includes income from a REMIC, as long as at least 95% of
the assets of the REMIC are interests in real property.  If less than 95%

                                     - 20 -
of the assets of a REMIC consist of real estate, income accrued by the REIT will
be treated as interest from a mortgage in the  proportion in which assets of the
REMIC consist of real estate  assets.  Subject to certain  exceptions,  interest
does not include  amounts  received or accrued,  directly or indirectly,  if the
amount depends, in whole or in part, on the income or profits of any person. One
exception  to this rule is that  amounts  may be based on the gross  receipts or
sales of a person, and still constitute interest for these purposes.  The second
exception  would be available if the REIT receives or accrues amounts that would
be excluded  from  interest  because the borrower  receives or accrues an amount
based on the income or profits of any person; in such case, only a proportionate
part of the  amount  received  or  accrued  by the REIT is  excluded  from being
treated as interest.  Third, if the borrower  derives  substantially  all of its
gross  income with  respect to the  property  subject to the  mortgage  from the
leasing of its property to tenants, an amount based on the net income or profits
of the borrower  may be treated as interest if the borrower  receives or accrues
amounts  that would  qualify as rents from real  property  had such amounts been
received by the REIT.

         Rents  received  by us will  qualify as "rents from real  property"  in
satisfying  the gross income  requirements  for a REIT  described  above only if
several conditions are met.

         We  believe  that  substantially  all of our  interest  income  will be
qualifying income under the gross income tests.

         If we fail to satisfy one or both of the 75% or 95% gross  income tests
for any taxable  year,  we may  nevertheless  qualify as a REIT for such year if
such failure was due to reasonable cause and not willful  neglect,  we disclosed
the nature and  amounts of our items of gross  income in a schedule  attached to
our return,  and any incorrect  information on the schedule was not due to fraud
with intent to evade tax. It is not possible,  however,  to state whether in all
circumstances we would be entitled to the benefit of this relief provision. Even
if this relief  provision  applied,  a 100%  penalty tax would be imposed on the
amount by which we failed  the 75% or 95% test  (whichever  amount is  greater),
less an amount which  generally  reflects  expenses  attributable to earning the
nonqualified income.

Subject to certain safe harbor  exceptions,  any gain realized by us on the sale
of any property held as inventory or other  property held  primarily for sale to
customers  in the ordinary  course of business  will be treated as income from a
prohibited  transaction  that is subject to a 100% penalty tax. Such  prohibited
transaction  income may also have an adverse  effect upon our ability to satisfy
the income  tests for  qualification  as a REIT.  Under  existing  law,  whether
property is held as inventory or primarily for sale to customers in the ordinary
course of a trade or  business  is a  question  of fact that  depends on all the
facts and circumstances with respect to the particular transaction.

         Asset Tests.  At the close of each quarter of our taxable year, we must
also satisfy the following tests relating to the nature of our assets.  At least
75% of the value of our total assets must be  represented by real estate assets,
including (1) our allocable  share of mortgage and other real estate assets held
by  partnerships  in  which we own an  interest  or held by our  qualified  REIT
subsidiaries  and (2) stock or debt  instruments held for not more than one year
purchased  with the proceeds of an offering of equity  securities or a long-term
(at least five  years)  debt  offering by us,  cash,  cash items and  government
securities.  In  addition,  not  more  than  25%  of  our  total  assets  may be
represented by securities other than those in the 75% asset class. Not more than
20% of the value of our total assets may be  represented by securities of one or
more taxable REIT subsidiaries. Except for investments included in the 75% asset
class,  securities in a taxable REIT subsidiary or qualified REIT subsidiary and
certain partnership interests and debt obligations,  (1) not more than 5% of the
value of our total assets may be  represented  by  securities of any one issuer,
(2) we may not hold  securities  that  possess more than 10% of the total voting
power of the  outstanding  securities of a single issuer and (3) we may not hold
securities  that  have a value  of  more  than  10% of the  total  value  of the
outstanding securities of any one issuer.

                                     - 21 -
We believe that  substantially all of our assets consist and, after the
offering, will consist of (1) mortgages, (2) stock or debt investments that earn
qualified  temporary  investment income, (3) other qualified real estate assets,
and (4)  cash,  cash  items and  government  securities.  We may also  invest in
securities of other entities, provided that such investments will not prevent us
from  satisfying  the asset and income  tests for REIT  qualification  set forth
above.

         After initially meeting the asset tests at the close of any quarter, we
will not lose our status as a REIT for failure to satisfy the asset tests at the
end of a later  quarter  solely by  reason of  changes  in asset  values.  If we
inadvertently  fail  one or more of the  asset  tests  at the end of a  calendar
quarter because we acquire  securities or other property during the quarter,  we
can cure this failure by disposing of sufficient  nonqualifying assets within 30
days after the close of the calendar quarter in which it arose.

         Annual Distribution Requirement.  With respect to each taxable year, we
must  distribute  to our  shareholders  as  dividends  (other than  capital gain
dividends) at least 90% of our taxable income. Specifically,  we must distribute
an amount equal to (1) 90% of the sum of our "REIT taxable  income"  (determined
without  regard to the  deduction  for  dividends  paid and by excluding any net
capital gain), and any after-tax net income from foreclosure property, minus (2)
the sum of certain items of "excess noncash income" such as income  attributable
to leveled  stepped  rents,  cancellation  of  indebtedness  and original  issue
discount.  REIT  taxable  income is  generally  computed  in the same  manner as
taxable income of ordinary  corporations,  with several  adjustments,  such as a
deduction allowed for dividends paid, but not for dividends received.

         We will be subject to tax on amounts not  distributed at regular United
States federal  corporate  income tax rates.  In addition,  a  nondeductible  4%
excise tax is imposed  on the excess of (1) 85% of our  ordinary  income for the
year plus 95% of  capital  gain net  income  for the year and the  undistributed
portion  of the  required  distribution  for the prior  year over (2) the actual
distribution  to  shareholders  during the year (if any).  Net operating  losses
generated  by us may be carried  forward but not carried back and used by us for
20 years to reduce REIT  taxable  income and the amount that we will be required
to distribute in order to remain qualified as a REIT. As a REIT, our net capital
losses may be carried  forward for five years (but not carried back) and used to
reduce capital gains.

         In general,  a  distribution  must be made  during the taxable  year to
which  it  relates  to  satisfy  the  distribution  test and to be  deducted  in
computing  REIT  taxable  income.  However,  we may  elect to  treat a  dividend
declared and paid after the end of the year (a "subsequent  declared  dividend")
as paid during such year for purposes of complying  with the  distribution  test
and computing REIT taxable  income,  if the dividend is (1) declared  before the
regular  or  extended  due date of our tax return for such year and (2) paid not
later  than the date of the  first  regular  dividend  payment  made  after  the
declaration,  but in no case later than 12 months after the end of the year. For
purposes of  computing  the 4% excise  tax, a  subsequent  declared  dividend is
considered  paid when actually  distributed.  Furthermore,  any dividend that is
declared by us in October,  November or December of a calendar year, and payable
to  shareholders  of record as of a specified  date in such quarter of such year
will be  deemed  to have  been  paid by us (and  received  by  shareholders)  on
December 31 of such calendar year, but only if such dividend is actually paid by
us in January of the following calendar year.

         For purposes of complying with the distribution test for a taxable year
as a  result  of an  adjustment  in  certain  of our  items of  income,  gain or
deduction  by the IRS, we may be  permitted  to remedy such  failure by paying a
"deficiency dividend" in a later year together with interest and a penalty. Such
deficiency  dividend may be included in our deduction of dividends  paid for the
earlier year for purposes of satisfying the  distribution  test. For purposes of
the 4% excise tax, the deficiency  dividend is taken into account when paid, and
any income giving rise to the  deficiency  adjustment is treated as arising when
the deficiency dividend is paid.

                                     - 22 -
We  believe  that  we  have  distributed  and  intend  to  continue  to
distribute to our  shareholders  in a timely  manner such amounts  sufficient to
satisfy the annual  distribution  requirements.  However,  it is  possible  that
timing differences between the accrual of income and its actual collection,  and
the need to make  non-deductible  expenditures  (such as  principal  payments on
debt)  may  cause us to  recognize  taxable  income  in  excess  of our net cash
receipts,  thus  increasing the difficulty of compliance  with the  distribution
requirement.  In order to meet the  distribution  requirement,  we might find it
necessary to arrange for short-term, or possibly long-term, borrowings.

         Failure to  Qualify.  If we fail to  qualify as a REIT for any  taxable
year,  and if certain  relief  provisions of the Code do not apply,  we would be
subject to federal income tax (including applicable  alternative minimum tax) on
our taxable income at regular corporate rates.  Distributions to shareholders in
any year in which we fail to qualify will not be  deductible by us nor will they
be  required  to be made.  As a result,  our  failure to qualify as a REIT would
reduce  the  cash  available  for  distribution  by us to our  shareholders.  In
addition,  if we fail to qualify as a REIT, all  distributions  to  shareholders
will be taxable as ordinary income, to the extent of our current and accumulated
earnings  and profits.  Subject to certain  limitations  of the Code,  corporate
distributees may be eligible for the dividends-received deduction.

         If our failure to qualify as a REIT is not due to reasonable  cause but
results from willful neglect, we would not be permitted to elect REIT status for
the four taxable years after the taxable year for which such disqualification is
effective.  In the  event we were to fail to  qualify  as a REIT in one year and
subsequently  requalify in a later year, we may be taxed on the net appreciation
in  value  of our  assets  if we sell  assets  within  ten  years of the date we
requalify as a REIT under federal income tax laws.

Taxation of Taxable U.S. Shareholders

         As used herein,  the term "U.S.  shareholder"  means a holder of shares
who (for United States federal income tax purposes) (1) is a citizen or resident
of the United States, (2) is a corporation, partnership, or other entity treated
as a  corporation  or  partnership  for federal  income tax purposes  created or
organized  in or  under  the  laws  of the  United  States  or of any  political
subdivision thereof (unless, in the case of a partnership,  Treasury regulations
are adopted  that  provide  otherwise),  (3) is an estate the income of which is
subject to United States federal income taxation regardless of its source or (4)
is a trust  whose  administration  is subject to the  primary  supervision  of a
United States court and which has one or more United States persons who have the
authority to control all substantial  decisions of the trust or a trust that has
a valid election to be treated as a U.S. person in effect.

         As  long  as we  qualify  as a REIT,  distributions  made  to our  U.S.
shareholders  out of  current  or  accumulated  earnings  and  profits  (and not
designated  as capital  gain  dividends)  will be taken into  account by them as
ordinary  income  and  corporate  shareholders  will  not be  eligible  for  the
dividends-received deduction as to such amounts.

         Distributions  that are properly  designated as capital gain  dividends
will be taxed as gains  from the sale or  exchange  of a capital  asset held for
more than one year (to the extent they do not exceed our actual net capital gain
for the taxable year) without regard to the period for which the shareholder has
held its shares. However,  corporate shareholders may be required to treat up to
20% of certain capital gain dividends as ordinary income under the Code.

         Distributions  in excess of our current and  accumulated  earnings  and
profits will constitute a non-taxable  return of capital to a shareholder to the
extent  that  such  distributions  do  not  exceed  the  adjusted  basis  of the
shareholder's  shares,  and will  result  in a  corresponding  reduction  in the
shareholder's  basis in the shares.  Any reduction in a shareholder's  tax basis
for its  shares  will  increase  the  amount of  taxable  gain or  decrease  the
deductible  loss that will be  realized  upon the  eventual  disposition  of the
shares.  We will notify  shareholders at the end of each year as to the portions
of the distributions which constitute

                                     - 23 -
ordinary  income,  capital  gain or a return of  capital.  Any  portion  of such
distributions that exceed the adjusted basis of a U.S. shareholder's shares will
be taxed as  capital  gain from the  disposition  of shares,  provided  that the
shares are held as capital assets in the hands of the U.S. shareholder.

         Aside from the different income tax rates applicable to ordinary income
and capital gain  dividends,  regular and capital gain dividends from us will be
treated as dividend income for most other federal income tax purposes.  However,
dividends paid by REITs generally do not qualify for the residual tax rates that
are available for dividends  paid by most  corporations  that are not REITS.  In
particular, such dividends will be treated as "portfolio" income for purposes of
the  passive   activity  loss  limitation   (including  all   individuals)   and
shareholders  generally will not be able to offset any "passive  losses" against
such dividends.  Dividends will be treated as investment  income for purposes of
the  investment  interest  limitation  contained in Section  163(d) of the Code,
which limits the  deductibility  of interest  expense  incurred by  noncorporate
taxpayers  with  respect to  indebtedness  attributable  to  certain  investment
assets.

         In general, dividends paid by us will be taxable to shareholders in the
year in which they are received, except in the case of dividends declared at the
end of the year, but paid in the following January, as discussed above.

         In general, a domestic shareholder will realize capital gain or loss on
the disposition of shares equal to the difference between (1) the amount of cash
and the fair market value of any property  received on such  disposition and (2)
the  shareholder's  adjusted  basis  of such  shares.  Such  gain  or loss  will
generally be  short-term  capital gain or loss if the  shareholder  has not held
such shares for more than one year and will be long-term capital gain or loss if
such  shares  have  been  held for more  than one  year.  Loss  upon the sale or
exchange of shares by a  shareholder  who has held such shares for six months or
less (after applying  certain holding period rules) will be treated as long-term
capital  loss to the extent of  distributions  from us required to be treated by
such shareholder as long-term capital gain.

         We may elect to retain  and pay  income  tax on net  long-term  capital
gains. If we make such an election, you, as a holder of shares, will (1) include
in your  income as  long-term  capital  gains your  proportionate  share of such
undistributed  capital  gains and (2) be deemed to have paid your  proportionate
share of the tax paid by us on such  undistributed  capital  gains  and  thereby
receive a credit  or  refund  for such  amount.  As a holder of shares  you will
increase  the  basis in your  shares by the  difference  between  the  amount of
capital  gain  included  in your  income and the amount of tax you are deemed to
have paid. Our earnings and profits will be adjusted appropriately.

Backup Withholding

         We will report to our domestic  shareholders  and the IRS the amount of
dividends  paid during each calendar  year,  and the amount of tax withheld,  if
any, with respect thereto. Under the backup withholding rules, a shareholder may
be subject to backup  withholding  with  respect to  dividends  paid unless such
holder (a) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or (b) 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.  Amounts withheld 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  made to any  shareholders  who fail to
certify their  non-foreign  status to us. Additional issues may arise pertaining
to  information  reporting  and backup  withholding  with  respect  to  Non-U.S.
Shareholders  (persons other than U.S.  shareholders,  further described below).
Non-U.S. Shareholders should consult their tax advisors with respect to any such
information and backup withholding requirements.

                                     - 24 -
Taxation of Non-U.S. Shareholders

         The  following  discussion  is only a summary  of the  rules  governing
United  States  federal  income  taxation  of  Non-U.S.   Shareholders  such  as
nonresident alien individuals,  foreign  corporations,  foreign  partnerships or
other  foreign  estates  or trusts.  Prospective  Non-U.S.  Shareholders  should
consult with their own tax advisors to  determine  the impact of federal,  state
and local income tax laws with regard to an investment in shares,  including any
reporting requirements.

         Distributions that are not attributable to gain from sales or exchanges
by us of United  States real  property  interests  and not  designated  by us as
capital gains  dividends will be treated as dividends of ordinary  income to the
extent  that  they are made  out of our  current  or  accumulated  earnings  and
profits.  Such  distributions  ordinarily  will be subject to a withholding  tax
equal to 30% of the gross amount of the  distribution  unless an applicable  tax
treaty reduces or eliminates that tax.  Certain tax treaties limit the extent to
which  dividends  paid by a REIT can qualify for a reduction of the  withholding
tax on  dividends.  Distributions  in  excess  of our  current  and  accumulated
earnings and profits will not be taxable to a Non-U.S. Shareholder to the extent
that they do not exceed the  adjusted  basis of the  shareholder's  shares,  but
rather will reduce the adjusted  basis of such  shares.  To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Shareholder's shares, they
will give rise to tax liability if the Non-U.S.  Shareholder  would otherwise be
subject  to tax on any gain  from  the sale or  disposition  of his  shares,  as
described below.

         For  withholding tax purposes,  we are currently  required to treat all
distributions as if made out of our current or accumulated  earnings and profits
and thus  intend to  withhold  at the rate of 30% (or a reduced  treaty  rate if
applicable)  on  the  amount  of  any  distribution  (other  than  distributions
designated  as capital gain  dividends)  made to a Non-U.S.  Shareholder.  Under
regulations,  we  would  not  be  required  to  withhold  at  the  30%  rate  on
distributions  we  reasonably  estimate  to be in  excess  of  our  current  and
accumulated  earnings  and  profits.  If it cannot be  determined  at the time a
distribution is made whether such  distribution will be in excess of current and
accumulated   earnings  and  profits,   the  distribution  will  be  subject  to
withholding at the rate applicable to ordinary dividends.  However, the Non-U.S.
Shareholder may seek from the IRS a refund of such amounts from the IRS if it is
subsequently  determined that such  distribution  was, in fact, in excess of our
current or accumulated  earnings and profits,  and the amount withheld  exceeded
the Non-U.S.  Shareholder's United States tax liability, if any, with respect to
the distribution.

         For any year in  which we  qualify  as a REIT,  distributions  that are
attributable  to gain  from  sales or  exchanges  by us of  United  States  real
property interests will be taxed to a Non-U.S.  Shareholder under the provisions
of the Foreign  Investment  in Real Property Tax Act of 1980  ("FIRPTA").  Under
FIRPTA,  a  Non-U.S.  Shareholder  is taxed  as if such  gain  were  effectively
connected with a United States  business.  Non-U.S.  Shareholders  would thus be
taxed 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 non-resident  alien  individuals).  Also,  distributions  subject to
FIRPTA may be subject to a 30% branch  profits  tax in the hands of a  corporate
Non-U.S. Shareholder not entitled to treaty relief or exemption. We are required
by  applicable  regulations  to withhold 35% of any  distribution  that could be
designated by us as a capital gains dividend  regardless of the amount  actually
designated as a capital gain  dividend.  This amount is  creditable  against the
Non-U.S. Shareholder's FIRPTA tax liability.

         Gain  recognized  by a  Non-U.S.  Shareholder  upon  a sale  of  shares
generally  will not be taxed under FIRPTA if we are a  "domestically  controlled
REIT,"  defined  generally  as a REIT in which at all times  during a  specified
testing  period  less  than 50% in  value of the  shares  was held  directly  or
indirectly by foreign  persons.  It is anticipated that we will continue to be a
"domestically controlled REIT" after the offering. Therefore, the sale of shares
will not be subject to taxation  under FIRPTA.  However,  because our shares are
publicly traded, no assurance can be given that we will continue to qualify as a

                                     - 25 -
"domestically  controlled  REIT." If the gain on the sale of  shares  were to be
subject to taxation under FIRPTA,  the Non-U.S.  Shareholder would be subject to
the same  treatment as U.S.  Shareholders  with respect to such gain (subject to
applicable  alternative minimum tax, special alternative minimum tax in the case
of  nonresident  alien  individuals  and possible  application of the 30% branch
profits  tax in the case of foreign  corporations)  and the  purchaser  would be
required  to  withhold  and remit to the  Internal  Revenue  Service  10% of the
purchase  price.  Gain not  subject  to FIRPTA  will be  taxable  to a  Non-U.S.
Shareholder if (1)  investment in the shares is  effectively  connected with the
Non-U.S.  Shareholder's  United  States  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 (2) the  Non-U.S.  Shareholder  is a  nonresident
alien  individual  who was  present  in the  United  States for 183 days or more
during the taxable year and such  nonresident  alien individual has a "tax home"
in the United States,  in which case the  nonresident  alien  individual will be
subject to a 30% tax on the individual's capital gain.

Taxation of Tax-Exempt Shareholders

         Tax-exempt  entities,  including  qualified employee pension and profit
sharing  trusts and individual  retirement  accounts  ("Exempt  Organizations"),
generally are exempt from federal income taxation.  However, they are subject to
taxation on their unrelated business taxable income ("UBTI").  While investments
in real estate may generate UBTI,  the Service has issued a published  ruling to
the effect that dividend  distributions  by a REIT to an exempt employee pension
trust do not  constitute  UBTI,  provided  that the  shares  of the REIT are not
otherwise used in an unrelated trade or business of the exempt employee  pension
trust. Based on that ruling,  amounts distributed by us to Exempt  Organizations
generally  should  not  constitute  UBTI.  However,  if an  Exempt  Organization
finances its  acquisition  of our shares with debt, a portion of its income from
us, if any, will constitute UBTI 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 paragraphs (7), (9), (17), and (20), respectively, of
Code Section  501(c) are subject to different UBTI rules,  which  generally will
require them to characterize distributions from us as UBTI.

         In addition,  a pension  trust that owns more than 10% of our shares is
required  to treat a  percentage  of the  dividends  from us as UBTI (the  "UBTI
Percentage") in certain  circumstances.  The UBTI Percentage is our gross income
derived 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 the dividends are
paid. The UBTI rule applies only if (i) the UBTI  Percentage is at least 5% (ii)
we qualify as a REIT by reason of the  modification of the 5/50 Rule 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 (iii) either
(A) one  pension  trust  owns more than 25% of the value of our  shares or (B) 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.

         While an investment in our shares by an Exempt  Organization  generally
is not expected to result in UBTI except in the  circumstances  described in the
preceding paragraph, any gross UBTI that does arise from such an investment will
be combined with all other gross UBTI of the Exempt  Organization  for a taxable
year  and  reduced  by the sum of all  deductions  attributable  to the UBTI and
$1,000.  Any amount  then  remaining  will  constitute  UBTI on which the Exempt
Organization  will be subject to tax. If the gross  income taken into account in
computing UBTI exceeds  $1,000,  the Exempt  Organization is obligated to file a
tax return for such year on IRS Form 990-T.  We, our board of trustees,  and any
of our or their  affiliates do not intend to undertake the preparation or filing
of IRS Form 990-T for any Exempt  Organization  in connection with an investment
by such Exempt  Organization  in the shares.  Generally,  IRS Form 990-T must be
filed with the  Service by April 15 of the year  following  the year in which it
relates.

                                     - 26 -
Other Tax Considerations

         Entity  Classification.  Certain of our  investments  are held  through
ARCap  Investors,  L.L.C.,  a limited  liability  company that has elected to be
taxed as a  partnership.  If such limited  liability  company were treated as an
association, the entity would be taxable as a corporation and therefore would be
subject to an entity level tax on its income. In such a situation, the character
of our assets and items of gross income would change and might  preclude us from
qualifying as a REIT.

         We believe  that  ARCap  Investors,  L.L.C.  is  properly  treated as a
partnership  for  tax  purposes  (and  not  as  an  association   taxable  as  a
corporation).

         Tax  Shelter   Reporting   Regulations.   Under  recently   promulgated
regulations,  if a  shareholder  recognizes  a loss with respect to shares of $2
million  or more for an  individual  shareholder  or $10  million  or more for a
corporate  shareholder,  the  shareholder  must file  with the IRS a  disclosure
statement on Form 8886. Direct shareholders of portfolio  securities are in many
cases  excepted from this  reporting  requirement,  but under current  guidance,
shareholders  of a REIT are not  excepted.  The fact  that a loss is  reportable
under these  regulations does not affect the legal  determination of whether the
taxpayer's  treatment of the loss is proper.  Shareholders  should consult their
tax advisors to determine the  applicability  of these  regulations  in light of
their individual circumstances.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This re-offer  prospectus and the  information  incorporated  herein by
reference  contain  certain  statements  and  other  written  material  and oral
statements  made from time to time by us do not relate strictly to historical or
current facts. As such, they are considered "forward-looking  statements" within
the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.  These
forward-looking statements are not historical facts, but rather are based on our
current expectations,  estimates and projections about our industry, beliefs and
assumptions.   Words  such  as  "anticipates,"  "expects,"  "intends,"  "plans,"
"believes,"  "seeks,"  "estimates"  and  similar  expressions  are  intended  to
identify  forward-looking  statements.  These  statements  are not guarantees of
future  performance and are subject to risks,  uncertainties  and other factors,
some of which are beyond our control,  are  difficult to predict and could cause
actual results to differ  materially  from those  expressed or forecasted in the
forward-looking statements. These risks and uncertainties are described in "Risk
Factors" and elsewhere in this re-offer prospectus.  We caution you not to place
undue reliance on these forward-looking statements,  which reflect our view only
as of the respective  date of this re-offer  prospectus or other dates which are
specified herein.

                                 USE OF PROCEEDS

         We will not receive  any  proceeds  from the sale of the common  shares
which may be sold pursuant to this re-offer  prospectus  for the accounts of the
Selling  Securityholders.  All such proceeds, net of brokerage  commissions,  if
any,   will  be   received  by  the  Selling   Securityholders.   See   "Selling
Securityholders" and "Plan of Distribution."

                             SELLING SECURITYHOLDERS

         This re-offer  prospectus  covers offers and sales from time to time by
the  Selling  Securityholders  of up to 855,277  common  shares  issued or to be
issued to the Selling  Securityholders  pursuant  to the terms of the  Incentive
Plan and/or Share Agreements.  Under Rule 416 of the Securities Act, the Selling
Securityholders  may also offer and sell  common  shares  issued to the  Selling
Securityholders  as a  result  of,  among  other  events,  stock  splits,  stock
dividends and similar events that affect the number of common shares held by the
Selling   Securityholders.   The  Selling  Securityholders  are  or  may  become
affiliates of the Company pursuant to Rule 144 of the Securities Act.

                                     - 27 -
The following table sets forth certain information as to the beneficial
ownership   of  common   shares  as  of  August  25,   2004  for  each   Selling
Securityholder:
---------------------------------------------------------------------------------------------------------------------

                     Name                         Common Shares     Common Shares    Common Shares     Percentage of
                                                  Beneficially        Offered        Beneficially     Common Shares
                                                  Owned Before                       Owned After       to be Owned
                                                  Offering (1)                       Offering (1)    After Offering
---------------------------------------------------------------------------------------------------------------------
Stuart J. Boesky                                   119,971(2)           (3)            119,971            1.4%
---------------------------------------------------------------------------------------------------------------------
Alan P. Hirmes                                     106,471(2)           (3)            106,471            1.3%
---------------------------------------------------------------------------------------------------------------------
Denise L. Kiley                                    94,471(2)            (3)             94,471            1.1%
---------------------------------------------------------------------------------------------------------------------
Marc D. Schnitzer                                  94,471(2)            (3)             94,471            1.1%
---------------------------------------------------------------------------------------------------------------------
Richard M. Rosan                                      365               (4)              -0-                *
---------------------------------------------------------------------------------------------------------------------
Scott M. Mannes                                       365               (4)              -0-                *
---------------------------------------------------------------------------------------------------------------------
Stanley R. Perla                                      729               (4)              -0-                *
---------------------------------------------------------------------------------------------------------------------
John A. Garth                                        2,000              (3)             2,000               *
---------------------------------------------------------------------------------------------------------------------
Other trustees and executive officers of              (5)               (6)              (5)               (5)
the Company
---------------------------------------------------------------------------------------------------------------------
* Less than 1%.

(1)   The  number  of  shares  beneficially  owned  is  determined  under  rules
      promulgated by the Commission and includes  outstanding  common shares and
      options for common shares that have vested or will vest within 60 days.

(2)   92,858 of such common shares are owned directly by Relcap Holding Company,
      LLC, of which Mr. Boesky indirectly owns 9.69%, Mr. Hirmes indirectly owns
      9.69%, Mr.  Schnitzer  indirectly owns 9.69% and Ms. Kiley indirectly owns
      5.93%.

(3)   Cannot be determined at this time.  Selling  Securityholder  may offer and
      sell up to an aggregate of 833,818 common shares that may be issued in the
      future under the Company's Incentive Plan. If required by applicable rules
      and regulations,  we will file a supplement to this re-offer prospectus to
      update this Selling  Securityholder table with each additional issuance of
      common shares under the Incentive Plan.

(4)   Cannot be determined at this time. Mr. Rosan and Mr. Mannes may each offer
      and sell 365  common  shares  and Mr.  Perla may offer and sell 729 common
      shares,  plus an  additional  aggregate  amount of up to (x) 20,000 common
      shares  that  may be  issued  to  them in the  future  pursuant  to  Share
      Agreements and (y) 833,818 common shares that may be issued to them in the
      future under the Company's Incentive Plan. If required by applicable rules
      and regulations,  we will file a supplement to this re-offer prospectus to
      update this Selling  Securityholder table with each additional issuance of
      common shares pursuant to the Share Agreements and/or Incentive Plan.

                                     - 28 -
(5)   Cannot be determined at this time.

(6)   Cannot be determined at this time. The trustees and executive  officers of
      the  Company  may offer and sell an  aggregate  amount of up to (x) 20,000
      common  shares that may be issued to them in the future  pursuant to Share
      Agreements and (y) 833,818 common shares that may be issued to them in the
      future under the Company's Incentive Plan. If required by applicable rules
      and regulations,  we will file a supplement to this re-offer prospectus to
      update this Selling  Securityholder table with each additional issuance of
      common shares pursuant to the Share Agreements and/or Incentive Plan.

                                     - 29 -
PLAN OF DISTRIBUTION

         This  re-offer  prospectus  relates  to the offer and sale from time to
time by the persons listed under the "Selling  Securityholders"  section of this
re-offer  prospectus of up to 855,277 common shares.  As used in this section of
the re-offer prospectus, the term "Selling Securityholders" includes the Selling
Securityholders  named in the  table  above and any of their  donees,  pledgees,
transferees  or other  successors in interest who receive  shares offered hereby
from a Selling  Securityholder  as a gift,  pledge,  or other  non-sale  related
transfer  and who  subsequently  sell any of such shares  after the date of this
re-offer  prospectus.  We have  registered the Selling  Securityholders'  common
shares for re-sale to provide the Selling  Securityholders with freely tradeable
common shares.  However,  registration  of the Selling  Securityholders'  common
shares does not necessarily mean that the Selling  Securityholders will offer or
sell any of their shares.  We will not receive any proceeds from the offering or
sale of the Selling Securityholders' shares.

         The Selling  Securityholders  may sell our common  shares to which this
re-offer  prospectus  relates from time to time on the American Stock  Exchange,
where our  common  shares are listed for  trading,  in other  markets  where our
common shares may be traded, in negotiated transactions, through underwriters or
dealers, directly to one or more purchasers,  through agents or in a combination
of such methods of sale. The Selling  Securityholders may sell our common shares
at prices  which are  current  when the sales take  place or at other  prices to
which  they  agree.  All  costs,  expenses  and  fees  in  connection  with  the
registration of the common shares offered hereby will be borne by us.  Brokerage
commissions and similar selling  expenses,  if any,  attributable to the sale of
common shares offered hereby will be borne by the Selling Securityholders.

         The Selling Securityholders may effect such transactions by selling the
common shares offered hereby  directly to purchasers or through  broker-dealers,
which may act as agents or principals,  or pursuant to a distribution  by one or
more  underwriters on a firm commitment or  best-efforts  basis.  The methods by
which the common shares which are the subject of this re-offer prospectus may be
sold include:  (a) a block trade in which the broker-dealer will attempt to sell
shares as agent but may  position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker-dealer as principal and
re-sale  by  the   broker-dealer  for  its  account;   (c)  ordinary   brokerage
transactions  and transactions in which the broker solicits  purchasers;  (d) an
exchange  distribution  in  accordance  with  the  rules of the  American  Stock
Exchange;   (e)  privately   negotiated   transactions;   and  (f)  underwritten
transactions.

         The Selling  Securityholders  may enter into hedging  transactions with
broker-dealers  or  other  financial  institutions.  In  connection  with  those
transactions,  broker-dealers  and other  financial  institutions  may engage in
short sales of our common shares in the course of hedging the related  positions
they assume. The Selling  Securityholders  may also sell our common shares short
and redeliver the common shares covered by this re-offer prospectus to close out
the short positions.  In addition,  the Selling  Securityholders  may enter into
option or other transactions with broker-dealers or other financial institutions
which require the delivery to the broker-dealers or other financial institutions
of  common  shares  offered  by  this  re-offer  prospectus,  which  shares  the
broker-dealers  or other  financial  institutions  may resell  pursuant  to this
re-offer prospectus (as supplemented or amended to reflect the transaction).

         Broker-dealers  may  receive  compensation  in the  form of  discounts,
concessions,   or  commissions  from  the  Selling  Securityholders  and/or  the
purchasers of the common shares offered hereby for whom such  broker-dealers may
act as agents or to whom they sell as principal,  or both (which compensation as
to a particular  broker-dealer might be in excess of customary commissions).  In
connection  with an  underwritten  offering,  underwriters or agents may receive
compensation  in the form of  discounts,  concessions  or  commissions  from the
Selling  Securityholders  or from purchasers of the shares which are the subject
of this re-offer  prospectus for whom they may act as agents,  and  underwriters
may sell the

                                     - 30 -
shares which are the subject of this re-offer  prospectus to or through dealers,
and such dealers may receive compensation in the form of discounts,  concessions
or commissions from the underwriters  and/or commissions from the purchasers for
whom they may act as agents.

         We will file a supplement  to this  re-offer  prospectus,  if required,
pursuant  to Rule  424(b)  under the  Securities  Act upon being  notified  by a
Selling  Securityholder  that any material  arrangements  have been entered into
with a  broker-dealer  for the sale of  shares  through a block  trade,  special
offering, exchange or secondary distribution or a purchase by a broker-dealer.

         In addition, upon receiving notice from a Selling Securityholder that a
donee, pledgee or transferee or other successor in interest intends to sell more
than 500 shares covered by this re-offer  prospectus,  we will file a supplement
to this re-offer  prospectus pursuant to Rule 424(b) under the Securities Act to
identify the non-sale  transferee  who may sell the shares which are the subject
of this re-offer prospectus.

         The Selling  Securityholders  and any  underwriters,  dealers or agents
participating  in the  distribution  of the shares which are the subject of this
re-offer prospectus may be deemed to be "underwriters" within the meaning of the
Securities  Act,  and any  profit  on the  sale of such  shares  by the  Selling
Securityholders  and any commissions  received by any such broker-dealers may be
deemed to be underwriting commissions under the Securities Act.

         The Selling  Securityholders  have not informed us as to their plans of
distribution.

                                  LEGAL MATTERS

         Certain legal  matters have been passed upon for us by Paul,  Hastings,
Janofsky & Walker LLP, New York,  New York.  The  validity of the common  shares
have been passed upon for us by Goodwin Procter LLP, Boston, Massachusetts.

                                     EXPERTS

         The consolidated  financial statements as of December 31, 2003 and 2002
and for each of the three years in the period  ended  December  31, 2003 of AMAC
and the related financial schedule  incorporated in this re-offer  prospectus by
reference  from our  annual  report on Form 10-K and Form  10-K/A for the fiscal
year ended  December  31,  2003 have been  audited by  Deloitte & Touche LLP, an
independent  registered public accounting firm, as stated in their reports which
are incorporated  herein by reference,  and has been so incorporated in reliance
upon the  reports  of such  firm  given  upon  their  authority  as  experts  in
accounting and auditing.

       DISCLOSURE OF SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT
                                  LIABILITIES

         Insofar as the provisions  described below in Item 6 of Part II of this
registration statement permit indemnification of directors,  officers or persons
controlling  the Company,  the Company has been  informed that in the opinion of
the Securities and Exchange  Commission,  this indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

                                     - 31 -
855,277 COMMON SHARES OF

                      AMERICAN MORTGAGE ACCEPTANCE COMPANY

                               RE-OFFER PROSPECTUS

                                 AUGUST 26, 2004

                                     - 32 -
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference

         The following documents and information  previously filed by Registrant
with the Commission are hereby  incorporated  by reference in this  Registration
Statement:

                  (a) The  Company's  Annual Report on Form 10-K and Form 10-K/A
         for the fiscal year ended December 31, 2003,  filed with the Commission
         on March 15, 2004 and May 7, 2004,  respectively  (Commission  File No.
         001-14583);

                  (b) The Company's Quarterly Report on Form 10-Q for the period
         ended  June 30,  2004,  filed  with the  Commission  on  August 9, 2004
         (Commission File No. 001-14583);

                  (c) The Company's Quarterly Report on Form 10-Q for the period
         ended  March  31,  2004,  filed  with the  Commission  on May 10,  2004
         (Commission File No. 001-14583);

                  (d) The Company's  Definitive  Proxy Statement dated April 30,
         2004 on Schedule 14A prepared in connection  with our Annual Meeting of
         Shareholders held on June 9, 2004 (Commission File No. 001-14583); and

                  (e) The description of the Company's  Shares  contained in the
         Company's Form 10 Registration Statement under the caption "Description
         of  Registrant's  Securities  to be  Registered",  as  filed  with  the
         Commission on August 1, 1997 (Commission File No. 001-13237).

All  documents  subsequently  filed by the Company  pursuant to Sections  13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment that  indicates  that all  securities  offered have been sold or which
deregisters  all  securities  then  remaining  unsold,  shall  be  deemed  to be
incorporated by reference in this Registration Statement and to be a part hereof
from the respective dates of the filing of those documents.

Any  statement  contained  herein  or  in a  document  incorporated,  or  deemed
incorporated,  by reference  herein or therein shall be deemed to be modified or
superseded  for  purposes  of the  Registration  Statement  to the extent that a
statement  contained  herein  or  therein  or in any  other  subsequently  filed
document which also is deemed to be incorporated by reference  herein or therein
modifies or supersedes such statement. Any such statement shall not be deemed to
constitute a part of this Registration  Statement or the Prospectus except as so
modified or replaced.

Item 4.  Description of Securities

         Not Applicable.

Item 5.  Interests of Named Experts and Counsel

         Not Applicable.

Item 6.  Indemnification of Trustees and Officers

         Our Company has purchased  and maintains  insurance on behalf of all of
its  trustees and  executive  officers  against  liability  asserted  against or
incurred by them in their official capacities with our

                                     - 33 -
Company,  whether or not our Company is  required or has the power to  indemnify
them against the same liability.

Item 7.  Exemption from Registration Claimed

         Not Applicable

Item 8.  Exhibits.

 Exhibit     Description
   No.
--------     -----------

3.1          Second Amended and Restated Declaration of Trust, dated as of April
             6,  1999  (incorporated  by  reference  to  Exhibit  3.4(c)  in the
             Company's March 31, 1999 Quarterly Report on Form 10-Q).

3.2          Amendment  to Second  Amended and  Restated  Declaration  of Trust,
             dated as of August 20, 2004.*

4.1          Specimen  Share  Certificate  (incorporated  by  reference  to  the
             Company's   Amendment   No.  1  on  Form  10/A  to  the   Company's
             Registration Statement on Form 10, File No. 001-13237).

5.1          Opinion  of Goodwin  Procter  LLP  regarding  the  legality  of the
             restricted Common Shares being registered*

23.1         Consent of Deloitte & Touche LLP*

23.2         Consent of Goodwin Procter LLP (included in Exhibit 5.1)*

24.1         Power of Attorney (included on signature page hereto)*

99.1         Amended and Restated Incentive Share Plan*

99.2         Amendment to Amended and Restated Incentive Share Plan*

99.3         Share Agreements*

* Filed Herewith

                                     - 34 -
Item 9.  Undertakings

         The Company hereby undertakes:

         A        (1)  To file,  during  any  period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to;

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

         (ii)     Reflect   in  the   prospectus  any  facts  or  events  which,
individually or together,  represent a fundamental  change in the information 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 percent  change in the maximum  aggregate  offering price set forth in
the  "Calculation  of  Registration  Fee"  table in the  effective  Registration
Statement; and

         (iii)    Include  any additional or changed material information on the
plan of  distribution;  provided,  however,  that the  statements  in paragraphs
(A)(1)(i)  and  (A)(1)(ii)  do  not  apply  if  the  information  required  in a
post-effective  amendment is  incorporated  by reference  from periodic  reports
filed by the Company under the Securities  Exchange Act of 1934, as amended (the
"Exchange Act").

                  (2)  That, for determining liability under the Securities Act,
treat each such post-effective  amendment as a new registration statement of the
securities  offered,  and the offering of the  securities at that time to be the
initial bona fide offering.

                  (3)  To  file  a  post-effective   amendment  to  remove  from
registration  any  of the  securities  that  remain  unsold  at  the  end of the
offering.

         (B)      That  insofar as indemnification for liabilities arising under
the  Securities  Act may be  permitted to  trustees,  officers  and  controlling
persons of the Company pursuant to the foregoing provisions,  or otherwise,  the
Company  has  been  advised  that  in  the  opinion  of  the   Commission   such
indemnification  is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

         In the event that a claim for indemnification  against such liabilities
(other  than the  payment  by the  Company  of  expenses  incurred  or paid by a
director, officer or controlling person of the Company 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
Company  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 Securities  Act and will be governed by the final  adjudication
of such issue.

                                     - 35 -
SIGNATURES

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 New  York,  State of New  York,  on this 26th day of
August, 2004.

                                     AMERICAN MORTGAGE
                                        ACCEPTANCE COMPANY
                                     A Massachusetts business trust (registrant)

                                     By: /s/ Stuart J. Boesky
                                         ---------------------------------------
                                         Stuart J. Boesky
                                         President and
                                         Chief Executive Officer

                                POWER OF ATTORNEY

         Each person  whose  signature  appears  below  hereby  constitutes  and
appoints  Stuart J. Boesky and Alan P. Hirmes,  and each or either of them,  his
true  and  lawful   attorney-in-fact   with  full  power  of  substitution   and
resubstitution,  for  him  and in his  name,  place  and  stead,  in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this  Registration  Statement  (or any  registration  statement  for the same
offering that is to be effective  upon filing  pursuant to Rule 462(b) under the
Securities  Act of 1933),  and to cause the same to be filed,  with all exhibits
thereto and other  documents in connection  therewith,  with the  Securities and
Exchange Commission,  hereby granting to said  attorneys-in-fact and agents, and
each of them,  full power and authority to do and perform each and every act and
thing whatsoever requisite or desirable to be done in and about the premises, as
fully  to all  intents  and  purposes  as the  undersigned  might or could do in
person,   hereby  ratifying  and  confirming  all  acts  and  things  that  said
attorneys-in-fact  and  agents,  or  either  of them,  or their  substitutes  or
substitute, may lawfully do or cause to be done by virtue hereof.

         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 dates indicated.
Signature                                       Title                               Date
/s/ Stuart J. Boesky                                    Chairman, President and                August 26, 2004
----------------------------------------                Chief Executive Officer
             Stuart J. Boesky

/s/ Alan P. Hirmes                                       Managing Trustee and                  August 26, 2004
----------------------------------------                Chief Financial Officer
              Alan P. Hirmes

/s/ Scott M. Mannes                                        Managing Trustee                    August 26, 2004
----------------------------------------
              Scott M. Mannes

/s/ Stanley R. Perla                                       Managing Trustee                    August 26, 2004
----------------------------------------
             Stanley R. Perla

/s/ Richard M. Rosan                                       Managing Trustee                    August 26, 2004
----------------------------------------
             Richard M. Rosan
- 36 -
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