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CORRESP
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Letter of Correspondence

 Skadden, Arps, Slate, Meagher & Flom llp and affiliates

 M E M O R A N D U M

 May 23, 2005

TO:

Douglas Scheidt

Elizabeth Osterman

Rochelle Plesset

FROM:

Michael Hoffman

Philip Harris

RE:

JER Investors Trust Inc.

 JER Investors Trust
Inc. (including its majority owned subsidiaries, “JERIT”) is a recently formed specialty finance company that originates and acquires real estate debt products. JERIT invests primarily in commercial mortgage backed securities
(“CMBS”), commercial real estate mezzanine loans and B-Note participations in commercial real estate whole mortgage loans. JERIT may also invest in other real estate debt products. JERIT intends to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as amended.

 JERIT intends to conduct its operations so as to be excepted from registration and regulation under the 1940 Act by Section 3(c)(5)(C) of the 1940 Act (and Section 3(c)(6) if, from time to time, it engages in a 3(c)(5)(C) business through
one or more majority-owned subsidiaries). In this connection, JERIT intends to invest more than 55% of its assets in Qualifying Real Estate Assets (as defined below), including CMBS. When JERIT invests in CMBS, it generally will acquire the most
subordinate class of a CMBS issuance then outstanding. The most subordinate class of a CMBS issuance is in the “first loss” position and is commonly referred to in the industry as the “Controlling Class” of a CMBS
issuance. JERIT generally acquires 100% of the Controlling Class in each CMBS issuance that it acquires. In addition, JERIT generally acquires 100% of each succeeding senior class of CMBS through the BB class. In some cases, JERIT also acquires all
or a majority of the BBB class.

 On behalf of JERIT, we request
that you concur in our view that Controlling Class CMBS are Qualifying Real Estate Assets (as defined below) for

 purposes of Section 3(c)(5)(C). On behalf of JERIT, we also request that the staff (the “Staff”) of the
Securities and Exchange Commission (the “Commission”) will permit JERIT’s Registration Statement on Form S-11, Registration No.333-122802 (the “Registration Statement”) to be declared effective if JERIT includes
certain more senior classes of CMBS in the category of Qualifying Real Estate Assets for purposes of Section 3(c)(5)(C), subject to the conditions described below.

 CMBS. CMBS are securities backed by pools of loans secured by first or, less often, junior mortgages
(“Mortgage Loans”) on commercial real estate. The commercial real estate securing the Mortgage Loans generally consists of income producing properties including, but not limited to, office buildings, shopping centers, apartment
buildings, manufactured housing communities, industrial properties, healthcare properties and hotels, among others. Mortgage Loans may be originated by various lenders and pooled together in a trust (a “Trust”) that issues CMBS in
the form of various classes of fixed and floating rate debt pass through certificates secured by the cash flows from the underlying Mortgage Loans.

 Classes of CMBS. CMBS issued by a Trust are rated by one or more nationally recognized statistical credit rating organizations and are rated from
AAA down to B (or C in some cases).1 In addition, a Trust issues a class of CMBS that is not rated (the
“NR” class). The NR class is generally the most subordinate class of the Trust and initially is in the “first loss” position. Consequently, the NR class is the Controlling Class on the date of issuance. Should the value of
the NR class erode by more than 75% of its initial face amount, however, the rights originally exercised by the NR class as the Controlling Class are automatically transferred to the next more senior class. This self executing mechanism is intended
to ensure that the class of CMBS that are then most “at risk” for losses have the control and discretion necessary to protect their interest, including the rights of foreclosure on the underlying mortgages. Therefore, if and when
necessary, the rights of the Controlling Class of a CMBS issuance owned by JERIT are available to protect all classes of a CMBS issuance most at risk for loss and owned by JERIT, including the B, BB and BBB classes, without additional actions or
approvals by the original issuer, the Trustee (defined below) or the other classes of CMBS.

 The transfer of controlling class rights from one class to the next is not just a theoretical possibility. In practice, the controlling class rights are often conveyed from the NR class to the B class and from the B
class to the BB class as losses are suffered by the NR class and the B class. In fact, when evaluating subordinate classes of CMBS, JERIT and its competitors assume and build in to their analysis principal losses to such classes of CMBS.
Accordingly, the NR and B classes generally are purchased at significant discounts to face value. In general, NR classes are acquired at less than 40% of face value and B classes at less than 65% of face value.

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Classes may be further divided by the rating agencies into sub-classes, such as B-, B and B+.

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 In order for JERIT to assure itself that it will be able to exercise the rights of the Controlling Class
CMBS, JERIT generally acquires 100% of the NR, B and BB classes of a CMBS issuance and may also acquire all or a majority of the BBB class. In fact, the NR, B and BB classes often are sold as a “block transaction” because of the extensive
due diligence that must be conducted in order for the purchaser of these classes of CMBS to evaluate the risks and to model the profitability of an investment in such classes of CMBS. JERIT generally takes two to three months to evaluate a CMBS
investment, conduct its due diligence and negotiate the documentation governing these subordinate classes of CMBS. At the final stages of the closing of a CMBS issuance, the final loan pool is set and the rating agency gives the final class sizes to
the issuer. JERIT views its investment in the subordinate classes of a CMBS issuance as a single real estate investment, even though for rating agency and market transparency reasons, the subordinate classes of a CMBS issuance may be divided into
multiple classes. While the sizes of the various subordinate classes of a CMBS issuance are important to the market and senior investors for transparency and comparison purposes, they are irrelevant to JERIT from a due diligence and economic
perspective, as loan loss projections are modeled against the entire loan pool. In addition, even though the subordinate CMBS may be divided into multiple classes, all tranches of the subordinate classes are typically paid the same coupon based on
the weighted average coupon of the underlying mortgage loans. Thus, the only material difference in the non-investment grade classes is the level of subordination.

 Foreclosure Rights. The Trust generally is administered by a trustee (the “Trustee”), a master
servicer (the “Master Servicer”) and a special servicer (the “Special Servicer”). Although each plays an important role in administering the Trust, the Trustee and Master Servicer generally exercise ministerial
functions, whereas the Special Servicer exercises all discretion in servicing defaulted Mortgage Loans. Ultimately, the Special Servicer has the greatest impact on the actual returns realized by holders of all of the CMBS.

 The pooling and servicing agreement establishing the Trust (the
“Pooling Agreement”) generally provides that the Trustee will administer the Trust and report information to certificate holders as required by the Pooling Agreement. The duties of the Trustee also typically include the maintenance
of accounts into which certain amounts collected on the Mortgage Loans and other assets of the Trust may be deposited, the distribution of such amounts to the holders of the CMBS and the payment of certain fees and expenses incurred by the Trust. If
the Trustee resigns or for any other reason ceases to act as Trustee of the Trust, a replacement Trustee that satisfies the qualifications set forth in the Pooling Agreement will be appointed. Typically, the holders of a majority of the CMBS issued
by a Trust may remove and replace the Trustee at any time.

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 The Pooling Agreement generally provides that the Master Servicer will administer and service the
Mortgage Loans, prior to the occurrence of a default or other material adverse event (or the determination by the Master Servicer that a default or other material adverse event is likely to occur) with respect to a Mortgage Loan. The duties of the
Master Servicer typically include establishing various accounts in the name of the Trustee for the benefit of the certificate holders, collecting amounts payable on the Mortgage Loans and properties acquired through foreclosure and depositing such
amounts in the accounts maintained in the name of the Trustee, directing the investment of such amounts in certain highly liquid, high credit quality cash equivalent investments permitted by the Pooling Agreement, paying certain fees and expenses
incurred by the Trust, maintaining books and records on behalf of the Trust, maintaining certain insurance policies on the properties underlying the Mortgage Loans and monitoring Mortgage Loans for the occurrence of a default or other specified
adverse events. If the Master Servicer defaults on its obligations under the Pooling Agreement, it may be removed and replaced by the Trustee.

 The duties of the Special Servicer involve the greatest amount of discretion and have the greatest impact on the ultimate returns realized by the holders
of the CMBS. These duties include evaluating defaulted Mortgage Loans with a view toward developing a plan to maximize the return to the Trust that may be realized on the Mortgage Loan (as described below), foreclosing upon defaulted Mortgage Loans,
accepting deeds in lieu of foreclosure or making other arrangements for the collection of delinquent payments, directing appraisals to be conducted in connection with distressed Mortgage Loans and properties acquired through foreclosure and
recommending and implementing a plan that details whether and how to sell, and negotiating the sale of, distressed Mortgage Loans and properties acquired through the foreclosure of Mortgage Loans.

 When the Special Servicer assumes the administration and servicing of a
defaulted Mortgage Loan, the Pooling Agreement requires the Special Servicer to exercise reasonable efforts to foreclose upon the Mortgage Loan or otherwise collect delinquent payments subject to the servicing standard set forth in the Pooling
Agreement. Within a specified period of time after a Mortgage Loan becomes a specially serviced Mortgage Loan, the Special Servicer generally is required to deliver to a person nominated by the holders of a majority of the Controlling Class CMBS
(the “Controlling Class Representative”) a report (the “Asset Status Report”) summarizing the status of the troubled Mortgage Loan and the Special Servicer’s recommended actions with respect to the Mortgage
Loan. The Controlling Class Representative then has the opportunity to comment on the Asset Status Report and work with the Special Servicer to determine how to proceed with respect to the

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 Mortgage Loan until the earlier of (i) the Controlling Class Representative approves the Asset Status Report or (ii) a
specified period of time passes from the date of preparation of the initial report, after which the Special Servicer implements the plan of action in the final version of the Asset Status Report.

 The Special Servicer is required to administer and service the Mortgage Loans
and properties acquired through foreclosure for the benefit of the holders of the CMBS in accordance with the servicing standard set forth in the Pooling Agreement, which among other things states that the Special Servicer will service the Mortgage
Loans without regard to whether an affiliate of the Special Servicer owns any of the CMBS. In addition, the Controlling Class Representative is prohibited from directing the Special Servicer to act in any manner that would violate the law, the terms
of a Mortgage Loan or the terms of the Pooling Agreement.

 The
Pooling Agreement grants the Controlling Class Representative a number of rights with respect to the administration and servicing of the Mortgage Loans by the Special Servicer. Of primary importance, the Controlling Class Representative has the
authority to fire and replace the Special Servicer and has the option to purchase from the Trust any Mortgage Loan that has been turned over to the Special Servicer for administration and servicing as to which there has occurred a monetary default
or a material non monetary default. The purchase price of any such Mortgage Loan is its fair value as determined pursuant to the terms of the Pooling Agreement. In addition, the Special Servicer generally is not permitted to take any of the
following actions on behalf of the Trust unless it is approved in the Asset Status Report:

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to modify or amend the terms of a Mortgage Loan or grant any waiver in respect thereof;

•

to approve any major leases as defined in the Pooling Agreement

•

to complete the foreclosure of a Mortgage Loan (i.e., to accept a property that may be acquired through foreclosure on a Mortgage Loan);

•

to sell a Mortgage Loan; or

•

to sell a property acquired through foreclosure upon a Mortgage Loan.2

2
In some CMBS transactions, the Controlling Class Representative may unilaterally prohibit the
Special Servicer from completing any of these designated actions, subject to the application of the servicing standard by the Special Servicer.

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 Section 3(c)(5)(C). Section 3(c)(5)(C) of the 1940 Act excepts from the definition of
“investment company”, in relevant part, any issuer primarily engaged in purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.

 The Staff interprets Section 3(c)(5)(C) to require (i) at least 55% of an issuer’s assets to consist of investments in
mortgages and other liens on and interests in real estate (“Qualifying Real Estate Assets”) and (ii) at least 80% of an issuer’s assets to consist of investments in (A) Qualifying Real Estate Assets plus (B) other assets that
are not Qualifying Real Estate Assets but which are real estate related assets (“Real Estate Related Assets”).3

 Controlling Class CMBS. Qualifying
Real Estate Assets in their simplest form include real estate and Mortgage Loans with respect to which the issuer holds the right to foreclose without the consent of others or other substantial impediments to foreclosure and where the value of the
real estate security for any such loan equals or exceeds the amount of the Mortgage Loan when made (or, with respect to Mortgage Loans that were originated by a third party and subsequently purchased, where the value of the real estate security
equals or exceeds the amount of the Mortgage Loan when made, as well as the purchase price of the Mortgage Loan when acquired).

 The Staff also views real estate investments that are the “functional equivalent” of a fee interest in real estate or in a Mortgage Loan as
Qualifying Real Estate Assets.4 For example, the Staff has stated that a general partnership interest in a
partnership that owns a fee interest in real estate is a Qualifying Real Estate Asset where the general partner participates in the day to day management and control of the partnership.5 If the partnership owns Mortgage Loans, the general partner is required to have the unilateral right to cause the partnership to foreclose on the real

3
The Staff has not defined Real Estate Related Assets. Based on Staff pronouncements and
conversations with members of the Staff, the Staff generally views Real Estate Related Assets much more broadly than Qualifying Real Estate Assets