Real Estate Central

PHILADELPHIA, May 15 /PRNewswire-FirstCall/ — Alesco Financial Inc.
(NYSE: AFN), a specialty finance real estate investment trust, updates its
previous announcement concerning the expected impact to AFN of the deferral
by IndyMac Bancorp (NYSE: IMB) of the interest payments due on IMB’s trust
preferred securities held in AFN’s portfolio.

AFN has completed a review of its eight collateralized debt obligation,
or “CDO,” transactions that include trust preferred securities issued by
IMB. AFN holds a portion of the equity interests in these eight CDOs. IMB’s
securities represent an aggregate of 2.43% of the total pool of collateral
in those eight CDOs and approximately

.1 million in aggregate interest
payments per quarter to the eight CDOs, of which AFN’s proportionate share
is approximately $1.5 million, or about $0.02 per diluted AFN common share
per quarter.

IMB’s deferral will trigger the failure of over-collateralization tests
in five of the eight CDOs for a period of time, of which one is expected to
be a partial failure that should cure in the current period. Once the
failure of an over-collateralization test is triggered in a CDO, AFN will
no longer receive current distributions of cash with respect to its equity
interests in the CDO until sufficient cash flow is paid to senior debt
holders in the CDOs to cure the over-collateralization tests. IMB did not
disclose how long it expects to defer its payments.

AFN currently expects that, even if IMB does not resume making payment,
and assuming no additional deferrals, the four affected CDOs that are not
expected to cure in the current period will recommence making equity
distributions within four to seven quarters. For the year ended December
31, 2007, and the quarter ended March 31, 2008, the five CDOs that AFN
expects will fail over-collateralization tests contributed $32.3 million,
or 38%, and $8.8 million, or 44%, respectively, of AFN’s adjusted earnings
for such periods. AFN’s adjusted earnings will continue to include this
income even though AFN will not receive corresponding cash distributions
until the over-collateralization tests have been cured.

Currently, AFN has available unrestricted cash of approximately $125
million, including cash generated by previously-disclosed gains on credit
default swaps.

James McEntee, President and CEO of AFN, said, “The ultimate impact of
IMB’s actions on AFN will be determined over time, based upon whether, and
when, IMB commences payment on its obligations. The actions by IMB are
indicative of the stress that the banking sector is under at the current
time. As I have stated on recent investor calls, the stress in this sector
is likely to continue to evidence itself in our portfolio for the
foreseeable future. IMB’s announcement is a negative development; however,
we continue to believe in the health of this sector over the mid- and long
term, and we expect this portfolio to perform reasonably well. The key to
AFN participating in any turnaround in the banking sector is patience. We
have worked diligently over the past nine months to position AFN’s balance
sheet in such a way as to avoid having to take precipitous action; our
current liquidity is critical to being able to weather this storm. This
will, however, take some time. We have the liquidity to be patient, and we
have a management team focused on taking advantage of opportunities as they
arise, as is evidenced most recently by the benefits garnered from the
credit default swaps AFN put in place.”

AFN’s available unrestricted cash should be sufficient to allow AFN to
maintain its first quarter 2008 dividend rate for the remainder of 2008,
even after giving effect to the failure of the over-collateralization tests
described above. The payment of future dividends is, however, subject to
the review and approval of AFN’s board of directors, and there can be no
assurance that AFN’s board will determine to maintain the first quarter
dividend rate. As discussed on AFN’s earnings call last week, AFN is
reviewing a number of strategies for the company, including whether to
continue to maintain its REIT qualification. Any change in strategy could
impact the level of future dividend payments. A special committee of AFN’s
independent directors has been formed and has hired advisors to consider
these alternatives. Management and the Board are fully committed to
maximizing the realization of value for shareholders, and are actively
engaged in the process of seeking to do so.

About Alesco Financial Inc.

Alesco Financial Inc. is a specialty finance REIT headquartered in
Philadelphia, Pennsylvania and trades on the New York Stock Exchange under
the symbol “AFN”. Alesco is externally managed by Cohen & Company
Management, LLC, a subsidiary of Cohen and Company, a global alternative
fixed-income asset manager. For more information, please visit
http://www.alescofinancial.com.




Investors: Media:
John Longino Joseph Kuo
Chief Financial Officer Kekst and Company
215-701-8952 212-521-4863
info@alescofinancial.com


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Source: Real Estate Newswire