Alesco Financial (AFN) is among the Specialty REITs that have been significantly affected by the disruption in the credit markets. The company was formed as a result of the merger between Alesco Inc. and Sunset Resources in late 2006, and evolved in 2007 as an investment vehicle for CDO pioneer Cohen & Company to invest in a hybrid type of debt instrument called a Trust Preferred (TruPS) issued primarily to medium size banks and insurance companies. The company also has a business that provides commercial loans to mid market companies in 34 industries and a business that generates income from a $1B residential portfolio of 740+ FICO borrowers.

Alesco was among the first of the Specialty REITs to set a 2Q 2008 earnings release date (Tuesday, August 5^th ) and recently reported that it had $115M unrestricted cash as of May 15th. Moreover, the company recently declared a 25 cent dividend (see June 10^th announcement). This begs the obvious question: Why is a stock which just declared a 25 cent dividend trading for a $1+ and for less than the cash it has on hand.

The first half of 2008 has certainly not been kind to financials in general and Specialty mREITS in particular. However, a number of these Specialty REITs have been changing their focus and business paradigm to match these tough times.

One of these Specialty REITs is Crystal River Capital (CRZ). The company has refocused itself around some basic tenets: