UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





x  QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE


ACT
OF 1934





For the
Quarterly Period Ended:  March 31, 2010


Or





 ̈  TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE


ACT
OF 1934


For the
transition period from ____to ____





Commission
File Number 1-6249





WINTHROP
REALTY TRUST


(Exact
name of Registrant as specified in its certificate of
incorporation)





Ohio
                
                34-6513657(State
      or other jurisdiction of incorporation or organization)
                
                (IRS
      Employer Identification
Number)





7
      Bulfinch Place, Suite 500, Boston, Massachusetts
                    
                    02114(Address
      of principal executive offices)
                    
                    (Zip
      Code)





(617) 570-4614





(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days. Yes x No  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).   Yes
 ̈ No  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):





Large
      accelerated filer   ̈
                  Accelerated
      filer  xNon-accelerated
      filer    ̈
                  Smaller
      reporting company  o(Do
      not check if a smaller reporting
company)





Indicate
by check mark whether the registrant is a shell company (as defined in Exchange
Act Rule12b-2). Yes o No x





As of May
1, 2010 there were 21,181,449 Common Shares of Beneficial Interest
outstanding.








INDEX





PagePart I.
                
                Financial
      InformationItem
      1.
                
                Financial
      Statements (Unaudited):Consolidated
      Balance Sheets as of March 31, 2010 and December 31, 2009
                3Consolidated
      Statements of Operations and Comprehensive Income (Loss) for the Three
      Months Ended March 31, 2010 and March 31, 2009
                4Consolidated
      Statements of Equity for the Three Months Ended March 31, 2010 and March
      31, 2009
                5Consolidated
      Statements of Cash Flows for the Three Months Ended March 31, 2010 and
      March 31, 2009
                6Notes
      to Consolidated Financial Statements
                8Item
      2.
                
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                30Item
      3.
                
                Quantitative
      and Qualitative Disclosure about Market Risk
                39Item
      4.
                
                Controls
      and Procedures
                40Part
      II.
                
                Other
      InformationItem
      6.
                
                Exhibits
                41Signatures
                
                
                42Exhibit Index
                
                
                43




2





Item
1.  Financial Information





WINTHROP
REALTY TRUST


FORM
10-Q - MARCH 31, 2010


CONSOLIDATED
BALANCE SHEETS


(in
thousands, except share and per share data)





March
      31,
                      2010
                    
                    
                    December
      31,
                      2009ASSETSInvestments
      in real estate, at cost Land
                    
                    $
                    20,659
                    
                    
                    $
                    20,659Buildings
      and improvements
                    
                    
                    229,046
                    
                    
                    
                    228,419249,705
                    
                    
                    
                    249,078Less:
      accumulated depreciation
                    
                    
                    (32,775
                    )
                    
                    
                    (31,269
                    )Investments
      in real estate, net
                    
                    
                    216,930
                    
                    
                    
                    217,809Cash
      and cash equivalents
                    
                    
                    76,591
                    
                    
                    
                    66,493Restricted
      cash held in escrows
                    
                    
                    7,753
                    
                    
                    
                    9,505Loans
      receivable, net
                    
                    
                    25,516
                    
                    
                    
                    26,101Accounts
      receivable, net of allowances of $545 and $565,
    respectively
                    
                    
                    13,245
                    
                    
                    
                    14,559Securities
      carried at fair value
                    
                    
                    45,528
                    
                    
                    
                    52,394Loan
      securities carried at fair value
                    
                    
                    1,048
                    
                    
                    
                    1,661Available
      for sale securities, net
                    
                    
                    210
                    
                    
                    
                    203Preferred
      equity investment
                    
                    
                    3,992
                    
                    
                    
                    4,012Equity
      investments
                    
                    
                    73,010
                    
                    
                    
                    73,207Lease
      intangibles, net
                    
                    
                    23,926
                    
                    
                    
                    22,666Deferred
      financing costs, net
                    
                    
                    1,370
                    
                    
                    
                    1,495Assets
      held for sale
                    
                    
                    3,134
                    
                    
                    
                    3,087TOTAL
      ASSETS
                    
                    $
                    492,253
                    
                    
                    $
                    493,192LIABILITIESMortgage
      loans payable
                    
                    $
                    214,977
                    
                    
                    $
                    216,767Series
      B-1 Cumulative Convertible Redeemable Preferred Shares, $25 per share
      liquidation preference; 852,000 shares authorized and outstanding at
      March 31, 2010 and December 31, 2009
                    
                    
                    21,300
                    
                    
                    
                    21,300Accounts
      payable and accrued liabilities
                    
                    
                    6,722
                    
                    
                    
                    7,401Dividends
      payable
                    
                    
                    3,474
                    
                    
                    
                    3,458Deferred
      income
                    
                    
                    43
                    
                    
                    
                    48Below
      market lease intangibles, net
                    
                    
                    2,679
                    
                    
                    
                    2,849TOTAL
      LIABILITIES
                    
                    
                    249,195
                    
                    
                    
                    251,823COMMITMENTS
      AND CONTINGENCIESNON-CONTROLLING
      REDEEMABLE PREFERRED INTERESTSeries
      C Cumulative Convertible Redeemable Preferred Shares, $25 per share
      liquidation preference, 144,000 and 544,000 shares authorized and
      outstanding at March 31, 2010 and December 31, 2009,
      respectively
                    
                    
                    3,221
                    
                    
                    
                    12,169Total
      non-controlling redeemable preferred interest
                    
                    
                    3,221
                    
                    
                    
                    12,169EQUITYWinthrop
      Realty Trust Shareholders’ Equity:Common
      Shares, $1 par, unlimited shares authorized; 21,137,268 and 20,375,483
      issued and outstanding at March 31, 2010 and December 31, 2009,
      respectively
                    
                    
                    21,137
                    
                    
                    
                    20,375Additional
      paid-in capital
                    
                    
                    506,876
                    
                    
                    
                    498,118Accumulated
      distributions in excess of net income
                    
                    
                    (300,660
                    )
                    
                    
                    (301,317
                    )Accumulated
      other comprehensive loss
                    
                    
                    (40
                    )
                    
                    
                    (87
                    )Total
      Winthrop Realty Trust Shareholders’ Equity
                    
                    
                    227,313
                    
                    
                    
                    217,089Non-controlling
      interests
                    
                    
                    12,524
                    
                    
                    
                    12,111Total
      Equity
                    
                    
                    239,837
                    
                    
                    
                    229,200TOTAL
      LIABILITIES AND EQUITY
                    
                    $
                    492,253
                    
                    
                    $
                    493,192





See Notes
to Consolidated Financial Statements and refer to Note 17 for information
regarding variable interest entities (VIEs) including VIEs for which the Trust
is the primary beneficiary.


3





WINTHROP
REALTY TRUST


FORM
10-Q - MARCH 31, 2010


CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)


(in
thousands, except per share data)





Three
      Months Ended
                  March
      31,2010
                
                
                2009RevenueRents
      and reimbursements
                
                $
                9,520
                
                
                $
                10,655Interest
      and dividends
                
                
                3,209
                
                
                
                1,75212,729
                
                
                
                12,407ExpensesProperty
      operating
                
                
                1,959
                
                
                
                1,859Real
      estate taxes
                
                
                720
                
                
                
                673Depreciation
      and amortization
                
                
                2,362
                
                
                
                2,851Interest
                
                
                3,651
                
                
                
                4,275Provision
      for loss on loans receivable
                
                
                -
                
                
                
                428General
      and administrative
                
                
                1,909
                
                
                
                1,442State
      and local taxes
                
                
                15
                
                
                
                5010,616
                
                
                
                11,578Other
      income (loss)Earnings
      from preferred equity investments
                
                
                83
                
                
                
                1,015Equity
      in loss of equity investments
                
                
                (527
                )
                
                
                (18,163
                )Gain
      (loss) on sale of securities carried at fair value
                
                
                695
                
                
                
                (87
                )Gain
      on extinguishment of debt
                
                
                -
                
                
                
                5,237Unrealized
      gain (loss) on securities carried at fair value
                
                
                2,540
                
                
                
                (11,148
                )Unrealized
      loss on loan securities carried at fair value
                
                
                (613
                )
                
                
                -Interest
      income
                
                
                37
                
                
                
                722,215
                
                
                
                (23,074
                )Income
      (loss) from continuing operations
                
                
                4,328
                
                
                
                (22,245
                )Discontinued
      operationsIncome
      (loss) from discontinued operations
                
                
                122
                
                
                
                (17
                )Consolidated
      net income (loss)
                
                
                4,450
                
                
                
                (22,262
                )Income
      attributable to non-controlling interest
                
                
                (245
                )
                
                
                (171
                )Net
      income (loss) attributable to Winthrop Realty Trust
                
                
                4,205
                
                
                
                (22,433
                )Income
      attributable to non-controlling redeemable preferred
    interest
                
                
                (113
                )
                
                
                -Net
      income (loss) attributable to Common Shares
                
                $
                4,092
                
                
                $
                (22,433
                )Comprehensive
      income (loss)Consolidated
      net income (loss)
                
                $
                4,450
                
                
                $
                (22,262
                )Change
      in unrealized gain on available for sale securities
                
                
                7
                
                
                
                2Change
      in unrealized gain on interest rate derivative
                
                
                40
                
                
                
                138Change
      in unrealized loss from equity investments
                
                
                -
                
                
                
                (197
                )Comprehensive
      income (loss)
                
                $
                4,497
                
                
                $
                (22,319
                )Per
      Common Share data - BasicIncome
      (loss) from continuing operations
                
                $
                0.19
                
                
                $
                (1.42
                )Income
      from discontinued operations
                
                
                0.01
                
                
                
                -Net
      income (loss) attributable to Winthrop Realty Trust
                
                $
                0.20
                
                
                $
                (1.42
                )Per
      Common Share data - DilutedIncome
      (loss) from continuing operations
                
                $
                0.19
                
                
                $
                (1.42
                )Income
      from discontinued operations
                
                
                0.01
                
                
                
                -Net
      income (loss) attributable to Winthrop Realty Trust
                
                $
                0.20
                
                
                $
                (1.42
                )Basic
      Weighted-Average Common Shares
                
                
                20,598
                
                
                
                15,806Diluted
      Weighted-Average Common Shares
                
                
                21,389
                
                
                
                15,806





See Notes
to Consolidated Financial Statements.


4





WINTHROP
REALTY TRUST


FORM
10-Q - MARCH 31, 2010


CONSOLIDATED
STATEMENTS OF EQUITY


(in
thousands, except per share data)





Accumulated
                              
                              
                              AccumulatedCommon Shares
                              
                              
                              Additional
                              
                              
                              Distributions
                              
                              
                              Otherof Beneficial Interest
                              
                              
                              Paid-In
                              
                              
                              In Excess of
                              
                              
                              Comprehensive
                              
                              
                              Non-ControllingShares
                              
                              
                              Amount
                              
                              
                              Capital
                              
                              
                              Net Income
                              
                              
                              Income (Loss)
                              
                              
                              Interests
                              
                              
                              TotalBalance,
      December 31, 2009
                              
                              
                              20,375
                              
                              
                              $
                              20,375
                              
                              
                              $
                              498,118
                              
                              
                              $
                              (301,317
                              )
                              
                              $
                              (87
                              )
                              
                              $
                              12,111
                              
                              
                              $
                              229,200Net
      income attributable to Winthrop Realty Trust
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              4,205
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              4,205Net
      income attributable to non-controlling interests
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              245
                              
                              
                              
                              245Distributions
      to non-controlling interests
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (120
                              )
                              
                              
                              (120
                              )Contributions
      from non-controlling interests
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              288
                              
                              
                              
                              288Dividends
      paid or accrued on Common Shares of Beneficial Interest ($0.1625 per
      share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (3,435
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (3,435
                              )Dividends
      paid or accrued on Series C Preferred Shares ($0.40625 per
      share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (113
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (113
                              )Change
      in unrealized gain on available for sale securities
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              7
                              
                              
                              
                              -
                              
                              
                              
                              7Change
      in unrealized gain on interest rate derivatives
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              40
                              
                              
                              
                              -
                              
                              
                              
                              40Conversion
      of Series C Preferred Shares to Common Shares
                              
                              
                              714
                              
                              
                              
                              714
                              
                              
                              
                              8,234
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              8,948Stock
      issued pursuant to dividend reinvestment plan
                              
                              
                              48
                              
                              
                              
                              48
                              
                              
                              
                              524
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              572Balance,
      March 31, 2010
                              
                              
                              21,137
                              
                              
                              $
                              21,137
                              
                              
                              $
                              506,876
                              
                              
                              $
                              (300,660
                              )
                              
                              $
                              (40
                              )
                              
                              $
                              12,524
                              
                              
                              $
                              239,837Accumulated
                              
                              
                              AccumulatedCommon
      Shares
                              
                              
                              Additional
                              
                              
                              Distributions
                              
                              
                              Otherof
      Beneficial Interest
                              
                              
                              Paid-In
                              
                              
                              In
      Excess of
                              
                              
                              Comprehensive
                              
                              
                              Non-ControllingShares
                              
                              
                              Amount
                              
                              
                              Capital
                              
                              
                              Net
      Income
                              
                              
                              Income
                              
                              
                              Interests
                              
                              
                              TotalBalance,
      December 31, 2008
                              
                              
                              15,754
                              
                              
                              $
                              15,754
                              
                              
                              $
                              460,956
                              
                              
                              $
                              (213,284
                              )
                              
                              $
                              (15,176
                              )
                              
                              $
                              10,958
                              
                              
                              $
                              259,208Net
      loss attributable to Winthrop Realty Trust
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (22,433
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (22,433
                              )Net
      income attributable to non-controlling interests
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              171
                              
                              
                              
                              171Distributions
      to non-controlling interests
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (130
                              )
                              
                              
                              (130
                              )Contributions
      from non-controlling interests
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              63
                              
                              
                              
                              63Dividends
      paid or accrued on Common Shares of Beneficial Interest ($0.25 per
      share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (3,971
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (3,971
                              )Change
      in unrealized gain on available for sale securities
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              2
                              
                              
                              
                              -
                              
                              
                              
                              2Change
      in unrealized gain on interest rate derivatives
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              138
                              
                              
                              
                              -
                              
                              
                              
                              138Change
      in unrealized loss from equity investments
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (197
                              )
                              
                              
                              -
                              
                              
                              
                              (197
                              )Stock
      issued pursuant to dividend reinvestment plan
                              
                              
                              62
                              
                              
                              
                              62
                              
                              
                              
                              603
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              665Balance,
      March 31, 2009
                              
                              
                              15,816
                              
                              
                              $
                              15,816
                              
                              
                              $
                              461,559
                              
                              
                              $
                              (239,688
                              )
                              
                              $
                              (15,233
                              )
                              
                              $
                              11,062
                              
                              
                              $
                              233,516





See Notes
to Consolidated Financial Statements.


5


WINTHROP
REALTY TRUST


FORM
10-Q - MARCH 31, 2010


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(in
thousands)





Three
      Months Ended
                  March
      31,2010
                
                
                2009Cash
      flows from operating activitiesNet
      income (loss)
                
                $
                4,450
                
                
                $
                (22,262
                )Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
      and amortization (including amortization of deferred financing
      costs)
                
                
                1,644
                
                
                
                1,892Amortization
      of lease intangibles
                
                
                654
                
                
                
                1,313Straight-lining
      of rental income
                
                
                599
                
                
                
                324Earnings
      of preferred equity investments
                
                
                (83
                )
                
                
                (1,015
                )Distributions
      from preferred equity investments
                
                
                103
                
                
                
                1,060Losses
      of equity investments
                
                
                527
                
                
                
                18,163Distributions
      from equity investments
                
                
                590
                
                
                
                343Restricted
      cash held in escrows
                
                
                1,745
                
                
                
                714(Gain)
      loss on sale of securities carried at fair value
                
                
                (695
                )
                
                
                87Unrealized
      (gain) loss on securities carried at fair value
                
                
                (2,540
                )
                
                
                11,148Unrealized
      loss on loan securities carried at fair value
                
                
                613
                
                
                
                -Gain
      on extinguishment of debt
                
                
                -
                
                
                
                (5,237
                )Provision
      for loss on loan receivable
                
                
                -
                
                
                
                428Tenant
      leasing costs
                
                
                (2,131
                )
                
                
                (454
                )Bad
      debt (recovery) expense
                
                
                (20
                )
                
                
                65Net
      change in interest receivable
                
                
                5
                
                
                
                4Loan
      discount accretion
                
                
                (1,741
                )
                
                
                -Net
      change in other operating assets and liabilities
                
                
                151
                
                
                
                (604
                )Net
      cash provided by operating activities
                
                
                3,871
                
                
                
                5,969Cash
      flows from investing activitiesInvestments
      in real estate
                
                
                (687
                )
                
                
                (495
                )Investment
      in equity investments
                
                
                (920
                )
                
                
                -Purchase
      of securities carried at fair value
                
                
                (1,306
                )
                
                
                (25,668
                )Proceeds
      from sale of securities carried at fair value
                
                
                11,407
                
                
                
                6,967Restricted
      cash held in escrows
                
                
                (30
                )
                
                
                2,635Issuance
      and acquisition of loans receivable
                
                
                (679
                )
                
                
                (1,596
                )Proceeds
      from sale of loans receivable
                
                
                3,000
                
                
                
                -Collection
      of loans receivable
                
                
                -
                
                
                
                5,300Net
      cash provided by (used in) investing activities
                
                
                10,785
                
                
                
                (12,857
                )





(Continued
on next page)





See Notes
to Consolidated Financial Statements.


6





WINTHROP
REALTY TRUST


FORM
10-Q - MARCH 31, 2010


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(in
thousands, continued)





Three
      Months Ended
                      March
      31,2010
                    
                    
                    2009Cash
      flows from financing activitiesProceeds
      from mortgage loans payable
                    
                    $
                    -
                    
                    
                    $
                    49Principal
      payments of mortgage loans payable
                    
                    
                    (1,790
                    )
                    
                    
                    (1,486
                    )Restricted
      cash held in escrows
                    
                    
                    37
                    
                    
                    
                    5,293Payments
      of note payable
                    
                    
                    -
                    
                    
                    
                    (9,800
                    )Deferred
      financing costs
                    
                    
                    (13
                    )
                    
                    
                    -Contribution
      from non-controlling interest
                    
                    
                    288
                    
                    
                    
                    63Distribution
      to non-controlling interest
                    
                    
                    (120
                    )
                    
                    
                    (130
                    )Issuance
      of Common Shares under Dividend Reinvestment Plan
                    
                    
                    572
                    
                    
                    
                    665Dividend
      paid on Common Shares
                    
                    
                    (3,311
                    )
                    
                    
                    (5,934
                    )Dividend
      paid on Series C Preferred Shares
                    
                    
                    (221
                    )
                    
                    
                    -Net
      cash used in financing activities
                    
                    
                    (4,558
                    )
                    
                    
                    (11,280
                    )Net
      increase (decrease) in cash and cash equivalents
                    
                    
                    10,098
                    
                    
                    
                    (18,168
                    )Cash
      and cash equivalents at beginning of period
                    
                    
                    66,493
                    
                    
                    
                    59,238Cash
      and cash equivalents at end of period
                    
                    $
                    76,591
                    
                    
                    $
                    41,070Supplemental
      Disclosure of Cash Flow InformationInterest
      paid
                    
                    $
                    3,687
                    
                    
                    $
                    4,593Taxes
      paid
                    
                    $
                    11
                    
                    
                    $
                    30Supplemental
      Disclosure on Non-Cash Investing andFinancing
      ActivitiesDividends
      accrued on Common Shares
                    
                    $
                    3,435
                    
                    
                    $
                    3,971Dividends
      accrued on Series C Preferred Shares
                    
                    $
                    39
                    
                    
                    $
                    -Capital
      expenditures accrued
                    
                    $
                    141
                    
                    
                    $
                    158Redemption
      of Series B-1 Preferred Shares
                    
                    $
                    -
                    
                    
                    $
                    (17,081
                    )Deposit
      on redemption of Series B-1 Preferred Shares
                    
                    $
                    -
                    
                    
                    $
                    17,081





See Notes
to Consolidated Financial Statements.


7




WINTHROP
REALTY TRUST


FORM
10-Q MARCH 31, 2010





NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





1.
            Organization





Winthrop
Realty Trust (“Winthrop”) is an unincorporated association in the form of a
business trust organized in Ohio under a Declaration of Trust dated August 1,
1961, as amended and restated on May 21, 2009, which has as its stated principal
business activity the ownership and management of, and lending to, real property
and real estate related assets.





Winthrop
conducts its business through WRT Realty L.P., a Delaware limited partnership
(the “Operating Partnership”). Winthrop is the sole general partner of, and owns
directly and indirectly, 100% of the limited partnership interest in the
Operating Partnership.  All references to the “Trust” refer to
Winthrop and its consolidated subsidiaries, including the Operating
Partnership.





The Trust
is engaged in the business of owning real property and real estate related
assets which it categorizes into three specific areas:  (i) direct or
indirect ownership of operating properties (“operating properties”); (ii)
origination and acquisition of loans and debt securities secured directly or
indirectly by commercial real property (collectively “loan assets”), including
collateral mortgage-backed securities and collateral debt obligation securities;
and (iii) equity and debt interests in other real estate investment trusts
(“REIT securities”).





2.
            Summary
      of Significant Accounting Policies





Basis of
Presentation





The
accompanying unaudited consolidated interim financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States (“GAAP”) for interim financial statements and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission (the “SEC”). Accordingly, they do not include
all of the information and footnotes required by GAAP for complete financial
statements, although management believes that the disclosures presented herein
are adequate to make the accompanying unaudited consolidated interim financial
statements not misleading. The accompanying unaudited consolidated interim
financial statements should be read in conjunction with the audited consolidated
annual financial statements and the notes thereto included in the Trust’s Annual
Report on Form 10-K for the year ended December 31, 2009 filed with the
SEC.  In the opinion of management, all adjustments considered
necessary for fair statements have been included, and all such adjustments are
of a normal recurring nature. The results of operations for the three months
ended March 31, 2010 are not necessarily indicative of the operating results for
the full year.





The
accompanying unaudited consolidated financial statements represent the
consolidated results of Winthrop, its wholly-owned taxable REIT subsidiary, WRT
TRS Management Corp., the Operating Partnership, wholly-owned subsidiaries and
certain partially-owned entities in which the Operating Partnership owns either
(i) a controlling interest or (ii) is the primary beneficiary of a variable
interest entity (“VIE”).  All significant intercompany amounts have
been eliminated.  The Trust accounts for its investments in companies in
which it has the ability to significantly influence, but does not have a
controlling interest, by using the equity method of accounting.





Reclassifications





Certain
prior year balances have been reclassified in order to conform to the current
year’s presentation.  Discontinued operations for the three month
periods ended March 31, 2010 and 2009 include the Trust’s property in Athens,
Georgia.


8




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Earnings Per
Share





The Trust
determines basic earnings per share on the weighted average number of Common
Shares of Beneficial Interest (“Common Shares”) outstanding during the period
and reflects the impact of participating securities.  The holders of
the Series B-1 Cumulative Convertible Redeemable Preferred Shares (“Series B-1
Preferred Shares”) and the Series C Cumulative Convertible Redeemable Preferred
Shares (“Series C Preferred Shares”) are entitled to receive cumulative
preferential dividends on a quarterly basis equal to the greater of (i) $0.40625
per share quarterly (6.5% of the liquidation preference on an annualized basis)
or (ii) cash dividends payable on the number of Common Shares into which the
Series B-1 Preferred Shares and Series C Preferred Shares (assuming that the
conversion price of the Series C Preferred Shares equals the conversion price
for the Series B-1 Preferred Shares) are convertible.  The Trust
computes diluted earnings per share based on the weighted average number of
Common Shares outstanding combined with the incremental weighted average effect
from all outstanding potentially dilutive instruments.





The Trust
has calculated earnings per share in accordance with relevant accounting
guidance for participating securities and the two class method.





Three
      Months Ended
                          March
      31,2010
                        
                        
                        2009BasicIncome
      (loss) from continuing operations
                        
                        $
                        4,083
                        
                        
                        $
                        (22,416
                        )Preferred
      dividend of Series C PreferredShares
                        
                        
                        (113
                        )
                        
                        
                        -Income
      (loss) from continuing operationsapplicable
      to Common Shares
                        
                        
                        3,970
                        
                        
                        
                        (22,416
                        )Income
      (loss) from discontinued operations
                        
                        
                        122
                        
                        
                        
                        (17
                        )Net
      income (loss) applicable to CommonShares
      for earnings per share purposes
                        
                        $
                        4,092
                        
                        
                        $
                        (22,433
                        )Basic
      weighted-average Common Shares
                        
                        
                        20,598
                        
                        
                        
                        15,806Income
      (loss) from continuing operations
                        
                        $
                        0.19
                        
                        
                        $
                        (1.42
                        )Income
      from discontinued operations
                        
                        
                        0.01
                        
                        
                        
                        -Net
      income (loss) per Common Share
                        
                        $
                        0.20
                        
                        
                        $
                        (1.42
                        )DilutedIncome
      (loss) from continuing operations
                        
                        $
                        4,083
                        
                        
                        $
                        (22,416
                        )Preferred
      dividend of Series C PreferredShares
                        
                        
                        -
                        
                        
                        
                        -Income
      (loss) from continuing operationsapplicable
      to Common Shares
                        
                        
                        4,083
                        
                        
                        
                        (22,416
                        )Income
      (loss) from discontinued operations
                        
                        
                        122
                        
                        
                        
                        (17
                        )Net
      income (loss) applicable to CommonShares
      for earnings per share purposes
                        
                        $
                        4,205
                        
                        
                        $
                        (22,433
                        )Basic
      weighted-average Common Shares
                        
                        
                        20,598
                        
                        
                        
                        15,806Series
      B-1 Preferred Shares (1)
                        
                        
                        -
                        
                        
                        
                        -Series
      C Preferred Shares (2)
                        
                        
                        789
                        
                        
                        
                        -Stock
      options (3)
                        
                        
                        2
                        
                        
                        
                        -Diluted
      weighted-average Common Shares
                        
                        
                        21,389
                        
                        
                        
                        15,806Income
      (loss) from continuing operations
                        
                        $
                        0.19
                        
                        
                        $
                        (1.42
                        )Income
      from discontinued operations
                        
                        
                        0.01
                        
                        
                        
                        -Net
      income (loss) per Common Share
                        
                        $
                        0.20
                        
                        
                        $
                        (1.42
                        )





(1)
            The
      Series B-1 Preferred Shares were anti-dilutive for the three months ended
      March 31, 2010 and 2009 and are not included in the weighted-average
      shares outstanding for the calculation of diluted earnings per Common
      Share.


(2)
            The
      Series C Preferred Shares were issued November 1, 2009 and are dilutive
      for the three months ended March 31,
2010.


9




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(3)
            The
      Trust’s outstanding stock options are dilutive for the three months ended
      March 31, 2010.  The stock options were anti-dilutive for the
      three months ended March 31, 2009 and are not included in the weighted
      average shares outstanding for the calculation of diluted earnings per
      Common Share.





Recently Issued Accounting
Standards




In
January 2010 the FASB issued an amendment to the accounting and disclosure
requirements for fair value measurements. This amendment requires more robust
disclosures of valuation techniques and inputs into fair value measurements and
requires amounts and reasons for significant transfers between levels in the
fair value hierarchy to be reported along with disclosure of the company’s
policy for recognizing such transfers. This amendment is effective for the Trust
beginning on January 1, 2010, except for Level 3 sensitivity disclosures, which
are effective for the Trust beginning in fiscal 2011. The Trust has adopted this
standard which did not have a material impact on its consolidated financial
statements.


In
January 2010 the FASB issued an amendment to accounting and disclosure
requirements on stock dividends and stock splits. This update addresses
accounting for a dividend payment that allows shareholders to elect to receive
cash or stock with a potential limitation on the total amount of cash that
shareholders can elect to receive in the aggregate. The new guidance requires
classifying the stock portion of a dividend payment as a new issuance of stock
and added to earnings per share on a prospective basis and not treated as a
stock dividend. The Trust has adopted this standard which did not have a
material impact on its consolidated financial statements.





In
June 2009 the FASB issued an amendment to the accounting and disclosure
requirements for the consolidation of VIEs. The updated guidance requires a
company to disclose significant judgments and assumptions used to determine
whether or not to consolidate a VIE.  It also amends the guidance governing
the determination of whether a company is the primary beneficiary of a VIE and
is therefore required to consolidate an entity by using a qualitative analysis
rather than a quantitative analysis. The qualitative analysis will include,
among other things, consideration of who has the power to direct the activities
of the entity that most significantly impact the entity's economic performance
and who has the obligation to absorb losses or the right to receive benefits of
the VIE that could potentially be significant to the VIE. This standard also
requires reassessments on a continuous basisof whether a company is the primary
beneficiary of a VIE. Previously, consolidation guidance required
reconsideration of whether a company was the primary beneficiary of a VIE only
when specific events had occurred. The Trust has adopted this standard
which did not have a material impact on its consolidated financial
statements.





In June
2009 the FASB issued an amendment to the accounting and disclosure requirements
for transfers of financial assets. The intent of the original accounting
guidance on this topic was to preclude sale accounting for transfers of
financial assets in which the transferor has certain types of continuing
involvement with the transferred assets or portions thereof. The new guidance
requires greater transparency and clarifies how a transferor’s continuing
involvement impacts whether control over a financial asset has been surrendered
and amends other existing guidance relating to the derecognition of certain
financial assets and eliminates the concept of a qualifying special-purpose
entity. The Trust has adopted this standard which did not have a material impact
on its consolidated financial statements.





3.
            Fair
      Value Measurement





Cash equivalents, derivative financial
instruments, available for sale securities and securities carried at fair value
are reported at fair value.  The accounting standards emphasize that
fair value is a market-based measurement, not an entity-specific measurement.
Therefore, a fair value measurement should be determined based on the
assumptions that market participants would use in pricing the applicable asset
or liability. As a basis for considering market participant assumptions in fair
value measurements, the standards establish a fair value hierarchy that
distinguishes between market participant assumptions based on market data
obtained from sources independent of the reporting entity (observable inputs
that are classified within Levels 1 and 2 of the hierarchy) and the reporting
entity’s own assumptions about market participant assumptions (unobservable
inputs classified within Level 3 of the hierarchy).


10




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Level 1
inputs utilize unadjusted quoted prices in active markets for identical assets
or liabilities that the Trust has the ability to access. Level 2 inputs are
inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 2 inputs may include
quoted prices for similar assets and liabilities in active markets, as well as
inputs that are observable for the asset or liability other than quoted prices,
such as interest rates, foreign exchange rates, and yield curves that are
observable at commonly quoted intervals. Level 3 inputs are unobservable inputs
for the asset or liability which are typically based on an entity’s own
assumptions, as there is little, if any, related market activity. In instances
where the determination of the fair value measurement is based on inputs from
different levels of the fair value hierarchy, the level in the fair value
hierarchy within which the fair value measurement falls is based on the lowest
level input that is significant to the fair value measurement in its entirety.
The Trust’s assessment of the significance of a particular input to the fair
value measurement in its entirety requires judgment, and takes into
consideration factors specific to the asset or liability.





Level 1
securities include highly liquid government bonds, mortgage products and
exchange-traded equities. If quoted market prices are not available, then fair
values are estimated by using pricing models or quoted prices of securities with
similar characteristics, which would generally be classified within Level 2 of
the valuation hierarchy.  Examples of such instruments include certain
derivative financial instruments. In cases where there is limited activity or
less transparency around inputs to the valuation, securities are classified
within Level 3 of the valuation hierarchy. Securities classified within Level 3
include, for example, residual interests in securitizations and other less
liquid securities.





In
October 2008 the Trust adopted an amendment to the guidance for fair value
measurements which provides clarification that determination of fair value in an
inactive market depends on facts and circumstances and may require the use of
significant judgment to determine whether certain individual transactions are
forced liquidations or distressed sales. In cases where the volume and level of
trading activity for an asset has declined substantially, the available prices
vary significantly over time or among market participants, or the prices are not
current, observable inputs might not be relevant and could require material
adjustment. In addition, the amended guidance also clarifies that broker or
pricing service quotes may be appropriate inputs when measuring fair value, but
are not necessarily determinative if an active market does not exist for the
financial asset. Regardless of the valuation techniques used, the accounting
rules require that an entity takes into consideration appropriate risk
adjustments that market participants would make for nonperformance and liquidity
risks. The Trust has always included nonperformance and liquidity risks in its
analysis of loans and collateral underlying its securities and the adoption of
this new guidance did not have a material impact on its consolidated financial
statements.





The
following is a description of the valuation methodologies used for instruments
measured at fair value, as well as the general classification of such
instruments pursuant to the valuation hierarchy.





Recurring
Measurements





Cash
and Cash Equivalents





The
Trust’s cash and cash equivalents are classified within Level 1 of the fair
value hierarchy because they are valued using quoted market prices. The types of
instruments that are valued based on quoted market prices in active markets
include most U.S. government treasury bills with original maturities of less
than 90 days and money market securities acquired through overnight
sweeps.





Available
for Sale Securities





Where
quoted prices are available in an active market, securities are classified
within Level 1 of the valuation hierarchy. At March 31, 2010 all of the Trust’s
available for sale securities are classified within Level 1 of the valuation
hierarchy.




11




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Securities
Carried at Fair Value





At March
31, 2010 all of the Trust’s securities carried at fair value are classified
within Level 1 of the fair value hierarchy.





Loan
Securities Carried at Fair Value





The Trust
uses a third party pricing model to establish values for the loan securities in
its portfolio.  The Trust also analyzes the performance of the loans
and collateral underlying the securities, the estimated value of the collateral
supporting such loans and considers the impact of local, industry and broader
economic trends and factors.  Significant judgment is utilized in the
ultimate determination of fair value.  This valuation methodology has
been characterized as Level 3 in the fair value hierarchy.





Derivative
Financial Instruments





The Trust
uses interest rate swaps to manage its interest rate risk. The valuation of
these instruments is determined using both quantitative and qualitative
valuation techniques including discounted cash flow analysis on the expected
cash flows of each derivative as well as potential credit risks with the swap
counterparty. The analysis considers the contractual terms of the derivatives,
including the period to maturity, and uses observable market-based inputs,
including interest rate curves, and implied volatilities to the extent
available.  The fair value of interest rate swaps are determined using
the market standard methodology of netting the discounted future fixed cash
receipts (or payments) and the discounted expected variable cash payments (or
receipts). The variable cash payments (or receipts) are based on an estimate of
future interest rates (forward curves) derived from observable market interest
rate curves.





To comply
with the accounting provisions of fair value measurements, the Trust utilizes
credit valuation adjustments to appropriately reflect both its own
nonperformance risk and the respective counterparty’s nonperformance risk in the
fair value measurements. In adjusting the fair value of its derivative contracts
for the effect of nonperformance risk, the Trust considers the impact of netting
as well as any applicable credit enhancements, such as collateral postings,
thresholds, mutual puts and guarantees.





Although
the Trust has determined that the majority of the inputs used to value its
derivative fall within Level 2 of the fair value hierarchy, the credit valuation
adjustments associated with its derivative utilize Level 3 inputs, such as
estimates of current credit spreads, to evaluate the likelihood of default by
the Trust and its counterparty.  However, as of March 31, 2010, the
Trust assessed the significance of the impact of the credit valuation
adjustments on the overall valuation of its derivative position and has
determined that the credit valuation adjustments are not
significant.  As a result, the Trust has determined that the
derivative valuation in its entirety should be classified in Level 2 of the fair
value hierarchy.





Impaired
Loans





All of
the Trust’s loans are collateral dependent and are evaluated for impairment by
comparing the fair value of the underlying collateral to the carrying value of
each loan.  Due to the unique nature of each individual property
collateralizing the Trust’s loans, the Trust uses a combination of the income
approach through internally developed valuation models and an evaluation of any
recent transactions to estimate the fair value of the
collateral.  This approach requires the Trust to make significant
judgments with respect to discount rates and the timing and amounts of estimated
future cash flows that are considered Level 3 inputs in accordance with the
guidance.  These cash flows include capital expenditures, operating
costs and sale prices.





The table
below presents the Trust’s assets and liabilities measured at fair value on a
recurring basis as of March 31, 2010, according to the level in the fair value
hierarchy within which those measurements fall(in
thousands):


12


WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Recurring Basis
                  
                  Quoted Prices in Active
                    Markets for Identical Assets
                    and Liabilities (Level 1)
                  
                  
                  Significant Other
                    Observable Inputs
                    (Level 2)
                  
                  
                  Significant
                    Unobservable
                    Inputs (Level 3)
                  
                  
                  TotalAssetsCash
      and cash equivalents
                  
                  $
                  76,591
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  76,591Restricted
      cash held in escrow
                  
                  
                  7,753
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7,753Available
      for sale securities
                  
                  
                  210
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  210Securities
      carried at fair value
                  
                  
                  45,528
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  45,528Loan
      securities carried at fair value
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,048
                  
                  
                  
                  1,048$
                  130,082
                  
                  
                  $
                  -
                  
                  
                  $
                  1,048
                  
                  
                  $
                  131,130LiabilitiesDerivative
      liabilities
                  
                  $
                  -
                  
                  
                  $
                  44
                  
                  
                  $
                  -
                  
                  
                  $
                  44





The table
below presents the Trust’s assets and liabilities measured at fair value on a
recurring basis as of December 31, 2009, according to the level in the fair
value hierarchy within which those measurements fall(in
thousands):





Recurring Basis
                  
                  Quoted Prices in Active
                    Markets for Identical Assets
                    and Liabilities (Level 1)
                  
                  
                  Significant Other
                    Observable Inputs
                    (Level 2)
                  
                  
                  Significant
                    Unobservable
                    Inputs (Level 3)
                  
                  
                  TotalAssetsCash
      and cash equivalents
                  
                  $
                  66,493
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  66,493Restricted
      cash held in escrow
                  
                  
                  9,505
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  9,505Available
      for sale securities
                  
                  
                  203
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  203Securities
      carried at fair value
                  
                  
                  51,702
                  
                  
                  
                  -
                  
                  
                  
                  692
                  
                  
                  
                  52,394Loan
      securities carried at fair value
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,661
                  
                  
                  
                  1,661$
                  127,903
                  
                  
                  $
                  -
                  
                  
                  $
                  2,353
                  
                  
                  $
                  130,256LiabilitiesDerivative
      liabilities
                  
                  $
                  -
                  
                  
                  $
                  84
                  
                  
                  $
                  -
                  
                  
                  $
                  84





The table
below includes a roll forward of the balance sheet amounts from January 1, 2010
to March 31, 2010, including the change in fair value, for financial instruments
classified by the Trust within Level 3 of the valuation
hierarchy.  When a determination is made to classify a financial
instrument within Level 3 of the valuation hierarchy, it is based upon the
significance of the unobservable factors to the overall fair value
measurement.





Three Months Ended March 31, 2010
                    
                    Securities Carried
                      at Fair Value
                    
                    
                    Loan Securities
                      Carried at Fair Value(in
      thousands)Fair
      value, January 1, 2010
                    
                    $
                    692
                    
                    
                    $
                    1,661Purchases,
      issuances and settlements, net
                    
                    
                    (692
                    )
                    
                    
                    -Unrealized
      loss, net
                    
                    
                    -
                    
                    
                    
                    (613
                    )Fair
      value, March 31, 2010
                    
                    $
                    -
                    
                    
                    $
                    1,048





Non-Recurring
Measurements





Equity
and Preferred Equity Investments





Equity
and preferred equity investments are assessed for other-than-temporary
impairment.  The determination of fair value of preferred equity and
equity investments is determined using widely accepted valuation techniques,
including discounted cash flow analysis on the expected cash flows of each asset
as well as the income capitalization approach considering prevailing market
capitalization rates.  The Trust reviews each investment based on the
highest and best use of the investment and market participation
assumptions.  The significant assumptions used in this analysis
include the discount rate used in the income capitalization valuation and
interest rate volatility.  The Trust has determined that the
significant inputs used to value its equity investments and preferred equity
investments fall within Level 3.  There were no valuation adjustments
made during the three months ended March 31, 2010.


13




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Investments
in Real Estate





The Trust
assesses the assets within its portfolio for recoverability based upon its
estimate of undiscounted future cash flows expected to result from use and
disposition of the assets.  For those assets not deemed recoverable,
the Trust determines the fair value of those assets using an income
capitalization approach based upon assumptions it believes a market participant
would utilize.  The Trust records impairment charges equal to the
difference between its carrying value and the estimated fair value of the
asset.  There were no impairment charges recorded during the three
months ended March 31, 2010.





The table
below presents as of December 31, 2009 the Trust’s assets and liabilities
measured at fair value as events dictate according to the level in the fair
value hierarchy within which those measurements fall (in
thousands):





Non-Recurring Basis
                  
                  Quoted Prices in
                    Active Markets for
                    Identical Assets and
                    Liabilities (Level 1)
                  
                  
                  Significant Other
                    Observable
                    Inputs (Level 2)
                  
                  
                  Significant
                    Unobservable
                    Inputs (Level 3)
                  
                  
                  TotalEquity
      investments
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  1,582
                  
                  
                  $
                  1,582Preferred
      equity investments
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Investments
      in real estate
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,813
                  
                  
                  
                  10,813$
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  12,395
                  
                  
                  $
                  12,395





Fair
Value Option





The
current accounting guidance for fair value measurement provides a fair value
option election that allows companies to irrevocably elect fair value as the
measurement attribute for certain financial assets and liabilities. Changes in
fair value for assets and liabilities for which the election is made will be
recognized in earnings on a quarterly basis based on the then market price
regardless of whether such assets or liabilities have been disposed of at such
time.  The fair value option guidance permits the fair value option
election to be made on an instrument by instrument basis when it is initially
recorded or upon an event that gives rise to a new basis of accounting for that
asset or liability.  The Trust elected the fair value option for all
securities acquired subsequent to September 30, 2008.





For the
three months ended March 31, 2010, the Trust recognized a net unrealized gain of
$1,927,000, and for the three months ended March 31, 2009, the Trust recognized
a net unrealized loss of $11,148,000 as a result of the change in fair value of
the securities for which the fair value option was elected, which is recorded as
an unrealized gain or loss in the Trust’s statement of
operations.  Income related to securities carried at fair value is
recorded as interest and dividend income.





The
following table presents the Trust's financial assets for which the fair value
option was elected (in thousands):





Financial
      instruments, at fair value
                  
                  March
      31, 2010
                  
                  
                  December
      31, 2009AssetsSecurities
      carried at fair value:Debentures
                  
                  $
                  17,510
                  
                  
                  $
                  18,794Preferred
      shares
                  
                  
                  26,419
                  
                  
                  
                  23,950Common
      shares
                  
                  
                  1,599
                  
                  
                  
                  9,650Loan
      securities carried at fair value
                  
                  
                  1,048
                  
                  
                  
                  1,661$
                  46,576
                  
                  
                  $
                  54,055




14




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


The table
below presents as of March 31, 2010 the difference between fair values and the
aggregate contractual amounts due (debentures) for which the fair value option
has been elected (in thousands):





Fair Value at
                    March 31, 2010
                  
                  
                  Amount Due
                    Upon Maturity
                  
                  
                  DifferenceAssetsSecurities
      carried at fair value:Debentures
                  
                  $
                  17,510
                  
                  
                  $
                  18,040
                  
                  
                  $
                  530Loan
      securities carried at fair value
                  
                  
                  1,048
                  
                  
                  
                  7,494
                  
                  
                  
                  6,446$
                  18,558
                  
                  
                  $
                  25,534
                  
                  
                  $
                  6,976





The table
below presents as of December 31, 2009 the difference between fair values and
the aggregate contractual amounts due (debentures) for which the fair value
option has been elected (in thousands):





Fair
      Value at
                    December
      31, 2009
                  
                  
                  Amount
      Due
                    Upon
      Maturity
                  
                  
                  DifferenceAssetsSecurities
      carried at fair value:Debentures
                  
                  $
                  18,794
                  
                  
                  $
                  21,191
                  
                  
                  $
                  2,397Loan
      securities carried at fair value
                  
                  
                  1,661
                  
                  
                  
                  7,494
                  
                  
                  
                  5,833$
                  20,455
                  
                  
                  $
                  28,685
                  
                  
                  $
                  8,230





4.
            Acquisitions,
      Dispositions and Other Activity





Acquisitions &
Dispositions of REIT Securities





During
the three months ended March 31, 2010 the Trust sold debentures acquired for
$1,413,000 and received net proceeds of approximately $2,078,000.  In
addition, during the three months ended March 31, 2010, the Trust sold common
shares acquired for $7,908,000 and received net proceeds of approximately
$9,329,000.  The Trust recognized a net gain on the sale of these
securities of approximately $695,000 exclusive of any interest or dividends
earned.





Real Estate Loan
Disposition





On
February 5, 2010, the Trust restructured its Siete Square loan into a $3,000,000
Sub-Participation A Note and a $4,219,000 Sub-Participation B
Note.  Pursuant to the option granted to Concord Debt Holdings LLC
(“Concord”) at the time of the Trust’s acquisition of the Siete Square loan, the
Trust sold the Sub-Participation A Note at par to Concord Real Estate CDO
2006-1, Ltd. (“CDO-1”), on the same date.




Financing





In March
2010 the Trust obtained a two-year extension of a $9,300,000 mortgage loan on
the River City property. The maturity date was extended to April 28, 2012 and
the terms of the extension require monthly payments of interest only at a fixed
rate of 6% through March 2011, increasing to 6.25% through maturity. The
extension was subject to a $200,000 principal payment which was made in March
2010 and requires an additional $200,000 principal payment on March 28,
2011.





Conversion of Preferred
Shares





In March
2010 an investor converted 400,000 Series C Preferred Shares into 714,400 Common
Shares resulting in a decrease in the outstanding Series C Preferred Shares to
144,000. The conversion of the Series C Preferred Shares resulted in a transfer
to common equity. There was no gain or loss recognized from the
conversion.


15




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Leasing
Activity





Andover,
Massachusetts – In January 2010 the Trust executed a lease agreement with
PAETEC Communications, Inc. for 93,000 square feet, representing 100% of the
rentable square footage of the property, through September 2022.  The
annual rent is $742,000 for the first year less six months free rent of
$371,000, $969,000 for the second year, increasing 3% every two years
thereafter.  The tenant has the option to purchase the property for
$10,500,000 effective after January 12, 2011 through March 19,
2013.





South
Burlington, Vermont – In January 2010 the Trust executed a lease
agreement with FairPoint Communications, Inc. for 56,000 square feet,
representing 100% of the rentable square footage of the property, through
January 1, 2015. The rent is $800,000 annually through January 2012 and
increases to $820,000, $840,000 and $861,500, respectively, for years 2013
through 2015.





Jacksonville,
Florida – In January 2010 the Trust executed a lease agreement with
Football Fanatics, Inc. for 558,000 square feet of space at this property
through July 2015.  The lease has an initial term of 66 months, with
three, three-year renewal options. Net rent payable under the lease commences in
August 2010 at an annual rent of $648,000, increasing to $669,000 annually for
August 2011 through July 2012 and thereafter increasing by an average of
approximately 16% per year for the balance of the initial term.





5.
            Loans
      Receivable





All of
the Trust’s loans identified as being impaired are collateral dependent loans
and are evaluated for impairment by comparing (i) the fair value of the
underlying collateral less costs to sell with (ii) the carrying value of each
loan.  Due to the unique nature of each individual property
collateralizing the Trust’s loans, the Trust uses the income approach through
internally developed valuation models to estimate the fair value of the
collateral.  This approach requires the Trust to make significant
judgments with respect to discount rates and the timing and amounts of estimated
future cash flows which are considered Level 3 inputs in accordance with the
accounting guidance of fair value measurements.





The
following table summarizes the Trust’s loans receivable at March 31, 2010 and
December 31, 2009 (in thousands):





Carrying Amount (1)Property
                              
                              Location
                              
                              Interest Rate
                              
                              Maturity
                              
                              March 31,
                                2010
                              
                              
                              December
                                31, 2009180
      North Michigan (2) (3)
                              
                              Chicago,
      IL
                              
                              8.5%
                              
                              May
      2016
                              
                              $
                              805
                              
                              
                              $
                              717160
      Spear (3)
                              
                              San
      Francisco, CA
                              
                              (4)
                              
                              June
      2012
                              
                              
                              4,724
                              
                              
                              
                              4,281160
      Spear – Mezzanine (3)
                              
                              San
      Francisco, CA
                              
                              15.0%
                              
                              June
      2012
                              
                              
                              1,817
                              
                              
                              
                              1,212Siete
      Square (5)
                              
                              Phoenix,
      AZ
                              
                              (6)
                              
                              June
      2012
                              
                              
                              2,487
                              
                              
                              
                              5,505Beverly
      Hilton (3)
                              
                              Beverly
      Hills, CA
                              
                              Libor
      + 1.74%
                              
                              August
      2010
                              
                              
                              5,911
                              
                              
                              
                              5,384Wellington
      Tower (3)
                              
                              New
      York, NY
                              
                              6.79%
                              
                              July
      2017
                              
                              
                              2,383
                              
                              
                              
                              2,364Metropolitan
      Tower (3)
                              
                              New
      York, NY
                              
                              Libor
      + 1.5%
                              
                              Nov
      2010
                              
                              
                              7,389
                              
                              
                              
                              6,638$
                              25,516
                              
                              
                              $
                              26,101





(1)
            The
      carrying amount includes accrued interest of $192 and $197 at March 31,
      2010 and December 31, 2009, respectively, and accretion of discount of
      $2,762 and $1,021 at March 31, 2010 and December 31, 2009,
      respectively.


(2)
            Represents
      tenant improvement and capital expenditure
  loans.


(3)
              The
      Trust has determined that these loan receivables were deemed to be
      variable interests in VIEs primarily based on the fact that the underlying
      entities do not have sufficient equity at risk to permit the entity to
      finance its activities without additional subordinated financial
      support.  The Trust does not have the power to direct the
      activities of the entity that most significantly impact the entity’s
      economic performance nor does it have the obligation to absorb the losses
      or the right to receive the benefits of the VIE that could potentially be
      significant to the
VIE.




16




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(4)
            The
      Trust holds a B Note in this loan.  Interest on the B Note
      equals the difference between (i) interest on the entire outstanding loan
      principal balance ($73,796 at March 31, 2010) at a rate of 6.48215% per
      annum less (ii) interest payable on the outstanding principal balance of
      the A Note ($35,000 at March 31, 2010) at a rate of 9.75% per
      annum.  As a result, the effective yield on the Trust’s $3,410
      cash investment is 40.8%.


(5)
            The
      carrying value at March 31, 2010 reflects the Trust’s sale of the $3,000
      Sub-Participation A Note.


(6)
            The
      Trust holds a B Note in this loan.  Interest on the B Note
      equals the difference between (i) interest on the entire outstanding loan
      principal balance ($7,219 at March 31, 2010) at a rate of 9.8375% per
      annum less (ii) interest payable on the outstanding principal balance of
      the A Note ($3,000 at March 31, 2010) at a rate of 8.0% per
      annum.  As a result, the effective yield on the Trust’s $2,460
      cash investment is 19.4%.





There was
no provision for loan loss recorded during the three months ended March 31,
2010.  During the three months ended March 31, 2009, the Trust
recorded a provision for loan loss of $428 related to loans on several
properties in the Marc Realty portfolio.





For the
three months ended March 31, 2010, the Trust recorded discount accretion into
interest income of $1,741,000.  There was no discount accretion for
the three months ended March 31, 2009.





For the
three months ended March 31, 2010 and 2009, the Trust did not recognize any
interest income on impaired loans subsequent to the date of their
impairment.  Cash payments received on impaired loans were classified
as cost recovery.  There were no cash payments received on impaired
loans for the three months ended March 31, 2010.  As of March 31,
2009, the Trust received $9,000 which was recorded as a cash recovery on
impaired loans.





6.
            Securities





Available for Sale
Securities





Available
for sale securities at March 31, 2010 are summarized in the table below (in
thousands):





Cost
                      
                      
                      Unrealized
                        Losses in
                        Other
                        Comprehensive
                        Income
                      
                      
                      Unrealized
                        Gains in
                        Other
                        Comprehensive
                        Income
                      
                      
                      Impairment
                      
                      
                      Fair
                        ValuePreferred
      shares
                      
                      $
                      204
                      
                      
                      $
                      -
                      
                      
                      $
                      6
                      
                      
                      $
                      -
                      
                      
                      $
                      210





Available
for sale securities at December 31, 2009 are summarized in the table below (in
thousands):





Cost
                  
                  
                  Unrealized
                    Losses in
                    Other
                    Comprehensive
                    Income
                  
                  
                  Unrealized
                    Gains in
                    Other
                    Comprehensive
                    Income
                  
                  
                  Impairment
                  
                  
                  Fair
                    ValuePreferred
      shares
                  
                  $
                  204
                  
                  
                  $
                  (1
                  )
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  203





Net
unrealized gain on available for sale securities in the amount of $7,000 for the
three months ended March 31, 2010 and in the amount of $2,000 for the three
months ended March 31, 2009 have been included in other comprehensive
income.





Securities Carried at Fair
Value





Securities
carried at fair value are comprised of debentures, preferred shares, and common
shares for which the Trust has elected the fair value option.


17




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Securities
carried at fair value at March 31, 2010 are summarized in the table below (in
thousands):





Cost
                  
                  
                  Fair
      ValueDebentures
                  
                  $
                  12,183
                  
                  
                  $
                  17,510Preferred
      shares
                  
                  
                  14,641
                  
                  
                  
                  26,419Common
      shares
                  
                  
                  1,223
                  
                  
                  
                  1,59928,047
                  
                  
                  
                  45,528Loan
      securities
                  
                  
                  1,661
                  
                  
                  
                  1,048$
                  29,708
                  
                  
                  $
                  46,576





For the
three months ended March 31, 2010, the Trust recognized an unrealized gain on
securities carried at fair value of $1,927,000.





Securities
carried at fair value at December 31, 2009 are summarized in the table below (in
thousands):





Cost
                  
                  
                  Fair
      ValueDebentures
                  
                  $
                  13,597
                  
                  
                  $
                  18,794Preferred
      shares
                  
                  
                  14,231
                  
                  
                  
                  23,950Common
      shares
                  
                  
                  8,234
                  
                  
                  
                  9,65036,062
                  
                  
                  
                  52,394Loan
      securities
                  
                  
                  1,661
                  
                  
                  
                  1,661$
                  37,723
                  
                  
                  $
                  54,055





During
the three months ended March 31, 2010 and March 31, 2009, securities were sold
for total proceeds of approximately $11,407,000 and $6,967,000,
respectively.  The Trust recognized a net realized gain of $695,000 on
the sale of these securities during the three months ended March 31,
2010.  The Trust recognized a gross realized loss of $87,000 on the
sale of these securities during the three months ended March 31,
2009.  The Trust utilizes the specific identification method for
calculating gain or loss on the sale of securities.





7.
            Preferred
      Equity Investments – Marc Realty





The Trust
recognized earnings from preferred equity investments of $83,000 for the three
months ended March 31, 2010 and $1,015,000 for the three months ended March 31,
2009.  The results for the three months ended March 31, 2010 reflect
the effects of the restructuring of the preferred equity investment with Marc
Realty.   Effective with the third quarter of 2009, 12 of the
investments with Marc Realty were deemed to be equity investments for which the
Trust began recognizing its pro-rata share of income or loss subsequent to June
30, 2009.




18
  WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


8.
            Equity
      Investments





The
Trust’s equity investments consist of the following at March 31,
2010:.





Investment Group (1)
                      
                      Equity Investment
                      
                      Nominal %
                        Ownership (2)
                      
                      
                      Equity
                        Investment
                        March 31,
                        2010
                      
                      
                      Equity
                        Investment
                        December 31,
                        2009(in
      thousands)Marc
      Realty (3)
                      
                      8
      South Michigan LLC
                      
                      
                      50
                      %
                      
                      $
                      6,976
                      
                      
                      $
                      6,859Marc
      Realty (3)
                      
                      11
      East Adams Street LLC
                      
                      
                      49
                      %
                      
                      
                      2,971
                      
                      
                      
                      2,963Marc
      Realty (3)
                      
                      29
      East Madison Street LLC
                      
                      
                      50
                      %
                      
                      
                      7,766
                      
                      
                      
                      7,750Marc
      Realty (3)
                      
                      Michigan
      30 LLC
                      
                      
                      50
                      %
                      
                      
                      12,008
                      
                      
                      
                      11,881Marc
      Realty (3)
                      
                      High
      Point Plaza LLC
                      
                      
                      50
                      %
                      
                      
                      6,023
                      
                      
                      
                      5,986Marc
      Realty (3)
                      
                      Brooks
      Building LLC
                      
                      
                      50
                      %
                      
                      
                      7,288
                      
                      
                      
                      7,346Marc
      Realty (3)
                      
                      1701
      Woodfield LLC
                      
                      
                      50
                      %
                      
                      
                      1,534
                      
                      
                      
                      1,582Marc
      Realty (3)
                      
                      River
      Road LLC
                      
                      
                      50
                      %
                      
                      
                      4,099
                      
                      
                      
                      4,075Marc
      Realty (3)
                      
                      3701
      Algonquin Road LLC
                      
                      
                      50
                      %
                      
                      
                      2,958
                      
                      
                      
                      2,827Marc
      Realty (3)
                      
                      Enterprise
      Center LLC
                      
                      
                      50
                      %
                      
                      
                      3,167
                      
                      
                      
                      3,094Marc
      Realty (3)
                      
                      900
      Ridgebrook LLC
                      
                      
                      50
                      %
                      
                      
                      1,733
                      
                      
                      
                      1,661Marc
      Realty (3)
                      
                      Salt
      Creek LLC
                      
                      
                      50
                      %
                      
                      
                      1,547
                      
                      
                      
                      1,536Sealy
                      
                      Sealy
      Northwest Atlanta Partners LP
                      
                      
                      60
                      %
                      
                      
                      3,014
                      
                      
                      
                      3,189Sealy
                      
                      Sealy
      Airpark Nashville GP
                      
                      
                      50
                      %
                      
                      
                      4,305
                      
                      
                      
                      4,618Sealy
                      
                      Sealy
      Newmarket GP LLC
                      
                      
                      68
                      %
                      
                      
                      7,621
                      
                      
                      
                      7,840Concord
                      
                      Lex-Win
      Concord LLC
                      
                      
                      50
                      %
                      
                      
                      -
                      
                      
                      
                      -$
                      73,010
                      
                      
                      $
                      73,207





(1)
            The
      Trust has various venture partners which it refers to as investment groups
      for purposes of explaining its equity investments. Further detail is
      provided for the equity investments under their respective investment
      group headings below.


(2)
            The
      Trust has determined that all of the Marc Realty equity investments and
      the investment in Lex-Win Concord LLC are
VIEs.


(3)
            Upon
      a capital transaction, the Trust will receive 45% of any remaining
      proceeds after a return of investment plus    9%
      thereon to both the Trust and Marc
Realty.





The
following table reflects the activity of the Trust’s equity investments for the
three months ended March 31, 2010 (in thousands):





Marc Realty
                    Ventures
                  
                  
                  Sealy
                    Ventures
                  
                  
                  Lex-Win
                    Concord LLC
                  
                  
                  TotalBalance
      at December 31, 2009
                  
                  $
                  57,560
                  
                  
                  $
                  15,647
                  
                  
                  $
                  -
                  
                  
                  $
                  73,207Equity
      in income (loss)
                  
                  
                  76
                  
                  
                  
                  (603
                  )
                  
                  
                  -
                  
                  
                  
                  (527
                  )Contributions
                  
                  
                  920
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  920Distributions/capital
      returns
                  
                  
                  (486
                  )
                  
                  
                  (104
                  )
                  
                  
                  -
                  
                  
                  
                  (590
                  )Balance
      at March 31, 2010
                  
                  $
                  58,070
                  
                  
                  $
                  14,940
                  
                  
                  $
                  -
                  
                  
                  $
                  73,010





Marc
Realty





On July
1, 2009, the Trust restructured certain of its existing investments with Marc
Realty and reclassified 12 investments from preferred equity investments to
equity investments.  In addition, any tenant improvement and capital
expenditure loans to these properties were reclassified from loans receivable to
equity investments.





The
restructuring of each of the Marc Realty investments was considered to be a
reconsideration event under FASB’s consolidation guidance due to the material
change in the agreements and the exchange of consideration between Marc Realty
and the Trust. As a result of the reconsideration, the Marc Realty equity
investments were deemed to be variable interests in VIEs primarily based on the
fact that the underlying entities do not have sufficient equity at risk to
permit the entity to finance its activities without additional subordinated
financial support.  As a result of the existence of certain provisions in
the operating agreements identifying the Trust and Marc Realty as related
parties, the Trust determined that Marc Realty, as the primary decision maker
and manager of the operating properties, is considered to be most closely
aligned with the business and is the primary beneficiary of the
VIEs.




19




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Although
the legal structure of the investments with Marc Realty is as loans, the
characteristics of both the mezzanine loans and the tenant improvement and
capital expenditure loans indicate that equity method accounting is most
appropriate.  The Trust is entitled to residual proceeds from capital
transactions and net operating cash flows, both of which are typical of an
equity investment.  The Trust's level of participation also supports
venture accounting treatment.  There are also provisions in the
agreements for future funding of additional tenant improvement and capital
expenditure loans for which both parties will fund in accordance with their
effective equity percentages.  The additional funding will be used to
fund either capital expenditures or operating losses, as necessary, which can be
viewed akin to capital contributions.





As a
result, effective with the third quarter of 2009, the investments with Marc
Realty are deemed to be equity investments for which the Trust recognizes its
pro-rata share of income or loss on 12 separate equity investments. The Trust
recorded net income from the 12 equity investments of $76,000 for the three
months ended March 31, 2010.  Additionally, the Trust received cash
distributions of $486,000 from the investments during the three months ended
March 31, 2010.





The
combined summarized balance sheets of the Trust’s Marc Realty venture
investments are as follows (in thousands):





March
      31, 2010
                  
                  
                  December
      31, 2009ASSETSReal
      estate, net
                  
                  $
                  174,222
                  
                  
                  $
                  174,310Cash
      and cash equivalents
                  
                  
                  723
                  
                  
                  
                  1,100Receivables
      and other assets
                  
                  
                  24,221
                  
                  
                  
                  25,287Total
      Assets
                  
                  $
                  199,166
                  
                  
                  $
                  200,697LIABILITIES
      AND MEMBERS’ CAPITALMortgage
      and notes payable
                  
                  $
                  94,300
                  
                  
                  $
                  94,969Other
      liabilities
                  
                  
                  10,716
                  
                  
                  
                  12,722Members’
      Capital
                  
                  
                  94,150
                  
                  
                  
                  93,006Total
      Liabilities and Members’ Capital
                  
                  $
                  199,166
                  
                  
                  $
                  200,697Trust’s
      share of equity
                  
                  $
                  47,079
                  
                  
                  $
                  46,497Basis
      differentials (1)
                  
                  
                  13,491
                  
                  
                  
                  13,563Other-than-temporary
      impairment
                  
                  
                  (2,500
                  )
                  
                  
                  (2,500
                  )Carrying
      value of the Trust’s investments in the equity investments
                  
                  $
                  58,070
                  
                  
                  $
                  57,560





(1)
            This
      amount represents the aggregate difference between the Trust’s historical
      cost basis and the basis reflected at the equity investment level, which
      is typically amortized over the life of the related assets and
      liabilities.  The basis differentials are the result of
      other-than-temporary impairments at the investment level and a
      reallocation of equity at the venture level as a result of the
      restructuring.  In addition, certain acquisition, transaction
      and other costs incurred by the Trust are not reflected in the net assets
      at the equity investment level.





The
combined summarized statements of operations of the Trust’s Marc Realty venture
investments are as follows (in thousands):





For
      the Three Months Ended
                    March
      31, 2010Total
      revenue
                  
                  $
                  10,067ExpensesOperating
                  
                  
                  4,300Interest
                  
                  
                  1,152Real
      estate taxes
                  
                  
                  1,482Depreciation
      and amortization
                  
                  
                  2,339Other
      expense
                  
                  
                  496Total
      expenses
                  
                  
                  9,769Net
      income
                  
                  $
                  298Trust’s
      share of net income
                  
                  $
                  148Amortization
      of basis differential
                  
                  
                  (72
                  )Income
      from equity investments
                  
                  $
                  76




20




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Sealy





As of
March 31, 2010, the Trust owns between 50-68% of three office flex parks located
in southeastern United States together with its venture partner, Sealy &
Co., Ltd. (“Sealy”), a real estate investment and operating company
headquartered in Dallas, Texas and Shreveport, Louisiana.





The
combined summarized balance sheets of the Sealy venture equity investments are
as follows (in thousands):





March 31,
                    2010
                  
                  
                  December 31,
                    2009ASSETSReal
      estate, net
                  
                  $
                  152,115
                  
                  
                  $
                  153,565Cash
      and cash equivalents
                  
                  
                  1,455
                  
                  
                  
                  971Receivables
      and other assets
                  
                  
                  13,996
                  
                  
                  
                  14,658Total
      Assets
                  
                  $
                  167,566
                  
                  
                  $
                  169,194LIABILITIES
      AND MEMBERS’/PARTNERS’ EQUITYMortgage
      and notes payable
                  
                  $
                  139,750
                  
                  
                  $
                  139,750Other
      liabilities
                  
                  
                  2,987
                  
                  
                  
                  3,373Members’/Partners’
      equity
                  
                  
                  24,829
                  
                  
                  
                  26,071Total
      Liabilities and Members’/Partners’ Equity
                  
                  $
                  167,566
                  
                  
                  $
                  169,194Carrying
      value of the Trust’s investments in the equity investments
                  
                  $
                  14,940
                  
                  
                  $
                  15,647





The
combined summarized statements of operations of the Sealy venture equity
investments are as follows (in thousands):





For
      the Three Months Ended
                    March
      31,2010
                  
                  
                  2009Total
      revenue
                  
                  $
                  4,370
                  
                  
                  $
                  4,443ExpensesOperating
                  
                  
                  957
                  
                  
                  
                  660Real
      estate taxes
                  
                  
                  447
                  
                  
                  
                  491Interest
                  
                  
                  2,058
                  
                  
                  
                  2,051Depreciation
      and amortization
                  
                  
                  1,712
                  
                  
                  
                  1,848Other
      expense
                  
                  
                  228
                  
                  
                  
                  245Total
      expenses
                  
                  
                  5,402
                  
                  
                  
                  5,295Net
      loss
                  
                  $
                  (1,032
                  )
                  
                  $
                  (852
                  )Trust’s
      share of net loss
                  
                  $
                  (603
                  )
                  
                  $
                  (482
                  )




21




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Lex-Win Concord LLC –
“Concord”





At June
30, 2009, the Trust wrote down its investment in Concord to zero and recognized
an impairment loss of $31,670,000 primarily as a result of the fair
value of its share of Concord’s net asset value being less than
zero.




Concord
is in violation of certain debt covenants to its lenders for the period ended
March 31, 2010 as a result of the continued deterioration of the value of its
assets and cumulative operating losses as indicated above. Concord’s debt is
non-recourse to the Trust and Concord’s lenders’ sole recourse with respect to
defaults is limited to the value of Concord’s assets collateralized by the debt.
The lenders do not have recourse against the Trust’s assets.





On May
22, 2009, a wholly-owned subsidiary of Inland American Real Estate Trust, Inc.
(“Inland”) filed a legal action against Concord generally seeking changes to the
organization documents, declarations that Inland is not required to make any
additional capital contributions and that Inland should not be required to
satisfy the May 11, 2009 capital call made by Concord in the amount of
$24,000,000.  The Trust believes that Inland’s claims are without
merit.  Concord filed counterclaims against Inland which state, in
general, that Inland is in material breach of the their agreements with Concord
and Concord will seek to recover all losses incurred by it as a result of such
breach.





On
December 21, 2009, the applicable parties and certain of their affiliates
entered into a settlement agreement to resolve the action which would provide
for, among other things, no obligation on any of the parties to make additional
capital contributions to Concord, the allocation of distributions equally among
Inland, Lexington, and the Trust and the formation of a new entity to be owned
by subsidiaries of Inland, Lexington and the Trust which, under certain
circumstances, would contribute assets to CDO-1.  The implementation
of the settlement agreement is conditioned on certain events including the
ability of certain CDO-1 bonds held by Concord Debt Funding Trust, a subsidiary
of Concord, to be cancelled.





CDO-1 has
brought an action in the Delaware Court of Chancery seeking declaratory relief
that the bonds held by Concord Debt Funding Trust may be cancelled and no longer
remain outstanding.  If the bonds remain outstanding obligations,
CDO-1 will not satisfy certain of its par value tests resulting in interest
payments and distributions on certain of the CDO-1 bonds being used instead to
redeem the most senior class of CDO-1 bonds, thereby reducing the cash flow to
Concord Debt Funding Trust from CDO-1. The
parties in the action brought cross summary judgment motions which were heard on
April 21, 2010. It is anticipated that a ruling will be received from the court
during the second quarter.




22




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


The
summarized consolidated balance sheets of Lex-Win Concord are as follows (in
thousands):





As
      of
                  March
      31, 2010
                
                
                As
      of
                  December
      31, 2009Condensed
      Consolidated Balance SheetsASSETSCash
      and restricted cash
                
                $
                9,608
                
                
                $
                26,116Real
      estate debt investments, net of loss
    allowance
                
                
                444,403
                
                
                
                447,270Real
      estate debt investments held for sale
                
                
                10,000
                
                
                
                66,311Available
      for sale securities, net
                
                
                98,088
                
                
                
                83,977Other
      assets
                
                
                7,932
                
                
                
                10,834Total
      assets
                
                $
                570,031
                
                
                $
                634,508LIABILITIES
      AND MEMBERS’ CAPITALRepurchase
      agreements
                
                $
                78,630
                
                
                $
                135,064Revolving
      credit facility
                
                
                53,829
                
                
                
                58,850Collateralized
      debt obligations
                
                
                347,525
                
                
                
                347,525Contingent
      collateral support obligation
                
                
                9,875
                
                
                
                9,757Sub-participation
      obligation
                
                
                4,500
                
                
                
                4,500Accounts
      payable and other liabilities
                
                
                15,390
                
                
                
                14,198Non-controlling
      redeemable preferred interest
                
                
                8,192
                
                
                
                5,720Members’
      Capital
                
                
                104,299
                
                
                
                113,928Accumulated
      other comprehensive loss
                
                
                (52,314
                )
                
                
                (55,148
                )Non-controlling
      interest
                
                
                105
                
                
                
                114Total
      Liabilities and Members’ Capital
                
                $
                570,031
                
                
                $
                634,508Trust’s
      share of equity
                
                $
                25,993
                
                
                $
                29,390Basis
      differential (1)
                
                
                (25,993
                )
                
                
                (29,390
                )Carrying
      value of the Trust’s investment in Concord
                
                $
                -
                
                
                $
                -





(1)
            At March 31, 2010, this amount
      represents other-than-temporary impairments recognized by the Trust of
      $68,213 adjusted for suspended losses of $16,063 and accumulated other
      comprehensive losses of $26,157.  At December 31, 2009, this amount represents other-than-temporary
      impairments recognized by the Trust of $68,213 adjusted for suspended
      losses of $11,249 and accumulated other comprehensive losses of
      $27,574.





The summarized consolidated statements of
operations of Lex-WinConcord are as
follows (in thousands):





FortheThreeMonthsEndedMarch31,
                  2010
                
                
                March31,
                  2009Condensed Consolidated Statement
      ofOperationsInterest and other income
                
                $
                7,107
                
                
                $
                12,525Interest expense
                
                
                (3,607
                )
                
                
                (4,632
                )Impairment loss on available
      forsale securities
                
                
                (2,628
                )
                
                
                (881
                )Provision for loss allowance on
      realestate debt
    investments
                
                
                (5,600
                )
                
                
                (2,500
                )Impairment loss on real estate
      debtinvestments held for
      sale
                
                
                -
                
                
                
                (36,908
                )Realized loss on sale of
      investments
                
                
                (1,254
                )
                
                
                -Contingent collateral support
      expense
                
                
                (118
                )
                
                
                -General and administrative
                
                
                (1,054
                )
                
                
                (1,089
                )Consolidated net loss
                
                
                (7,154
                )
                
                
                (33,485
                )Income attributable to
      non-controllingredeemable preferred
      interest
                
                
                (2,472
                )
                
                
                (1,874
                )Income attributable to
      non-controllinginterest
                
                
                (3
                )
                
                
                (3
                )Net loss attributable to
      Concord
                
                $
                (9,629
                )
                
                $
                (35,362
                )Trust’s share of net loss
                
                $
                (4,814
                )
                
                $
                (17,681
                )Suspended Loss
                
                
                4,814
                
                
                
                -Loss from equity investment
                
                $
                -
                
                
                $
                (17,681
                )




23




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


9.
            Debt





Mortgage Loans
Payable





The Trust
had outstanding mortgage loans payable of $214,977,000 and $216,767,000 at March
31, 2010 and December 31, 2009, respectively.  The mortgage loan
payments of principal and interest are generally due monthly, quarterly or
semi-annually and are collateralized by applicable real estate of the
Trust.





The
Trust’s mortgage loans payable at March 31, 2010 and December 31, 2009 are
summarized as follows:





Maturity
                      
                      Spread
      Over
                        LIBOR/Prime
                      
                      
                      Interest
      Rate at
                        March 31, 2010
                      
                      
                      Balance
      at
                        March 31, 2010
                      
                      
                      Balance
      at
                        December 31, 2009(in
      thousands)Fixed Interest Rate:Amherst,
      NY
                      October
      2013
                      
                      
                      —
                      
                      
                      
                      5.65
                      %
                      
                      $
                      16,423
                      
                      
                      $
                      16,526Indianapolis,
      IN
                      April  2015
                      
                      
                      —
                      
                      
                      
                      5.82
                      %
                      
                      
                      4,298
                      
                      
                      
                      4,317Houston,
      TX
                      April
      2016
                      
                      
                      —
                      
                      
                      
                      6.39
                      %
                      
                      
                      63,035
                      
                      
                      
                      63,869Andover,
      MA
                      March
      2011
                      
                      
                      —
                      
                      
                      
                      6.60
                      %
                      
                      
                      6,233
                      
                      
                      
                      6,266S.
      Burlington, VT
                      March
      2011
                      
                      
                      —
                      
                      
                      
                      6.60
                      %
                      
                      
                      2,671
                      
                      
                      
                      2,686Chicago,
      IL
                      March
      2016
                      
                      
                      —
                      
                      
                      
                      5.75
                      %
                      
                      
                      21,043
                      
                      
                      
                      21,118Lisle,
      IL
                      June
      2016
                      
                      
                      —
                      
                      
                      
                      6.26
                      %
                      
                      
                      24,099
                      
                      
                      
                      24,176Lisle,
      IL
                      March
      2017
                      
                      
                      —
                      
                      
                      
                      5.55
                      %
                      
                      
                      5,600
                      
                      
                      
                      5,600Orlando,
      FL
                      July
      2017
                      
                      
                      —
                      
                      
                      
                      6.40
                      %
                      
                      
                      39,020
                      
                      
                      
                      39,148Chicago,
      IL
                      April
      2012
                      
                      
                      —
                      
                      
                      
                      6.00
                      %
                      
                      
                      9,100
                      
                      
                      
                      9,300Variable Interest Rate:Various
      (1)
                      June
      2010
                      
                      LIBOR+1.75%
                      
                      
                      
                      (2
                      )
                      
                      
                      23,455
                      
                      
                      
                      23,761$
                      214,977
                      
                      
                      $
                      216,767





(1)
            The
      loan payable to KeyBank (“the KeyBank Loan”) is collateralized by 14
      properties and the Trust has one remaining one-year option to extend this
      loan.


(2)
            The
      Trust entered into an interest rate swap agreement in the notional amount
      of $23,000, effectively converting the floating interest rate to a fixed
      rate of 2.8% through June 2010.





The fair
value of the Trust’s mortgage loans payable are less than their current carrying
amounts by $20,926,000 at March 31, 2010 and $25,704,000 at December 31,
2009.





10.
            Revolving
      Line of Credit





The Trust
has a line of credit with KeyBank pursuant to which the Trust can borrow on a
revolving basis up to $35,000,000.  The revolving credit line matures
December 16, 2010 with the option of the Trust to extend the term for an
additional year.  Amounts borrowed under the credit facility bear
interest at LIBOR plus 3.0%.  To the extent the Trust maintains cash
balances at KeyBank in excess of a certain threshold, the interest rate is
reduced to LIBOR plus 2.25%.





The
revolving line of credit requires the Trust to maintain (i) a minimum
consolidated debt service coverage ratio, (ii) a maximum leverage ratio, (iii)
liquid assets of $17,500,000 and (iv) a minimum net
worth.  Additionally, the Trust is limited to payment of dividends not
to exceed 100% of adjusted earnings on a trailing 12-month basis, as
defined,  except to the extent necessary to maintain its tax status as
a REIT.  The revolving credit line is collateralized by substantially
all of the Trust’s assets.  The revolving credit line requires monthly
payments of interest only.  To the extent that the amounts outstanding
under the facility are in excess of the borrowing base (as calculated), the
Trust is required to make a principal payment to reduce such excess. The Trust
may prepay from time to time without premium or penalty and re-borrow amounts
prepaid.


24




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


At March
31, 2010 and December 31, 2009, there were no amounts outstanding under the
facility.  The Trust is required to pay a commitment fee on the unused
portion of the line, which amounted to approximately $22,000 for each of the
three months ended March 31, 2010 and 2009.




11.
            Derivative
      Financial Instruments





The Trust
has exposure to fluctuations in market interest rates.  The Trust
seeks to limit its risk to interest rate fluctuations through match financing on
its assets as well as through hedging transactions.  Specifically, the
Trust enters into derivative financial instruments.





The
Trust’s objective in using interest rate derivatives is to add stability to
interest expense and to manage its exposure to interest rate
movements.  To accomplish this objective, the Trust primarily uses
interest rate swaps as part of its interest rate risk management
strategy.  Interest rate swaps designated as cash flow hedges involve
the receipt of variable rate amounts from a counterparty in exchange for the
Trust making fixed-rate payments over the life of the agreements without
exchange of the underlying notional amount.





The
effective portion of changes in fair value of the interest rate swap designated
and that qualifies as a cash flow hedge is recorded in accumulated other
comprehensive income and is subsequently reclassified into earnings in the
period that the hedged forecasted transaction affects
earnings.  During the three months ended March 31, 2010 and 2009, the
interest rate swap was used to hedge the variable cash flows associated with
existing variable-rate debt.  The Trust also assesses and documents,
both at the hedging instruments inception and on an ongoing basis, whether the
derivative instrument is highly effective in achieving offsetting changes in the
cash flows attributable to the hedged item.  The Trust has recorded
changes in fair value related to the effective portion of its interest rate swap
contracts designated and qualifying as cash flow hedges totaling $40,000 and
$176,000 of increased interest expense for the three months ended March 31, 2010
and 2009, respectively.





The table
below presents information about the Trust’s interest rate swaps at March 31,
2010 (dollars in thousands):





Maturity
                  
                  Swap
                    Rate
                  
                  
                  Notional
                    Amount
                    of Hedge
                  
                  
                  Cost
                    of
                    Hedge
                  
                  
                  Estimated Fair
                    Value of
                    Swap in Other
                    Comprehensive
                    Income
                  
                  
                  UnrealizedGain
                    on SettledSwap
                    in Other
                    Comprehensive
                    Income
                  
                  
                  Change in Swap
                    Valuations Includedin
                    OtherComprehensive
                    Income
                    For the Three Months
                    Ended March 31,2010June
      2010
                  
                  
                  1.05
                  %
                  
                  $
                  23,000
                  (1)
                  
                  $
                  -
                  
                  
                  $
                  (44
                  )
                  
                  $
                  -
                  
                  
                  $
                  40





(1)
            In
      connection with the KeyBank Loan extension, the Trust was required to
      provide interest rate protection through the maturity of the extension
      (June 30, 2010).  The Trust obtained an interest rate swap with
      a $23,000 notional amount that will effectively convert the interest rate
      on the KeyBank Loan from a floating rate of LIBOR plus 1.75% to a fixed
      rate of 2.8%.





12.
            Common
      Shares





The
following table sets forth information relating to sales of Common Shares during
the three months ended March 31, 2010:





Date of Issuance
                  
                  Number of Shares Issued
                  
                  
                  Price per Share
                  
                  Type of Offering1/15/10
                  
                  
                  47,385
                  
                  
                  $
                  12.73
                  
                  DRIP(1)





(1)         The Trust’s Dividend Reinvestment and
Stock Purchase Plan.


25




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


13.
            Discontinued
      Operations





In
November 2009 the tenant at the Trust’s Athens, Georgia retail property notified
the Trust that it was exercising its right to purchase the property at the
expiration of the current lease term.  In accordance with the lease,
the purchase price will be equal to the fair market value of the property at the
time of sale.  Both the Trust and the tenant have engaged independent
third parties to determine the fair market value of the property.  The
Trust anticipates that the sale will be consummated on or before October 31,
2010, the current lease expiration date.





In August
2009 the First District Court of Wyandotte County, Kansas, appointed a receiver
to operate and manage the Trust’s apartment complex in Kansas City, Kansas
commonly referred to as Creekwood Apartments.  In October 2009 a
notice of foreclosure was issued on behalf of the first mortgage
holder.  The property was foreclosed in December 2009.





14.
            Commitment
      and Contingencies





The Trust
is involved from time to time in litigation on various matters, including
disputes with tenants and disputes arising out of agreements to purchase or sell
properties.  Given the nature of the Trust’s business activities,
these lawsuits are considered routine to the conduct of its
business.  The result of any particular lawsuit cannot be predicted
because of the very nature of litigation, the litigation process and its
adversarial nature, and the jury system.  The Trust does not expect
that the liabilities, if any, that may ultimately result from such legal actions
will have a material adverse effect on its financial condition or results of
operations.




During
the first quarter of 2010, the Trust exercised its option to acquire the land
underlying six of the properties currently ground leased by the Trust and which
are leased to The Kroger Co.  The consummation of the acquisition of the
six land parcels is expected to occur in the fourth quarter of 2010 at an
aggregate purchase price of approximately $4,209,000.





15.
            Related-Party
      Transactions





FUR
Advisors





The
activities of the Trust are administered by FUR Advisors LLC (“FUR Advisors”)
pursuant to the terms of the Advisory Agreement between the Trust and FUR
Advisors.  FUR Advisors is controlled by and partially owned by the
executive officers of the Trust. Pursuant to the terms of the Advisory
Agreement, FUR Advisors is responsible for providing asset management services
to the Trust and coordinating with the Trust’s shareholder transfer agent and
property managers.  FUR Advisors is entitled to receive a base
management fee and an incentive fee.  In addition, FUR Advisors or its
affiliate is also entitled to receive property and construction management
fees.





Winthrop
Management





Winthrop
Management L.P. (“Winthrop Management”), an affiliate of FUR Advisors and the
Trust’s executive officers, assumed property management responsibilities for
various properties owned by the Trust. Pursuant to the terms of the property
management agreement, Winthrop Management receives a property management fee
equal to 3% of the monthly revenues on the properties it manages.





The
following table sets forth the fees and reimbursements paid by the Trust for the
three months ended March 31, 2010 and 2009 to FUR Advisors and Winthrop
Management (in thousands):





For
      the Three Months Ended2010
                          
                          
                          2009Asset
      Management (1)
                          
                          $
                          1,024
                          (3)
                          
                          $
                          781
                          (4)Property
      Management (2)
                          
                          
                          59
                          
                          
                          
                          67Construction
      Management (2)
                          
                          
                          -
                          
                          
                          
                          3$
                          1,083
                          
                          
                          $
                          851




26




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(1)
            Payable
      to FUR Advisors in accordance with the terms of the Advisory
      Agreement.


(2)
            Payable
      to Winthrop Management in accordance with the terms of the Advisory
      Agreement.


(3)
            Before
      WRP Sub-Management LLC credits of
$52.


(4)
            Before
      WRP Sub-Management LLC credits of
$69.





Base
Management Fee





Effective
January 1, 2010, the Advisory Agreement was amended so that the determination of
the issuance price of Common Shares reverted back to the pre 2009
definition.  This change will result in an increase to the annual
advisory fee payable to the Advisor of approximately $2,100,000, which increase
will be phased in with 54% of the increase being paid during 2010 and then 100%
of the increase being paid commencing in 2011.





16.
            Business
      Segments





FASB
guidance on segment reporting establishes standards for the way that public
business enterprises report information about operating segments in financial
statements and requires that those enterprises report selected financial
information about operating segments in interim financial reports issued to
shareholders.





Based on
the Trust’s method of internal reporting, management determined that it has
three operating segments: (i) the ownership
of operating properties; (ii) the origination and acquisition of loans and debt
securities secured directly or indirectly by commercial and multi-family real
property – collectively, loan assets; and (iii) the ownership of equity and debt
securities in other REITs – REIT securities.  The accounting policies
of the segments are identical to those described in Note 2.





The
operating properties segment includes all of the Trust’s wholly and partially
owned operating properties.  Prior to July 1, 2009, the loan assets
segment includes all of the Trust’s activities related to real estate loans,
which consisted primarily of the Trust’s investment in Lex-Win Concord LLC and
its tenant improvement and capital expenditure loans to properties in the Marc
Realty portfolio.  As of July 1, 2009, in conjunction with the
restructuring of its preferred equity investment in Marc Realty, the Trust’s
preferred equity investments and tenant improvement and capital expenditure
loans in the Marc Realty portfolio are now classified as equity investments and
are included in the operating properties segment.  The REIT securities
segment includes all of the Trust’s activities related to the ownership of
securities in other publicly traded real estate companies.  In
addition to its three business segments, the Trust reports non-segment specific
income and expense under corporate income (expense).





The
following table summarizes the Trust’s assets by business segment for the
periods ended March 31, 2010 and December 31, 2009 (in thousands):





March
      31, 2010
                  
                  
                  December
      31, 2009Operating
      properties
                  
                  $
                  313,866
                  
                  
                  $
                  313,682Loan
      assets
                  
                  
                  30,556
                  
                  
                  
                  31,774REIT
      securities
                  
                  
                  45,738
                  
                  
                  
                  52,597CorporateCash
      and cash equivalents
                  
                  
                  76,591
                  
                  
                  
                  66,493Other
                  
                  
                  25,502
                  
                  
                  
                  28,646Total
      Assets
                  
                  $
                  492,253
                  
                  
                  $
                  493,192





The Trust
defines net operating income for each segment presented as all items of income
and expense directly derived from or incurred by each business segment before
depreciation, amortization and interest expense.  Interest on cash
reserves, general and administrative expenses and other non-segment specific
income and expense items are reported under corporate income
(expense).  The following table presents a summary of revenues from
operating properties, loan assets and REIT securities and expenses incurred by
each segment for the three months ended March 31, 2010 and March 31, 2009 (in
thousands):


27




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010
 
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


For the Three Months EndedMarch 31,
                      2010
                    
                    
                    March 31,
                      2009Operating
      PropertiesRents
      and reimbursements
                    
                    $
                    9,520
                    
                    
                    $
                    10,655Operating
      expenses
                    
                    
                    (1,959
                    )
                    
                    
                    (1,859
                    )Real
      estate taxes
                    
                    
                    (720
                    )
                    
                    
                    (673
                    )Equity
      in loss of Sealy Northwest Atlanta
                    
                    
                    (175
                    )
                    
                    
                    (38
                    )Equity
      in loss of Sealy Airpark Nashville
                    
                    
                    (209
                    )
                    
                    
                    (258
                    )Equity
      in loss of Sealy Newmarket
                    
                    
                    (219
                    )
                    
                    
                    (186
                    )Equity
      in income of Marc Realty investments
                    
                    
                    76
                    
                    
                    
                    -Net
      operating income
                    
                    
                    6,314
                    
                    
                    
                    7,641Depreciation
      and amortization expense
                    
                    
                    (2,362
                    )
                    
                    
                    (2,851
                    )Interest
      expense
                    
                    
                    (3,193
                    )
                    
                    
                    (3,472
                    )Operating
      properties net income
                    
                    
                    759
                    
                    
                    
                    1,318Loan
      AssetsInterest
                    
                    
                    2,463
                    
                    
                    
                    378Equity
      in earnings of preferred equity investment of Marc Realty
                    
                    
                    83
                    
                    
                    
                    1,015Equity
      in loss of Lex-Win Concord
                    
                    
                    -
                    
                    
                    
                    (17,681
                    )Provision
      for loss on loans receivable
                    
                    
                    -
                    
                    
                    
                    (428
                    )Net
      operating income (loss)
                    
                    
                    2,546
                    
                    
                    
                    (16,716
                    )General
      and administrative expense
                    
                    
                    (10
                    )
                    
                    
                    -Loan
      assets net income (loss)
                    
                    
                    2,536
                    
                    
                    
                    (16,716
                    )REIT
      SecuritiesInterest
      and dividends
                    
                    
                    747
                    
                    
                    
                    1,374Gain
      (loss) on sale of securities carried at fair value
                    
                    
                    695
                    
                    
                    
                    (87
                    )Unrealized
      gain (loss) on securities carried at fair value
                    
                    
                    1,927
                    
                    
                    
                    (11,148
                    )Net
      operating income (loss)
                    
                    
                    3,369
                    
                    
                    
                    (9,861
                    )Interest
      expense
                    
                    
                    -
                    
                    
                    
                    (75
                    )REIT
      securities net income (loss)
                    
                    
                    3,369
                    
                    
                    
                    (9,936
                    )Net
      Income (Loss)
                    
                    
                    6,664
                    
                    
                    
                    (25,334
                    )Reconciliations
      to GAAP Net Income (Loss):Corporate
      Income (Expense)Interest
      income
                    
                    
                    37
                    
                    
                    
                    72Interest
      expense
                    
                    
                    (459
                    )
                    
                    
                    (728
                    )Gain
      on extinguishment of debt
                    
                    
                    -
                    
                    
                    
                    5,237General
      and administrative (1)
                    
                    
                    (1,899
                    )
                    
                    
                    (1,442
                    )State
      and local taxes
                    
                    
                    (15
                    )
                    
                    
                    (50
                    )Income
      (loss) from continuing operations before non-controlling
      interest
                    
                    
                    4,328
                    
                    
                    
                    (22,245
                    )Non-controlling
      interest
                    
                    
                    (245
                    )
                    
                    
                    (171
                    )Income
      (loss) from continuing operations attributable to Winthrop Realty
      Trust
                    
                    
                    4,083
                    
                    
                    
                    (22,416
                    )Income
      (loss) from discontinued operations attributable to Winthrop Realty
      Trust
                    
                    
                    122
                    
                    
                    
                    (17
                    )Net
      Income (Loss) Attributable to Winthrop Realty Trust
                    
                    $
                    4,205
                    
                    
                    $
                    (22,433
                    )Capital
      ExpendituresOperating
      properties
                    
                    $
                    627
                    
                    
                    $
                    295





(1)       After
credits – See Note 16.





28


17.
              Variable
      Interest Entities


Consolidated Variable
Interest Entities




The lease
agreement executed on the Andover, Massachusetts property gives the tenant an
option to purchase the building for a fixed price of $10,500,000. The option is
exercisable at the tenant's discretion at any point during the lease
term.  As a result of the fixed price purchase option contained in
this lease agreement, the Trust has determined that its Andover, Massachusetts
property is a variable interest entity for which the Trust is the primary
beneficiary since it has the power to direct activities that most significantly
impact the economics of the property.




The
carrying amounts of the Trust's Andover property include building of $4,774,000,
lease intangibles of $1,598,000 and mortgage debt of $6,233,000. Prior to the
execution of the lease agreement, the Andover property was not considered a
VIE but it has been consolidated since its acquisition.  For this
reason, no gain or loss has been recognized in connection with the Trust's
determination that it is the primary beneficiary of the VIE.




Variable Interest Entities
Not Consolidated




Equity
method investments




Lex-Win Concord LLC – The
Trust has a 50% equity interest in Lex-Win Concord LLC (“Lex-Win”). The Trust
has determined that Lex-Win is a VIE because the equity investment at risk is
not sufficient for Lex-Win to finance its activities without additional
subordinated financial support.




Lexington
Realty Trust and the Trust, two of the variable interest holders, hold identical
50%/50% membership interests.  By design and in practice, they share
equally in the economics and the decision-making. Further, Lexington and the
Trust, which are otherwise unrelated parties, each have 50% of the voting rights
of the equity of Lex-Win and each represents 50% of the boards and committees
making decisions with respect to the entity. An affiliate of FUR advisors is
responsible for day-to-day administration and operations of Lex-Win, decisions
that most significantly impact the entity’s economic performance are jointly
decided through their voting interests and equal board/committee representation.
Lexington and the Trust are deemed to have shared power, such that neither party
is considered to have the power to direct the activities of the
VIE.  In addition, there is no principal agency relationship through
transfer restrictions that would indicate a primary beneficiary exists as noted
above.




At March
31, 2010, the carrying value of the Trust’s investment in Lex-Win is
zero. The Trust does not have the current intent to provide financial or
other support to Lex-Win and the obligations of Lex-Win are non-recourse to the
Trust. The Trust has always accounted for its investment in Lex-Win as an equity
method investment.




Marc Realty Equity Investment
– The Trust has concluded that the 12 Marc Realty equity investments are
variable interests in variable interest entities.  This assessment is
primarily based on the fact that the underlying entities do not have sufficient
equity at risk to permit them to finance their activities without additional
subordinated financial support.




While the
Trust maintains certain protective rights under the terms of the agreements
governing the Marc Realty investments, the power to direct the activities that
most significantly impact the economics of the Marc Realty investments is vested
in Marc Realty as the managing member.  As such, management has
concluded that the Trust is not the primary beneficiary of these Marc Realty
investments.  The Trust's investment in the Marc Realty equity
investments at March 31, 2010 was $58,070,000.




Loans
receivable and loan securities




The Trust
has reviewed its loans receivable and loan securities and certain of these
assets have been identified as variable interests in a VIE because the equity
investment at risk is not considered sufficient for the entity to finance its
activities without additional subordinated financial support.  The Trust
does not, however, currently have the power to direct the activities of the
ventures collateralizing its loans receivable and loan
securities.  For this reason, management believes that it does not
control, nor is it the primary beneficiary of these ventures. Accordingly, the
Trust accounts for these investments under the guidance for loans and real
estate debt investments.





18.
            Subsequent
      Events




In April
2010, the Trust notified KeyBank of its intent to exercise its one-year option
to extend the KeyBank loan through June 2011.




29




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


ITEM 2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





Certain
statements contained
herein constitute forward-looking statements as such term is defined in Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.  Forward-looking statements are not
guarantees of performance.  They involve risks, uncertainties and
assumptions.  Our future results, financial condition and business may
differ materially from those expressed in these forward-looking
statements.  You can find many of these statements by looking for words
such as “approximates,” “believes,” “expects,” “anticipates,” “intends,”
“plans,” “would,” “may” or similar expressions in this quarterly report on Form
10-Q.  These forward-looking statements are subject to numerous
assumptions, risks and uncertainties.  Many of the factors that will
determine these items are beyond our ability to control or predict. 
Factors that may cause actual results to differ materially from those
contemplated by the forward-looking statements include, but are not limited to,
those set forth in our Annual Report on Form 10-K for the year ended December
31, 2009 under “Forward Looking Statements” and “Item IA - Risk Factors,” as
well as our other filings with the SEC. For these statements, we claim the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.  We expressly disclaim
any responsibility to update forward-looking statements, whether as a result of
new information, future events or otherwise.  Accordingly, investors should
use caution in relying on forward-looking statements, which are based on
information, judgments and estimates at the time they are made, to anticipate
future results or trends.





Management’s
Discussion and Analysis of Financial Condition and Results of operations include
a discussion of our unaudited consolidated financial statements and footnotes
thereto for the three months ended March 31, 2010 as compared with the three
months ended March 31, 2010. These unaudited financial statements are prepared
in conformity with accounting principles generally accepted in the United States
of America which requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.





Overview





We are a
real estate investment trust engaged in the business of owning and managing real
property and real estate related assets. Our business objective is to maximize
long-term shareholder value through a total return value approach to real estate
investing.  As a result of our emphasis on total return, while we seek
to achieve a stable, predictable dividend for our shareholders, we do not select
or manage our investments for short-term dividend growth, but rather towards
achieving overall superior total return.  We believe this approach
will ultimately result in long term increased share value.





We
operate in three strategic business segments: (i) operating properties; (ii)
loan assets; and (iii) REIT equity and debt securities. We acquire assets
through direct ownership as well as through strategic alliances and
ventures.  Our primary sources of income are: rental income and tenant
recoveries from leases of our operating properties; interest income and discount
accretion from our loan assets; and interest and dividend income and
appreciation from our investments in REIT securities.





Economic
Conditions


There is
an obvious contradiction between reports of upside improvement in the economy
and real time economic data relating to commercial real estate.  While
we are optimistic and see prospects in the current market, we do not expect real
estate fundamentals to materially improve this year.  We believe that
capitalization rates will ultimately revert back to historic levels and real
estate pricing will trend downward more accurately reflecting its current and
near term operating fundamentals. We expect that excessive leverage, reduced
liquidity and a reappraisal of value by institutional lenders will create
ongoing investment opportunity not presented by the current lender policies.
Consequently, we intend to continue to be patient and invest prudently in 2010
and pursue opportunities when we see them.
 30
  WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


Debt
Maturities




At March
31, 2010, our balance sheet contains liquid assets consisting
of cash and cash equivalents, securities carried at fair value and available for
sale securities aggregating $122,329,000.  During 2010 we have
no debt maturing other than the loan which is collateralized by 14 properties
and which we have the right to extend for one year.  In April 2010, we
notified the lender of our intent to exercise our one-year option to extend the
loan through June 2011.





We
continually evaluate our debt maturities and, based on our current assessment,
we believe there are viable financing and refinancing alternatives that will not
materially adversely impact our liquidity or our expected financial
results.




Financing Arrangement
Activities




Consolidated Operating Properties– In March 2010 we obtained a two year extension of a $9,300,000 mortgage
loan on our River City property. The maturity date was extended to April 28,
2012 and the terms of the extension require monthly payment of interest only at
a fixed rate of 6% through March 2011, increasing to 6.25% through maturity. The
extension was subject to a $200,000 principal payment which was made in March
2010 and requires an additional $200,000 principal payment on March 28,
2011.




Equity Investments – During
the quarter ended March 31, 2010 we extended all of the debt maturing in 2010 on
our equity investments. Three mortgage loans secured by four Marc Realty
properties with an aggregate outstanding balance of approximately $29,079,000
were refinanced. One mortgage loan, in the amount of $5,500,000 was extended
through 2011 at its existing terms. The remaining two mortgage loans amounting
to $23,579,000 were extended through February 2013 at Libor + 2.75% with a
minimum rate of 4.25%. The refinancing of the mortgage loans also required a
$1,300,000 principal payment which was made in April 2010.




Line of Credit – Our
$35,000,000 revolving line of credit which has no outstanding balance at March
31, 2010 matures in December 2010. We have one option to extend the term of this
facility for an additional year.





Preferred Shares – In March
2010 an investor converted 400,000 Series C Preferred Shares into 714,400 Common
Shares.  As a result, as of March 31, 2010, we had outstanding 852,000
Series B-1 Preferred Shares and 144,000 Series C Preferred Shares which, if not
previously converted, we are required to redeem in February 2012 at a price
of $25 per share.





Comparability of Financial
Data from Period to Period




The
comparability of financial data from period to period is affected by several
items including 1) the timing of our property acquisitions and leasing
activities, 2) the purchases and sales of assets and investments, 3) taking
material other-than-temporary impairment losses on assets in our portfolio and
4) the reclassification of assets.  In this regard, the comparability
of financial results for the current periods were impacted by the write-down of
our investment in Lex-Win Concord during the second quarter of 2009 and the
reclassification of certain Marc Realty assets from an aggregated preferred
equity investment to 12 individual common equity investments as of July 1,
2009.





Operating
Properties





During
2010 we expect that our operating property portfolio, which consists of 39
properties containing 8.3 million square feet, will continue to be faced with
leasing and expense containment issues effecting commercial real estate
nationally.





During
the quarter ended March 31, 2010 we made no acquisitions or dispositions of
operating properties.  The current economy has slowed our
transactional activity as it relates to the acquisition and sale of real estate
assets which we expect to continue to be restricted in the near
term.





Consolidated Operating
Properties-
During the quarter ended March 31, 2010 there was significant positive leasing
activity. Our 554,000 square foot Jacksonville, Florida property which was
vacant much of 2009 has been leased up under a long term lease to a
credit-worthy tenant.  Similarly, our properties in Andover,
Massachusetts and Burlington, Vermont with expiring contracts have been fully
re-leased, Andover with a new tenant for 93,000 square feet through September
2022 and Burlington through the renewal of an existing sub-tenant for 56,000
square feet through January 1, 2015, leaving us with 96.1% occupancy on our
consolidated assets.


31




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


In
October 2009 Kroger notified us of its intention not to exercise its renewal
option on five buildings containing 229,000 square feet which they lease from
us.  The leases for these properties will expire in October 2010 and
we are aggressively marketing these properties for lease or sale.





Our
1,008,000 square foot property located in Churchill, Pennsylvania is under lease
through December 2010.  The property requires significant capital
improvements which we believe to be the tenant’s responsibility under the terms
of the lease.  Based on the current developments on this property we
recorded impairment losses in 2009 as required under relevant accounting
guidance. Due to
our inability to reach resolution with CBS Corporation and Viacom, Inc., the
obligors of the lease at our Churchill, Pennsylvania property, as to their
collective restoration obligations relating to the severe disrepair of the
property, we have advised CBS and Viacom that we will be seeking damages in
excess of $29,000,000 in view of the year-end lease
termination.




Assets Held for Sale -
Operating Property - In 2009 the tenant at our Athens, Georgia retail
property notified us that it was exercising its right to purchase the property
at the expiration of the current lease term.  In accordance with the
lease, the purchase price will be equal to the fair market value of the property
at the time of sale.  We and the tenant have each engaged independent
third parties to determine the fair market value of the property.  We
are awaiting the results of the appraisal process and anticipate that the sale
will be consummated on or before October 31, 2010, the current lease expiration
date.





Equity Investments in
Operating Properties





Sealy - Asof March 31, 2010, we held equity interests in three real estate ventures
with Sealy & Co which have an aggregate of approximately 2.1 million
rentable square feet consisting of 18 office/flex buildings and 13 light
distribution and service center properties. The investment properties are
located in Northwest Atlanta, and Atlanta, Georgia and Nashville, Tennessee and
had occupancies of 70%, 80% and 86%, respectively, at March 31,
2010.  This compares to occupancy of 84%, 82%, and 88% at March 31,
2009.  The decrease in occupancy at the Northwest Atlanta, Georgia
property is the result of the current softening in this market.  The
properties are being aggressively marketed for lease.  They continue
to generate sufficient cash flow to service debt, meet capital expenditure needs
and in 2010, although reporting a loss of $603,000 for the quarter ended March
31, 2010 due primarily to depreciation and amortization, we received cash
distributions of $104,000 from operations.





The Sealy
properties have $139,750,000 of mortgage debt with no maturities until January
2012.





Marc Realty - As of March 31,
2010, we held 12 equity interests with Marc Realty which consist of an aggregate
of approximately 1,977,000 rentable square feet of office and retail space which
was 83.5% occupied as compared to 84.1% occupied at December 31,
2009.





Five
downtown Chicago properties contain approximately 959,000 rentable square feet
of the aggregate Marc Realty portfolio and accounted for $37,009,000 of our
March 31, 2010 carrying value.  These five properties had occupancy of
89.2% at March 31, 2010, compared to 93.1% occupancy at March 31,
2009.  They offer significant stability to our overall investment due
to their size, locality, tenant composition and consistent results during times
of difficult market conditions.  The balance of the portfolio,
representing seven properties and $21,061,000 of our March 31, 2010 carrying
value, contain approximately 1,018,000 square feet.  This part of the
portfolio is located in the Chicago suburbs and was 78.1% occupied at March 31,
2010 compared to 79.6% occupied at March 31, 2009.





The Marc
Realty properties are encumbered with $94,300,000 of mortgage debt currently,
with no debt maturing in 2010, $29,984,000 maturing in 2011 and the remainder in
2012 or later.





Loan
Assets





Our loan
asset portfolio as of March 31, 2010 consists of $30,556,000 invested in a
combination of whole loans, B-notes and mezzanine loans that are secured by
quality assets in major metropolitan cities. These recent 2009 acquisitions
exemplify the type of investments that we view as opportunities in this market.
The collateral is located in markets that we believe will recover quicker and
most dramatically, and the loan assets were priced to yield a return consistent
with our expectations in this market. The portfolio generated interest earnings
of $2,463,000 for the quarter ended March 31, 2010.


32




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


We have
seen increased deal flow through collateralized real estate loans and
preferred equity.  Recent market statistics indicate billions of
dollars of commercial mortgage-backed securities and collateral debt obligation
loans are now in special servicing and there is an expectation that the number
will continue to grow.  We expect strong opportunities to invest will
emerge when borrowers are unable to refinance loans at maturity and as monetary
defaults increase due to reduced rental income.




REIT
Securities





We had
significant returns from our REIT securities investing after having invested
approximately $71,317,000 since the fourth quarter of 2008.  We have
tapered off on our investing in REIT equity and debt securities and are now
realizing those returns through the sale of the
securities.  Accordingly, during the period ended March 31, 2010 we
generated net proceeds of approximately $11,407,000 and recorded realized and
unrealized gains in the first quarter of $695,000 and $2,540,000
respectively.




Liquidity
and Capital Resources





At March
31, 2010, we held $76,591,000 in unrestricted cash and cash equivalents and
$45,738,000 in equity and debt REIT securities.  In addition, we had
the ability to draw up to $35,000,000 on our revolving line of
credit.





We
believe that cash flow from operations will continue to provide adequate capital
to fund our operating and administrative expenses, regular debt service
obligations and all dividend payments in accordance with REIT requirements in
the short-term. We anticipate that cash on hand, borrowings under our credit
facility and issuance of equity and debt securities will provide the necessary
capital required for our investment and financing activities.  As a
REIT, we must distribute annually at least 90% of our REIT taxable income. As a
result of this dividend requirement, we, like other REITs, are unable to
reinvest all of our operating cash flow and are dependent on raising capital
through equity and debt issuances or forming ventures with investors to obtain
funds with which to expand our business.





Our
primary sources of funds include:





·
            the
      use of cash and cash equivalents;


·
            rents
      and reimbursements received from our operating
  properties;


·
            payments
      received under our loan assets;


·
            the
      issuance of equity and debt
securities;


·
            interest
      and dividends received from investments in REIT
  securities;


·
            cash
      distributions from joint ventures;


·
            borrowings
      under our credit facilities; and


·
            asset
      specific borrowings.





Cash
Flows





Our level
of liquidity based upon cash and cash equivalents increased by approximately
$10,098,000 from $66,493,000 at December 31, 2009 to $76,591,000 at March 31,
2010.





Our cash
flow activities for the three months ended March 31, 2010 are summarized as
follows (in thousands):





Net
      cash flow provided by operating activities
                    
                    $
                    3,871Net
      cash flow provided by investing activities
                    
                    
                    10,785Net
      cash flow used in financing activities
                    
                    
                    (4,558
                    )Increase
      in cash and cash equivalents
                    
                    $
                    10,098




33




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


Operating
Activities





Our
operating activities generated net income of $4,450,000 and positive cash flow
of $3,871,000 for the three months ended March 31, 2010.  Our cash
provided by operations reflects our net income adjusted by: (i) non-cash items
of $2,444,000; (ii) $693,000 of distributions from non-consolidated interests;
and (iii) a net decrease due to changes in other operating assets and
liabilities of $3,716,000.  See our discussion of Results of
Operations below for additional details on our operations.





Investing
Activities





Cash
provided by investing activities of $10,785,000 for the three months ended March
31, 2010 was comprised primarily of the following:





·
            $11,407,000
      in proceeds from the sale of securities carried at fair value;
      and


·
            $3,000,000
      in proceeds from the sale at par value of the Siete Square A
      Note;





These
sources of investing cash flows were offset primarily by:





·
            $1,306,000
      for purchases of securities carried at fair
  value;


·
            $679,000
      for additional loan advances on the 160 Spear property and 180 North
      Michigan;


·
            $920,000
      for investment in our Marc Realty equity investments;
  and


·
            $687,000
      for investment in capital and tenant improvements at our operating
      properties.





Financing
Activities





Cash used
in financing activities of $4,558,000 for the three months ended March 31, 2010
was comprised primarily of the following:





·
            $3,311,000
      for dividend payments on our Common
Shares;


·
            $221,000
      for dividend payments on our Series C Preferred Shares;
  and


·
            $1,790,000
      for mortgage loan repayments.





Dividends





In paying
dividends we seek to have our quarterly dividends track recurring cash flow from
operations.  While we intend to continue paying dividends each quarter,
they will depend on the actual cash flow, financial condition, capital
requirements, utilization of available capital losses and net operating loss
carryforwards, distribution requirements for REITs under the Internal Revenue
Code, and such other factors as our Board of Trustees deem relevant.  
Subject to the foregoing, we expect to continue distributing our recurring
current cash flow after reserving normal and customary amounts thereby allowing
us to maintain our capital.   In addition, when deemed prudent or
necessitated by applicable distribution requirements for REITs under the
Internal Revenue Code, we may make one or more special distributions during any
particular year.





In light
of the foregoing, in 2009 we reduced our dividend from $0.325 per share to $0.25
per share for the first three quarters of 2009 and, as a result of the issuance
of additional Common Shares during the fourth quarter of 2009 from our rights
offering, the proceeds of which have not yet been invested into accretive
investments, we reduced the quarterly dividend again to $0.1625 for the fourth
quarter of 2009.  This represents our existing budgeted recurring cash
flow generated by assets currently owned and excludes any potential future cash
flow generated from the investment of the substantial cash and cash equivalents
on hand.  Additionally, during a favorable investing environment, we
expect that we will utilize our carryforward capital losses to shelter gains
from the disposition of our assets so we may use the proceeds for
investment.  We expect to continue applying these standards with
respect to our dividends on a quarterly basis which could cause the dividends to
increase or decrease depending on these various factors.


34




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


We paid a
quarterly dividend of $0.1625 per Common Share for the fourth quarter of 2009 in
January 2010 and we paid a quarterly dividend of $0.1625 per Common Share for
the first quarter of 2010 in April 2010.





We paid a
regular quarterly dividend of $0.40625 per Series B-1 Preferred Share and per
Series C Preferred Share in the first quarter of 2010.





Results of
Operations





Our
results are discussed below by business segment:





Ø
            Operating
      Properties – our wholly and partially owned operating properties from and
      after July 1, 2009 our 12 Marc Realty equity
  investments;


Ø
            Loan
      Assets – our senior and mezzanine real estate loans as well as commercial
      mortgage-backed securities including, prior to July 1, 2009, our Marc
      Realty venture properties;


Ø
            REIT
      Securities – our ownership of equity and debt securities in other real
      estate investment trusts; and


Ø
            Corporate
      – non-segment specific results which include interest on cash reserves,
      general and administrative expenses and other non-segment specific income
      and expense items.





The
following table summarizes our assets by business segment (in
thousands):





March 31,
                    2010
                  
                  
                  December 31,
                    2009Operating
      properties
                  
                  $
                  313,866
                  
                  
                  $
                  313,682Loan
      assets
                  
                  
                  30,556
                  
                  
                  
                  31,774REIT
      securities
                  
                  
                  45,738
                  
                  
                  
                  52,597CorporateCash
      and cash equivalents
                  
                  
                  76,591
                  
                  
                  
                  66,493Other
                  
                  
                  25,502
                  
                  
                  
                  28,646Total
      Assets
                  
                  $
                  492,253
                  
                  
                  $
                  493,192





Total
assets decreased by $939,000, or 0.2%, from $493,192,000 at December 31, 2009 to
$492,253,000 at March 31, 2010.  Cash and cash equivalents increased
by $10,098,000.  In addition, we experienced decreases of $6,859,000
in REIT securities assets and $1,218,000 in loan assets and $3,144,000 in other
assets.  Our operating properties assets remained relatively
constant.





The
decrease in REIT securities assets was primarily the result of the sale of
securities carried at fair value for proceeds of $11,407,000.





The
decrease in loan assets was due primarily to the sale of the $3,000,000 Siete
Square A Note at par.





The
decrease in other assets resulted primarily from a $1,752,000 reduction in
restricted cash held in escrow and a $1,314,000 reduction in accounts receivable
and prepaid expenses.





Comparison
of Three Months ended March 31, 2010 versus Three Months ended March 31,
2009





The
following table summarizes our results from continuing operations by business
segment for the three months ended March 31, 2010 and 2009 (in
thousands):





2010
                  
                  
                  2009Operating
      properties (1)
                  
                  $
                  759
                  
                  
                  $
                  1,318Loan
      assets (1)
                  
                  
                  2,536
                  
                  
                  
                  (16,716
                  )REIT
      securities
                  
                  
                  3,369
                  
                  
                  
                  (9,936
                  )Corporate
      income (expenses)
                  
                  
                  (2,336
                  )
                  
                  
                  3,089Consolidated
      income (loss) from continuing operations
                  
                  $
                  4,328
                  
                  
                  $
                  (22,245
                  )




35




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


(1)
            As
      of July 1, 2009, in conjunction with the restructuring of our preferred
      equity investment in Marc Realty, 12 of our investments in the Marc Realty
      portfolio are classified as equity investments and are included in the
      operating properties segment.





Operating
Properties





The
following table summarizes our results from continuing operations for our
operating properties business segment for the three months ended March 31, 2010
and 2009 (in thousands):





2010
                  
                  
                  2009Rents
      and reimbursements
                  
                  $
                  9,520
                  
                  
                  $
                  10,655Operating
      expenses
                  
                  
                  (1,959
                  )
                  
                  
                  (1,859
                  )Real
      estate taxes
                  
                  
                  (720
                  )
                  
                  
                  (673
                  )Equity
      in loss of Sealy Northwest Atlanta
                  
                  
                  (175
                  )
                  
                  
                  (38
                  )Equity
      in loss of Sealy Airpark Nashville
                  
                  
                  (209
                  )
                  
                  
                  (258
                  )Equity
      in loss of Sealy Newmarket
                  
                  
                  (219
                  )
                  
                  
                  (186
                  )Equity
      in income of Marc Realty investments
                  
                  
                  76
                  
                  
                  
                  -Operating
      income
                  
                  
                  6,314
                  
                  
                  
                  7,641Depreciation
      and amortization expense
                  
                  
                  (2,362
                  )
                  
                  
                  (2,851
                  )Interest
      expense
                  
                  
                  (3,193
                  )
                  
                  
                  (3,472
                  )Net
      income
                  
                  $
                  759
                  
                  
                  $
                  1,318





For
purposes of management’s discussion of our results of operations, operating
income for each business segment is defined as all items of income and expense
directly derived from or incurred by each business segment before depreciation,
amortization and interest expense.  Operating income from our
operating properties decreased by $1,327,000 over the prior year
period.  The decrease was due primarily to:





·
            a
      decrease of $369,000 in rents and reimbursements at our Andover,
      Massachusetts property due to the expiration of the lease in place at
      December 31, 2009.  This space has been leased effective March
      18, 2010;


·
            a
      decrease of $340,000 in rents and reimbursements from our net lease
      portfolio due to the reduced rent pursuant to the restructuring and
      10-year extension of the lease for our Plantation, Florida property as of
      April 1, 2009;


·
            a
      decrease of $158,000 in rents and reimbursements at our Jacksonville,
      Florida property due to the loss of two tenants in 2009 who occupied
      approximately 80% of the property.  This space has been leased
      effective February 1, 2010;


·
            a
      decrease of $131,000 in rents and reimbursements from our Lisle, Illinois
      properties due to an approximate 15% decrease in average occupancy at one
      of the properties for the three months ended March 31, 2010 as compared to
      the three months ended March 31, 2009;
and


·
            a
      $121,000 increase in losses from our Sealy equity investments due
      primarily to a $137,000 increase in loss related to our Northwest Atlanta,
      Georgia office complex which experienced a 3% decrease in occupancy at
      March 31, 2010 from March 31, 2009.  Losses from the Sealy
      portfolio are primarily the result of non-cash depreciation and
      amortization expenses.  We received cash distributions of
      $104,000 from the Sealy equity investments for the three months ended
      March 31, 2010.




36




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


Partially
offset by:





·
            income
      of $76,000 in 2010 representing our share of operations from our 12 Marc
      Realty equity investments for the three months ended March 31,
      2010.  We received cash distributions of $486,000 from the Marc
      Realty equity investments during the three months ended March 31,
      2010.


Depreciation
and amortization expense decreased by $489,000 primarily as a result of values
assigned to leases in place at the time of acquisition being fully amortized
during 2009.  Interest expenses related to our operating properties
decreased by $279,000 primarily as a result of normal amortization of the
mortgage loans payable.





Loan
Assets





The
following table summarizes our results from our loan assets business segment for
the three months ended March 31, 2010 and 2009 (in thousands):





2010
                  
                  
                  2009Interest
      income
                  
                  $
                  2,463
                  
                  
                  $
                  378Equity
      in earnings of preferred equity investment of Marc Realty
                  
                  
                  83
                  
                  
                  
                  1,015Equity
      in loss of Lex-Win Concord
                  
                  
                  -
                  
                  
                  
                  (17,681
                  )Provision
      for loss on loan receivable
                  
                  
                  -
                  
                  
                  
                  (428
                  )Operating
      income (loss)
                  
                  
                  2,546
                  
                  
                  
                  (16,716
                  )General
      and administrative expense
                  
                  
                  (10
                  )
                  
                  
                  -Net
      income (loss)
                  
                  $
                  2,536
                  
                  
                  $
                  (16,716
                  )





Operating
income from loan assets increased by $19,262,000 from a loss of $16,716,000 for
the three months ended March 31, 2009 to income of $2,546,000 for the three
months ended March 31, 2010.  The increase was due primarily
to:





·
            a
      $17,681,000 reduction in losses recognized on our equity investment in
      Lex-Win Concord.  Our equity investment in Lex-Win Concord was
      written down to zero as of June 30, 2009.  We had no income or
      loss recognition for this investment for the three months ended March 31,
      2010; and


·
            a
      $2,085,000 increase in interest income due primarily to $2,444,000
      recognized on loan assets acquired in 2009 which was partially offset by a
      reduction of $348,000 of interest on our tenant improvement and capital
      expenditure loans related to the Marc Realty investments which are now
      reported in the operating properties segment as of July 1,
      2009;





Partially
offset by:





·
            a
      $932,000 decrease in interest earnings from our preferred equity
      investment in March Realty as a result of the July 1, 2009 restructuring
      of this investment.





REIT
Securities





The
following table summarizes our results from our REIT securities business segment
for the three months ended March 31, 2010 and 2009 (in thousands):





2010
                  
                  
                  2009Interest
      and dividends
                  
                  $
                  747
                  
                  
                  $
                  1,374Gain
      (loss) on sale of securities carried at fair value
                  
                  
                  695
                  
                  
                  
                  (87
                  )Unrealized
      gain (loss) on securities carried at fair value
                  
                  
                  2,540
                  
                  
                  
                  (11,148
                  )Unrealized
      loss on loan securities carried at fair value
                  
                  
                  (613
                  )
                  
                  
                  -Operating
      income (loss)
                  
                  
                  3,369
                  
                  
                  
                  (9,861
                  )Interest
      expense
                  
                  
                  -
                  
                  
                  
                  (75
                  )Net
      income (loss)
                  
                  $
                  3,369
                  
                  
                  $
                  (9,936
                  )




37




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


Operating
income from REIT securities increased by $13,230,000 from a loss of $9,861,000
for the three months ended March 31, 2009 to income of $3,369,000 for the three
months ended March 31, 2010.  The increase was due primarily
to:





·
            a
      $13,688,000 increase in unrealized gain on securities carried at fair
      value; and


·
            a
      $695,000 realized gain on the sale of securities carried at fair value for
      the three months ended March 31, 2010 as compared to a loss of $87,000
      recognized in the same period last
year;





Partially
offset by:





·
            a
      $627,000 decrease in interest and dividend income primarily due to the
      sale of certain securities; and


·
            a
      $613,000 unrealized loss on loan securities carried at fair value
      recognized during the three months ended March 31,
  2010.





Corporate





The
following table summarizes our results from our corporate business segment for
the three months ended March 31, 2010 and 2009 (in thousands):





2010
                  
                  
                  2009Interest
      income
                  
                  $
                  37
                  
                  
                  $
                  72General
      and administrative
                  
                  
                  (1,899
                  )
                  
                  
                  (1,442
                  )Interest
      expense
                  
                  
                  (459
                  )
                  
                  
                  (728
                  )Gain
      on extinguishment of debt
                  
                  
                  -
                  
                  
                  
                  5,237State
      and local taxes
                  
                  
                  (15
                  )
                  
                  
                  (50
                  )Operating
      income (loss)
                  
                  $
                  (2,336
                  )
                  
                  $
                  3,089





The
decrease in corporate operations for the comparable periods was due primarily
to:





·
            a
      $5,237,000 gain on early extinguishment of debt recognized in 2009
      resulting from our January 2009 purchase of 917,105 of our Series B-1
      Preferred Shares at a discount to their liquidation value;
    and


·
            a
      $457,000 increase in general and administrative expenses due primarily to
      an increase in the base management fee of $260,000 and a $146,000 increase
      in professional fees.  The increase in professional fees was
      primarily the result of $200,000 in costs incurred in 2010 related to
      pursuing potential investments;





Partially
offset by:





·
            a
      $269,000 decrease in corporate interest expense due to lower aggregate
      payments in 2010 on our Series B-1 Preferred Shares as a result of fewer
      Series B-1 Preferred Shares outstanding during
  2010.





State
income taxes were $15,000 and $50,000 for the three months ended March 31, 2010
and 2009, respectively, due primarily to our anticipated taxable income for
state purposes, after deductions for dividends paid and after the utilization of
net operating loss carryforwards, where applicable.





Discontinued
Operations





Discontinued
operations consists of our Athens, Georgia retail property where the tenant
notified us of its intent to exercise its purchase option at the expiration of
the current lease term and our apartment complex in Kansas City, Kansas which
was foreclosed in December 2009.


38




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


Income
from discontinued operations increased by $139,000 from a loss of $17,000 for
the three months ended March 31, 2009 to income of $122,000 for the three months
ended March 31, 2010.  The increase was due primarily to an operating
loss of $96,000 recognized on the apartment complex in 2009.


The
operations of the foregoing properties are classified as discontinued operations
for all periods presented.




Critical Accounting Policies
and Estimates





A summary
of our critical accounting policies is included in our Annual Report on Form
10-K for the year ended December 31, 2009.





Recently Issued Accounting
Standards





See Item
1. Financial Statements – Note 2.





ITEM 3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Interest
Rate Risk





We have
exposure to fluctuations in market interest rates.  Market interest
rates are highly sensitive to many factors beyond our
control.  Various financial vehicles exist which would allow
management to partially mitigate the potential negative effects of interest rate
fluctuations on our cash flow and earnings.





Our
liabilities include both fixed and variable rate debt.  As discussed
in ITEM 2 – Management’s Discussion and Analysis of Financial Conditions and
Results of Operations, we seek to limit our risk to interest rate fluctuations
through match financing on our loan assets as well as through hedging
transactions.  In this regard, we entered into the following
agreements:





·
            We
      entered into an interest rate swap agreement, with a notional amount of
      $23,000,000, which commenced December 1, 2009 and will expire June 30,
      2010 which effectively converts the interest rate on that portion of
      principal from a floating rate of 1.75% to a fixed rate of
      2.80%.





The fair
value of our debt, based on discounted cash flows at the current rate at which
similar loans would be made to borrowers with similar credit ratings for the
remaining term of such debt, was less than its carrying value of
$214,977,000 at March 31, 2010 and $216,767,000 at December 31,
2009 by $20,926,000 at March 31, 2010 and $25,704,000 at December
31, 2009.





The
following table shows what the annual effect a change in the LIBOR rate would
have on interest expense based upon the unhedged balances in variable rate debt
at March 31, 2010 (in thousands):




Change
      in LIBOR(2)-0.25%
                      
                      
                      1%
                      
                      
                      2%
                      
                      
                      3%Change
      in consolidated interest expense
                      
                      $
                      (1
                      )
                      
                      $
                      5
                      
                      
                      $
                      9
                      
                      
                      $
                      14Pro-rata
      share of change in interest expense of debt on non-consolidated
      entities (1)
                      
                      
                      (19
                      )
                      
                      
                      77
                      
                      
                      
                      213
                      
                      
                      
                      408(Increase)
      decrease in net income
                      
                      $
                      (20
                      )
                      
                      $
                      82
                      
                      
                      $
                      222
                      
                      
                      $
                      422




(1)
            Represents
      our pro-rata share of a change in interest expense in our Marc Realty
      equity investment.  The amount does not reflect our equity
      investment in Concord which has been written down to
  zero.


39




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


(2)
            The
      one-month LIBOR rate at March 31, 2010 was
  0.25%.





We may
utilize various financial instruments to mitigate the potential negative impact
of interest rate fluctuations on our cash flows and earnings, including hedging
strategies, depending on our analysis of the interest rate environment and the
costs and risks of such strategies.  In addition, as of March 31, 2010
and December 31, 2009 our variable rate loan assets with a face value
aggregating $32,504,000, for both periods, partially mitigate our exposure to
change in interest rates.




Market
Value Risk




Our hedge
transactions using derivative instruments also involve certain additional risks
such as counterparty credit risk, the enforceability of hedging contracts and
the risk that unanticipated and significant changes in interest rates will cause
a significant loss of basis in the contract.  The one counterparty of
these arrangements is KeyBank at the present time.  We do not
anticipate that this counterparty will fail to meet its
obligations.  There can be no assurance that we will adequately
protect against the foregoing risks and that we will ultimately realize an
economic benefit.




ITEM 4.
            CONTROLS
      AND PROCEDURES





We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed with the SEC is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer
(CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely
decisions regarding required disclosure.




As of
March 31, 2010, an evaluation was performed under the supervision and with the
participation of our management, including the CEO and CFO, of the effectiveness
of the design and operation of our disclosure controls and procedures (as
defined in Rules 13a-15(e) under the Securities Exchange Act of 1934).
Based on that evaluation, our management, including the CEO and CFO, concluded
that our disclosure controls and procedures were effective as of March 31,
2010.




Other
Matters




There
have been no changes in our internal controls over financial reporting during
the most recent quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.




40




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


PART
II. OTHER INFORMATION





ITEM 6.
            EXHIBITS





Exhibits
required by Item 601 of Regulation S-K are filed herewith or incorporated herein
by reference and are listed in the attached Exhibit Index.




41




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Trust has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.





Winthrop
      Realty TrustDate:  May
      10, 2010
                      By:
                      /s/ Michael L. AshnerMichael
      L. AshnerChief
      Executive OfficerDate:  May
      10, 2010
                      By:
                      /s/ Thomas C. StaplesThomas
      C. StaplesChief
      Financial
Officer




42




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


EXHIBIT
INDEX





Exhibit
              
              Description
              
              Page
                Number3.1
              
              Second
      Amended and Restated Declaration of Trust as of May 21, 2009 -
      Incorporated by reference to Exhibit 3.1 to the Trust’s Quarterly Report
      on Form 10-Q for the period ended June 30, 2009.3.2
              
              By-laws
      of Winthrop Realty Trust as amended and restated on November 3, 2009 -
      Incorporated by reference to Exhibit 3.1 to the Trust’s Current Report on
      Form 8-K filed November 6, 2009
              
              -3.3
              
              Amendment
      to By-laws - Incorporated by reference to Exhibit 3.1 to the Trust’s
      Current Report on Form 8-K filed March 6, 2010
              
              -4.1
              
              Form
      of certificate for Common Shares of Beneficial
      Interest.  Incorporated by reference to Exhibit 4.1 to the
      Trust’s Annual Report on Form 10-K for the year ended December 31,
      2008
              
              -4.2
              
              Warrant
      to purchase 500,000 shares of Beneficial Interest of Trust - Incorporated
      by reference to Exhibit 4(l) to the Trust’s Annual Report on Form 10-K for
      the year ended December 31, 1998.
              
              -4.3
              
              Agreement
      of Limited Partnership of WRT Realty L.P., dated as of January 1, 2005 -
      Incorporated by reference to Exhibit 4.1 to the Trust’s Form 8-K filed
      January 4, 2005.
              
              -4.4
              
              Amended
      and Restated Certificate of Designations for Series B-1 Cumulative
      Convertible Redeemable Preferred Shares of Beneficial Interest (“Series
      B-1 Certificate of Designations”) - Incorporated by reference to Exhibit
      4.1 to the Trust’s Form 8-K filed June 21, 2005.
              
              -4.5
              
              Amendment
      No. 1 to Series B-1 Certificate of Designations - Incorporated by
      reference to Exhibit 4.1 to the Trust’s Form 8-K filed November 13,
      2007.
              
              -4.6
              
              Certificate
      of Designations for Series C Cumulative Convertible Redeemable Preferred
      Shares of Beneficial Interest - Incorporated by reference to Exhibit 4.1
      to the Trust’s Form 8-K filed November 2, 2009.10.1
              
              Indemnification
      Agreement with Neil Koenig, dated as of April 29, 2002 - Incorporated by
      reference to Exhibit 10.Q to the Trust’s Annual Report on Form 10-K for
      the year ended December 31, 2002.
              
              -10.2
              
              Stock
      Purchase Agreement between the Trust and FUR Investors, LLC, dated as of
      November 26, 2003, including Annex A thereto, being the list of Conditions
      to the Offer - Incorporated by reference to Exhibit 10.1 to the Trust’s
      Form 8-K filed December 1, 2003.
              
              -10.3
              
              Second
      Amended and Restated Advisory Agreement dated March 5, 2009, between the
      Trust, WRT Realty L.P. and FUR Advisors LLC. Incorporated by reference to
      Exhibit 10.3 to the Trust’s Annual Report on Form 10-K for the year ended
      December 31, 2008
              
              -10.4
              
              Amendment
      No. 1 to Second Amended and Restated Advisory Agreement - Incorporated by
      reference to Exhibit 10.30 to the Trust’s Quarterly Report on Form 10-Q
      for the period ended March 31, 2009.




43




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


10.5
              
              Amendment
      No. 2 to Second Amended and Restated Advisory Agreement - Incorporated by
      reference to Exhibit 10.1 to the Trust’s Form 8-K filed January 29,
      201010.6
              
              Exclusivity
      Services Agreement between the Trust and Michael L. Ashner - Incorporated
      by reference to Exhibit 10.4 to the Trust’s Form 8-K filed December 1,
      2003.
              
              -10.7
              
              Amendment
      No. 1 to Exclusivity Agreement, dated November 7, 2005 - Incorporated by
      reference to Exhibit 10.7 to the Trust’s Form 8-K filed November 10,
      2005.
              
              -10.8
              
              Covenant
      Agreement between the Trust and FUR Investors, LLC - Incorporated by
      reference to Exhibit 10.5 to the Trust’s Form 8-K filed December 1,
      2003.
              
              -10.9
              
              Loan
      Agreement, dated November 18, 2004, among FT-Fin Acquisition LLC, Keybank
      National Association, Newstar CP Funding LLC, Keybank National
      Association, as agent for itself and such other lending institutions, and
      Keybanc Capital Markets, as the Arranger - Incorporated by reference to
      Exhibit 10.1 to the Trust’s Form 8-K filed November 23,
    2004.
              
              -10.10
              
              Loan
      Modification Agreement, dated June 30, 2006, among FT-Fin Acquisition LLC,
      Keybank National Association, Newstar CP Funding LLC, Keybank National
      Association, as agent for itself and such other lending institutions, and
      Keybank Capital Markets, as the Arranger - Incorporated by reference to
      Exhibit 10.11 to the Trust’s Quarterly report on Form 10-Q for the period
      ended June 30, 2006.
              
              -10.11
              
              Form
      of Mortgage, dated November 18, 2004, in favor of Keybank National
      Association - Incorporated by reference to Exhibit 10.2 to the Trust’s
      Form 8-K filed November 23, 2004.
              
              -10.12
              
              Ownership
      Interest Pledge Agreement, dated November 18, 2004, from FT-Fin
      Acquisition LLC to Keybank National Association - Incorporated by
      reference to Exhibit 10.3 to the Trust’s Form 8-K filed November 23,
      2004.
              
              -10.13
              
              Guaranty,
      dated as of November 18, 2004, by First Union Real Estate Equity and
      Mortgage Investments in favor of Keybank National Association, as the
      agent - Incorporated by reference to Exhibit 10.4 to the Trust’s Form 8-K
      filed November 23, 2004.
              
              -10.14
              
              Indemnity
      Regarding Hazardous Materials, dated as of November 18, 2004, by First
      Union Real Estate Equity and Mortgage Investments in favor of Keybank
      National Association, as the agent - Incorporated by reference to Exhibit
      10.5 to the Trust’s Form 8-K filed November 23, 2004.
              
              -10.15
              
              Amended
      and Restated Omnibus Agreement, dated March 16, 2005, among Gerald Nudo,
      Laurence Weiner and WRT Realty L.P. - Incorporated by reference to Exhibit
      10.1 to the Trust’s Form 8-K filed March 18, 2005
              
              -10.16
              
              Agreement,
      dated as of July 1, 2009, among Gerald Nudo, Laurence Weiner and WRT
      Realty L.P.
              
              -10.17
              
              Securities
      Purchase Agreement, dated February 16, 2005, between First Union Real
      Estate Equity and Mortgage Investments and Kimco Realty Corporation -
      Incorporated by reference to Exhibit 10 to the Trust’s Form 8-K filed
      February 18, 2005.
              
              -10.18
              
              Securities
      Purchase Agreement, dated February 25, 2005, between First Union Real
      Estate Equity and Mortgage Investments, Perrin Holden & Davenport
      Capital Corp. and the Investors named therein - Incorporated by reference
      to Exhibit 10.1 to the Trust’s Form 8-K filed March 3,
    2005.
              
              -




44




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


10.19
              
              Securities
      Purchase Agreement, dated June 15, 2005, between First Union Real Estate
      Equity and Mortgage Investments, Perrin Holden & Davenport Capital
      Corp. and the Investors named therein - Incorporated by reference to
      Exhibit 10.1 to the Trust’s Form 8-K filed June 21, 2005.
              
              -10.20
              
              Amended
      and Restated Registration Rights Agreement, dated June 20, 2005, between
      First Union Real Estate Equity and Mortgage Investments and the Investors
      named therein  - Incorporated by reference to Exhibit 10.2 to
      the Trust’s Form 8-K filed June 21, 2005.
              
              -10.21
              
              Amended
      and Restated Investor Rights Agreement, dated June 20, 2005, between First
      Union Real Estate Equity and Mortgage Investments and the Investors named
      therein - Incorporated by reference to Exhibit 10.3 to the Trust’s Form
      8-K filed June 21, 2005.
              
              -10.22
              
              Securities
      Purchase Agreement, dated November 7, 2005, between the Trust and Vornado
      Investments L.L.C. (“Vornado”) - Incorporated by reference to Exhibit 10.1
      to the Trust’s Form 8-K filed November 10, 2005.
              
              -10.23
              
              Registration
      Rights Agreement, dated November 7, 2005, between the Trust and Vornado -
      Incorporated by reference to Exhibit 10.2 to the Trust’s Form 8-K filed
      November 10, 2005.
              
              -10.24
              
              Loan
      Agreement, dated as of December 16, 2005, between WRT Realty L.P. and
      KeyBank, National Association - Incorporated by reference to Exhibit 10.1
      to the Trust’s Form 8-K filed December 21, 2005.
              
              -10.25
              
              Guaranty
      from Winthrop Realty Trust in favor of KeyBank, National Association-
      Incorporated by reference to Exhibit 10.2 to the Trust’s Form 8-K filed
      December 21, 2005.
              
              -10.26
              
              Second
      Amendment to Loan Agreement, dated as of December 16, 2008- Incorporated
      by reference to Exhibit 10.1 to the Trust’s Form 8-K filed December 22,
      2008.
              
              -10.27
              
              Third
      Amendment to Loan Agreement, dated as of December 16, 2008- Incorporated
      by reference to Exhibit 10.2 to the Trust’s Form 8-K filed December 22,
      2008
              
              -10.28
              
              Agreement
      between Michael L. Ashner and Winthrop Realty Trust dated July 23, 2006 -
      Incorporated by reference to Exhibit 10.2 to the Trust’s Form 8-K filed
      July 25, 2006.
              
              -10.29
              
              Winthrop
      Realty Trust 2007 Long Term Stock Incentive Plan - Incorporated by
      reference to the Trust’s Definitive Proxy Statement on Schedule 14A filed
      with the Securities and Exchange Commission on March 30,
    2007.
              
              -10.30
              
              Second
      Amended and Restated Limited Liability Company Agreement of Concord Debt
      Holdings LLC, dated August 2, 2008, between Lex-Win Concord LLC and Inland
      American (Concord) Sub LLC  - Incorporated by reference to
      Exhibit 10.1 to the Trust’s Form 8-K filed August 4, 2008
              
              -10.31
              
              Limited
      Liability Company Agreement of Lex-Win Concord LLC, dated August 2, 2008,
      among WRT Realty L.P., The Lexington Master Limited Partnership and WRP
      Sub-management LLC - Incorporated by reference to Exhibit 10.2 to the
      Trust’s Form 8-K filed August 4, 2008
              
              -




45




WINTHROP
REALTY TRUST
 FORM
10-Q MARCH 31, 2010


10.32
              
              Form
      of Series B-1 and Series C Preferred Share Purchase Agreement, dated
      November 1, 2009 - Incorporated by reference to Exhibit 10.1 to the
      Trust’s Form 8-K filed November 2, 200910.33
              
              Investor
      Rights Agreement (Series C Preferred Shares), dated November 1, 2009,
      between Winthrop Realty Trust and the investors party thereto - -
      Incorporated by reference to Exhibit 10.2 to the Trust’s Form 8-K filed
      November 2, 200931
              
              Certifications
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
              
              *32
              
              Certification
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
              
              *




* filed
herewith


46